PRESENTER: Welcome, everybody.
Today's author Google
guest is Jeremy Rifkin.
The book is titled "Zero
Marginal Cost Society:
The Internet of Things,
the Collaborative Commons,
and the Eclipse of Capitalism."
Jeremy is the
best-selling author
of 19 books on the impact of
scientific and technological
changes.
His books have been translated
into more than 35 languages,
and are used in hundreds of
universities, corporations,
and government agencies
around the world.
In 2001, Jeremy Rifkin published
the New York Times bestseller,
"The Third Industrial
Revolution."
Presented in this
book, his vision
of a sustainable
post-carbon economic era
has been endorsed by the
European Union and the United
Nations, and embraced by
world leaders-- including
chancellor Angela
Merkel of Germany,
president Francois
Hollande of France,
and premiere Li
Keqiang of China.
Rifkin's other
recent titles include
"The Empathic of Civilization:
the Age of Excess,"
"The End of Work," "The European
Dream," "The Biotech Century,"
and "The Hydrogen Economy."
Jeremy Rifkin has been an
advisor to the European Union
for the past decade.
He also served as an advisor
to President Nicolas Sarkozy
of France, chancellor
Angela Merkel of Germany,
prime minister Jose
Socrates of Portugal,
prime minister Jose Luis
Rodriguez Zapatero of Spain,
and prime minister
Janez Jansa of Slovania,
during their respective
European Council presidencies.
Mr. Rifkin is the
principal architect
of the European Union's Third
Industrial Revolution Long-Term
Economic Sustainability plan
to address the triple challenge
of the global economic crisis,
energy security, and climate
change.
The Third Industrial Revolution
was formally endorsed
by the European
Parliament in 2007,
and is now being implemented
by various agencies
within the European Commission,
as well as in the 27 member
states.
Jeremy Rifkin is the president
of the TIR Consulting Group,
comprised of many of the
leading renewable energy
companies, electricity
transmission
companies, construction
companies, architectural firms,
IT and electronics companies,
and transport and logistics
companies.
Mr. Rifkin is a senior
lecturer all the Wharton School
executive education program at
the University of Pennsylvania.
His monthly column
on global issues
has appeared over
many years in many
of the world's leading
newspapers and magazines,
including the Los Angeles
Times, The Guardian, Die Deutsch
Zeitung, and the Handelsblatts,
Le Soir Arnaque, L'Espresso,
El Mundo, and El Pais in
Spain, and many others.
Mr. Rifkin holds a degree in
economics from the Wharton
School of the University
of Pennsylvania,
and a degree in international
affairs from the Fletcher
School of Law and Diplomacy
at Tufts University.
After this somewhat
long introduction,
but worth reading it, please
welcome to Google, Mr. Jeremy
Rifkin.
[APPLAUSE]
JEREMY RIFKIN: Good
afternoon, everyone.
It's a pleasure to be with you
here at Google this afternoon.
We're just beginning to
glimpse the bare outlines
of a new economic system
entering onto the world stage.
This is the first
new economic system
to emerge since the
advent of capitalism--
and its antagonist, socialism--
in the early 19th century.
It's a remarkable
historical event.
It has long-term
implications for every one
of us, our children,
and our grandchildren.
This new economic system is
the collaborative commons.
And what's triggering this shift
to a new economic paradigm,
a collaborative commons economic
system, is something called
zero marginal cost.
Now, zero marginal
cost is something
you're very familiar
with here at Google,
and certainly we are
the business community--
not very well known
in the public.
Marginal cost-- the cost of
producing an additional unit
of a good and service after
your fixed costs are covered.
Business people have always
wanted to reduce marginal cost,
and they're always in
search of doing that.
And here's why.
And I want to introduce
to you a paradox.
There's really a
paradox deeply embedded
in the heart of the
capitalist system-- previously
undisclosed, really.
This paradox has
been responsible
for the great
success of capitalism
and the invisible hand
of the marketplace.
The paradox is this
invisible hand success
is now leading to
its potential demise,
and the advent of
a new successor
paradigm to replace it.
Let me explain.
Sellers in a capitalist
market are always
attempting to find
new technologies that
can increase their productivity,
reduce their marginal cost
so they can put out
cheaper products,
win over consumers
in market share,
bring home profits
for their investors.
Clear?
So business people have
always welcomed the reduction
of marginal cost in the
production and distribution
of goods and services.
It's just that the
business community never
anticipated in their
wildest imagination
the prospect of a technology
revolution so extreme
in its productivity
that it could reduce
those marginal costs to near
zero across the value chain,
making goods and services
essentially priceless, nearly
free, abundant, and beyond
the market exchange economy.
That's beginning
getting to happen.
The first inkling of
this paradox, of course,
was Napster, back in 1999.
All of a sudden,
millions of young people
that apparently had nothing
else to do after school
but figure out new software
in order to share music
and bypass providing royalties
to the music industry.
Then this zero
marginal cost phenomena
went on to invade the entire
information goods industry.
Millions of consumers
became prosumers.
And they began producing their
own information goods-- videos
on YouTube, news blogs,
e-books, and decimated
the newspaper and magazine
publishing industry.
Newspapers went out of business.
Magazines went out of business.
And I'm in book publishing.
I can tell you that free
e-books have decimated the book
publishing industry.
For a long time,
industry watchers
said, well, this is fine.
We understand that more and more
people are becoming prosumers.
And they're
producing and sharing
their own audio, their own
videos, their own text,
their news blogs.
They're working together
and sharing information
on Wikipedia.
We understand that.
But we think that more and
more free goods and services
provides the basis so that
the premiums will allow people
to then go up to this-- the
freemiums will allow people
to go up and have premiums.
In other words, if
you're a musician,
you give away your music.
