Intellectual Property As Property

 In 2013, the Supreme Court came down with a decision on Bowman vs Monsanto. Bowman was convicted of growing what he thought was his own crops, using seeds from the soy he’d planted the previous year. Monsanto sued, claiming a violation of their intellectual property: He’d bought their Roundup Ready brand genetically modified seeds, and so the second crop was a violation of their copyright in the same way torrenting a game off of Pirate Bay is.

Also in 2013, activist Aaron Swartz – the man who shut down the internet for the SOPA protests – was facing charges by prosecutors of up to $1 million, and facing up to 35 cumulative years of prison, for the crime of illegally downloading academic journals from MIT servers. He committed suicide, and was inducted into the Internet Hall of Fame that same year.

In 2018 the John Deere corporation said that farmers didn’t really own their tractors: They owned an “implied license… to operate the vehicle”. This is currently being fought by the Right to Repair movement, but if it goes the way of Bowman Vs Monsanto, it means that farmers will not legally have the right to repair their own tractors, because they don’t really own them.

To drop the solemn tone for a moment: What the hell is going on?

The farmer didn’t own seeds he’d grown himself. Swartz had legal access to JSTOR, MIT gave him the account he used to access their servers, what was illegal was the volume of information he copied – copied, that is, no information was removed or damaged. Farmers who try to repair tractors they believe they own, or the local IT guy they hire to fix the software, may face prison time. The Digital Millennium Copyright Act covers it under ‘piracy’. That last one hasn’t happened yet, but it seems more like an issue of ‘when’ than ‘if’.

What all of these things have in common is a determined fight to enforce intellectual property as a concept. Not just in its specifics, but to the degree that even ideas can be owned.

One of the big shifts we’re seeing is in the movement from a materials-based society to an information-based society. Information only has an initial cost to be discovered or created – software for instance – but from that point can be replicated infinitely and almost freely. Because it can have a large initial cost of investment, we need to charge a price for its reproduction even though there’s no labour value.

That is, once it’s made, information-based goods keep making their owners profit without having to compensate workers with wages.

Unfortunately, this means that we’re protecting the sanctity of these ideas after they’ve already been applied to physical goods. This is why the John Deere tractor case is so worrying. It means we’re losing the right to own the things we own, because we don’t own the rights to the information that makes them work.

Let’s step back a bit. First, what makes something property? It’s not the thing itself, but an agreement of possession backed by violence. You can disagree that someone owns a thing, but if the police disagree with you, then it’s not yours.

That works out nicely when it means someone can’t break into your house and steal your stuff, just because they can take it. It works out less great for you when you’re arrested for planting seeds you grew, because the state disagrees that growing the seeds means you owned them.

There are reasons that justify this. Research and development cost time and money, and we believe that it’s right to reward that process. If people, or companies, can’t profit from their inventions, then you’re going to see degenerative business practices based around reverse engineering instead of producing things.

So the argument goes, anyway.

But as I talked about in Breaking the Bankers, by making these ideas property, then it’s something that can be bought and sold as well. As a result we still see this degenerative business, and I can give two examples of the entire system breaking down: Patent trolling and hedge fund acquisition.

In patent trolling we see people use intellectual property as a speculative commodity, and earn money by being willing to enforce their property rights in court. – There are entire companies based around acquiring vague patents and applying them to specific technologies, and suing entities like Apple or Microsoft.

In the second we see the vastly inflated price of pharmaceuticals in the US by men like Martin Shkreli. Innovation in pharmaceuticals is profitable but risky. Standard for the pharmaceutical industry is to reinvest 20% of revenue back into research and development. Hedge Funds have seized on this ‘market inefficiency’ by buying out companies that have made successful products, acquiring them for that intellectual property, and then reducing the R&D department to 1% of revenue, and jumping up the price of the products they’ve acquired by several hundred percent – especially if those products are life-saving.

The second case should be particularly galling to anyone who is an advocate of capitalism, because it means that effective competition can’t take place. Owning the right to the idea of a product is a total monopoly on it.  However, capitalism also reduces everything down to profit, and doesn’t have a ready answer to the problem of rewarding the innovation it needs to produce technological solutions to problems, especially as we reach a point of diminishing returns on technology investment..

There’s a larger problem, though, than the parasitism we see now.

The origins of capitalism came about when it became more profitable to own a complex machine than it was to work it, and more and more complex machines meant less and less people could afford their own. This means that even as we are producing more, fewer people are seeing the benefits of that through wages, and why wages are actually below inflation in the first world.

To be a Luddite today is to be someone who’s afraid of, or renounces, technology. The real Luddite movement was a series of skilled weavers and craftspeople who could not compete with the new looms and spinning jennys of the 19th century.

Their problem wasn’t that they were against technology. The problem was that what was previously a skilled trade job, paid commensurately, was now being replaced with child workers and water wheels. Far more textiles were being produced of a much higher quality and a much lower cost, but none of that extra productivity was being seen by the workers, or as wages.

Wages went down as productivity went up, and the difference was seen as profits for the people owning the machines. The previously employed workers were not compensated, and worker-owned co-ops have historically been brutally out-competed.

The reason for that isn’t because they’re worse businesses, but because the capitalist market doesn’t allow for it. Capitalism tries to minimize labour costs because all its costs are, either directly or indirectly, labour costs.

