Intellectual Property as Artificial Property Rent

Discussion

Excerpted from Kevin Carson:

"Of all the forms of artificial property and legal privilege in existence, the one most indispensable to corporate power in today's economy is probably "intellectual property.

A large portion of the price of most goods and services consists of embedded rents on “intellectual property.” Tom Peters, in The Tom Peters Seminar, argued that the cost of materials probably accounted for some $60 of the total price of his new Minolta camera, and that he paid “the rest, about $640, for its intellect....” He went on to celebrate the portion of economic value made up of “intellect” and “imagination.”33 Whether Peters' estimate is typical for the portion of the price of manufactured goods made up of rents on IP is doubtful. But in an economy with no property rights in software and product design, with competition unrestricted by "intellectual property" claims of any kind, whatever portion of a product's price was made up of rent on the ownership of designs or ideas—as opposed to labor and materials—would evaporate overnight.

IP is a major legal support to oligopoly, since so many cartels were stabilized by the exchange or pooling of patents between the major players in various industries (e.g. G.E. And Westinghouse in home appliances, the Bell Patent Association as the basis for AT&T, RCA as a patent pooling arrangement for the major radio producers, etc.).

If IP were abolished, there would be no legal barrier against many small companies producing competing modular components or accessories for the same platform, or even big companies producing modular components designed for interoperability with other companies products. That means that IP is an important legal bulwark not only for planned obsolescence, but also for a business model based on selling cheap platforms and then charging an enormous markup to a captive market for accessories. If you've ever remarked on how expensive toner cartridges or glucometer testing strips are, you can thank “intellectual property” for it.

It's odd that the so-called “Free Trade Agreements” promoted by so many professed “free traders” focus so disproportionately on provisions for stricter enforcement of patents and copyrights. IP plays exactly the same protectionist role for global corporations that tariffs did for the old national industrial economies. Patents and copyrights are barriers, not to the movement of physical goods, but to the diffusion of technique and technology. The one, as much as the other, constitutes a monopoly of productive capability. “Intellectual property” enables the transnational corporation to benefit from the moral equivalent of tariff barriers, regardless of where it is situated. In so doing, it breaks the old link between geography and protectionism. With an American tariff on a particular kind of good, the corporations producing that good have a monopoly on it only within the American market. With the “tariff” provided by a patent on the industrial technique for producing that good, the same corporations have an identical monopoly in every single country in the world that adheres to the international patent regime. “Intellectual property,” just as much as the tariff, is a form of protectionism in that it restricts the right to produce a given good for a particular market area to a privileged class of firms." (http://c4ss.org/wp-content/uploads/2010/12/Political-Economy-of-Waste.pdf)

More Information

• Artificial Property Rights
• Essay: Kevin Carson on the Political Economy of Waste