Jeremy Rifkin delivered the opening keynote address of the conference entitled “Digital Europe: the rise of the internet of things and the transition to a third industrial revolution in the EU”. Mr. Rifkin argued that the Digital Europe transition will revolutionize every commercial sector, disrupt the workings of virtually every industry, bring with it unprecedented new economic opportunities, put millions of people back to work, and create a more sustainable post-carbon society to mitigate climate change.
Rifkin was joined by Angela Merkel, the Chancellor of Germay, Jean-Claude Juncker, the president of the European Commission and Werner Hoyer, the president of the European investment bank (EIB) yesterday March 2nd, in the opening plenary session of the EIB conference entitled “Momentum for Europe – innovation and competitiveness” held in Berlin.
Rifkin said that the Digital Europe Third Industrial Revolution is built around the convergence of the Communication Internet, the nascent renewable Energy Internet, and the fledgling automated Transportation and Logistics Internet. The coming together of these three Internets in an operating kernel becomes the new high-tech infrastructure for establishing a single integrated market and a smart Europe.
In the Internet of Things era, sensors will be embedded into every device and appliance allowing them to communicate with each other and Internet users, providing up to the moment data on the managing, powering, and moving of economic activity across a Digital Europe.
In the digital economy, private enterprises connected to the Internet of Things can use Big Data and analytics to develop algorithms that can speed efficiency, increase productivity, and dramatically lower the marginal cost of producing and distributing physical things and services, making European businesses the most competitive in the global marketplace. (Marginal cost is the cost of producing an additional unit of a good or service, after fixed costs have been absorbed.)
The marginal cost of some goods and services in a Digital Europe will even approach zero, allowing Internet of Things users to produce and exchange things, for nearly free, in the growing Sharing Economy. Already, observes Rifkin, a digital generation is producing and sharing music, videos, news blogs, social media, free e-books, and other virtual goods at near zero marginal cost.
Now, says Rifkin, the Internet of Things is allowing millions of prosumers to produce, consume, and exchange their own renewable energy at near zero marginal cost. (Currently, twenty-seven percent of the electricity generated in Germany is near zero marginal cost solar and wind power.) The digital generation is also sharing mobility via car sharing services like Uber, sharing apartments and homes through Airbnb, and even sharing toys, clothes, tools, and other items, using the emerging Internet of Things, while minimizing the use of the Earth’s resources and ushering-in a more circular economy.
The transition to a digital economy and Third Industrial Revolution results in a leap in productivity far beyond the gains achieved by the Second Industrial Revolution in the 20th Century. Cisco systems forecasts that by 2022, the Internet of Things will generate $14.4 trillion in cost savings and revenue. A recent General Electric study projects that the productivity advances brought on by an Industrial Internet could impact every economic sector by 2025, effecting “approximately one half of the global economy.”
Rifkin acknowledges that erecting the Internet of Things infrastructure will require a significant investment of public and private funds. European investment on infrastructure-related projects totaled $741 billion in 2012, much of it to shore up a Second Industrial Revolution technology platform that is outmoded, and whose productivity potential has long since been reached. If just twenty-five percent of these funds were redirected and earmarked in every region of the European Union to assemble an Internet of Things infrastructure, the Digital Union could be phased in between now and 2040.
Mr Rifkin asserted that the establishment of the Third Industrial Revolution Internet of Things infrastructure will necessitate the active engagement of virtually every commercial sector, spur commercial innovations, promote Small and Medium Sized Enterprises (SME’s), and employ millions of workers over the next forty years. In summary, the scale up of a smart digitalized Internet of Things infrastructure across the European Union, and its partnership regions, will put Europe back to work, generate new business opportunities in both the market economy and the Sharing Economy, dramatically increase productivity, and create an ecologically oriented post-carbon society.
The EU is on the cusp of a promising new economic era. While the challenges and road blocks ahead are enormous, Rifkin argues that the benefits of creating a Digital Europe are transformative and far reaching.
Jeremy Rifkin is an economic theorist and President of the Foundation on Economic Trends
