Re: [OPE] intermission: value of knowledge

Ah! Yes, I was wondering if your reluctance to go along with Paula and
me was based on your concern that our story about knowledge might be
taken to imply that socialist planning of R&D would be impossible. I
agree that socialist planning could rationally allocate resources in
this field.
And conversely, it seems like we agree that as production becomes more
knowledge-intensive, capitalist calculation (based on the value form
and SNLT) loses its ability to guide resource allocation.

On Nov 10, 2009, at 5:49 AM, wpc wrote:

> 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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*******
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 09:17:06 2009