Rifkin’s Economic Fight of the Century—Capitalism vs “Commons”-ism—Called Because of Extreme Weather and No Electricity (part I)

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Welcome to part I of a two-part post. Economist and educator Jeremy Rifkin in his 2014 book entitled The Zero Marginal Cost Society—The Internet of Things, The Collaborative Commons, and The Eclipse of Capitalism, delivers what I consider to be an “annual report” of sorts for the Internet. Actually, three Internets: The Internet of Communication, the Internet of Energy, and the Internet of Logistics. Together these Internets form what Rifkin calls the Collaborative Commons. We’ll look at what a Collaborative Commons is in a bit. Rifkin’s very rosy and enthusiastic annual report tries to convince us that when the three-way mix of communications, energy, and logistics, shifts, we should expect a shift in paradigms as well. According to Rifkin, the oil economy paradigm (which we are now in) is now giving way to the Internet economy paradigm (which is soon to arrive). “[W]hat is becoming clear,” Rifkin alerts us, “is that the capitalist system [which holds oil] that provided both a compelling narrative of human nature and the overarching organizational framework for the day-to-day commercial, social, and political life of society—has peaked and begun its slow decline.”

According to Rifkin’s research, there have been several of these paradigm shifts as civilization has moved from hunter-gatherer groups, to agriculture, to wind power, to water power, to electricity, and now oil. Whereas the oil economy paradigm depends on big capital outlays (to explore for, discover, refine, and transport oil), the Internet paradigm will have a limited need for capital, thus Rifkin’s imagined reduction in the need for capitalism and capitalist markets. Whereas the oil economy in specific and capitalism in general depends on hierarchical, vertical structures that tend to “fence things in” (by making things private), the Internet in specific and Commons-ism in general is about peer-to-peer, lateral structures that tend to “free or liberate things” (by placing things into a commons). So, what’s a Collaborative Commons?

According to Rifkin, the idea of a Commons has been around since the times of feudalism. Wikipedia defines feudalism as follows: “The dominant social system in medieval Europe, in which the nobility held lands from the Crown in exchange for military service, and vassals were in turn tenants of the nobles, while the peasants (villeins or serfs) were obliged to live on their lord’s land and give him homage, labor, and a share of the produce, notionally in exchange for military protection.” Peasants had so little that they decided to pool their meager belongings and place them “in common” so that all could gain enjoyment and benefit. As Rifkin talks about at length, the Commons model has been used since the days of feudalism to manage all manner of resources. Today many people living in rural areas of the US obtain their electricity through electrical collaboratives. For a year back in the 1980s, I lived in the Commonwealth of Massachusetts. I’ll leave you to read Rifkin’s book if you are at all interested in the history of the Commons model.

An accountant friend of mine once told me that when assessing the information presented in a financial statement, always read the footnotes first. If, for instance, a footnote says, “These revenue numbers will be adversely affected in the event the company is not successful in defending itself against a pending class action suit,” it’s probably a good idea to pass on that company as a possible investment. So, I appreciate that Rifkin presents two footnotes to his Collaborative Commons financial statement. And, yes, they appear in the second to last chapter of his book. Taking my accountant friend’s advice, let’s take a look at these footnotes.

Rifkin Footnote 1—Did you know that there are approximately 2,000 electrical transformers strategically placed all over the US? These transformers allow electricity to be “uploaded” to the electrical grid, transported across transmission lines, and then “downloaded” to local communities (which, by the way, requires considerable capital). These transformers are the “on” and “off” ramps of the electrical grid. If a fair number of these transformers were to catch fire and explode, the entire US electrical grid would fail.

Now, here’s the real kicker: these transformers are manufactured outside of the US. As a result, it would be incredibly difficult to obtain a fair number of replacements in a short period of time. By some estimates, it may take as long as a year to obtain replacements and have them installed. “Try to imagine the entire U.S. society without electricity and basic government and commercial services for upward of a year,” Rifkin challenges us. He continues, “By that time, the United States as we know it will have long since ceased to exist.” How might these critical transformers be taken out? Cyberterrorism. Rifkin is quiet on the subject of how we might combat cyberterrorism. In his 2015 book entitled Confronting the Internet’s Dark Side—Moral and Social Responsibility on the Free Highway, philosophy educator and researcher Raphael Cohen-Almagor lays out a plan whereby nations come together to formulate a comprehensive course of action to combat cyberterrorism.