And then you hope that
the long tail will set in,
and enough people will then
decide to go from the freemium
to the premium, go
to your concert,
and pay a lot of money.
Or the New Your
Times will say, look,
we'll give out 20
articles a month free.
And we hope that the freemium
will encourage a certain number
of people to subscribe to
our new service, the premium.
It hasn't happened.
This was wishful
thinking, or naive.
The more and more we
are able, as prosumers,
to produce and share our
own information goods,
the less likely we are to move
from freemiums to premiums.
Because our attention
span is limited,
and there are so much free
goods that they really
don't push us into
the premium category.
And the proof is in the pudding.
If you take a look at the
newspaper industry, magazines,
book publishing, and
the recording industry,
they've never come back
from zero marginal cost.
Economists, however,
have-- up until the moment
now-- our economists
have thought,
well, we think there's
a firewall here.
And that is, even though more
and more information goods
are heading toward near zero
marginal cost in virtual worlds
that they will not
cross the firewall
into the physical world of brick
and mortar goods and services.
No longer.
What's happening now is that the
communication internet is now
expanding to an internet of
things, a physical internet.
So what we're beginning to see
is the communication internet
is just beginning in
Europe, where I work,
to converge with an
emerging energy internet
that we're laying across
Europe, and a nascent automated
logistics and
transport internet.
The internet of things
is an expansive internet
that allows us to go
from the world of bits
to the world of atoms.
And when we have these
three internets embedded
in one system-- a
communication internet that's
interacting continually
with an energy internet
and a transport and logistics
internet in one platform--
this internet of
things allows us
to begin moving near zero
marginal cost from information
goods to physical goods.
The internet of things, three
interoperable internets,
then connect out
with sensors across
the entire economic value chain.
Even though this
internet of things
is just in its early stages,
we have 14 billion sensors now
connecting resource flows.
We have sensors connecting
warehouses, distribution
centers.
We have sensors along
smart road systems.
We have sensors connecting the
production lines on the factory
floor.
We have sensors connecting
the new energy internet
so we know the price of
electricity moment to moment.
We have sensors connecting
offices and vehicles and homes
and appliances, continually
feeding big data to these three
internets that operate
as one platform--
the communication, internet,
the fledgling energy
internet, the nascent automated
transport and logistics
internet.
By 2020, IBM says we'll
be at 30 billion sensors.
And a recent forecast
study a few months ago
says that by 2030, we will have
100 trillion sensors connecting
everything with everyone in
one global neural network.
When we move from the internet
to the internet of things,
and we move from
bits to atoms, we
began to see a completely
new economic model
they can get us to near zero
marginal cost in the production
and distribution of physical
energy and physical products.
So a prosumer, and millions of
prosumers-- and pretty soon,
billions of
prosumers-- are going
to be able to go up on this
expanded internet which
is already here.
And they'll be able to access
the big data flowing back
from all the sensors
to the three internets
operating in that general
purpose technology platform.
And with the apps that companies
like Google will provide
and others, they'll
be able to use
that data with
their own analytics
to create their own algorithms,
because you can program it
right into the app.
You don't have to be
a rocket scientist.
And then any one of
millions of prosumers
will be able to increase
their productivity,
dramatically reduce
their marginal cost,
and produce, consume, and
share their own physical energy
and manufactured
goods with each other,
just like we now do
with information goods.
While this is early on, the
trajectory is already clear.
So if I had said to you in 1989,
a year before the World Wide
Web went online, that 24 years
later 40% of the human race,
equipped with a cheap
cellphone, a raspberry computer,
could send their own
audio, video, and text,
create their own
entertainment, their own news,
their own knowledge-- any one
of those 40% of the human race--
and then share it with
each other at near zero
marginal cost on
the World Wide Web,
what would you
have said in 1989?
We did it in less than 20 years.
As we move to the expansive
internet of things,
and from bits to atoms, what
I'm suggesting to you here
at Google is we're going to
be able, in the next 20 years,
to move to near zero marginal
cost in the production
of energy and some
manufactured goods.
Let me preface this.
The big wild card here is food
and water and climate change.
Because if we can't
address climate change
and we continue on this road,
if we can't produce food
and don't have access to
water in a reliable fashion,
everything I'm telling
you is derailed.
Let me give you an example of
how this new system is already
in place in Europe.
Let's take energy.
We now have millions
and millions
of players, urban
dwellers, small businesses,
large companies
who are producing
their own solar and wind green
electricity on site in Europe.
And that's at near zero
marginal cost right now.
So it's not academic.
The technology for
harvesting solar and wind
is still a little
pricey, but the price
is on an evolutionary curve,
just like computer chips.
We never expected in
1960 that computer chips
would be on an
exponential curve.
And here's where I agree
with Ray Kurzweil who
I know is now here
with you at Google.
Send him my regards.
We did a lecture
together a few years ago.
The pricing technology--
a solar watt
cost $60 to produce
a solar watt in 1970.
It's $0.66 today,
and it's going down.
We're in a 20-year exponential
curve for solar and wind
technologies.
So we're going to see the
price of these technologies
be as cheap as the
price that we now
have for cellphones, mobile,
et cetera in 20 years.
We see the curve.
Ray Kurzweil says that
if we are doubling
on the exponential
curve every two years,
eight more doublings, 16
years, we're in the solar age.
He may be little optimistic.
I'd say within 25
years we're there.
But here's the
interesting thing.
The moment you put
up a solar panel
on your building,
or a wind turbine
on-site, even
before you pay back
the fixed cost-- and that's
usually three to eight years,
so it's not a long time.
Immediately though,
your marginal costs
are near zero, because the
sun off your roof is free.
The wind off the side of
your building is free.
The geothermal heat coming up
from under the ground is free.
Your garbage converted
in a bioconverter
to energy in your
kitchen, that's all free.
