Jeremy Rifkin - Economist HARDtalk

congregation to remember him not with violence but with peace.

Now on BBC News, it's time for HARDtalk. Welcome to HARDtalk.

Today, I want you to imagine living in a radically different world. An

internet`driven smart world where individuals and communities generate

their own free energy, reduce and share the things they need and build

an economy defined by collaboration and not competition. `` produce and

share. According to my guest today, Jeremy Rifkin, this is no utopian

fantasy but the unfolding story of the next century. Are we really

entering the postcapitalist age? Jeremy Rifkin, welcome.

You have long been a man of big ideas and it seems to me that your

big idea is now that the internet and digital technology have sowed

the seeds of capitalism's demise. Have I got that right?

You have. We are beginning to see the outlines of a new economic

system entering into the world stage.

Let me stop you there. I need you to explain the concept of the

collaborative commons. It is a new way of characterising the new

economic model where we produce and share goods with each other,

bypassing the traditional capitalist market. This is the first new

economic system since the advent of capitalism and socialism in the

early 19th century. It is a remarkable historical event that

will have long`term implications on the way we live and work and

organise life. What is interesting is what is precipitating it.

You say you're not some kind of ideological warrior who wants to see

capitalism collapse but a man who looks at the way that the digital

technology is impacting our world and believes that it is inevitable.

That is what I want you to explain. Zero marginal cost is a good or

service after the growth has been accounted for. Ther eis a pradox

that is responsible for the success of the hand of the market. What is

that paradox? Now, here it is. Sellers are always looking for more

technology that can reduce their marginal cost so that can win over

market share and consumers. The idea is to be more competitive and at

better prices, but that maintains itself today. Capitalism seems to be

functioning today. Parts of it are changing radically.

What businesspeople did not expect was a productivity revolution so

powerful that it could make goods and services eventually free,

priceless and abundant and no longer subject to the exchange economy.

That is already beginning to happen. Over the last 15 years with the

internet, we have seen millions and hundreds of millions of consumers

become pro`sumers. Producing and sharing their own information goods.

It started with music bypassing the recording industry and then we began

to share knowledge on Wikipedia, then news blogs and eventually young

people began to put out e`books for free, and what this has done to the

information industry is devastated it. The recording industry has gone

down, newspapers and magazines are going out of business and the

publishing industry is in trouble because of zero marginal costs.

I do see what you're saying but here is my counter argument. What we have

seen in the information fields is that many of the old established

corporates have indeed suffered and you would say that that is a sign

that capitalism is eating itself. But I would say that, on the

contrary, there are signs that it is extraordinarily resilient as we have

seen the emergence of new successful business models, whether it is

Google or Facebook or music apps. There are new ways to make money in

the internet age. Some of these enterprises are capitalist and some

of them are hybrids or nonprofits. There is a bed and breakfast app

called AirBnB in which, a marketplace for accommodation is

used online to attract people to come and stay. They are not

professionals but they can make money through a room in their house.

This is now said to be worth $9 billion or $10 billion. What is

interesting about it is that it has become successful as they set up a

website that is now near zero marginal cost. For the people who

want to rent out their rooms and apartments, they are already paying

a mortgage or a rent and it is a zero marginal cost for them to rent

out space to a visitor and this website alone, in New York has

resulted in hotel night stays dramatically reduced.

But your overall thesis is that this long`term shift in economic

modelling is killing capitalism, but my counter argument is that it is

creating new forms of capitalism. For the AirBnB example, it is new

capitalism. They not giving it away for free.

Do you know what couch surfing is? It is totally nonprofit and they

have millions and millions of people who are sharing spaces for free.

What we are seeing is a combination and hybrid, part capitalist and part

free market. Let's slow down a minute and talk about the context.

We have seen hundreds of millions of people sharing their own information

at a zero marginal cost, you cannot deny it. `` information goods.

Videos on YouTube, information news blogs...

I am just arguing that it is not the demise of capitalism. If you look at

news organisations, many sell fewer copies of newspapers than they used

to but they are monetizing in other ways. Paywalls and firewalls. You

are in the media and you will appreciate this. For a long time

industry analysts have thought that there would be an opportunity for

capitalism to take new out new "freemiums". For example, a musician

will say that he will give out his music for free and people will come

to his concert because they like his music or someone will say to the New

York Times that they will give them free articles and then they will

have to subscribe if they want more. There have been new opportunities

but it is a smaller and smaller market because as new information

becomes free, less people have the time and inclination to buy it. I

just wonder if Google and Eric Schmidt will buy into your notion.

There are companies that are able to become an enormous giant but there

are people who are producing and sharing for free and that is

undeniable. You have laid out what you believe

we can learn from the last decade, but you go further. You seem to be

saying that all forms of tangible goods production are going to go the

same way, and become much closer to free. The marginal cost will go down

and in the end, there will be no incentive for companies to safeguard

what they produce and it will all become collaborative and I do not

buy it. Economists have said that there is a

firewall here. Free content has changed the information industry.

