Up next on booktv after words with guest host Siva Vaidhyanathan author of the globalization of everything. This week bestselling author Jeremy Rifkin and his latest book the zero cost society. In that the European Union advisor argues that capitalism is on its way out and Communications Energy and listed just ask internet will lead to its demise by increasing production and distribution and effectively eliminating corporate profits. The program is about an hour. Host hello. Jeremy rifkin is with me today. I am Siva Vaidhyanathan from the university of virginia and we are going to discuss his newest book the zero cost society. Its also his 20th book which is quite a feat in and of itself this book takes the entire world as its subject that has a tremendous amount of focused on the current state and perhaps immediate future state of the u. S. Economy as well and so it ranges across so many topics. Im sure we will have a very rich set of discussions that we will link together quite nicely. Jeremy i was hoping you could explain the title. Thats a good way to start. The zero cost society. What do you mean by zero marginal cost . Levee put it into context. I think what is happening is we are just getting a glimpse the outline of a new Economic System entering onto the world stage. The collaborative comments. This is the first Economic System to emergency at hand of capitalism and socialism in the early 19th century so its a remarkable historic event with longterm implications for all of us around the world. The triggering agent for this great Economic Transformation is something called zero marginal cost. Let me explain. Theres a paradox deeply embedded in the heart of the capitalist market which has been responsible for the Great Success of the invisible hand over two centuries. The irony is this paradox is leading to the ultimate triumph of capitalism but that tribe is going to lead to its demise as the primary Economic System of the world and heres the paradox. In a capitalist market for sellers are continually probing for new technologies that can increase productivity reduce their marginal cost so they can put out Cheaper Products win over consumers and market share and bring back profits to their investors. Marginal costs are the cost of producing an additional unit of a good or service after your fixed costs are covered. Business businesspeople have always wanted to reduce marginal cost for obvious reasons. They simply never anticipated a Technology Revolution whose productivity was so extreme that it could actually reduce those marginal cost and produce and distribute goods and service to new zero making goods and services nearly free abundant in no longer subject to market forces. That is what is beginning to happen in a major way across the global economy. You know because of what you teach because you spend all a lot of time in the special media we saw the zero marginal phenomena affect the Information Industries over the last 10 years devastating entire businesses. First we saw nafta and the young people began to find ways to create software to share music files bypassing the capitaliscapitalis t market and Recording Industry. It didnt pay any royalties and it brought the Recording Industry to its knees. Then the zero marginal cost phenomena started to effect the newspaper and Book Publishing industry. Millions of consumers became the proconsumers and begin to produce and share their own knowledge and information. Wikipedia news blogs ,com,com ma people shared news together and of course publishing people started putting up their own ebooks for free and this meant newspapers went out of business. Magazines bellied up. The Book Publishing industry has been devastated by free ebooks and most recently and of course you can speak to this from the University Point of view massive open on line courses. We have six or 7 Million Students that are taking these free on line courses that operated near zero marginal cost top by some of the best professors in the world after receiving credit. This is now forcing universities to rethink their business model. In the last 10 years the zero margin cost phenomena has not been academic. It is devastated an entire industry but economists thought there would be a firewall. They thought okay this zero marginal cost would affect informational goods but it would not move over for the Virtual World to the physical world the brickandmortar world of energy and manufactured products so that firewall would not be breached. It is now being breached because the internet is now is standing to an internet of things a more expansive internet that has now allowed us to produce energy and products is zero marginal cost. Host the idea of the internet of things sounds in itself. Doxil to many people. The internet to our general way of thinking is about the inflow of information and the flow of data a distributed noncontrolled flow of data that seems to touch everybody in new and interesting ways every day and stretches the whole world. How would this apply to cars, two airplanes and two collections of everyday materials that you would buy at walmart . Guest the information internet which we are all very familiar with is just now beginning to converge with the nascent Energy Internet in europe and now in china and also beginning to converge with a fledgling automated logistics internet so the internet is expanding to three internets read the information internet the automated transport and