The Zero Marginal Cost Society, by Jeremy Rifkin

This is a book I really wanted to like. Both because I like Rifkin, his ethics and what much of what he has done, but also as I think the theme of the book is both very interesting and important.

The idea with a “near zero marginal cost society” is an interesting one, but I do not understand why Rifkin writes a book that is confusing the issue rather than helping make sense of the complex situation we face.

If we look at the different phenomenon that Rifkin discusses as “near zero” they are all interesting, but they are very different and only one category, with very few example, could be called close to zero marginal cost (if we ignore the cost of building and maintaining the ICT infrastructure). By confusing very different categories Rifkin is not helping provide a better understanding of the challenges we face. Perhaps he was hoping to contribute to a broader shift in how we approach cost in the digital age, but with such

I have seen others do similar mistakes as Rifkin, and below are four main categories that I use as a starting point during lectures to help provide a basic understanding regarding some of the key aspects of the digital economy.

1. (Close to) Zero marginal cost This is when a service can be provided for 1 person or 9 billion without any change in cost (for the provider): Software/information, books, movies. images and music belongs to this category (e.g. Operating systems, e-books, mkv-files, jpg-files, etc basically everything provided by Piratebay . It is important to understand that some of the goods in this category (like software) require significant investments. Too many people confuse zero marginal cost with zero cost. The question of how such goods should be priced is interesting and many might be goods that should be provided through taxes and then turned into digital public goods in key areas (education, health, science, etc. classical music).

These goods are interesting as many of them do not can be shared without loosing their value, the value actually increase as more people use them (from Skype to music)

This is basically data that can be copied.

2. Optimal use This is when limited additional use can be seen as zero marginal cost (if the existing use is profitable). This is when people share cars, tools, rooms (e.g. Air bnb, sharedearth, Zipcar). The “low” cost in these cases are not really low or zero, they are just a result of suboptimal use of our resources today. The fact that individual car ownership result in a situation when the car is often used less than 4% of the time does not really make the use of the additional 96% free. The fact that connectivity allows us to use products more optimal is very good, but it is only when we approach the challenges from a service perspective (in the case of the car “mobility”) that we can identify really smart solutions.

Optimal use is therefore in many cases just better use of fundamentally unsustainable solitudes, from extremely inefficient fossil SUVs that are part of car sharing schemes, to enormous inefficient apartments that are part of airbnb or similar schemes.

3. Low/zero running cost This is when the fuel/material used is zero or close to zero. Solar power, wind power, hydro power (almost nuclear power) belong to this category. These kinds of solutions have been part of society since the dawn of civilization, from windmills to water pumps.

These are fundamentally different from category 1, as these goods are not possible to share in the same way, if I use solar power it is less power left for you to use. When I read an e-book it does not affect your possibility to read it (if anything it increase the value of your reading it as we can discuss the book).

If the bulk of the cost belongs to the upfront investment for the construction of the goods, or to the running cost has noting to do with a zero marginal cost in the long run. It is the total cost of ownership that is interesting. There are challenges, from physiological/personal financial that tend to make people buy cheaper goods with higher running costs, to institutional when some companies roll over running costs to end-users. Still these challenges are not really related to the other zero cost aspects above.

E.g. the challenges with solar today is that most depend on materials that are limited in a way that do not allow them to be scaled up so that 9 billion can use them. They also require a lot of investments, not only to build them, but to connect them and maintain them in the current system. A simplistic “zero marginal cost” approach run the risk of hiding these important challenges.

This group of solutions must always be assessed through a LCA for natural resource use and actual costs of ownership.

4. Low production cost There are also a number of products where the value is due to research (or branding/marketing) not the actual production cost. Many medicines belong in this category, but also much of the luxury market where people pay for advertisement (like designer shoes, clothing, make-up).

For the “unnecessary” goods there are some positive environmental aspects as people pay a lot of money for very little material. Still the overall focus on citizens as consumers probably results in an overall negative impact (as these goods tend to promote short-tem thinking and limited empathy)

For necessary goods, like medicine, there are a number of interesting initiatives trying to explore how those in need can get access to medicines they need. E.g. http://healthimpactfund.org/ that is interesting as it also help focus on actual gains from the medicines.

In summary: Although I tend to disagree with much of the content in the book I still think this is a book that could be read as it covers many of the new trends and ideas that are often ignored. Also Jeremy has the heart in the right place so the discussions are interesting. I would recommend readers to approach the book like a bookmark collection from an interesting person who has found a lot of good pages on the web rather than a book with a coherent idea (or with any references to actual first hand research). I hope that the fact that almost all of the references are articles on the web is not an indication of a shallow thinking behind the book, but rather an attempt to provide easy read articles (although I think such books should have references to actual research).

I guess my conclusion is that this book could have been distributed as a 5000 words article and the weblinks downloadable as a package.

