A Conversation with Jeremy Rifkin on His New Book The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World

TIKKUN: Could you state for our readers what the major thesis is of your new book?

JR: We’ve had two events in the last three years that signal the endgame for the industrial revolution based on fossil fuels. The first event was in 2008, when oil hit $147 a barrel on world markets. All the other prices across the supply chain went through the roof because so much in this civilization is made out of fossil fuels: fertilizers, pesticides, pharmaceutical products, construction materials, synthetic fiber, power, transport, heat, light—it’s all made out of fossil fuels and moved by them. We had food riots in twenty-two countries. The price on basic commodities, rice, wheat, and other basic foodstuffs was doubling and tripling. We had a billion people in harm’s way in terms of hunger and starvation. People stopped buying everywhere. The entire economic engine—the growing economy—shut down, and purchasing went plummeting. What I’m suggesting is that was an economic earthquake. The collapse of the financial market sixty days later—that was the aftershock.

What I think we’re hitting here is peak globalization: peak oil per capita and peak oil of production. Peak oil per capita occurred in 1979 at the height of the auto age. If we had distributed all the crude oil we had at that point to all the people alive at that moment, that’s the most each person could have. Population grows a lot quicker than new oil reserves, so if we distribute all the crude oil we have today, there’s less to go around. That’s peak oil per capita. When half the oil reserves are used up, the price becomes unaffordable from there on in.

In 2011 the International Energy Agency (the premier body that governments rely on for their studies) dropped a bombshell: its 2011 report said it looks like we now peaked at crude oil in 2006 at 70 million barrels a day, and we’ll probably turn out around 69 million barrels a day over the next twenty years, but it’s going to cost 8 trillion dollars to get the remanding oil out.

So what happened here is that within the last ten years, China and India made a bid to bring a third of the human race into a second industrial revolution (with its blistering 8 percent, 9 percent, or 10 percent growth rate). The aggregate demand was so great, it dramatically spiked prices for oil. All the other goods and services went up, and per capita purchasing powers shut down.

This is an endgame. Every time we try to restart the economy at the same rate it was growing before July 2008, this process repeats itself. In 2009, oil went down 30 dollars a barrel because there was no economic activity; the economy had stalled everywhere as soon as we started to replenish inventory. Then India and China started moving, Europe and America started moving, and immediately oil prices shot up over a hundred a barrel, all the other prices went up, and purchasing power shut down again. We’re likely to see these gyration cycles: wild gyration cycles of four to five years of growth and then collapse. We might go to the dirtier fuels like tar sands from Canada, the heavy oil from Venezuela, or coal and shale gas, but they emit more carbon dioxide.

We humans on this globe have burned so much carbon throughout the second industrial revolution (in the nineteenth and twentieth centuries). As a result, massive amounts of carbon dioxide—and now industrially induced methane and nitrous oxide—have entered into the atmosphere, preventing carbon dioxide from getting off the planet. In 2007, 2,500 scientists, 125 countries, and all the major academies of science released a report saying it looks like the temperature will rise by 3 degrees Celsius rise in this century due to industrial-induced climate change. Five years later, that estimate’s now looking conservative. But to give a perspective to your readers, if we only go up 3 degrees, which is now looking very conservative, that takes us back to the temperature on earth 3 million years ago. Climate is all about the shift of the hydrological cycle, the water cycle: for every degree that the temperature goes up on the planet, the atmosphere absorbs 7 percent more precipitation from the ground. That means the whole water cycle of the planet shifts. More floods, more tsunamis, more hurricanes, more violent snows, longer periods of drought—that’s what’s going on around the world today.

Global ecosystems cannot catch up to a shift in our water. Drastic changes in the hydrological cycle leave ecosystems destabilized—and then the animals and plants within those systems die out. So what our scientists are now telling us is that we are in the early stages of the sixth great extinction event in the history of the planet.

