"Anyone will be able to access the internet of things and use big data and analytics to develop predictive algorithms that can speed efficiency, dramatically increase productivity and lower the marginal cost of producing and distributing physical things, including energy, products and services, to near zero, just as we now do with information goods."
Saying that the Internet of things will bring the marginal cost of energy prices to near zero because of big data seems like a stretch to me, as well as some amazing buzzword bingo.
It's almost as if that sentence itself were pieced together by some kind of blagosphere-mining machine learning algorithm. I guess that's kind of what writers do?
This is why I feel like farm to plate automation is the core technology that makes the future real. My concern is that people will reject it out of the lack of variety at the start.
I'm not sure what you mean. Are you referring to a specific technology (like Soylent) or just automating the process of growing, harvesting, and distributing food?
How much such automation is left to improve? There may still be room for technology proliferation, but at least for staples it may be about as automated as possible: vegetables automatically picked, cut, frozen, bagged on the spot and shipped directly to retail stores; likewise for grains, milk, frozen meals... there's a bottom line cost to growing 2000 calories of food and shipping it N miles to the consumer, and that cost is NOT going to "approach zero". I dunno how far from that bottom line we are, but suspect we're well within an order of magnitude of it.
I agree that there is a massively high rate of automation already employed in the agricultural sector, however much like the difficulty of high speed internet is focused on the last mile, the last mile for food automation is in cooking and delivery in a palatable, healthy and convenient manner.
To those ends, the logistics of food production are massively intensive and account for most of the food waste worldwide, so shrinking the logistics chain alone would significantly reduce costs and improve quality. I am thinking in this regard about the containerized growing systems that are starting to enter the market.
Eating is trivial; charities can feed people for <$1000 per day. Living space is also cheap; the only reason you need more than a 2m * 1m * 1m horizontal cupboard is a combination of government restrictions and psychological factors which are arguably waning. It's really medical care that's the huge elephant in the room IMO. That's the big problem, and the one I haven't yet seen too many projects try to tackle. I have a feeling it'll come in due time, but it'll take more advanced innovations like chemprinting and nanotechnology to get there.
1. Politics that prevent innovation, i.e. regulation.
2. Disruptive innovations, i.e. innovations that trade quality for cost have negative view by consumers relative to other industries.
Change those ,and tomorrow we can have a serious reduction in costs, and within a decade or two a huge amount of cost reducing innovation.
BTW 1 and 2 can be partially solved by targeting poor countries with disruptive innovations , letting them improve and prove their quality there, and then transfer them to the 1st world.
In theory... We do have the technology to work _a lot_ less if were just to get by.
And when you think about it, it's rather strange that we are still working the same amount of hours as they did in the early 20th century - given the amount technological progress since.
We've reached the first of those points. Theoretical you could survive in a van in an European country on a "basic income" of 600-800 euro's and have a luxurious lifestyle that surpasses most people lifes of 60-70 years ago.
You would have to bend the rules a bit to get that 600-800 euro's but you could also earn it by working 10-20 hours every week.
Despite the comical form, this comment is totally serious. Lawsuits also apply in domains where copyright is not an object (e.g. construction): look at what happened between Uber and the taxi unions.
What's interesting to me is that the real tipping point is when we are able to produce energy easily and cheaply in a virtually unlimited fashion, without relying on scarce resources.
It will accelerate our means to produce virtually anything locally, making the whole chain of production much less vulnerable to disaster. You could build vertical farms driven by technology (eliminating the need for pesticides, or huge land resources) and optimize food production. We'll be able to produce enough of what we need 10x over and with a small ecological foot print.
It's really interesting the things that become possible and economically viable once you have virtually unlimited energy. If there is one reason to keep living and be excited it is to see that day. It will be monumental. It will be bigger than the printing press or the electrical grid and maybe even the advent of the computer.
With unlimited, cheap energy, just imagine what we'll be able to do. Just imagine what the human race has been able to do in the 19th and 20th century with the advent of factories and machines. We built amazing tunnels, skyscrapers and road networks.
Imagine what we could in a different context, with different objectives. What if cleaning up the environment and creating beautiful buildings, parks and infrastructure again became the equivalent of what used to spur the economy on in the 19th and 20th century.
The cool thing is it could potentially happen in the next 30 years. There are so many different promising energy production technologies being worked on right now. It is only a matter of time.
