With guest host and author of the googlization of everything. This week Jeremy Rifkin end of a zero marginal cost to society. The advisor argues capitalism is on its way out. The combined communications, logistics and internet will lead to its demise by increasing production and effectively eliminating the corporate profits. The program is about an hour. Host Jeremy Rifkin is with us today. Im from the university of virginia and we are going to discuss his newest book the zero marginal cost to society. It is the 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 focus on the current state and perhaps the immediate future state of the u. S. Economy as well so it ranges across so many topics im sure we will have a set of rich discussions. If you could explain the title that is a good way to start the zero marginal cost to society. What do you mean . Guest i think whats happening is we are just beginning to glimpse the outline of the new Economic System and turning onto the world stage, the collaborative comment. This isnt the first Economic System to emerge since capitalism and socialism in the early 19th century so it is a remarkable event with longterm applications for all of us around the world. The agent for the great Economic Transformation is something called zero marginal costs. With me explain there is a paradox in the capitalist market that has been responsible for the Great Success over two centuries. The irony is that is now leading to the ultimate trial for capitalism but that is going to lead to its demise as the primary Economic System in the world. At the capitalist market they are looking for new technologies that can increase the productivity and the marginal cost so they can put a Cheaper Products and went over the consumers in the market share and bring back profits to their investors. Marginal costs are the costs of producing an additional unit of the good or service after the fixed costs are covered. Business people always want to reduce the cost for marginal reasons. They never anticipated the Technology Revolution whose productivity was so extreme that it could actually reduce the marginal costs o cost of producd distributing goods into services making the goods and services essentially or nearly free, abundant and no longer subject to the market forces. That is happening across the global economy. Even though in the medi know ine zero marginal cost phenomena affect the Information Industries over the last ten years devastating entire businesses. First we saw master and young people begin to find ways to create software to create music files bypassing the Recording Industry and didnt pay any royalties and they brought the Recording Industry to its knees. Then the marginal cost phenomena started to affect the newspaper magazine for Publishing Industry and millions of consumers became pro sooners and they began to produce and share their own information with the media, news blogs, people share news together and then of course people started putting out their own books for free and this meant the newspapers went out of business and magazines bellied up, the book Publishing Industry has been devastated and most recently and of course you can speak to this from the University Point of view to open online courses. We now have six or 7 Million Students that are taking these online courses that operated near the zero marginal cost of the best professors in the world as a receiving credit this is enforcing the universities to rethink the business model. So it this phenomena has not been academic. Its devastated the industry. Economists thought there would be a firewall. They thought okay is the zero marginal cost would affect the information goods, but they wouldnt move over from the Virtual World as to the physical world, the brick and mortar in effect turning products and so the firewall wouldnt be breached. Its now being preached because the internet is now expanding to an internet of things. The more expensive internet thats now going to allow us to produce around energy is zero marginal cost. Host that soun sounds in itself. Oxford to many people. The internet to our general way of thinking is about the flow of information and the flow of data. The distributed and done on the control flow of data seems to touch him new and interesting ways. How would this apply to the cars come airplanes, collections of everyday materials that you would buy in walmart . Guest its just beginning to converge with the nascent moment in china and now also beginning to converge in the automated transfer logistics and turn it so they are expanding to the Free InternetCommittee Energy internet, the automated logistics contract created a super internet called the internet of things and these are then placing sensors across the entire Economic System to monitor the flow of data so we have the sense is now conducting the resource flows feeding the data from the production lines, warehouses by Distribution Centers have the sensors on the smart roads that are conducting the grid. We have sensors connecting vehicles and offices. That data coming in across the economies of these Internet Communications, energy, internet and logistics internet is providing a wealth of data about what goes on at any given moment across the economy. By 2030 perhaps 112 yen sensors and i know later on we will talk about the questions of privacy and Data Security so it is exhilarating and frightening at the same time. Theres a lot of possibilities enabled of challenges that what is interesting in the opportunity perspective, millions