Near zero marginal cost societies and the impact on why we work

As the IoT becomes our working and living environment, energy costs will come closer to zero and community collaboration will be critical.
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A network of people

I have read Jeremy Rifkin's book The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism, which has a strong connection to open organization principles, particularly community building. Rifkin also writes about the future of green energy generation and energy use in logistics. This is the second of three articles in this series. In my previous article, I examined the Collaborative Commons. In this article, I look at its impact on energy production and supply.

Within the next 25 years, Rifkin believes most of our energy for home heating, running appliances, powering businesses, driving vehicles, and operating the whole economy will be nearly free with on-site power solar, wind and geothermal energy generation. This is starting already, through both individual and micropower plants. The payback is around two to eight years.

What would be the best organizational structure to manage nearly free green energy? Furthermore, through an intelligent communication and energy system, an organization could generate business anywhere in the world, and share energy across a continental energy internet. On top of that, it could produce and sell goods at a fraction charged by global manufacturing giants.

The Internet of Things is on the way

According to Rifkin, the Internet of Things (IoT) will connect every machine, business, residence, and vehicle in an intelligent network that consists of not just a communications internet like now, but in the future an energy internet, and a logistics internet. They will all be embedded in a single operating system. Energy use will be completely monitored. Rifkin believes that within 10 years, many smart energy meters will be in use (by 2025). All this investment will reduce at least 10% of the waste in the current industrial system.

All this will be possible with the reduction of costs of sensors and actuators embedded in devices. Radio-frequency identification (RFID) chip prices have fallen by 40% in around 2012-2013. Micro-electromechanical system (MEMS), including gyroscopes, accelerometers, and pressure sensors, have also dropped by 80-90% in price over the past five years (up to 2015 when this book was published).

This will increase device connections, to as many as 1,000 connections on one person's devices, appliances, and facilities. This connection is what young people love, total inclusion in a global virtual public square to share everything. They thrive on transparency, collaboration, and inclusivity with care taken to an appropriate level of privacy. So, you can see, the time is right for the growth of a Collaborative Commons in society.

Exponential curve

Question: Would you accept US $1,000,000 today or US $1.00 that doubled every day for 30 days? (In 30 days it will be US $536,870,912. That is 500 times more). In 31 days, over one billion. Exponential growth is deceptively fast. That is how fast costs are coming down according to Rifkin. This will turn the entire fossil fuel industry investments into stranded assets. We should be planning for the Collaborative Commons using all open organization principles now, as the situation will be ideal for them very soon.

Next, a free energy internet

At this point in time there is free information for learning if you look for it. The next step is free energy (solar, wind, geothermal, biomass, hydro). After initial investments (research, development, deployment), Rifkin forecasts that unit costs will rapidly come down. The information internet and near zero-cost renewables will merge into the energy internet, powering homes, offices, and factories. Ideally, there will be energy that's loaded into buildings and partially stored in the form of hydrogen, distributed over a green-electricity internet, and connected to plug-in, zero-emission transportation. The development of renewable energy establishes a five pillar mechanism that will allow billions of people to share energy at near zero marginal cost in the IoT world

Solar energy

If you start collecting energy from the sun, facilities only need to obtain 00.1% of the sun's energy that reaches the Earth. That would provide six times the energy we now use globally.

SunPower Corporation is one company doing that. It supports making homes energy producers. The price of solar photovoltaic (PV) cells tends to drop by 20% for every doubling of industry capacity. Solar panels are increasing, and their ability to capture more energy per panel is increasing. Expect to see the development of thinner solar panels, and paper thin solar sheets. Eventually there will be solar energy paint and solar energy windows in the future.

When too much energy is generated, it must be sold elsewhere or stored in batteries or used to produce hydrogen. This technology is coming to the market and will dominate it very soon. With these technologies alone, electricity is on the way to have zero marginal cost.

Wind power generation

Wind power has been growing exponentially since the 1990s, and is now nearing fossil fuel and nuclear power generation levels (as of 2015). With the lowering costs of windmill production, installation, and maintenance, wind power is doubling every 2-½ years. With the increase of solar and wind energy sources, governments do not need to subsidize them with tariffs any longer.

Energy Watch Group is tracking this. According to Rifkin geothermal energy, biomass, and wave and tidal power will likely reach their own exponential takeoff stage within the next decade. He believes that all this will happen in the first half of the twenty-first century. If this capacity doubles eight more times, by 2028, 80% of all energy generation will be from these renewables.

