Looting the Commons

Looting the Commons
An interview with Michael Perelman

By Pierre Loiselle (znet)

Issues around intellectual property rights have spurred a lot of absurd scenarios with a plethora of bizarre claims and litigations in the courts. Furthermore, we are seeing how the U.S.-imposed patent system is assaulting the lives of people the world over. Michael Perelman is professor of economics at California State University at Chico. His books include Class Warfare in the Information Age, The Invention of Capitalism, and The Perverse Economy: The Impact of Markets on People and the Environment. I spoke with him about his latest book Steal this Idea!: Intellectual Property Rights and the Corporate Confiscation of Creativity.

PIERRE LOISELLE: In Steal this Idea!, you write that “intellectual property rights have contributed to one of the most massive redistribution of wealth that has ever occurred.” Could you expand on this?

MICHAEL PERELMAN: It’s very simple. Anybody who gets sick in the United States pays an enormous amount of money and that money comes from taxpayers, who give their money to government researchers, who develop new discoveries, who turn them over to private companies, who patent some drug, who then charge exorbitant fees for that drug. So in effect, money is taken from people as taxpayers, as consumers, and given over to the pharmaceutical companies.

How does this distribution of wealth play out on a global scale?

What happens is people come into a country like India. They patent something like the neem tree, which is a traditional source of medicine. They patent something like basmati rice. Then they expect to charge people for using this, even people who discovered it in the first place.

Intellectual property rights are instrumental for the so-called “first world” economy. Why?

Well, if you think about the United States, where is it that we have a comparative advantage? What we see is the types of things that we are dependent on: oil, more and more, even food. They are increasing in number and importance. The things that the U.S. exports, that the rest of the world needs from us, are declining in importance. People in China and people in India can do what we can do just about as well as we can, especially because in the United States we are letting our educational system deteriorate, in the hopes of privatizing it and making it into a business.

What is it that the United States can export easily? Other than weapons, our major export is intellectual property. We’re demanding countries around the world pay royalties for intellectual property. We’re exporting music, films, and software. Virtually everything that we are developing a comparative advantage in is heavily dependent on intellectual property. So, it becomes very important for the United States to be able to trade, in effect, intellectual property for things like oil.

Can you describe the machinations of how the patent system actually works in the international arena?

The United States is demanding that other countries make their patent systems conform more or less to our patent system. They are pushing underdeveloped countries to accept this sort of intellectual property rights. During the election of 2000, for example, the U.S. was demanding full price from Africa for AIDS medicine. AIDS medicine costs many times more than what the average African would be making, even if they were able to work. If they where suffering from AIDS, then the costs would be even more prohibitive. The point-person in the Clinton administration was Al Gore. This became a sore issue until Act Up started chanting wherever Gore was appearing: “AIDS Kills.” Eventually the United States agreed in effect that the South African government (not Africa in general) would have the right to use generic AIDS drugs. Of course, the fine print in the agreement was far less generous than the public relations relief that the Gore campaign got from this agreement.

If any country were to defy the United States in that respect, they would be cut off from trade or subjected to boycotts or even military force if it came to that.

Tell us about the historic role that intellectual property rights have played in the development of the economy as we know it today.

The U.S. was founded on the idea that intellectual property rights would be fairly non-existent except for patents, which were put into the Constitution more or less as an afterthought. Regularly, people would take books and novels that were published in Europe and reprint them here and nothing would be given to the author. The United States at the time was a consumer rather than a producer of intellectual property so we routinely violated the intellectual property of others. It was only when the United States became a predominate accumulator of intellectual property that intellectual property rights become sacrosanct.

When the United States has a deep recession or stagnation, suddenly you start seeing calls for stronger intellectual property as a way to somehow strengthen the economy. There was virtually no support for intellectual property laws in the 1870s. Corporations would routinely steal ideas from inventors. In fact, there was one Supreme Court case regarding a braking system on the railroads. The Supreme Court ruled that the inventor deserved nothing because the idea was in the air and if that person hadn’t invented it, someone else would.

