The Ghost of Marginal Cost has Vanished from the Dismal Desert of Economics

Today we are all living largely in a knowledge economy in which innovation and subsequent knowledge creates value compared to previous industrial economy in which value was dependent on the tangible production and output. This has turned matters up-side down. For example, according Professor, Geremy Rifkin, this transition to knowledge economy has made the mythical marginal cost (mc) concept on which the entire capitalism is built has become obsolete and irrelevant in the economic discourse. The basic idea of the mainstream economics is that the goods and services has to pass through various stages in the form of exchange of either inputs or output entailing additional cost at each level and therefore, price must be decided based on the additional or incremental or  marginal cost. Of course, it may appear to be appealing to the logic even though it is not possible to figure out how much is marginal cost in the practical situations and therefore, it is mythical. At the same time, in a knowledge economy, there is no such a cost like marginal cost at all. For example, consider my blog for which the service providers has to ear mark certain space which constitutes both total cost and fixed cost. Even if it is accessed by billions of the people around the world, it does not entail any additional cost to the service providers or to me. Thus, the spirit of mc has vanished from the dismal desert of economics.

Another most amusing development in the modern knowledge economy is the astonishing u-turn and thereby camouflages of the economic agents (read human being), which instead of destabilizing the very foundation – selfishness- on which the modern economics is built, it has essentially reinforced its credibility to remain as well as continue to be the foundation of economics. In the erstwhile industrial economy, the selfishness of the people vis-a-visa economics was satisfied by way of denying others what they possessed and thereby distinguish themselves from others based on the ownership. For example, land lords in the past denied others the right to own land and thereby they satisfied their selfishness by owning vast stretches of land in which they were proud of. Thus, in the past people appealed to and satisfied their selfishness by way of denial and deprivation. But, contrary to this, in the modern knowledge economy the same people are appealing to and satisfying their selfishness with sharing and distribution, just opposite of what they did in the past to achieve the same objective. What a miraculous turn of events.  Today, people share their blogs, their videos through Youtube, their wisdom through facebook and twitter. How this will satisfy his/her selfishness and thereby help economist to eke out a living for their otherwise hapless kids. The idea is this:  unlike the past industrial economy in which tangibles like gold  which were considered to be the assets  must be kept in the dark inner rooms of the castle to deny it to others, as Travancore King did in the past by storing huge amount of precious metals in the Temple as he can draw credit out of this as he is the custodian of the temple and thereby satisfy your selfishness by ruling the paradise of fool over the pride that I have this or that which others do not have so that I am distinguished from others and hence your ego which is your boss who controls you will be happy with you, the slave, today in the modern knowledge  economy, your boss (selfishness) will be satisfied only you share your asset like knowledge  with others because what made you proud of you in the past industrial economics is the impression that I am great or noble because I have land , BMW etc whereas who will mind  and acknowledge you today if you conceal your knowledge within your shelf at home without sharing it with people. Once you share your wisdom with others, if it is impressive, you will be acknowledged which will make you proud of yourself and thereby you will also make your boss happy. That is why people share their wisdom today not necessarily to be useful to others but to glorify themselves. Economics, I LOVE YOU SO MUCH. You are a wonderful and beautiful ghost.

By the way, being distinguished form others is one of the driving forces of the life. For example, why should the so called VIPs insist that they should not be frisked at the airports? Are they smugglers? No, the issue is that all others are being frisked so VIP should not be frisked so that he is distinguished from others. The logical root of the current identity politics can also interpreted with same reasoning as the modern champions of identity politics proclaim that they are of being, say, a dalit or being hailing from a particular regions and thereby they are trying to invoke the spirit of identity to appease their ego. Thus, ultimately what matters is not the quantity of good you have produced, or length of the land you own or colour of the sari you have purchased for your wife , instead what matters is your ego or your selfishness because you are simply and miserably so poor and so constrained to be happy simply by appealing to your selfishness as it is the dominant evil force controlling you and also because you ultimately love only yourself and you pretend to be in love with others not because you really love them but because you really love you. That is, when you inherently pretend to love others, they will also be doing the same thing and you will be pleased as you are under the false impression that they love you and finally, thereby, you, the idiot, satisfy your princess of selfishness. You are a fool because others are also indulging in the same tactics directed at you to satisfy their princess. Thus, life is a drama written by an idiot (in which the actor is also an idiot).