EFTA01137525.pdf

e Reader File Edit View Window Help 40 100% C3. j...42t13:414Pt. a o Rifkin - Zero Marginal Cost Society Ch 12, 13.pdf 77, - Cr'*.Vil V" . * 7 / 48 100% itF Tools Sign Comn Powerful industry leaders often strive to restrict entry of new en- mind from a preoccupation with strictly pecuniary interests to focus more terprises and innovations. But slowing down or stopping new, more on the "arts for life" and the quest for transcendence. productive technologies to protect prior capital investments creates a Both Lange and Keynes foresaw, back in the 1930s, the schizophrenia positive-feedback loop by preventing capital from investing in profitable that lies at the nucleus of the capitalist system: the inherent entrepreneurial new opportunities. If capitai can't migrate to new profitable investments, dynamism of competitive markets that drives productivity up and mar- the economy goes into a protracted stall. ginal costs down. Economists have long understood that the most efficient Lange described the struggle that pits capitalist against capitalist in economy is one in which consumers pay only for the marginal cost of the stark terms. He writes: goods they purchase. But if consumers pay only for the marginal cost and those costs continue to race toward zero, businesses would nor be able to The stability of the capitalist system is shaken by the alternation of at- ensure a return on their investment and sufficient profit to satisfy their tempts to stop economic progress in order to protect old investments and shareholders. That being the case, market leaders would attempt to gain tremendous collapses when those attempts fail.6 market dominance to ensure a monopoly hold so they could impose prices higher than the marginal cost of the products they're selling, thus prevent- Attempts to block economic progress invariably fail because new en- ing the invisible hand from hurrying the market along to the most efficient economy of near zero marginal cost and the prospect of nearly free goods trepreneurs are continually roaming the edges of the system in search of and services. This catch-22 is the inherent contradiction that underlies innovations that increase productivity and reduce costs, allowing them to capitalist theory and practice. win over consumers with cheaper prices than those of their competitors. productiv- Eighty years after Lange and Keynes made their observations, con- The race Lange outlines is relentless over the long run, with profit margins to temporary economists arc once again peering into the contradictory work- ity continually pushing costs and prices down, forcing ings of the capitalist system, unsure of how to make the market economy shrink. function without self-destructing in the wake of new technologies that are nearly free While most economists today would look at an era of speeding society into a near zero marginal cost eca. few earlier economists goods and services with a sense of foreboding, a Lawrence Summers, U.S. secretary of the treasury during President a guarde d enthus iasm over the prospe ct. Keynes, the venerable expres sed Bill Clinton's administration and former president of Harvard University, still hold consider- twentieth-century economist whose economic theories and J. Bradford DeLong, a professor of economics at the University of Cal- a small essay in 1930 entitled "Economic Possibilities able weight , penned millions of Americans were ifornia, Berkeley, revisited the capitalist dilemma in a joint paper delivered for Our Grandchildren," which appeared as at the Federal Reserve Bank of Kansas City's symposium, "Economic Pol- that the sudden econom ic downturn of 1929 was in fact beginn ing to sense icy for the Information Economy," in August 2001. This time, there was the beginning of a long plunge to the bottom. much more at stake as the new information technologies and the incipient advancing productivity Keynes observed that new technologies were Internet communication revolution were threatening to take the capitalist and service s at an unprecedented rate. They and reducing the cost of goods system to a near zero marginal cost reality in the coming decades. also dramat ically reducin g the amount of human labor needed to were EFTA01137525