Monday, October 03, 2016

The Zero Marginal Cost Society

"The Zero Marginal Cost Society", subtitled "The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism" is a 2014 book by Jeremy Rifkin. In "Postcapitalism" I learned that a near zero marginal cost (the cost to produce 1 additional product) of many goods, particularly those which are information-based, breaks the free market capitalistic system. I was going to say "breaks economics", but I think that economics was already broken. This book seemed like it would expand on that important idea.

The hardcopy book has 448 pages. It has 16 chapters and an afterword. After 1 introductory chapter, the book is divided into 5 parts of 3, 5, 3, 2, and 2 chapters. The style was a little off to me, I think maybe because Rifkin seems to like to use very long sentences.


The opening sentence of the book:

The capitalist era is passing ... not quickly, but inevitably. A new economic paradigm — the Collaborative Commons — is rising in its wake that will transform our way of life.
The chapter brings us up to date on the progress of the "zero marginal cost revolution".
The near zero marginal cost phenomenon has already wreaked havoc on the publishing, communications, and entertainment industries as more and more information is being made available nearly free to billions of people. Today, more than one-third of the human race is producing its own information on relatively cheap cellphones and computers and sharing it via video, audio, and text at near zero marginal cost in a collaborative networked world. And now the zero marginal cost revolution is beginning to affect other commercial sectors, including renewable energy, 3D printing in manufacturing, and online higher education. There are already millions of “prosumers”—consumers who have become their own producers—generating their own green electricity at near zero marginal cost around the world. It’s estimated that around 100,000 hobbyists are manufacturing their own goods using 3D printing at nearly zero marginal cost. Meanwhile, six million students are currently enrolled in free Massive Open Online Courses (MOOCs) that operate at near zero marginal cost and are taught by some of the most distinguished professors in the world, and receiving college credits.
Rifkin points out that free market capitalism surprisingly carries within it the seeds of its own destruction.
A near zero marginal cost society is the optimally efficient state for promoting the general welfare and represents the ultimate triumph of capitalism. Its moment of triumph, however, also marks its inescapable passage from the world stage.
After giving the required props to Adam Smith, Rifkin discusses everyone's favorite, Keynes' "Economic Possibilities for Our Grandchildren", which I first talked about in my very 1st post on Economy of Plenty. He gives a different and insightful definition of the Internet of Things (IoT):
The coming together of the Communications Internet with the fledgling Energy Internet and Logistics Internet in a seamless twenty-first-century intelligent infrastructure—the Internet of Things (IoT) — is giving rise to a Third Industrial Revolution.
Rifkin brings the laws of thermodynamics into economics, with each successive Industrial Revolution reducing the amount of entropy created via increased efficiency, but this interesting formulation does not make it past the 1st chapter.
the IoT is made up of a Communications Internet, an Energy Internet, and a Logistics Internet that work together in a single operating system, continuously finding ways to increase thermodynamic efficiencies and productivity in the marshaling of resources, the production and distribution of goods and services, and the recycling of waste.
I learned quite a lot about the concept of The Commons and its history, going back to medieval times and now instantiated as the online Social Commons or the Collaborative Commons.
The operating logic of the IoT is to optimize lateral peer production, universal access, and inclusion, the same sensibilities that are critical to the nurturing and creation of social capital in the civil society. The very purpose of the new technology platform is to encourage a sharing culture, which is what the Commons is all about. It is these design features of the IoT that bring the social Commons out of the shadows, giving it a high-tech platform to become the dominant economic paradigm of the twenty-first century.
An interesting fun fact, "The adjective collaborative didn’t even exist until well into the twentieth century. " Rifkin sees a paradigm shift in progress.
Markets are beginning to give way to networks, ownership is becoming less important than access, the pursuit of self-interest is being tempered by the pull of collaborative interests, and the traditional dream of rags to riches is being supplanted by a new dream of a sustainable quality of life.
Rifkin confirms a thought that I have been having - that Secular Stagnation and the jobless recovery from the 2008 Great Recession are signs that our economic system is broken.
The current debate among economists, business leaders, and public officials on what appears to be a new type of long-term economic stagnation emerging around the world is an indicator of the great transformation taking place as the economy shifts from exchange value in the marketplace to sharable value on the Collaborative Commons.

...

The steady decline of GDP in the coming years and decades is going to be increasingly attributable to the changeover to a vibrant new economic paradigm that measures economic value in totally new ways.

One of the Rifkin's strongest formulations which carries throughout the book is the characterization of an era by its energy source and communication capabilities. He refers to this as a "communication/energy matrix".
Throughout history, great economic transformations occurred when human beings discovered new energy regimes and created new communication media to organize them.


Part I is titled "The Untold History of Capitalism". An interesting history of economic systems.

