The Third Industrial Revolution

By Jeremy Rifkin

Notes made by Russ Faure-Brac

Rapid Change

• Peak oil production occurs when half of the ultimately recoverable oil reserves are used up.  The top of the curve represents the midpoint in oil recovery. After that, production drops as fast as it climbed.

• When oil hit a record of $147 per barrel in July 2008, the banking community shut off credit, the stock market crashed and globalization came to a standstill.

• Renewables are sun, wind, hydro, geothermal heat, biomass and ocean waves and tides.

• Fossil fuels are found only in select places, requiring a significant military investment to secure their access.  As we are forced to move away from oil, that need for military protection will decrease.

• There are only 442 nuclear reactors in the world generating only 6 percent of total energy.  To have even a minimal impact on climate change would require construction of three new plants every thirty days for the next forty years at a cost of $12 trillion.

Gross Domestic Product

• GDP measures negative as well as positive economic activity – armaments, prisons, police security, polluted environment, degraded human health.  Alternatives to GDP: Index of Sustainable Economic Welfare (ISEW), the Fordham Index of Social Health (FISH), the Genuine Progress Indicator (GPI), the Index of Economic Wellbeing (IEWB) and the UN’s Human Development Index (HDI).

• New measures to include – infant mortality, longevity of life, availability of health coverage, the level of education attainment, average weekly earnings, the eradication of poverty, income inequality, affordability of housing, the cleanliness of the environment, biodiversity, the decrease in crime, amount of leisure time, etc.

• The governments of France, the United Kingdom, the European Union and the OECD have all created formal quality-of-life indexes.

• The issue is more how we envision what we mean by work rather than just how we retrain the workforce.  There are four areas where people can engage in work: the market, the government, the informal economy and the civil society.  The first three will diminish as traditional economies transition into high-tech societies.  That leaves civil society (nonprofits, nongovernmental organizations [NGOs]) as a means of employment.

• The Third Industrial Revolution offers the prospect, at least, that the poorest countries on Earth, who were virtually left out of both the First and Second Industrial Revolutions, could leapfrog into the new era of distributed capitalism over the course of the next half century.

New Business Models

• The great economic transformations in history occur when new communication technology converges with new energy systems:
  • First Industrial Revolution: steam powered printing
  • Second: electrification and the oil-powered internal combustion engine
  • Third: Internet and renewable energies

• Five pillars of the TIR:

1. A shift to renewable energy
2. Micro renewable energy power plants on buildings
3. Hydrogen and other storage technologies to store intermittent energies
4. An intercontinental energy-sharing intergrid (unidirectional rather than bidirectional) using the Internet
5. Electric plug-in and fuel cell vehicles

• We need master plans that reconnect existing living spaces, work spaces and play spaces with the biosphere.

• The distributed nature of renewable energies necessitates collaborative rather than hierarchical command and control mechanisms, leading to a more distributed sharing of the wealth generated.  Shifting from markets to networks replaces the adversarial relationship between buyers and sellers to a collaborative relationship between suppliers and users.  Shared interest replaces self-interest.  Examples: Wikipedia, distributed manufacturing with “3-D printing,” Community Supported Agriculture, car-sharing operations (Zipcar), Couch Surfing Association.

• Distributed Capitalism = Democratization of entrepreneurship – everyone becomes a producer of their own energy, requiring a collaborative approach to sharing energy across neighborhoods, regions and whole continents.

• He favors the creation of energy cooperatives in every neighborhood to allow small, micro-producers of energy to aggregate their capital and spread their risk so they can become effective players in the distributed energy market.

• The challenge is the conventional energy sector, built around fossil fuels and nuclear power, that thinks in a centralized manner and the corporate mindset that is mirrored in Congress.

• Globalization is dying.  The economic current is shifting from globalization to continentalizatoin (Biosphere politics).  We may be moving to continental governance as with the European Union and ASEAN (Association of Southeast Asian Nations).

• Economists define productivity in terms of output per unit of input.  The inputs are defined as capital and labor, but what’s missing is energy.  The full cost over time to third parties, society as a whole and the environment and future generations is never taken into account.

• Social spaces like Wikipedia and Facebook challenge the basis of classic economic theory, that human beings are selfish creatures, constantly in pursuit of an autonomous existence.  TIR bring out a different set of biological drives – the need for sociability and the quest for community.

• We’ll be moving toward more peer-to-peer relationships rather than autonomous exchanges.  Property exchange in markets will give way to access relationships in collaborative networks.

• TIR will dramatically reduce transaction costs. As they approach zero in each step of the conversion process from production to processing to wholesaling to retailing, it is no longer possible to maintain a margin and the whole concept of profit has to be rethought.  How do businesses make profit when transaction costs shrink and margins disappear?

• Answer: Property will still exist in the hands of the producer but will be accessed over time through leasing and other mechanisms – car leasing, vacation time-shares.  Auto manufacturers will have a vested interest in making a vehicle that is durable, with low maintenance costs, made of easily recyclable material and has a low carbon footprint – the opposite of planned obsolescence. The shift from sellers and buyers to suppliers and users – from exchange of ownership to access to services – is changing the way we think about economic theory and practice.

Rate of Change

• Given that smart tech replaces more and more workers, who is going to buy all of the products being produced and services being offered?  TIR is likely the last opportunity in history to create millions of conventional mass wage labor jobs.  If current projections hold, a juvenile TIR infrastructure should be in place on most continents by 2040 to 2050, at which time the industrial workforce will peak and plateau.  Laying down the critical infrastructure over the next forty years will require the final surge of mass labor power.

• The transition from an industrial to a collaborative era is likely going to unfold in 50 years or less, as Kurzweil and others are forecasting.

•  The transition from an industrial to a collaborative era is likely going to unfold in 50 years or less, as Kurzweil and others are forecasting.  [me: peace can happen fast].

Millenials

• Beyond Left and Right – Ideology is disappearing.  A new political mindset is emerging among the younger generation of political leaders who have been socialized on Internet communications.  Their politics are less about right versus left and more about centralized and authoritarian versus distributed and collaborative.
• Our children’s understanding of economic theory and the governing assumptions of economic practice will be radically different from ours.

• As seen in the Arab Spring and the Occupy Movement, the Internet generation is demanding an end to autocratic, centralized governance so they can live in an open, transparent, borderless world.

• The right of free and open access to the renewable energies that bathe the Earth is increasingly becoming a rallying cry of a younger generation committed to sustainable lifestyles and stewardship of the biosphere.  The conventional ownership and control of fossil fuel energy in the hands of a few giant corporations and governments will appear odd to young people in 2050, who grew up in the TIR economy and assumed that the Earth’s energy is a public good – like the air we breathe – to be shared by all of humanity.  (Me – As the TIR proceeds we will become less reliant on oil and the world will be sharing resources more, both of which will result in less need for the military.

• A younger generation may well believe that while economic comfort is essential, one’s happiness is also proportional to the accumulation of “social capital.”

• Many of the best and brightest young people around the planet are eschewing traditional employment in the marketplace and government in favor of working in the non-for-profit sector.  The millennial generation and their children will need to be educated to work and live in both an industrial and collaborative economy.  Their children, however, will be increasingly employed in the civil society, creating social capital while intelligent technology will substitute for much – but not all- of human labor in the commercial arena.

Our Challenge

• TIR changes our sense of relationship to and responsibility for our fellow human beings.  Sharing the renewable energies of the Earth in collaborative commons that span entire continents can’t help but create a new sense of species identity.  Quality of life will be based on collaborative interest, connectivity and interdependence.