From: Paul Bullock (paulbullock@ebms-ltd.co.uk)
Date: Sun Sep 15 2002 - 16:57:13 EDT
Dear michael, canyou confirm your email as given here, i tried direct but couldnt get through thanks paul bullock ----- Original Message ----- From: "michael perelman" <michael@ecst.csuchico.edu> To: <ope-l@galaxy.csuchico.edu> Sent: Thursday, September 05, 2002 4:41 AM Subject: [OPE-L:7598] Re: Value of information > This is a very primitive version of a paper I am preparing for the URPE > sessions in Washington. Any comments would be appreciated. > > Intellectual Property Rights and the Commodity Form: New Dimensions in > the Legislated Transfer of Surplus Value > Introductory > Karl Marx analyzed how markets first create surplus value and then > transfer some of this surplus value from capitalists to rentiers, > landlords, and other capitalists. Intellectual property rights are > rapidly expanding the scope of the commodity form, often converting the > products of what Marx called universal labor into an entirely new type > of commodity. This new commodity form radically deepens the > contradictions of the capitalist system. > I am now going to restrict my discussion here to intellectual property > in science and technology. Markets for goods with high intellectual > property content are unlike typical commodity markets. The owners of > existing intellectual property provide no material good or even a > service, yet can nonetheless demand payments for use of their > "products." Since intellectual property is a monopoly, owners of > intellectual property do not feel the direct force of competition, only > cross product competition. In addition, the cost of production is more > or less irrelevant in markets for intellectual property, since > reproduction costs are trivial compared to market prices. > Payments to owners of intellectual property are more like the > extraction of rent than the payment for a commodity. But unlike land, > intellectual property rights supposedly represent a reward for a > creative achievement. > As I will discuss later, in almost every case, the creation of > intellectual property represents a social effort in which scientists or > artists draw upon the work of their predecessors. As a result, rival > claimants to intellectual property rights abound. More often than not, > they will launch expensive litigation in hopes of obtaining exclusive > ownership for themselves, or at least a valuable monetary concession. > Within the eyes of the law, intellectual property rights are akin to > the ownership of capital goods, except that this ownership expires after > a set period of time. Intellectual property, however, differs from real > capital goods in an important respect. In the case of a typical > commodity, payments flow to the various agents who control the elements > of the social labor process that originally contributed to the > production of the capital good, despite the fact that some of the > surplus value will provide rewards for non?producers in the form of > profits, interest, and rents. > In the case of the conversion of scientific or technical knowledge > into intellectual property, modern capitalism reverts to a > winner?take?all arrangement in which the law assigns ownership to a > single agent, while offering absolutely nothing to the others who have > contributed to its creation. Nonetheless, even more so than in the case > of the production of capital goods, scientific and technical knowledge > depends upon a social labor process. > No one person makes a scientific discovery. Instead, science and > technology depend upon a complex network of information flows, > reinforced by a publicly supported educational system. Yet the first to > make a claim with the patent system is supposed to deserve the exclusive > right to the discovery. > Intellectual Property as a Public Good > Writing in the Theories of Surplus Value, before he had worked out his > fully worked out his distinction between price and value, Marx observed: > > The product of mental labour ?? science ?? always stands far below its > value, because the labour?time needed to reproduce it has no relation at > all to the labour?time required for its original production. For > example, a schoolboy can learn the binomial theorem in an hour. [Marx > 1963?1971, i, p. 353] > So, unlike land or most commodities that command rents, intellectual > property is non?rivalrous. As Marx observed, "Once discovered, the law > of the deflection of a magnetic needle in the field of an electric > current, or the law of the magnetization of iron by electricity, cost > absolutely nothing" (Marx 1977, p. 508). In fact, science and > information may be called meta?public goods, in the sense that they > become more valuable the more that people use them. > Writing well before the hyperbole of the New Economy became > commonplace, Marx sensed that the growing importance of science > represented a serious contradiction to the law of value. In a > remarkable section of the Grundrisse, he observed: > To the degree that labour?time ?? the mere quantity of labour ?? is > posited by capital as the sole determinant element, to that degree does > direct labour and its quantity disappear as the determinant principle of > production ?? of the creation of use?values ?? and is reduced both > quantitatively, to a smaller proportion, and qualitatively, as an, of > course, indispensable but subordinate moment, compared to the general > scientific labour, technological application of natural sciences, on one > side, and to the general productive force arising from social > combination in total production on the other side ?? a