  • In feudal times the only sources of energy were people, draft animals, and wood-burning. Agricultural was largely communal. Property was owned by God, not people.
  • In medieval times, water and wind mills became energy sources. These led to the rise of towns around mill locations and a burgher class to somewhat rival the power of the feudal aristocracy. The Enclosure Movement saw the communal commons fenced off and turned into private property, particularly for raising sheep for wool. The printing press created the 1st high-volume communications media. Roads and waterways were the logistic mechanism.
  • The 1st Industrial Revolution begins in 1776 with James Watts steam engine. Coal became the energy source. The telegraph was the communication medium. Railroads and mail order catalogs were the logistic implementation. Interesting points about the railroads and capitalism:
    The railroads became, in effect, the first modern capitalist business corporations ... Capitalism is a unique and peculiar form of enterprise in which the workforce is stripped of its ownership of the tools it uses to create the products, and the investors who own the enterprises are stripped of their power to control and manage their businesses.

    The high capital cost of establishing a rail infrastructure made necessary a business model that could organize around vertical integration, bringing upstream suppliers and downstream customers together under one roof.

  • The 2nd Industrial Revolution begins with the 20th century and mass production. Oil is the energy source, with the electric grid capable of delivering that energy everywhere. The telephone was the communication medium. Cars and later airplanes were the logistic mechanism. AT&T accepted government regulation as the price for a monopoly.
  • The 3rd Industrial Revolution begins in the late 20th century with the Internet as the communication medium. The energy source is smart distributed renewables. The logistics are provided increasingly by shared and autonomous vehicles.
    The Third Industrial Revolution (TIR) is what the rest of the book covers in detail.
Paralleling these paradigm shifts were changing views of humanity's role in the organization of the world. In feudal and into medieval times, Catholic doctrine taught that every man's role in society was predetermined by God. Protestantism kept a similar view, but wanted to get rid of the middle man Catholic Church. Protestants also thought that one's spiritual outcome in the afterlife was predetermined. But you could maybe create an appearance of being one of God's annointed by working hard and bettering one's self, from whence came the Protestant Work Ethic.

I did not know that John Locke was an early proponent of private property. Private property became yours by you working and adding value. But coming into the 2nd Industrial Age, workers started to feel that gave them more right to the profits of capitalists. Capitalists seized on David Hume and Jeremy Bentham’s "theory of utilitarian value" to combat these ideas, stating that maximizing the utility of resources works out best for everybody. Then in the 19th century, Herbert Spencer changed Darwin's "Natural Selection" into "Survival of the Fittest", and Social Darwinism was born. Ugh.


Part II is titled "The Near Zero Marginal Cost Society". It is the longest part. There is a fair amount of overlap with the "gee-whiz, bright shiny future" anecdotes that were present in "Abundance". And similarly, this book was written 2 years later than "Abundance", but, even for a book written only 2 years ago, there were things where I thought "Whatever happened to that?" or "Why haven't I heard of that?".

Rifkin sets the stage with a series of very illustrative "what if" statements.

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?

...

what if nearly free information were to begin managing nearly free green energy, creating an intelligent communication/energy matrix and infrastructure that would allow any business in the world to connect, share energy across a continental Energy Internet, and produce and sell goods at a fraction of the price charged by today’s global manufacturing giants?

...

what if millions of students around the world who had never before had access to a college education were suddenly able to take courses taught by the most distinguished scholars on the planet and receive credit for their work, all for free?

...

what if the marginal cost of human labor in the production and distribution of goods and services were to plummet to near zero as intelligent technology substitutes for workers across every industry and professional and technical field, allowing businesses to conduct much of the commercial activity of civilization more intelligently, efficiently, and cheaply than with conventional workforces?

Rifkin details the explosive growth of the Internet of Things and mentions IPv6. Ha ha, I had to google that it went from a 32-bit address to a 128-bit address. That's a lot of bits, 2^128 is 3 x 10^38, a number beyond astronomical.

He raised the issue of potential privacy problems, but concluded, I think correctly, that kids growing up now will really not care much about privacy. [Particularly if this transparency shines a light on dark corners of business, government, and the oligarchy.]

The moniker of the younger generation is transparency, its modus operandi is collaboration, and its self-expression is exercised by way of peer production in laterally scaled networks.
Rifkin also discusses the magic word "exponential". I think it is definitely one our many cognitive biases that we have no intuitive grasp of exponential scaling - our hunter/gatherer ancestors probably did not run across it very often.

Rifkin examines 3d printing in fair detail, listing 7 differences from "conventional centralized manufacturing". I like the new word, infofacture, he introduces in the 1st difference. Yes, information, not hands, is doing the work. New words such as this to me mean, paradigm shift.

First, there is little human involvement aside from creating the software. The software does all the work, which is why it’s more appropriate to think of the process as “infofacture” rather than “manufacture.”
Interestingly, his discussion of the 6th difference leads us to discover the "democratization of manufacturing", of which Mahatma Gandhi was an early proponent. Gandhi was also an early proponent of sustainability.
Sixth, because the IoT is distributed, collaborative, and laterally scaled, 3D printers can set up shop and connect anywhere there is a Third Industrial Revolution (TIR) infrastructure

...

Gandhi’s alternative proposal was local production by the masses in their own homes and neighborhoods—what he called Swadeshi. The idea behind Swadeshi was to “bring work to the people and not people to the work.”

...