We’ve had five wipeouts in the past. When they come, they come very quickly because the chemistry of the planet shifts. Every time, we’ve had a mass extinction of life, and it has taken 10 million years to recover that biodiversity. Scientists tell us that, on the upper end, we may see a 70 percent extinction of life by the end of the century. The human race is sleepwalking here, totally in denial. There has not been a moment like this since we’ve been on the planet as a species in the last 175,000 years. It’s really a defining moment for the species.

America: A Laggard in the Struggle Against Climate Change

TIKKUN: It may be the case, Jeremy, that many American economic and political elites have given up on the future and are not in denial but rather simply ready to accept that there is no future. Perhaps for that very reason they are now willing to exploit and even destroy some of their own corporations for the sake of short-term plunder for individual wealth and success. We can look at the policies of both political parties and see that the ruling elements in both know most of these facts but are unwilling to develop long-term alternatives or solutions because they simply don’t believe it possible, and given that analysis, they have given up on the future and even the future of their children or grandchildren. If you look at it that way, then you don’t have to attribute irrationality to our ruling elites, but just behavior consistent with an assessment that the ship is going down and that long-term planning no longer makes sense.

JR: Right. Well, there are only 300 million people in the United States, and there are 7 billion people on the planet. People in other countries are beginning to pick up this crisis and demand action, and the U.S. elites will not be able to withstand these demands forever. I don’t think the “powers that be” will be able to withstand it if the wind blows in a new direction across the rest of the world, and I think that’s what beginning to happen. That’s why I started to shift my focus to Europe in the Nineties and spend time with European governments and European industry and civil society. The GDP of the EU’s twenty-seven member states exceeds the GDP of our fifty states even now. We’re beginning to rustle up a new wind in Europe and in the developing countries—an economic wind that I think is going to blow back to America.

I think within a year or so, America is going to have to ask whether American capitalists want to continue to place their money in the sunset energy, technology, and industries that are part of a dying, second industrial revolution, or do they want to be in the satellite energies-technologies industry of an emerging third industrial revolution? So maybe we should talk about the new economic paradigm (it’s moving very, very quickly in places like Germany) and what America can do to catch up.

TIKKUN: Yes, please do.

The Path to a Green Economy

JR: The bottom line is that we have to get off carbon-based energy by 2040. In the process, we’re going to have to create a new economic paradigm that can completely reorient the way we think about business on this planet. It’s helpful to start by looking at how the great economic revolution industry occured so we can get the beginning of a roadmap for the future. The great economic revolution occurred when a new energy revolution converged with a new communication revolution.

When energy and communication revolutions merge, they change the economic paradigm—they even change consciousness. When new energy regimes emerge, they make possible more complex living environments and they allow people to come together in larger units, differentiate skills, and integrate in larger economic social patterns. But when that happens, the new complexities that these energy regimes bring require communication revolutions that are agile enough to manage these new energies. When they come together it makes history.

In the nineteenth century, for example, print technology became very cheap because we went from manual printing presses to steam-powered presses, linotype, and rotary presses. That reduced the transaction costs and allowed us to mass-produce printing material in a cheap and efficient way. In that century we also introduced public schools in Europe and America. And we created a print-literate workforce with the communication skills to manage the complexity of the coal-powered, steam-driven, first industrial revolution. Obviously, an illiterate workforce could not have done it. We needed that communication revolution.

In the twentieth century, we had another convergence as centralized electricity and especially telephones, radios, and televisions became the communication vehicles to manage and market a more dispersed auto and oil culture, a suburban era, and a mass consumer society.

What I’m suggesting now is that for sure the second industrial revolution is on life support. Nobody believes coal, oil, gas, shale gas, tar sand, and uranium are sunrise energies. They’re inventory. And certainly the technologies based on these energies—like the internal combustion engine—are exhausted. The whole infrastructure based on carbon is literally falling apart, crumpled.

The fortunate news here is that if we can get there, we are on the cusp of a new convergence of communication and energy—a third industrial revolution that can move us quickly to a post-carbon regime in thirty or forty years if we can focus our attention and move the roadblock.

