
Capitalism is making way for the age of free - hdivider
http://www.theguardian.com/commentisfree/2014/mar/31/capitalism-age-of-free-internet-of-things-economic-shift
======
kleinsch
"Anyone will be able to access the internet of things and use big data and
analytics to develop predictive algorithms that can speed efficiency,
dramatically increase productivity and lower the marginal cost of producing
and distributing physical things, including energy, products and services, to
near zero, just as we now do with information goods."

Saying that the Internet of things will bring the marginal cost of energy
prices to near zero because of big data seems like a stretch to me, as well as
some amazing buzzword bingo.

~~~
ArbitraryLimits
That's a lot of buzzwords in one sentence. Reminds me of the early 90s when
everything had to use neuro fuzzy wavelets.

~~~
pachydermic
It's almost as if that sentence itself were pieced together by some kind of
blagosphere-mining machine learning algorithm. I guess that's kind of what
writers do?

~~~
WalterSear
Either they do that, or the press a button on one and then go do what they
really wanted to do.

------
pknight
What's interesting to me is that the real tipping point is when we are able to
produce energy easily and cheaply in a virtually unlimited fashion, without
relying on scarce resources.

It will accelerate our means to produce virtually anything locally, making the
whole chain of production much less vulnerable to disaster. You could build
vertical farms driven by technology (eliminating the need for pesticides, or
huge land resources) and optimize food production. We'll be able to produce
enough of what we need 10x over and with a small ecological foot print.

It's really interesting the things that become possible and economically
viable once you have virtually unlimited energy. If there is one reason to
keep living and be excited it is to see that day. It will be monumental. It
will be bigger than the printing press or the electrical grid and maybe even
the advent of the computer.

With unlimited, cheap energy, just imagine what we'll be able to do. Just
imagine what the human race has been able to do in the 19th and 20th century
with the advent of factories and machines. We built amazing tunnels,
skyscrapers and road networks.

Imagine what we could in a different context, with different objectives. What
if cleaning up the environment and creating beautiful buildings, parks and
infrastructure again became the equivalent of what used to spur the economy on
in the 19th and 20th century.

The cool thing is it could _potentially_ happen in the next 30 years. There
are so many different promising energy production technologies being worked on
right now. It is only a matter of time.

~~~
alexeisadeski3
US spends a whopping 8.3% of GDP on energy.

Cheap(er) abundant(er) energy would be great but not transformative.

~~~
pknight
I think you're vastly underestimating what it means to have (virtually)
unlimited energy. Things that we are not doing now because it's not
economically viable, become viable. Water filtration for drinkable water is
huge and also happens to be one of the main problems in the world. That
problem becomes more approachable when you have an excess of energy at your
disposal.

Recycling materials is also heavily constrained by energy costs. With so much
energy available you can employ recycling techniques that are not viable right
now and/or do it at a larger scale.

There are also huge reductions possible when you have abundant energy. Take
out costs associated with driving your car, or the cost of cleaning up ongoing
pollution, or the costs of extracting energy from scarce resources. Those
could all be dramatically reduced once abundant energy becomes a reality.

It will be impactful for people who are not rich (99% of the planet), not
having to pay huge chunks of income for energy. After rent costs, the biggest
part of my living costs come from energy production (elec, gas, water etc).

Abundant energy also makes a more distributed form of general production more
viable. The more communities become self reliant, the less vulnerable the
world becomes to localized disasters (political and environmental) and the
stronger our ability to help out communities that are suffering. All the costs
we are making (money & environmental) for the purpose of transporting goods
and resources around the world can be scaled back.

Think about this for a minute, if you have access to cheap abundant energy,
you have some source of water and the technology to filter it than you have
all the basic necessities to supply basic survival needs to a community. That
is huge.

~~~
alexeisadeski3
In fact you've overestimated it.

The processes you describe may be energy intensive, but the systems which
surround said processes - and the design required to deploy them - are
intensive in man hours. Labor is of course a far larger portion of GDP, and
lowering the cost of labor would of course have a far more dramatic impact on
our lives than would lowering the cost of energy. Prof Hanson has written on
this subject if you care to read a more comprehensive academic take on it.

