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Capitalism has been the dominant economic system in the U.S. for centuries. But economist and social theorist Jeremy Rifkin says a battle is under way between capitalism and a new economic paradigm. It will be drawn out and hard fought. But he predicts that capitalism will inevitably lose, existing only at the edges of economic life. In its place will be a hybrid system based on the sharing of goods and services. Rifkin argues this is being brought about by advances in technology and communications that are dramatically lowering the cost of those goods and services. A discussion about how the Internet is radically transforming our economy and way of life.
- Jeremy Rifkin president, Foundation on Economic Trends; adviser, European Union; author of "The Third Industrial Revolution," "The Empathic Civilization," "The Age of Access" and "The End of Work."
Read An Excerpt
Excerpted from “The Zero Marginal Cost Society” by Jeremy Rifkin. Copyright © 2014 by Jeremy Rifkin. Excerpted by permission of Palgrave Macmillan. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
MS. DIANE REHMThanks for joining us. I'm Diane Rehm. In a provocative new book, economist Jeremy Rifkin argues we're seeing the slow but inevitable demise of capitalism. Technological advances are reducing the cost of many products and services to the point where they're almost free. In place of capitalism, a new economic system is emerging, one based on sharing.
MS. DIANE REHMRifkin says it will transform our way of life and, he hopes, create a more just and humane world. His book is titled "The Zero Marginal Cost Society." Jeremy Rifkin joins me in the studio. We'll welcome your questions and comments, 800-433-8850. Send us your email to email@example.com. Follow us on Facebook or Twitter. Jeremy, it's always good to see you.
MR. JEREMY RIFKINIt's very nice to be here with you as always.
REHMJeremy, describe how you see this new economic system.
RIFKINYou know, Diane, this idea of zero marginal cost is something familiar in the business community, but not in the general public. But let me explain how significant this is going to be for every one of our lives in the years ahead. We're beginning to glimpse the outline of a whole new economic system emerging and flourishing alongside the capitalist market. We call this a collaborative commons. This is the first new economic system to enter the world stage since the advent of socialism and capitalism in the early 19th century.
RIFKINSo it has great historical relevance to our future way of life in the 21st century. And it -- the trigger for this new system is something called zero marginal cost. Let me explain. There's a deep paradox at the very heart of the capitalist system, which has been responsible for its tremendous success over the last two centuries. And now the very success of this paradox may be undermining the system itself and giving rise to this new paradigm that's replacing it.
RIFKINIn the capitalist market, sellers are always trying to find new technologies that allow them to increase their productivity, reduce their marginal cost of production, allow them to put out cheaper products so that it can win over consumers and bring back some profits for their investors. And so business people have always welcomed the reduction of marginal cost.
RIFKINMarginal costs are the cost of reducing an additional unit of something once your fixed costs are absorbed. Well, here's the rub. Economists and business people never imagined the possibility of a technology revolution so extreme in its productivity that it could reduce the marginal cost of reducing goods and services to near zero.
RIFKINI'll give you an example. Let's go back and see the first inkling of this. Remember Napster in 1999? This music service came along. And all of a sudden, millions of young people are sharing music at near zero marginal cost, and they're bypassing the recording companies. And for the recording industry, this was devastating, and they never recovered.
RIFKINThen the zero marginal cost phenomena raced into the publishing industry: newspapers, magazines, and books. Millions of consumers became prosumers and began to produce their own video, audio, text, blogosphere, news items, and began to share it with each other at near zero marginal cost, bypassing the traditional system.
RIFKINSo for the newspaper and magazine industry, this was devastating. Newspapers went out of business. Magazines went out of business. I'm an author, and our publishing industry has been racked by e-books and free books. Now, today, we have the newest development of this, and that's MOOCs, massive open online courses.
RIFKINYou know, a lot of young people are paying $50,000 a year for an education. All of a sudden, two years ago, massive open online courses -- we have several million students now that are taking these online courses, taught by the best professors at the best universities in the world. They're getting credit for them. And it's operating at near zero marginal cost, and the fee is zero.
RIFKINSo what's happened here is economists are waking up to this, and they're saying, OK, but we think there's a firewall. We know that more and more information goods are becoming nearly free and that millions of prosumers are sharing all this. But we think there's a firewall, and the zero marginal cost phenomena will not cross that wall and invade the physical world of physical goods and services...