He also bound his theory of happiness to a responsibility to the planet. Nearly a half century before sustainability came into vogue, Gandhi declared that “Earth provides enough to satisfy every man’s need but not enough for every man’s greed.”

Rifkin's discussion of MOOCs includes another issue I had not heard much about before: service learning, where students learn through performing service in their community. Apparently it is very good tech.
studies of elementary schools and high schools conducted in different regions of the country report that service learning improved students’ problem-solving skills and understanding of cognitive complexity as well as their performance in classroom work and on standardized tests, as compared to students who did not take part in service-learning programs.
He discusses for-profit Coursera, and non-profit EdX, from MIT and Harvard. Some of the online courses are starting to actually award credits, sometimes in conjunction with coming on-campus, which doesn't seem very scalable. Rifkin raises interesting points on the rationale of these famous universities providing these online options.
Why then, are so many universities so anxious to push forward? First, in their defense, there is a great deal of idealism involved here. It has long been the dream of educators to bring the knowledge of the world to every human being. Not to do so, once we have the means, would be considered unethical to many academics. But second, they recognize that if they hold out, others will rush in—which they already are. Like their counterparts in so many other sectors where new technologies are making possible a near zero marginal cost society and nearly free goods and services, they realize that the logic of optimizing the welfare of the human race in collaborative, networked Commons is so compelling that it is impossible to shut it out or turn away.
I like the title of Chapter 8: "The Last Worker Standing". Did I see somewhere, "Will the last worker close the door on their way out"? Rifkin correctly, IMO, analyzes the jobless recovery, and addresses the delusional thinking that somehow, the US can do something to get manufacturing jobs back from China.
American and European politicians, and the general public, blame blue collar job losses on the relocation of manufacturing to cheap labor markets like China. The fact is that something more consequential has taken place. Between 1995 and 2002, 22 million manufacturing jobs were eliminated in the global economy while global production increased by more than 30 percent worldwide.

...

factory employment, which accounted for 163 million jobs in 2003, is likely to be just a few million by 2040, marking the end of mass factory labor in the world.

Rifkin posits that automation will also affect service jobs - think self-service ordering and checkout kiosks - and white-collar jobs as well. He sees us moving past the days of wage slavery, and into the time of real life. As Universal Basic Income (UBI) proponents say, "Jobs are for machines, life is for humans". This seems like the point of the book where some discussion of UBI would be appropriate, but he never touches on the subject.
The First Industrial Revolution ended slave and serf labor. The Second Industrial Revolution dramatically shrank agricultural and craft labor. The Third Industrial Revolution is sunsetting mass wage labor in the manufacturing and service industries and salaried professional labor in large parts of the knowledge sector.

...

The very idea that a human being’s worth was measured almost exclusively by his or her productive output of goods and services and material wealth will seem primitive, even barbaric, and be regarded as a terrible loss of human value to our progeny living in a highly automated world where much of life is lived on the Collaborative Commons.

...

Attachment to community and the search for transcendence and meaning comes to define the measure of one’s life rather than one’s material wealth.

The last chapter of Part II raises the worrisome part of all this future thinking: how are the old lizards, the oligarchs who currently have the world set up pretty much the way they like it, going to be dealt with?
Whether the new potential inherent in the IoT infrastructure can be realized will be determined by who finances the platform. The struggle for control is already well underway, mostly behind the scenes, in regulatory commissions, courtrooms, legislatures, corporate boardrooms, civil society organizations, and academic circles all over the world.
I think Rifkin feels that the overall distributed, democratic foundations of the Internet - the communication medium - will lead naturally to the democratization of the energy source and the logistic system. [Speaking as one who has installed 9kW of solar panels on a Florida house, it ain't happening yet. I'm paid $0.01869/kWh for electricity that FPL sells to my neighbors for $0.11 or $0.13/kWh. But there was a ballot initiatives that was supposed to favor solar prosumers that did pass in Florida last month. However there is supposed to be another referendum supported by the power industry that will oppose solar on the November ballot. So maybe that does show progress, but a "tipping point" seems to me to be a reach right now.]
The shift from being a consumer to being a prosumer of energy marks a tipping point in the way power is generated and used.
Rifkin discusses the "Cleanweb Movement, also called energy IT or clean IT". I had not heard of this, and The Google did not yield much in the way of any real organization, i.e., cleanweb.org. He also discusses the federal (DOE) initiative, "Green Button", allowing consumers to monitor their energy. This does appear to be ongoing. My electric company has for at least a couple of years provided me monthly energy efficiency reports, maybe that is an offshoot.

Finally Rifkin discusses the "free Wi-Fi for everyone" which the FCC announced in 2013. High speed internet and ubiquitous wi-fi do indeed appear to me to be making progress everywhere. [I remember in maybe 2005 the CEO of the company I was at telling me that before long wi-fi internet access would be everywhere. He was definitely a visionary guy - I think he'd be disappointed we're still not there a decade later.]


