Economic system

A radical new economic system will emerge from the collapse of capitalism | Guardian of sustainable business

At the very moment of its ultimate triumph, capitalism will experience the most exquisite of deaths.

It is the conviction of the political adviser and author Jeremy Rifkinwho argues that the current economic system has been so successful in reducing production costs that it has created the very conditions for the destruction of the traditional system vertically integrated company.

Rifkin, who has advised the European Commission, the European Parliament and heads of state including German Chancellor Angela Merkel, says:

No one in their wildest imagination, including economists and businessmen, ever imagined the possibility of a technological revolution so extreme in its productivity that it could actually reduce marginal costs to near zero. , making the products nearly free, abundant, and absolutely more subject to the market. forces.

With many manufacturing companies surviving on razor-thin margins, they will cave in to competition from smaller operators at virtually no fixed cost.

“We are witnessing the final triumph of capitalism followed by its exit from the world stage and the entry of the collaborative commons,” predicts Rifkin.

The creation of collaborative commons

From the ashes of the current economic system, he believes, will emerge a radical new model fueled by the extraordinary pace of innovation in energy, communications and transportation.

“It is the first new economic system since the advent of capitalism and socialism in the early 19and century, so it’s a remarkable historic event and it’s going to fundamentally transform our way of life over the next few years,” says Rifkin. ” It’s already the case ; we just didn’t frame it.

Certain industries, such as music and media, have already been disrupted by the internet’s ability to let individuals and small groups compete with the big, established players. Meanwhile, the mainstreaming of 3D printing and technological advances in logistics – such as the installation of billions of smart sensors in supply chains – means that this phenomenon is now spreading from the virtual to the physical world. , explains Rifkin.

Climate change

Creating a new economic system, Rifkin argues, will help alleviate key sustainability challenges, such as climate change and resource scarcity, and reduce pressure on the natural world. This is because it will only require minimal energy, materials, labor and capital.

He says few people are aware of the scale of the danger facing the human race, particularly the increasing levels of precipitation in the atmosphere, which are leading to extreme weather.

“Ecosystems cannot catch up with the changing water cycle of the planet and we are in the sixth pattern of extinction,” he warns. “We could lose 70% of our species by the end of this century and jeopardize our ability to survive on this planet.”

Convergence of communication, energy and transport

Every economy in history has counted for its success on the three pillars of communication, energy and transportation, but what Rifkin says makes this era unique is that we see them converging to create a super internet .

While the radical changes in communication are already well known, he asserts that a revolution in transport is upon us. “You will have near zero marginal cost electricity with the likelihood of printing cars within 10 or 15 years,” he says. “Add to that GPS guidance and driverless vehicles and you’ll see the marginal costs of transport on this automated logistics internet drop quite sharply.”

Rifkin takes a particular look at the upheavals currently rocking the energy sector and points to the millions of small and medium businesses, homeowners and neighborhoods that are already generating their own green electricity.

The momentum will only accelerate as the price of renewable technologies falls. Rifkin predicts that the cost of energy harvesting will one day be as cheap as buying a phone:

You can create your own green electricity, then access the emerging energy internet and program your applications to share your surpluses on this energy internet. You can also use all the big data in this value chain to see how the energy is flowing. It’s not theoretical. It is just beginning.

He says German energy company E.ON has already recognized that the traditional centralized energy company model is going to die out and is taking his advice to become a service provider, finding value in helping others manage their flows. of energy.

He urges major companies across industries to follow suit and, rather than resist change, use their impressive scale and organizational capabilities to help bring emerging networks together.

Network neutrality: the key to success

While Rifkin thinks the economic revolution is likely to be unstoppable, he warns that it could be skewed if countries and corporations succeed in stepping up in their battle for control of the internet:

If old industries can monopolize pipes, structure and destroy net neutrality, then you have global monopolies and Big Brother for sure.

But if we are able to maintain net neutrality, that would mean that any consumer who becomes a prosumer, with their mobile and their apps, can already start powering this expanding IoT.

People think it’s on the horizon, but if I had said in 1989, before the advent of the web, that 25 years later we would have democratized communication and 40% of the human race would be sending information goods of all kinds, they would have said it couldn’t happen.

The paradox of overconsumption

Isn’t Rifkin concerned that the ability to produce goods so cheaply will only lead to increased pressure on the planet’s finite resources as a growing world population goes on a frenzy of ‘purchase ?

He believes there is a paradox at work here, that overconsumption results from our fear of scarcity, so it will go away when we know we can have what we want.

Millennials already see through the misconception that the more we accumulate, the more empowered and free we are. They seem to be more interested in developing networks and integrating into the sharing economy than in consumption for consumption’s sake.

The non-profit sector will become preeminent

What about the fear that the end of capitalism will lead to chaos? Rifkin believes the void left by the demise of big business will be filled by the nonprofit sector.

For anyone in doubt, Rifkin points to the hundreds of millions of people who are already involved in a vast network of cooperatives around the world:

There is an institution in our life that we rely on every day that provides all kinds of goods and services that have nothing to do with profit or government rights and without it we could not live and c is the social common good. There are millions of organizations providing health care, education, services to the poor, culture, arts, sports, recreation, and it goes on and on.

This is not taken into account by economists because it creates social capital which is essential to the three internets, but does not create market capital. But as a revenue generator, it’s huge, and what’s interesting is that it’s growing faster than GDP in the private market system.

At the age of 69, Rifkin admits he may not live long enough to see his hope for a better future come to fruition, but says the collaborative commons offer the only viable path to face the challenges of sustainability facing humanity.

“We have a potential new platform to get us where we need to go,” he says. “I don’t know if it’s in time, but if there’s an alternate plan, I have no idea what it could be. What I do know is that staying with a vertically integrated system – based on big corporations with fossil fuels, nuclear power and centralized telecommunications, alongside rising unemployment, shrinking GDP and moribund technologies – is not the answer.

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