REHMBut now you have the 3-D production.
RIFKIN3-D printing and renewable energy, absolutely. Let me -- what's facilitating this -- and this is what's really new. This is really in the last 12, 24 months. We have a new technology revolution emerging that allows us to bring physical goods and services to near zero marginal cost. And that's going to change the game. It's called the Internet of things.
RIFKINIt's a more expansive Internet, so what's happening is our communication Internet, which we've come to love, is now converging with a nascent energy Internet in a little fledgling automated transport and logistics Internet to create a single system. It's kind of a neural system, a brain. And what we're doing now is they're attaching sensors from this system out to connect everything with everyone, machines, devices, appliances, humans.
RIFKINSo we now have 13 billion sensors connected to resource flows, factory production lines, distribution and warehouses, smart roads, offices, vehicles, homes, and they're feeding back data to this new system, this Internet of things. There's 13 billion sensors now, but listen to this. In 2020, there'll be 30 billion sensors.
RIFKINAnd are you ready? I'm not sure I can deal with this. By 2030, 100 trillion sensors connecting everything.
REHMOh, my goodness.
RIFKINSo we're all becoming engaged in a single network. This allows us to produce physical goods and things in near zero marginal cost. And maybe we can talk for a few minutes about 3-D printing and energy.
REHMBut you used a phrase collaborative commons. Explain what you mean by that.
RIFKINWhat's happening is that as our -- as we're beginning to see our physical things reduce in price -- let me give you two examples and talk about how they're engaged in a collaborative commons. Let's take energy. We now have millions and millions of people that are producing their own green electricity at near zero marginal cost. They have solar panels. They have wind turbines.
REHMRight. But they paid for the solar panels.
RIFKINThey did. And it's still a little pricy, but the prices are coming down. I was just looking at the stats. In the 1970s, one solar watt cost $66. It's now 66 cents.
RIFKINAnd it's moving down. But even before you pay back the fixed cost of the solar panels and wind turbine, the moment you install it, the marginal cost of generating that green energy is near zero 'cause the sun is free. The wind on the side of your building is free.
REHMBut how is my installing a solar panel going to affect other people's energy intake or consumption?
RIFKINIt's called the energy Internet, so now we have our traditional Internet converging with an energy Internet. So if I produce some surplus green electricity that I don't need, I can send that back on the energy Internet and let other people share that.
RIFKINOr I can go off the general transmission grid -- and some countries now, they have microgrids. So I can go off the grid, produce my own green electricity with my solar panel or my wind turbine, and then I can choose to share that on a microgrid with my neighbors.
REHMIn -- at a more basic level, you've got parents sharing clothes, toys, used things they no longer need with other parents.
RIFKINThat's where this collaborative commons comes in. This Internet of things makes possible a collaborative commons because this Internet of things allows us all to share. And the distributive nature of this Internet of things makes it so that the products we're sharing are nearly free in terms of their marginal cost.
RIFKINSo we're sharing cars. We're sharing our homes with Air B&B and Couch Surfing. We're sharing clothes, as you say, with thredUp and other groups. We're beginning to share lots of our stuff, if you will, with each other over this emerging collaborative commons. And a lot of it's bypassing the traditional market.
REHMBut there are some things that can't be shared, for example, the skills of a surgeon. If you've got to have an operation, there has got to be a surgeon there to do it. So his skills are still going to be required in this non-capitalistic system.
RIFKINAnd let me be clear. I think this collaborative commons is flourishing alongside the capitalist market. Sometimes they benefit each other, and sometimes they're adversarial. But my sense is that by mid-century, more and more of our activity's going to be on the collaborative commons. And here's the proof in the pudding. Everyone listening right now to us, millions of people, hundreds of millions of people, are actually producing, as prosumers, their own information goods, video, audio, text, blogs.
RIFKINAnd they're sharing with each other at near zero marginal cost. This isn't academic. We've got 40 percent of the human race doing this now. So we did this in 20 years. Now, the next stage, when you get to this Internet of things, the more expansive Internet, we have to envision over the next 20 years reducing our marginal cost to near zero for physical goods and sharing them on collaborative commons. 3-D printing -- you mentioned 3-D printing -- it's a classic example.
RIFKINWe now have thousands of hobbyists with 3-D printers and small businesses. So these printers allow you to print out a physical product. So if you're connected to the Internet of things, you can download the software for free. It's free software. Then you use recycled plastic, recycled paper for your feedstock, nearly free.
