Zero Marginal Cost – the end of capitalism or its rebirth

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Is The Zero Marginal Cost Society The End Of Capitalism… Or A Way To Fix Capitalism?
[Via Techdirt]

As regular readers here on Techdirt will know, I’ve been talking about the importance of understanding what happens to economic equations when the marginal cost of something is zero for over 15 years already. It’s a very common theme around here. One of my complaints has been that those who came out of an economic world viewpoint in which economics is entirely about dealing with the efficient allocation of scarce resources, tend to fall into a weird intellectual black hole when they try to put a zero in the equation. But I’ve long argued that this is the wrong way to look at things. The basic equations still work fine, it’s just that you have to recognize the flip side of zero is infinity. When you have a zero marginal cost item, you are creating an infinite good — a resource that can never run out. When you begin to realize that you have a new form of resources — inputs in economic terms — suddenly you realize that you’re massively expanding the pie, allowing incredible new things to be created from that limitless pool of resources. That’s powerful stuff.

So, as you can imagine, I was excited when the publisher of Jeremy Rifkin’s new book, The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism, reached out to send me a promo copy a few weeks ago. I am only halfway through it, so I’ll probably write more about it when it’s done, and there’s an awful lot of really interesting examples and profound thinking going on. So I’m really enjoying the basic part of it. However, there’s one aspect of the book that I have trouble with, and it’s exemplified in Rifkin’s op-ed in the NY Times a few weeks ago, called The Rise of Anti-Capitalism. You can probably already suspect the problem I’m seeing, based on the title. The explanation of zero marginal cost and how more and more of our economy is heading there is spot on. And, as we’ve been noting for over a decade as well, this goes way, way beyond just “content” like music and movies. It’s going to impact nearly every important industry in our lives:

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Nice discussion. The endeavors that are most disruptive right now, as marginal cost begins to move to zero, are those that enhance social activities and collaborative needs.

And most are acting in very capitalistic ways. But in ways that mirror more closely just what Adam Smith hypothesized in Wealth of Nations than we have grown used to calling capitalism today.

Add in increased resources from space and things will change a lot.