We’ve had a very powerful communication revolution in the last twenty-five years involving the personal computer and internet. What’s so interesting about this revolution is that it’s scaled. I grew up on centralized communication (electricity, radio, television), which is top-down. What’s interesting about internet communication is its distributive, collaborative, and lateral power—not top-down power, but side-by-side power. Today we have 2.3 billion people out there, a third of the human race, with a desktop computer or cell phone, and they can distribute their own video, audio, and text in a collaborative manner at the speed of light, with far more lateral power than the most centralized TV and radio networks. We accomplished this shift in twenty-five years.

What’s happening now in Europe—especially in Germany and the Scandinavian countries—is that this internet communication revolution, which is distributive, collaborative, and creates lateral power, is now merging with the new renewable energy sources that by nature are distributed and organized collaboratively and scale laterally. It’s a complete kick in the economic social-political landscape.

The lead energies (coal, oil, gas, all the fossil fuels) are derelict and they’re not found everywhere. They’re only found in a few places, and to get at them we’ve had to make huge military investments, particularly in the Middle East, to secure them. We’ve had to centralize power and expend huge political investments and massive capital to organize them for the user.

Now the renewable energies are what we call “distributed” energies: they’re everywhere. The sun shines everywhere on the world, every day. The wind blows around the planet every day. Everywhere we check there is a geothermal core of energy, heat energy underneath the ground. And in the rural areas, we have agricultural foraging waste that can be converted to energy. On the coastal areas, the ocean tides and waves come in every day for energy. Wherever we have garbage, it can be bioconverted back to energy. So these are energies that are found literally in every square inch of the world in some frequency or proportion, enough to provide us till kingdom come. So the European Union committed itself back to a five-pillar infrastructure for a third industrial revolution.

Here are the five pillars:

1. Mandated Renewable Energy

EU countries have committed to 20 percent renewable energy by 2020. That means a third of the electricity has to be green. It’s a mandate—every country has to do it. It’s not a suggestion.

2. Collecting Energy in Buildings

We’ve had to ask ourselves, “How do we collect and distribute renewable energy?” Years ago we thought: Let’s go to Spain or Greece—they’ve got a lot of sun. Let’s concentrate it with big solar panels and put a high voltage line and ship it out to Europe. The Irish have a lot of wind. Norwegians have the hydro. None of us opposes these more concentrated uses of what are essentially distributed energies (solar power, wind, geothermal, and hydro), but they’re not essential to get us off carbon. They’re only transitional.

If renewable energy is deposited in every square inch of the world, why the hell are we only collecting it from just a few concentrated points? We were using twentieth-century thinking based on how you collect valuables. There are 191 million buildings in the EU: houses, offices, factories, sheds, etc. The number one cause of climate change is buildings. Buildings use the most energy and they create the most carbon dioxide. The number two cause of industrial-induced climate change is beef production and consumption. The goal in the European Union is to convert every single existing building into a green micro-power plant. The partial power plant in each building will seek to get solar off the roof, wind off the wall, geothermal heat from under the ground, and energy from garbage back for each building. This is already happening for some buildings in Europe.

This pillar jumpstarts construction and creates jobs. It’s going to require millions and millions of jobs to convert the entire real estate stock into thousands of little power sources. Germany reached a goal of 20 percent green electricity in 2011 and it’s heading to 35 percent green electricity by 2020, way ahead of the United States. Germany has 1 million buildings that have been converted to become mini-power plants. The process has created hundreds of thousands of new jobs already. Once we convert every building to everyone’s personal power plant, we have the democratization of energy, the democratization of information. And Pillar 2 will jump start the economy.

3. Storage

Pillar 3 is very difficult: storage. The sun isn’t always shining. The wind can be blowing at night in California, but you need the electricity during the day. In the EU we’re committed to all sorts of storage: flywheels, batteries, capacitors, and more. We’re putting most of our emphasis at the center of storage with hydrogen. It’s the basic elements of the universe. It’s what we’re made out of. It carries other energy. And it’s modular, so you can put it in a home or a big utility, or a power plant. The EU’s committed 8 billion euros to public-private partnerships to introduce hydrogen to store green electricity.