And in Germany,
we've now seen this.
I've been advising the
chancellor, some of you know,
and working with the
German government
for a number of
years, many years.
We're now at 25% green
electricity in Germany
in seven years.
We're heading to 35% green
electricity in four more years.
And you know who's
producing it all?
We have a million
buildings that have
been converted to
micro power plants.
And millions of small
players have joined together
in cooperatives-- small and
medium-sized businesses,
homeowners.
They're generating
the new electricity.
What about the big,
huge, global electricity
companies out of
Germany, EnBW, E.ON?
They're gone in less
than seven years.
Remember what happened to
the recording industry, what
happened to newspapers,
what happened
to magazines and publishing?
This is happening to
the huge global power
companies in Germany.
And they acknowledge it.
This last week, one of
the directors of E.ON
said, we're out of it.
They're producing less
than 7% of the new power,
and going down, down, down.
They can't scale it.
Because in the first and
second industrial revolution,
we have to scale with
vertically-integrated companies
that put everything
under one roof
in order to get
economies of scale.
The internet of things is
designed to be distributed,
collaborative, peer-directed.
And it scales to lateral
economies of scale.
Think of millions
of young people
sharing music, wiping out
the recording industry.
Or think of millions of people
sharing knowledge on Wikipedia
and wiping out the
Encyclopedia Britannica.
Now this is actually
happening in Germany right now
with green electricity.
It's a disruptive revolution
in the best sense of the term.
Then let's take 3D
printed products.
We now have several
hundred thousand hobbyists,
thousands of small and
medium-sized startup companies
that are printing out their
own 3D printed products.
And they're attaching their
3D printing operation,
at least in Europe, into
this new internet of things,
this third Industrial
Revolution.
So if you were a 3D
printer, whether you're
in Senegal or Berlin, you
go up on the internet.
You download your software.
It's all free.
Most of this software
is free, open source.
Then you use for your feed
stock recycled plastic.
They're now using
recycled paper,
or even using sand and
gravel and melting it down.
So you can get local feed stock
at near zero marginal cost.
Then they're powering
their 3D printing factory
with green energy from
their energy internet
that's generated at
near zero marginal cost.
Then they're marketing
their products
on global websites like Etsy
with very little advertising
cost.
You just pay a short
fee, low marginal cost.
And then we're just beginning to
put in the logistics internet.
So we have now
electric vehicles.
And two or three years from
now, all the six major auto
companies will have
fuel cell vehicles
out-- trucks, cars, and
buses, mass production.
You'll be able to power your
vehicle to send your 3D printed
product to market with
your own green electricity
from the energy internet,
nearly free marginal cost.
And the electric vehicles
in a few years from now
will be printed out.
The first printed vehicle
now exists Canada, the URBI.
You've probably seen it.
It runs on solar.
It's pretty impressive.
And then you'll
have GPS guidance.
And thanks to Google, we
will have driverless vehicles
that can move across
the system at will
near zero marginal cost.
This is a revolution.
The question becomes this.
If millions, then hundreds
of millions of people
can begin to produce, consume,
or share their own information
goods, energy, and a lot
of their manufactured goods
at near zero marginal cost,
making them nearly free
and beyond the exchange model
of the capitalist market,
what kind of new
economic system do we
have to envision here at
Google, and other places,
to organize the world, the
one that I'm laying out here?
Economists will usually
say there's only two ways
to organize the economy--
either the government
or private enterprise, or
some combination of both.
Capitalism, socialism,
or in Europe,
a social market economy.
Our economists ignore
a third institution,
which is responsible in our
daily lives for a whole range
of goods and services
you and I rely on.
And it's not market,
and it's not government.
It's the social commons.
Part of it's the formalized
not-for-profit sector.
But it's the social commons from
cooperatives to credit unions.
And a huge part
of the human race
is engaged in activities
in the social commons.
And with cooperatives,
you share.
And when people say,
how do you make money
if you're not in a
profit-making organization?
How do you make profit?
Wake up call-- there are
hundreds of millions of people,
actually billions of people,
who are parts of cooperatives.
The entire world
electricity system, the US,
are world electric cooperatives.
And it's almost 50% of
our transmission lines.
When you get food
at the store, it's
coming from agricultural
cooperatives.
Most people around the world
live in housing cooperatives.
In Europe, banking
cooperatives--
if you're from
Europe, they're bigger
than the commercial banks.
And it goes on, and on, and on.
So the social commons
is ignored by economists
because it doesn't
create finance capital.
It creates social capital.
But it's a big revenue player.
In 40 countries surveyed,
the social commons
is responsible for about
$2.2 trillion in revenue,
and it's responsible for over
5% of the GDP in many countries,
including the US.
What's happening now
is the social commons--
which is a venerable
institution that we
rely on for educational
institutions that
are nonprofit, health
services, day care
centers for our
children, assisted
living for the elderly,
environmental organizations,
cultural sports, arts,
it goes on and on.
If they were eliminated and
we just had the marketplace,
we would not have much
of a life on the planet.
What's making this social
commons now more relevant
than anytime in the past
is this internet of things.
Because the internet of things
is a general purpose technology
platform that's designed to
be the technological soul
mate of a social commons.
The whole design is to be
distributed, collaborative,
scales laterally not vertically,
and it rewards collaboration
across these lateral networks.
It creates a sharing community.
And of course, who understands
this better than Google?
Because you helped us
create a sharing community.
When we were kids, we
always said, boy, it
would be nice if
there was a magic box.
And all we have to do is
click in, and all of a sudden,
within three seconds, the
knowledge of the world.
You did it.
You did it by cueing into a
communication internet that
allowed us to laterally scale.
But that's just the
beginning of the story.