RIFKINThen you connect up to the Internet of things, and you get the energy from the energy Internet to power your little factory, much lower marginal cost. Then you want to transport your goods, right? So you can transport your goods on the emerging logistics Internet with an electric vehicle powered by the energy Internet.
RIFKINAnd then the transport logistics Internet will allow us to use GPS tracking and, within a few years, driverless vehicles to get that product to market at a lower and lower marginal cost. So you have to think of three Internets, communication, energy logistics, and then think of millions of prosumers accessing this system, looking at the data. And we create our own algorithm, just like the big guys at Google in our little apps. And we increase our productivity, reduce our cost. And as prosumers, we share.
REHMJeremy Rifkin, his new book is titled "The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism." When we come back, we'll take your calls. We'll also talk about how the corporate world might fight tooth and nail to keep all this from happening. Stay with us.
REHMAnd if you've just joined us, Jeremy Rifkin is my guest. He's written a very provocative new book. It's titled, "The Zero Marginal Cost Society: The Internet of Things, The Collaborative Commons, And The Eclipse of Capitalism." Here's our first tweet from Nate, who says, "Will markets be able to naturally evolve or will governments attempt to legislate protectionism for existing firms, as they do now?"
RIFKINWell, let me start off by saying that I think that the capitalist market's going to be here for a long, long time. And it's going to live side-by-side with its collaborative commons and it's going to find value as a very powerful niche player in creating the network services and solutions for this new system. So it's not going away, but I don't think it'll be the dominant paradigm by mid-century. In terms of the control, there's really a struggle going on.
RIFKINAbsolutely. It just hasn't made the public airwaves yet. And that is in courtrooms, in backrooms in corporations, in law offices, on who's going to control this internet of things. There's a basic concept with the internet, called network neutrality. And this is basic to the whole operation of the internet, which is that once you get a service provider and you access the internet, your information and data is treated just like anyone else's.
RIFKINYou don't go in front of the line, in the back of the line, you're not discriminated against. It's open, it's inclusionary, it's distributed, it's collaborative. Everyone is equal to everyone else.
REHMBut you've got to pay for it.
RIFKINYou have to pay for the service.
RIFKINAnd that's very -- a very small amount of money each month for a service provider. Now, in the last few months some of the big cable and telecom companies have been coming in and saying, "Well, we're not sure we like network neutrality." Just a few months ago, the Appeals Court of the United States threw out the Federal Communication Commission mandate for network neutrality. That's always been part of the Federal Communication mandate.
RIFKINAnd they said, "You've over-stripped your mandate. You've gone beyond your mandate." So now it's forcing the Federal Communication Commission to try to maintain network neutrality by rewriting their basic protocols. So what's happening is the cable and telecom companies are saying, "You know what? We own the pipes. So if you're putting your data out there, we might want to charge discriminatory prices, so some people go ahead of the line. We may want to exclude some."
RIFKINAnd they're even saying that the data going through that pipe, they ought to have their hands on so that they can use that for other ends. But it's not just the cable and telecom companies. Now, some of our favorites, Google, Facebook, Twitter, which we love. These are the very enterprises that have provided this great commons for us. But now, Berners-Lee, who was the founder of the World Wide Web, put out a missive on the 25th anniversary of the Web.
RIFKINAnd he said, "I'm worried about these big global companies because even though it's a commons, we can go up on Google and Facebook and Twitter and share with everyone else at near zero marginal cost, what's happening behind the scenes is these companies are using our data, secluding it within their websites so you can't move it beyond that, selling it to third parties for all sorts of commercial and other purposes.
RIFKINAnd so the date itself is now a question. How do you provide for data security, data privacy? These companies are now the new global monopolies. Let me give an example. I use Google every day. I love Google. But they take six billion queries a day. All right. They control 67 percent of the search engine market in the U.S. and over 90 percent in Europe and 50 billion in revenue last year.
RIFKINI love Google, but it's becoming to look like a global social utility, a monopoly. Look at Facebook. One out of every three human beings on this planet -- excuse me -- one out of every six human beings on this planet, almost, is on Facebook, 1.3 billion people. And they have tremendous revenue, 7 billion. Twitter -- we're getting tweets in now. We all love to tweet, but that's again 640 million people. Or let's take Amazon. One of every three searches for a good or a product comes through Amazon.