Maybe not transformative if you are talking about just replacing the cost of what is used now, but if energy is extremely cheap we will actually use more of it.
For example: Tired of landfills? Recycle everything! Tired of plowing your driveway, heat it! Tired of polluted air? Break water down into pure air for your house! etc
Just a number check: eight percent of the US GDP is well over a trillion dollars. That is, over $1e12, or more easily understood as over $1,000,000,000,000.
I think the trick here is a lot of energy is consumed by heavy industry. An single line in a plant can consume megawatts of power, and refining processes are flat out extravagant in consumption. If this energy was conserved or near free, we would see those savings passed onto lowered cost of goods or in process improvements/expansions. I think that's likely qualitatively different from just the Fed pumping cash into the system, and the impact would be impressive.
I think you're vastly underestimating what it means to have (virtually) unlimited energy. Things that we are not doing now because it's not economically viable, become viable. Water filtration for drinkable water is huge and also happens to be one of the main problems in the world. That problem becomes more approachable when you have an excess of energy at your disposal.
Recycling materials is also heavily constrained by energy costs. With so much energy available you can employ recycling techniques that are not viable right now and/or do it at a larger scale.
There are also huge reductions possible when you have abundant energy. Take out costs associated with driving your car, or the cost of cleaning up ongoing pollution, or the costs of extracting energy from scarce resources. Those could all be dramatically reduced once abundant energy becomes a reality.
It will be impactful for people who are not rich (99% of the planet), not having to pay huge chunks of income for energy. After rent costs, the biggest part of my living costs come from energy production (elec, gas, water etc).
Abundant energy also makes a more distributed form of general production more viable. The more communities become self reliant, the less vulnerable the world becomes to localized disasters (political and environmental) and the stronger our ability to help out communities that are suffering. All the costs we are making (money & environmental) for the purpose of transporting goods and resources around the world can be scaled back.
Think about this for a minute, if you have access to cheap abundant energy, you have some source of water and the technology to filter it than you have all the basic necessities to supply basic survival needs to a community. That is huge.
The processes you describe may be energy intensive, but the systems which surround said processes - and the design required to deploy them - are intensive in man hours. Labor is of course a far larger portion of GDP, and lowering the cost of labor would of course have a far more dramatic impact on our lives than would lowering the cost of energy. Prof Hanson has written on this subject if you care to read a more comprehensive academic take on it.
In summation, much of the focus people place upon lowering the cost of energy is misplaced and quite silly when one stops to think about it in an unbiased manner.
Complementing cheap energy is efficient use thereof. A smartphone today can practically be run off solar energy, where such computing power used to darn near require its own major power plant. "3D printed buildings" will construct architecture with much less energy than current building techniques, which in turn are made with much less energy than past all-human-powered construction. There's a baseline of how much energy we each need (lifting building elements into place, caloric food needs, BTUs for thermal comfort in a given enclosed space), with a baseline of what energy is available (1KW/hr per m^2, plus whatever stored energy is available in wood & fossil & nuclear fuels); while there are upper and lower limits, we can use what's available to more efficiently transition one to the other.
There's a fundamental difference between goods and services composed of bits, and those composed of other forms of energy and matter. The marginal cost of many physical goods will never be zero. At least not until we have limitless amounts of energy to recompose molecules as we wish. I think that's a long way off.
What Rifkin isn't really analyzing is the role of free. Why do people provide free goods and services? It's usually for the same reason grocery stores and heroine dealers do: to let you test the merchandise, so they can make money if you want more. "Free" is simply a way to lower the friction points for consumers, and draw public attention.
If it reads 'Capitalism is making way for basic income' it would have make sense. Not that way. Freemium is often paving the way for even more agressive capitalsim by crowding out competitors to raise prices afterwards.
"Marx never asked what might happen if intense global competition some time in the future forced entrepreneurs to introduce ever more efficient technologies, accelerating productivity to the point where the marginal cost of production approached zero, making goods and services "priceless" and potentially free, putting an end to profit and rendering the market exchange economy obsolete."
Uh, Marx did ask that question. It's called the tendency of the rate of profit to fall.
The problem with increased productivity and lower marginal costs is that labor, too, becomes less and less valuable. Supply of labor goes up; demand of labor goes down. People are more easily exploited.
"Summers and DeLong focused their presentation on the new communication technologies that were already reducing the marginal (per-unit) cost of producing and sending information goods to near zero."