They've said, will not see a zero marginal cost go from the virtual

world to the physical world, but that is no longer the case. A new

technology revolution is emerging, within the last two years and it is

expanding. An expanded internet. The internet of things. It has allowed

us to expand and converge with emerging energy internet and

fledging logistics internet, three in one, a super internet of things

and sensors are now being connected across those feeding information to

those three. Resource flows, factory floors, the electricity grid,

vehicles. They are all connected and feeding information back into those

three. What does this mean? If we keep network neutrality as we have

now, it means that you and I and 40% of the human race can go up on this

internet of things, some are already doing it, and you can mine this big

data that is coming through the system and determine your own

algorithms and you can increase your own productivity, reduce your

marginal costs and create your own energy and your own 3D printed

products, heading to near zero marginal cost. I can tell you that

this is happening and I can tell you where. Millions of people are

engaged in it. It is real. You seem to have abandoned any

notion of patent or copyright law. You cannot go onto the internet and

bring down exclusive innovations produced by millions or billions of

dollars from the corporate sector... I have to give you some education.

Let's take 3D printers. We have hobbyists and start ups and now

school systems that are putting 3D printers into place, which means

that anyone can take free software, almost all of it is free... The

important stuff isn't free... You didn't let me finish... You don't

know what the thought is. We have a lot to get through. Here is what I

am thinking. Take the pharmaceutical industry. Hugely important to all of

us and our healthcare. You are suggesting that you can, one day, go

onto the internet and discover a recipe for an important drug and

make it yourself with materials that you can buy. Who would need

pharmaceutical companies anymore? We would get no new drugs because there

would be no innovation. 3D printed products, thousands of people are

doing it, most of the software is free, you can print out your own

products and they are using recycled plastic and paper almost at no cost

and when they produce it, they are using their own renewable energy to

do it. Let's look at energy. It is really specific so give me a few

seconds. We have millions and millions of people, small

businesses, homeowners and co`ops who are literally producing their

own solar and green energy at near zero marginal costs. The technology

costs money but the moment it is out there on your property, the actual

marginal cost is free. The sunshine is free and your property is free.

Geothermal energy is free. Do we have millions of people who are

bypassing the fossil fuel industry and producing their zero marginal

cost energy right now? Do we have millions of people who

are bypassing the fossil fuel industry and producing their zero

marginal cost energy right now? I'm just wondering at what point you

lost touch with reality in the energy field? I'm talking about the

fact that all of us can become our own energy producers. Who needs the

big energy companies anymore? But do you not look around and see what is

happening in the energy market today? That actually fossil fuels

have made a remarkable comeback? That governments all over the world,

and peoples all over the world, appear to be becoming more reliant

on fracking, shale gas, shale oil, carbon`based fuels, than ever

before, even though you have been preaching this message for the past

decade? That's the past, you're living in the 20th century. That is

not happening. I'm living in the present. The Chinese just made a big

decision... You just put yourself in a big hole. Let me stop right there.

