The Global Political Economy of Intellectual Property Rights

The New Enclosures?

Christopher May

• Publisher: Routledge
• Year: 2013
• Print ISBN:
  9780415229043
• eBook ISBN:
  9781136361241
• Topic: Politics & International Relations
• Subtopic: Political Economy
• Index: Politics & International Relations

It has become a commonplace that there has been an information revolution, transforming both society and the economy. In 1995 the Trade Related Intellectual Property (TRIPs) agreement aimed to harmonise protection for property in knowledge throughout the global system. This book considers the contemporary disputes about the ownership of knowledge resources - as in the cases of genetically modified foods, the music industry or the internet - and the problematic nature of the TRIPs agreement. In this highly topical book, Christopher May reveals that, because of such problems, at present the balance in intellectual property rights between public good and private reward is more often than not weighted towards the latter.

1 On institutions and property

At the centre of this study is the question of a particular set of property rights, and so it is useful to be absolutely clear at the outset: property is not protected by the state’s legislative apparatus because it is property but rather vice versa. Writing in the 1930s Professor Walter Hamilton summed this up succinctly, noting that it was ‘incorrect to say that the judiciary protected property; rather they called that property to which they accorded protection’ (quoted in Cribbet 1986: 4). Or as Ely stressed when discussing the role of the state in property relations: the state has ‘the power to interpret property and especially private property and to give the concept a content at each particular period’ (Ely 1914: 207). Property qua property does not pre-exist the apparatus of government (or the state), waiting to be recognised legally; rather, the legal recognition of property constitutes its existence in a form we can identify. Only when there is some form of government and legal apparatus can property be thought of in a way other than merely possession by those with the physical ability to protect themselves from dispossession. As such, rather than thinking of property as a physical thing, it is better to think of it as a social institution, one that can change in response to social and political requirements. It is constructed and reproduced by state legislation to protect not something previously existing, already recognised as property, but rather to protect certain current interests and in doing so codify their protection as ‘property’.

The control of things by humans is not a sufficient basis for the emergence of property; it is rather their interest in the differential control of things that encourages a legal construction of property (with linked rights). The key right that extends to the owner of property is the right to ‘control the actions of others in respect to the objects of property’ (Ely 1914: 132). Property rights are held against others and the state itself (in most cases). It is these rights that form the institution rather than the specific stuff to which a property right is attached. And though the institution of property is established enough in modern societies that the sanction of the state to support or enforce this control is seldom needed, once a thing has been accepted as property by those conducting social relations, behind such acceptance lies the legal strength of the institution. In the last analysis any property rights are dependent on the support of the state in its role as authority over legal process.

If modern law is ‘a body of enacted laws; … positive law, willed, made and given validity by the state itself in the exercise of its sovereignty’, then we can assume that laws do not develop spontaneously (Poggi 1978: 103). Laws may recognise non-state activities or traditional practices but can only be law in the sense of a society-wide legal code through the existence of state authority. Indeed, the development of a legal code is one of the foundations on which the modern state’s authority and legitimacy rests. Furthermore, ‘Integral to the law is a moral topography, a mapping of the social world which normalises its preferred contours – and, equally importantly, suppresses or at best marginalises other ways of seeing and being’ (Corrigan and Sayer 1981: 33). By coding certain outcomes and practices as legal and others not, the state (and its government) affects certain outcomes and legitimises coercion against those practices not consistent with such an agenda. The state cannot be removed from the institution of property; without it there would be no institution of property.

The presence of the state in the relationship between property owners is rooted in two contradictory dynamics, each of which has played a general role in the development and expansion of property rights. Part of the history of property rights has been the ability of the powerful to protect their particular interests through the mobilisation of a legal apparatus that cedes to their interests the characterisation of property, to which are attached specific rights. But in a contrasting dynamic, the history of property is also related as a history of the protection of the individual’s interests from the intervention of the state. The property rights derived from the state-sanctioned legal apparatus are also held against the state, provided certain conditions are adhered to relative to the rest of the legal code. Property rights may be dissolved in light of certain criminal activities, for instance. Therefore the interests that are protected through the incidence of property rights can be potentially under threat both from other individuals and from the state itself. The history of property rights is often presented as the manner in which individuals have developed legal protection from this dual threat, from the danger of theft and state appropriation or confiscation (Reeve 1986). However, these rights could not have been normalised without a further element. Law needs some form of social justification if it is to be successfully legitimised. A continuing recourse to force does not a society make.

When thinking about the incidence of property and property rights there are two issues that need to be explored. First, there is the actual appearance of property as an institution which protects certain interests in society in a specific manner. And second, though by no means less important, there is a parallel history of the ways in which the institution of property has been legitimised and justified within the social relations in which it appears. However, it is by no means always the case that this analytical distinction is made, and much of the power of justificatory schemata stems from their appearance as ‘just history’ (both in the sense of merely history and in the sense of a history that has produced an equitable outcome). Indeed, the present conceptual resolution of the character and applicability of ‘property’ implicitly denies its contingency on the current political economic settlement: it is characterised as having ‘always been with us’. I shall examine possible explanations for the emergence of the institution of property before returning to the issue of justification and legitimisation below.