RIFKINThey have 122 -- I think it's 122 million customers. They're massive. So the question, Diana, is this. Are these new global monopolies? Not just cable and telecom, but some of our favorites on the internet.
RIFKINAnd a discussion's beginning to be had. Should they be regulated like the utilities of the 20th century, which were regulated by national authorities, like AT&T, etcetera? Perhaps we need to have some kind of global debate on how to get the best out of these new internet companies, but make sure that they don't control our lives, but rather are fundamental to facilitate to a shift toward near zero marginal cost.
REHMAnd here's an email on that exact point. He says, "I'd like to think Mr. Rifkin's hypothesis is right, but isn't the very technology he says will enable the sharing economy based on the capitalist model?"
RIFKINWell, you know, it's interesting. The internet, everyone talks about how most innovation comes from the private market. And I'm a believer, you know, I grew up with a private market. I taught at the Wharton School and the Advanced Management and Executive Ed. Program for over 16 years. But I should say that a lot of the technology that we're now using came from government research.
RIFKINThe internet came out of the ARPANET.
RIFKINWhich was created by the Pentagon for security purposes. If you look at much of the basic technology for the iPhone, it was government research and grants. If you take a look at the evolving internet of things, it's going to be a combination of government research and facilitation and private research. And some of the efforts have come from the non-profit sector. Berners-Lee, who created the World Wide Web, he wasn't involved with private enterprise.
RIFKINWikipedia, which is a completely open collaborative commons and non-profit, that's certainly was able to thrive outside the market. So it's been a combination. Some of it's market innovation, some other. And here's one of the things that I would raise. Economists will come back and say, "Well, wait a minute, if everyone is producing and sharing goods and services nearly free in this social economy in the commons…
REHMHow do you make money?
RIFKINHow do you make money and how do you steer innovation? Innovation's easy. We've now seen that millions of people have been innovating all sorts of idea for new software and new ways to share information and news and knowledge and 3D printing, all of this for nearly free. They didn't need the incentive of return on investment. And this surge in mass democratic innovation and creativity in the last few years, has at least equaled the surge in entrepreneurial innovation in the 20th century with a market. But how do you make money? This is the big question.
REHMYeah, let's go back to that individual surgeon who has gone through years of training to achieve his skill or her skill, and charges for it, big time.
RIFKINI think what we're beginning -- you know, we always think there are only two ways to manage an economy, either the government or private enterprise or some combination of both. Capitalism, socialism or a social market economy. What we lose sight of is there's a third alternative. There's another sector that we rely on every single day, everyone listening in now, to provide an entire array of goods and services that we don't get from government and we don't get from the private market. It's called the social commons or the not-for-profit sector, the social sector.
RIFKINAnd this is where we create our social capital. Educational institutions, healthcare services, daycare centers for our children, assisted living for the elderly, environmental restoration, cultural and sports and recreation and on and on. There are literally millions of organizations providing these services not for profit, but for fees for services. And although some economists say it's a parasitic sector because it relies on government entitlement and private grants -- no, no, no.
RIFKINJohns Hopkins, which does all the international surveys on the not-for-profit sector, did a survey of 40 countries and here's what they found out, Diane. Over 50 percent of all the revenue in non-profits across the world comes for fees for services rendered. So they're not parasitic on government or on philanthropy, although they play a smaller role. So economists don't pay much attention to this sector because it creates social capital, but the revenues in this sector are 2.2 trillion in 40 countries.
RIFKINAnd in many countries, including the U.S., this non-profit sector, this social commons is over 5 percent of the GDP. And here's the interesting thing. It's growing faster than the private marketplace around the world. From 2000 to 2010, this sector grew by 42 percent. GDP and the private enterprise system grew by 16 percent. So as we're -- what we're beginning to see is a new system, the collaborative commons, in the social economy. And it's flourishing alongside the market. They're both existing together.
REHMAll right. We've got lots of callers waiting. Going to open the phones now, 800-433-8850. First to Roger, in Miami Beach, Fla. Hi there, you're on the air.
ROGERYes, thank you. I have a question about the effect, an offshoot of this new economy and the internet of things. I'm a coin collector. Will it be possible to reproduce exactly rare coins, as many as you want, a certain date, a certain mint, a certain condition if you have the original? And what will this do to hobbies? I would think it would end hobbies like coin collecting, stamp collecting, manuscript collecting, autograph collecting, you name it."