In summation, much of the focus people place upon lowering the cost of energy
is misplaced and quite silly when one stops to think about it in an unbiased
manner.

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peterashford
This is overblown. We still need food, we still need heavy engineering, we
still need nanotech. Yes, there are some simple things that can be
manufactured differently to how they had been in the past, but even those are
still not free. The printers are not free, their consumables are not free and
they can't produce more than a small fraction of the things we currently buy.

I think this tech will be revolutionary, don't get me wrong, but I don't think
everything is going to be free nor do I think capitalism is going anywhere
fast (at least, not on account of 3d printers!)

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diminoten
> Over the past decade millions of consumers have become prosumers, producing
> and sharing music, videos, news, and knowledge at near-zero marginal cost
> and nearly for free, shrinking revenues in the music, newspaper and book-
> publishing industries.

No, these things aren't produced for "free". They're replicated for "free".
Huge difference.

The first cancer vaccine will "cost" trillions of spent research dollars. The
second one? Probably a few cents, if that.

Let's not, especially on this site, forget about how important investors are.

~~~
WalterSear
I don't think that's what they are talking about. I think they are talking
about how fast things are getting cheaper to design, including, eventually,
vaccines.

------
spikels
Rifkin has been pushing these ideas (basically advancing technology will
require his preferred political positions) for 20+ years (see "End of Work"
(1995)). He just updates the buzzwords and publishes it as a new book (see
"The Age of Access" (2000) and "The Zero Marginal Cost Society" (2014)). As
usual there are a few grains of truth (jobs replaced by technology,
drastically lower costs for some products) but it is mostly just well known
falsehoods (lump of labor fallacy). In the end you will know less after
listening to Rifkin's arguments.

~~~
Shivetya
Well robotics will make about anything possible as time and tedium will be
removed as barriers. In a society where supply is merely a result of time
there won't be much to want or steal. At least if your in that first world
part of the world.

Yeah there are costs involved in setting it all up, but with robotics it comes
down to material access to build with. The nice thing about robotics is you
can put them into inhospitable areas for about, well forever.

I fully expect there will be a generation not too far off whose primary source
of work is creating things just because and not for whom. Oh sure there will
be people who do and do for others, but it won't be a real requirement. Just
like a small number of people get the real work done in most work environments
so will society migrate too.

------
ctdonath
_" with information goods the social marginal cost of distribution is close to
zero ... If information goods are to be distributed at their marginal cost of
production – zero – they cannot be created and produced by entrepreneurial
firms that use revenues obtained from sales to consumers to cover their [fixed
set-up] costs … [companies] must be able to anticipate selling their products
at a profit to someone."_

1/N > 0 for N = (1,∞)

There is a very significant difference between a cost of distribution close to
zero vs actually zero. So long as revenue costs are above zero,
entrepreneurial firms can find a way to profit enough for food, clothing, and
shelter.

There is a basic cost to survival (food/clothing/shelter/healthcare is not,
and never will be, free), requiring everyone contribute _something_ which
another will consider valuable enough to exchange their work for. Confiscation
of "excess" fails as it disincentives increased productivity. So long as
people have a motive to either elicit value from their environment, or
persuade others to trade that value in a mutually beneficial manner,
capitalism will ensure enough productivity to provide for all ... and as
marginal costs decrease towards (but not reach!) zero, incentive is there to
accelerate productivity to match.

~~~
to3m
I don't understand why companies won't simply ignore his suggestion that they
can't do what he says they can't, and use revenues obtained from sales to
cover their fixed costs. The fact that their marginal cost is zero has
precisely no relevance; they've spent money making whatever it is they've
made, and they need it made back. And the burden of paying for all of this
will fall on the customer, just as it does today.

As an example, consider some top-selling video game on the iOS app store. The
$100/year fee for the development licence isn't nothing, but compared to the
cost of the staff and their equipment, it really might as well be. And yet
it's perfectly possible for these things to make money, and in the cases they
don't, the zero marginal cost thing has absolutely nothing to do with it. In
fact the zero marginal cost is a major draw, for exactly the reasons I give in
my first paragraph.

This seems like some an obvious rebuttal that I can only imagine I've missed
something...

(Another article from this chap reached the front page a couple of weeks ago -
see
[https://news.ycombinator.com/item?id=7406894](https://news.ycombinator.com/item?id=7406894)
\- basically the same thing.)

------
dcre
I'll believe it when people don't have to work in order to eat.