The collaborative age will soon be here

With all the above developments, society's working and living environment are changing. According to the collaborative age: "This means ensuring that people can collaborate on tasks without friction. That humans and machines work seamlessly together. And automation — machine to machine collaboration — will be crucial. Those businesses that get these elements right will be able to boost employee satisfaction and attract the best talent. They will reduce costs by automating mundane tasks and by requiring a smaller office footprint. The social impact-focused organizations that Laura Hilliger and Heather Leson write about how it will take advantage of this new age. Download the PDF of their article here: Opening up social impact-focused organizations.

Making the transition

It sounds good, but how do businesses transition from the information age to the collaboration age? One area will be in decentralized production through 3D printing technology (additive manufacturing, not cutting away and creating waste).

Instead of shipping goods, in the future, software will be shipped for many items to be manufactured locally, avoiding all shipping costs and making manufacturing become on-site near where the market need is. Locally, newly developed molten plastics, molten metal, or other feedstock inside a printer will be used for fabrication. This will give one 3D printer the ability to produce tens of thousands of products (like jewelry, airplane parts, and human prostheses).

Centralized manufacturing vs local production which Rifkin projects will come

Rifkin believes lower marketing costs are possible by using the IoT economy and using global internet marketing sites at almost zero marginal cost.

  1. There is little human involvement in the local 3D process (giving the name "infofacture" rather than manufacture. They ship the information required for local manufacturing, like downloading music today. It is just code that you receive.

  2. The code for 3D printing is open source, so people can learn and improve designs, becoming further prosumers in a wide range of items (no intellectual-property protection barriers). This will lead to exponential growth over the next several decades, offering more complicated products at lower prices and near zero marginal cost.

  3. There is great waste with subtraction processes (current manufacturing processes) producing great waste with each process. (1/10 the materials required. This material could be developed from subatomic particles that are available anywhere in the local environment, like recycled glass, fabrics, ceramics, and stainless steel. Composite-fiber concrete could be extruded form-free and be strong enough for building construction walls [probably available in two decades].)

  4. 3D printing processes have fewer moving parts and less spare parts. Therefore, expensive retooling and changeover delays will be less extensive.

  5. Materials will be more durable, recyclable, and less polluting.

  6. Local distributed production, through IoT, will spread globally at an exponential rate with little shipping cost and less use of energy.

Rifkin cites Etsy as an example of this model. You can find things you are interested in, and have them produced locally using their network. They sell the code, and you can have it supplied in your area.

Rifkin feels that in the future, small and medium sized 3D businesses, infofacturing more sophisticated products, will likely cluster in local technology parks to establish an optimum lateral scale (another form of community development). Here are current examples:

  1. RepRap: This is a manufacturing machine that can produce itself and all its parts.

  2. Thingiverse The largest 3D printing community. They share under the General Public Licenses (GPL) and Creative Commons Licenses.

  3. Fab Lab: Open source peer-to-peer learning in manufacturing. It is being provided to local, distant communities in developing countries.

  4. 3D Printed automobiles (Urbee vehicle) is already being tested.

  5. KOR EcoLogic has an urban electric vehicle.

The makers' movement principles

Here are the principles that these ecosystems follow:

  1. They use open source shared software.

  2. They promote a collaborative learning culture.

  3. They believe that it will build a self-sufficient community.

  4. They are committed to sustainable production practices.

The future of work and collaborative commons

When technology replaces workers, capital investments replace labor investments. In 2007, companies used 6 times more computers and software than 20 years before, doubling the amount of capital used per hour of employee work. The robot workforce is on the rise. China, India, Mexico, and other emerging nations are learning that the cheapest workers in the world are not as cheap, efficient, or productive as the information technology, robotics, and artificial intelligence that replaces them.

Going back to Rifkin, the first industrial revolution ended slave and serf labor. The second industrial revolution will dramatically shrink agricultural and craft labor. Rifkin believes the third industrial revolution will be a decline in mass wage labor in the manufacturing, service industries, and salaried professional labor in large parts of the knowledge sector.

Rifkin believes that an abundance, zero marginal cost economy, will change our notion of economic processes. He thinks the old paradigm of owners and workers, sellers and consumers will break down. Consumers will start producing for themselves (and a few others), eliminating their distinction. Prosumers will increasingly be able to produce, consume, and share their own goods and services with one another on the Collaborative Commons at diminishing marginal costs approaching zero, bringing to the fore new ways of organizing economic life beyond the traditional capitalist market mode.

Rifkin forecasts that in the future, greater importance will be placed on the Collaborative Commons and be as important as hard work was in the market economy (one's ability to cooperate and collaborate as opposed to just working hard). The amassing of social capital will become as valued as the accumulation of market capital. Attachment to community and the search for transcendence and meaning comes to define the measure of one's material wealth. All the open organization principles we write about will be exponentially more important in the future.

The IoT will free human beings from the capitalist market economy to pursue nonmaterial shared interests on the Collaborative Commons. Many — but not all — of our basic material needs will be met for nearly free in a near zero marginal cost society. It will be abundance over scarcity.

