The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism (11 page)

The term
Internet of Things
was coined by Kevin Ashton, one of the founders of the MIT Auto ID Center, back in 1995. In the years that followed, the IoT languished, in part, because the cost of sensors and actuators embedded in “things” was still relatively expensive. In an 18 month period between 2012 and 2013, however, the cost of radio-frequency identification (RFID) chips, which are used to monitor and track things, plummeted by 40 percent. These tags now cost less than ten cents each.
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Moreover, the tags don’t require a power source because they are able to transmit their data using the energy from the radio signals that are probing them. The price of micro-electromechanical systems (MEMS), including gyroscopes, accelerometers, and pressure sensors, has also dropped by 80 to 90 percent in the past five years.
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The other obstacle that slowed the deployment of the IoT has been the Internet protocol, IPv4, which allows only 4.3 billion unique addresses on the Internet (every device on the Internet must be assigned an Internet protocol address). With most of the IP addresses already gobbled up by the more than 2 billion people now connected to the Internet, few addresses remain available to connect millions and eventually trillions of things to the Internet. Now, a new Internet protocol version, IPv6, has been developed by the Internet Engineering Task Force; it will expand the number of available addresses to a staggering 340 trillion trillion trillion—more than enough to accommodate the projected 2 trillion devices expected to be connected to the Internet in the next ten years.
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Nick Valéry, a columnist at
The Economist
, breaks down these incomprehensibly large numbers, making sense of them for the average individual. To reach the threshold of 2 trillion devices connected to the Internet in less than ten years, each person would only need to have “1,000 of their possessions talking to the Internet.”
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In developed economies, most people have approximately 1,000 to 5,000 possessions.
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That might seem
like an inordinately high number, but when we start to look around the house, garage, automobile, and office, and count up all the things from electric toothbrushes to books to garage openers to electronic pass cards to buildings, it’s surprising how many devices we have. Many of these devices will be tagged over the next decade or so, using the Intenet to connect our things to other things.

Valérey is quick to point out a number of big unresolved issues that are beginning to dog the widespread rollout of the IoT, potentially impeding its rapid deployment and public acceptance. He writes:

The questions then become: Who assigns the identifier? Where and how is the information in the database made accessible? How are the details, in both the chip and the database, secured? What is the legal framework for holding those in charge accountable?

Valéry warns that

glossing over such matters could seriously compromise any personal or corporate information associated with devices connected to the internet. Should that happen through ignorance or carelessness, the internet of things could be hobbled before it gets out of the gate.
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Connecting everyone and everything in a neural network brings the human race out of the age of privacy, a defining characteristic of modernity, and into the era of transparency. While privacy has long been considered a fundamental right, it has never been an inherent right. Indeed, for all of human history, until the modern era, life was lived more or less publicly, as befits the most social species on Earth. As late as the sixteenth century, if an individual was to wander alone aimlessly for long periods of time in daylight, or hide away at night, he or she was likely to be regarded as possessed. In virtually every society that we know of before the modern era, people bathed together in public, often urinated and defecated in public, ate at communal tables, frequently engaged in sexual intimacy in public, and slept huddled together en masse.

It wasn’t until the early capitalist era that people began to retreat behind locked doors. The bourgeois life was a private affair. Although people took on a public persona, much of their daily lives were pursued in cloistered spaces. At home, life was further isolated into separate rooms, each with their own function—parlors, music rooms, libraries, etc. Individuals even began to sleep alone in separate beds and bedrooms for the very first time.

The enclosure and privatization of human life went hand-in-hand with the enclosure and privatization of the commons. In the new world of private property relations, where everything was reduced to “mine” versus “thine,” the notion of the autonomous agent, surrounded by his or her
possessions and fenced off from the rest of the world, took on a life of its own. The right to privacy came to be the right to exclude. The notion that every man’s home is his castle accompanied the privatization of life. Successive generations came to think of privacy as an inherent human quality endowed by nature rather than a mere social convention fitting a particular moment in the human journey.

Today, the evolving Internet of Things is ripping away the layers of enclosure that made privacy sacrosanct and a right regarded as important as the right to life, liberty, and the pursuit of happiness. For a younger generation growing up in a globally connected world where every moment of their lives are eagerly posted and shared with the world via Facebook, Twitter, YouTube, Instagram, and countless other social media sites, privacy has lost much of its appeal. For them, freedom is not bound up in self-contained autonomy and exclusion, but rather, in enjoying access to others and inclusion in a global virtual public square. The moniker of the younger generation is transparency, its modus operandi is collaboration, and its self-expression is exercised by way of peer production in laterally scaled networks.

Whether future generations living in an increasingly interconnected world—where everyone and everything is embedded in the Internet of Things—will care much about privacy is an open question.

Still, in the long passage from the capitalist era to the Collaborative Age, privacy issues will continue to be a pivotal concern, determining, to a great extent, both the speed of the transition and the pathways taken into the next period of history.

The central question is: When every human being and every thing is connected, what boundaries need to be established to ensure that an individual’s right to privacy will be protected? The problem is that third parties with access to the flow of data across the IoT, and armed with sophisticated software skills, can penetrate every layer of the global nervous system in search of new ways to exploit the medium for their own ends. Cyber thieves can steal personal identities for commercial gain, social media sites can sell data to advertisers and marketers to enhance their profits, and political operatives can pass on vital information to foreign governments. How then do we ensure an open, transparent flow of data that can benefit everyone while guaranteeing that information concerning every aspect of one’s life is not used without their permission and against their wishes in ways that compromise and harm their well-being?

