Economist and academician, Jeremy Rifkin, is a senior lecturer at Wharton School's Executive Education Programme at the University of Pennsylvania.
Author of 19 bestselling books and an advisor to the European Union, his most recent work, The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and World , talks about how the current industrial revolution is fizzling out and what is needed to spark the next one.
Rifkin speaks to
The second industrial revolution was based on oil and suburban construction. This life support is dying. Crude is getting expensive, food prices are spiralling, unemployment is high, the housing market has tanked, consumer and Government debt are soaring and the technology of internal combustion engine is no longer sustainable.
The real economic earthquake happened in July 2008, when crude prices spiralled to $147/barrel. The meltdown that followed was more of an after-shock. India and China, who make up one-third of the world's civilization, are guzzling oil at a tremendous rate. With every spurt of economic growth, oil prices go up, followed by other prices going up and decline in purchasing power. We are in for a long end-game with gyrations of growth and collapse. It has now become a business cycle of four-five years.
The problem is compounded by climate change. There is just too much carbon dioxide in the atmosphere that means more floods and drought which, in turn, affect infrastructure and agriculture. The Internet revolution is beginning to merge with new energy regimes creating a powerful paradigm for the third industrial revolution.
What is the third industrial revolution?
The third industrial revolution works on five pillars and Europe has formally committed to them. One, by 2020, every European country will produce 20 per cent of their energy requirement through renewables. Two, every building will have its own renewable energy plant, a micro power plant of sorts by 2020. Three, since renewable energy is intermittent in nature, hydrogen molecules will be used to store it. The EU has deployed €8 billion for this. Four, there will be an energy Internet where the excess energy of one micro power plant will be sold to the other through a seamless network. The fifth pillar would pertain to green electricity to charge cars. There would be a charging station every kilometre through which people can sell and buy electricity, as in a stock market.
These five pillars would form synergies for the new economic paradigm to flourish. It would mean power to the people – distributed capitalism of great magnitude.
Where does the developing world fit into this?
The potential for such a paradigm is more for the developing world, where 22 per cent of their population has no power and another 25 per cent has intermittent supply. In India, for instance, 400 million don't have power supply. The developing world can easily move into this paradigm because they have no existing infrastructure in place. They can create a virgin infrastructure.
India, being a leader in IT and communications, with massive solar radiations and wind velocity off the coast, can very well position itself as the leader of this third revolution.
Under this framework, rural areas can become larger communities using 3D printers to manufacture at one-tenth energy cost using green electricity. This means small and medium enterprises would flourish — a case for distributed capitalism in distributed geographies.
India is more suitable than China because of the democratic set-up and traditionally being a country of small business. What I am referring to is actually Gandhiji's vision of small enterprises.
Can you elaborate more on Gandhiji's vision?
Gandhiji understood the need for localisation, but he went to traditional khadi, which was primitive in nature and did not help people get out of the poverty trap. With the third industrial revolution, what we would really be creating is oceanic circles of communities that produce and share technology.
What will be the governance structure for such a paradigm?
The first and second industrial revolutions were centralised because of dependence on fossil fuels. In the third revolution, we will see a lateral power structure based on renewable energy. The first and second industrial revolutions favoured national markets and national government. The third would favour continental markets and continental political union.
In your earlier works, you forecast that the European dream was quickly eclipsing the American dream. Looking at current European mess, do you still stand by your view?
In the late 1980s, we had the second industrial revolution that led to massive construction of roadways, highways and housing. Globalisation was based on America's purchasing power and the family savings of the second industrial revolution. We depleted previous wealth to create globalisation, so that we can create more debt. The European crisis is the after-shock of the US debt crises.
The European dream that I spoke of is about sustainable development, and to keep this dream alive, we cannot compromise on the social market. The third industrial revolution is the way forward.