The Internet of Things (IoT) may mean more than simply having devices and machines talking to each other. It potentially represents a profound shift affecting the way businesses and society operate. At this point, we’re only just starting to grasp the implications these new technologies will have.
This was the observation of Jeremy Rifkin, social activist, policy advisor and author, keynoting the recent CeBIT conference in Hannover, Germany. Rifkin has written numerous books on economic changes, the latest being The Zero Marginal Cost Society.
“We are beginning to see the long end game for one of the great economic periods in history,” Rifkin said, noting that the second industrial revolution peaked in July 2008, along with the price of oil, followed by a savage global recession. “GDP is slowing all over the world. Every country. Productivity has been waning for 20 years all over the world. Unemployment is stubbornly high in every country.” At the same time, he continued, “We are beginning to glimpse the emergence of a new economic paradigm so different than anything we’ve ever known. That were going to have to catch our breath and think it out. ”
The shift to an IoT-based economy is driven by the rise of the digitized internet for communications, new forms of smart energy, and an automated transport and logistics internet, Rifkin points out. “
We are seeing the emergence of three internets,” he says. “We need to rethink how we manage, power and move economic activity.”
These three internets — communications, energy and transport/logistics — “are the kernel of a new operating platform called the Internet of Things,” said Rifkin. “It’s not just about big data. It’s about how we place sensors in every machine and device, not so they could just talk to each other, but serve as the brain of the economy. We have 14 billion sensors connecting devices now. Sensors monitoring our food crops, smart vehicles, warehouses. smart roads. By 2020, we’ll have maybe 100 trillion sensors — every machine is talking to every other machine.”
Significant developments in communications, energy and transportation were the foundation of the previous major shift to an industrial economy, Rifkin says. The next incarnation is poised to turn industrial-era institutions upside down. “For the first time in history, everyone is going to have a transparent picture of the economic life in society,” he says. “We are leveling the playing field. If this network stays open, everyone is going to know what everyone knows. Everyone is going to know what’s going on across the value chain.”
Employment of digitization across the economy will drive down many costs of doing business to virtually zero, Rifkin maintains. “By constantly using analytics, algorithms, and apps, we can dramatically increase our productivity every day,” he explains. “We can reduce our marginal costs to create a very streamlined economy. We’ve already seen the impact of what digitalization and communications has done to give us a near zero marginal cost economy. It all started with that little file-sharing service called Napster. Some of the biggest vertically integrated industries of the 20th century have been disrupted. The music industry is a shadow of itself, newspapers and magazines have gone out of business, and book publishing taking a hit.”
Ultimately, the shift is toward empowered consumers, who are increasingly adopting the tools and technologies to guide their own economic destinies. “Now we have three billion people now out on the Internet of Things, and every one of them now are ‘prosumers,’” says Rifkin. “That is, everyone at one time or another as has shared video, posted blogs, or have taken massive online college courses. That’s all zero marginal costs.”
“We all have a value chain,” said Rifkin. “As individuals, families, small businesses, large organizations, every day you and I are marshaling economic activity. We are producing economic activity, we’re re-arranging economic activity. We’re storing economic activity, and were recycling economic activity. What this means with all this technology is any one of us now is now connected to the Internet of Things. We can cut out our value, our data, and we can use our own analytics to create our own algorithms with our own apps, because there are going to be thousands of companies creating apps for us.”
This article was written by Joe McKendrick from Forbes and was legally licensed through the NewsCred publisher network.