By Neil Patrick
We all need to think differently about our jobs and careers in the 21st century. This isn’t something which is ever talked about in the mainstream media. They are too busy reporting job losses and hunting down stories about new jobs being created. At best you’ll find tips about interviews or resume writing. None of this information deals with the fundamental shifts in society that we seeing today and which will become more and more dominant in the future. Worse, none of this really helps people who are desperately searching for jobs and trying to figure out why even if they have great qualifications, they still can’t find work…
What is REALLY going on?
Part of the reason for this tragic state of affairs is that the world is undergoing a radical transformation. It’s a change so great that nothing like it has happened for over two hundred years. It’s the endgame of a complex interplay between technology, energy sources, demographics, communications, globalisation and the biosphere.
Jeremy Rifkin’s latest book, “The Zero Marginal Cost Society” has set out an immensely insightful view of what’s really going on in the world today. And it has nothing to do with selfish businesses, greedy bankers or corrupt politicians.
As Rifkin says, “We are just beginning to glimpse the bare outlines of an emerging new economic system, the collaborative commons. This is the first new economic paradigm to emerge on the world scene since the advent of capitalism and socialism in the early 19th century. So it's a remarkable historical event. It has long-term implications for society”.
Technology will continue to make goods and services cheaper and cheaper until they are almost free
The trigger for this global change is something called “zero marginal cost”. Marginal costs are the costs of producing an extra unit of a good or service after your fixed costs are covered. All business people are familiar with marginal costs, most of the public isn't. And as I discussed here, marginal costs have been falling consistently for decades as technology progressively replaced expensive human labor and drove down the cost of production. I distinctly recall wanting a flat screen television about twelve years ago. I never bought one then, because they cost about £15,000. Today I could buy a bigger and much better TV for less than £1000.
Books used to be another thing I would spend a lot of money on. It wasn’t unusual for me to fork out £20, £30 or even more to buy a printed copy of a book that really interested me. Today I can download an electronic version usually for around £5. CDs would cost me £10-£15 each back then. Today, most CDs are about half that price and legal downloads even less.
Endlessly falling marginal cost means consumer goods and many services will continue to get cheaper and cheaper, heading ever closer to zero. Zero or near zero marginal cost is going to dramatically affect every single person in the world in the coming years in every aspect of their life.
A new economic paradigm is on its way right now
There's a paradox embedded in the heart of the capitalist market system that’s pretty much never discussed. This paradox has been responsible for the tremendous success of capitalism over the last two centuries. But here's the irony; the very success of this paradox is now leading to an end game and the new paradigm emerging is what Rifkin calls, “collaborative commons”.
In a traditional market, sellers are always constantly probing for new technologies that can increase their productivity, reduce their marginal costs so they can put out cheaper products and win over consumers and market share and beat out their competitors and bring some profit back to investors. So business people are always looking for ways to increase productivity and reduce their marginal cost.
But they simply never expected in their wildest dreams that there would be a technology revolution so powerful that it might reduce those margins of cost to near zero making goods and services essentially free, priceless and beyond the market exchange economy. That's now beginning to happen in the real world.
And the internet is at the heart of this transformation
The first inklings of this zero margin cost phenomenon was with the inception of the world wide web from 1990. Millions of consumers became prosumers with the advent of the Internet. Today, they produce and share their own videos, their own news blogs, their own entertainment and their own knowledge with each other. In these lateral networks, this is done at near zero marginal cost. It’s essentially free, completely bypassing the capitalist market.
This zero marginal cost phenomena wreaked havoc first on publishing businesses. Newspapers went out of business; they couldn't compete with near zero marginal costs. Magazines went out of business. Record companies went out of business.
But free stuff cannot easily be converted into stuff which earns us money
The strange thing about it is that at first a lot of industry watchers said this was a good thing. They argued that if we give out more and more information goods free and people are producing and sharing it free, these “freemiums” will stimulate people's appetite to want premiums and then upgrade this free goods and information by getting more customized information.
Musicians gave away their music free when they started to see this happen hoping that they would get a big loyal fan base and then their fans would be enticed to go to their concerts and pay the premium in order to be there in person. We saw a similar strategy with newspapers. The New York Times will give you ten free articles a month, hoping that you'll then upgrade to premiums and join their subscription service. It just didn't happen on any large scale.
This was very naïve by industry watchers. Sure, some people have moved from freemiums to premiums but when more and more information goods are out there nearly free shared with each other, music, film, arts, information and knowledge, the attention span and scarcity is not there to motivate people enough to want to pay for the premiums when they have so much available already for free.
What does this mean for jobs in the future?
All the while that this has been going on, jobs have become scarcer for more and more people. Even where human skills are required to deliver services, like healthcare, the ever increasing efficiency of the technology they use to provide care, means fewer and fewer people are needed.
The implications of the zero marginal cost society are huge. We all need to think differently about how we will earn a living in the coming years. There are several implications as I see it:
- Even if we are working full time currently, it is almost certain that the number of people organisations require to do the type of work we do will continue to reduce.
- As traditional jobs continue to become scarcer, competition for the remaining jobs will continue to become fiercer.
- The loss of a job is likely to result in longer periods without work. The loss of income coupled with continuing outgoings, will continue to bankrupt many people.
I believe that we can keep ahead of this tsunami of job destruction if we embrace three essential ideas about our careers in the internet age:
The importance of connectivity and personal networks. The internet facilitates the development of our personal networks. The largest numbers of opportunities will accrue to those who are the best connected people. This is why Linkedin and other social media is so important to all of us.
Collaborative approaches will yield greater returns than competitive ones. Building our opportunities will be less and less as a result of competition. More and more they will be the result of collaborations. People do business with people they like. And helping others out is the best way I know to develop the necessary goodwill for a relationship which has future value to both parties.
Personal intellectual capital and especially forms of creativity that cannot be easy replicated by technology will be the most resistant to erosion. We tend to think of intellectual capital as a very corporate thing. But every one of us has personal intellectual capital which is ours and ours alone. It might be great cooking recipes. Or a gift for oratory, or the ability to show great empathy. The list is endless. But more than ever before we need to clearly understand what our personal intellectual capital assets are. This will be the only way we can figure out how we can leverage our value and continue to earn money in a zero marginal cost society…