A decade later in the 1880s, there was a serious recession. What do we do to get? Too much competition. Prices in manufacturing goods were going down because productive capacity was increasing faster than was the capacity of people to buy the stuff. Intellectual property at that time was not meant so much to be a means of giving an incentive to people to create more intellectual property, but to get around anti-trust legislation. It allowed the large corporations to share their patents in patent pools. In that way, they could restrain competition and get together and organize in ways that would otherwise be illegal.

The next big upsurge of intellectual property came in the 1960s when the United States was suddenly getting into a deficit situation; that is, we started in the United States importing more than we were exporting. What can we do? Oh, we can charge more for intellectual property and that will give us some benefits and it will make it more difficult for people in other countries to compete with us. So again, you have a big upsurge in intellectual property.

You can make the case that modern western capitalism grew and developed because of the absence of intellectual property. What we think of today is that modern scientific and technological advancements were key to the development of what we call the capitalist state. What made Western science burst out ahead of the rest of the world? If you go back to 1400, science was not particularly advanced. Various members of the nobility would hire themselves a scientist, like Leonardo da Vinci, as an ornament and then say: “I have the great Leonardo da Vinci and he works in my court, and you see what I great person I am.” Eventually, as science developed, the nobility were unable to distinguish who was the great scientist and who wasn’t.

As a result, they set up what were called scientific societies—in England, it was a Royal Society. These scientific societies were places where scientists would meet and communicate with scientists from other countries and bring their theories and bestow the type of honor on various scientists who would allow the nobility to know what kind of scientist they were buying. It meant that what we now call intellectual property, scientific information, was freely spread all around the western world.

You talk about treating knowledge as a commodity, both in Steal this Idea!, as well as in Class Warfare in the Information Age. Would you draw a parallel from the anarchist dictum of “property is theft” to the notion of intellectual property?

Let’s talk about intellectual property as theft. Nobody invents anything. That is, there has never been anyone in the history of the world that has invented anything. By that, I mean all information, all ideas depend on what goes before them. If I was to come up with a new idea, I do so because I have drawn on the work and experience of generations of people before me. What the patent system means is that I take this flow of information and suddenly say: “I claim credit for the whole thing.” I would think that’s theft because no one person really did anything.

One of my favorite examples of this was the telephone. It turned out that two people tried to patent the telephone on the same day unbeknownst to each other. The two people were working in parallel lines to patent the telephone and it happened that Alexander Graham Bell got there in the morning and Elisha Gray got there in the afternoon. Alexander Graham Bell invented the telephone, as everybody knows. So it becomes difficult to think of a fair patent system unless you have a way of distinguishing and there is no way of distinguishing who did what and who deserves credit for what. The only way to figure out who did what or who deserves credit for what is through the legal system. That means each of the contenders goes to court and these court cases are becoming increasingly expensive. As intellectual property becomes more finely embedded within the technological system, the prospect of court cases increases exponentially.

What are the implications of treating knowledge as a commodity?

It doesn’t work as a commodity at first and here is the reason: I have brilliant idea and I say, “Who would like to buy this from me?” You say, “Sure, show me your idea.” I show you my idea and you say, “No, I don’t want to buy it.” But the problem is you already have it. It’s like going into a clothing store and you try on this suit and you take the suit off, you put on your street clothes, walk out, and somehow you still have the suit. It means that the only way I could sell you the information is to keep it secret. Of course, what makes information so valuable is the more it’s shared, the more it’s used, the more valuable it gets.

Secondly, in economics, one of the first things you learn is that the price system should, under competitive conditions, set prices equal to the cost of producing one more unit. That is what competition does and that is what every class in economics teaches. What’s the cost of producing one more unit of information; that is, replicating the same idea? The first person to invent, let’s say, the binomial theorem in mathematics, might have taken years to develop it. It takes only five minutes for that person to explain to the next person how they did it. Now, all you have to do is go on the Internet and you look at it, it’s already there. It costs nothing to produce, just as it costs nothing to produce another MP3 copy of a song or a piece of software. So what that says is that under competition, the price of intellectual property would go to zero. The producers of intellectual property say: “Well, if that happens I wouldn’t have an incentive to produce intellectual property.” So to prevent the price from going to zero, you give the producer of intellectual property a monopoly, i.e., nobody is allowed to use that except under terms that you define.

