Don’t Try to Control It
Jeremy Rifkin, the author of the Third Industrial Revolution concept, tells BRICS Business Magazine how companies can profit from the Internet of Things platform and the sharing economy, what danger can potentially come from governments and big corporations, and reveals he is ready to collaborate with Russian authorities.
Why does your concept consist of these three elements – new communication technologies, new energy sources, and new transportation system?
They are crucial. If you look at the major paradigm shifts in history – there’ve been at least seven – that’s the common denominator they share: There is a moment in time when new communication technologies converge with new sources of energy and new modes of transportation. And when it happens, it fundamentally changes the way you manage – that’s the communication, power; that’s the energy and move; that’s transport and logistics. All economic activity is about managing, powering, and moving. I spent some time on it in a number of my books – The Empathic Civilization, The End of Work, The Third Industrial Revolution, The Zero Marginal Cost Society. When you change the communication, energy, and transportation matrix, the new platforms you create change tempo-spatial relationship. They bring more people together, they allow you to create more complex civilizations, more differentiated skills – everything goes with communication, energy, and transport. Those are the basics.
Is your idea of the Third Industrial Revolution mostly about the environment, or is it also an economic paradigm?
It’s an economic paradigm. For sure. That’s exactly what it is: It’s a new economic narrative and a new economic development plan that has been embraced both by the European Union and now China. However, it is also the only plan we know that is possibly able to address climate change in time to hopefully mitigate the worst of what’s coming, because the Third Industrial Revolution paradigm is coming to bring together the communication internet with the digitalized renewable energy internet and a digitalized automated GPS, and soon driverless road, rail, water, and air transport internet. And they come together as a single internet to manage part of economic activity and lie on top of Internet of Things, when we put sensors in all devices and all machines so they can send data back on these three internets.
So let’s say that you are small- or medium-sized company or a cooperative or nonprofit: You can already begin to grow up on this emerging Internet of Things platform, and you can get a transcript picture of all the economic data flowing across society, assuming the platform stays network-neutral and we guarantee privacy, secure data, and prevent cyber crime and cyberterrorism. And if we can do that, that’s going to be the political struggle for the next several generations. But say, you’ve got a small- or medium-sized company, you grew up there on the Internet of Things platform, and you cut your big data out of all the other data. And the rest is just noise. But everywhere there’s a value chain: You’re extracting things from nature, storing them, moving things around, producing goods and services, consuming things, and recycling things, so you can actually cut the data you care about in your value chain out of all the other data, and then use you own analytics to mine the data and create your own algorithms and apps. You can dramatically increase your aggregate efficiency and productivity, reduce your marginal cost at every step of conversion in your value chain. So you can be a better-performing company or nonprofit, and, at the same time, this reduces your ecological footprint. Every step of conversion means we’re using less of the Earth’s energy and materials, and getting more out of it – that’s what aggregate efficiency is. So, if you add a little mobile technology, and you can find your way through the analytics and create algorithms that dramatically increase your aggregate efficiency and productivity, that means you are using less and you’re wasting less. And then, what we do produce in the capitalist market is sharing in the sharing economy – sharing the vehicles, sharing the home, sharing the kids’ toys. And more of us are using less of that resources we produced, and more goes to the economy. And that is, nothing goes to the landfill.
Then, if we use this Third Industrial Revolution platform, for the energy internet, it means everybody is potentially going to be producing their own green electricity. It’s already happening with millions of people producing their own green electricity, solar and wind, at zero marginal cost. And once you have paid the fixed cost, you have been inducing these technologies – solar panels, wind turbines. And those costs are plummeting; the marginal cost is zero. Once you set up a solar panel, the sun doesn’t send you a bill, the wind doesn’t send you a bill, and the geothermal source doesn’t send you a bill. So you’re getting nearly free energy, and it can be collected by everyone at a very small fixed cost, and then shared with each other across energy internets.
I noticed the new Oxfam statistical issue: The wealth of the 62 richest people in the world today equals that of half of humanity. It was 283 people two years ago! It’s so dysfunctional that it’s hard to even grasp at this point. But have you read my books The Third Industrial Revolution and The Zero Marginal Cost Society? They’re all about this. By moving in this platform, we begin to directly engage each other, and we don’t need middlemen
Same with car-sharing. In a car share, you have access rather than ownership, and that eliminates 15 cars for every car shared. That means we can use less of Earth’s resources, share the vehicles, have better mobility, and, when all the vehicles are electric and fuel cell vehicles, they’re operating on zero marginal cost energy. And if they’re 3D-printed – and the first 3D-vehicle is out, the Stratasys – you can use recomposed materials at very low marginal cost. And those vehicles will soon be driverless, so you have no labor cost! It allows us to begin to produce and share goods and services for each other, not in scarcity economy, but in abundance economy. And we do so in a way that stewards the resources of the planet and dramatically lowers the ecological footprint.