Property as an institution

At their most basic, social institutions are ‘the humanly devised constraints that shape human interaction … they structure incentives in human exchange, whether political, social or economic’ (North 1990: 3). In this sense the notion of an institution brings together the formal and the informal. Rules can be those which are legally constituted by the state, but alongside them are the informal modes of behaviour, the norms of society, which make such rules effective without the constant need for positive enforcement. Equally, laws related to traditional practices codify and formalise certain, but by no means all, previous patterns of social interaction. Enforcement of legal rules, then, is both dependent on their incidence as law and their basis in accepted ways of proceeding within socially legitimated parameters. These rules or institutions facilitate activities by reducing levels of uncertainty, producing layers of patterned behaviour which can be easily understood and followed. The duplication of effort that would be required constantly to re-negotiate bi-lateral co-ordination between social actors is dispensed with on the basis of the shared rules governing the particular area of social interaction being undertaken at any time. In this view, then, institutions arise to ensure a more efficient co-ordination of society. The risks of the breakdown of social exchange are lower, which frees the extensive reserves (of food and fuel for instance) which it might be prudent to hoard when the risks of ‘dishonest dealing’ are higher. This is to say, the emergence of social institutions serves a particular function – the efficient co-ordination of social, political economic activities.

If some form of social efficiency is the motive force behind the emergence of institutions, how does the particular institution of property emerge? In the first instance it might have emerged between individuals whose activities required some form of co-ordination, due to their competition over scarce resources. Institutions, and in this case property rights, structure the expectations which individuals have regarding the behaviour of others towards them. Thus an important reason for the emergence of property rights is the internalisation of external costs and benefits – all activities have costs and benefits to those who indulge in them. Property as an institution seeks to attach those costs and benefits to the ‘owner’ of the property which produces them (Demsetz 1967: 348–350). Part of the continuing fluidity in the legal constitution of property rights has been the widespread attempt by ‘owners’ to secure benefits while keeping costs externalised. Social efficiency might be best served by costs accruing to the property that delivers the benefit; however, for individual owners it is more ‘efficient’ to have the costs met by others. This tension between the public or social and the private interest will be a recurring theme throughout this book.

Property rights (and therefore intellectual property rights) do not just emerge, however; they are constructed to serve particular interests. As will be discussed below, the logic of efficiency has often been utilised to both justify and to explain the incidence of property rights within economic justifications. But efficiency cannot be the whole picture; goals are more ambiguous than a single end that can be achieved in a particular and efficient manner, and power relations are never absent from social relations (Lukes 1974; Oberschall and Leifer 1986). Indeed, power manifests itself in whose efficiency is prioritised, society’s or the individual actor’s. Though there may be a need for efficient operation of economic transactions, this is only one and not necessarily the most important aspect to the history of property as a social institution.

Therefore while the gains from co-operation and co-ordination can be explained and located as part of social development in an abstract sense, in the history of social relations the emergence of particular institutions may be more difficult to explain. As North points out:

Institutions are not necessarily or even usually created to be socially efficient; rather they, or at least the formal rules, are created to serve the interests of those with the bargaining power to devise new rules. In a zero-transaction-cost world, bargaining strength does not affect the efficiency of outcomes, but in a world of positive transaction costs it does.

(1990: 16)

The assumption that the social location of an activity is neutral, as it costs nothing to transfer the product from one ‘owner’ to another produces a different result from that which is found in the real political economy. Thus, though in an abstract sense the location of activities might be decided by the efficient use of resources, the ability of some actors to extract a transaction cost for transfer (either monetary or social) may shift the location on grounds other than efficiency. The same is the case for the emergence of institutions – while in the abstract world of zero transaction costs, institutions will emerge that produce an efficient co-ordination of social activities, when power differentials are taken into account, the sorts of institutions that actually emerge may well serve different purposes (Williamson 1985: 26ff.). The emergence of particular institutions is tied up with the need to reduce costs of certain behaviour and to maximise the benefits obtained by specific (which is to say, powerful) social actors.

The institutions that interest me in this study are those providing the structures in which economic exchange can take place. Usefully for this purpose North suggests three historical types of exchange. Each has different levels of transaction costs and thus different needs relative to the emergence of particular institutions (North 1990: 34–35). The first is small-scale interpersonal exchange which is characterised by repeat-dealing, a substantial amount of cultural homogeneity, and the lack of incidence or need of third-party enforcement. But while transaction costs are low, the development of the division of labour and specialisation are also rudimentary, and therefore the costs of transforming inputs into goods are relatively high. The next type of exchange emerges as the scope and extent of exchange expands. In this second type, exchange becomes impersonal by virtue of the increasing quantity of individual exchanges between clients and contractors. However, here behaviour is regulated through kinship ties, bonding, merchant codes of conduct or in extreme cases hostages. This sort of development underpinned a geographic expansion of trade along international trade routes and at the fairs of medieval Europe. It led to an increased role for the proto-state in protecting merchants’ interests and to the use of such merchants as a revenue source through taxation and the sale of monopolies.