logistics internet and creating one super and in the net called the internet of things. These three internets are then placing sensors across the entire Economic System to monitor the flow of data. We have sensors now connecting resource flows. We have sensors feeding data in from production lines, warehouses and distribution centers. We have centers on smart groves connecting electricity grid so we know what the appliances are doing at any moment. We have sensors connectinconnectin connecting vehicles in offices and stores. That big data coming in across the economy to these Free Internet communication Energy Internet and the distance internet is providing a wealth of data about what goes on at any given moment across the economy. We now have 14 billion sensors out there now and ibm says in 2020, 50 billion sensors and by 2030 perhaps 100 trillion sensors connecting everything with everyone. Later on we will talk about the questions of privacy and Data Security. Its exhilarating and frightening at the same time. Theres a lot of a lot of possibilities in a lot of challenges but whats interesting from the opportunity perspective millions of prosummers can now do this expanded internet of things in mind that the data coming through on their own multiples with their own maps and with that data coming through the system they can use analytics and create their own athletics like google and facebook today and dramatic we increase their own productivity reduce marginal cost in producing their energy and Free Enterprise just like they have now reduced the marginal cost of information goods on the internet. Its just beginning. Its only the first few years but its a tremendous shift in the economy. Host you use the word processor murder. Can you explain what a pro zimmer is . Guest its now coming into practice. Thats consumers and they become prosummers. Prozimmers produce, consume and or share their own goods and services. Let me give you two examples of how the internet affects the physical world and turns us into prosummers. Renewable energy 3d printing. We now have millions and millions of early adopters in europe who are actually producing their own Green Electricity with solar panels on the roof and wind hermits on their property and reducing it at near zero marginal cost. Turning it into electricity is still Little Pricey but its on an exponential curve just like we saw with computer chips in the computer industry. We had a twentyyear exponential curve with solar and wind. A solar lots cost 60 per one lot to produce it. Its 66 cents a watt today and it continues to go down but before they are paid back for the harvesting technologies the marginal cost of producing a unit of solar electricity or wind is near zero. You just have to capture it. The wind coming up the side of your building is free. You just have to capture it. So we have millions of people who are now producing their own Green Electricity at a near zero marginal cost. They are sharing it with each other on the emerging Energy Internet. To show you how fast its moving china has taken up the plan that ive outlined in my last book and now we are working on the new book. I visited the chinese leadership last year and after my visit they announced 80 billiondollar commitment to begin to lay out the Energy Internet of this phase of millions of Chinese People can produce their own solar wind and electricity and distributed across china. Id contrast the u. S. Is putting up 3. 5 billion which is centralized and not distributed. Europe and china are quite far ahead of this. Host people are making their own energy. How are they able to Work Together collaboratively to forage new works and wikipediwikipedi a comes to mind for instance. You good example of his 3d printed arctics in terms of the collaboration. This has hit us as a storm in the last few years. We now have hundreds of thousands and of medium and small sized social enterprises that are putting out their own physical product just like we use printers for software and producing our information goods. If you are a small 3d printer you can go up on the expanded internet of things and Download Free software to print out your product. Then you can use cheap recycled material as your feedstock using recycled plastic which can find around the neighborhood recycled paper and even sand and gravel is being melted down for feedstock and then you can powered your 3d printer with their own Renewable Energy from the emerging Energy Internet. Then you can take your product and transport in the future on the logistics internet with electric and fuel cell operated at zero marginal cost in soon driverless vehicles that operate at low marginal costs of this is an example where everyone can become a prosumer and not only consume their own goods but share their surpluses with each other over an emerging collaborative context. What has happened here is we are starting to see a debate unfold and that is its obvious that this near zero marginal cost effect is pretty significant. The question is what kind of Economic System and this is what i think you are getting at, what kind of Economic System would we need to envision in a world where millions and hundreds of millions of people could not use only not only their own information is zero marginal cost their own energy at zero marginal cost in their own manufacture products at zero marginal cost allowing them to bypass the market so what kind of system would you need . The