Here’s how it works: Let’s say you have a solar panel on your roof and you’re collecting solar electricity off that panel. If you have some surplus electricity, you put it in water just like in high school chemistry—the anodes, the cathodes. You put the electricity in the water and the hydrogen comes out of the water into a tank. When the sun isn’t shining on your roof, you just convert the hydrogen back into electricity. So it’s stored, and whenever you need it, you got it.

4. A Nervous System for the Third Industrial Revolution

Pillar four is where the internet communication revolution converges with the new distributed renewable energy to create a nervous system for this third industrial revolution. We transform the electricity grid of Europe into an energy “inter-net” that acts just like the Internet. Once millions and billions are collecting their own energy and storing it in hydrogen, then any buildings that have more than they need at any given time of day can use software to send electricity out and sell it across Europe, from Ireland to the doorsteps of Russia. It’s similar to collecting information on a computer, storing it in digital form, and sharing it online.

5. Infrastructure for a New Economy

Pillar five is transformers. Electric vehicles came out this year, and hydrogen-fuel-cell cars, buses, and trucks are set to come out 2014-2015. We will eventually be able to plug in all of our vehicles anywhere where there’s infrastructure that’s collecting green electricity. And anywhere we travel, there will be thousands of power-charging units. Every parking meter will have one. Every parking space will be able to connect back up and get green electricity from the grid. Or, if your car is sitting there doing nothing and it’s monitoring the grid, the computer in your car will tell you when to send your electricity back into the grid.

So, these five pillars together create the infrastructure, the meta-technology platform, for a completely new economic paradigm. And as you know, in America, all of these politicians talk about “infrastructure, infrastructure.” But they’re talking about mending up the old infrastructure, not creating a new one.

I can tell you from the lessons we learned in Europe, why Obama’s green economy didn’t take off. If these pillars come in isolated, stand-alone, the whole effort is powerless. When we realized last year that we need all five pillars, the EU Commission put out a memo saying we need a trillion euros for the energy inter-net now. A trillion in the next nine years.

We put in feed-in tariffs across Europe—they raise the electricity price for each consumer by such a small amount that you don’t even know it on the bill. But the money collected is used for a fund so early adopters can put solar or photovoltaic window shades in their buildings and get premium price for sending their electricity back to the grid. Only Ontario in all of the Americas—all the way to Chile—has an advanced feed-in tariff. Vermont just created one. Fifty-one countries have feed-in tariffs. Germany’s feed-in tariff is what allowed it to take off. So, what we realized is, if feed-in tariffs have been so successful, we have literally millions of players now, millions just in Germany.

TIKKUN: Feed-in?

JR: Feed-in tariffs. Meaning, if the electricity price goes up for the consumer slightly, the money you collect allows early adopters to put photovoltaics on their roofs and then they get more money for sending their electricity back to the grid than the normal electricity in the grid. The feed-ins have been so successful that we have hundreds of thousands of places trying to get their electricity back to the grid. But the old transmission grid is unidirectional. It only goes in one way. When you get electricity in your home, it’s going from the electric company to you. It’s pretty hard for you to send it back.

So we realized that we had to get the grid up because now we’ve got thousands and thousands of players—millions now—that wanted to get their electricity back to the grid. Then we realized the feed-in tariffs have been so successful that in some regions, 20 percent, 30 percent, 40 percent, or even 70 percent of the electricity is green. But we’re losing 3 out of 4 kilowatts because the wind is blowing at night and we need electricity during the day or because sometimes the solar is not there. So unless you store the energy with hydrogen, we’re losing 3 out of 4 kilowatts.