Rifkin Footnote 2—Did you know that if the Earth’s temperature were to rise by 6 degrees (Celsius), life as we know it would cease to exist? “James Hansen, former head of the NASA Goddard Institute for Space Studies and the chief climatologist for the U.S. government, forecasts a 6º C rise in the Earth’s temperature between now and the turn of the century—and with it, the end of human civilization as we have come to know it,” writes Rifkin. What might heat up our atmosphere? Hydrocarbons (oil). For more on this theme, see my August 29th, 2016, post entitled “This Changes Everything—Capitalism vs The Climate”—What I Learned. The 2014 book This Changes Everything is by social critic Naomi Klein. Klein and Rifkin agree: unless the oil economy is effectively overthrown, and very quickly, all bets are off. Rifkin sees the Collaborative Commons as the only way past an oil economy.

Rifkin sees the emergence of the Internet age as the reemergence (or resurgence) of the Commons model. Today, because of Internet technologies, people (mostly Millennials) are sharing more and more goods and services: clothing, education, houses, cars, food, toys, medical histories, and the list goes on. Rifkin sees this Internet-facilitated sharing trend quickly pushing marginal costs toward zero. What are marginal costs and why are they heading toward zero?

Marginal cost “is the cost of producing one more unit of a good” (quoting Wikipedia). Think of a software program. Once the program is written, it costs very little to make a copy and send it to a consumer. Today most people download their software (or software upgrades) directly from the Internet. Gone are the days of expensive software packaging and printed manuals. Music today also follows this model. Once the music is recorded, it costs nearly nothing to make a copy and send (or stream it) to a consumer. In essence, Rifkin argues that as marginal costs approach zero, the workings of capitalist markets will come to a screeching halt. Whereas capitalism depends heavily on experts and authority figures, Commons-ism does not. In a Collaborative Commons model, all you have to do is bring what you have to the commons and you’re in. Rifkin is quick to point out that Commons-ism is not another form of communism or socialism because both communism and socialism depend on hierarchical, vertical structures that tend to fence things in.

Now, in fairness, Rifkin does allow that capitalism is a great model if you need a lot of capital to get things off the ground, like building a petroleum economy, or a road system, or an electrical grid. However, Rifkin, as mentioned above, sees these days of huge capital coming to an end. In the age of the Internet—Internet energy, Internet logistics, and Internet communications—capital demands will be minimal as most things will be free or nearly free. We will grow our own food, share clothing, make our homes using 3D printers, ride in driverless cars, and produce our own energy from solar, thermal, and wind sources. This is the Internet narrative that we will live by in the near future.

As Rifkin makes clear, a paradigm maps our personal experience to the social or collective experience. Although beyond the scope of this post, when paradigm narratives shift, there is extensive cognitive unrest. I’m writing this post on the day after the 2016 US presidential election, and I think the big message is: “We the People wish to return to paradigm narratives that we know and trust.” [1] I’ll leave you to learn more about the Collaborative Commons and the new narratives it will usher in by reading Rifkin’s book.

In part II of this post, I’d like to add a couple of additional footnotes to Rifkin’s annual report for the Collaborative Commons that I think are important.


[1] For more on shits in paradigm narratives, see the following two books:

Laszlo, E., Artigiani, R., Combs, A. and Csányi, V. (1996). Changing visions—Human cognitive maps: past, present, and future. (Westport, CT: Praeger).

Laszlo, E. and Masulli, I. (Eds.). (1993). The evolution of cognitive maps—New paradigms for the twenty-first century. The World Futures General Evolution Studies, Vol. 5. Amsterdam: Gordon and Breach Science Publishers.