Of course, a monopoly is just the opposite of what capitalism is supposed to be. It’s supposed to be based on the competitive system. So in effect, what we have is a capitalist system that is not really based on capitalism with respect to intellectual property because it’s based on monopoly.

Tell us about how intellectual property rights confiscate creativity.

They confiscate creativity in several ways. First of all, a friend of a friend invents a new type of crank for a bicycle, which is not round and therefore it gives you a lot more power all the time. What would happen, obviously, is one of the large bike companies would take over this patent; take over this idea. The individual inventor, who’s selling little bits and pieces of what he is doing to specialized bike users, would lose out because there is no way that he could go up against a multinational corporation in a patent fight. It’s confiscation in that respect.

The second type of confiscation occurs because, in the case of the pharma- ceuticals, the public already paid for the intellectual property. That is, it supported the science that is then turned around and patented.

Even if the person who claims the intellectual property really did do the work that they say they did, it’s confiscation because they’re claiming the right to all the information and all the work, all the research that went before. That’s a third form of confiscation.

Finally, even if that person had thought of the idea out of whole cloth and had not depended on other scientists or researchers, that scientist still owes a lot to society because that scientist enjoyed the education and the upbringing from society as a whole. We take advantage of what society offers us. Society has provided enormous amounts of information and other inputs to make science possible. All of a sudden a single corporation steps in and says, “All that is mine.” I call that confiscation.

But there is something that goes beyond confiscation and that would be destruction of creativity. You get the destruction of creativity because the whole system becomes less friendly to creativity. When you work as a scientist in the corporation, it’s rare that scientists have the freedom to explore what they would like to do, where their interests are. They are often pushed into doing something that is in the corporate interest and has little to do with science. It may be just modifying some little thing so you can maintain the patent a little bit longer, even though it’s not an improvement. It may be that they’re just trying to get around a patent by copying something—what they call reverse engineering—and making it in a way that they can claim that it really doesn’t violate someone’s patent. This may be creative in a sense, but it’s not creating something new. It’s just working around a patent system.

You write, “It should be no surprise that today, when knowledge and information are so crucial to the economy, that the tradition of looting the commons extends to knowledge and information.”

Let me add to that. Scientific advances take about 20 or 30 years before they actually show up in a consumer product. We have a long tradition of relatively open science and a relatively short period of corporate science being so dominant. For centuries we have been putting scientific information into the commons, making it available. What is happening now is that the system of intellectual property is draining the commons. When you do that, the outcome should be a rapid increase in the development of new applications. But we’re not reinvesting in the scientific commons very much; we are short changing what we call basic science, the sort of science that would lead to the great products of the future, so we are looting the commons in the sense that we are draining all this previous information.

Do you have any ideas on what people can do to get ourselves out of this mess?

I wish I knew. There is something now called the Creative Commons and they are working hard to take information and put it into the public domain. But with corporate power increasing in the way it is, it becomes difficult to get around that.

It’s going to require a strong organizing. It is very difficult to even begin a discussion on a rational level. There are only a handful of people who seem to be taking a great interest in this problem. Maybe that is justified, given so many problems out there. It is certainly something that is going to impose a heavy cost on us sooner or later. It’s a very important subject and with the problems that we have been generating so quickly, we are going to need all the information shared as much as possible in order that we have any hope making this world into a better world.

Pierre Loiselle is a community radio enthusiast and freelance journalist living in Halifax, Nova Scotia.

From:Z Magazine Online May 2005 Volume 18 Number 5

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Friends of the commons

What is the commons On this web site, we use the terms commons , common assets , common property and common wealth . They all refer to the same thing in slightly different ways.

Commons is the generic term. It embraces all the creations of nature and society that we inherit jointly and freely, and hold in trust for future generations.

Common assets are those parts of the commons that have a value in the market. Radio airwaves are a common asset, as are timber and minerals on public lands. So, increasingly, are air and water.

Common property refers to a class of human-made rights that lies somewhere between private property and state property. Examples include conservation easements held by land trusts, Alaskans’ right to dividends from the Alaska Permanent Fund, and everyone’s right to waterfront access.

Common wealth refers to the monetary and non-monetary value of the commons in supporting life and well-being. Like stockholders’ equity in a corporation, it may increase or decrease from year to year depending on how well the commons is managed.