California is classic. It gathers all the wind power at night but its residents need the energy during the day. They need to store it. So, we’re realizing—you can’t do electric vehicles and fuel cell vehicles if there is no infrastructure and the other four pillars aren’t in place. You’ve got to put them all in.

Well, Obama went wrong. He didn’t understand that economic revolutions occur when energy and communication revolutions merge to create a nervous system for a new infrastructure. He spent billions and billions of dollars in U.S. tax money after 2008 on stand-alone, piloted, isolated projects. A wind turbine park here, a battery factory there, a solar factory somewhere else. Completely unconnected. So, there was no multiply effect, there was no synergy that created the new businesses and the new employment. And we end up with people saying, where are the jobs? Where are the businesses? All we see are pilot projects! That’s what he did. It was a failure.

The third industrial revolution—you’ll get a kick out of this—is power to the people. It literally is distributed power. And knowing the impact that the democratization of information has had in terms of lateral power, then imagine how much more powerful it is when that information is used to democratize energy. It will change power relationships literally and figuratively because communication and energy matrices determine, to a great extent, how power is produced and distributed in any civilization in history.

Here we are at the end of that era. Three out of the five largest companies are energy companies; underneath them are large banks and finances; underneath them are Fortune 500 companies that together rely on the oil spigot for all their goods, their services, their products, their logistics. These companies account for one-third of the GDP of the whole world. That’s top-down. So the young kids on the streets and in the Occupy movement—the 99 percent—they have to understand how this occurred. It occurred because of a centralized telecommunication energy matrix. You and I know for damn sure that we’re all better off now, at least in the developed world, than our ancestors were before the first industrial revolution. However, those who are at critical points at the top of the pyramid have benefitted disproportionately.

TIKKUN: Yeah. It sounds the way you’re talking as though all this is just going to happen, as though these stages of development happen apart from human convictions and decisions.

JR: No. I think it is happening. The momentum is very strong. It’s strong but it could be derailed. The newspapers didn’t see the blogosphere coming. Now they’re either creating blogs or internet sites, or they’re going out of business. What they don’t want to recognize is what happens when you can democratize energy, and millions of small players—small, medium-sized companies—can network together. It takes far more lateral power to produce in market products than you could ever get with the centralized old factories in the nineteenth and twentieth centuries and the old logistics of transport.

I’m not sanguine. I’m not pessimistic. I’m guardedly hopeful because I know that this plan is workable. It’s the EU plan. It has now become the United Nations plan. I introduced this in Vienna last month in November at the United Nations Industrial Development Organization headed by Kandeh Yumkella who, aside from being Director General, is also the head of UN Energy.

In Abu Dhabi we’re laying this out for the renewable energy industry. Then India. We are going to be announcing a plan for the entire Indian business community, the Federation of Indian Chambers of Commerce. So we are moving this.

But there are places where it’s not moving. The United States, of all the places in the world, is by far the outlier. It’s not moving here at all except in California, Oregon, and Washington, parts of New England, and southern Texas.

What we’re sensing here is that there’s a new politics that’s emerging here among the younger generation. In Europe it was bottom-up and top-down. It was efforts going on within the green parties and green movements and civil society groups across Europe. The early adopters. Then, it started to move politically because they have a multi-party system and the greens pushed the socialists and the socialists sped past the Christian Democrats, that’s how it moved.

The Lateral Power of the Occupy Movement

JR: The new politics is really interesting. These kids—the internet generation—are already thinking about lateral power. That’s how they organized the Occupy movement. They Twitter and YouTube and Facebook. They know logistically how to use lateral power. They don’t think right/left. When young people think about institutional behavior, the political spectrum they use is very interesting. They judge it by whether the institution—whether it’s business, government, or an educational institution—behaves in a fashion that’s centralized, patriarchal, top-down, closed, and proprietary, or whether the institutional behavior is distributive, collaborative, transparent, open, and based on lateral power.