Part III is titled "The Rise of the Collaborative Commons". I like the title of Chapter 10, "The Comedy of the Commons". After having heard about The Tragedy of the Commons for so long, it is nice to think of its opposite. [It always makes me think of the Dr. John song lyric "If I don't do it, somebody else will."] And indeed, in reviewing research into Commons throughout the world, Rifkin recounts many instances of Commons being managed successfully, and often by the participants without central government regulation. The book he references most on the issue is Elinor Ostrom’s "Governing the Commons" (1990) (oops, he gets the name wrong, referring to it as "The Governing of the Commons"). This defines 7 very commonsense design patterns for maintaining a Commons successfully. I think this is important enough that I will include these here.

First, effective management of a commons requires “clearly defined boundaries” on who is allowed to appropriate from the commons and who is not.

Second, it’s necessary to establish appropriation rules restricting the time, place, technologies, and quantity of the resources that can be used as well as setting up the rules on the amount of labor, materials, and money that can be allotted to the appropriation.

Third, a commons association needs to guarantee that those affected by the appropriation rules jointly and democratically determine those rules and their modifications over time.

Fourth, the commons association should ensure that those monitoring the activity on the commons are the appropriators or are accountable to them.

Fifth, appropriators who violate the rules should, in principle, be subject to graduated sanctions by the other appropriators or officials accountable to the appropriators, to guard against overly punitive punishment that sours their future participation and creates ill will in the community.

Sixth, the commons association ought to build in procedures for rapid access to low-cost private mediation to quickly resolve conflict among appropriators or between appropriators and public officials.

Seventh, it is vital that government jurisdictions recognize and condone the legitimacy of the rules established by the commons association.

Rifkin points out that economics of course has a great problem with this.
Most economists would be nonplussed because their discipline is so wedded to the idea that human nature is purely self-interested and that each individual seeks to optimize his or her autonomy. The very idea of freely choosing to pursue the collective interest is anathema to many market-oriented economists.
And indeed, the Commons is always under attack by the forces of enclosure, of fencing things off. Reagan and Thatcher led the push for privatization of many formerly common resources. That there is now legislation before Congress wanting to privatize our National Parks is abhorrent to me. My catch line for a few years has been, "privatization === some fat cat putting a lot of money in his pocket".
Would we want to fence off every beachfront, lake and river, every forest, every suburban community, every road and bridge, and put the whole of the Earth’s diverse ecosystems into private hands, allowing property owners the exclusive right to charge an access fee for admission and use of the resources, or worse, deny admission altogether?
Rifkin discusses in detail one of the worst ongoing attempts to loot the Commons: the patenting of human and other genes. I can agree with patenting genetic modifications that go to create specific GMOs, but to me it is the height of lunacy to apply patent protection to any part of any naturally occurring genome. Rifkin on the other hand seems to be against any patents on any lifeforms. I found this preamble to the 2002 "Treaty to Share the Genetic Commons" inspirational, so I will include it here in its entirety.
We proclaim these truths to be universal and indivisible;

That the intrinsic value of the Earth’s gene pool, in all of its biological forms and manifestations, precedes its utility and commercial value, and therefore must be respected and safeguarded by all political, commercial and social institutions,

That the Earth’s gene pool, in all of its biological forms and manifestations, exists in nature and, therefore, must not be claimed as intellectual property even if purified and synthesized in the laboratory,

That the global gene pool, in all of its biological forms and manifestations, is a shared legacy and, therefore, a collective responsibility,

And,

Whereas, our increasing knowledge of biology confers a special obligation to serve as a steward on behalf of the preservation and well being of our species as well as all of our other fellow creatures,

Therefore, the nations of the world declare the Earth’s gene pool, in all of its biological forms and manifestations, to be a global commons, to be protected and nurtured by all peoples and further declare that genes and the products they code for, in their natural, purified or synthesized form as well as chromosomes, cells, tissue, organs and organisms, including cloned, transgenic and chimeric organisms, will not be allowed to be claimed as commercially negotiable genetic information or intellectual property by governments, commercial enterprises, other institutions or individuals.

Tne last 2 chapters of this part return to the battle against the old lizards. The struggle is far from complete, but there are some victories in which to take heart.
The struggle between prosumer collaboratists and investor capitalists, while still nascent, is shaping up to be the critical economic battle of the first half of the twenty-first century.

...

The unfolding economic clash between the collaboratists and capitalists is a manifestation of a cultural conflict that will likely redefine the nature of the human journey in the years ahead. If there is an underlying theme to the emerging cultural narrative, it is the “democratization of everything.”

The Free Culture Movement, the Environmental Movement, and the movement to reclaim the public Commons are the coproducers, if you will, of this unfolding cultural drama.

A well-known victory for the Commons is the Free and Open Source Software (FOSS) movement. It was and is spearheaded by our hero, Richard Stallman, perhaps in part in opposition to Bill Gates deciding that he could make big money from the software that used to be exchanged for free by hobbyists.
Stallman argued that software code was quickly becoming the language of communication between people, and between people and things, and that it was immoral and unethical to enclose and privatize the new communications media, allowing a few corporate players to determine the conditions of access while imposing rent. Stallman proclaimed that all software should be free, by which he meant as in “free speech, not free beer.”
From GNU to Linux to most if not all of the software stacks now used in Web software development, the FOSS has indeed been a great victory.

