Intellectual property and knowledge roaming free will not make a new creative world order

There is a growing idea that our information society will bring in a golden post-capitalist age where creation costs next to nothing. This is why we should caution against this optimistic view.
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Intellectual property (IP) and the value of information received little attention from economics in the past because it did not seem important. Now, in our information rich world, it is just beginning to be modeled and thought through in mainstream economics.

But intellectual material has always existed in societies. Pre-industrially the society’s know-how would encapsulate the technologies of the time in, for example, house building, clothes making, farming, shoeing horses, or whatever knowledge is needed to produce. The knowledge those activities require would be valuable information. If that intellectual stuff were anyone’s property it could have been called IP. Later, in industrial times, designs and methods are written down or encapsulated in complex physical goods which meant they could be owned and we have the birth of IP.

This is uncontroversial. But there are two observations to consider. There is a difference between information and design (which IP represents) and know-how (which is the application of the IP) And, in any case, the nature of information makes it’s ownership transient and problematic.

Firstly, there is a key difference between pure knowledge and know-how. The knowledge of how to sew wheat may exist in the society as a whole, for example. But the know-how of sewing wheat remains in the hands of special individuals. Not everyone has acquired the skills to farm. In other words, IP only becomes of value when it is applied (at a cost to the applier) and becomes know-how. This conversion is not free. So the assumption that the abundance of information will bring about a golden age where goods must become very cheap is false. This misunderstanding can be cleared up by looking at the physical dimensions of knowledge (beyond the scope of this blog)

Secondly, knowledge always disseminates. This means information as property must be a temporary thing. In fact, the purpose of patents and other protection is to afford some temporary “property” right in exchange for a deliberate publication and free sharing of the knowledge in the future. If this mechanism for protecting IP had not been invented the knowledge could be kept secret, but only for a while. As soon as you share or sell the manifestations of that knowledge, it becomes a badly kept secret.

So for a long time we have been producing, trying to cling onto, then giving up our IP. In summary, the property part of IP is a delusion because society can own it but individuals within that society cannot. As individuals it, at best, can be our adopted child for a while before it grows up and leaves us. But also it is not like other property. If I have a house then that is property because when it is sold the buyer can move in pretty much for free. On the other hand, if you have knowledge, whether an acquirer buys, finds or purloins it, they still must spend both the time to acquire the skills to use it and expend the energy to make something of value from it.

How does this relate to creativity? The dream would be that a vibrant IP industry will mean more intellectual output, hence more dissemination and therefore greater creativity. But on the contrary, the IP industry is an industry designed to delay the sharing and cross-fertilization of ideas that would increase creativity and also tends to fool us into thinking we have already created value when we have just an idea or blueprint. People may develop and trade the knowledge behind creation but that does not have value in the way that the created output has. IP trade is pure speculation on some forecast of a transient period of possible creation. We can be optimistic about many aspects of the empowerment of our information age but, unfortunately, super-abundant trade of information is neither freedom or wealth.


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