RIFKINYou know, you're the first one that' raised that question. It's interesting. There would certainly be attempts, but it's just like traditional forgery, and that is you will be able to take a look and hopefully, with the best expertise, be able to see the authentic original from the forged copy. But it's probably going to be somewhat difficult because this is digital technology, which is pretty good at reproduction, as we've seen with photographs.
RIFKINBut not impossible. And we're going to have to build in the safeguards. And let me deal with that for a moment. I think all of us wouldn't benefit from being able to be prosumers and produce and share information goods and energy and 3D-printed products, and bypass the middle man. What makes this internet of things so beneficial, is that you can cluster millions of people together and they can share their goods and services and eliminate the middle man.
RIFKINIn the traditional marketplace, you have these big, vertically integrated global companies, there's a lot of middle men who are marking up the transaction cost at each stage of the delivery of a good. What the internet and now the internet of things does is compress all that and people are directly engaged with other people. This is the democratization of economic life. However, this data security issue, this privacy issue is going to be absolutely critical to address.
RIFKINThe E.U. -- and as you know, Diane, I work and advise the European Union, spend most of my time there. We are beginning to address this question of data privacy and security in an internet of things world, on the collaborative commons. We're not addressing it very well in the U.S. We're asleep.
REHMSo is this coin collector going to be able to reproduce his own coins?
RIFKINYou'll still have expertise that can tell the forgery from the original, but it's going to be more difficult and it's going to require a tremendous amount of expertise to be able to make the distinction, but you can do it.
REHMAnd you're listening to "The Diane Rehm Show." Let's go now to Mike, in Athens, Ohio. Hi, you're on the air.
MIKEWell, thank you, Diane. I haven't read this book, but, you know, when you bring up questions about like Napster, and examples like that, I'm wondering if we're not confusing the technology with an old economic system, basically produced by Captain Barbosa and Jack Sparrow called piracy. You know, every movie that you pick up, you know, they've got the big sign up on the front of the thing, this is piracy if you copy this thing. So I don't know if you cover that in your book.
RIFKINI do. You know, an older generation, we would have called the sharing in music piracy. The kids call it sharing. But what's happening now is that the internet and now the internet of things actually allows us to produce our own goods and services and share it with each other so we don't have to pirate goods and services from others. And that's what we're beginning to see more and more of as this unfolds. But it's a good question.
RIFKINAnd what it means is when anybody can produce a good and service and then share the surplus with others, that's a good thing. Because it allows us to create a sustainable economy where we use less and share more. For example, Diane, you mentioned sharing our clothes and our toys and our tools, etcetera. This is good because instead of having to buy things, we only use for a shorter period of time, toys for our children, tools in our tool kit, clothes, our car, we can buy these things and then share them and recycle them over and over and over in these redistribution networks, the sharing economy and the collaborative economy and the collaborate commons.
RIFKINAnd what this means is less stuff, less use of resources, more sustainability. We recycle and recycle and everything we have has nine lives.
RIFKINThat's a good thing.
REHMTo Matt, in Alexandria, Va. Hi there.
MATTHey, good morning.
MATTI care very much about food. I care about healthy food for me and for the environment and I care about local food. But the main detractors always say that it's just too darn expensive and it's not a sustainable model because of that. It's just so much easier to go with the massive corporate farms. So I'm wondering if with this new economy there's a model that allows us to share our food, the food that we grow in our own backyards, to benefit those around us.
RIFKINYes, absolutely. In the Zero Marginal Cost Society I have a whole section on food, so I'm so glad you asked. There's one really interesting sharing website that's emerged, where an entrepreneur in Silicon Valley, he had a garden in his backyard, but he didn't have the time to actually grow anything on it. So he put out a thing on the web saying who would like to garden? If you do it, I'll share the produce with you.
RIFKINIt took off. And now, all over the country, people who have spare lots, are connecting up on the collaborative commons with people who love to garden and they're sharing the produce. On a larger scale, community assisted agriculture, we now have with this emerging internet of things, farmers who are connecting with consumers a year before the harvest. So the consumers put up money ahead of time, in the fall, to help the farmers put the seeds down.
REHMWhere is that happening?
