As I described in the Postcapitalist Manifesto, postcapitalism is developing along the lines of four primary transformations: from hierarchy to networks, from coercion to collaboration, from extraction to conversion, and from scarcity to abundance. As society develops toward a postcapitalist economy, people often ask: “What about the real economy—like real estate? They aren’t making more of that! It will always be scarce.”
While there may not be any more land being created on Earth (notwithstanding the artificial islands being built by countries like China and Dubai), the real estate industry, and especially home building, are just beginning to feel the impact of digitalization. Soon, they will be forced to reckon with a very different economic reality—they too will become postcapitalist.
Recently, three disconnected announcements were made, each of which in its own right is powerful, but which taken together, illustrate the future of this critical industry, and show how the old capitalist model will give way to a new postcapitalist reality. Here are the three.
Solar Roofs Are Becoming Cheaper than Shingles
You read it right: Elon Musk announced recently that they are on the verge of undercutting the traditional roofing industry on cost of creation and installation of a new roof—not after accounting for electric generation cost savings, but before. It used to be that one had to amortize the return on investment to make solar roofs look good financially, which meant you needed cash flow to be able to do it. Now, if Musk is right, no matter where you live or what you think of solar power, it is cheaper to build your roof from solar shingles that generate electricity than with asphalt shingles. Whoa!
I read this as another step toward the conversion economy. For that to happen, three conditions will be required. First, every building’s roof needs to generate electricity. With Musk’s invention, there is no reason that cannot happen. And when roofs become the generation source of electricity, the entire industrial, capitalist model of large power plants generating electricity is disrupted.
Second, productivity of the shingles needs to increase enough so that the electricity generated can power not only the home (lights, heat, air conditioning, etc.), but also the electric vehicles. I am watching for these as the next steps on conversion.
Third, the battery technology must improve dramatically in two ways: less need for the extraction-based lithium, which is mined, and much higher storage capacity and life. This gets us to the second big development…
Battery Technology Just Got a Kick in the Butt
A 94-year-old scientist named John Goodenough, and his team at the University of Texas, invented a new battery made from glass and sodium that outlasts and outstores the lithium-ion batteries that power our cell phones, solar homes, and electric vehicles.
This is a HUGE breakthrough, assuming it fulfills its promises. The ability to store electricity has been the bane of solar energy since it was first invented. The question was always—what happens if the sun doesn’t shine? Mr. Goodenough appears to have an answer.
What is even more important about this invention, however, is that the source materials of glass and sodium are highly plentiful and cheap. They relegate as useless the expensive mining and smelting involved in creating lithium. So, while enabling the conversion economy, this new technology also directly undermines the extraction economy. At the same time, scarcity is giving way to abundance.
3D Printed Concrete House
Digitalization is moving ahead full force in the home construction industry. The video link below shows an entire house being 3D printed with concrete in less than 24 hours.
While workers are still doing the detailed installation of windows and doors, painting and other finishings will also be 3D printed soon. Imagine what happens to the cost of a home built with affordable 3D printers and almost no labor. The value will be in the digital design, and the primary cost in the concrete, thus making homes far more digital than anyone imagined. This capability challenges the notion that digitalization doesn’t apply to the so-called real economy. In fact, it does.
Homes of the Future
So, can the cost of a home go to zero? Not with this technology. Not yet. But imagine what happens when home construction goes from a several months long project with multiple construction workers to an inexpensive project lasting a few days. The home is 3D printed with robots, cheaper roofs are installed—roofs that generate electricity, which can be stored in batteries that are cheap and plentiful—and the stored electricity reliably powers lights, appliances, cars, and heat for the home—and all of that power is virtually free.
The impact of these coming disruptions will go far beyond cars, phones, and labor. It will go beyond the elimination of mining activities and fossil fuel extraction. Indeed, it will go right to the heart of creating a free economy where cash becomes decreasingly meaningful, and eventually, meaningless. This is what happens when digitalization increases abundance, reduces cost, and begins to reshape the world.
Where Else Is This Happening?
The home building industry is one place this change will overtake nearly everything. As readers, many of you work in your own industries. What about you? What industry are you in that is changing due to digitalization? Please feel free to comment—I’d love to hear from you.