The Occupy movement, mainly young people, understand that there’s a 1 percent vs. 99 percent, and they certainly understand that there’s something very unfair in the way that the economy and the societal world is organized to benefit the few at the expense of the many. And they’re certainly frustrated about not having any jobs and any future, and angry as hell that the political apparatus keeps them locked out. Whether it’s the Arab Spring or the streets of Manhattan or Oakland or Campton or Ohio. But what I think is missing is the connecting the dots and having a broader analysis of why this has happened. And that a narrative, a framework of why this has happened historically, the communication energy matrices, and the impact it has on creating a pyramid organization society, and they still need to actually begin to look at a new economic vision and game-plan that’s compatible with where they’re coming from. The third industrial revolution really is their revolution because they grew up empowered to create information. They’re completely comfortable with open-commons, open-source—from Wikipedia to YouTube. Now all they have to do is apply it to energy, bring it together, and change the economic and political landscape.

We have a movement here of young people who are asking, “Where are the jobs, where are the businesses?” They should then ask the question, “Can we create new economic opportunities with the existing economic paradigm in this country?” How are they going to have an economic future within a dying economic regime? They’ve got to start looking at a new economic paradigm that they can move, not just on the streets but also in terms of their professional experience.

There is a whole generation of young people coming out of the universities here having done a sustainability curriculum. Hundreds of universities are beginning to create curricula that bring together the business schools, the architecture schools, the urban planning schools, the chemistry and engineering departments, and the ecology departments into cross-disciplinary programs for sustainability. And there are campuses that are actually creating the third industrial revolution’s infrastructure. The community colleges of Los Angeles have all come together and they’ve created a five-pillar infrastructure to share electricity energy across the community colleges.

There has to be prophetic, and there also has to be a thoughtful generation that can create the new professional skills, the intellectual abilities, the political stamina, the focus and discipline to move this thing forward. Otherwise, it’s going to peter out.

A Response to the Politics of Austerity

We’re starting to see right-wing reactions in Europe. More austerity. More cuts. But this right-wing, libertarian phase is going to run its course—because if you keep cutting everything and don’t create any collective response to lay down a new economic infrastructure and paradigm, it gets worse and worse. We are sitting in an old dying economic regime, and we are collectively not doing anything at the federal, state, and local level to stimulate a new infrastructure that creates a new possibility for the next fifty years. If you follow the libertarian path all the way, and get rid of all government, there is no way to create a new economic paradigm for the twenty-first century.

In the first and second industrial revolutions, it was a public-private partnership all the way. Who the hell do they think laid out the public lands, ceded public lands, for the railroads? Who do the libertarians think created the first telegraph, by financing the Baltimore to Washington telegraph for Morse? It was the federal government. Who financed the utilities, subsidized the utilities in the rural electric cooperatives across the country? Who set up the monies for state and federal highways, for the auto culture? Who provided the loans for millions of people to get their own homes under the FHA? Who subsidized the oil pipelines through the whole twentieth century?

I think the young people around the world are moving to biosphere consciousness really quickly. All over the world—this has all happened in less than seven years, really since 2004—ten-year-olds and twelve-year-olds all over the world are coming home and asking some really interesting questions like, “Why is the television on when no one’s watching it in that room?” “How come we have two cars when we can have a car-share, y’know, on a car-sharing lot?” “Where did my clothes come from?” and “Where did the hamburger on the table come from?”

What the young people are learning from grade school through the university is that everything we do has an ecological footprint that affects the well-being of some other family, or some other creature somewhere else in the biosphere—we’re all connected. That is a big deal. If I were thinking about this anthropologically, that’s the biggest shift in consciousness we’ve seen since the shift from ideological thinking to therapeutic thinking. This shift to biosphere consciousness is real. The young people are grasping this and they’re connecting the dots. They’re thinking systemically.

TIKKUN: Well, if the younger generation could succeed in bringing that approach into politics, we’d soon have a “Love, Social Justice, and Transformation Party” advocating for a platform like the one put forward in the Network of Spiritual Progressives’ Spiritual Covenant with America. We certainly hope to see that someday soon!

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