RIFKINIt's all over the country. I mean, you can find it here in Washington, D.C., everywhere. So what happens is these prosumers are actually helping produce and consume their own share of the food. Let me, though, raise a little bit of a quibble here. There are two wild cards that could really derail this whole shift to a collaborative commons and a sustainable just society. And they're big wild cards. One is climate change and its impact on agriculture.
REHMAnd there's a new report out on that.
RIFKINLet's talk about that. Secondly, cyber terrorism. These are the wild cards. On agriculture, you know, climate change is the elephant in the room. And what we have failed to understand about climate change is it changes the water cycle. For every one degree that the temperature goes up from climate change from industrial activity, the atmosphere is absorbing 7 percent more precipitation from the ground, because of the heat. It's sucking it up. That means the whole water system of the world is out of sync.
RIFKINWe're getting more bitter winter snows, more droughts in the summer, more floods in the spring. That's affecting our ability to grow food. That's a real wild card here.
REHMJeremy Rifkin. And when we come back we'll talk more about cyber terrorism, how that could throw a huge wrench into this whole process. Stay with us.
REHMAnd welcome back. Jeremy Rifkin is with me. He is always thinking ahead. His new books is titled "The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons and the Eclipse of Capitalism". Here's an email from David in Durham, N.C. He says, "The free or nearly free goods and services Mr. Rifkin describes are likely to put many people out of work or provide them with precarious short term work at best. I wonder how he sees this playing out for people who cannot find paying jobs. Does he support government guaranteed employment or a basic income for citizens to enable them to still purchase those essentials that are not free?"
RIFKINBig issue. Nowhere is the impact of a zero marginal cost society going to be more felt than employment because we now have artificial intelligence, analytics, predictive algorithms, robotics that are eliminating entire job categories. Now, Diane, you remember I wrote a book called "The End of Work" in 1995...
RIFKIN...and said this was going to happen. It was a little controversial at the time. I notice that The Economist recently said, well it looks like Mr. Rifkin got that one right. It went faster than I thought. What we're seeing now is workerless factories, virtual retailing. And now it's not just white collar and service industries and blue collar. It's now knowledge workers. We now can use analytics and algorithms and eliminate many, many of our most educated professional categories, less radiologists, less lawyers, less accountants, etcetera.
RIFKINSo the question is, how are people gainfully employed in this new world, this internet of things platform in this new collaborative commons? Let me say in the short run, which I think is the next 30 years, we have one silver lining. And that is we have to build out this internet of things. This is infrastructure and that's real jobs. So I think we have one last surge of mass and salaried wage labor to put the system in, meaning we have to convert the entire world from fossil fuel and nuclear power to renewable energy. That requires huge amounts of jobs, lots of businesses, very labor intensive.
RIFKINSecondly, we have to put in technology to store all these energies around the world. That requires a lot of businesses and jobs. We have to take the whole electricity system of the world and transform it into an energy internet, lots of work for small, medium and large size companies. And we have to change the entire logistics and transport grid and move from the internal combustion engine to electric and fuel cell vehicles and automated logistics networks.
RIFKINSo in the short run, to build out this automated system hundreds of millions of jobs. But in the long run, the system itself is smart, intelligent, can correct itself and be operated by small supervised workforces. So then where do people be employed? First of all, millions of consumers becoming prosumers are going to be able to produce and use and share their own (unintelligible) .
REHM...their own goods.
RIFKINThey're going to need less income so the whole idea of sellers and buyers and owners and workers kind of breaks down. But we're still going to need employment. So if the marketplace is moving toward high tech, where are the jobs migrating? They're migrating to the social economy, the collaborative commons, the not-for-profit sector. And this'll surprise the listeners. This is the fastest growing employment sector in the world and has been for 15 years as employment has declined in the market.
RIFKINEven in the great recession when we were just shoveling jobs off the marketplace, the not-for-profit sector continued to grow in employment. So these are jobs requiring social capital. Machines can't do it. It's humans engaged with humans in creating the culture of the social capital society. And they get paid by fees for services that they perform, but it's not for profit.
REHMHow concerned are you about the prospect or possibility of cyber terrorism?
RIFKINIt's the last wildcard that I mention in the book because it's a big concern. I think climate change is the big elephant in the room but I think cyber terrorism is right out there. The fact is, as we connect everyone in this neural network, this internet of things and we began to live our lives in a collaborative commons, that commons is vulnerable. That internet of things is vulnerable for cyber terrorism, for commercial exploitation. It's vulnerable for political purposes and for just downright terrorism.