You know I have advised Germany over the years. And right now they have

an energy crisis. No, here is the crisis. We have 25% green energy on

the grid in Germany. We are heading to 35% in 2020. It is being produced

at near`zero marginal cost. Here is the crisis. The wholesale prices

have gone way down. But the retail prices have gone up because they are

passing the tariff on to the ratepayers. When they get over that

hump, free electricity. I will not let you go with China. With China,

talking about the Chinese leadership, I talked to them in

September. I have just been in China. They are looking at shale gas

in a whole new way. They say they cannot afford to be out of fossil

fuel. I just met with the Chinese leadership. They instructed the

Federal Government to begin looking into this transition to this

Internet of Things, a third industrial revolution. I met with

the Chinese leadership in September, and ten weeks after I was there, the

Chinese government announced an $80 billion plan for four years to begin

laying out the energy Internet, so millions of Chinese could produce

their own solar and wind locally at near`zero marginal cost. That is

reality. The other reality is they are going down the nuclear path as

well. We are in a transition. It is never either/or. We are in a

transition from the second to the third technology eras. I'm talking

about the beginning of something which will merge us into a new

economy. Not the ending. You're an economist, as well is a

futurologist. I wonder at what point your role as a futurologist allows

you to gloss over the realities of the 21st century which don't fit

with your theory? For example, I was with you at a conference a couple of

years ago in Brussels all about the commitment to create what they call

the European Super Grid, the smart energy grid which would allow

renewables to feed in from southern Europe, solar from northern Europe,

wind, to create an overwhelmingly powerful energy grid for Europe. You

said it had to happen. What have we seen in the last year? Investment

across Europe in energy infrastructure has been cut by

almost 50%. Although it has been cut, the on`the`ground experience is

very different. I am not a futurologist, I am a theorist. We

are a global consulting company. We are laying out infrastructure in

regions of Europe now. In the north of France, my global team of

companies have come into the area and are working with the region to

lay down this. When you say it is fairy tale, come and visit the

regions where we are actually laying this down. I would invite you to

come and see it. Invitation accepted, I look forward to seeing

it. In the meantime I want to get more philosophical. You have talked

about the energy grid, 3D printers, smart production, and how things

will become more abundant and close to free. Not everything. Energy,

yes. Many products we use, yes. When it comes to food and water, that is

the real problem. They seem quite important. That is the problem,

because of climate change. It is affecting the water cycle, meaning

more floods, droughts, and a loss in yield. This could be the trigger

that stops this process now. This ubiquitous Internet of things I am

talking about, this third Industrial Revolution, this transformation of

collaborative commons, is probably the only way we will be able to

address climate change, it gets us off fossil fuels and uses less

resources. Let me explain, because this is a new idea. People ask how

we can be sustainable. We are using more resources, and we now have CO2,

creating climate change. Near`zero marginal cost is the ultimate metric

of sustainability. Because if you can produce information and goods

and services at zero marginal cost, you are using the least energy to do

it. If we can move to extreme productivity, near`zero marginal

cost, it will be able to produce sufficient energy goods with very

little of the earth's resources. Surely that is a good journey to be

on. It is a fascinating idea of a journey. It is not an idea. We are

doing it in Germany, Denmark... They are trying. But the point is this.

You have acknowledged what was about to be my point about the strain on

finite resources, including food and water. You have acknowledged that

may be a problem. Here is something you haven't even addressed yet. And

that doesn't feature in your economic analysis. That is pure

human nature. When you talk about the collaborative commons, and the

shift from competition and ring`fencing and private ownership

to sharing, and cooperation, it seems to me you fly in the face of

what we have learnt over many centuries of basic human nature. You

have to read the book. The Zero Marginal Cost Society, I have a huge

section of the book, give me a little time to talk about it. I

haven't quite finished my questions. Tell me why the instincts we have as

human beings, many of which are about competition, will not

undermine the collaborative commons. There is an old tradition. The

modern capitalist marketplace is about competition, but we are social

creatures. And throughout most of history, people have cooperated and

collaborated to share their goods and services. Even today, let me at

least try to answer. Let me at least answer one. We have... Everyone

thinks there is only the private marketplace and the government, no

other way to manage the economy. There is another whole sector called

the social commons. Millions of organisations in the nonprofit

sector, which produce and share goods and services we desperately

need. Education, healthcare, all sorts of services which have nothing

to do with the profit motive. This is a huge sector, growing faster

than the private market sector for 20 years. In your own country 10% of

the GDP in the UK and US is now in the sector. What happens to

selfishness and greed? What happens is you take a look at what is going

on with the millennial generation, the young people, they are seeing

their entrepreneurial spirit best advanced by being entrenched in

these massive networks where they benefit the network and benefit

themselves. Why are so many young people sharing free software?

Sharing their music? Sharing cars, sharing all sorts of things that our

generation never did? Because ownership is not as important to

them as access. They want to be involved in networks where they can

be social entrepreneurs, not just traditional business entrepreneurs.

I don't deny these trends. It would be insane to do that. But I see that

around the developed world, as well is developing, inequality is on the

rise. And the idea that everybody is now more collaborative and more

sharing, just doesn't seem to fit. The reason this is happening is

because inequality is on the rise. As we move to the last stages of

this capitalist era, it will still be capitalist. It will not

disappear. But as the dominant system, what we see? After two

Industrial Revolution through the 19th and 20th century, we have

organised vertically integrated corporations. And the 500 largest

companies in the world today, the Fortune 500, their revenues equal

one third of the GDP of the planet. 65 richest individuals in the world,

their wealth now equal to 3.5 billion poorest people, half the

human population. You want to continue with that economic system?

I'm curious. What's your answer? Would you like to continue... I need

an answer. My question, and we are almost out of time. I want a new

economic journey, allowing our better instinct to flower and a

collaborative journey on this collaborative commons. We know that

young people are beginning to do it. We should be hopeful, and we should,

rather than say it can't be done, and nothing can be changed, we are

going to continue to have fewer jobs and more climate change, that is not

a good journey. You make a great play of the facts which you have

advised senior leaders of the European Union, the United States

and China, but isn't the truth that they see you as an interesting

idealist but not a realist. I don't think so, because they are

developing the plans I have outlined. The formal plan of the EU

is endorsed by the Parliament and is working its way through the European

Commission. It is in their 2030 and 2050 plan. Those ideals are for them

to generate. They are still ideals. No, regions are developing parts of

this right now. That is not fair, Stephen. You are giving your

audience and unfair picture of Europe. Europe is far ahead on

moving toward sustainability plans. Would I like it to be doing more,

quicker, yes. We have to end there. We will come back and chew it over

again. Jeremy Rifkin, thank you for joining HARDtalk.

Good morning. We saw some big contrast around the UK on Monday.

Scotland had the best of the weather. Lots of sunshine in the

north`west. 19 degrees on the Isle of Skye. In the Midlands, 13 degrees

in Nottingham. The rain