

Implications of the Third Industrial Revolution - blue1
http://www.theeuropean-magazine.com/jeremy-rifkin--2/9652-implications-of-the-third-industrial-revolution

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minthd
For a more realistic view on this subject:

[http://www.forbes.com/sites/timworstall/2014/03/16/12632/](http://www.forbes.com/sites/timworstall/2014/03/16/12632/)

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danbruc
Ad hoc I would say he is wrong, zero marginal costs are a problem for
capitalism. Zero marginal costs imply no labor involved, no wages earned, no
prices payed, no profits made. So how are you now going to acquire the capital
for the initial investment?

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tsotha
I don't see how you get there from here. If a product requires fixed costs
there will be prices paid and profit even if marginal costs are negligible.
That's the software industry in a nutshell.

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danbruc
You are looking at it from the wrong side - selling software does not provide
an income to anyone. Lets take the nuclear power plant example again. You have
high initial costs F building it and then you are trying to produce x units of
electricity without additional costs and sell them for a price per unit P. In
this scenario you will provide incomes on the order of F to the people
building the power plant but later you ask for x * P to pay for the produced
electricity and x tends to infinity. So unless you just throw away your
perfectly good nuclear power plant at some point or lower the price to zero,
you will suck in money you will never hand out again.

The heart of the problem is that at zero marginal costs nobody has to work,
nobody has an income, nobody can pay the price. And more realistically having
very small but non-zero marginal costs does not really improve the situation
either, because it will still only provide an income to very few workers
compared to the large group of potential customers.

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dougabug
You still have to pay taxes, at least property and payroll taxes, and comply
with laws; and the government can still print money, tax people and
corporations, employ people, give/lend money to institutions at low rates, and
pass laws and regulations/obligations which cost labor to fulfill. Likewise,
people and organizations owe rents to each other, have covenants they need to
fulfill. Your nuclear power plant will never be a money black hole in the way
that you mean.

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danbruc
But then again the marginal costs are non-zero due to state intervention. But
let me change the example, I can probably make a more convincing case with
software.

You have developed the perfect office suite and it is used all over the place.
No further development needed. You request a daily license fee of $1 per user.
You have also bought and payed for a fully automatic solar powered license
server on your private island processing credit card payments and handing out
new license keys.

Now you have essentially enslaved the people - everyone has to directly or
indirectly work a tiny bit harder, produce a tiny bit more goods and services,
to pay your license fees and therefore finance your consumption. This is not a
big deal if seven billion people have to finance only you, but it is obviously
nothing that scales to an entire economy.

Even at $1 per day you will collect $140 million per month assuming 0.1 % of
the population is using your office suite every working day. That is enough to
also pay for your family and your friends, 14,000 friends at $10,000 per
month. It still is a pretty tiny portion of the entire population but we are
already in a region where only thousands of such businesses would have a
significant impact.

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dougabug
Is the state going away sometime soon? Or it's going to stop intervening?

Good luck with your $1 a day, "enslave the people" software tax. World of
Warcraft generates ballpark the numbers you are throwing out there, although
they have some server costs and the game is getting a bit long in the tooth.
If you want to keep your slaves you probably need programmers and designers
continually improving the product, fixing bugs, maintaining compatibility with
and fully utilizing OS and HW upgrades; otherwise, competition (both free and
paid) will likely overtake you. If you are immune to competition, you could
get hit with anti-trust action on three continents.

Your hypothetical 4.67M subscribers surely aren't going to pay $365 a year
unless they have an expected payoff in excess of that. When you buy something,
does it make it less valuable to you that there are no serfs working hard,
endlessly and forever to make it? If that's the case the Beatle's catalog
shouldn't still be a multi-billion property, since "the Band" isn't hitting
the studio any time soon. Is software less valuable than music, videos, books
or other forms of content?

Even if magically this never-updated software somehow keeps generating stable
revenue forever without any ongoing costs (marketing? accounting? legal?), it
still has a finite Net Present Value, with all its costs in the development
phase. Are you suggesting there's a catastrophic limit on the allowed gain
(NPV / total cost)? Why are investment bankers allowed unlimited upside on
their investments without it posing an existential threat to the economy?

As soon as you earn your nut, that's it, you're done spending money and
engaging in new economic activity? You won't invest, start new projects, buy
stuff? Start a spaceship company or solve malaria, maybe run for office or
fund election campaigns?

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kennethh
This article was a waste of time, it only tells us that the robots will take
our jobs just like numerous times before. Technology have always changed the
labour landscape and old professions vanish and new one show up.

Petition of the Candle Makers

Ironically, French economist Frederic Bastiat lampooned protectionism back in
1845 when he penned 'Petition of the Candle Makers', mocking the sun's "unfair
trade advantage" over candle-makers.

We are suffering from the ruinous competition of a rival who apparently works
under conditions so far superior to our own for the production of light that
he is flooding the domestic market with it at an incredibly low price; for the
moment he appears, our sales cease, all the consumers turn to him, and a
branch of French industry whose ramifications are innumerable is all at once
reduced to complete stagnation. This rival, which is none other than the sun,
is waging war on us so mercilessly we suspect he is being stirred up against
us by perfidious Albion (excellent diplomacy nowadays!), particularly because
he has for that haughty island a respect that he does not show for us.”

Read more at [http://globaleconomicanalysis.blogspot.com/2014/11/too-
big-t...](http://globaleconomicanalysis.blogspot.com/2014/11/too-big-too-
powerful-too-free-google-vs.html#RloSqtC36lsgf79Q.99)

[http://globaleconomicanalysis.blogspot.no/2014/11/too-big-
to...](http://globaleconomicanalysis.blogspot.no/2014/11/too-big-too-powerful-
too-free-google-vs.html)