Yes, sending an email can be free.
But the infrastructure for the Internet? The article really ignored how many tax payer dollars went into different public institutions to make the Internet a reality, e.g. Big Government and universities.
>The article really ignored how many tax payer dollars went into different public institutions to make the Internet a reality"
Which is why their analysis focuses on the marginal cost, which is the cost of producing the next unit (or sending the next piece of information electronically). Even if you amortize infrastructure costs over each piece of information sent, the costs are on their way to near-zero.
"with information goods the social marginal cost of distribution is close to zero ... If information goods are to be distributed at their marginal cost of production – zero – they cannot be created and produced by entrepreneurial firms that use revenues obtained from sales to consumers to cover their [fixed set-up] costs … [companies] must be able to anticipate selling their products at a profit to someone."
1/N > 0 for N = (1,∞)
There is a very significant difference between a cost of distribution close to zero vs actually zero. So long as revenue costs are above zero, entrepreneurial firms can find a way to profit enough for food, clothing, and shelter.
There is a basic cost to survival (food/clothing/shelter/healthcare is not, and never will be, free), requiring everyone contribute something which another will consider valuable enough to exchange their work for. Confiscation of "excess" fails as it disincentives increased productivity. So long as people have a motive to either elicit value from their environment, or persuade others to trade that value in a mutually beneficial manner, capitalism will ensure enough productivity to provide for all ... and as marginal costs decrease towards (but not reach!) zero, incentive is there to accelerate productivity to match.
I don't understand why companies won't simply ignore his suggestion that they can't do what he says they can't, and use revenues obtained from sales to cover their fixed costs. The fact that their marginal cost is zero has precisely no relevance; they've spent money making whatever it is they've made, and they need it made back. And the burden of paying for all of this will fall on the customer, just as it does today.
As an example, consider some top-selling video game on the iOS app store. The $100/year fee for the development licence isn't nothing, but compared to the cost of the staff and their equipment, it really might as well be. And yet it's perfectly possible for these things to make money, and in the cases they don't, the zero marginal cost thing has absolutely nothing to do with it. In fact the zero marginal cost is a major draw, for exactly the reasons I give in my first paragraph.
This seems like some an obvious rebuttal that I can only imagine I've missed something...
I've been wracking my brain trying to understand the article. Yes, "just take the limit" was my initial reaction too. But I think (maybe) the author is further arguing that the race to the bottom will squeeze the bottom line, which will suffocate competition until only the strongest remains. At this point, the market is a monopoly (which we all know is the root of all evil).
Incidentally, diminoten points out that replication is free, rather than production. The industries undergoing the cost squeeze which the article specifically mentions (knowledge, news and entertainment) are in the replication business. Therefore, leveraging marginal costs is literally their business model. But I expect the cost of creation will remain more or less constant. In other businesses like manufacturing, this is equivalent to economies of scale, except manufacturing produces the first copy and replicates subsequent copies. So while music corporations might eventually go totally bankrupt, musicians will continue producing music while uploading for free, and I expect manufacturing will continue manufacturing widgets (even if it comes down to a monopoly).
Rifkin has been pushing these ideas (basically advancing technology will require his preferred political positions) for 20+ years (see "End of Work" (1995)). He just updates the buzzwords and publishes it as a new book (see "The Age of Access" (2000) and "The Zero Marginal Cost Society" (2014)). As usual there are a few grains of truth (jobs replaced by technology, drastically lower costs for some products) but it is mostly just well known falsehoods (lump of labor fallacy). In the end you will know less after listening to Rifkin's arguments.
Well robotics will make about anything possible as time and tedium will be removed as barriers. In a society where supply is merely a result of time there won't be much to want or steal. At least if your in that first world part of the world.
Yeah there are costs involved in setting it all up, but with robotics it comes down to material access to build with. The nice thing about robotics is you can put them into inhospitable areas for about, well forever.
I fully expect there will be a generation not too far off whose primary source of work is creating things just because and not for whom. Oh sure there will be people who do and do for others, but it won't be a real requirement. Just like a small number of people get the real work done in most work environments so will society migrate too.
The fun thing is Rifkin has also sometimes been a doomsayer – especially with regard to genetic biotech or global energy. I think in his career he's aiming more for "say thought-provoking things" than "be substantially correct in retrospect". That can be OK!
