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June 6th, 2014 at 9:37 am

What the consumer will look like in 2030

self serve

The future consumer is a self-sustaining prosumer, a savvy maker/consumer empowered by their network and data.

Futurists help us envision what the far future will look like. Futurist Jeremy Rifkin’s recent book, The Zero Marginal Cost Society: The Internet Of Things, The Collaborative Commons, And The Eclipse of Capitalism, is a robust 300-page work that crystallizes his thinking about the maturation of the sharing economy and the emergence of new Internets to manage energy and the transports-logistics infrastructure.

 

 

With roots in activism and economics, Rifkin’s writing goes through great lengths to paint a vivid picture of the future consumers and humanity will experience in 2030 and beyond. Perhaps most importantly, Rifkin’s thinking bridges the all too common gap that exists between academia and corporations, given that he draws advisers from the European Union, tech companies like Cisco and Siemens, in addition to teaching at various universities including Wharton School’s Executive Education Program at the University of Pennsylvania. We met up with Jeremy Rifkin recently to form a perspective on his recent book. The text below is a synthesized paraphrasing of an interview, existing published articles on the book, and a deep-dive into the text itself.

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Understanding the Landscape of Rifkin’s Big Ideas

Rifkin believes capitalism will need to share its economic weight with an emergent economic system that is grounded in peer-to-peer networks. At its most basic level, marginal cost is defined as the additional cost of each unit of production for a good or service after the fixed cost has been absorbed.

Consumers that balance their consumption out with sharing and producing their own information and goods. You can’t compete with zero marginal cost. The naysayers say that they don’t think this trend will go on to impact physical goods and that firewall is now being breached, and that’s why there is a potential for a transformation into a new economic system.

Pointing to the phenomenal growth of sharing economy services and platforms like , Rifkin believes we are witnessing the formation of a new economic system in the world: the collaborative commons, the first new economic system to emerge on the world scene since the advent of socialist and capitalism in the early 19th century. He describes it as “having some features of socialism and capitalism but it goes beyond them and the trigger is zero marginal cost”. As HBR explains:

The competition that capitalism has fostered is bringing marginal costs of production down far lower than anticipated by economists, to near zero in sectors such as publishing, education, energy, and even manufacturing. This is occurring not only through MOOCs (massive open online courses) but also such things as 3-D printing of products… As marginal costs approach zero, the driving forces of capitalism – profit and investment – are neutered. As a result, a social sector that doesn’t rely on profit will play a larger role in the creation and distribution of goods and services, becoming a more significant employer in the process.

Rifkin’s consulting group, The Industrial Revolution Consulting, is working to lay out third industrial revolution infrastructures for countries and regions (which is particularly advanced in Denmark, Germany, France, Italy, Spain, China). Germany alone is running on 25% solar; according to the NY Times, the Internet of Things movement is providing real-time information on the usage and changing price of electricity on the transmission grid: “This will eventually allow households and businesses that are generating and storing green electricity on-site from their solar and wind installations to program software to take them off the electricity grid when the price spikes so they can power their facilities with their own green electricity and share surplus with neighbors at near zero marginal cost.” Rifkin is not alone in how he envisions the future of the Internet, but some do question his perspective on the role of peer-to-peer networks in undermining capitalism in a significant way. This was particularly articulated by a Forbes writer who believes that Rifkin confuses capitalism and markets.

From Consumer to Prosumer: Key Takeaways on Consumer Culture in 2030

The paradox is that in a capitalist market, sellers are always trying to find new technologies that will increase the productivity, reduce the marginal cost, so they can put out a cheaper product and win consumers, build market share, and bring back some profits for the investors. But economists and business people never actually anticipated the possibility of a technology revolution who’s productivity is so extreme that it could actually produce a marginal cost of nearly zero, making goods and services basically priceless potentially free, abundant and not prone to market forces and regulations. Where we really began to see it come with a vengeance is with print media and publishing. Consumers became prosumers.

From a cultural standpoint, the center of Rifkin’s vision of the future is a self-sustaining prosumer, a savvy maker/consumer empowered by their network and data. The prosumer will transform the face of brands, business, and governance all together because they are able to generate their own energy, goods, and economic well-being as more ‘middle men’ are knocked out of the picture.

Taking a few steps back, in 2010 prosumers were discussed in the context of media fragmentation and consumers’ newfound influence on corporate and brand reputation. Winning over influencers became that much more important and ‘power of the crowd’ driven campaigns (i.e. transmedia storytelling) led to the development of new parameters for advertisers and marketers. Jeremy Rifkin evolves the term prosumer to encompass at least two new dynamics for the decades ahead.

The Prosumer Is Self-Sufficient | Being an avid believer in the scalability of peer-to-peer networks, Rifkin points to a world where millions of prosumers begin to regularly share virtual/physical goods and energy at near zero marginal cost and asks: what kind of economic system would we have to envision to manage this entity? There’s another institutional mechanism, besides government and private enterprise and market capitalism, that we all rely on everyday: the civil society, the social commons. This consumer would also have access to the benefits of 3D printing (most of which is open-source) and domestically-generated green energy. They would have the option of selling anything ranging from their physical belongings to the energy generated for cheap on a social market, which is relatively free of formal regulations.

As the value of access competes with absolute ownership, network reliance would continue to strengthen, putting the focus on using rather than consuming. Rifkin points out that economists always assume there are two ways to manage an economy: the government or free enterprise. Economists tend to underestimate the power of the social commons. This is the sector that creates social welfare, education services, services for the elderly, universities, healthcare, our cultural institutions and sports. We have millions of non-profits, start-ups, and informal organizations that we use everyday to mediate our lives.

The Prosumer Is Empowered By Data Seamlessness | Rifkin does not believe that the Internet Of Things is just about data flow, but rather the convergence of different types of Internets. This convergence will be harnessed by a sensor-rich world that is responsive and equipped with a neutral network of logistics that will reduce parts of the economy to near zero marginal cost, “We’ve got 14 billion sensors out there now, attached to resource flows, production lines, warehouses, distribution centers, smart road systems are starting. We’re attaching sensors to the factory floors, to front and back offices, vehicles, homes, the electricity grid…etc. These sensors are enabling us to feed big data across the value chain into these 3 internets that operate under one platform.” Assuming net neutrality will be protected, this gives small businesses and people equal access to the internet Of Things and use the data themselves.

Closing Remark: The Food Scarcity Wildcard

There is at least one significant wildcard RIfkin readily acknowledges as a game changer and might move to address more directly: food scarcity. As humanity transitions into an age of extreme weather conditions and water scarcity, will food come to undermine the constructive transformations we are moving towards or are we headed for an “Age of Abundance” as Peter Diamandis asserts? Rifkin does acknowledge that without good solutions and preparations for scarcity, the emergence of an alternative to capitalism becomes significantly less probable.

Via PSFK

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