In this second stage, in certain respects the predecessors to the state increased rather than decreased transaction costs. As protectors and enforcers of property rights they intervened in transactions which were being concluded through informal links and ties. However, in the third type of exchange (which might be termed modern) enforcement no longer relies exclusively on informal links (through guilds or families) between contracting parties, but is enforced by a third party. An even greater proliferation of exchange(s) is allowed as there is no longer a need for any sort of personal link between parties. On the other hand, third party involvement, by virtue of its imprecise and generalised nature is more costly in any particular circumstance relative to first and second stage exchanges. Where the returns for cheating and opportunism expand through the anonymity of the market, third party enforcement is necessary. If enforcement was entirely dependent on active policing and force, the advantages of complex economic exchange would be unlikely to arise. Thus ‘effective third-party enforcement is best realised by creating a set of rules that then make a variety of informal constraints effective’ (North 1990: 35). This leads to efforts to produce a legitimised and socially embedded set of norms and principles which will in most cases ensure behaviour accords with the formal rules without being policed: legislators build on rather than contradict broad patterns of traditional practice.

The sorts of institutions required and supported in each of these types of exchange are somewhat different. For property this is the history of the move from the common understanding of property as physical things held for the owner’s use to the more modern conception of property as assets, which can be used or otherwise sold to another potential user. However,

while this transition was hardly noticeable as long as the merchant, the master, the labourer, were combined under small units of ownership, [it] becomes distinct when all opportunities are occupied and business is conducted by corporations on a credit system which consolidates property under the control of absentee owners. Then the power of property per se, distinguished from the power residing in personal faculties or special grants of sovereignty, comes into prominence … When to this is added the pressure of population and the increasing demand for limited supplies of mineral and metal resources, of water-powers, of lands situated at centres of population, then the mere holding of property becomes a power to withhold, far beyond that which either the labourer has over his labour or the investor has over his savings, and beyond anything known when this power was being perfected by the early common law or early business law.

(Commons 1959 [1924]: 53)

It is this move from holding to withholding, the ability to restrict use, which is of crucial importance. When the resources required for social existence are scarce, then the distribution of the rights to their use (property rights) becomes a central, if not the central issue of political economy.

If property is to be something more than possession then the rights accorded to possession (or under property law ‘ownership’) need to be embedded within a legal framework that can be enforced by the state. Thus, as the Supreme Court of North Carolina made clear in 1872

Property itself, as well as the succession to it, is the creature of positive law. The legislative power declares what objects in nature may be held as property; it provides by what forms and on what conditions it may be transmitted from one person to another. The right to give or take property is not one of those natural, inalienable rights which are supposed to precede government, and which no government can rightfully impair.

(cited in Ely 1914: 189/190)

Property, while being related to pre-legal practices, can only be recognised qua property to which rights are accorded by the intervention and sanction of the state. Legitimate disputes therefore will not be concerned with the actual institution itself, but rather with boundary issues (what is and is not property) and ownership issues (the control and legitimisation of sales and rents, alongside the punishment of theft and other infringements of the rights of owners, such as damage by third parties).

This retelling of the history of property carries with it the implicit notion that property rose as an institution, to fulfill a certain function. And therefore justifications founded on the emergence of property as a support for the efficient operation of markets relate the function of property as the efficient allocation of scarce economic resources. Even if it is accepted that this allocation may not be ‘optimal’, property markets are still presented as, though less than perfect, the most efficient method of allocation available. However, as I will discuss when I turn to intellectual property, there is a complementary function which may equally well be seen as the root of certain developments. The emergence of property furthers the interests of specific groups in society: those in possession of such resources that can be utilised to accumulate more resources, the nascent capitalists. While the institution of property may further efficiency of allocation there is a need to remember exactly what such efficiency means and whose benefit it serves. In the pragmatic or economic justifications I discuss below, it is exactly this functional history that is appealed to to legitimise the institution of property.

This returns us to the problem of property’s emergence in the first place. As with many social institutions it is difficult to pinpoint a moment of transition and so part of the problem in justifying property has been to construct not only the legitimated rights accorded to ownership but also a legitimated (philosophical) history, a myth of origin. And it is to these histories that I now turn.

Justificatory schemata of property

Throughout the following chapters I explore the way intellectual property is currently justified ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Dedication
• Contents
• Series editors’ preface
• Acknowledgements
• Introduction
• 1 On institutions and property
• 2 Developing intellectual property
• 3 TRIPs as a watershed
• 4 Sites of resistance: patenting nature, technology and skills?
• 5 Sites of consolidation: legitimate authorship?
• 6 Between commons and individuals
• Notes
• References
• Index