combination which > appears as a natural fruit of social labour (although it is a historical > product). Capitalism thus works towards its own dissolution as the > force dominating production. [Marx 1973, pp. 700] > Here Marx was not looking at the overthrow of capitalism by dissatisfied > workers, but rather by its technological irrelevance. He continued: > The theft of alien labour time, on which the present wealth is based, > appears a miserable foundation in face of this new one, created by > large?scale industry itself. As soon as labour in the direct form has > ceased to be the great well?spring of wealth, labour time ceases and > must cease to be its measure, and hence exchange value [must cease to be > the measure] of use value .... The free development of individualities, > and hence not the reduction of necessary labour time so as to posit > surplus labour, but rather the general reduction of the necessary labour > of society to a minimum, which then corresponds to the artistic, > scientific etc. development of the individuals in the time set free, and > with the means created, for all of them. Capital itself is the moving > contradiction, [in] that it presses to reduce labour time to a minimum, > while it posits labour time, on the other side, as sole measure and > source of wealth. [Marx 1973, pp. 705?6] > Within this environment, capitalists can no longer pretend that they are > serving a social function fostering accumulation by driving workers > longer or harder or even by organizing them efficiently. Instead, Marx > realized that this new stage: > calls to life all the powers of science and of nature, as of social > combination and of social intercourse, in order to make the creation of > wealth independent (relatively) of the labour time employed on it. > [Marx 1973, pp. 706] > In other words, value theory, which is merely an analysis of how > capitalism works, may have some relevance in a primitive stage where the > "worker [is reduced to] nothing more than personified labour?time [and > where all] individual distinctions are obliterated" (Marx 1977, p. > 353). In contrast, at the stage where universal labor becomes dominant, > the "material conditions [of production] blow this foundation [based on > the minimization of labor time] sky?high" (Marx 1973, p. 706). > Another Dimension of Universality > Universal labor has another important characteristic. In addition to > spreading costlessly throughout society, it often works in strange > ways. A scientific idea can cascade for decades and decades inspiring > one technology after another. Econometric estimates suggest that the > typical technological discovery requires about 20 years before it > reaches fruition. More basic scientific research, which lies behind the > technology, takes even longer before it begins to affect our daily > lives. In this spirit, Lewis Mumford once proposed: "It was Henry who > in essentials invented the telegraph, not Morse; it was Faraday who > invented the dynamo, not Siemens; it was Oersted who invented the radio > telegraph, not Marconi and De Forest. The translation of the scientific > knowledge into practical instruments was a mere incident in the process > of invention" (Mumford 1963, pp. 217?8). > Typically, the new technologies do not develop from a single > scientific idea; instead they depend upon the confluence of the number > of scientific discoveries, each of which had been further developed by > number of other people. By the time the technology is mature enough to > pay propose to the patent office absolutely nobody could determine the > relative contributions of the various people involved. > Intellectual Property and the Falling Rate of Profit > Of course, Marx never suggested that the rise of universal labor would > be an exclusive cause for transcending the capitalist mode of > production, but it certainly does call for a sharp break with the > traditional vision of a market?based system of competitive commodity > production. > Rather than directly threatening the capitalist of production, > universal labor has become a major prop for the system in the form of > intellectual property rights. In fact, the protection of intellectual > property has become a substantial counterweight to the tendency for the > rate of profit to fall. > The relationship between intellectual property rights and the rate of > profit is not new. During the late nineteenth century laissez?faire > economists strongly opposed the strengthening of intellectual property > rights as a monopolistic intrusion into sacred grounds of free markets. > Only after the economy slipped into crisis mode in the last decades of > the century did most economists relent, seeing intellectual property > rights as a way to avoid the economic catastrophe they saw unfolding. > Some principled laissez?faire economists, such as Hayek and Mises, > continued their resistance even into the twentieth century, but they > were a distinct minority. > Not surprisingly, the next surge in strengthening intellectual > property rights in the United States began in the latter part of the > 1960s, as stagflation began to engulf the economy and earlier trade > surplus turned negative. Although many old line industries could not > compete effectively in world markets, exports of intellectual property > in the form of royalties and copyright fees soared. > I have not seen hard data regarding the effect of intellectual > property rights on the rate of profit, but I am convinced that it is > substantial. Just think about Microsoft and pharmaceutical and industry > with their low marginal costs relative to their market prices. > The