This means that you can only price your product as low as it was cheap to produce. If you can’t price your product low enough, nobody will buy it and you’ll be outcompeted. This is a mechanism to prevent price-gouging but it also, unfortunately, ensures that when slavery is profitable and legal, it will become the default.

If you are in such a system and against slavery, your only long term options are: Be a kind slave master, and do your best to treat your slaves well. Or it’s to try and use only free workers, to be driven out of business, and to have your position in the economy filled by someone more apathetic to the plight of slaves.

This is why minimum wage laws are so important, and why worker co-ops are so often outcompeted. It’s also why we see such huge and increasing wealth gaps.

According to Thomas Piketty, we are returning to levels of income inequality not seen since the Gilded Age of the 1920s. To get a feel for how absurdly wealthy some of the ‘owning class’ are, I recommend the game You Are Jeff Bezos, where your goal is to give away as much of Jeff Bezos money as possible, as fast as possible.

There’s no moral or economic justification for this level of wealth inequality. Even John Maynard Keynes said that capitalism should only be seen as an ethical system so long as there was dispute over the allocation of scarce resources.

Information-based goods, however, are the opposite of a ‘scarce’ resource.

Until the digital age, wealth inequality still came from the owning of physical things: The so called ‘means of production’, the stuff that makes stuff, factories, warehouses, physical goods. That means that profit was still tied to production in some way, and still relied on paying wages. It’s fair to argue that an employer is in a parasitic relationship with their employees, but not necessarily the economy at large.

Then comes intellectual property, and this is where things get messy.

Intellectual property is the ultimate expression of rent-seeking. That is, extracting wealth from society without producing wealth. The owners of textile mills who put the skilled weavers out of work did so because they could produce a better product, cheaper. Intellectual property is purely rent-seeking on the justification that its rent-seeking drives innovation.

This creates an interesting problem, as seen by the Bowman Vs Monsanto case: We can see a future where even owning the means of production no longer entitles you to the products.

Taken to its logical extremes, we can imagine a future where everyone has access to a Star-Trek replicator, but everyone is still poor. Use of the replicator requires a license, since you only bought an implied right to operate it. Use of the individual ‘recipes’ also requires licenses, as that’s intellectual property as well.

Peter Fraze discusses the likeliness of this in his book Four Futures. He concludes that there are only three notable careers left in such a future. The first is ‘Creative’, at the very least for designing recipes for ‘makers’, but that creatives would fight each other down to subsistence wages for much the same reason they do in the present.. The second is ‘Legal’, for negotiating all that intellectual property law, but this could largely be automated – and is already starting to be.

The third is ‘Security’ – To keep people impoverished and desperate enough to keep working, and to keep ‘ideas’ enforced as property, you need a meaningful threat of violence, enough to dissuade revolution. This is the reason so much of dystopian science fiction has such rigorous private security, and private armies.

There’s also a reason hackers end up being the protagonists of science fiction novels so often.

The Luddites weren’t wrong. Middle-class jobs are disappearing, and aren’t being replaced with high wage, high skill jobs. As James Bloodworth writes in Hired! “One in five working people had a job in manufacturing in Britain in the mid-1980s. By 2013 that figure had fallen to just one in twelve.“ He also writes that “Between 1996 and 2008, for every ten middle-skilled jobs that disappeared in the UK, around 4.5 of the replacement jobs were high-skilled whereas 5.5 were low-skilled.

Low-skill jobs aren’t being made obsolete, because their purpose now is to provide wages for people. The people working them often have to struggle to keep their wages below the price of automation. That is to say, income inequality is growing, and an increase in global productivity is driving standard of living down, not up.

It’s no longer just manufacturing jobs at risk. Construction is being automated.Trucking is at risk of being automated by self driving cars. Warehousing can be automated. A McDonalds could theoretically operate without human staff very soon. A burger chain in Australia responded by replacing its workforce with $4 an hour ‘interns’.

For the first time in history, even the ‘thinking’ jobs are at risk. Law I’ve already mentioned, but many medical diagnosis are more accurately and safely reached by AIs than by humans. It’s reasonable to think that robotic surgery is in the near future, capable of precision humans simply aren’t.

But we’re reminded of the Luddites again: Instead of celebrating a future where menial jobs are replaced, we worry what will happen when the robots are the only ones drawing a wage. And instead of working 15 hour work weeks, as John Maynard Keynes predicted, we’ve instead made busywork to justify paying people wages.

David Graeber explains:

“37% of people [in Britain] believe that if their job didn’t exist, there would be no difference in the world.”

But more and more, people need those jobs more than those jobs need people. And that’s something that more automation is going to make worse, not better.

In the growing trend on capitalizing on intellectual property, we see why and how the capitalist system will outlast its reasons for being. Even when we see a commodity that requires no labour to reproduce, as opposite of ‘scarce’ as ‘infinite’, we do not see that reflected in its price.

We see the power of the state bent to defending property rights for things like software, because it is necessary. Aaron Swartz died over it.

So that answers the question at the start: What the hell’s going on. We’re seeing scarcity being introduced to non-scarce goods to justify the capitalist framework.

Poverty is necessary, even in a world of abundance, for capitalism to function. Increasing sources of abundance will be seen not with a lessening of poverty, but increasing artificial reasons for poverty and scarcity.

If you think this is an exaggeration, liberal economists would rather like to dob themselves in with papers like this one on ‘kinky labor supply and the attention tax‘.

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