Postcapitalism - Basic Theory

Many today believe that the current economic inequality is insurmountable, and that meaningful resistance to capitalism is all but impossible. I won’t deny that we exist a world that requires a mindboggling amount of both overt and implied violence in order to function, a system that destroys thousands each day in order to survive. However within capitalism are various trends that point towards an emerging alternative economic model that could usurp neoliberal capitalism as the dominant economic force in our world.

Instead of rupturing with the system in a violent revolution, I believe that these trends will result in ‘postcapitalism’, an economic system that exists outside the logic of capitalism. This will not happen overnight, rather it will be a slow gradual process over many years.

These various counter-trends were described in great detail in Jeremy Rifkin's The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons and the Eclipse of Capitalism. According to him we are currently in the middle of this transition. In his words:

The capitalist era is passing . . . not quickly, but inevitably. A new economic paradigm—the Collaborative Commons—is rising in its wake that will transform our way of life. We are already witnessing the emergence of a hybrid economy, part capitalist market and part Collaborative Commons. The two economic systems often work in tandem and sometimes compete. They are finding synergies along each other’s perimeters, where they can add value to one another, while benefiting themselves. At other times, they are deeply adversarial, each attempting to absorb or replace the other.[1]

The Collaborative Commons refers to part of the Commons that concerns information sharing. While Rifkin calls for the Commons to be reinstated over social spaces, the environment and language-all of which are vital areas for achieving social justice, I am concerned here with the information Commons. The scope and importance of the information Commons has been expanded exponentially by the internet. The emergence and then domination of open source software has created a vibrant software commons built entirely by volunteer labor. Likewise the information commons has been expanded greatly by websites like Wikipedia and the Open Access movement in science.

Of course these are just the tip of the iceberg. Activists and hackers have circumvented laws and paywalls to crack software, give access to media and free scientific knowledge controlled by paywalls. These trends are all lowering the price of info-goods so they can compete, or in some cases, destroying the price mechanism completely (Wikipedia being the most obvious example of this).

This price destruction is happening not just with info-goods however. The marginal cost, that is to say the cost of production once you have the equipment required, is also falling to a point where a competitive market can no longer really exist as goods can no longer really be priced.

The first place to look for this trend is in renewable energy. The state of California, probably the most renewable friendly region in the world has reached the point where if conditions are right the cost of electricity can go negative.[2] In these periods California must export solar energy to other states for free so as to avoid damaging the power lines through overloading it with excess energy. We can see the impact that zero-marginal cost has on traditional business models when we look at how energy providers that burn fossil fuel to provide energy are affected. In Germany which has similarly embraced renewables, major energy companies that were once stable investments have now either gone bankrupt or had to completely change their business model as the country experienced a utility death spiral[3] with traditional fossil fuels being unable to compete price wise with the zero-marginal cost energy provided by renewables. The effect on the market was dramatic - instead of just a handful of companies providing energy, now small businesses, small energy cooperatives and households can put energy on to the grid reducing costs.

While this transition to 100% renewable energy is rocky thanks to incumbent players who would lose out, as well as price spikes that occur when the sun stops shining / the wind stops blowing, we can still see the obvious truth that electricity generation has become effectively free once you set up the generation equipment. The implications for zero-marginal cost electricity are enormous for production as electricity is no longer factor in the final price of the good. In this we glimpse a future of zero-marginal cost society in which the traditional logic of capitalism no longer makes economic sense.

The next most obvious place we can see zero-marginal costs emerging is with next generation manufacturing equipment. This is a highly complex topic that I cannot quickly summarize, so I will focus on one particular piece of manufacturing equipment, the 3d-printer. The 3d-printer signals a revolution in manufacturing as it is a low-cost, flexible technology that can produce objects for minimal cost. For reference, a 2017 study [4] showed that homes could expect between a 100%-1000% return on investment over just a few years by buying an open source RepRap printer for a few hundred dollars and just printing what you need. Further compounding this trend is the existence of distributed recycling. Cheap recycling equipment can be used to transform waste plastic and turn it into 3d-printer feedstock further decreases costs as you cut out the synthesis / transportation costs of new plastic. Also, once you combine this manufacturing process with renewable energy described above you effectively cut out all costs aside from the minimal labour required and the initial purchase of the equipment. In a perfect environment you have a manufacturing process that produces output with a near zero-marginal cost to the manufacturer.

This trend towards distributed, accessible production equipment is not just for manufacturing plastics and generating electricity however. We are seeing developments like 3d-printers but for metal, relatively cheap computerized cutting machines that have collapsed in price in the last few decades and initiatives like the Right to Repair movement that have liberated information on how to fix damaged technology, bypassing IP constraints. This cost of production means that more and more anyone can set up a micro-factory for minimal startup costs. While the reproduction costs might not be zero-marginal, the intense competition will decrease prices to the point where the traditional driving forces of capitalism, interest accrued over time by lenders, will no longer be able to function properly. The GDP growth promised by capitalism will no longer be possible outside of dramatic state intervention, which cannot be sustained.

As the price mechanism collapses through either goods that are outright free or supercompetitive markets in which profit margins are razor thin, capitalism becomes unsustainable. Traditional models of growth in which investment recoups itself within a few years are no longer possible. The result is a systems change forced by the underlying economic realities.

This is of course not inevitable. There are many ways to prevent such a transition - through outright suppression and destruction of property to more subtle measures in which state power is deployed to disrupt development. The highly fluid and complex nature of our modern world means every prediction about the future must come with a caveat that we live in uncertain times. But it should be recognized that within capitalism, as well as on its periphery there are growing trends that threaten its status as the single economic system for humanity.

Cover Image Licensed Under Creative Commons

  1. The Zero Marginal Cost Society: The Internet of Things, the Collaborative, Commons, and the Eclipse of Capitalism, Jeremy Rifkin ↩︎

  2. California is getting so much power from solar that wholesale electricity prices are turning negative, Cassie Werber, Quartz ↩︎

  3. This Is What The Utility Death Spiral Looks Like, Stephan Lacey, Greentech Media ↩︎

  4. Emergence of Home Manufacturing in the Developed World: Return on Investment for Open-Source 3-D Printers, Emily. E. Peterson, Joshua. Pearce ↩︎