So what's happening
now is this expansive
of internet of things
allows millions and millions
and millions of consumers
to be prosumers and join
with small and
medium-sized enterprises
and connect directly,
eliminate all the middle men
of vertically-integrated
global companies.
It's the middle men in
vertically-integrated global
corporations, the Fortune 1,000,
that mark up their transaction
costs along the value chain
in order to have the margins.
If you eliminate the middle man
with laterally-scaled networks,
you eliminate all
of those margins.
And you can directly
engage each other.
But it creates a new system.
What I suspect we're seeing
here is a hybrid system-- part
capitalist market, part
collaborative commons.
The capitalist market is
not going to disappear.
There will be many goods that
are sophisticated and will
require a capitalist
exchange economy.
And there'll be sufficient
margins for profit and return.
But I do believe that
by the time some of you
are my age, mid-century,
most of our economic life
is going to be on the
collaborative commons.
It's just too
sweet to say no to.
There'll be attempts to stop it
and thwart it and hold it up.
But when the
technology's available,
people will get it
one way or the other.
The recording industry
was not able to stop
file sharing of music.
The newspaper and magazine
industry and book publishing,
very powerful
industries, they were not
able to stop lateral
economies of scale.
So I think the
capitalist market's
going to be a very
powerful player here,
but probably a niche player in
a more dominant collaborative
commons.
And it will be an aggregator
of networks-- the Googles,
the Facebooks, the Twitters.
There'll be a lot of this
aggregating of networks
to provide the technological
base for the internet of things
expansion, because that's
sophisticated software
and hardware.
That's where you find
the edge in order
to have the capitalist
market work together
with a collaborative commons.
In economics, we've
always believed
that the most
efficient economy is
where you sell at marginal cost.
We just never expected
zero marginal cost.
I'll let you in on something.
This'll amuse you.
And Larry Summers, if you're
hear this, my little thing
here with the folks at Google,
this is pretty interesting.
Larry Summers was the president
of Harvard University, past US
Secretary of the Treasury.
In 2001, after the bubble
burst, the dot com,
the Federal Reserve of Kansas
City held a special seminar.
They wanted to talk about
the new data and information
industries that were emerging.
And Larry Summers-- and
is it Bradford DeLong here
at the University
of California?--
issued a paper to
start the conversation.
They got what was happening.
They glimpsed the paradox.
And so Summers and
DeLong said, we
have this new
technology revolution
that's going to be as
important as electricity--
data, information,
and computing.
Now the problem we face,
though, is marginal cost.
Because as this new
technology comes on board,
we're heading to near
zero marginal cost
in information goods.
But when you get to
zero marginal cost,
we can't return
investment and get profit.
So what do we do?
You know what he suggested?
He did say that we agree
that the marginal cost is
the most efficient place in
which to price your product.
But he said we can't
do this anymore.
We're going to have to favor
monopolies-- monopolies.
temporary monopolies--
to keep the marginal cost
above near zero cost so
we can return profits
to the investors.
You all got this?
He said the competitive market--
that's private enterprise
capitalism-- does
not work when you
get to near zero marginal cost.
And he said, we don't know
what the replacement paradigm
will be.
The fact that the
former Secretary
Treasurer and President
of Harvard University
actually suggested
there's a replacement
paradigm that the competitive
market doesn't function
and we need monopoly
is astounding.
But he thought he was talking
to a small group of people
inside the Federal Reserve.
It's in my book in chapter one.
Yeah, it's amusing.
So I'm waiting to hear from him.
I did an opinion piece
in The Guardian on this
about a week ago.
I haven't heard from him yet.
He may say silent on this.
But what's interesting is
he understood the dilemma.
He and Bradford DeLong,
they understood it.
But the dilemma is
also an opportunity.
And there will be many
companies like Google
who can find ways to
aggregate networks
to allow this collaborative
commons to flourish and find
some value in doing that.
Nowhere will the impact
of near zero marginal cost
have a bigger reach then
in labor employment.
This is what comes up
every time I raise this.
We're heading to near
zero marginal cost labor
with these new technologies--
with analytics, algorithms,
artificial
intelligence, robotics,
pattern recognition technology.
Some of the older
people remember-- well,
we talked about
it at lunch-- you
read my book "The End of Work."
Well, I projected in 1995--
you don't look that old,
either-- 1995 that we would
be moving to a workless world.
It was controversial
at the time.
But I notice that
now, in the last year,
this new spate of books
coming out at least
acknowledged that that was
right on target, that book.
We have workerless
factories right now.
We have virtual
retailing right now.
We have eliminated
massive amounts
of blue collar, white
collar, and service workers,
and we're just beginning to
shift into an analytical world
that's basically supervised
with advanced analytics
an robotics and AI.
We're now eliminating
knowledge workers.
We don't need all
the accountants,
the attorneys, the radiologists.
We can do it with the software.
So the question then
becomes, in a world
where we're heading towards
zero marginal cost labor, what
do people do throughout life,
if they're no longer needed
in the marketplace?
In the mid-term,
short to mid-term,
we have one silver lining.
There's going to
be one last surge
of mass and professional
wage labor in the next 30
years, one last surge.
That's to do the build out
of the internet of things.
It takes labor intensivity to
build out this infrastructure.
In Germany, when we got
10% green electricity,
we'd already created
as many jobs--
350,000 jobs-- as the
entire rest of the energy
industry combined, only at 10%.
So we have to build out and
change the whole energy system
from fossil fuels and
nuclear to renewables.
We have to convert
every building
in the world, existing and new
ones, to your own power plant.
We have to insulate them, seal
them up, get them efficient,
and put the technology on.
As I say in Germany, we've
done a million buildings,
and lots of jobs.
We have to transform the entire
electricity grid of the world
from servomechanical to a
digital laterally-scaled
internet.