The Engines of God, by Jack McDevitt

A science fiction that addresses the Fermi paradox in an innovative way is always a welcome contribution to my reading list. This book had two things that I liked. First, how it describes a situation where we knew that there is life in the universe, but we are too late. To get to know a future where we are traveling around ruins of earlier civilizations is an interesting angle. Second, how a society grapples with a catastrophic challenge that will happen in a thousand years, but were actions probably is needed now in order to avoid the catastrophe (and to make things more interesting the probability for humanity managing the challenge is low based on existing data). The parallel to climate change is obvious, but the setting is so different that it feels fresh. The fact that we do not understand the threat and the book never reveals it is also interesting. We are so used to stories when we get the answer in the end (or more correct before the end when it comes to this kind of threat). The actual mechanism in this case is not the most important, especially as no explanation is provided (at least not in this book). What I find clever and interesting is how mankind would react (and get used to) a universe filled with civilizations that are dead and not understanding a threat to human existence. Adding to this a countdown clock (that gives us 1000 years or more) and we have a very interesting situation.

It’s not great literature, but enough interesting ideas to make it a good read.

Under the Skin, by Michel Faber

Under_the_Skin_Faber

This is a must read. It is one of the best novels about empathy I have ever read and also one of the best about industrial society as well as our relation to nature. I think it is actually THE best fiction in support of vegetarianism I have ever read, a bit surprising as Faber is not a vegetarian himself.

To get all the above was not something I expected from a science fiction novel I read as it was made into a movie. If you have seen the movie, with Scarlett Johansson, please forget that and read the book. If you have read the book, do not expect anything good from the book in the movie. While the movie has some good parts it feels most like a bad excuse to show Scarlet naked and explore some hidden camera work. Basically everything that made the book relevant and interesting is removed from the movie. The movie is not bad, it just have nothing to do with the book.

I was a bit disappointed in how the book ended, as it felt a little out of place. Instead of a small bang it should have ended with a long whimper. Fading out is how too many people live their lives and I think it would have been the perfect ending for the book.

Still, everything from how the characters look at nature to the way they exist in a system where they make their own personal suffering more important than the enormous suffering they are an active part of is fantastic. I often feel that people say things like “to capture the large in the small” as an excuse for not looking at the big picture, but here the details became not only a magnifying glass, but also a mirror. Judging from reviews I read, maybe it was too much of a magnifying glass/mirror for most? That the film (that I have to admit I feel very frustrated about) could drop all structural aspects and turn it into a small personal drama probably tells us more about our time than I want to admit.

Capital in the Twenty-First Century, by Thomas Piketty

Although “Capital” is one of the most recent books I have read I wanted to post a short text about it at the same time as a posted my text about “The new digital age”, as “capital in the 21st century” is the opposite to the “digital age” in so many ways. It is intelligent, focus on important issues, is funny and thought-provoking. It is a book where I often found myself agree and disagree with the author a number of times on a single page.

I initially just thought I would read the introduction and the conclusions, as I heard it was long and mostly about methodology. But once I started I just kept on reading. For once the term “page turner” made sense in a high-quality book. It such a well researched book (that also celebrate transparency by putting all the data out there for people to use), that focus on patterns through history that are of fundamental importance. Still it is humble and ambitious at the same time, but more than anything challenges you to think, both about the content, but also the method/approach.

I do not know if the title “Capital” was Piketty’s own idea, but he does not comment on it in the book so I must assume that Piketty was behind it, or at least is OK with it. For me that is a clear sign that he has humor, as it is easy to see how many of those who see themselves as economic experts in media, most still with a neo-classical approach, will be provoked with a reference to Marx. Especially in a book about equity.

I find the book particularly rewarding on three levels:

1. The fact that Piketty actually spent time researching the book and thought about the major trends in society while also being 100% transparent with all his data. This in a time where most authors do not even use footnotes, or if they do it is to newspaper articles, to back up their arguments. In the future I would like to see a situation where we can rank/measure books based on the actual research and number of ideas in the book? If this is 90+ on a 1-100 scale for quality research. As a reference I would say that most airport literature that is on the best-seller lists would be in the 8-12 range (this would include “the new digital age” and “the fourth revolution”).
2. The fact that he has a long-term perspective, that focus on the evolution of income and wealth over the past 300 years, makes the book a tool that makes it easier to separate important trends from noise today. It is also an inspiration for all of us who want to make sure that anything significant we do today should be evaluated based also on its impact beyond the year 2100.
3. The contribution to a simple framework where tax levels are discussed on a structural level, i.e. what do you get if you have 10% of GDP through taxes, 30% or 50%. This is particular interesting in relation to the emerging countries. It is interesting that Piketty notes that China has done progress and could potentially build a new social state (with Chinese characteristics), while India is struggling to put a system in place that supports equity and a social state. Obviously taxes can be good or bad, and you can have all the money in the world and still do not get anything of value if you do not have a state that can deliver. Still it is interesting to compare how all current developed countries have built a social state that is way beyond what you can get for 10% of GDP (e.g. in terms of health, education and redistribution).

The focus on the book is inequality when it comes to capital. Piketty defines capital a little special, and it is possible to argue with that (like James Galbraith does in this article in a way that is both a good contribution to the discussion, but also feels like a way to try to link his work to Piketty although it is much more limited). Regardless, Piketty’s contribution is something that I think can be seen as a mirror image of Manuel Castell. Where Castell’s tried to make sense of a new world by gathering a lot of data Piketty use a lot of data to explain long-term trends. I really would like to see them work together.

