The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism Hardcover – April 1, 2014

This is a fascinating take on several "tensions" that are playing out in the world economic stage right now (circa 2014) that have the potential to cause hugely disruptive transformations in our society over the next 25 years. I was 13 when Intel introduced the 8008, and I closely watched the evolution of microprocessors over time, to the extent that I worked for Intel right out of college for 5-1/2 years after getting a degree in math/computer science. I've seen the impact that microcomputers have had on the world since then, and observed Moore's law in action. When you take that same explosive growth paradigm and apply it to things like renewable energy (eg., solar, wind, etc), communication bandwidth, wearable computers, the "Internet of Things", the Makers Market (3D printing), electric vehicles, etc., it's easy to envision a future that's got a very different political and economic structure than what's in place now. The entrenched players in the largest economies will do all they can to hold onto a shrinking market by making these transitions painful and expensive; while smaller players in countries that have no economic inertia to maintain will quickly evolve into economic powerhouses while the dinosaurs controlling the largest economies are lumbering towards their own inevitable deaths.I chose the headline that I did because I think it's quite significant that companies like Uber, Lyft, AirBnB, and other types of highly disruptive innovators are, for the first time in history, evolving so quickly that the entrenched players are getting politicians to put the brakes on to slow things down while they figure out how to deal with them. For example, hospitality magnates in San Francisco got their City Council to pass regulations outlawing private citizens from renting out rooms on AirBnB. The livery companies in Nevada got the Nevada Attorney General to file a motion in Federal Court requesting an injunction be issued to keep ridesharing companies like Uber and Lyft from operating in the Las Vegas and Reno areas. In both cases, the incumbents made a case that such actions are necessary for "public safety", even though they have yet to present any statistics that support a thesis that consumers are being harmed in any way by the existence of any of these new startups in any way beyond current industry norms.(Cabbies assault passengers and cheat them blind with such regularity that it's not even considered "news" any more. But when one Uber driver allegedly clobbered a passenger with a hammer, it made international news overnight!)The livery and hotel industries make a lot of noise about these new services stealing their business. But ask them how much they're building out capacity to handle surges in cities where large events are occurring, like the Super Bowl, they'll say, "Oh, we can't afford to increase capacity to handle huge spikes in demand across local markets like that." But crowdsourcing rides and rooms via ridesharing apps and couch-surfing websites are perfectly capable of helping absorb the peak demands while putting additional monies into the pockets of local citizens who have not been the beneficiaries of productivity increases that these same companies have enjoyed for the past 15-20 years.Imagine a housing subdivision where the roof of every house is made up of high-efficiency solar panels; where there are several wind turbines on the property; where each house has a battery in the garage that stores up enough energy to last a week without wind or sunshine; and where there's a small "micro-grid" throughout the subdivision where everybody can share power. And imagine that that subdivision has no power coming into it from the local power company.This scenario scares the bejesus out of power companies, to the point where they are already getting local and state governments to pass regulations that will charge individual homeowners a flat minimum rate for energy whether they consume it or not -- allegedly as a form of "maintenance fee" to keep their industry alive even as demand for their services begins to plummet.Rifkin nails it here with his insights into what's going on and how disruptive things might become. The interesting thing is the time-frames he gives, as well as those reported by various "think tanks" and researchers all say his predictions are not a matter of "if" but "when". And if the large incumbent players in the various markets have anything to say about it, they're going to do all they can to encourage lawmakers to poke their noses, fingers, and whatever else they can into these areas to slow down the inevitable decline of their businesses as Rifkin's predictions unfold.

This is a book I would recommend to most people as interesting, well written, and informative.Rifkin tries to give us an expansive, big-picture view of some of fundamental changes we are experiencing. Driven by information technology, we are seeing a host of second order changes with real consequences. In short, the internet of things is tied to the collaborative commons, and possibly bringing about the end of capitalism. That is the big story: the END of CAPITALISM. Can it be true?He starts with a historical view to point out that capitalism did not always exist. Roman and middle age societies worked on principles that were very distinct from capitalism. In a feudalistic society, the idea of ownership was very different from what we have today. People worked (but not very hard) and produce was distributed (but not very fairly) and people got by. It was the emergence of enlightenment ideas, and the subsequent industrial revolution, that brought about (1) the concrete ideas of ownership and (2) capitalism that you invest in and benefit from owning means of production. America is a country where the ideas of capitalism are so well integrated into the culture that it is hard to separate them, and hard to imagine a world that is different.Many information technologies are disrupting: specifically (1) sustainable power generation (e.g. solar), (2) 3d printing replacing manufacturing, (3) MOOCs and essentially free education, (4) ubiquitous communications infrastructure. There is no doubt in my mind that these are causing dramatic transformation. Look at music recording industry, how movies are changing, how much of the entertainment is direct person to person sharing on Facebook, Twitter or Pintrest. Like web 2.0 , he talks about people evolving from one-direction consumers, to bi-directional prosumers. In these kinds of things, it is certainly true that we are evolving into a collaborative commons because the marginal costs are driving to zero.One of his key points is that capitalism only works when there is scarcity. If the marginal cost goes to zero, then things become both free and plentiful. The idea of investing and controlling makes no sense if everyone can have as much as they want. He spends a lot of time talking about the collaborative commons, and how the tragedy of the commons is easily avoided by social norms which are enforced in places where a real commons exists. Don't worry, there are ways for collaborative commons to work -- and his points are credible.However, there is more to the economy that this. He does not talk at all about production of food: wheat, corn, hogs, cattle, chickens, fruit, vegetables, etc. Automation does bring down the cost of these, but certainly NOT to zero. Who will produce my wine for $0? We all have to eat, and we need clothes, and a warm place to sleep. These are not going to zero cost, and so there is no reason to believe that capitalism will disappear entirely. Sure, the Internet of Things (IoT) will dramatically effect entertainment, learning, and maybe even dramatically improve patient-led medical research. But IoT will not feed and cloth us.The second half of the book is a wealth of information about the ways that these transformations are going on around us. Cars are being replaced by car sharing programs. ThredUP allows parents to effectively share children's clothes. SharedEarth allows landowners find people who want to garden. Craig's List is decimating classified ads. AirBNB and Couch surfing is transforming overnights. Crowdfunding like KickStarter is reforming how you invest and how you get loans.What makes us happy? We used to believe that owning things would make us happy, but there is plenty of evidence that is not so. This is the great thing about collaborative commons: we might be happier with fewer things, but still having access to more than we need. The sharing economy is very promising indeed, and Rifkin covers it well.Yet, overall, I feel a little let down. The IoT will have a dramatic effect on our lives, but only on PART of our lives. Our social lives are likely to be radically changed. Anything to do with communications and interaction might be morphed beyond recognition. Cooperation will be transformative. Reading this part is a wild and entertaining ride.BUT ... certain physical requirements exist. 3D printing might get powerful enough to print entire automobiles, but the metal (and plastic) is still not free. The IoT will not allow us to raise cattle in our apartments, or mine for ore in our backyards. Capitalism has nothing to worry about. The entire society will not be zero marginal cost. Only parts of it. I do wish Rifken had covered the COMPLETE economy, and not just the amazing parts which are being transformed. To really understand the future, we need to consider the entire picture.