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The inconsistencies of intellectual property

from Herman Daly

Of all things knowledge is that which should be most freely shared, because in sharing it is multiplied rather than divided. Knowledge is a non-rival good and should be also non excludable. Yet, as already noted, our trade theorists have rejected Thomas Jefferson’s dictum that “Knowledge is the common property of mankind” in exchange for a muddled doctrine of “trade related intellectual property rights” by which they are willing to grant private corporations monopoly ownership of the very basis of life itself–patents to seeds (including the patent-protecting, life-denying terminator gene) and to knowledge of basic genetic structures.

The argument offered to support this enclosure of the knowledge commons is that, unless we provide the economic incentive of monopoly ownership for a significant period of time, little new knowledge and innovation will be forthcoming. Yet, as far as I know, James Watson and Francis Crick, who discovered the structure of DNA, do not share in the patent royalties reaped by the second rate gene-jockeys who are profiting from their monumental discovery. Nor of course did Gregor Mendel get any royalties – but then he was a monk motivated by mere curiosity about how Creation works! Nor did Jonas Salk try to patent the polio vaccine. He thought it would be like trying to patent the sun. 

Once knowledge exists, its proper allocative price is the marginal opportunity cost of sharing it, which is close to zero, since nothing is lost by sharing it. Yes, of course you do lose the monopoly on the knowledge, but then economists have traditionally argued that monopoly is inefficient as well as unjust because it creates an artificial scarcity of the monopolized item. Furthermore, the main input to the production of new knowledge is existing knowledge, and keeping the latter artificially expensive is bound to slow down the production of the former.

Of course the cost of production of new knowledge is not zero, even though the cost of sharing it is. This allows biotech corporations to claim that they deserve a fifteen or twenty year monopoly for the expenses they incur in research and development, even though they spend more on advertising than research. Of course they deserve a profit on their efforts, but not on Watson and Crick’s contribution without which they could do nothing, nor on the contributions of Gregor Mendel, and all the great scientists of the past who made the fundamental discoveries.[1] As economist Joseph Schumpeter emphasized, being the first with an innovation already gives one a temporary monopoly. In his view these recurring temporary monopolies were the source of profit in a competitive economy whose theoretical tendency is to compete excess profits down to zero.

As the great Swiss economist, Sismondi, argued long ago, not all new knowledge is a benefit to mankind. We need a social and ethical filter to select out the beneficial knowledge. Motivating the search for knowledge by the purpose of benefiting mankind rather than by securing monopoly profit provides a better filter. Perhaps the greatest virtue of the steady-state economy is that because it is a slow rather than a fast journey of no return, we would have time to evaluate and experiment with new technologies, rather than blindly accepting anything in order to keep growth from slowing.

This is not to say that we should abolish all intellectual property rights – that would create more problems than it would solve. But we should certainly begin restricting the domain and length of patent monopolies rather than increasing them so rapidly and recklessly. And we should become much more willing to share knowledge. Shared knowledge increases the productivity of all labor, capital, and resources. International development aid should consist far more of freely shared knowledge, and far less of foreign investment and interest-bearing loans.

John Maynard Keynes,[2] one of the founders of the recently subverted Bretton Woods Institutions, recommended the following pattern for our international economy:

“I sympathize therefore, with those who would minimize, rather than those who would maximize, economic entanglement between nations. Ideas, knowledge, art, hospitality, travel – these are the things which should of their nature be international. But let goods be homespun whenever it is reasonably and conveniently possible; and, above all, let finance be primarily national.”

Growth-driven globalization will maximize economic entanglement between nations in pursuit of trading advantage, of monopoly power, of privatizing the remaining commons, especially that of knowledge, and of concentrating income to an extreme degree. These are the patterns that growthism solves for by way of globalization. Globalism is not the realization of world community. Rather it is individualism writ large – corporate feudalism in a global open-access commons.  read more

[1] Similarly, it radically under-estimates the role of the state; its many contributions become invisible in much of mainstream economic theory; see the Real-World Economics Review special issue number 84: “The public economy and a new public economics”


[2] J. M. Keynes (1933) “National Self-Sufficiency”, in D. Muggeridge , ed., The Collected Writings of John Maynard Keynes, vol. 21, London: Macmillan and Cambridge University Press.

  1. Gerhard Becker
    March 24, 2019 at 3:47 pm

    The USA appropriated British IP during the war of 1812 and German IP during the world wars.
    Oligarchs decimated patent protection for inventors and universities, labelling them as “trolls”
    (Mayo v. Prometheus, Alice v. CLS Bank, SAP v. InvestPic) Bayer had the aspirin trademark and its US assets seized during World War One, while Merck Sharp & Dohme was compulsorily split off from its Germany parent company at the same time. The Office of Alien Property Custodian was an office within the Government of the United States during both World Wars as a Custodian of property that belonged to US enemies. The office was created under the Trading with the Enemy Act 1917.

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