RIFKINLet me give you an example. When these three internets come together, and that is communication, the energy internet and logistics internet in one system and we rely on this around the world, a cyber terrorist can break into that system and destroy the major transforming power units we use to keep the energy and electricity going.
RIFKINNow the electricity grid is essential. If cyber terrorists were to knock out part of our electricity grid, everything stops. Our automobiles run by electricity. We have our fuel pumps, you need electricity, our sewage, our water system, everything. Now there are ways to deal with this. The fact is, a distributed internet of things allows us to actually deal with cyber terrorism if we create the right technology imbedded in it.
RIFKINDo you remember when Sandy hit New York?
RIFKINThere were a lot of buildings that had solar technology. And they could've gone off the grid and still kept their electricity, but they didn't because the utility companies required that their electricity only go to the grid. And if the power grid went out, they went out. One little converter in those houses and you could've gone off grid, used your solar panel and you wouldn't have to rely on the main power grid.
RIFKINSo there are ways to actually provide guarantees and safeguards against cyber terrorism, but we're not thinking this out. We need to think this out quickly.
REHMAll right. To Debra in Arlington, Va. Hi, you're on the air.
DEBRAGood morning. Thank you for inviting me to participate in the conversation.
DEBRALately there's been more talk about the condition of status of women who have left the workforce temporarily to raise children. And what comes to mind and is based on family history research I've been doing in Virginia, my family's been in Virginia for 400 plus years. And as I look at the progression of family size, type of employment, economics of the families, one thing that comes abundantly clear, the Virginia economy was largely based on unpaid labor, slavery.
DEBRAWhen that went away family size grew exponentially. My grandmother had 14 children. That means my father was one of 14 children. Slavery was replaced by large families going out and working in agricultural endeavors. In the '50s and '60s there was much conversation about the leisure class, the leisure life we would all be living because machinery had come in and replaced washing the clothes in old wringer washers, washing clothes by hand, right.
DEBRABut what has happened? Women now work more than anyone. Their work life never ends. They go to college, they're working a job, they're married, have children. They're taking care of those children, they're going into daycare and I listened to the caller -- I'm sorry, listened to the speaker talk about the daycare situation, how it's paid for by other subsidies. Oh my gosh, I paid more than half of my income as a D.C. attorney for childcare. Now at that point I was divorced but the father was not paying for those things.
DEBRASo women are working more than ever. And it's largely unpaid. There is no second parent, in many cases, my own included. There's no second parent picking up even half of it. And then, myself included and other friends who are mothers and professionals, we're also asked to provide volunteer, i.e., unpaid work in schools and churches and soccer teams, etcetera.
DEBRAAnd when you're in sharing collaborative economy, who's driving to go deliver those goods?
RIFKINYeah, let me say that this is -- let's deal with this on two levels. First of all, if we did not have the sharing society, the nonprofit sector, we'd be even worse off than we are today. Many people, either through formal or informal organizations in the community, are sharing the load. And they're helping each other out whether it be for daycare or assisted living for the elderly. That isn't by the marketplace and that isn't paid but it's a way for people to share with each other so when someone has some free time, they meet up with someone that doesn't. So if we didn't have that we'd be in big trouble.
RIFKINI agree that there's a lot of workload that especially falls on single parents, whether they be women or men. But as we move into more of this collaborative commons and sharing economy, it changes the narrative. Where we begin to realize that life is not just about how much you're worth in financial terms, but how much you're worth in terms of your social capital with others so that you can share with each other and not necessarily pin it down to how much you make.
RIFKINI think as -- you know, Keynes wrote a great essay in 1930 at the height of the depression, to his grandchildren. It may be his most important. He said, you know we have technology replacing human labor. This looks like a serious situation but it could be liberating because my great grandchildren may live in a world where they don't have to sit there and toil day in and day out because we can have the technology do it for us. And they can move to the more meaningful things in life, creating community, creating a sense of a social development and not -- and let the machines do the work.
RIFKINI think it's possible -- even with everything that this caller just said, it is possible to at least envision that by midcentury a lot of the heavy lifting is going to be done by automation across society.
