Jeremy Rifkin’s new book The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism muses about the imminent transformation of the economy in ways that will make the old distinctions of left, right, capitalism, socialism, etc. seem redundant and quaint.
“If I had told you 25 years ago that, in a quarter century’s time, one-third of the human race would be communicating with one another in huge global networks of hundreds of millions of people…” he writes, painting a picture of a present that seemed impossible only a short while ago before pivoting to a question, “But what if I were to say to you that 25 years from now, the bulk of the energy you use to heat your home and run your appliances, power your business, drive your vehicle, and operate every part of the global economy will likewise be nearly free?”
It’s a nice thought. It’s also the ancient, road-tested one-two punch of the confidence man: “If I were to tell you [unlikely scenario that has come to pass], you’d say I was crazy,” followed by “But what if I were to say to you…”
It sounds too good to be true, doesn’t it? Pass the Kool-Aid.
No, Jeremy Rifkin is not a con man, wandering from town to town selling a monorail. He’s selling books, and clearing a dust-free space on an imaginary mantle that will one day hold a bust of his likeness. Nobody ever went broke selling people what they want to hear.
As the sage of Baltimore, H.L. Mencken, once wrote, “For every complex problem there is a solution that is neat, simple and wrong.”
I’d hate to estimate the environmental benefit of a moratorium on books with a world-changing promise in their title, but I imagine that millions of life-giving trees would still be standing today if we had been sensible enough to implement one.
What’s wrong with optimism, you may reasonably ask? Lighten up. Rifkin is looking for solutions, while you just sit there and shoot them down. It’s true, reacting skeptically to Panglossian types like Rifkin risks coming off like the kind of person who hates both puppies and children.
But we’ve been here before. We’ve seen the movie, bought the t-shirt and told our friends. It never gets old, it always sells books, and it has no effect whatsoever on the problem it pretends to solve. I’d hate to estimate the environmental benefit of a moratorium on books with a world-changing promise in their title, but I imagine that millions of life-giving trees would still be standing today if we had been sensible enough to implement one.
Rifkin’s concept of “nearly free” rests on the idea that through a network of sensors linking smart devices to the cloud, in combination with the ubiquity of the “sharing economy” and of 3D printing (which he calls “infofacturing”), and clean renewable energy, a technocratic frictionless capitalism will… Well, you get the idea. It will change the world.
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In the June 30, 1975 issue of Business Week, a Xerox researcher in Palo Alto named George Pake speculated about the office of the future – the office of 1995.
“I’ll be able to call up documents from my files on the screen, or by pressing a button,” he says. “I can get my mail or any messages. I don’t know how much hard copy [printed paper] I’ll want in this world.”
Pake, uncannily accurate in foreseeing desktop computers and email way back in 1975, headed up Xerox’s newly formed Research Center. “There is absolutely no question that there will be a revolution in the office over the next 20 years. What we are doing will change the office like the jet plane revolutionized travel and the way that TV has altered family life.”
We all remember the “paperless office”, a possible future which never quite got around to happening. We make, use and waste more paper than we ever have: a billion photocopies every day, four trillion paper documents in the U.S. with 880 billion paper documents added to that total every year, and the cost of storing and retrieving paper estimated at $25 to $35 billion annually. Less than 1% of EU offices are paperless. We’re nowhere near free of paper, not even close to free of oil and gas, and just about as far away as it is possible to be from the kind of “free” that Rifkin predicts, even though we exhibit many of the imaginary symptoms of seeming free.
Certainly the nature of work has changed. But do you have more free time? Are you working less than your parents or grandparents did? Where are the robots? Where are the jetpacks?
If the world made the kind of sense that technocrat futurists would like it to, paper would be an anachronistic luxury good in the year 2014, an unnecessary indulgence on par with trophy hunting and cosmetic surgery.
Similar prognostications have been made about “labour-saving” devices, whether in reference to housework or the factory floor. Certainly the nature of work has changed. But do you have more free time? Are you working less than your parents or grandparents did? Where are the robots? Where are the jetpacks?
A recently released U.N. report says that while increased fuel efficiency of up to 30% in some first-world car models has certainly reduced emissions for those particular cars, auto pollution is set to rise 71% from 2010 levels until the year 2050. Increased oil and gas production and private car ownership in the rest of the world outside North America and Europe will drive that cloud.
Where “The Internet of Things” will be revolutionary is that it will close loopholes for inefficiencies that cost the economy and the environment already. “Buildings account for three-quarters of all electricity use in the United States, and of that, about one-third is wasted. Lights stay on when there is natural light available, and air is cooled even when the weather outside is more comfortable or a room is unoccupied,” writes Neil Gershenfeld, head of MIT’s Center for Bits and Atoms. “Only when the infrastructure itself becomes intelligent, with networked sensors and actuators, can the efficiency of a building be improved over the course of its lifetime.”
Note Gershenfeld’s caveat. “Only when” the groundwork is laid can this revolution take place. It would obviously be great if any of this actually came to pass. Rifkin offers no such caveat. According to him, this is all inevitable and happening.
As Gershenfeld points out, these victories will remain marginal without serious, large-scale change to existing methods of heating our buildings, running our vehicles and powering our mobile devices.