I think this victory encouraged others to extent the principles of FOSS to other domains. There is a very interesting discussion of historical ideas of authorship.

they felt that ideas came from without in the form of a vision or inspiration—that they were struck by an idea. The very notion that an idea might come solely from within, as a unique creative insight, would have seemed strange, if not completely incomprehensible.

...

(In a script or oral culture, the concept that one could own his or her own words and charge other people to listen to them would have been simply unbelievable.)

I think that if you apply the concept of memetics to ideas and authorship, it is obvious that no new memes are created in isolation, that they are instead bred from older existing memes. So how can one claim sole ownership of any new meme, just because it happened to have been bred in one's own mind? Why do we not then claim that the global meme pool is a Commons just like the global gene pool?

The major application of FOSS principles to culture in general was led by Lawrence Lessig and the other creators of the Creative Commons license.

Rifkin next discusses transborder peace parks as a technique for pulling land back into the Commons. Humans are the only species on earth that knows anything about national boundaries. Ecological work needs to be able to ignore these boundaries.

The very idea that nature’s boundaries supersede political and commercial boundaries in importance has the effect of redirecting the social narrative away from individual self-interests, commercial pursuits, and geopolitical considerations to the general well-being of nature.

...

The enclosures of the land and ocean Commons, the fresh water Commons, the atmosphere Commons, the electromagnetic spectrum Commons, the knowledge Commons, and the genetic Commons has severed the complex internal dynamics of Earth’s biosphere, jeopardizing every human being’s welfare and the well-being of all the other organisms that inhabit the planet.

...

The opposite of enclosure is not merely openness, but transcendence.

Rifkin sees globalization, the WTO, the TPP, and similar trade agreements as being primarily increasingly concerned with protecting corporate intellectual property issues, in direct conflict to the creation of the Commons. The Sonny Bono Copyright Term Extension Act of 1998 extended copyrights to 70 years (just in time to save Mickey Mouse from the public domain); the odious Digital Millennium Copyright Act (DCMA) passed in the same year. These were part of what led to the extensive demonstrations against the 1999 WTO meeting in Seattle. And so the battle was joined.
There were calls for opening up the public square Commons, the land Commons, the knowledge Commons, the virtual Commons, the energy Commons, the electromagnetic spectrum Commons, the Communications Commons, the ocean Commons, the fresh water Commons, the atmosphere Commons, the nonprofit Commons, and the biosphere Commons. Virtually every Commons that had been enclosed, privatized, and commodified in the market during the 200-year reign of capitalism suddenly came under scrutiny and review. NGOs were formed and initiatives were launched to champion the reopening of the many Commons that embed the human race in the biosphere. Globalization had met its nemesis in the form of a diverse movement committed to reversing the great enclosures and reestablishing the global Commons.
Rifkin references a book by Peter Barnes, "Capitalism 3.0: A Guide to Reclaiming the Commons" (2006), that I think will be my next economics read. Here is Barnes' vision of the future. I look forward to more details on how this actually gets done.
"the key difference between versions 2.0 and 3.0 is the inclusion in the latter of a set of institutions I call the Commons sector. Instead of having only one engine—that is, the corporate-dominated private sector—our improved economic system would run on two: one geared to managing private profit, the other to preserving and enhancing common wealth."
The last chapter of this part reviews the current status of Commons vs. lizards with regard to the communication/energy/logistic matrix of the 3rd Industrial Revolution (TIR). On the communication side, he talks about net neutrality, which seems to be faring well so far. He also sees as a threat the siloization of the Internet, with our data being partitioned between private sites like FaceBook, Twitter, LinkedIn, etc.
Berners-Lee warns that “large social networking sites are walling off information posted by their users from the rest of the Web” and creating enclosed commercial spaces.
On the energy front there is similar conflict. Unsurprisingly, Europe seems to be a bit ahead of the US in progressing towards an Energy Commons.
Already, the creation of an Energy Internet Commons across locales, regions, countries, and continents is coming up against entrenched commercial interests every bit as formidable as those the Communications Internet is facing with the telecommunications and cable companies.

...

The European Union, the world’s largest economy, has taken steps to keep the Energy Internet an open architecture by requiring that conventional power and utility companies unbundle their power generation from their transmission of electricity.

There is a very interesting history of the Tennessee Valley Authority (TVA) and the Rural Electric Administration (REA). These were both very successful in creating the 2nd Industrial Revolution energy grid in Appalachia and other rural areas through government programs and cooperatives. The cooperatives were funded by the Federal government through low-interest loans, all of which were paid back.
This Commons form of self-management accomplished in just 13 years what private enterprise and government could not have done in twice that time at anywhere near the low cost.
As is appropriate, Rifkin speaks very highly of cooperatives. I was surprised tho that he did not mention the Mondragon Cooperative of Spain, as it is often pointed to as an exemplar of a successful cooperative. The last sentence of this next excerpt is a little worrysome: paranoia or valid concern?
The year 2012 was officially recognized by the United Nations as the International Year of Cooperatives, but a quick Google search shows barely a blip of news about the year-long celebrations. Perhaps it’s because the global media are concentrated in the hands of a few giant for-profit media companies that decide what is news.
Finally, Rifkin discusses the logistics Commons, where he notes that the IoT could support a sophisticated, computerized system where there are fewer long hauls and more short hauls, with more handoffs of cargo. Surprising, there is no discussion of drones, which are being touted by many as a technology by which the Third World, particularly Africa, could leapfrog 1st and 2nd Industrial Revolution logistics and go straight to a more distributed means of delivering goods, particularly medications.


