The postwar model of the American corporation started to run into problems in the 1980s, he says.
The managerial system of corporate organization was like a lumbering giant, a powerful producer able to turn out a large volume of standardized goods but lacking the flexibility to make the kind of rapid changes necessary to adjust to sudden fluctuations in the domestic or global market. (p94).
New technology increasingly eliminated what he calls "the increasingly bloated ranks of middle management" who just processed information flow up and down the hierarchy.
In the information era, "time" is the critical commodity, and corporations bogged down by old-fashioned hierarchical management schemes cannot hope to make decisions fast enough to keep up with the flow of information that requires resolution. (p101)
This is driving re-engineering, and leaner corporations, he says. He then diligently examines the impact of technology and automation on a series of sectors, including agriculture, manufacturing, retail and banking.
The nation state and government in general is declining. Governents can no longer guarantee market functioning, either.
So what is his answer? There needs to be more growth in "the third sector" - the non-market, non-government, "social economy."
Most people would find it difficult to imagine a society in which the market sector and government play less of a role in day-to-day affairs. These two institutional forces have come to so dominate every aspect of our lives that we forget how limited their role was in the life of our society just one hundred years ago. Corporations and nation-states are, after all, creatures of the industrial era. ...Now, however, that the commercial and public sectors are no longer capable of securing some of the fundamental needs of the people the public has little choice but to begin looking out for itself, once again, by reestablishing viable communities as a buffer against both the impersonal forces of the global market and increasingly weak and incompetent central governing authorities. (p238)
The independent sector includes voluntary activities, tax-exempt organizations and charities, running from "social services to healthcare, education and research, the arts, religion and advocacy" which together are responsible for 9% of total employment. The third sector creates social capital.
Community service is a revolutionary alternative to tradtional forms of labor. Unlike slavery, serfdom and wage labor, it is neither coerced or reduced to a fidiuciary relationship.. It is an act entered into willingly and often without expectation of material gain. In this sense, it is more akin to the ancient economics of gift-giving.
It is also, he argues, very American. Toqueville thought voluntary organization was one of the most distinct and remarkable features of the new American democracy: (Rifkin's quote of Toqueville, p 243)
Nothing, in my view more deserves attention than the intellectual and moral associations in America... In democratic countries, knowledge of how to combine is the mother of all other forms of knowledge; on its progress depends that of all the others.
The third sector, Rifkin says, is an antidote to the excessive materialism that dominated twentieth century industrial thinking.
He thinks the third sector can restore social services which are being abandoned by over-indebted governments, despite suspicions on the left of what the first President Bush called "a thousand points of light." Interestingly, Rifkin defends himself against being seen as advocating a partisan Republican idea.
Rifkin argues for a "shadow wage" - a deduction from income tax for volunteer hours given, as well as a "social wage" for those unemployed people who want to do community service full-time as an alternative to welfare.
It would be a form of guaranteed income, but linked to community service. Interestingly, he notes Lyndon Johnson established a National Commission on Guaranteed Incomes in 1967. It went nowhere as many politicians feared it would undermine the work ethic. But the idea was not confined to the left. Milton Friedman proposed a "negative income tax" as a cash alternative to the mess of bureaucratic welfare dictats which amounted to a guaranteed income in any case.
finding an alternative to formal work in the marketplace is the critical task ahead for every nation on earth. Preparing for a post-market era will require far greater attention to the building up of the thrid sector and the renewal of community life.. The end of work could spell a death sentence for civilization as we have come to know it. The end of work could also signal the beginning of a great social transformation, a rebirth of the human spirit. The future lies in our hands. (p291,293)
So what should we make of the book? It is detailed, it is diligent, it is in many ways quite moderate.
It was perhaps premature. Economies have grown substantially since the mid-1990s, but it seems we have done it in part by ever more boom and bust, and with a huge infusion of debt.
His arguments for the third sector are also well-taken. Indeed, they are strenghhened by new forms of cooperation like open-source software, Wikipedia, and other huge voluntary endeavors at the heart of the new economy. More than ever is being done voluntarily.
But I don't think the expansion of the voluntary sector in itself is a full solution. For one thing, why will the third sector expand? It needs to be encouraged and supported as well. I think Martin Ford's book, The Lights in the Tunnelwhich I discussed earlier, is more interesting in its emphasis on incentives, and the motivations people might have to do the right thing.
The growth of voluntary organizations and restraint of exploitative or deviant behavior needs to be explained.
I fully agree with Rifkin that more government is not the answer. This is where he parts company with liberals. There needs to be a wider range of organization and collective activity than just centralized activity.
Perhaps the biggest contribution he makes, though, is his history of fears of automation in the twentieth century. So far we have always put such fears behind us, as growth has indeed being a swift incoming tide that raised all boats.
After the second world war, for example, the huge expansion of the service sector, the vast increase in the scale of government, and the expansion of the market sphere as women went out to work enlarged the scope of the market and consumer demand. Suburbanization led to a huge wave of demand for many goods too. That made up for the increasing automation or loss to foreign markets of heavy industry.
But the fact that we have escaped the problems once does not mean we will inevitably escape them every time, or by using the same tools in the same way.