The lowering marginal costs. Part One

You may read the text or listen to the podcast.


The world is changing with the modern technologies available to us. It is not only about the availability of those technologies, but mostly about the changes they bring to the societies and the life we live. To explain what is going all around us, I will refer for a moment to the theory of the industrial revolutions proposed by the American thinker Jeremy Rifkin.

Jeremy Rifkin claims that every society needs three things to organise themselves. These are a source to generate power, a form of communications and a form of mobility. An industrial revolution occurs when at a specific moment in time, new technologies emerge in those three fields of socio-economic life and converge with each other making the world or making the economies change profoundly.

They change the way we manage, we power, and we move the economic life. New modes of communications give us new possibilities to manage economic life. New sources of energy are about how we can more efficiently power the economic life. And, the new modes of mobility are decisive for how we can more efficiently move our economic life.


In the 19th century, it was the steam power that changed the societies and economies for good. Mass production was introduced in manufacturing. Craft workshops changed into factories producing en masse.

What many forget; however, steam power also made possible steam printing that in turn, allowed for cheap and efficient communications. In a comparison of course to what we understand as communications today – it allowed for quick and affordable spreading of the news and information in local and regional communities. Later it was also the telegraph that allowed fast conveying of messages to distant locations. It took only several hours to write, convey, and deliver a message from Europe to Asia door to door. Unimaginable for past generations who awaited a slice of information for long but long months.

The 19th century brought yet another ground-breaking advancement. It was about the beginning of steam-powered transport. Railways allowed for getting cities and smaller communities together. Faster and high-volume transport technology allowed for creating national markets. Steamships made intercontinental trading routes closer by shortening the transit times radically in comparison to times when sailors could only rely on wind or slaves rowing in the galleys.

In the 20th century, it was the telephone, radio and television that changed the communications. The phone for the first time allowed for instant communications with people being in some other parts of the world. And yet another power source was discovered and quickly widespread. It was crude oil. New mobility solutions based on internal combustion engine were invented and changed the way people and goods moved. Cars, buses, and trucks appeared on the roads revolutionizing transportation, of course in comparison to past ages. With time transportation got possible to each and every one of us on individual terms, at least in the developed world. Maritime transport became yet quicker and more efficient.

Consequently, the conveying of goods between continents got cheaper and cheaper. And finally, air transport allowed people to move between continents quickly. What happened next was the globalization process.

Mass production based on power generated by the commercial power plants became even more efficient and reliable getting, in turn, cheaper for the customer. At least in the developed world, people changed into consumers of the globally provided goods.

But the price of the fossil fuel-based economies was, however, somewhere in the wind. Only a few noticed, only a few took care, only a few had been whistleblowing so that the world paid the real price for the modern way of living. Yes, fossil fuels cost us more than thought at first … But already as we have noticed yet another industrial revolution is knocking at our doors.

In the third industrial revolution of today, the communications are the Internet and the Internet of Things that allow for automated collection and passing over of data and information. In many industrial processes, the human touch is getting redundant. Good programming today saves time and human effort tomorrow.

New sources of power are based on renewable energy. The sources are there. The management still requires refinement. But it is doable. And those new sources of power, renewable sources of power, do not deplete. The Sun is shining, and the wind is blowing. Just so. These are natural processes of the Mother Earth. What is more, Mother Earth is not billing us for those processes. The energy is for free. We only need to learn to make proper use of it.

And all of these coincides today with the real-time climate changes. Yes, I would like to turn your attention to the expression Jeremy Rifkin uses in his lectures. Not the climate change any more, but the real-time climate change that happens right before our eyes.

Mobility may be based on electrical power generated with renewable resources. This is the future, and we know it for sure already. The socio-economic changes are, however, much more profound than that. They are much more profound than the energy resources changing the ways we power our socio-economic life. The expected future solutions for transportation are no longer only about the power generation anymore. They are about driverless autonomous vehicles. Still, some time will be needed until we achieve it. But the costs of transportation will be getting cheaper and cheaper.

What is more, during the first and the second industrial revolutions, we needed global companies vertically integrated, creating the value-added chains. Today in many industries, we no longer need that vertical integration. Thanks to the world wide web, we are going peer to peer. We are going person to person. We are going company to company without any intervention by the old-fashioned intermediaries. The exchange gets lateral. We can even talk about the lateral economies of scale. Some activities are getting more efficient and less costly.

The result of all of those changes in many fields of our life, by far of course, not all, is zero or near zero marginal costs for the individuals and the society as a whole.

To Part Two >>>

Photos by: Gabriela Palai and Flickr on Pexels