Don’t you think it will still not solve the inequality problem because there will be leaders who will take all the profits?
It could. That’s the struggle. I noticed the new Oxfam statistical issue: The wealth of the 62 richest people in the world today equals that of half of humanity. It was 283 people two years ago! It’s so dysfunctional that it’s hard to even grasp at this point. But have you read my books The Third Industrial Revolution and The Zero Marginal Cost Society? They’re all about this. By moving in this platform, we begin to directly engage each other, and we don’t need middlemen. For example, I’m sure you produce and share your own music with people on the web at zero marginal cost, you can do news blogs at zero marginal cost, you can take massive open online college courses with free college credits, or contribute to Wikipedia. Put out e-books. And all of that is because there are platforms being set up, plus connections and apps that allow people to freely engage each other. You don’t have to purchase stuff in a vertically integrated organization: You don’t have to buy the television anymore, you have YouTube videos, you don’t have to buy the CD, you can do your free e-books, you can have your social media news blogs, you don’t have to buy the magazines. So, that’s kind of a democratization of economic life brought up by digitalization and zero marginal cost, and now it’s moving to the physical world – energy, transportation, 3D-printing.
However, we have to understand that governments and corporations want to close these Internet of Things platforms for political and commercial ends. We have to prevent that invasion of privacy and secure data, we have to make sure that our creative content is not sold to a third-party, and that means we have to put in block chains to make sure that we encrypt. So we have to prevent monopolies from trying to close it.
The funny thing about it is that if you try to enclose this Third Industrial Revolution platform, you lose the productivity on it. It is designed – communication, energy, and transport internet – to be open, transparent, distributive, collaborative, and laterally scaled – so the minute you try to control it, you lose it. You lose the productivity gains.
So yeah, I think it’s a real issue; that’s a political struggle, and it isn’t the technology that doesn’t allow us to just get there; it’s enabling for us, and it’s an opportunity. But we have to have a political struggle to make sure it stays network-neutral, open, distributive, collaborative, and open-source.
Your critics often say you are too optimistic, that in reality green technologies are not that promising, they still need a lot of investment…
No, they don’t know what they are talking about. That’s absurd. Someone hasn’t done the homework. The solar and wind have been on the exponential curve for 20 years. The solar watt used to cost $78 to generate in the 1970s. It’s 60 cents today. It’s going to be 38 cents 18 months from now. The fact is, I’ve been involved in designing a plan for Germany, and there are power companies buying long-term contracts with solar and wind right now at four cents a kilowatt-hour. So anyone who tells you that has absolutely no understanding of what’s going on with solar and wind renewables. And all you have to is to look at Germany. I’ve been working with the chancellor of the country – we have 32% of solar and wind energy now in the power grid of Germany at zero marginal cost, and we’re heading to 40% within five years. If the critics are right, then Germany is wrong. And the EU is wrong. And China is wrong. So maybe the critics are right, but I don’t know who they are. Maybe you can tell me who they are?
Just one example: After the lecture you delivered in Moscow at the Open Innovations Forum 2015, a Russian physicist came up to me and said that what you were saying was interesting, but he thought you were exaggerating a little bit because things with renewables didn’t go so smoothly.
Do you know what you have to do? Just ask them to check what’s going on in Germany. They should just look at the German energy transition – the fourth biggest and most powerful economy in the world. Take a look at what we’re doing in the EU and China, and then make a judgment call out of it, okay?
Okay. Then, my last question: You’ve consulted a lot of governments – France, Germany, China, and others. Have you had any contacts with the Russian authorities?
No. Only that one thing that I did in Moscow, and I know the prime minister was there (not President Putin), and he did not come up to say hello, but he was in the front row and I’m sure he heard a little bit of my talk. No, I have no dealings with Russia.
Do you think Russia is ready for that kind of changes?
I have no idea, but we’ll be open for any kind of discussion with them. Absolutely, for sure.