From Ownership to Access: Considering the Era of the Sharing Economy

This book review covers The Zero Marginal Cost Society: The Rise of the Internet of Things and the Sharing Economy (NHK Publishing), a collection of essays on the future economy by Jeremy Rifkin, an American cultural critic and economic advisor to Germany and the European Commission.

Is Capitalism Coming to an End!?

The book begins with the statement, "Capitalism is now giving birth to its successor." The author repeatedly argues that the capitalist system, by its very nature, is destined to end somewhere, and as marginal costs approach zero, the economy will shift to a new paradigm.

What does this mean?

According to the author, capitalism fundamentally operates on the principle that companies providing "better products at lower prices" through market competition survive. However, when this competition to "lower prices" reaches its limit and everything becomes provided for free, corporate profits inevitably cease to rise—much like the laws of thermodynamics—forcing the system to end.

The author explains using an analogy from his own manuscript.

In a market exchange economy, profits are earned as margins. For example, as an author, I sell the fruits of my intellectual labor to a publisher, receiving an advance and future royalties. However, before my manuscript becomes a book and reaches the final buyer, it passes through the hands of external manuscript editors, typesetters, printers, wholesalers, transport and warehouse operators, and retailers. Each party involved in this process adds a profit margin commensurate with their work to the cost.

But what if the marginal cost of manufacturing and distributing books plummeted to near zero? In fact, this is already happening. Increasingly, authors are bypassing publishers, editors, printers, wholesalers, transport/warehousing companies, and retailers by uploading their works to the internet, making them available at very low cost or even for free. The cost per copy for sales and distribution approaches zero.Costs are limited to the effort expended in creating the work and the fees for using a computer to connect to the internet. E-books can be produced and distributed at near-zero marginal cost. (P.13-14)

A society where everything is free?

While consumers intuitively grasp this analogy, this book predicts that the wave of free services will, in the IoT era, extend beyond communication (the information industry) to make energy costs and transportation costs nearly free as well.

For instance, in the energy sector, technological innovations in solar power generation (occurring exponentially, akin to Moore's Law in computing) will enable peer-to-peer, decentralized, and horizontally scalable sharing, similar to the internet. This would allow households to produce and share energy, effectively making electricity nearly free.

Furthermore, transportation costs are expected to become extremely low due to the proliferation of services like Uber and advances in autonomous driving technology. The buzzword "Industry 4.0" from Germany is based on this very concept.

(Incidentally, the author is skeptical of Industry 4.0, arguing that IoT is not a manifestation of a Fourth Industrial Revolution, but merely the universal application of digital technology across society through the construction of smart infrastructure—a feature of the Third Industrial Revolution.)

So what is the paradigm to replace capitalism?

An Economy Supported by Collaborative Commons

This book posits that beyond capitalism, a sharing economy will emerge, supported by collaborative commons. The term "commons" originates from the shared pastures and watermills used by peasants in feudal European villages. It refers to cooperative organizations run by citizens or users sharing common values, distinct from both the state and private enterprises.

The new era, it says, will see "commons" connected by new technology sharing goods, information, and energy in a decentralized, horizontally distributed manner.

What can we share?

While this book reflects the author's ideals and contains many points that remain unclear in reality (with numerous exceptions), it is understandable that the sharing economy will grow in prominence as a major trend.

As the value guaranteed by capitalism and currency gradually becomes relative and changes (with alternative ways of thinking emerging), we in advertising too must perhaps redefine our values. We should not only think about "How to make money?", "How to sell things?", and "How to advertise?", but also adopt the perspective of "How can we contribute to the community?" and "What can we share?"