That's a huge amount of
professional and semi-skilled
and skilled work to lay it down.
And we have to put in
the automated logistics
and transport network, and
change from internal combustion
engine transport to
driverless fuel cell vehicles.
So in the next 30 to 40 years,
we have to do the build out.
My global consulting
team, TR Consulting,
has some of the major companies
in the world involved--
logistics, IT, electronics.
We're actually working with
entire countries and regions
in the world right
now, and laying out
this internet of things
Third Industrial Revolution.
It's not academic.
Where will the new jobs be?
Well, first of all, if
millions and millions of people
are producing and
sharing their own energy
in 3D printed products
and information goods,
they're going to need less
income at zero marginal cost.
They're still going
to need employment.
If the marketplace
doesn't need them,
because we can produce the
energy and the products
in the marketplace with
just high technology,
where will you get
the employment?
In the social commons.
The social commons creates
social capital, human beings
with the other human
beings, creating
communities-- cultural,
sports, arts, wellness, health,
quality of life.
Those are, the more
important employments.
Making widgets is
not as intellectually
challenging and motivating
to the young mind
as it is trying to create
a sense of human community,
a sense of
transcendence and sense
of finding meaning in the world.
Between 2000 and 2010, the
social commons grew by 42%
in revenue.
The GDP grew by 16% in revenue.
Did you catch that?
It's already happening.
And in the last 15
years, employment
in the social commons
kept going up, up, up.
Employment in the marketplace
kept going down, down, down.
And during the Great
Recession, employment
in the social commons went up.
Employment in the
marketplace went down.
When you survey
high school kids,
it's interesting where they want
to be-- the millennials, not
the X'ers.
Because the
millennials have gone
through the Great Recession.
And this is kind of a
different group now.
They asked 9,000 honor
students, the best and brightest
high school students, last
year, what kind of employment
do you want?
And they said, we don't care
so much about the money.
We want meaningful
jobs that challenge us.
And when they surveyed 200
companies or institutions
they could work
for, many of them
chose those institutions that
were in the social commons.
And do you know what the
number one institution they all
chose to be employed in,
9,000 honor students?
It wasn't Google.
It wasn't General Motors.
It was St Jude's Hospital.
Isn't that interesting?
I wouldn't have
even gotten that.
A hospital where you
go in, you don't pay,
and you are provided for.
Interesting.
Now, economists will
say, well, wait a minute.
Isn't this social
commons a parasite?
It isn't a
self-sufficient sector,
because it relies on government
grants and private philanthropy
to maintain itself.
That's a myth.
The Johns Hopkins University
survey of 40 countries
shows that 50% or
more of the revenue
in the nonprofit
social commons world
is fees for services
rendered-- health care
centers, educational
organizations,
environmental groups, et cetera.
Only 35% of the revenue comes
from government entitlement,
and maybe 10%, 15%
from philanthropy.
Well, on this scale,
you'd have to then ask
about the marketplace.
Because 36% percent of all
the GDP in the United States
goes from the government
taxpayers to private enterprise
so that they can engage
in building out things
that we need.
So is that parasitic?
We provide more for them
than we do this sector.
So I think what we have
here is a very interesting
dynamic unfolding.
It's going to raise very
substantial questions about who
will control this
internet of things.
Will it be open and transparent?
And let me say, Google has a
very big responsibility here
to lead.
We are very worried
about network neutrality.
And I know you are, as well.
You know, network neutrality
was critical to the idea
of the World Wide Web.
And if we're having
an internet of things
without network
neutrality, it fails.
It will be enclosed,
privatized, monopolized,
and we will not get to a
near zero marginal cost
collaborative commons world.
In January, the US Court of
Appeals-- the second highest
court in the country-- five to
four, you can guess the vote.
They struck down
network neutrality,
the central principle of
the Federal Communication
Commission overseeing
the internet.
Because they said this was
not within their mandate.
So now the FCC has
to go back and try
to recast this idea of network
neutrality with new protocols.
But already, as you well
know, the cable and telecom
companies are saying, wait
a minute, we own the pipes.
We're getting tired of this.
We want to make sure that
we get some return here.
So we feel we ought to be able
to charge different prices.
And network neutrality means
everyone's treated the same.
You get a service
provider, you go up there.
No one's left behind.
No one's put at the
back of the line.
No one's put at the
front of the line.
But now the telecom and
cable companies say,
we want to change that.
We want to provide different
kinds of premium services.
So we can discriminate
and decide who gets what,
and on what time schedule.
And we even would like to
control some of the data.
It's going through our pipes.
So it's going to be essential
that the internet companies
that have brought us
this social commons
make sure that we keep an
open network neutrality.
Now let me say one more thing
that may step on a few toes
here.
I love Google.
I use Google every day.
I don't know what I'd do
without Google as a research
tool for my office.
I love Facebook.
I love Twitter.
I use Amazon.
But we are now reaching
a point now where
these institutions which have
provided the social commons
are starting to look like
global public utilities,
social utilities.
There's what, six
billion queries on Google
a day, I think?
And I think you're about--
I think you're around 67%
of the research engine market
in the US, and 90% in Europe.
$50 billion in revenue,
you're doing well.
And then you take
a look at Facebook,
one out of every six
people on the planet
almost is on Facebook.
That's amazing.
And Twitter, you have
640 million people.
And on Amazon, one out
of every three purchases
start on Amazon, including mine.
So we love these internet
companies, because they've
allowed us to create,
and began to facilitate
a collaborative commons.
But we're going to have to
find some way as you mature
as global institutions
that there's
the appropriate regulations
both internally and externally
to make sure that we facilitate
open, transparent sharing
on this collaborative commons.
And that's the responsibility of
a younger generation and Google
to make that happen.
Then we can have the
best of the new world.
Last thought.
