The Zero Marginal Cost Society
The capitalist era is passing -- not quickly, but inevitably. Rising in its wake is a new global collaborative Commons that will fundamentally transform our way of life. Ironically, capitalism's demise is not coming at the hands of hostile external forces. Rather, The Zero Marginal Cost Society argues, capitalism is a victim of its own success. Intense competition across sectors of the economy is forcing the introduction of ever newer technologies. Bestselling author Jeremy Rifkin explains that this competition is boosting productivity to its optimal point where the marginal cost of producing additional units is nearly zero, which makes the product essentially free. In turn, profits are drying up, property ownership is becoming meaningless, and an economy based on scarcity is giving way to an economy of abundance, changing the very nature of society. Rifkin describes how hundreds of millions of people are already transferring parts of their economic lives from capitalist markets to global networked Commons. "Prosumers" are producing their own information, entertainment, green energy, and 3-D printed products at nearly zero marginal cost, and sharing them via social media sites, rentals, redistribution clubs, bartering networks, and cooperatives. Meanwhile, students are enrolling in massive open online courses (MOOCs) that also operate at near-zero marginal cost.
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What Hacker News says
- In South Korea I have a 5 gigabit connection for $20/month. I could have chosen between at least three competing companies, and that's for regular land lines.
The US is so much larger than the South Korea, but this shows that it is possible to have three companies' wires going through the same space. Interestingly the same companies provide telephone and TV; there's no distinction as far as I know between a phone and a cable company. They are data network companies.
Btw you can read an interesting history of phone monopoly in Jeremy Rifkin's "Zero Marginal Cost Society," starting at page 49.
From a technical perspective, couldn't you theoretically have a network of big tubes with several company wires inside? Maybe the mother tube could be paid for by municipalities, and then individual companies could add their wires to without having to rip everything up each time? The companies then pay for the space in the tube, perhaps like licensing air waves? There are probably problems with this, but isn't there a better way to accommodate competition? The situation in the US is awful.
- This post is basically a copy/paste of the latest book of Rifkin:
http://www.amazon.com/Zero-Marginal-Cost-Society-Collaborati...
Book, which is by the way very good.
- Reminds me of The Zero Marginal Cost Society by Jeremy Rifkin.
- > Albert, another partner as USV has been evolving his understanding and has been working on a book called World After Capital
It's probably no reflection on the rest of his thesis, but he's wrong about what was scarce in pre-agrarian societies (see 'The Original Affluent Society by Marshall Sahlins). Looks like an intriguing book though, thanks for sharing. Seems similar to the thesis of Jeremy Rifkin's 'Third Industrial Revolution' and 'Zero Marginal Cost Society' books.
As for your worst-case-scenario about crypto-currencies, replace them with over-valued real estate and we've already seen it play out at least once. The majorities (or 40% minorities in my country) who vote for fiscally conservative parties pushing austerity policies, despite all the evidence they make the problem worse not better, are desperately trying to prop up the value of their real estate investments and retirement funds. Like goldbugs and bitcoinbugs, they have an irrational fear and hatred of even mild inflation, as any inflation causes some erosion of the value of their stored wealth. This fear and hatred makes them willing to ignore the acid that austerity pours of the social fabric, and the way its gradual demolition of public services built up over generations, so it can feed the remains into barrel fires and convince itself this is "growth".
- I agree with Kelly that the Internet is the modern outgrowth of the publishing and media industry, though I find his focus and conclusions beyond that point lacking.
For starters, the Internet itself is far more about distribution than duplicating. It's effect is to achieve distribution of information. Computers alone are sufficient to achieve copying, but it was the distribution component which computers alone, or even low-speed or fixed-location Internet failed to achieve. And though the Internet's distribution involves copying of bits, that's not the critical function.
Information theory itself concerns the origination, distribution, receipt, comprehension (or decoding), and possibly redistribution of messages. Those are instantiated through such systems as webservers (or application engines), the Internet, protocols, and ultimately some human or nonhuman interpretation engine.
Kelly is also correct in that the Internet removes costs and frictions. Or alternatively, it shifts the cost points of media, and generally reduces the costs of originating and duplicating information, without increasing individual capacity to comprehend or filter it. This gets to the core of what's been called the attention economy, forseen in the 1970s and earlier by Herbert Simon and Alvin Toffler.
I've been looking at quantifications of information absorption capacity of people and suspect that that's generally quite low -- a few tens, possibly hundreds, of messages per day, but not much above that. The consequence of filter overload is a real problem. And the attention we can give any one message is directly inversely proportional to the number of messages received, divided by our time to dedicate to such messages.
Reducing costs gives rise to the Jevons paradox: It's not that the high-barrier-to-entry messages of the high-cost era suddenly become more available, but that a new flood of low-barrier, low-value (or negative-value) messages appear. Spam. Viruses. Junk mail. Phone solicitations. Web advertising. Clickbait.
There's also Woozle's Law of Epistemic Systems: as the audience using any given communications medium increases in number (and especially: in significance), the value of manipulating that audience will increase.
In market economics, low marginal costs become a problem as marginal cost is the mechanism by which markets set prices. For goods with high fixed and low marginal costs, market prices are simply insufficient to reward producers (or creators). This is the subject of recent books by Paul Mason (Postcapitalism) and Jeremy Rifkin (The Zero Marginal Cost Society).
Gresham's Law is another challenge, multiple ways. The popular form is "Bad X drives out good", though the general mechanism is more nuanced: Greshams mechanisms are complexity constraints applied where a "better" (more complex) good is valued identically to a "worse" one, for whatever reasons, within a given domain. The general result is that the worse goods predominate. The capacity to distinguish better from worse itself affects this, which is why a larger market tends to incentivise worse goods. And, if there is an alternative market in which the better goods are more highly rewarded, you'll see a flight of those goods to those markets. This is often exhibited as brain-drain: flight from low-paid professions such as teaching, government work, politics, or academia, to business, trades, or finance, for example.
It can also be exhibited as international flows of capital, coin, or talent.
And this plays out in information markets, where the lack of sufficient reward will see authors and creators either depart for realms in which they are appropriately rewarded, or to other fields. Political and ethnic persecution can have similar effects -- the flight of European Jews to the US in the 1930s and 1940s, or the flight of American blacks to Europe from the 1930s through the 1970s and even beyond, as examples.
Sorting out the implications of changing relative costs and rewards is key, and that's what Kelly, and a great many others, fail to do.
- author: On April 1st, 2014 Mr. Rifkin's published his latest book, The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. In 2011, Jeremy Rifkin published the New York Times bestseller The Third Industrial Revolution
