Zero Marginal Cost

According to Jeremy Rifkin, capitalism has evolved into a “Zero Marginal Cost Society,” which is the title of his latest book.

Let’s start by looking at equity valuation. The S&P is at a record high. What accounts for this value of attainment at “near-zero marginal cost?”

Remember, to keep buyers in the market long term it is necessary to keep equity values moving up, expanding the margin, and the best way to do that is to reduce costs, especially labor costs, which reduces demand against rising valuations. The one thing capitalists don’t want is to have high valuations and no one to sell it to. So, it is important to keep buying the bid, inflating it with demand acquired from reduced costs, until you get in. Once there is no more income–economic demand or dollar votes–to consolidate, of course, the jig is up. The margin is zero, which is naturally resisted over time with measures that intend to create a negative yield, which can then be referred to as marginal gains at absolute zero, which never exists (being unattainable) but is always the ultimate measure of what exactly a marginal existence (“objective reality”…being and nothingness) really is.

Attainment is a function of cost containment–inflation, for example. Attaining record, equity value is the direct result of reduced marginal cost; specifically, unemployment!

Unemployment contains what capitalism considers to be inflation. Creating jobs (demand) is contained (hardly the model of a free market). The more unemployment there is the more power the capitalist has. So, what do you think the incentive is here?

The incentive is to consolidate industry and markets, so much that all the demand there is in the marketplace is at the top, which is inflationary. Everything becomes priced to “the demand” (the risk)–the income the consumer has.

Monopoly pricing power consolidates the risk. The natural result, Rifkin says, is “collective collaboration” (rather than collective bargaining, which is busted if you don’t have a job!) to freely enterprise without the dollars to demand the virtual supply. If you want a house, you can just print it out at marginal cost.

Don’t need construction workers anymore, which means the risk is going gamma. It means that instead of the Walmart happy face, it’s the picture of “The Scream” (continuously accumulating the risk we are so happy to avoid). If you have no income (with the objective being to progressively acquire and contain your income with monopoly-pricing power), you have no means to make demands (to make ends meet), and whatever marginal income you may have is wasted (contained) by inflation. Your interest is “marginalized” to near-zero!

Containment is “the object”–containing all the “things”–the method of capitalism is intended to attain–zero marginal cost–which yields to elite power and authority on command (and that includes conforming to the tastes and preferences of people who aspire and consider themselves to be the power elite). A free market is exactly what it is not, so Rifkin, for example, refers to it as a “collective commons.”

Keep in mind the example of the public smoking ban in the previous article. Such measures destroy the marketplace. It reduces the incentive to have a small business. It reduces the incentive to privately enterprise and organically organize a pluralistic, proprietary control of authority, which minimizes elite authority.

The identity (the scale) of containment trickles down. The pathologues (the mayor and the council) now own the proprietorship (what it means to be happy) in the name of public utility, because once you have consolidated the dollar votes all that’s left is dictating what exactly “the good life” is. Gaining the public utility of the collective dimension maximizes elite authority, making sure that whatever “We” do reflects the value of their tastes and preferences because, representing the masses, “they” are naturally superior.

Consolidation of private property is what capitalists do on a regular, cyclical basis, and it spreads like a pathogen. Spreading to the local level, the identity of economic scale gains the “collective” corporate name, but conforming to the identity of this collective, organized pathology is not an improvement. Consolidation of assets is the risk to be avoided. If you don’t think so, just keep trying to sell something to people that don’t want to buy it and they will be sure to treat you like a public nuisance!

What the method of containment yields is a nuisance value–an organized psychopathy that should not be confused with the strength of common divisibility (deconsolidation of the risk) a free-and-UNCONSOLIDATED marketplace WILL provide.

(Articles by griffithlighton on attainment, containment, nuisance value, and proprietary risk can be found on the World Wide Web.)

It’s important to understand, zero marginal cost yields from building economies of scale. Yielding TO the scale is the objective. It is intended that everyone be “subjected” to its identity, what Randians call “objective identity.” It is antithetical to a free-market identity in which conformity is a function of maximum plurality of the risk (to survive and flourish), not its consolidation.

Detecting the value of zero marginal cost as a leading macro indicator is a negative value when correlated with increasing consolidation of industry and markets. It means the risk proportion is getting bigger–catastrophic.

Gaining a catastrophic proportion is bad, not good. When the risk gets so big it becomes all consuming (when it goes gamma), it isn’t going to be the quiet revolution of a creeping “collective commons” but the “big risk” (the collected risk) that yields to aristocratic identity and the tragedy of the commons.


About griffithlighton

musician-composer, artist, writer, philosopher and political economist (M.A.)
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