Economic system

A radical new economic system will emerge from the collapse of capitalism | Sustainable business custodian

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

It is the belief of policy advisor and author Jeremy Rifkin, who argues that the current economic system has been so successful in lowering production costs that it has created the very conditions for the destruction of traditionally vertically integrated society.

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

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

With many manufacturing companies surviving only on very slim margins, they will give in to competition from smaller operators with virtually no fixed cost.

“We are witnessing the final triumph of capitalism followed by its exit from the world stage and the entry of 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 at the beginning of the 19e century, it is therefore a remarkable historic event and it will fundamentally transform our way of life over the next few years, ”says Rifkin. ” It’s already the case ; we just haven’t framed it.

Some industries, such as music and media, have already been disrupted due to the internet’s ability to allow individuals and small groups to compete with the major established players. Meanwhile, the integration of 3D printing and technological advancements in logistics – such as installing billions of smart sensors in supply chains – means this phenomenon is now spreading from the virtual world to the physical world. , explains Rifkin.

Climate change

Creating a new economic system, according to Rifkin, will help alleviate key sustainability challenges, such as climate change and resource scarcity, and ease the pressure on the natural world. This is because it will only need a minimum of energy, materials, labor and capital.

He says few people are aware of the magnitude of the danger facing the human race, especially the increasing levels of precipitation in the atmosphere, which lead to extreme weather conditions.

“Ecosystems cannot catch up with the change in the planet’s water cycle and we are in the sixth model 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 communications, 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 that makes this age unique is that we see them converge to create a super Internet.

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

Rifkin is particularly interested in the upheavals currently shaking the energy sector and points to the millions of small and medium-sized businesses, homeowners and neighborhoods already producing their own green electricity.

The momentum will only accelerate as the price of renewable technologies drops. Rifkin predicts that the cost of energy harvesting will someday 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 that energy internet. You can also use all the big data in this value chain to see how energy is flowing. It is not theoretical. This is just the beginning.

He says that German energy company E.ON has already recognized that the traditional model of a centralized energy company will disappear and is following its advice to become a service provider, finding value in helping others manage their energy flows.

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

Network neutrality: the key to success

While Rifkin believes the economic revolution is likely to be unstoppable, he warns that it could be distorted if countries and businesses succeed in their increasingly intense battle for control of the Internet:

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

But if we are able to maintain network neutrality, that would mean that any consumer who becomes prosumer, with their mobile and their apps, can already start feeding this expansive Internet of Things that is growing.

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 that 40% of the human race would send goods to each other. information of all kinds, they would have said it could not happen.

The paradox of overconsumption

Isn’t Rifkin concerned that the ability to produce goods at such a low price will only put increased pressure on the planet’s finite resources as a growing world population goes into a frenzy? purchase?

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

Millennials already perceive the misconception that the more we accumulate, the more autonomous and free we are. They seem to be more interested in developing networks and integrating into the sharing economy than in consumption for consumption.

The non-profit sector will become dominant

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 refers 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 all rely on every day that provides all kinds of goods and services that have nothing to do with profit or the rights of government and without it we could not live and it is the social common good. There are millions of organizations providing health care, education, ministry 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 an income producer it’s huge and what’s interesting is that it grows 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 true, but says 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 on time, but if there is an alternative plan, I have no idea what it might be. What I do know is that to stay with a vertically integrated system – based on large companies with fossil fuels, nuclear power and centralized telecommunications, with growing unemployment, shrinking GDP and technologies. dying – is not the answer.

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