What about innovation and quality? Let's assume that digital technologies finally make entertainment essentially free. Who will make the good movies? Do we have lower quality entertainment since it started becoming increasingly cheaper? It would be interesting to see studies on that.
Now suppose an analogous situation occurs with food, energy etc. Does this mean we will eventually end up eating pizza every day?
> Over the past decade millions of consumers have become prosumers, producing and sharing music, videos, news, and knowledge at near-zero marginal cost and nearly for free, shrinking revenues in the music, newspaper and book-publishing industries.
No, these things aren't produced for "free". They're replicated for "free". Huge difference.
The first cancer vaccine will "cost" trillions of spent research dollars. The second one? Probably a few cents, if that.
Let's not, especially on this site, forget about how important investors are.
I don't think that's what they are talking about. I think they are talking about how fast things are getting cheaper to design, including, eventually, vaccines.
What's most troublesome is statements like this, typical of the guardian:
"A new economic paradigm – the collaborative commons – has leaped onto the world stage as a powerful challenger to the capitalist market."
Whereas capitalism as a philosophy is about individual rights and private property, this "new collaborative economy" stinks of failed historical experiments.
This is overblown. We still need food, we still need heavy engineering, we still need nanotech. Yes, there are some simple things that can be manufactured differently to how they had been in the past, but even those are still not free. The printers are not free, their consumables are not free and they can't produce more than a small fraction of the things we currently buy.
I think this tech will be revolutionary, don't get me wrong, but I don't think everything is going to be free nor do I think capitalism is going anywhere fast (at least, not on account of 3d printers!)
The most realistic case of something close to this scenario happening, is that virtual reality will greatly improve and people will prefer to mostly live there.
And in virtual reality ,marginal cost does go to zero.
Unfortunately since the US chose to go with Friedman/supply side economics since about the 80s, we're in a race to the bottom. Lower production costs used to equate to increased consumption, but that didn’t account for finite resources. If we factor in externalities like pollution, the value being produced in the world has been constant for quite some time, maybe as far back as the 80s also. And worse, a whole slew of markets like oil/fishing/timber/mining are in decline. So we’re in this bizarre situation of everything being destroyed, but hey, prices are cheaper than ever. Too bad incomes are in decline too so nobody can afford to buy anything anyway.
Contrast this with Keynesian/demand side economics that countries like Germany and Finland have adopted, where one of the top priorities is per-capita income. In Germany, 50% of a company’s board must be made up of labor, and during downturns the government pays people to go on furloughs while they are still employed (to maintain demand by propping up buying power) . And in Finland, they redistribute the North Sea oil money back into the economy (I realize this is not sustainable, I’m just saying that it’s arguably better than what the US does). Education, maternity leave, healthcare, pretty much everything that contributes to a higher quality of life is given priority over profit. They’ve been at it so long that their customer base is huge and companies are able to invest in long term planning and research. Jobs are plentiful, one can’t hardly even get fired, and the middle class is huge.
Regardless of political ideology, if we look out 10, 20, 30 years, it’s pretty obvious that natural resources are going to go into the toilet and more and more work is going to be done by machines. Communism was able to absorb that by forcing everyone to work unproductive jobs. Socialism seems to be able to absorb it to some degree by focussing on people first. But capitalism.. I don’t know. It’s the economic form of darwinism. If it’s going to survive into the future then I think it’s going to evolve into something unrecognizable. To me it looks like there are two extremes: a Star Trek economy with guaranteed basic incomes or a new gilded age where perhaps 1000 people own all of the wealth on the planet and people’s labor/personal profit is on an ever declining trajectory.
"it’s pretty obvious that natural resources are going to go into the toilet and more and more work is going to be done by machines"
These seem to be contradictory. If natural resources are going to go into the toilet, wouldn't intensive labor be more necessary? What are you using to power and build the machines?
Hmmm I see what you mean, I was thinking about robots made of steel, running on electricity with some efficiency greater than humans. Sort of like the used car bodies getting crushed in dumps, like we have basically unlimited amounts of iron and whatever remaining fossil fuels would go to run industry instead of feeding people. And then one mechanic could maintain dozens or hundreds of machines and multiply his or her productivity many times.
But you bring up a good point, about how if natural resources are in decline, we may be headed back to an agrarian society (which incidentally is not productive enough to feed more than about 1 or 2 billion people, so most of the world would starve). To me, a future in which people are still engaged in manual labor is one where technology has stopped improving or even failed.