REHMWell, but on to carry further her point -- and this was something I argued as a homemaker for 14 years -- I cared for the children. My husband earned the salary. But it was the two of us who kept our family going. My work as a homemaker should have been counted as earning. And therefore should have received some kind of salary in the form of tax credit, something. There is a discounting of the work women do in the home.
RIFKINAbsolutely. It's just unequivocal. And I think that the reason I'm a fan -- you know, I'm a real fan of the social economy because it allows us to begin to value the services that are performed that go unnoticed and unrecognized in a market setting. In a nonprofit social commons, people's work is valued. I'll give you an example. In this collaborative commons they're not beginning to use social currencies. They're bypassing official currencies altogether. Millions of people donate an hour of their time into a time bank. And this allows them then to trade that for -- on some other service they want.
REHMWe used to do it all the time.
RIFKINSo here's the situation where social currencies are proliferating all over the world now in this collaborative commons. It allows the work that has been undervalued or not valued at all, to be recognized. An hour of my time is worth the same as an hour of your time.
REHMBut don't you think tax credits or something should be included in this whole system for women who are the homemakers, the caregivers?
RIFKINAnd without -- and that service, when you take a look -- you know, I always say to folks, this is people -- high-powered business people, and when I teach in my advanced management program in Wharton over the years they would talk about their tough job. And I said, you think you have a tough job as a CEO? Why don't you take off six months and why don't you work in a daycare center nonprofit with two-year-olds. And you're responsible for the emotional and intellectual development of a human being's brain, which is a much bigger task, and you tell me which one is more emotionally challenging but intellectually stimulating when you come back to your CEO job.
REHMAnd you're listening to "The Diane Rehm Show." Here is a critic. "The internet of things is great news for libertarians and opponents of big government because it allows people to be self reliant, use barter and avoid income tax. This system is in fact more like laissez-faire capitalism then socialism."
RIFKINGood question. I'm glad it's raised because I completely disagree with it. It -- this internet of things -- and what we've learned from the internet, not the internet of things, it requires that everybody be more entrepreneurial. But one's entrepreneurial abilities depend on being deeply embedded in social networks in collaborative commons. So it does -- the collaborative commons does not favor the autonomous being pursuing their own individual self interests.
RIFKINIf you're an autonomous being pursuing your own self interest, as Adam Smith would say in the market, you're not part of this collaborative commons. So what we learned with the internet and internet things is that it's our social capital that counts. So a young generation of kids call themselves social entrepreneurs. They are entrepreneurial but their entrepreneurial skills are dependent on collaborating a deep social network and benefitting everyone else, to the extent they do, they benefit themselves..
REHMBut doesn't that require a sense of altruism which we are not seeing currently?
RIFKINIn the last -- near the last chapter of the book, I talk about the millennial generation because there's been a lot of discussion that the younger generation, are they more selfish, are they more empathic? What we're seeing now, since the great recession started, is a real turnaround in this millennial generation. Some big surveys have come out. We're beginning to see a switch from me, me, me culture to a share, share, share culture, less branding in terms of branded products and more sharing of their clothes, their homes, their apartments, their 3D printed products.
RIFKINWe're beginning to see among the millenials less materialism and more social engagement. I wrote a book in 2000 called "The Age of Access" and I said the younger generation is going to move from ownership to access, from markets to networks. That's what's happening with these kids today. They don't want to own a car. They want to share a car with others and use it when they need it. And so that they use it only when it's of a value to them.
RIFKINSo I think we're getting a younger generation, the millenials, less materialistic, more into access and ownership, more into sharing than controlling. And we'll see how it goes but at least it's a beginning, an inkling of a trend that is somewhat hopeful.
REHMAnd you don't think you are being too optimistic.
RIFKINYou know, Diane, after 40 years of activism, I'm never optimistic. I'm never pessimistic. I'm guardedly hopeful but I'm not naïve about all the things that could derail this vision. But we need a vision. All of us need a vision for our journey on this planet. And certainly now more than ever I'm hoping that this shift to collaborative commons will give us new hope that there's a future worthy of ourselves and our kids.
REHMJeremy Rifkin. " The Zero Marginal Cost Society" is the title of his book. "The Internet of Things, the Collaborative Commons and the Eclipse of Capitalism." Thanks for being here. Jeremy.
RIFKINThank you, Diane. It's a pleasure.
REHMThanks for listening all. I'm Diane Rehm.
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