Prosumer and the entry of the smart economy

Rifkin writes that as capitalist economies step aside in some global commodities, in the Collaborative Commons, sellers and buyers will give way to prosumers, property rights will make room for open source sharing, ownership will be less important than access, markets will be superseded by networks, and the marginal cost of supplying information, generating energy, manufacturing products, and teaching students will become nearly zero.

Internet of energy is on the way

Financing of the IoT will not come from wealthy capitalists and corporate shareholders, but from hundreds of millions of consumers and taxpayers. No one owns the internet. It is only in operation because a set of agreed-upon protocols were established that allows computer networks to communicate with each other. It is a virtual public square for all who pay for a connection to use it. Next comes distributed renewable energies that will be distributed in the same way. Supported by feed-in tariffs and other fund-raising methods, governments will pay for the initial research, but after that fixed investment, the public will be able to connect and use it freely. Once underway, governmental centralized operations will move to distributed ownership. The Electric Power Research Institute (EPRI), is studying how to build a national energy internet over the next 20 years.

This is not just supplying electricity. Every device in every building will be equipped with sensors and software that connect to the IoT, feeding real-time information on electricity use to both the on-site prosumer and the rest of the network. The entire network will know how much electricity is being used by every appliance at any moment — thermostats, washing machines, dishwashers, televisions, hair dryers, toasters, ovens, and refrigerators.

This is not happening in the future, but now. It is not just being considered but being done now. Intwine Energy can supply the above process now. The issue is getting it into the greater global population. A group of young social entrepreneurs are now using social media to mobilize their peers to create, operate and use the energy internet.

A new world of abundance beyond our needs

Rifkin thinks society has to start envisioning an entire different living environment. Imagine a world in which you can just give away things you once had to pay for, or had to sell at a profit. No one charges us for each internet connected phone call. He believes these give-away goods need not be covered by governments, like telecommunication, roads, bridges, public schools or hospitals. They need not be considered totally private property to be sold and bought, either. These goods have to be supplied in communities with rules, responsibilities and joint benefits (information, energy, local production, and online education). Not governed by the markets or governments, but by networked commons because of the tragedy of the commons. It governs and enforces distributed, peer-to-peer, laterally scaled economic activities.

Rifkin feels the Collaborative Commons as a governing body is extremely important. This is where local (project) leadership comes in. The goals, processes, tasks and responsibilities must be successfully executed, after they have been decided and agreed on. Furthermore, "social capital" is a major factor. It must be widely introduced and deepened in quality. Community exchange, interaction and contribution is far more important than selling to distant capital markets. If that is the case, our open organization leadership will be extremely important.

The public square versus private ownership

"The public square at — least before the Internet, is where we communicate, socialize, revel in each other's company, establish communal bonds, and create social capital and trust. These are all indispensable elements for a nurturing community." Historically, Japanese villages were built like that to survive natural, economic and political disasters like earthquakes and typhoons. They put common interests over self-interests. This is what the open organization principle of community is all about.

The right to be included, to have access to one another, which is the right to participate together, is a fundamental right of all. Private property, the right to enclose, own, and exclude is merely a qualified deviation from the norm. For some reason, having massive private property rights have gained in importance in more recent modern times. This will all be reversed in the years ahead according to Rifkin.

Rifkin writes that the world will move to these commons:

  1. Public square commons

  2. Land commons

  3. Virtual commons

  4. Knowledge commons (languages, cultures, human knowledge and wisdom)

  5. Energy Commons

  6. Electromagnetic spectrum commons

  7. Ocean commons

  8. Fresh water commons

  9. Atmosphere commons

  10. Biosphere commons.

The past 200 years of capitalism, the enclosed, privatized, and commodification of the market must be put under review. How would they be most effective in a transparent, non-hierarchical and collaborative culture? It comes down to two views, the capitalist (I own it. It is mine, and you can't use it) and the collaborationist (This is for everyone to use, and there are rules and guidelines to use it, so everyone can get their fair share). Today's cooperatives are good at this, like the International Co-operative Alliance (ICA). Cooperatives have to generate motivation for the greater community good, and that motivation must be greater than any profit motive. That is their challenge but this is not new, as one in seven people on the earth are in some kind of cooperative now.

As I've presented in this article, the IoT will become our working and living environment. Also, energy costs are projected to go to near zero. With those changes, community collaboration and cooperation will become ever more important over hard work. In the last part of this series I will look at Collaborative Commons in logistics and other economic activity.

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Ron McFarland has been working in Japan for over 40 years, and he's spent more than 30 of them in international sales, sales management training, and expanding sales worldwide. He's worked in or been to more than 80 countries.

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