For example, I’m shocked that people still pick crops by hand. Some of that is propped up by immigration laws and being able to pay farm workers below minimum wage. Otherwise someone surely would have automated it by now. But then, I could say the same thing about almost any manual labor (somewhere along the line, the dignity of manual labor and the compensation we pay for it diverged, so almost all of it pays less now than we think it does, and is declining).
> And in Finland, they redistribute the North Sea oil money back into the economy
Finland doesn't border the North Sea, nor does it produce a drop of oil from anywhere else. I'm not quite sure which country you were thinking of there -- Norway quite explicitly doesn't pump the oil money into the local economy but runs a giant fund that invests the proceeds elsewhere, to be used once the oil runs out.
It's also completely absurd to claim that Germany and Finland are somehow optimizing for per-capita income (wtf?), or that profit is the last priority, or that jobs are plentiful, or that one can't even get fired, etc. You appear to have built up some idealized version of Europe that has little to do with reality.
I stand corrected, it's Norway that has the North Sea oil money, not Finland.
But Germany does have the policy I mentioned, that inject money directly into employees' pockets during downturns rather than firing them, it's called Kurzarbeit:
"the most basic condition for economic efficiency: [is] that price equal marginal cost"
Huh? I would think that economic efficiency is when something that is hugely desired gets delivered, meaning that price would be way higher than marginal cost.
It seems to me that capitalism is struggling because of a lack of technological progress, not because of a surplus of it. There really haven't been any major breakthroughs for a while for improving access to energy or materials. Manufacturing is if anything degrading; the new hotness is finding people to work cheap. That's probably because robotics has been stagnant for too long. Food production is more or less a fight to stay even.
This is an age of improvements in computing/communications. That is eventually going to help other areas but for now people seem to be determined to stop that from happening...
57 comments
[ 4.8 ms ] story [ 127 ms ] threadSaying that the Internet of things will bring the marginal cost of energy prices to near zero because of big data seems like a stretch to me, as well as some amazing buzzword bingo.
I'm not sure what you mean. Are you referring to a specific technology (like Soylent) or just automating the process of growing, harvesting, and distributing food?
To those ends, the logistics of food production are massively intensive and account for most of the food waste worldwide, so shrinking the logistics chain alone would significantly reduce costs and improve quality. I am thinking in this regard about the containerized growing systems that are starting to enter the market.
1. Politics that prevent innovation, i.e. regulation.
2. Disruptive innovations, i.e. innovations that trade quality for cost have negative view by consumers relative to other industries.
Change those ,and tomorrow we can have a serious reduction in costs, and within a decade or two a huge amount of cost reducing innovation.
BTW 1 and 2 can be partially solved by targeting poor countries with disruptive innovations , letting them improve and prove their quality there, and then transfer them to the 1st world.
And when you think about it, it's rather strange that we are still working the same amount of hours as they did in the early 20th century - given the amount technological progress since.
You would have to bend the rules a bit to get that 600-800 euro's but you could also earn it by working 10-20 hours every week.
It will accelerate our means to produce virtually anything locally, making the whole chain of production much less vulnerable to disaster. You could build vertical farms driven by technology (eliminating the need for pesticides, or huge land resources) and optimize food production. We'll be able to produce enough of what we need 10x over and with a small ecological foot print.
It's really interesting the things that become possible and economically viable once you have virtually unlimited energy. If there is one reason to keep living and be excited it is to see that day. It will be monumental. It will be bigger than the printing press or the electrical grid and maybe even the advent of the computer.
With unlimited, cheap energy, just imagine what we'll be able to do. Just imagine what the human race has been able to do in the 19th and 20th century with the advent of factories and machines. We built amazing tunnels, skyscrapers and road networks.
Imagine what we could in a different context, with different objectives. What if cleaning up the environment and creating beautiful buildings, parks and infrastructure again became the equivalent of what used to spur the economy on in the 19th and 20th century.
The cool thing is it could potentially happen in the next 30 years. There are so many different promising energy production technologies being worked on right now. It is only a matter of time.
Cheap(er) abundant(er) energy would be great but not transformative.
