I
ssues
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.