Rifkin’s impulse is to mistake a trend for a paradigm shift. Writers tend to do this. We spot something like “cord-cutting” and then breathlessly report, cherry picking information that supports our thesis, that the big telecoms and TV networks are dying as you’re reading this.
But we still live in homes and buildings with heating and communications technologies that haven’t changed appreciably since the 1960s. Making our lives “smart” will involve replacing all of that with a vast infrastructure of sensors and the means to connect them to the Internet.
Rifkin’s impulse is to mistake a trend for a paradigm shift. Writers tend to do this. We spot something like “cord-cutting” and then breathlessly report, cherry picking information that supports our thesis, that the big telecoms and TV networks are dying as you’re reading this. This is delusion. A cursory look at the state of the industry puts the kibosh on triumphalist interpretations of the habits of millennials.
The Internet of Things also needs interoperability and open access for all of our devices to function. So the big manufacturers and auto makers need to play nice for this to happen. But even the blue chip tech players are essentially at war with each other.
Scott Jenson, a leader of Google’s Chrome team doubts whether the term “cloud” is even meaningful. “The single biggest fallacy I want to blow up is this utopian idea that there is this SINGLE thing called ‘The Cloud’. Each company today reinvents their own cloud.”
We use terms like “green” and “lean” and “cloud” to put a sunny PR spin on the infrastructure we’re developing, which relies on quick obsolescence for digital devices and a hefty energy footprint for the data processing centres that are required for their smooth operation.
The paradigm shift that Rifkin yearns for isn’t going to displace, or even particularly disrupt, existing industries.
Although the start-up scene has changed the rhetoric around how business might be conducted, the companies who are pushing the Internet of Things and “free” information are not members of a constellation of tiny, agile start-ups.
The paradigm shift that Rifkin yearns for isn’t going to displace, or even particularly disrupt, existing industries.
The intent of writing this is not to suggest that there is no hope. Technology is inherently optimistic. It’s a gamble on making the future better, and it’s important to dream big. But technology can also blind us to the very real challenges we face.
Rifkin writes, “An increasingly streamlined and savvy capitalist system will continue to operate at the edges of the new economy, finding sufficient vulnerabilities to exploit, primarily as an aggregator of network services and solutions, allowing it to flourish as a powerful niche player. But it will no longer reign.”
I asked Tom Slee, who has written extensively about the sharing economy, whether he saw a “zero marginal cost” of production benefiting either the decentralized network that Rifkin sees coming up or the few huge players who have emerged in the social media/data collection economy.
“When marginal costs of production are small, as you point out, industries don’t vanish. Instead, they are typically very concentrated industries because the fixed costs of production create barriers to entry,” he said. “Amazon, Apple, Google, Facebook and others in the digital world are obvious examples of how a very successful business can be built out of zero or near-zero marginal cost. Zero marginal costs don’t mean zero fixed costs, and that’s why venture capital is drawn to digital industries. He seems to get these completely mixed up: he talks about producing music etc ‘at near-zero marginal cost and nearly for free’, but the production of good music is just about as expensive as ever – it’s the cost of investment in skill, the dedication of the artist. It’s distribution that has become part of the information technology world. What we’ve seen is that when one part of a production chain becomes cheap (distribution, say) then the investment moves to those parts of the chain that complement that part and in the IT world those parts tend to be winner-take-all markets, so music is cheap but Apple makes money off devices that play it and manage it; when movie distribution became cheap, video stores were largely replaced by Netflix. One can like them or dislike them, but this doesn’t look much like the death knell of capitalism.“
Rifkin contends that “Hundreds of millions of people are already transferring parts of their economic lives to this new business model. They are making and sharing their own information, entertainment, green energy and 3D-printed products at near zero marginal cost. Besides sharing homes, they are also sharing cars, clothes and other household items via social media sites, redistribution clubs and cooperatives at low or near zero marginal cost.”
He then singles out bike-sharing programs for praise and similarly imagines that these programs represent a zero-sum exchange between disruptive industries and the old guard. “As millennials shift from bike ownership to bike sharing services, revenues are likely to plummet in the bicycle manufacturing industry because more people will be sharing fewer bikes.”
I live in Montreal, and I love Bixi. I use it every day when it’s in season and was happy to see it spread to New York, London, Melbourne and Toronto. But no one who’s been paying attention to Bixi’s “business model” will be particularly eager to hold it up as a credible replacement for people owning bicycles of their own, or to suggest that car sharing will put a significant dent in car ownership. These things are at best supplementary to public transit, vehicle ownership and urban living.
For Rifkin to offer up “sharing cars, clothes and other household” items as a new economic paradigm is meaningless.
In Canada, we’ve got good reason to be optimistic about the rise of the technology sector, with companies like Carbon Cure sequestering carbon dioxide during the concrete manufacturing process, or Clearpath Robotics opening up new possibilities for automation, or Mojio attempting to standardize connectivity between automobiles and the cloud.
These homegrown success stories are worth celebrating and encouraging. But their success in no way changes the conversation regarding Rifkin’s “eclipse of capitalism”. These companies do what innovators have always done best. They make our lives easier in largely invisible ways so that we can no longer remember what life was like before their ubiquity.
There are serious solutions to serious problems that we could be talking about. Rifkin’s proposals are a distraction to those.