The Poverty of Theory

The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism BY Jeremy Rifkin. Palgrave Macmillan Trade. Paperback, 448 pages. $18.

The cover of The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism

Some people will go through spectacular contortions to ignore politics and its role in the global economy. Technology just changes. Social change just happens.

Imagine a world that had never experienced the spice trade, colonialism, the slave trade, mercantilism, racism, two world wars, and a “cold war.” Envision a global matrix of trade and commerce that did not emerge via massive state investment (in some countries) in public education and universities; massive state investment (ditto) in military technology, the World Bank, and the International Monetary Fund; and enormous state support for industry and agriculture.

In such a world, one might expect a level playing field among nations. States could leverage their natural gifts, such as climate, arable land, buried resources, labor supplies, and navigable bodies of water, to achieve comparative advantages over their competitors. And all the theoretical arguments for “free trade” might generate actual evidence supporting them.

Instead, of course, we live in a world in which economic dominance is stained by blood and marked by the nation-state’s brutally efficient machinery of resource exploitation. In reality, natural advantages shrink in importance next to the raw political power of the richest and most militarily aggressive states.

Nevertheless, American writers in the booming tech-seer sector continue to ignore the role of politics and policy in explaining how and why wealth is distributed unequally across the globe, usually deploying a pair of interlocking analytical strategies to transport their readers into the tech futurist’s idealized world, shorn of politics or history. Their first step is to construct a scientific-sounding theoretical scaffolding using lay summaries of actual science to explain human phenomena. Their second is the quasi-religious invocation of “innovation,” a force that moves us down necessary and knowable paths to a certain future.

Two recent books by pedigreed authors showcase these maneuvers grandly. Why Information Grows, by MIT researcher and physicist César Hidalgo, employs the first rhetorical strategy in an alarmingly thin and facile tour of information theory and its effects on the world. The Zero Marginal Cost Society, by legendary futurist and pundit Jeremy Rifkin, is impressive in its breadth and heft, positing nothing less than the clear and present erosion of capitalism as we know it, via the remorseless internal logic of innovation.

Hidalgo, as one might expect, has starred in a TED talk—a TEDxBoston talk, to be exact—that reveals the pallid mission at the core of the book. His goal is to simplify complexity, and he does so repeatedly and violently, forcing volumes of work on information theory and chaos and complexity theory into a few dozen pages of pithy prose.

Information theory tries to explain how order signals meaning. It was influential in forging the theory behind the conversion of analog signals into compressible digital packets, thus enabling us to send dense collections of content across the planet in a few seconds. Complexity theory, meanwhile, seeks to understand how patterned order spontaneously emerges from chaos, such as in the well-known examples of the spiral of a seashell and the formation of a whirlpool. Both of these areas of science are revealing, and as complicated as they are influential. Scientists who made signal contributions to these fields, such as Benoit Mandelbrot and Nobel laureate Ilya Prigogine, have written clear and insightful books about them. And science writers like Stephen Johnson and James Gleick have summarized both extremely well.

By contrast, Hidalgo offers an interpretive scheme that might well be dubbed Complexity for Dummies—and in the process leaves readers fairly bewildered as to the relevance of this work for his larger purpose: the application of complexity theory to the wide variations of national standing in the global economy. He tries to link the scientific idea of information growth to the relative success of economies by coining a neologism, “crystallized imagination,” which stands for the objects a country invents in which to “accumulate information.” At one point, for instance, an iPhone was merely an imaginary thing. But once Apple “crystallized” it, it began serving the interests of the United States—or, more accurately, those of the workers in China and Korea who manufacture component parts and assemble the device, of the patent holders from around the world who license their technology to Apple, and of Apple stockholders, who also live and work around the world.

Hidalgo wants to convince us that if a country can manage information among its citizens via the (nondigital) social networks necessary to promote crystallized imagination, it can then readily export its products to countries that lack those products or technologies.