economists are somewhat befuddling because they believe there are only two ways to organize the economy their private enterprise or the government or some combination in between. Capitalism socialism or if the social market economy. What what economists forget is theres a Third Institution that we rely on all of us millions of people around the world every day to provide an entire array of goods and services that are provided by the market and are provided by the government and are beyond the profit motive. We called this the social context of Civil Society. The notforprofit sector. Millions of organizations involved in Education HealthCare Services assisted living for the Elderly Daycare Center sports environmental groups and the economist dont pay much attention attention to this sector but its a huge sector in terms of revenue. It accounts for 2. 2 trillion in revenue in the 40 countries surveyed and its growing faster than the private marketplace. Its growing at a fast clip and the u. S. Canada and the u. K. Its already over 5. 5 of gdp its growing all the traditional private Enterprise Market is shriveling. Its quite interesting. So what i think we are seeing is the emergence of the collaborative social economy. The trigger for that is a zero marginal cost infrastructure because its like a soulmate. For people who want to share things in the community. The internet of things is designed to be distributed collaborative its peer production and its scale so it encourages millions of people to bypass big Global Companies come together directly in produce and share with each other and eliminate all the middle of these Big Companies to markup the profit margin. You mention sharing. We are seeing millions of people now moving up on this economy. Theyre not just sharing information and Renewable Energy in 3d printer products they are sharing homes. They are sharing clothing. In past weeks even hearing about cloud surfing. We now have millions of people who are sharing their apartments and homes on this collaborative comment. For air bmv at zero or journal cost. Its done to the Hotel Industry what file sharing did to the Recording Industry. Once you have your fixed costs in place and you set up your web site the marginal cost of putting an additional apartment or home on their who wants to lease out their property is near zero. If you have a home or an apartment and want to lease it out for shortterm until you have covered your fixed costs. That is your mortgage is being paid your property taxes are being paid so the marginal cost of renting out your apartment or home is near zero. In new york alone last year air bmv was responsible for eliminating 1 Million Hotel mites and hotels because millions of travelers rented out spaces put up by small homeowners. Car sharing. We now have 800,000 people in United States sharing cars rather than buying cars and where they have access to a car not ownership. For every car you share that takes 15 cars off the road. Imagine the longterm impact of the Auto Industry when the millennial generation comes of age and they are sharing cars paid that means reducing 14 out of 15 cars on the road and that has impacts. s. Host are you sure its zerosum . Are you sure there are a car subtracted or 50 cars subtracted for every car shared and are you sure thats a Million Hotel rooms that didnt get occupy it and were taken off that merely an expansion of the supply . Guest theres a small expansion of supply that much of it is the gdp is growing slowly. We are seeing a shrinking in the growth of gdp around the world say you can take a little bit off the interest there because gdp is growing at a slower and slower rate. In fact what its doing is its taking the traditional changed economy and moving to the shareable economy so that means less business. Interestingly enough it drives the whole way we measure economic prosperity. We measured gdp gdp is the amount of output of goods and services and it doesnt differentiate between negative and positive. Involved in building aircraft for the military all goes to gdp. Here when people move to the collaborative comments the economic wellbeing is increasing but it doesnt count in the gdp. If you are a prosumer in consuming your own products thats not part of the gdp or fewer sharing your car or home at zero marginal cost thats a reduction of gdp. So its a completely different measure of economic wealth. Part of the reason gdp is going down a small part is this collaborative commons is coming up and people are moving beyond the market economy. Its now measured in gdp. Host you bring us all these good ideas zero marginal cost the internet of things the collaborative commons and the general sense of abundance and economy driven by abundance rather than one dripping by measured by scarcity. Is your book the zero Marginal Cost Society a prediction or an exercise in advocacy . Guest i think its looking at the trendlines. The Financial Times did a nice long review of the book a thoughtful review of the Financial Times and they said the difference between us and i take a look at the existing trendlines of what is happening as a trajectory rather than going into the future and coming back. So we see this trendline as great. We have experienced in the last 10 years the devastation of newspapers magazines Book Publishing and a lot of the Entertainment Industry at zero marginal cost. We are now seeing Renewable Energy in europe and places like germany where its 25