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Yves here. In our regular discussions of rentierism, we tend to focus, perhaps overmuch, on the ones that are visible in our daily lives, such as literal rentierism, as in ever-rising residential lease costs and related high home purchase prices, or ones that result from monopoly/oligopoly power, from the lousy (by world standards) and high cost of connectivity in the US, to Amazon increasingly squeezing small merchants on its platform, We don’t often enough discuss the costs imposed by overly-generous intellectual property regimes in combination with government agencies often funding basic and applied research, yet letting private interests license that work and greatly marking it up. This sort of thing is endemic in drug development.
Notice in the uproar about Huawei, which America has been unduly eager to harm, launching a smart phone with a 7 micron chip, something the US had tried to keep out of the hands of the Chinese via its recent chip sanctions, The US is convinced Huawei must have circumvented the sanctions, as if China has no engineers, scientists, and fabs. From CNN:
The United States government is seeking more information about the Huawei Mate 60 Pro, a Chinese smartphone powered by an advanced chip.
The new flagship device, which reportedly includes a new 5G Kirin 9000s processor developed specifically for Chinese manufacturer Huawei, recently shocked industry experts who didn’t understand how the company would have the technology to make such a chip following sweeping efforts by the United States to restrict China’s access to foreign chip technology.
US National Security Adviser Jake Sullivan said during a White House press briefing Tuesday that the US needs “more information about precisely its character and composition” to determine if parties bypassed American restrictions on semiconductor exports to create the new chip
While the US suspicions may prove to be correct, recall the New York Times story on how Steve Jobs concluded very shortly before the initial iPhone launch in 2007 that a plastic screen was unworkable and he needed a scratch-resistant glass screen and in huge volumes yesterday. The top American glass producer Corning was not up to the task. This is the response Jobs got in China, per a Business Insider recap of the New York Times piece:
Before they even won Apple’s business, the Chinese company started building a new factory building in which to cut the glass. (The Chinese government was providing subsidies, and the company took advantage of them–“just in case.”) The company provided Apple with a team of cheap engineers, as well as spare glass for Apple to experiment with, the latter for free. The company’s engineers were housed in dormitories, so they were available to Apple 24 hours a day.
Apple hired the company to cut the hardened glass for the screens, and after a month of experimentation, the engineers figured out how to do it. They quickly sent the first shipment of screens to Foxconn’s assembly plant in Shenzhen, where they arrived in the middle of the night. Foxconn’s managers woke up thousands of workers and immediately began assembling iPhones.
This extract does not make clear, but the Times account did, that making this glass required other technical breakthroughs, which the Chinese engineers pulled off in an impressively short period of time.
To come back to the point of this article, intellectual property protection is not a bad thing per se. As a writer, I get upset when sites scrape all of our content and have set themselves up so we can’t do much about this. But this article points to a much bigger and more pernicious issue, that the old model of discovery, a lot of which was deliberately in the public domain to encourage further invention and commercialization, has now been privatized because profit.
By Prabir Purkayastha, the founding editor of Newsclick.in, a digital media platform. He is an activist for science and the free software movement. His most recent book is (LeftWord, 2023). Reproduced with permission from LeftWord. This adaptation was produced for the web by Globetrotter
The twentieth century saw the emergence of public funded universities and technical institutions, while technology development was concentrated in the R&D laboratories of large corporations. The age of the lone inventor—Edison, Siemens, Westinghouse, Graham Bell—had ended with the nineteenth century. The twentieth century was more about industry-based R&D laboratories, where corporations gathered together leading scientists and technologists to create the technologies of the future. In this phase, capital was still expanding production. Even though finance capital was already dominant over productive capital, the major capitalist countries still had a strong manufacturing base. In this phase of development, science was regarded as a public good and its development was largely concentrated in the university system or publicly funded research institutions. Technology development was largely regarded as a private enterprise. Science was supposed to produce new knowledge, which could then be mined by technology to produce artifacts. The role of innovation was to convert ideas into artifacts. The system of intellectual property—patents and other rights—arose to provide protection to the useful ideas embodied in artifacts. From the beginning, patents also had a public purpose—the state-granted monopoly for a certain period was meant to ensure the eventual public disclosure of the invention: the quid pro quo being full public disclosure in lieu of a limited-term monopoly.
The transformation of this system that had existed for several centuries came about as a result of two major changes in the production of knowledge. The first relates to the way in which, under the neoliberal order, the university system of knowledge production has been transformed into a profit-making commercial enterprise. Secondly, the distinction between science and technology has blurred considerably and the two are more closely integrated than before. For example, an advance in genetics can almost seamlessly lead to an artifact—a drug, a diagnostic tool or a seed—that is both patentable and marketable. Similar is the case of innovations in the field of electronics and communications. Many disciplines of science and also research output in universities, are, in consequence, driven closer to the systems of production. The conversion of the university system into a system producing knowledge directly for commercial purposes has happened in tandem with the destruction of the R&D laboratories that were so much a part of the industrial landscape of the twentieth century. Finance capital controls university science, not just through “investment” in R&D, but also the purchase of “knowledge”. Its monopoly is exercised through buying the patents that university research produces. This monopoly in turn allows finance capital to dominate over industrial capital.
The end of the twentieth century revealed the rupture of finance capital and productive capital. Today, global capital operates far more as disembodied finance capital, controlling production at one end with its control over technology and markets at the other. In this phase, where capital increasingly lives off speculation and rent, there is also a marked separation of knowledge as capital from productive or physical capital—plant and machinery. Foxconn/Hon Hai Precision Industries manufactures Apple products but cannot claim a major share in the profits from their sale, since Apple holds the intellectual knowledge and property rights. Roughly, Apple gets 31 percent of the profits from an iPhone sale, Foxconn less than two percent.
The transformation of capital to rent seeking, by using its monopoly over knowledge—patents, copyrights, industrial designs, etc.—characterizes the current phase of capital. With this, the advanced capitalist countries have increasingly become rentier and “service” economies. In essence, they dominate the world by virtue of controlling the global financial structure, new knowledge required for production, and distribution through retail and global brands.
Even as universities are captured by capital and turned into what is termed as University Inc, the new knowledge they produce is still publicly funded. This is true alike of advanced capitalist countries and those like India. The direction of scientific research is dictated by private capital, which takes over any successful outcome, and yet this transformation of science did not come about through being privately funded. The cost of fundamental research is high and only a few of its research outputs may have immediate benefits in terms of advancing technology. This is where the state, whether in electronics or in genetics, takes care of the costs while the patents are handed over to private capital. A hallmark of the neoliberal system is the socialization of risk and privatization of rewards.
The understanding that science needs to be restored as an open and collaborative exercise has given birth to the commons movement. By a curious sleight of hand, capitalism sees the finite commons—the atmosphere and large water bodies such as lakes, rivers and oceans—as infinite, and demands the right to dump waste in these commons. Yet it regards knowledge, capable of being copied infinite number of times without loss, as finite and demands monopoly rights over it!
Never before has society had the ability it does today to bring together different communities and resources in order to produce new knowledge. It is social, universal labor, and its private appropriation as intellectual property under capitalism stands in the way of liberating the enormous power of the collective to generate new knowledge and benefit people.