Jeremy Rifkin on the Fall of Capitalism and the Internet of Things | Big Think

We are just beginning to glimpse the bare outlines of an emerging new economic system, the collaborative commons. This is the first new economic paradigm to emerge on the world scene since the advent of capitalism and socialism in the early 19th century. So it's a remarkable historical event. It has long-term implications for society.

But what's really interesting is the trigger that's giving birth to this new economic system. The trigger is something called zero marginal cost. Now, marginal costs are the costs of producing an additional unit of a good and service after your fixed costs are covered. Business people are all aware of marginal costs; most of the public isn't. But this idea of zero marginal cost is going to dramatically and intimately affect every single person in the world in the coming years in every aspect of their life.

There's a paradox deeply embedded in the very heart of the capitalist market system, previously really undisclosed. This paradox has been responsible for the tremendous success of capitalism over the last two centuries. But here's the irony: the very success of this paradox is now leading to an end game and a new paradigm emerging out of capitalism, which is the collaborative commons.

Let me explain. In a traditional market, sellers are always constantly probing for new technologies that can increase their productivity and reduce their marginal costs so they can put out cheaper products, win over consumers, gain market share, beat out their competitors, and bring some profit back to investors. So, business people are always looking for ways to increase productivity and reduce their marginal cost. They simply never expected, in their wildest dreams, that there would be a technology revolution so powerful in its productivity that it might reduce those margins of cost to near zero, making goods and services essentially free, priceless, and beyond the market exchange economy.

That's now beginning to happen in the real world. The first inklings of this zero marginal cost phenomenon was with the inception of the World Wide Web from 1990 until 2014. We saw this zero marginal cost phenomenon invade the newspaper industry, the magazine industry, and book publishing. With the coming of the World Wide Web and the Internet, all of a sudden millions of people, then hundreds of millions of people, and now 40 percent of the human race with very cheap cell phones and computers are sending audio, video, and texting each other at near zero marginal cost.

So what's happened is millions of consumers became prosumers with the advent of the Internet. They are producing and sharing their own videos, their own news blogs, their own entertainment, and their own knowledge with each other in these lateral networks at near zero marginal costs and essentially for free, bypassing the capitalist market in many instances altogether.

This zero marginal cost phenomenon, as it invaded the information industries, wreaked havoc on big, big industries. Newspapers went out of business; they couldn't compete with near zero marginal costs. Magazines went out of business. And my own industry, publishing, has been just wracked by free e-books and free knowledge and information.

But, you know, the strange thing about it is that at first, a lot of industry watchers said this is a good thing because if we give out more and more information goods free and people are producing and sharing it free, these freemiums will stimulate people's appetite to want premiums and then upgrade this free goods and information by getting more customized information.

I'll give you an example. Musicians give away their music for free when they started to see this happen, hoping that they would get a big loyal fan repertoire and then their fans would be enticed to go to their concerts and pay premium in order to be there in person. And then, of course, we saw this with newspapers. The New York Times will give you ten free articles a month, freemiums, hoping that you'll then upgrade to premiums and buy their subscription service.

It didn't happen on any large scale. This was very na...