We're seeing the first glimpses of a new economic system entering onto the world stage, the first new system since the advent of capitalism, and its antagonist, socialism, says Jeremy Rifkin. The new system is the collaborative commons, and what's triggering a shift to this new paradigm is zero marginal cost. Zero marginal cost is when the cost of producing an additional unit of a good or service after your fixed costs are covered go to zero. The paradox at the center of the capitalist system is the success of the invisible hand leads to its own demise.
Businesses have always sought reduction of marginal costs to increase profits, but never imagined they could go to near-zero. When that happens, goods and services go beyond the market exchange economy. As consumers became pro-sumers, newspapers went out of business. People going from free-mium to premium was wishful thinking. The notion that zero marginal cost won't cross the wall from virtual goods and services to the physical world is also wishful thinking. The internet is expanding to "an internet of things". By 2030 we will have a hundred trillion sensors.
For energy, solar has near zero marginal cost. Once you've paid for the installation of the solar panels, each unit of electricity is essentially free -- near zero marginal cost. When millions of people share knowledge on Wikipedia, they wipe out the encyclopedia industry. When millions of people share energy on an internet of energy, they wipe out the conventional energy industry.
What will people do for work after the zero marginal cost revolution? He says the answer is the social commons.
The same concept applied to employment is near-zero marginal cost labor. We have workerless factories and virtual retailing We're eliminating knowledge workers, like accountants, attorneys, and radiologists -- we can do it with software. There's going to be one last surge of wage labor in the next 30 years, and that's to build out the infrastructure for the internet of things.
Driverless cars and fuel cell vehicles powered by renewables will do the same thing to transportation. Airbnb's success is zero marginal cost. They have the web, they have the homes and apartments -- the fixed costs are already paid, they're already paying the mortgage. The marginal cost is near zero; how to the hotel chains compete?
We have a generation growing up thinking it's not about ownership, it's access. As people share what they have, less has to be produced.
Employment will all be in the social commons, where people create social capital.