For example: Tired of landfills? Recycle everything! Tired of plowing your driveway, heat it! Tired of polluted air? Break water down into pure air for your house! etc
I think the trick here is a lot of energy is consumed by heavy industry. An single line in a plant can consume megawatts of power, and refining processes are flat out extravagant in consumption. If this energy was conserved or near free, we would see those savings passed onto lowered cost of goods or in process improvements/expansions. I think that's likely qualitatively different from just the Fed pumping cash into the system, and the impact would be impressive.
Recycling materials is also heavily constrained by energy costs. With so much energy available you can employ recycling techniques that are not viable right now and/or do it at a larger scale.
There are also huge reductions possible when you have abundant energy. Take out costs associated with driving your car, or the cost of cleaning up ongoing pollution, or the costs of extracting energy from scarce resources. Those could all be dramatically reduced once abundant energy becomes a reality.
It will be impactful for people who are not rich (99% of the planet), not having to pay huge chunks of income for energy. After rent costs, the biggest part of my living costs come from energy production (elec, gas, water etc).
Abundant energy also makes a more distributed form of general production more viable. The more communities become self reliant, the less vulnerable the world becomes to localized disasters (political and environmental) and the stronger our ability to help out communities that are suffering. All the costs we are making (money & environmental) for the purpose of transporting goods and resources around the world can be scaled back.
Think about this for a minute, if you have access to cheap abundant energy, you have some source of water and the technology to filter it than you have all the basic necessities to supply basic survival needs to a community. That is huge.
The processes you describe may be energy intensive, but the systems which surround said processes - and the design required to deploy them - are intensive in man hours. Labor is of course a far larger portion of GDP, and lowering the cost of labor would of course have a far more dramatic impact on our lives than would lowering the cost of energy. Prof Hanson has written on this subject if you care to read a more comprehensive academic take on it.
In summation, much of the focus people place upon lowering the cost of energy is misplaced and quite silly when one stops to think about it in an unbiased manner.
What Rifkin isn't really analyzing is the role of free. Why do people provide free goods and services? It's usually for the same reason grocery stores and heroine dealers do: to let you test the merchandise, so they can make money if you want more. "Free" is simply a way to lower the friction points for consumers, and draw public attention.
Uh, Marx did ask that question. It's called the tendency of the rate of profit to fall.
The problem with increased productivity and lower marginal costs is that labor, too, becomes less and less valuable. Supply of labor goes up; demand of labor goes down. People are more easily exploited.
Yes, sending an email can be free.
But the infrastructure for the Internet? The article really ignored how many tax payer dollars went into different public institutions to make the Internet a reality, e.g. Big Government and universities.
Which is why their analysis focuses on the marginal cost, which is the cost of producing the next unit (or sending the next piece of information electronically). Even if you amortize infrastructure costs over each piece of information sent, the costs are on their way to near-zero.
1/N > 0 for N = (1,∞)
There is a very significant difference between a cost of distribution close to zero vs actually zero. So long as revenue costs are above zero, entrepreneurial firms can find a way to profit enough for food, clothing, and shelter.
There is a basic cost to survival (food/clothing/shelter/healthcare is not, and never will be, free), requiring everyone contribute something which another will consider valuable enough to exchange their work for. Confiscation of "excess" fails as it disincentives increased productivity. So long as people have a motive to either elicit value from their environment, or persuade others to trade that value in a mutually beneficial manner, capitalism will ensure enough productivity to provide for all ... and as marginal costs decrease towards (but not reach!) zero, incentive is there to accelerate productivity to match.
As an example, consider some top-selling video game on the iOS app store. The $100/year fee for the development licence isn't nothing, but compared to the cost of the staff and their equipment, it really might as well be. And yet it's perfectly possible for these things to make money, and in the cases they don't, the zero marginal cost thing has absolutely nothing to do with it. In fact the zero marginal cost is a major draw, for exactly the reasons I give in my first paragraph.
This seems like some an obvious rebuttal that I can only imagine I've missed something...
(Another article from this chap reached the front page a couple of weeks ago - see https://news.ycombinator.com/item?id=7406894 - basically the same thing.)
Incidentally, diminoten points out that replication is free, rather than production. The industries undergoing the cost squeeze which the article specifically mentions (knowledge, news and entertainment) are in the replication business. Therefore, leveraging marginal costs is literally their business model. But I expect the cost of creation will remain more or less constant. In other businesses like manufacturing, this is equivalent to economies of scale, except manufacturing produces the first copy and replicates subsequent copies. So while music corporations might eventually go totally bankrupt, musicians will continue producing music while uploading for free, and I expect manufacturing will continue manufacturing widgets (even if it comes down to a monopoly).