Part IV is titled "Social Capital and the Sharing Economy". These are actually kind of discussed in the reverse order. I don't make much use of the sharing economy, but my 4 children, all in their 30s, all do to some degree. An insightful discussion of "freedom", pre- and post-Internet:

In the capitalist era, we came to define freedom in negative terms as the right to exclude. The automobile became the symbol of our conventional notion of freedom.

The Internet generation, however, has come to think of freedom not in the negative sense—the right to exclude others—but rather in the positive sense of the right to be included with others. For them, freedom means the ability to optimize one’s life, and the optimal life is realized by the diversity of one’s experiences and the distributed reach of one’s relationships in the various communities to which one affiliates over a lifetime. Freedom is measured more by access to others in networks than ownership of property in markets. The deeper and more inclusive one’s relationships, the more freedom one enjoys. Having continuous access to others in social spaces like Facebook and Twitter gives one’s life meaning. Freedom for an Internet generation is the ability to collaborate with others, without restriction, in a peer-to-peer world.

Although they are all online to various degrees, I think none of my 4 children would agree that "Facebook and Twitter gives one's life meaning". I think they are probably a little too old. Hah, what does that make me? I spend way too much time on both those services, and, yes, they're fun, but, no, I don't think they give my life meaning. Well maybe just a little.

2 of my kids (the ones married with children) own cars, 2 don't. "In 2012, 800,000 people in the United States belonged to a car-sharing service." My middle daughter was 1 of those. Car sharing is going nowhere but up, particularly once you can call a self-driving shared car to your location with an app on your smartphone.

I tried unsuccessfully to find out where I got this from. There was a statement somewhere that made total sense to me, to the effect that: we have only been using ownership because the tech wasn't good enough to use sharing. But now the tech is good enough that we can switch over.

Rifkin feels that the 2008 meltdown and the slow recovery has led many consumers to ask themselves, "Why?".

Families began to realize they had been sold a bill of goods, that they had been sucked into a debilitating addiction fed by billions of dollars of corporate advertising that had left them at the doorstep of ruin and despair. It was a collective “ah ha” moment when large numbers of people stopped dead in their tracks and began to reverse course. The way out was to turn the entire economic system on its head—buy less, save more, and share what one has with others. Runaway consumption would be replaced by a shareable economy.

...

Reducing addictive consumption, optimizing frugality, and fostering a more sustainable way of life is not only laudable, but essential if we are to ensure our survival.

Other sharing domains are examined: lodging via Airbnb and Couchsurfing; toys; clothes; and all manner of other merchandise. A company SharedEarth matches gardeners with people with land for a garden, with the produce being shared. Community supported agriculture (CSA) has been around for decades, and continues to grow in popularity. I know several younger families who use it.

The Internet Commons has also facilitated a powerful kind of information sharing: the sharing of medical information by patients, which Rifkin refers to as patient-driven health care. Rather than just providing emotional support, the sites for sharing information between sufferers also seem to be instantiations of "the wisdom of crowds".

[Dan] Hoch said that what surprised him most of all was the realization “that an online group like the BrainTalk Communities epilepsy group is not only much smarter than any single patient, but is also smarter, or at least more comprehensive, than many physicians—even medical specialists."
The wisdom of crowds is also taking its toll on an American institution: the commercial, and marketing in general. [Every year when people watch the Super Bowl to see the commericials, I realize that the TV commercial is probably the great American original art form.] Modern consumers now place far more reliance in online reviews and ratings than in commercials. And Internet-based ads are just as vulnerable as ads on the older media.
If there ever was an invisible hand, it is surely advertising’s ability to keep demand at pace with increasing supply.

...

[Eric] Clemons believes that paid advertising “will fail as a major revenue source for most Internet sites” for all the reasons mentioned above. His conclusion is that “the Internet is not replacing advertising but shattering it.”

To me "social capital" can mean a couple of different things, both of which are discussed by Rifkin. 1st, there is access to capital as a domain of the sharing economy. It started as "peer-to-peer lending or social lending", which I believe have now been eclipsed by crowdfunding. Kickstarter is very popular and works great - I have supported several projects. Indiegogo also seems to be doing very well. GoFundMe has become ubiquitous to the point that funding requests for funeral expenses for unexpected deaths have become a frequent reminder of income inequality.

The other meaning of "social capital" is that of the good will you have created for yourself with others - your reputation. All sites that exchange goods maintain ratings of all participants.

like more traditional Commons, the new Collaborative Commons has experimented with a range of protocols to maintain the high level of social trust necessary to ensure sufficient social capital to build a collaborative ethos, including sanctions to punish and even weed out free riders and spoilers.
Rifkin also brings up reputation services, "similar to credit-rating services in the market economy". He mentions TrustCloud, and more recently there was one called Clout, which now appears to be defunct. I have not seen them getting much traction. My oldest daughter, a freelance graphics designer in Brooklyn who has done a lot of pro-bono work, including for Occupy, concurs.

