RE: [OPE] intermission: value of knowledge

I agree with your general point that easily reproducible knowledge revolts against private property
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From: ope-bounces@lists.csuchico.edu [ope-bounces@lists.csuchico.edu] On Behalf Of Adler Paul [padler@usc.edu]
Sent: Monday, November 09, 2009 5:52 PM
To: Outline on Political Economy mailing list
Subject: Re: [OPE] intermission: value of knowledge

Going back over the series of posts on the value of knowledge, it
seems like there's a pretty deep difference of views here, and I
wonder if we can get to the root of it. I think Paula A and I are on
the same wavelength, but since she may disagree with my formulation,
I'll just speak for myself.

But let's start with Paula's example: imagine a capitalist publisher
hires an author to produce a work of fiction (the publisher doesn't
realize it, but it turns out that the author was James Joyce and the
book he writes was Ulysses). How can the SNLT of this kind of
commodity ascertained?

Paul C. says the publisher can calculate the average number of working
hours that an author puts into writing a novel (let's say 2000 hours).
And they know something about the average complexity of labor among
writers (let's say, BAs with English majors). Then, to set the price,
all the publisher needs to know is the size of the print run: that's
hard to do, and only ever statistically accurate, but that's true for
any commodity.

And we can reason the same way about a new pharmaceutical drug: Jerry
asks (Nov 5) how to count that labor that goes into pharma R&D? But
Paul C. is surely correct in saying that pharma firms know what
proportion of projects end up with an approved drug, and how many
hours of R&D labor are typically required to get a drug to market, so
they can quite appropriately count the labor-time invested in the
failed projects as part of the total labor-time required to come up
with the successful drug. (I think Jerry's concern about oligopoly in
pharma is a separate issue.)

But I still don't see how SNLT for a specific increment of knowledge
development can be meaningfully defined. My main concern is that the
knowledge resources that these novel authors and these pharma
companies rely on are (a) absolutely essential to successful fiction
writing and pharma innovation, but (b) impossible to value. They are
impossible to value because they are not used up by being used: I
don't see how you can attach a value to such a resource. So any price
attached to these knowledge assets is entirely without material
grounding -- it is entirely conventional. "Fictional" values.

Where intellectual property rights are strong, firms can value these
assets at their market price (e.g. license fees), but how are these
license fees set? In reality, license fees are set in an entirely
conventional way that bears no relation to SNLT. As best I can tell,
technology licenses are usually paid for in the form of a royalty, set
rather arbitrarily at around 5% of the sales price of the product for
which the licensed technology is being used -- in other words,
entirely without regard to the costs of producing this knowledge. This
royalty setup is sometimes accompanied by a one-time lump sum payment,
but the main determinant here (as best I can tell) is the effort
required of the licensor to effectively transfer the knowledge -- not
the effort (let alone SNLT) involved in creating the knowledge in the
first place.

So I am not seeing how the capitalist firm can transfer the value of
the assets that are required to produce such knowledge-intensive
commodities as novels or pharmaceuticals. The SNLT of any commodity
includes a fraction of the SNLT embodied in these assets. If these
assets cannot be priced appropriately, their value cannot transferred
to the new products, and as a result the system lacks a crucial
stabilizing and orienting mechanism.

If SNLT cannot be ascertained, prices will still form of course, but
they are formed in an entirely 'conventional' way, without any
relation to the real labor requirements. The market mechanism
therefore tends to be come "unhinged".

Like Jurriaan, I see knowledge as particularly recalcitrant to the
commodity form. Labor was recalcitrant too -- but by dint of
dispossession, labor was forced into the commodity form. Knowledge
seems even more recalcitrant, since the assertion of property rights
is even more difficult here. Only few forms of socially-useful
knowledge have been brought under the law of intellectual property:
for the others, the nature of knowledge itself makes the assertion of
legal ownership rights infeasible or ridiculously expensive. On the
other hand, where intellectual property rights are successfully
asserted, this regime of private property in knowledge has huge social
costs that far outweigh the private advantages -- and these social
costs weigh not only on the relatively powerless (such as poor people
infected with HIV/AIDS who can't get access to drugs) but also on
firms that would profit from being able to use this knowledge (see
Heller on the "anti-commons" that is blocking progress in the
biosciences due to the proliferation of patents).

This contradiction is deepening... (a) because productivity growth
relies increasingly on knowledge assets rather than other types of
assets that have been more successfully subordinated to the commodity
form (labor, land, mineral resources), and (b) because knowledge is
increasingly in digital form and its "non-excludability" feature
correspondingly reinforced (protectability is harder to assure and the
costs of diffusion much reduced).

Paul

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Received on Mon Nov 9 19:33:09 2009