of the consumers can now do what they did with information goods. They can go up on this expanded internet of things ahead and buying the data coming through on their own and with that coming through the system they can create their own algorithms like google and facebooks today and dramatically increase their own productivity and reduce marginal costs and producing their own energy and three d. Printer products. Its only the first few years to determine this shift in the economy. Can you explain what the word prosumer is . Guest it was 25 or 30 years ago its coming to practice. That is consumers become prosumer and they produce and consume and are shared in their own goods and services. Let me give you an example of how this affects the physical world and turns us from consumers to prosumer. Renewable energy, three d. Products. We now have millions of early adopters in europe who are actually producing their own electricity with solar panels on the roof or Wind Turbines on the property. The technology for harvesting solar and wind into turning it into electricity is still privacy but its not an exponential trend and just like we saw with computer chips in the computer industry we had a twentyyear exponential curve with solar and wind. A solar water costs 1 dollar to produce in 1970. 66 and continues to go down. But even before the fixed costs are paid back in the harvesting technologies, the marginal costs are producing a unit of solar electricity or wind is near zero because its free you just have to capture it. The wind coming up the side of the building is free just have to capture it. There are millions of people that are producing their own electricity they are sharing it with each other and to show you how fast this is moving, china has taken up the plan that i outlined in my last book and i visited the chinese leadership last year and after my visit today announced that 80,000,000,000. 80 billion began to lay out the energy of things so millions of Chinese People could produce their own solar and wind electricity and distribute across china. The u. S. Is putting up 3. 5 billion which is centralized, not distributed over a twentyyear period so europe and china are a head. Host so people are making their own stuff and expressions into their own energy apparent apparently. How are they able to find markets . How are they able to find consumers for their products and how are they able to Work Together collaboratively to forge the new works. Guest this has hit us as a storm and we have hundreds of thousands of small and mediumsized social enterprises that are printing out their own physical products like we used printers fotheseprinters for sog our information bills. So if you are a small three d. Printer, you can go up on the expanded internet of things and download the software to print your product, then you can use the cheap recycled material as your feedstock using the recycled plastic that you can find account of the neighborhood, recycled paper, sand and gravel was being melted down for feedstock and then the you can power your three d. Printer with your own energy from the emerging Energy Internet at least in europe. And then you can take your product and transport it in the future on the logistics internet with electric and fuel vehicles that operate near the zero marginal cost and soon the driver list of vehicles operate at the remote marginal cost. They not only consume their own goods that the surpluses with each other over an emerging and collaborative comment. What has happened here is we are starting to see a debate unfold. And that is its obvious that the zero marginal Cost Effective pretty significant. The question is what kind of Economic System and this is what i think youre getting at is what do we need to envision a world where hundreds of millions of people can produce not only their own information goods but their own energy and the zero marginal cost and Manufacturing Products that would allow them to bypass the markets because he would be beyond profit. But, what kind of system would you need quick study, missed some somewhat befuddled because they believe theres only two ways to organize the economy either private enterprise or the government or some combination in between. Capitalism, socialism, were in europe the social market economy. But economists forget if there is a Third Institution that we rely on audience of people around the world every day to provide an entire array of goods and services that are provided by the market and are not provided by the government and are beyond the profit motive. And we call this the social comment, the Civil Society, the notforprofit sector. Millions of organizations involved in education, healthcare services, assisted living for the elderly, day care centers, sports on the environmental groups, and the economists dont pay much attention to this sector but its a huge sector in terms of revenue. It accounts for 2. 2 trillion in the countries surveyed and its growing faster in the private marketplace. Its growing at a very fast grip, and in the u. S. , canada and the uk is already over 5. 