I think is going
to be a rough road.
I have to tell you that
the real wild card here
s climate change
and cyber terrorism.
The latter is more
addressable than the former.
We can get to
nearly free energy.
We're already there, nearly
free goods and services.
But without food and
water, we don't survive.
What's terrifying about
climate change is it changes
the water cycle of the earth.
That's what this is all about.
It's not well-known
in the public,
but for every 1 degree that
the temperature goes up
on the planet from
climate change
from industrial
activity, the atmosphere
is absorbing 7% more
precipitation from the ground.
The heat sucks up
that precipitation
so you get more dramatic and
concentrated precipitation,
and more violent water events,
more violent winter snows,
more violent spring flooding,
more prolonged summer droughts,
more category 3, 4, and
5 hurricanes, tsunamis,
and typhoons.
Sound familiar?
And here in California, drought,
the breadbasket of the world.
And we don't know if we can even
feed people and provide water
for people.
How do we repopulate
millions of people
in the western part
of the US in 30 years?
So climate change is the
elephant in the room.
What's important
to acknowledge here
is that the Third Industrial
Revolution, this internet
of things, allows us to move
quickly out of fossil fuels
and have millions of people
begin to produce and share
their own green energy.
And this internet of things,
because its entire purpose
is to increase efficiencies,
to reduce marginal costs,
it means it shows us how to use
less resources more effectively
so we don't put a big burden
on the planet that we live in.
So we have young people here not
only sharing information goods
and energy now, and
3D printed products.
We've got young
people sharing cars.
The front page of the
San Francisco paper
today is providing
parking spaces
for car sharing services.
Young people don't
want to own a car.
They just want to have
access to mobility.
And for every car you share,
we take 10 cars off the road.
And when we move to
electric vehicles shared,
we move to clean energy.
And we have young
people now sharing
their homes and apartments.
The big issue in San
Francisco this week?
Airbnb.
And Airbnb's success is
near zero marginal cost.
They have the web up.
That doesn't cost them
anything after they put it up.
And how much does
it cost somewhere
who owns an apartment or a home?
They've already covered
their fixed cost.
They're paying their mortgage.
The marginal cost in renting
out the room is near zero.
How do the hotel chains
compete with that?
They have to put
together a physical room.
That costs money.
But so we have car
sharing and bike sharing.
And now we're sharing apartments
and homes and clothes and tools
and toys.
So we have a generation
that's beginning
to believe it's not
about ownership.
It's access.
And if more people
share what they have,
less has to be produced.
It does have a
negative impact on GDP.
But it has a positive
impact on quality of life,
and that's the way to
measure a good economy.
Last thought.
It isn't just about technology.
Google is a tremendous
place to be.
You've provided a
lot of technology
that's really helped us
create a better world.
It isn't just technology.
We need to change
the human narrative.
We need a new story
for the human race
to go with the technology
coming out of technology places
like Google.
We have to move from geopolitics
to biosphere consciousness
in one generation, or
we're not going to make it.
I'm telling you, I'm almost 70.
Some of you in your
20s and 30s, I really
shudder at the possible world
we are creating with climate
change, unless we reverse
this quickly, really quickly.
What is the biosphere?
That's the sheath from the
stratosphere to the ocean
depths, where-- 40 miles--
where all life interacts
with the chemicals of
the planet to maintain
this Earth and life on it.
I'm guardedly
hopeful, because we
have young 15-year-olds
coming home from school,
and they actually have biosphere
consciousness, a new thing.
They're asking
their parents, why
do you use so much water
when you're in the bathroom?
Why do you have the TV on?
We don't use it.
Why two cars?
Why not car share?
And here's the
one I particularly
like-- why is that
hamburger on my plate?
A lot of 14-year-old
kids aren't eating.
They're on strike.
Did the hamburger come
from a tropical rainforest
in Central America?
Did they have to
destroy the tree canopy
for four inches of
topsoil for my burger?
And the kids are smart enough
to know that those trees are
the habitats for rare
species that go extinct
when the tree canopy
is knocked out.
And the kids also understand
when the trees are knocked out
to graze the cow for the
burger, the trees are no longer
absorbing CO2 from
industrial climate change.
So the temperature of
the planet goes up,
and some farmer, she
can't feed her kids
because she has floods
and droughts on her land.
They're learning
ecological footprint.
It's a metric.
They're learning that
everything we do intimately
impacts some other human,
some other ecosystem,
some other species
on this Earth.
So I'm guardedly hopeful.
We've got a young
generation here
that's beginning to
see we live in one
indivisible community,
the biosphere.
And if we can
facilitate the process
where the Googles of this
world can help connect us
in a neural network so that
we can dramatically increase
efficiencies, reduce
our marginal cost,
and that means using less
resources more effectively
and taking a less
burden on the planet,
we may get to a better
world by mid-century.
I don't know if we will.
You will be the
judges on your watch.
So it's essential that Google,
and the other companies
like Google, you need
to help lead this
so we have a chance of
rehealing the planet
and creating a future
for our children.
Thank you.
[APPLAUSE]
You want to do a few questions?
AUDIENCE: I'm not an economist.
But I thought I had
a good understanding
of what zero
marginal cost meant.
JEREMY RIFKIN: Near
zero, it's near zero.
AUDIENCE: Near zero.
But at least-- so I have
two questions on this.
With regards to energy, you
kept talking about solar.
I have solar on my house.
It's not zero marginal cost.
I cannot produce more energy
that I want without putting
on more panels,
which has a cost.
But it's zero in
the sense of I'm
not consuming things--
like with coal, right?
So I wasn't sure which
of those two distinctions
you were talking about, and how
you get to zero in that regard.
And then I didn't understand
it at all in logistics,
because as far as I know, you
still have to drive miles.
