Jeremy Rifkin, founder and president of the Foundation on Economic Trends, is one of the world’s leading authorities on economic sustainability. In this thought-provoking five-part series, he explains how we are already transitioning into a post-carbon era and on the verge of creating a sustainable economic paradigm that will usher in the Collaborative Age.
The Third Industrial Revolution will be the last of the great Industrial Revolutions and will lay the foundational infrastructure for an emerging collaborative age. Its completion will signal the end of a two-hundred-year commercial saga characterized by industrious thinking, entrepreneurial markets, and mass labor workforces and the beginning of a new era marked by collaborative behavior, social networks and professional and technical workforces.
In the coming half century, the conventional, centralized business operations of the First and Second Industrial Revolutions will increasingly be subsumed by the distributed business practices of the Third Industrial Revolution; and the traditional, hierarchical organization of economic and political power will give way to lateral power organized nodally across society.
Near-Zero Cost Marketing & Logistics
The democratization of manufacturing is being accompanied by the tumbling costs of marketing. Because of the centralized nature of the communication technologies of the First and Second Industrial Revolutions—newspapers, magazines, radio, and television—marketing costs were high and favored giant firms who could afford to devote substantial funds to market their products and services. The Internet has transformed marketing from a significant expense to a negligible cost, allowing start ups and small and medium size enterprises to market their goods and services on Internet sites that stretch over virtual space, enabling them to compete and even out compete many of the giant business enterprises of the 21st century.
Consider Etsy, a brash web start-up company that has taken off in the past seven years. Etsy was founded by a young New York University graduate, Rob Kalin, who made furniture in his apartment. Frustrated that he had no way to connect with potential buyers interested in hand-crafted furniture, Kalin teamed up with a few friends and put up a website designed to bring individual craftsmen of all kinds, from around the world, together with prospective buyers. The site has become a global virtual showroom, where millions of buyers and thousands of sellers from more than fifty countries are connecting, breathing new life into craft production—an art that had largely disappeared with the advent of modern industrial capitalism.
Connecting multitudes of sellers and buyers in virtual space is almost free. By replacing all the middlemen—from wholesalers to retailers—with a distributed virtual network of sellers and buyers, and eliminating the transaction costs that are marked up at every stage in the marketing process, Etsy has created a new global craft bazaar that scales laterally rather than hierarchically, and markets goods collaboratively rather than top down.
Etsy brings another dimension to the market—the personalization of relationships between seller and buyer. The website hosts chat rooms, coordinates online craft shows, and conducts seminars, allowing sellers and buyers to interact, exchange ideas, customize products, and create social bonds that can last a lifetime. Giant, global companies mass-producing standardized products on assembly lines operated by anonymous workforces can’t compete with the kind of intimate one- to-one relationship between artisan and patron.
Although still in its infancy, Etsy is a quickly growing enterprise. In 2011, Etsy’s sales topped nearly $500 million. In a recent conversation, Kalin told me that his mission is to help foster “empathic consciousness” in the global economic arena and lay the foundation for a more inclusive society. His vision of connecting up “millions of local living economies that will create a sense of community in the economy again” is the essence of the Third Industrial Revolution model. Etsy is only one of hundreds of global Internet companies that are bringing together producers and consumers in virtual marketing spaces and, in the process, democratizing marketing costs across the global economy.
As the new 3-D technology becomes more widespread, on-site customized manufacturing of products will also reduce logistics costs with the possibility of huge energy savings. The cost of transporting products will plummet in the coming decades because an increasing array of goods will be produced locally in thousands of micro-manufacturing plants and will be transported regionally by trucks powered by green electricity and hydrogen generated on site.
The lateral scaling of the Third Industrial Revolution allows small and medium size enterprises to flourish. Still, global companies will not disappear. Rather, they will increasingly metamorphose from primary producers and distributors to aggregators. In the new economic era, their role will be to coordinate and manage the multiple networks that move commerce and trade across the value chain.
To read more from this five-part series, continue to A Sustainable Economic Future: Part 5: Jobs in the Collaborative Age.
The Third Industrial Revolution: A 5-Part Series on a Sustainable Economic Future
© 2013 Omega Institute for Holistic Studies