The two main weaknesses with Piketty’s book in my view are that

1. He hardly discuss our current situation with new information technology, new forms of power and a society that is very different than the one we have had so far. When knowledge and information (and this includes totally new ways of speculation) becomes capital in a way that we have never seen before. It would have been interesting to hear what Piketty think about these new trends. Does he consider these new phenomena to be ripples, or are they are so significant that he will include them in future work?
2. His recommendations are not developed and discussed enough. Still it is a relative weakness as his recommendations are so much better than 99% of the books written by policy makers and others that spend their time telling others what to do. The fact that he has a structure that the recommendations fit in so that he can provide both “utopian” and incremental suggestions is something that few seem to understand as many have criticized Piketty, e.g. for suggesting a progressive global tax on capital and wealth. The fact that he has recommendations and they are interesting make me want to hear more.

It should be obvious that I do not really see these two weaknesses above as real weaknesses, but rather potentials to develop the ideas even further.

The one real weakness as I see is that Piketty does not clearly explains the relation between his definition of capital and equity in enough details, nor how it relates to other definitions of capital. I hope he will expand on this in the future. Both are important as we develop more detailed recommendations to address unsustainable trends and inequity in particular as well as strategies for them.

Beside further work with integrating a new connected economy and develop the recommendations further it would be interesting to have some skilled experts use the data for visualizations as soon as possible. So much of the visualization work today is done by people that seem to find a few circles moving based on simplistic data as something amazing and capable of telling us chocking truths (obviously if they show that everything moves in the right direction they get media time and are invited to entertain on scenes around the world).

PS One small thing that I find very funny is the following quote from the Economist leaders page “Mr Piketty’s focus on soaking the rich smacks of socialist ideology, not scholarship.”

Piketty focus on equity and how that increased income/capital difference can be reversed. He spent 700 pages trying to explain that. If the Economist, John Micklethwait, could explain how “baby bonds” and “government top-ups of private saving accounts” could deliver this it would be interesting. But judging by the surprisingly low intellectual level on the book they put together (I say surprisingly low as have great respect for the Economist Intelligence Unit and many of the articles in the Economist are very good) that is not likely to happen anytime soon.

The book that triggered my blogging hiatus for six months: The New Digital Age, by Eric Schmidt and Jared Cohen

The book that triggered my blogging hiatus for six months was The New Digital Age, by Eric Schmidt and Jared Cohen. I always try to write about the parts that inspire my and I like books where I do not agree with the author(s). So why did this book made me stop writing? Basically I could not understand why an intelligent person like Eric could put his name on something that was of such low quality, so simplistic, and also to a large extent felt like a propaganda tool for the worst parts of American foreign policy. I then thought it might be interesting to explore the book from a perspective where I could understand what Google wanted from the Whitehouse. But my assumption was that Jared Cohen was a senior person in the Obama administration on his way to the top. I then I saw that Eric recruited Jared to work in Google Ideas. Looking at Google Ideas now in 2014, four year after it started it is hard to see what is going on. Nothing has been posted on Google + since January 2014 and the latest project/video is eight months old. The projects are not bad, but not very innovative, basically nine mainstream visualizations and coordination efforts that any ODA organization could have done.

With Google’s brand and skills you would expect something better than projects that something any semiskilled coder could pull off in a week or two. Or maybe I’m missing something here? The fact that Google, still, have a reasonable good brand, that they have two of the most thoughtful and visionary founders, etc. should allow them to do so much more than this. They could address the issues they do in more innovative ways, they could address the major challenges of today and they could work in a way that is more 21st century and less 19th century.

Back to the book: The ideas in the book are basically just a long laundry list of different technologies, presented without any context or discussion about the problems associated with them and how they are implemented. Most of the things are not directly wrong, but without a context they are trivial and many of them can be misunderstood as unique or groundbreaking.

The book reflects such a narrow and old perspective that you would expect a 70-year-old conservative person, who is desperately clinging to an old cold war worldview, to be the author. But this is a book by two young persons. One who should know a lot about technology (Eric) and one who should know a lot about current and future global policy challenges (Jared). Still they manage to produce something that is no more than scribbled notes where they seem very fascinated by themselves for being in exotic countries, and then Googled a few articles as they came back to “analyze” the situation.

The combination of a commercial perspective that they see no problem with what Google and others are doing and an outdated foreign policy agenda could have made it a thought-provoking book, but it is just boring, It is not only the low quality in the “research” and the fact that it often it feels as if you are reading press releases from Google and the US government that are cut and pasted together. Add to this the fact that the really interesting parts of the digital age, and this include mainstream phenomena like Wikipedia and WikiLeaks are hardly mentioned (and when they are it is in dismissive ways). The fact that major challenges like climate change and resource use are not even mentioned just make the book even more irrelevant. All this makes this one of the few books where I really can’t see why anyone should read, but maybe there is something hidden in the pages that I can’t find?

Still, being an optimist I hope that books like this can inspire a new generation of entrepreneurs to address the actual challenges of our time and focus less on trivial entertainment and old problems.