Yeah there are costs involved in setting it all up, but with robotics it comes down to material access to build with. The nice thing about robotics is you can put them into inhospitable areas for about, well forever.
I fully expect there will be a generation not too far off whose primary source of work is creating things just because and not for whom. Oh sure there will be people who do and do for others, but it won't be a real requirement. Just like a small number of people get the real work done in most work environments so will society migrate too.
Now suppose an analogous situation occurs with food, energy etc. Does this mean we will eventually end up eating pizza every day?
No, these things aren't produced for "free". They're replicated for "free". Huge difference.
The first cancer vaccine will "cost" trillions of spent research dollars. The second one? Probably a few cents, if that.
Let's not, especially on this site, forget about how important investors are.
"A new economic paradigm – the collaborative commons – has leaped onto the world stage as a powerful challenger to the capitalist market."
Whereas capitalism as a philosophy is about individual rights and private property, this "new collaborative economy" stinks of failed historical experiments.
I think this tech will be revolutionary, don't get me wrong, but I don't think everything is going to be free nor do I think capitalism is going anywhere fast (at least, not on account of 3d printers!)
And in virtual reality ,marginal cost does go to zero.
Contrast this with Keynesian/demand side economics that countries like Germany and Finland have adopted, where one of the top priorities is per-capita income. In Germany, 50% of a company’s board must be made up of labor, and during downturns the government pays people to go on furloughs while they are still employed (to maintain demand by propping up buying power) . And in Finland, they redistribute the North Sea oil money back into the economy (I realize this is not sustainable, I’m just saying that it’s arguably better than what the US does). Education, maternity leave, healthcare, pretty much everything that contributes to a higher quality of life is given priority over profit. They’ve been at it so long that their customer base is huge and companies are able to invest in long term planning and research. Jobs are plentiful, one can’t hardly even get fired, and the middle class is huge.
Regardless of political ideology, if we look out 10, 20, 30 years, it’s pretty obvious that natural resources are going to go into the toilet and more and more work is going to be done by machines. Communism was able to absorb that by forcing everyone to work unproductive jobs. Socialism seems to be able to absorb it to some degree by focussing on people first. But capitalism.. I don’t know. It’s the economic form of darwinism. If it’s going to survive into the future then I think it’s going to evolve into something unrecognizable. To me it looks like there are two extremes: a Star Trek economy with guaranteed basic incomes or a new gilded age where perhaps 1000 people own all of the wealth on the planet and people’s labor/personal profit is on an ever declining trajectory.
These seem to be contradictory. If natural resources are going to go into the toilet, wouldn't intensive labor be more necessary? What are you using to power and build the machines?
But you bring up a good point, about how if natural resources are in decline, we may be headed back to an agrarian society (which incidentally is not productive enough to feed more than about 1 or 2 billion people, so most of the world would starve). To me, a future in which people are still engaged in manual labor is one where technology has stopped improving or even failed.
For example, I’m shocked that people still pick crops by hand. Some of that is propped up by immigration laws and being able to pay farm workers below minimum wage. Otherwise someone surely would have automated it by now. But then, I could say the same thing about almost any manual labor (somewhere along the line, the dignity of manual labor and the compensation we pay for it diverged, so almost all of it pays less now than we think it does, and is declining).
Finland doesn't border the North Sea, nor does it produce a drop of oil from anywhere else. I'm not quite sure which country you were thinking of there -- Norway quite explicitly doesn't pump the oil money into the local economy but runs a giant fund that invests the proceeds elsewhere, to be used once the oil runs out.
It's also completely absurd to claim that Germany and Finland are somehow optimizing for per-capita income (wtf?), or that profit is the last priority, or that jobs are plentiful, or that one can't even get fired, etc. You appear to have built up some idealized version of Europe that has little to do with reality.
But Germany does have the policy I mentioned, that inject money directly into employees' pockets during downturns rather than firing them, it's called Kurzarbeit:
http://www.aei.org/article/economics/fiscal-policy/us-should...
Huh? I would think that economic efficiency is when something that is hugely desired gets delivered, meaning that price would be way higher than marginal cost.
This is an age of improvements in computing/communications. That is eventually going to help other areas but for now people seem to be determined to stop that from happening...