Social networks and the rich preserves of what our leading success theorists call social capital (i.e., education, accessible models of meritocratic achievement, family support, and the like) are the key virtues that successful national economies enjoy, Hidalgo posits. In advancing this argument, he relies, predictably, on the work of political scientist Robert Putnam and sociologist Mark Granovetter. Putnam outlined the role of social capital in explaining the economic and political differences between northern and southern Italy, before turning his attention to what he saw as the degradation of social capital in the United States in his 2000 best seller, Bowling Alone. Hidalgo, as uninterested in history as he is in politics, neglects to explain how Putnam’s narrative of America’s decline in social capital since the rise of television fits into the triumphalist story of iPhone-enabled American global dominance. Hidalgo concludes that nations with high levels of mutual trust in their social networks can build and sustain social capital and thus maximize the value of their crystallized imagination.

So what do information theory and complexity theory have to do with the differences among countries’ levels of social capital? Not much, as it turns out; Hidalgo could easily have written the final two-thirds of Why Information Grows without recourse to the imprecise scientism he deploys in the first third. But then he would have been on even thinner ice. Hidalgo is a physicist, so complexity theory is the material he actually knows, even if he explains it poorly in this book.

Hidalgo makes no mention of the state-funded research that, in reality, sparked the technology that underlies just about everything in the iPhone. He does not consider that some countries have strong university systems that sustain a class of engineers and leaders and that others do not. He also ignores the rampant corruption in postcolonial societies that sucks economic surplus into Swiss banks. To Hidalgo, the iPhone just “grew”—i.e., emerged organically from Northern California’s social networks. This matrix of self-reinforcing virtue is the secret ingredient that generates social capital, allowing a small number of entrepreneurial souls to exploit the agglomeration of personal data and produce crystallized imagination.

Clearly, most TED talks should remain TED talks. And, as a corollary: Some books are not so much studies in sustained and dispassionate persuasion as platforms for lucrative corporate speaking gigs.

Like Hidalgo, Jeremy Rifkin traverses vast bodies of academic work to produce books chock-full of big ideas. And, like Hidalgo, Rifkin launches The Zero Marginal Cost Society, his latest manifesto for the future, off the shoulders of a physicist—in this case, Sir Isaac Newton. Capitalism will fall, he argues, but not because the proletariat will rise up to overthrow it or because it will collapse from its own internal contradictions. Rather, it will (yes) organically decompose, under environmental pressures from without. Our atmosphere can no longer contain all the carbon that we burn to sustain capitalism. The system must sputter out at some point, and all that has melted into the air will come back to cast our factories into history’s dustbin. In short: the second law of thermodynamics to the rescue!


In this, his twenty-third book, Rifkin continues his pattern of writing grand narratives that predict massive changes. But his scenario for capitalism’s obsolescence doesn’t mean the end of free enterprise; far from it. Rifkin predicts that three commercially driven “Internets”—which is to say, forward-looking systems of information exchange, not computerized interfaces per se—will combine synergistically to alter the basic terms of economic reward. Important things will become, as nuclear-energy champions once predicted, “too cheap to meter.”

Rifkin celebrates the classic Internet—the “Communications Internet”—as the model for two more recent Internets that will erode capitalism as we know it. The Communications Internet has destroyed the music business (except that it hasn’t) and the news business (ditto), and it is about to destroy academia (except that there is no evidence that it will). Nevertheless, despite the persistence and adaptability of these putatively “disrupted” industries, and ignoring the inconvenient truth that the Internet might not survive in its current, open form, Rifkin declares the wars over the circulation and licensing of knowledge, information, and entertainment already over.

The second iteration of the Web, now frenetically liberating the world from work and capitalism’s other trademark drudgeries, is the “Energy Internet.” Here Rifkin celebrates (with justification) Germany’s and China’s recent success in developing models for producing alternative energy on a mass scale. China is exporting thousands of solar panels for use around the world; Germany is using them on private homes. Home owners in Germany are increasingly selling their surplus electricity back to the grid for use in energy-intensive enterprises such as mining and heavy industry. But this hardly seems to advance his overall argument: Indeed, it is evidence that solar energy is actually supporting capitalism rather than undermining it.

Nor does Rifkin examine the central role that politics plays in the solar-energy economy. China is dumping subsidized solar panels on the world, driving producers in the United States and elsewhere out of business. As these producers are increasingly priced out of the global energy market, they’re pleading for greater subsidies from their own governments. Likewise, the German model of residential solar adoption could not succeed without strong regulatory guidance. Here in Virginia, for example, I can’t put solar panels on my home and sell the surplus. Energy companies have successfully lobbied the state government here and in Florida and other sunny southern states to make that process either illegal or prohibitively expensive. Happily ignoring all that, Rifkin is confident the energy revolution will just happen.

