Saturday, July 01, 2006

The role of Intellectual Property in antiquity and in history, versus IP's role today

An important and, fortunately for most people, quite readable book on the economic history of intellectual property was published last year, THE DEMOCRATIZATION OF INVENTION: PATENTS AND COPYRIGHTS IN AMERICAN ECONOMIC DEVELOPMENT, 1790-1920 (New York: Cambridge University Press, 2005. ix + 322 pp. $60 (cloth), ISBN: 0-521-81135-X). The author, Dr B. Zorina Khan, is an associate professor of economics at Bowdoin College, and a Research Associate of the National Bureau of Economic Research - both in the USA.

Not surprisingly, her book is full of facts and of factual analysis and those who are interested in a technical discussion of those will I am sure find them easily elsewhere. My interests in this piece are more practical, philosophical and substantial, so I will sketch the key elements of her book (from my point of view) below, before going on to discuss these elements.

Khan documents the role of intellectual property institutions (patents and copyrights) in the economic and technical progress in the West. Her survey (in her second chapter) of the legal history of patent systems in France,
England, and the United States is fascinating. Compared to France, the
American system was less arbitrary. Compared to the English system, the American one was far less costly, and made it possible for ordinary Americans to obtain a patent relatively easily and quickly.

In her fourth chapter, she demonstrates that, as a result, patenting per capita increased, because of an increase in the proportion of individuals who patented - not because of a greater likelihood of invention by an elite. The rise of patenting also correlates with market expansion, urbanisation, access to means of transportation, and so on.

In chapters 8 she revisits some of the ideas above, to show that the American copyright system produced widespread access to intellectual output in contrast to the French model which assumed that inventors had "natural rights" to their work. This is not a surprising contrast since French society was probably the most individualistically-oriented society of all at this point in history.

Chapter ten is a summary of Dr Khan's conclusions and explores possible relationships between differences in patent systems and the differences in economic outcomes for these countries.

The author clearly has a magisterial command of the relevant literature and historical sources, both American and European. Moreover, she has a flair for telling stories and that will make it easier, even for readers who are not good with mathematics, to relate to her discussion of the hard numbers.

Now I come to matters that Dr Khan does not explore systematically, but which seem to me essential to discuss in the context of public policy for out time.

The notion of intellectual property (IP) and intellectual property rights (IPR) began to solidify around the mid-1700s and can be seen as the result of a continuing effort, since the Protestant Reformation, to establish the rule of law and to apply the Bible's teachings regarding the human right to make, to name and to possess (for purposes of stewardship).

Alternatively, the creation of the notion of IP rights can be seen, as Marxists and Socialists tend to do, as part of the effort by the global elite to possess and exploit (for selfish purposes) new ideas and inventions.

Dr Khan's view is more mainstream (which is not to say, as I will argue below, that that view is right): she thinks that IP has both encouraged invention and wealth creation.

Clearly, ruling values in any society play a role in determining which view of IP one accepts: in all traditional societies, IP was always considered something that was for the benefit of the community as a whole. Otherwise, for example, the creation of a new musical instrument such as the piano or the guitar could have been enjoyed only by those who invented and those who could afford to pay a fee to the inventor to reproduce such inventions (this is of course distinct from merely being able to afford to buy these inventions once they have been manufactured or reproduced).

Similarly, the creation of a raga in Indian music or the creation of a symphony by Beethoven could only have been enjoyed by those who gave a fee to the estate of the inventor (the notion of an estate was fundamentally reshaped by the notion of IP).

Indeed, most of what we enjoy in the world of music and literature and cuisine and gardens would have been impossible if IP had existed in the form it does today. For example, if John Bunyan had been able to get IP rights on the invention of the novel form, then everyone who has ever written a novel would have had to pay IP fees to the estate of John Bunyan, making that one of the richest estates in the world, and severely limiting the number of novels that would have been published.

These are what might be called "macro-inventions" as distinct from "micro-inventions" (as Joel Mokyr termed them).

In our time, the question of the validity of IP rights as a net contributor to wealth-creation and human happiness has been brought to the fore by two totally different sorts of developments: first, the AIDS crisis and the question of whether IP rights should be waived for medicines used to treat such disasters; and, second, by the widespread, almost routine, violation of IP rights by China and the role of that in enabling China's accummulation of profit.

There is considerable evidence that in the case of the AIDS crisis, though it does create difficulties in terms of precisely how this might be implemented, the sympathies of most people in the world are with the AIDS victims (and potential victims) rather than with the pharma companies which own the IP rights to these medicines.

It is also fairly clear that world opinion at present is against the violation of IP rights by Chinese (and other) fakers of brand names and IP-protected products such as computers.

However, though it has created a huge problem for the music industry, I find evidence divided regarding whether most people in the world regard as acceptable the copying and passing on of music to friends for their iPod or other MP3 players (and what constitutes a friend, anyway?).

My own view is that IP rights have indeed played an important role in creating technological progess, but I retain an open mind regarding whether we would have not progressed even faster without them.

Just imagine how much progress humanity would have made if the first inventor of a wheel had been able to get IP rights. Patents and copyrights have always been less important to human progress than copying without having to pay a fee to do so.

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