5 of the gdp. Its growing while the Traditional Market is struggling because it is quite interesting. So what i think we are seeing is the emergence of a collaborative comment in the social economy and the marginal cost infrastructure for people who want to share things in a community because it is designed to be distributed, collaborative and its a production that is scalable so it encourages millions of people to bypass the Global Companies, come together directly and produce and share with each other and the women made all of the middlemen of these big Global Companies that mark up the profit margin. So, you mentioned sharing. We are seeing millions of people now moving up. They arent just sharing information goods and Renewable Energy and products. They are sharing cars and homes endquoteclose. We now have millions of people that are sharing their apartments and their homes on this collaborative comment. Now is the zero marginal cost. Theyve really gone and done to the Hotel Industry with a data to the Recording Industry. Once you have the fixed cost in place and you have setup your website, the marginal cost of putting an additional home who wants to lease their property is near zero and if you have a home or apartment and want to rent it out for a short term rental youve already covered the fixed cost and that is your mortgage is being paid, property taxes being paid for the marginal cost of renting out your home to travelers is near zero. So in new york alone last year, they were responsible for eliminating 1 million hotels, because millions of travelers rented out the spaces put up by small apartment owners and homeowners. We now have 800,000 people in the United States sharing cars rather than buying the cars and they would rather have access not ownership so what is happening now is for every car that you share thats 15 cars off the road. Imagine the longterm impact. One of the Biggest Industries in the world. When the millennial generation comes of age that means 14 out of 15. Host but are you sure they are attracted for every car shared and are you sure that is an alien hotel rooms that didnt get occupied and were taken off of the grid rather than merely an expansion of the supplies . Guest that is an interesting point. Much of the supply is when the gdp is growing very slowly we are seeing a shrinking and the growth around the world, so you could take a little bit off the edges of gdp is growing but its a slower and slower rate. In fact what its doing is taking the traditional extremes economy and its moving to the shared economy so it needs with business. It throws off the way that we measure prosperity. We measured gdp as the amount of output of goods and services. And you are building prisons where you are involved in building aircraft for the military or cleaning up the toxic waste in the gdp. When people move to the collaborative process its not gdp whereas if you are sharing a car or a home and there is a zero marginal cost of that is a reduction of gdp. So, it is a completely different measure of economic wealth, so part of the reason that gdp is going down in small part is a collaborative comment that is coming out and people are moving beyond the market economy. Its not measured in gdp. Host you bring us the zero marginal cost and the collaborative comment. If yois your book the zero margl cost to society a prediction or an exercise in advocacy . Guest the Financial Times did a review and they said that the difference between this is what i do is i take a look at the existing trend lines of what is happening now in its trajectory rather than going into the future and coming back. So i think we see this trend line very clearly. Weve experienced in the last ten years the devastation of the newspapers, magazines, but publishing ipublishing at a lote Entertainment Industry from the marginal cost. We are now seeing it clearly in the Renewable Energy in europe and germany where it is 25 and most of the players are consumers and Small Businesses are producing the Green Electricity near zero marginal cost and are just beginning to see the product. Let me say the wildcard is food and water because the price is not going down so even if we are able to reduce and have a potential sustainable abundance of Climate Change is the elephant in the room. Its affecting the water cycle of the planet and we are getting more of the blockbusters prolonged and the more dramatic drop in the summer because of the Climate Change seeing a drop in at the decline in the water availability. So if we cannot tackle the Climate Change and the price of the food and water becomes prohibitive, this ship to the comments would be irrelevant. The bad news is if the internet of things create the Industrial Revolution and allows us to use less resources more efficiently and move to the Renewable Energies and greatly mitigates the Climate Change if we get there quick enough i just dont know if we will get there quick enough. Host you mentioned in the book a couple of times John Maynard Keynes and the prediction in the 1920s of automation and technological advances would of course create fictional job loss and perhaps suffering. But over the long term, we would be so liberated from the drudgery of labor that we would have our creative processes free and live in the world of cultural abundance. Say probably no way of imagining all of the variety of abundance that youve outlined here. And he seemed to say at the end that he was early. Early. He wrote that essay to his grandchildren. Everyone was pretty depressed about the depression and thought that there was a plunge to the bottom happening and he said i know everyone is depressed. And he said you are going to hear a new term called Technology Displacement, technological unemployment. He said this sounds like bad news but in the longrun it is good news because it is going to liberate the race. He said i can imagine in my grandchildrens generation people being able to be liberated from the toils in the jobs in bluecollar and