An even more orthogonal concept is alternative currencies.

community currencies, local exchange trading systems (LETS), or microcurrencies, began to take hold in locales around the world after the economic collapse of 2008.

...

Alternative currencies have mushroomed in some of the regions of Europe hardest hit by the Great Recession. In Greece and Spain, community currency networks are proliferating.

And of course there is bitcoin, which seems like horrible tech to me. Another more interesting concept is the time bank, where people exchange hours and minutes rather than dollars and cents.

Rifkin notes the creation of benefit corporation status in the US. These give social entrepreneurs a vehicle to pursue goals in support of the Commons.

Finally, Rifkin talks about the future of employment. His ideas here seem a little off to me. Basically, some years of building the Energy Internet, followed by everyone working for nonprofits contributing to the commons? Why do we need that 2nd part? But, nonprofits aren't actually that dependent on the old lizards, so it's all good? And still no mention of Basic Income.

In the short and mid terms, however, the massive build-out of the IoT infrastructure in every locality and region of the world is going to give rise to one last surge of mass wage and salaried labor that will run for 40 years, spanning two generations.

...

approximately 50 percent of the aggregate revenue of the nonprofit sector operating on the Commons already comes from fees for services, while government support accounts for only 36 percent of the revenues, and private philanthropy for only 14 percent.

Ha ha, I'll note in passing this horribly human chauvinistic comment. Tsk tsk, pretty short sighted.
The very idea that machines might someday create social capital is not entertained by even the most ardent technophiles.


Part V is titled "The Economy of Abundance". Yay! Yes, please! Note, Rifkin does not comment on the oxymoronic nature of this title.

The first chapter (#15) is titled "The Sustainable Cornucopia". What a great word, cornucopia! It comes from the Latin for "horn of plenty". Charlie Stross in a series of novels set in a post-scarcity utopia posits "cornucopia machines". Here's an image.

So is it doable? Rifkin reminds us that the current population is each year consuming 1.5x of the Earth's renewable resources. A world with everyone consuming at US levels would consume more like 4-5x annually. So, the bottom line is, we all need to consume less - go on the Mediterranean diet for starters. And, numerous studies have shown we'll be happier when we stop trying to keep up with the Joneses! Once you get to a reasonable "enough" wealth and stuff, adding more does not increase happiness.

Psychology professor Tim Kasser, author of "The High Price of Materialism", sums up the overwhelming evidence accumulated in years of studies on materialistic behavior.
"What virtually every study shows, he says, is that people who strongly value the pursuit of wealth and possessions report lower psychological well-being than those who are less concerned with such aims. . . . The more materialistic values are at the center of our lives, the more our quality of life is diminished."
...

In reality, the things we want most are not scarce but infinitely abundant—love, acceptance, and recognition of our humanity.

I found this next statistic to be surprising. I bet that if you directly observed people's behavior rather than asking them a question this number would go up to 80-90%.
In the 1960s, 56 percent of Americans said that most people can be trusted. Today, less than one-third still do.
Rifkin identifies materialism as leading to lack of empathy, the end state of which is sociopathy. He does not mention the studies that showed the similarities between the psychological profiles of sociopaths and the CEOs of large corporations.
What makes materialism so toxic is that it robs the individual of the primary drive that animates our species—our empathic nature.

...

When we hear of individuals who lack all sense of empathy, whose behavior shows no sensitivity to or concern for others, we think of them as inhuman. The sociopath is the ultimate pariah.

Rifkin seems to share my optimism and hope for the Millennials to be the ones who will make this brave new world succeed. [But are they going to vote, or are they going to try to sidestep the existing political system?]
Studies also indicate that millennials are the least prejudiced and most empathic of any generation in history in championing the legal and social rights of previously marginalized groups of the population, including women, people of color, gays and lesbians, and the disabled. They are also less xenophobic.

...

While there is evidence of their famed narcissism and materialism, there is also evidence of an increase in empathic engagement. I also suspect that the narcissistic and materialistic inclination is of waning influence in the aftermath of the Great Recession.

...

A sharing economy of collaborative prosumers is, by its very nature, a more empathic and less materialistic one.

The waning of the materialistic ethos is also reflected in the increasing commitment to sustainability and environmental stewardship.

I get accused of being a pollyanna all the time, Rifkin may top me here.
By midcentury, the falling fertility rate is likely to approach 2.1 children per family across the world, marking the beginning of a slow decline in human population, eventually bringing it down to 5 billion people—the number that will secure our ability to live off of nature’s ecological interest and enjoy an economy of abundance.
I really don't see population decreasing to 5 billion anytime in the next century without horrible catastrophes being responsible.

Rifkin now detours to talk about "The Two Wild Cards of the Apocalypse", which could keep us from getting to the Economy of Abundance.

