From a free market anti-capitalist perspective, Jeremy Rifkin’s account of “The Rise of Anti-Capitalism” [New York Times, March 15] gets it almost right.
Rifkin’s thesis that “The inherent dynamism of competitive markets is bringing costs so far down that many goods and services are becoming nearly free, abundant,” in a process which “is about to affect the whole economy,” and is fundamentally at odds with capitalism in the sense of diminishing profit returns to owners of capital to a vanishing minimum, is letter-perfect.
Also faultless is his rejoinder to the attempts by mainstream economists who grudgingly “acknowledge the creeping reality of a zero-marginal-cost economy” to downplay its extent and significance. Belittling it as “a parasite, dependent on government entitlements and private philanthropy” ignores solid evidence of its rapid growth into a “self-sufficient economic force.” While it does serve as a platform for marketing “higher-end goods and specialized services,” the demand for such premiums will be too small to provide a means of “ensuring large enough profit margins to allow the capitalist market to continue to grow.”
Rifkin’s means are also notably market-friendly. Private capital will be outcompeted, not outlawed. Welcoming ephemeralization of costs obviates the social democratic modus operandi of ensuring the availability of necessities by subsidizing, and in the process propping up, their costs. Observing that a decline in the workforce employed by for-profit businesses is an inevitable consequence of the dwindling of the amount of labor necessary to produce profit, he looks for a source of substitute livelihoods not in public works but the unimpeded growth of the nongovernmental nonprofit sector.
Rifkin’s lapses stem from not sufficiently disentangling markets and capitalism.
While his motif of marginal utility is borrowed from market economics, he refers to zero-marginal-cost goods as “no longer subject to market forces” and “beyond markets.” He sees markets’ anti-capitalist tendencies as a “paradox” within capitalism. But the most capitalist sectors of the economy are the ones where high profit returns have been maintained by restricting price competition and state-stabilized cartelization: Healthcare, education and housing. Michael Perelman has done extensive scholarship on how market price competition in goods with very low marginal costs relative to their fixed costs has always been problematic for capitalism, all the way back to the railroads of the nineteenth century.
Rifkin’s assertion that economists “never anticipated the possibility of a technological revolution that might bring those costs to near zero” betrays a lack of perspective of free-market economists whose understanding of market forces included just such a possibility. In the twentieth century, Murray Rothbard explained that “We have to pay a certain amount for a loaf of bread, for shoes, for dresses because they are all scarce. If they were not scarce but superabundant like air, they would be free,” and Israel Kirzner observed that markets under conditions of “vigorous entrepreneurial competition” will “tend toward the elimination of profit.” In the nineteenth, Henry George argued that the more wealth is produced under private ownership without privilege, “the greater grows the common wealth in which all may share,” and Frederic Bastiat that “any social order that is guided by the principles of liberty” would produce “a real, essential, and progressively increasing communal domain.”
Some radicals not usually thought of as economists foresaw the essential principle. Howard Zinn envisaged a time when “[c]ertain basic things would be abundant enough to be taken out of the money system and be available — free — to everyone.” Even Rifkin’s view of a downsized capitalism persisting “in a more streamlined role … thriv[ing] as a powerful niche player” was anticipated by Bertrand Russell: “Provided the sphere of capitalism is restricted, and a large proportion of the population are rescued from its dominion, there is no reason to wish it wholly abolished. As a competitor and a rival, it might serve a useful purpose in preventing more democratic enterprises from sinking into sloth and technical conservatism.”
The rise of anti-capitalism is the rise of free markets.