~~~
AndrewKemendo
This is why I feel like farm to plate automation is the core technology that
makes the future real. My concern is that people will reject it out of the
lack of variety at the start.

~~~
neuralk
>farm to plate automation

I'm not sure what you mean. Are you referring to a specific technology (like
Soylent) or just automating the process of growing, harvesting, and
distributing food?

~~~
AndrewKemendo
The latter, where growing, harvesting, processing and delivery is done through
a repeatable automated process.

------
zackmorris
Unfortunately since the US chose to go with Friedman/supply side economics
since about the 80s, we're in a race to the bottom. Lower production costs
used to equate to increased consumption, but that didn’t account for finite
resources. If we factor in externalities like pollution, the value being
produced in the world has been constant for quite some time, maybe as far back
as the 80s also. And worse, a whole slew of markets like
oil/fishing/timber/mining are in decline. So we’re in this bizarre situation
of everything being destroyed, but hey, prices are cheaper than ever. Too bad
incomes are in decline too so nobody can afford to buy anything anyway.

Contrast this with Keynesian/demand side economics that countries like Germany
and Finland have adopted, where one of the top priorities is per-capita
income. In Germany, 50% of a company’s board must be made up of labor, and
during downturns the government pays people to go on furloughs while they are
still employed (to maintain demand by propping up buying power) . And in
Finland, they redistribute the North Sea oil money back into the economy (I
realize this is not sustainable, I’m just saying that it’s arguably better
than what the US does). Education, maternity leave, healthcare, pretty much
everything that contributes to a higher quality of life is given priority over
profit. They’ve been at it so long that their customer base is huge and
companies are able to invest in long term planning and research. Jobs are
plentiful, one can’t hardly even get fired, and the middle class is huge.

Regardless of political ideology, if we look out 10, 20, 30 years, it’s pretty
obvious that natural resources are going to go into the toilet and more and
more work is going to be done by machines. Communism was able to absorb that
by forcing everyone to work unproductive jobs. Socialism seems to be able to
absorb it to some degree by focussing on people first. But capitalism.. I
don’t know. It’s the economic form of darwinism. If it’s going to survive into
the future then I think it’s going to evolve into something unrecognizable. To
me it looks like there are two extremes: a Star Trek economy with guaranteed
basic incomes or a new gilded age where perhaps 1000 people own all of the
wealth on the planet and people’s labor/personal profit is on an ever
declining trajectory.

~~~
jsnell
> And in Finland, they redistribute the North Sea oil money back into the
> economy

Finland doesn't border the North Sea, nor does it produce a drop of oil from
anywhere else. I'm not quite sure which country you were thinking of there --
Norway quite explicitly doesn't pump the oil money into the local economy but
runs a giant fund that invests the proceeds elsewhere, to be used once the oil
runs out.

It's also completely absurd to claim that Germany and Finland are somehow
optimizing for per-capita income (wtf?), or that profit is the last priority,
or that jobs are plentiful, or that one can't even get fired, etc. You appear
to have built up some idealized version of Europe that has little to do with
reality.

~~~
zackmorris
I stand corrected, it's Norway that has the North Sea oil money, not Finland.