Contradictions of Intellectual Property > The general thrust of Marx's scattered comments on universal labor is > clear: the "natural" course of market development would be the > promotion of universal labor and the obsolescence of markets. Markets, > however, are anything but natural. They came into being by the good > graces of primitive accumulation. Once begun, they still require the > constant nurturing of state power. > In the case of managing universal labor, the state performs two vital > functions to prop up the market. In the first place, the state directly > subsidizes a good deal of universal labor. This arrangement is, in > itself, perfectly understandable. As neoclassical economists have long > known, individual enterprises have little incentive to employ universal > labor because they have difficulty in appropriating its fruits in a > commodity form. The capitalist state, however, typically refuses to > make the results of universal labor available to all. Instead, it > converts the universal labor into private property, even if the work was > originally done in the public sector. > Over and above subsidizing universal labor and making it private > property, the state uses its coercive powers to enforce these > intellectual property rights. Since the misappropriation of > intellectual property is less obvious than the theft of physical goods, > the protection of intellectual property rights is necessarily far more > intrusive than comparable efforts to protect physical goods. Within > this environment, owners of intellectual property rights often even > demand that providers of commodities modify their products in ways that > actually diminish their usefulness. > The privatization of universal labor, like all other attempts to > correct crises, creates further contradictions ?? in this case, it > erects a serious barrier to further scientific and technological > progress. Let me just enumerate a few of the detrimental effects. > First of all, every agent, whether an individual researcher or a major > corporation, has a strong incentive to maintain the utmost secrecy ?? > thereby stifling the communication, which is the very lifeblood of > science. In addition, incredible efforts are wasted in attempting to > get around existing intellectual property by techniques such as reverse > engineering. > Because intellectual property law awards a single individual credit > for the complex social process it encourages patent races, which > dissipate considerable scientific effort. In addition, the emphasis on > intellectual property means that many scientists end up devoting > considerable time and energy learning about the legal ramifications of > their work ?? efforts that would be better spent in doing science. > Excessive litigation represents a more obvious dissipation of > potentially productive energies. Corporations attempt to extend the > boundaries of their intellectual property rights in much the way > imperialist nations wage war in order to increase their territory. > Corporations work frantically to amass patents. Many of these patents > have no utility whatsoever except to counterattack those who might > challenge their right to use some technique. > The main battlefield is the legal system. Patent suits typically cost > millions of dollars. Corporations also expend considerable energy to > win favorable legislation. Public relations become a useful adjunct in > this effort. These supplemental efforts are also costly. > The monopoly rights associated with intellectual property raise > prices, transferring immense quantities of income and wealth to the few > corporations that hold the mass of intellectual property rights. By > holding millions of people in unnecessary poverty, this system thwarts > their potential contributions to the pool of universal labor. In > addition, the quest for intellectual property rights has had monstrous > effects on higher education. > Finally, intellectual property rights undermine the very nature of > free scientific inquiry. The truly great scientific discoveries result > from scientists following their own interests rather than the narrow, > quick?profit?oriented priorities of giant corporations. > In my book, Steal This Idea: Intellectual Property Rights and the > Corporate Confiscation of Creativity, I have tried to document in more > detail the enormous costs that intellectual property rights have imposed > on society. > Instead, the economic progress depends upon people having the > opportunity to develop their skills freely and to cooperate with one > another. Harsh corporate discipline creates a barrier to progress. > Add > In short, universal labor defies the sort of commodification envisioned > in economic textbooks. At the same time, the commodification is a > necessary measure to counteract the falling rate of profit. This > strategy of defending the capitalist form seriously undermines the > social and economic potential of scientific labor creating a deeper > contradiction. > References > Marx, Karl. 1963?1971. Theories of Surplus Value, 3 Parts (Moscow: > Progress Publishers). > > ___. 1973. Grundrisse (NY: Vintage, 1973). > > ___. 1977. Capital, Vol. 1 (New York: Vintage). > > Mumford, Lewis. 1963. Technics and Civilization (NY: Harcourt, Brace and > World). > > Perelman, Michael. 2002. Steal this Idea: Intellectual Property Rights > and the Corporate Confiscation of Creativity (NY: Palgrave). > > > > > -- > > Michael Perelman > Economics Department > California State University > Chico, CA 95929 > > Tel. 530-898-5321 > E-Mail michael@ecst.csuchico.edu > > >
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