And that cost isn't
really changing.
JEREMY RIFKIN: Let's talk
about the solar panel
or the wind turbine or
the geothermal heat pump.
You have to pay the fixed cost
of the harvesting technology.
It probably is going to take
you somewhere between three
and nine years to pay
back on the solar panels.
But the moment that channel's
up, you keep it clean,
the sun is free.
Coal is not free.
Natural gas, shale gas, uranium?
None of that's free.
But the sun is free.
You just capture it.
The wind is free.
You capture it.
The geothermal heat's free.
You capture it.
So in that sense,
it's near zero.
But you're only
advantaged if you're
in an energy internet that's
part of an internet of things.
Because you may
have a lull one day
where the sun isn't
shining, and you
haven't stored that
green electricity.
Or maybe the wind's
blowing at night,
but you need electricity
during the day.
So we have to create
an energy internet that
crosses continents.
And that way, let's say in
Eastern Europe, where it's
night time, they
have a lot of wind?
The surplus goes up
on the energy internet
to the places which
are still daytime.
Or if you have a lot of
sun somewhere in Europe,
in Western Europe,
during the day,
you put the surplus up on
the net and that energy,
and then it would take it
to another part of Europe.
So these energies
are intermittent.
And they change in
different times of day
in different parts
of a continent.
To the extent that we
have an energy internet,
we can share our surpluses
when other has lulls.
And we can-- if we store
it correctly, hydrogen
and other storage technologies--
we can deal with peak loads,
base loads across continents.
That's we're attempting to
do in Germany and in Europe
right now.
And I was just in China.
That was a big surprise
to me with China,
because I didn't think they
were going to be players.
"The Third Industrial
Revolution," my former book,
was published there
two years ago.
And the new premiere
read it in English,
and instructed the
government to now
move on a distributed
energy internet
and to move toward an
internet of things.
I was there in September
with the leadership.
10 weeks later-- 10 weeks
later-- after my meetings
with government leadership,
the Chinese government
announced an $80 billion
four-year commitment
to move the distributed
energy internet across China
so everyone could
produce their own energy.
By contrast, the US is going
to try to raise $3.5 billion
over 20 years for a
centralized smart grid.
So I'm guardedly hopeful.
But I think that these
are real challenges.
And for you, the challenge
is your up-front cost.
So you can pay them off, and
get to your marginal cost
being nearly free.
It's a challenge.
AUDIENCE: What
about the logistics?
Can you explain that?
JEREMY RIFKIN: That's the newest
one, that's the newest one.
And I deal with
that in the book.
It's brand new, last 24 months.
We're dealing with
now, in Nord Calais,
we're doing a master plan for
the oldest industrial region
of France.
And they have Dunkirk,
a port facility.
The logistics is the
most inefficient part
of the value chain.
That's why it's costly.
You have freight
across the country.
When you see a truck, sometimes
it's only 20%, 30% full.
Or it's dead and heading
back with no cargo.
It's not systematized.
It's not efficient.
What we're looking
at now is a transport
and logistics
automated internet.
And this would allow you to
have everything modularized
so that you can move
shipments to any distribution
center you want.
For example, there are 5,000
warehouse is in the US.
So what?
If you're a big company,
vertically integrated,
you own maybe 20 of them.
So you have to send your
stuff way out of the way,
hold it there, and then
take it to the destination.
But what if all 5,000
warehouses, privately-owned,
came together in a cooperative?
So when they had space, it
would be open to anybody.
You follow me?
Then with 5,000
distribution centers,
you could move to
whichever one you wanted,
and save a huge amount
of your transport time
moving it through the
system with GPS guidance.
But you'd have to have all
the containers modularized.
Everything would have to
be on the same standards,
so you can move the package
across that internet
like you move all the packages
across the communication
internet.
And then if you can move to
driverless vehicles and drones,
that's going to reduce your
labor costs substantially.
So you'll get toward
zero, but it'll still
be marginal cost, but
fairly low compared
to the cost we have now.
It's exciting.
We're just beginning this
discussion in the last 24
months.
We're laying down the first
plan in northern France now.
So we're on a learning curve.
AUDIENCE: Hi.
I have two
interrelated questions.
One is, you're
mentioning Europe,
United States, and China.
How about other countries, maybe
in the developing or emerging
nations, either because of
the access to technology,
or because their
economical situation?
And the second
question would be,
how about the disparity between
any given society between those
that have a lot and those that
have little in the present?
Is it going to be different
in the next economic system
that you envision?
JEREMY RIFKIN: In the
business community,
we did not see cell phones
coming to sub-Saharan Africa
and rural India.
We didn't.
It was never in the equation.
All of a sudden, without any
marketing, millions of people
starting getting cell phones.
Then the cell towers came.
And what we realized there was
the liability in the developing
world is actually their asset.
They have no infrastructure.
It's easier and quicker
financially to build
from scratch then to mend
an old infrastructure.
It's like a home.
My wife and I have a
beautiful old home.
We spent 24 years trying
to renovate this home.
It's a big entropic
pit-- sorry, honey--
but it's an entropic pit.
Had we built a new
house from scratch
in six months, much cheaper.
So the United
Nations has embraced
the five-pillar, Third
Industrial Revolution
plan we've laid out toward
this internet of things.
Why?
They think the developing
world can move quicker.
Now in rural India, in the
last 24 months, and now
sub-Saharan Africa, young people
your age, startup companies,
are all over the map
in the rural areas.
And they're setting
up little micro grids.
$2,000 for a village,
you wire up the huts.
You put solar panels on.
You lease the panel.
When it's paid back, it's yours.
And a village, a small village
of several hundred? $2,000.
So you can set up micro grids,
and it works like Wi-Fi.
You start connecting these
small players together,
and all of a sudden,
you have a network.