The final challenge to capitalism, Rifkin argues, comes from the “Internet of Things”—the ballyhooed computer network that links common household appliances and accessories to digital feedback systems in order to increase the efficiency of delivering goods and services to suppliers, producers, and consumers. Rifkin archly dismisses many of the alarms over user privacy raised by critics of this further incursion of software protocols into the physical world. He insists that such concerns will wither away as young people who don’t care about privacy take charge of the economy—as if that were either true (it’s not) or relevant to the debate.

But at least Rifkin manages to pay lip service to privacy issues. He remains woefully silent when it comes to addressing the all-too-plain threats of market concentration raised by the emergence of the Internet of Things. The vertical integration of data control over more and more of our lives means, in turn, that a fairly small group of firms will be poised to assume monopolistic or oligarchic control of all the data about all the bodies and goods in our economy. These “things” include real estate, a sphere in which, Rifkin insists, “sharing” models like Airbnb and co-op living are certain to ease the current housing crunch in New York and San Francisco. The shortage of usable land in these cities (and in Hong Kong, Mumbai, Lagos, and Rio de Janeiro) won’t matter much longer. The sharing economy will simply fill up all the unused square feet of sleeping space.

As these three Internets make communication, energy, and logistics close to free—available at zero marginal cost, per the book’s title—the logic of the market will cause the price system to fold irreversibly in on itself. Simply too many important things in life will become supercheap for our prevailing scarcity-minded system of production and exchange to keep up.

This chipper analysis means, among other things, that Rifkin is untroubled by the prospective advent of what he should have called the “High-Up-Front-Cost Society”—i.e., a social order in which only the wealthy and politically connected can take full advantage of the zero-marginal-cost way of doing things.

Rifkin’s only words about the fate of labor in The Zero Marginal Cost Society echo those of John Maynard Keynes in a letter to his (at that time unborn) grandchildren in which he predicted a technologically driven life of ease, unfettered by the indignities of work. With the problem of work at last solved, Keynes prophesied, all of humanity could spend its days composing poetry, among other agreeably leisured pursuits.

Rifkin clearly believes the fulfillment of Keynes’s prophecy is imminent. Of course, millions of former miners, warehouse workers, teachers, and hotel workers might not have poems ready to sell on what surely would be a saturated poetry market already disrupted by the Communications Internet.

Rifkin also fails to account for the myriad human activities that don’t seem to fit into these three Internets. What about the production of wheat, yeast, and bread? What about cattle, leather, and shoes? Who will bake bricks, stir mortar, and assemble walls? Who will make aluminum, fashion it into airplanes, and staff first-class airline lounges? Even if Rifkin is partially correct and these three Internets substantially lower the marginal cost of communication (as has happened), energy (as has not happened), and the shipment of solid goods (which has happened only for Amazon Prime members), we still face a world in which the vast majority of capitalist enterprises work in cahoots with prostrate states that are all too willing to do their bidding. Rifkin pines for a world freed from carbon, tuition, and work. But he does not see a need to campaign for any of it. It will all just happen. He writes exclusively in the inevitable tense.

Rifkin and Hidalgo know what they are doing, of course. The audiences at major trade meetings, the World Economic Forum at Davos, and the Aspen Ideas Festival have no taste for actual politics. They want clean-sounding, gee-whiz predictions and solutions. And with airport bookstores bulging with copies of Atlas Shrugged, these two titles would fit just fine on the same shelf.

But at least Ayn Rand took the state seriously—too seriously, as it turned out. Rifkin, like Hidalgo, pays no attention to the contributions and contradictions of the state in his vision of a changing world economy. For someone like Rifkin, who first rose to prominence on the momentum of the left-wing antiwar and environmental movements of the early ’70s, that’s stunning. Nevertheless, both of these books are clear market achievements, of a very particular sort: In today’s pundit economy, one fueled by shallow scientism, simplistic models, and grand pronouncements about “revolutions,” Rifkin and Hidalgo deliver the goods—or, as they would doubtless prefer, the crystallized imagination—at zero marginal cost.

Siva Vaidhyanathan is the Robertson Professor of Media Studies at the University of Virginia and the author of The Googlization of Everything—and Why We Should Worry (University of California Press, 2011).