The Internet of Things on Collision Course with Free Market Capitalism

Delacroix, slight revision

 

Jeremy Rifkin, author of The Zero Marginal Cost Society, wrote a sobering piece for The New York Times Week in Review (3/16/14) on how reduction of marginal costs spells the end of capitalism as we know it.  Competitive markets are bringing costs so far down that goods and services are nearly free, abundant, and no longer subject to market forces.  Economists never anticipated a technological revolution that would bring costs to near zero.

Napster started the trend with music sharing, newspaper and book publishing soon followed.  Popular belief holds that free products entice consumers to purchase higher end goods.  The Internet of Things is an example on steroids and will play out over next few decades.  Billions of sensors now monitor resources, the electricity grid, etc. and are implanted in homes. offices, and vehicles.  Productivity advances could affect 1/2 the global economy by 2025.

Rifkin believes that non-profit organizations will take over the economy.  Emerging collaborative commons will flourish alongside capitalist markets.  Shared access will trump private ownership.  Social media sites allow us to share cars, homes, and goods.  The impact on the labor market is profound with workerless factories, virtual retailing and automated logistics.  The new employment opportunities lie in the collaborative commons via non-profits.

A note on the painting: Liberty Leading the People (French: La Liberté guidant le peuple) is a painting by Eugène Delacroix commemorating the July Revolution of 1830, which toppled King Charles X of France. A woman personifying Liberty leads the people forward over the bodies of the fallen, holding the flag of the French Revolution – the tricolor flag which is still France's flag today – in one hand and brandishing a bayonetted musket with the other. The figure of Liberty is also viewed as a symbol of France and the French Republic known as Marianne.

Did the Times Editor intend to imply that the depletion of the middle class would lead to another revolution ?