Marginal Costs and Jeremy Rifkin

Rifkin doesn’t entirely get it, but at least he is on the way to the ocean.

At the heart of capitalism there lies a contradiction in the driving mechanism that has propelled it ever upward to commanding heights, but now is speeding it to its death: the inherent dynamism of competitive markets that drives productivity up and marginal costs down, enabling businesses to reduce the price of their goods and services in order to win over consumers and market share. (Marginal cost is the cost of producing additional units of a good or service, if fixed costs are not counted.) While economists have always welcomed a reduction in marginal cost, they never anticipated the possibility of a technological revolution that might bring marginal costs to near zero, making goods and services priceless, nearly free, and abundant, and no longer subject to market forces.

Jeremy Rifkin

“Free” or nearly free and “priceless” is debatable, but a price reduction to get to Josiah Warren’s “cost the limit of price” is what can kill the margin skimmed by capitalists. That is all well and good, and should be the outcome of a just and truly free competitive market, but will it kill capitalism or capitalists? Ultimately yes, but this seems to be overlooked by Rifkin or perhaps misunderstood. It’s not that competition is “enabling businesses to reduce the price of their goods to win over consumers,” it’s that competition forces them to shrink the margin between cost and price. The question beyond that is if workers are owners and getting their full product for what they produce to shrink the margins to zero, but not the production. However, it seems Rikin mistakenly thinks the latter will be the case.

This misstep by Rifkin seems to be his idea of what is “free.” A product being “free” is not a reality unless of course the production is voluntary and people do not ask for remuneration, like situations of mutual aid and/or volunteerism. “Free of (or from) profit”(and maybe capitalism) is indeed a reality as the margin shrinks to or arrives at zero, but to call it “free” is disingenuous depending on the context. If people are getting paid, and items still cost xyz, but the margin or profit is zero, we can say the consumer is freed from an increase above cost, or basically freed from the theft of having their pockets picked, but to say the product or production is “free” is wrong. That isn’t to say free goods and services wouldn’t be nice nor good.

I haven’t read enough Rifkin to see if he also misses the all important question of “who owns the means of production” to make production just. Kevin Carson touches on this below:

Technological unemployment, as described in the various scenarios of Rifkin, Brain and Ford, is meaningful mainly because of the divorce of capital from labor which resulted from the high price of producer goods during the mass production era. Indeed, the very concept of “employment” and “jobs,” as the predominant source of livelihood, was a historical anomaly brought about by the enormous cost of industrial machinery (machinery which only the rich, or enterprises with large aggregations of rich people’s capital, could afford)… The same forces making more and more jobs superfluous are simultaneously reducing barriers to the direct ownership of production tools by labor.

Homebrew Industrial Revolution pdf p.157-58

To expand on this, years ago I did read Rifkin’s Beyond Beef: The Rise and Fall of Cattle Culture. Similarly, I hope capitalist culture falls, or is brought to it’s knees by consumers and businesses boycotting and divesting in xyz corporation and government favoritism to the point where governments are no longer relevant and the capitailsts’ ‘right of increase’ beyond the margin is not culturally permissible nor possible due to the nature of markets and human liberty. As Joel Schlosberg notes in his comments on Rifkin in The Forever of Anti-Capitalism (video below), “the rise of anti-capitalism is the rise of free markets”…or the fall of capitalism is the rise of freed markets.

A capitalist’s modus operandi is ‘the right of increase,’ i.e. to maximize profits via usury, or the spread between production cost and price, and rather than price items and pay workers fairly (or better their full product), capitalists will screw the consumer and/or the worker to eat more than their fair share, or The Fair Share. If consumers can’t be swindled above the margin, workers may get the shaft to compensate capitalists. However, if the competition for workers is high they can demand full product and we can move closer to a no-profit world where workers and consumers benefit because capitalism, or usury, is reduced or hopefully absent. Although competition lowers the margins, governments often help businesses in a protectionist bubble of noncompetitive cartels, e.g. health care in America. More to the point, or around the point, of who owns the means of production, I’m assuming Rifkin has not considered another important question on the margin: “should” capitalism be permissible at all considering the problem of human rentals?

Kevin Carson expands on the margins here: Don’t Tell Us What Our “Marginal Productivity” Is; We’ll Tell You:

Rifkin’s Marginal site:

For a more through critique of Rifkin see: Zero Marginal Thinking- Jeremy Rifkin gets it all wrong:

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