This post is excerpted from Jeremy Rifkins new book, The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism, published today by Palgrave Macmillan. Whats undermining the capitalist system is the dramatic success of the very operating assumptions that govern it. At the heart of capitalism there lies a contradiction in the driving mechanism that has propelled it ever upward to commanding heights, but now is speeding it to its death: the inherent dynamism of competitive markets that drives productivity up and marginal costs down, enabling businesses to reduce the price of their goods and services in order to win over consumers and market share. (Marginal cost is the cost of producing additional units of a good or service, if fixed costs are not counted.) While economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring marginal costs to near zero, making goods and services priceless, nearly free, and abundant, and no longer subject to market forces. The near zero marginal cost phenomenon has already wreaked havoc on the entertainment, communications, and publishing industries, as more and more information is being made available nearly free to billions of people. Today, more than forty percent of the human race is producing its own music, videos, news, and knowledge on relatively cheap cellphones and computers and sharing it 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. Its estimated that around 100,000 hobbyists are using open source software and recycled plastic feedstock to manufacture their own 3D printed goods 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. The reluctance to come to grips with near zero marginal cost is understandable. Many, though not all, of the old guard in the commercial arena cant imagine how economic life would proceed in a world where most goods and services are nearly free, profit is defunct, property is meaningless, and the market is superfluous. What then?
Posted on: Tue, 01 Apr 2014 19:26:03 +0000