Rise of the collaborative commons

26th June, 2014 by Anna Simpson

Anna Simpson asks Jeremy Rifkin how an era of nearly free goods and services could lead to a more efficient global economy.

Jeremy Rifkin talks at the speed of a visionary who sees the path to salvation, and knows the entrance gate is on a timer. As President of the Foundation on Economic Trends and author of 20 books on the impact of scientific and technological changes on our economy, society and planet, he’s well aware of the problems facing humanity: “We had five extinctions in 450 million years: there was a sudden shift in the chemistry and temperature of the planet and each time it took about 10 million years to get back that biodiversity. We're now in the real-time sixth extinction.”

He looks to present-day China for an example of how we might mitigate this process. “In December [2013] China announced an $80 billion, four-year initial commitment to lay out the new energy internet so that the Chinese people can produce their own solar and wind generated electricity and share it with each other across the country.” If all goes according to plan, millions of people in neighbourhoods and communities, and hundreds of thousands of businesses, will be able to produce their own renewable electricity locally and share it on a ‘national energy internet’, just as they now share information.

Rifkin claims some credit for the move: “When my book, The Third Industrial Revolution, came out in China, it was endorsed by Premier Li, and resulted in the sale of over 400,000 copies! Clearly the Chinese have now mapped out an economic plan.” In this 2011 bestseller, Rifkin argued that a new distributed model for energy will replace the elitist, centralised fossil-based economy that currently dominates the planet. This revolution, he proposed, would depend on five convergence factors: the commitment from governments to encourage the shift to renewable energy; the conversion of millions of buildings into micro-power plants, generating renewable energy; the installation of energy storage technologies, including hydrogen systems, batteries, water pumping, flywheels, etc; the transformation of the current electricity transmission grid to a digitalised energy Internet to allow millions of small producers of renewable energy to share surpluses with one another; and the establishment of an automated transport and logistics Internet comprised of electric and fuel cell vehicles powered by renewable energy.  [see ‘Are we on the cusp of a third industrial revolution?’, GF83].

His most recent book, The Zero Marginal Cost Society, picks up on an emerging economic phenomenon that he believes will speed up the shift, and could herald “the democratisation of everything”. He describes this phenomenon as an era of “extreme productivity, in which each additional unit introduced for sale approaches near zero marginal cost”. How will it come about? Through the rise of the ‘collaborative commons’, he explains, where people produce their own renewable energy and 3D-printed products and share them with one another at near zero marginal cost, making them virtually free.

“Neoclassical economists argue that new technologies increase productivity, allowing the seller to produce more goods at a cheaper cost per unit”, he says. “As you increase the supply of cheaper goods, you create demand and force competitors to increase productivity in order to sell their goods even more cheaply. But what happens when ever-leaner technology boosts production to a point where the goods can essentially be produced for free? Profit dries up, and we move much of our economic activity from a capitalist market based on scarcity to a collaborative commons based on shareability.”

For Rifkin, this is the democratisation of economic life. For example, he cites the power utilities in Germany who couldn’t scale to match the growing collaboration of millions of ‘little players’ coming together in green electricity cooperatives: “If you didn’t have cooperatives, you’d have to invent them”, he quips. “They allow small players to come together with a non-profit frame of reference and create economies of scale.”

But don’t economies of scale tend to lead to the production of greater quantities, I reply. How will nearly zero-cost production help our economies to thrive, while alleviating growing pressure on limited resources?

Rifkin’s come-back is that economic productivity is decoupled from material resource use: “Extreme productivity will allow us to use the minimum amount of material resources and energy in order to provide goods and services. It’s like the ecosystem of the Amazon: everything is recycled, everything is redistributed. If everyone is buying less and sharing more, it means less of the Earth’s resources are being used up: it’s a circular economy.”

The architecture behind this new model, Rifkin continues, is the Internet of Things (IoT) which will connect billions of devices the world over. Already, he says, the IoT is disrupting the communications and information markets: “More than one-third of the human race is producing its own information on relatively cheap smartphones and computers, and sharing it via video, audio and text at near zero marginal cost in a collaborative networked world.” At the same time, we’re seeing the emergence of the Energy Internet, through the development of smart grids and distributed renewables, and the Logistics Internet, whereby sensors embedded in our homes, offices and transport systems transmit information to data hubs to maximise efficiency and increase productivity.

For Rifkin, this platform is the ideal device for cooperatives to realise their potential, allowing “millions of people to come together directly in real-time, [bypassing] the middle men in big vertically integrated corporations”. We shouldn’t underestimate the scale of this, he insists:
“1.5 billion people on the planet are already members of cooperatives – we don’t pay much attention to them because they’re non-profit, but [there are] agricultural cooperatives, housing cooperatives, banking cooperatives, construction cooperatives, electricity cooperatives, etc…The sustainable society – where everyone on the planet produces their own green energy, information, 3D-printed goods, and so on, and shares any surplus – is the optimally efficient economy. The Internet of Things platform for a Third Industrial Revolution democratises the global economy and gives rise to a more ecologically oriented society.”

It’s an attractive prospect, but the path towards it remains unclear. For now, at least, we’re in a hybrid economy: the Collaborative Commons exists alongside the convetional capitalist market, and few governments share China’s ability to mandate a new model. The sharing economy is emerging, but it’s funded by investor capitalists and facilitated by the likes of Google, eBay, Amazon and Airbnb. The risk is that the collaborative commons develops too great a dependence upon this elite, which then monopolises access. Does Rifkin really believe the rise of the collaborative commons will see the demise of these new corporate giants?

“The commercial enterprises that created the social commons are certainly starting to look like global monopolies”, he concurs. “Google has two-thirds of the search engine market in the US and 90% in Europe; nearly one out of six human beings on the planet is on Facebook; Twitter has 640 million people gossiping on it. They allow all of us to engage with each other at near zero marginal cost, but what they then do is secure and sequester the data which they can sell to third parties for commercial gain. If we want to take advantage of the social-commons created by the likes of Google, Facebook, and Twitter,  we have to make sure that these giant enterprises are treated as global social utilities and regulated to ensure the common good.”

He points to the success of the internet, which is founded upon network neutrality: “For zero marginal cost we can send our information to anybody and we are treated like everyone else: no one is discriminated against.”

For Rifkin, if network neutrality is compromised, it will invariably lead to the monopolization of everything. If, however, network neutrality is preserved, “it will likely lead to the democratisation of everything”. Like many visionaries, he’s an optimist: “My sense is that the democratisation of everything will eventually win out, because it’s too sweet to ignore.”

Anna Simpson is Editor, Green Futures.

Photo credits: Chesky_W/iStock/Thinkstock, Petr Nad/iStock/Thinkstock/Jeremy Rifkin

Advertise block

I love Green Futures, it’s my favourite magazine.

Paul Robinson, Partner, New Era Consulting