Re: [OPE] intermission: value of knowledge

Adler Paul wrote:
> Thx Paul. What about the difficulty of identifying SNLT for the
> knowledge assets used in the production of new knowledge?
It may be difficult for a capitalist economy to do this, but a general
system of social accounting should be able to do this provided that we
are not concerned with private property rights.
It has to be done every time a scientist puts in a research grant
proposal. The proposals are only estimates, but they are better than
nothing.

> Do you agree
> that this too is represents a limit beyond which the commodity form
> loses traction?
> P
>
>
> On Nov 9, 2009, at 4:22 PM, Paul Cockshott wrote:
>
>
>> I agree with your general point that easily reproducible knowledge
>> revolts against private property
>> ________________________________________
>> 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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>
>
> *******
> Prof. Paul S. Adler
> Management and Organization Department
> Marshall School of Business
> University of Southern California
>
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Received on Tue Nov 10 08:52:13 2009