The European Commission has begun to address these issues. In 2012, the Commission held an intensive three month consultation, bringing together more than 600 leaders from business associations, civil society organizations, and academia, in search of a policy approach that will “foster a dynamic development of the Internet of Things in the digital single market while ensuring appropriate protection and trust of EU citizens.”
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The Commission established a broad principle to guide all future developments of the Internet of Things:

In general, we consider that privacy & data protection and information security are complimentary requirements for IoT services. In particular, information security is regarded as preserving the confidentiality, integrity and availability (CIA) of information. We also consider that information security is perceived as a basic requirement in the provision of IoT services for the industry, both with a view to ensure information security for the organization itself, but also for the benefit of citizens.
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To advance these protections and safeguards, the Commission proposed that mechanisms be put in place

to ensure that no unwanted processing of personal data takes place and that individuals are informed of the processing, its purposes, the identity of the processor and how to exercise their rights. At the same time processors need to comply with the data protection principles.
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The Commission further proposed specific technical means to safeguard user privacy, including technology to secure data protection. The Commission concluded with a declaration that “it should be ensured, that individuals remain in control of their personal data and that IoT systems provide sufficient transparency to enable individuals to effectively exercise their data subject rights.”
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No one is naïve regarding the difficulty of turning theory to practice when it comes to securing everyone’s right to control and dispose of their own data in an era that thrives on transparency, collaboration, and inclusivity. Yet there is a clear understanding that if the proper balance is not struck between transparency and the right to privacy, the evolution of the Internet of Things is likely to be slowed, or worse, irretrievably compromised and lost, thwarting the prospects of a Collaborative Age. (These questions of privacy, security, access, and governance will be examined at length throughout the book.)

Although the specter of connecting everyone and everything in a global neural network is a bit scary, it’s also exciting and liberating at the same time, opening up new possibilities for living together on Earth, which we can only barely envision at the outset of this new saga in the human story.

The business community is quickly marshaling its resources, determined to wrest value from a technological revolution whose effects are likely to match and even exceed the advent of electricity at the dawn of the Second Industrial Revolution. In 2013
The Economist
’s intelligence unit published the first global business index on the “quiet revolution” that’s beginning to change society.
The Economist
surveyed business
leaders across the world, concentrating on the key industries of financial services, manufacturing, health care, pharmaceuticals, biotechnology, IT and technology, energy and natural resources, and construction and real estate.

The report started off by observing that the rapid drop in technology costs and new developments in complimentary fields including mobile communication and cloud computing, along with an increase in government support, is pushing the IoT to the center stage of the global economy. Thirty-eight percent of the corporate leaders surveyed forecast that the IoT would have a “major impact in most markets and most industries” within the next three years, and an additional 40 percent of respondents said it would have “some impact on a few markets or industries.” Only 15 percent of corporate executives felt that the IoT would have only “a big impact for only a small number of global players.”
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Already, more that 75 percent of global companies are exploring or using the IoT in their businesses to some extent and two in five CEOs, CFOs, and other C-suite level respondents say they have “a formal meeting or conversation about the IoT at least once a month.”
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Equally interesting, 30 percent of the corporate leaders interviewed said that the IoT will “unlock new revenue opportunities for existing products/services.” Twenty-nine percent said the IoT “will inspire new working practices or business processes.” Twenty-three percent of those surveyed said the IoT “will change our existing business model or business strategy.” Finally, 23 percent of respondents said that the IoT “will spark a new wave of innovation.” Most telling, more than 60 percent of executives “agree that companies that are slow to integrate the IoT will fall behind the competition.”
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The central message in
The Economist
survey is that most corporate leaders are convinced that the potential productivity gains of using the Internet of Things across the value chain are so compelling and disruptive to the old ways of doing business that they have no choice but to try to get ahead of the game by embedding their business operations in the IoT platform.

However, the IoT is a double-edged sword. The pressure to increase thermodynamic efficiency and productivity and to reduce marginal costs will be irresistible. Companies that don’t forge ahead by taking advantage of the productivity potential will be left behind. Yet the unrelenting forward thrust in productivity let loose by an intelligent force operating at every link and node across the entire Third Industrial Revolution infrastructure is going to take the marginal cost of generating green electricity and producing and delivering an array of goods and services to near zero within a 25-year span. The evolution of the Internet of Things will likely follow roughly the same time line that occurred from the takeoff stage of the World Wide Web in 1990 to now, when an exponential curve resulted in the plummeting costs of producing and sending information.

Exponential Curves

Admittedly, such claims appear overstated until we take a closer look at the meaning of the word
exponential.
I remember when I was a kid—around 13 years old—a friend offered me an interesting hypothetical choice. He asked whether I would accept $1 million up front or, instead, one dollar the first day and a doubling of that amount every day for one month. I initially said “you have to be kidding . . . anyone in their right mind would take the million.” He said, “hold on, do the math.” So I took out a paper and pencil and began doubling the dollar. After 31 days of doubling, I was at over one billion dollars. That’s one thousand millions. I was blown away.