Just like a Wi-Fi network, you
have a near zero marginal cost
energy micro grid network,
and you create from the bottom
out, not from the top down.
That's beginning to happen.
It's pretty encouraging.
As to the haves and
have nots, let me say,
I taught the advanced
management program
at Wharton for 16 years, our
CEO program, nearly 16 years.
We all believed-- in the
First and Second Industrial
Revolution, we had to
vertically integrate
our business activity.
Every society needs
three things in order
to organize itself
as a society--
a form of communication,
a form of power,
and a form of mobility.
When communication comes
together with energy,
they create new systems.
For example, the 19th
century, the communication,
we went to steam-powered
printing-- cheap,
efficient, mass-produced
printing-- and the telegraph.
That allowed us to manage
a complex coal power
industrial revolution.
That was the power source.
And then we introduced the
locomotive for the mobility
so we could bring dense urban
areas together and create
national markets.
20th century, Second
Industrial Revolution,
the form of communication
was centralized electricity,
the telephone, then
radio and television,
to organize a power
source-- oil--
and a new mobility factor called
the internal combustion engine.
The Third Industrial
Revolution, the communication
is the internet and
the internet of things.
The power source is
the energy internet
and renewables that are
distributed energies.
And the mobility is an
automated, driverless transport
and logistics system
in one platform.
So I think the trend
lines are there.
But what it allows
us to do now is
eliminate vertically-integrated
global companies
where-- they were essentially in
the First and Second Industrial
Revolution, because they
reduced marginal cost.
They eliminated a
lot of middle men.
You put everything
under one roof.
But now the internet of things
allows millions of people
to even bypass those types
of vertical organizations,
scale laterally, eliminate
all the middle men,
and you directly
engage each other.
That's what the
internet's about.
Millions of people go up there
in lateral economies of scale.
They are bypassing-- thanks to
Google and all these others--
they're bypassing
all the middlemen
with information goods.
Now they're going to be able,
with these lateral economies
of scale, to also
move to the world--
the physical world-- energy
and 3D printed products.
And so I should say, things
like CouchSurfing and Airbnb
are just the beginning
of this shift.
But what it does is it
democratizes the economy.
And hopefully, you'll
be in a world in 2050
that won't be the 1% or the 99%.
It'll be a shared economy,
a sustainable good quality
of life, where no
one's left behind.
Now, is it Utopia?
No.
Will we actually get
everything I'm laying out?
Doubtful.
But if we can at least see
this as a possible narrative,
it's a pretty good journey
to be on even if we only
get half of it done.
And it's a lot better
journey than we're on now,
where we have a Second
Industrial Revolution that's
bringing us mass unemployment,
a greater disparity
between rich and poor, and
climate change threatening
our survival.
So I think this new journey
is a positive journey.
It's going to be fraught
with problems and challenges.
But it's worthy
of your generation
to help reheal the
planet and create a more
just world for all
of us, hopefully.
AUDIENCE: So I had
a question again
about zero marginal cost--
JEREMY RIFKIN: Near zero.
AUDIENCE: Or new zero.
I work in manufacturing, and
we use 3D printing quite a bit.
But the thing that we
like about 3D printing
is that it's a very low
fixed cost in exchange
for a much higher marginal cost.
So marginal cost for
current manufacturing
is already very, very
low-- much, much lower
than 3D printing will ever get.
So I guess maybe
I'm misunderstanding
what you mean by the near zero
marginal cost on manufacturing?
JEREMY RIFKIN: My
understanding-- of course,
the printers are pretty cheap.
But they're not
very sophisticated.
You can get a printer
now for $1,200.
The big, sophisticated
printers cost more.
But you're right.
It's an exponential curve.
The fixed costs are going to
really go down, especially
because it's added
at manufacturing.
AUDIENCE: They're
already much, much lower.
JEREMY RIFKIN: Yeah.
AUDIENCE: And this
is in a typical,
like a traditional
manufacturing line.
JEREMY RIFKIN: What
brings the marginal cost
down is its additive
manufacturing.
I always taught
subtractive manufacturing
would, in centralized first and
second Industrial Revolution
factories, you take a big hunk
of a material from nature,
cut it up, tear it down,
winnow it, and then put
the product together.
And you throw a lot out.
All right?
As you know, with 3D printing,
the software is directing
the molten material
to, layer by layer,
build up a three dimensional
product with moving parts.
It's additive manufacturing.
It uses, what, 1/10
of the material?
With additive manufacturing, you
are using a lot less materials.
But you're talking about
the materials themselves.
What I'm saying
is that what I've
been seeing in the
industry-- in Europe,
at least-- is they're using
a lot of recycled plastic
now, which is very low cost.
And they're now
using, as you know,
in the Scandinavian
countries they're
using recycled paper,
which is low marginal cost.
And we now have some printers
that are using gravel, rocks,
and sand for various
things, which
is just locally available.
I think it's going
to be a while.
This is so new-- and you're at
the cutting edge of it here--
it's going to be a while before
3D planning is on center stage.
But at least the kind
of work you're doing,
I'm sure you feel very
positive that it's
going to lead to a new kind
of manufacturing that's
going to reduce both fixed and
marginal cost down the line.
It's going to take a while.
Otherwise, why do it?
I'm hopeful that
here at Google, help
lead us into this new world.
We need to join
together, all the people
on the planet, with
this new technology,
and hopefully create some hope.
Because I see a lot of
despair, a lot of cynicism,
a sense that nothing can happen.
But we're right now on the cusp
of a great economic revolution,
this shift to the collaborate
comments and an internet
of things platform that allow
us to begin to produce and share
goods and services with
low or zero marginal cost,
and in a sustainable
way for the planet.
It's the journey we
all ought to be on.
Thank you.
[APPLAUSE]