  1. The climate crisis. No new data. And no synthesis, that getting beyond capitalism to our post-scarcity utopia is totally linked to fixing the climate crisis, as Naomi Klein does in "This Changes Everything".
  2. Cyberterrorism. This seems kind of out-of-left-field - a legitimate concern, but up there with the climate crisis? [It is still unbelievable to me that, as with nucs, the US was the 1st to rub the lamp on this terrifying genie when, with the Israelis, it released the StuxNet virus on the Iranian centrifuges. What an error in judgement!]
At the start of the last chapter of the book, Rifkin gives an optimistic assessment of the state of things. Hell yeah, FTW! Give me optimism, or give me death!
My sense is that with an unswerving commitment, no costly mistakes or setbacks, and a little luck, the race to a new economic paradigm can be achieved.
In the rest of this chapter, he gives a very interesting history of the "consciousness" associated with each of the 5 eras of energy/communication/logistics tech human civilization has been through. To me writer-wise, so odd that these are not all in a table somewhere. So I will take it on myself to create that table. Don't Fear Tables.

  1. every forager/hunter society—even those few still remaining today—had “mythological consciousness.” The empathic drive in forager/hunter societies only extended to blood ties and tribal bonds.
  2. The coming together of writing and hydraulic agricultural production shifted the human psyche from mythological to “theological consciousness.”
  3. In the nineteenth century, the convergence of coal-powered steam printing and the new coal-powered factory and rail-transport system gave rise to “ideological consciousness.”
  4. In the twentieth century, the coming together of centralized electrification, oil, and automobile transport, and the rise of a mass consumer society, marked still another cognitive passage, from ideological to “psychological consciousness.”
  5. the next leap in the human journey—a crossover into biosphere consciousness and an expansion of empathy to include the whole of the human race as our family, as well as our fellow creatures as an extension of our evolutionary family?
I do feel this is a compelling narrative. Ahh, I used the word earlier, in homage to Design Patterns, which was a Big Thing in software design maybe 10-15 years ago. The word is: pattern.
Nonetheless, there is a detectable pattern to human evolution, captured in the spotty but unmistakable transformation of human consciousness and the accompanying extension of the human empathic drive to larger fictional families cohering in ever more complex and interdependent communication/energy matrices and economic paradigms
Yes, yes, yes, this is indeed our tale. Ha ha, it's why I called the author out for short-selling the capabilities of AIs. The totally greatest non-zero-sum game is Love. There is absolutely no limit to how much Love you can create. Our "fictional families" can always, always expand - including to AIs. FTW!


In the Afterword, Rifkin pays homage to his father, a capitalistic entrepreneur, and as such pays homage to capitalism as it passes away.

So, while I celebrate, with qualifications, the entrepreneurial spirit that drove my father and so many others, I don’t mourn the passing of capitalism.
Just in comparison, my dad was a Union man, IPEU, and as such made enough money to raise 7 kids, drink too much, and bet on the ponies. He worked in corporate management a couple of times but never liked it and both times went back to being a Union man. As such, I think I will mourn the passing of capitalism less than Rifkin will.
No doubt, the nineteenth-century utilitarian economists and their twentieth-century progenies would be aghast at the prospect that the very theory they espoused would eventually run its course, but not before taking society to the cusp of a new economic order where promoting the general welfare is best achieved through collaborative pursuits operating in vast networked Commons in an evolving social economy.


So this is a good and fairly quick read. I think I read it in 3-5 days 3-5 hours/day. I would read this before "Abundance" and after "Postcapitalism". Notice that I am recommending you read these in reverse chronological order - so, as in booking hotel rooms, newer === better? I think this is not at all surprising, as information is being developed and published so quickly.

I think the best parts of this book can be summarized in this table, which I promised/threatened earlier. Hmmm, could also use a column for approximate start date, but I'm out of room.

Era Comm Energy Logistics Owner Consciousness
Feudal Oral Humans/ wood-burning Humans/ draft animals Divine Mythological
Medieval Printing press Water/ wind mills Roads/ waterways Divine Theological
1st Industrial Revolution Telegraph Coal RailroadsPrivate Ideological
2nd Industrial Revolution Telephone Oil/ electric grid Cars & trucks / Interstate HWsPrivatePsychological
3rd Industrial Revolution Internet Distributed renewables Self-driving & shared cars & trucksSharedBiosphere

Meanwhile, like "Abundance" which was my previous economics read/review/summary, where are the numbers? Where are the plans? Where are the political solutions? Where are the simulations which will tell us what parts of the current infrastructure of civilization we have to tweak to move from supporting 1.5x to 5x the annual renewable production of the planet back to 1.0 or less of that number? (Or to support Rifkin's contention that population will all on its own fall back to 5B?) What level of vehicle/housing/possession sharing is required?

The only details we are given about how the change comes about is a prediction of declining GDP and continuing or increasing unemployment. And once again, I was surprised there is no mention of UBI as a way to help in the transition from capitalism. This may just show how quickly UBI has moved into the zeitgeist - it has really just happened in the last year or so. So yet again, very interesting and plausible ideas are presented, but, aside from suggesting that the Millennials will lead the way, there is very little in the way of a real roadmap.

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