But Germany does have the policy I mentioned, that inject money directly into
employees' pockets during downturns rather than firing them, it's called
Kurzarbeit:

[http://www.aei.org/article/economics/fiscal-policy/us-
should...](http://www.aei.org/article/economics/fiscal-policy/us-should-try-
germanys-unemployment-medicine/)

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dwaltrip
The end of scarcity, which is a necessary condition for reducing the marginal
cost of non-digital goods to zero, is still a ways away.

~~~
svachalek
Exactly. What this article fails to mention is that during the same golden
decade of the "prosumer", the costs of commodities have skyrocketed.

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vonnik
There's a fundamental difference between goods and services composed of bits,
and those composed of other forms of energy and matter. The marginal cost of
many physical goods will never be zero. At least not until we have limitless
amounts of energy to recompose molecules as we wish. I think that's a long way
off.

What Rifkin isn't really analyzing is the _role of free._ Why do people
provide free goods and services? It's usually for the same reason grocery
stores and heroine dealers do: to let you test the merchandise, so they can
make money if you want more. "Free" is simply a way to lower the friction
points for consumers, and draw public attention.

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brenschluss
"Marx never asked what might happen if intense global competition some time in
the future forced entrepreneurs to introduce ever more efficient technologies,
accelerating productivity to the point where the marginal cost of production
approached zero, making goods and services "priceless" and potentially free,
putting an end to profit and rendering the market exchange economy obsolete."

Uh, Marx did ask that question. It's called the tendency of the rate of profit
to fall.

The problem with increased productivity and lower marginal costs is that
labor, too, becomes less and less valuable. Supply of labor goes up; demand of
labor goes down. People are more easily exploited.

~~~
ataggart
I wonder why so many people always assume that increased productivity means
fewer workers instead of more goods.

------
upofadown
It seems to me that capitalism is struggling because of a _lack_ of
technological progress, not because of a surplus of it. There really haven't
been any major breakthroughs for a while for improving access to energy or
materials. Manufacturing is if anything degrading; the new hotness is finding
people to work cheap. That's probably because robotics has been stagnant for
too long. Food production is more or less a fight to stay even.

This is an age of improvements in computing/communications. That is eventually
going to help other areas but for now people seem to be determined to stop
that from happening...

------
barce
"Summers and DeLong focused their presentation on the new communication
technologies that were already reducing the marginal (per-unit) cost of
producing and sending information goods to near zero."

Yes, sending an email can be free.

But the infrastructure for the Internet? The article really ignored how many
tax payer dollars went into different public institutions to make the Internet
a reality, e.g. Big Government and universities.

~~~
hnnewguy
> _The article really ignored how many tax payer dollars went into different
> public institutions to make the Internet a reality_ "

Which is why their analysis focuses on the _marginal_ cost, which is the cost
of producing the _next_ unit (or sending the next piece of information
electronically). Even if you amortize infrastructure costs over each piece of
information sent, the costs are on their way to near-zero.

------
return0
What about innovation and quality? Let's assume that digital technologies
finally make entertainment essentially free. Who will make the good movies? Do
we have lower quality entertainment since it started becoming increasingly
cheaper? It would be interesting to see studies on that.

Now suppose an analogous situation occurs with food, energy etc. Does this
mean we will eventually end up eating pizza every day?

------
ilbe
What's most troublesome is statements like this, typical of the guardian:

 _" A new economic paradigm – the collaborative commons – has leaped onto the
world stage as a powerful challenger to the capitalist market."_

Whereas capitalism as a philosophy is about individual rights and private
property, this _" new collaborative economy"_ stinks of failed historical
experiments.

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michaelfeathers
Very odd that there was no mention of IP and the monopolies that copyright and
patents bestow.

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dnautics
"the most basic condition for economic efficiency: [is] that price equal
marginal cost"

Huh? I would think that economic efficiency is when something that is hugely
desired gets delivered, meaning that price would be way higher than marginal
cost.

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hershel
The most realistic case of something close to this scenario happening, is that
virtual reality will greatly improve and people will prefer to mostly live
there.

And in virtual reality ,marginal cost does go to zero.

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JohnDoe365
If it reads 'Capitalism is making way for basic income' it would have make
sense. Not that way. Freemium is often paving the way for even more agressive
capitalsim by crowding out competitors to raise prices afterwards.

------
norswap
inb4 the lawsuits.

~~~
norswap
Despite the comical form, this comment is totally serious. Lawsuits also apply
in domains where copyright is not an object (e.g. construction): look at what
happened between Uber and the taxi unions.

