Chalmers Johnson on the Myth of Free Trade
Posted on Jan 24, 2008
Another salient aspect of the neoliberal canon has a much less hoary history than free trade. The idea of the state intervening to grant a monopoly to an inventor or a creative artist to exploit his or her device is relatively new and was once thought to be contrary to the idea of liberalism. Chang observes, “The technological ‘arms race’ between backward countries trying to acquire advanced foreign knowledge and the advanced countries trying to prevent its outflow has always been at the heart of the game of economic development.” During the 18th century, this competition took on a new dimension with the emergence of modern industrial technologies that had much greater potential for productivity growth than traditional technologies. The result was a vicious international competition to recruit skilled foreign workers, machine smuggling, and industrial espionage. The origins of patents, copyrights, and protection of trademarks are to be found in Britain’s attempts to protect its advanced technologies by erecting legal barriers against their outflow. The other industrializing countries in Europe and the United States had to violate those laws in order to acquire superior British technologies.
The first measure to protect IPRs (intellectual property rights) was a 1719 English ban on the migration of skilled workers. The law made it illegal to recruit experienced workers for jobs abroad—known as “suborning.” Emigrant workers who did not return home within six months of being warned would lose their right to lands and goods in Britain and their citizenship would be revoked. This was followed by a new act in 1750 prohibiting the export of “tools and utensils” in the wool and silk industries, extended by the Tools Act of 1785 to the export of many different types of machinery. The development of science in conjunction with industry meant that a lot of disembodied knowledge could be written down in a language that could be understood by anyone with appropriate training. Once an idea is written down in general scientific and engineering language, it becomes much easier to copy. It thus became more important to protect the ideas themselves than the workers or machines employing them. Beginning with some German states in the 16th century and with Britain in 1623 with the Statute of Monopolies, governments granted 10 years of protected monopoly to inventors of “new arts and machines.” Britain introduced the first copyright law in 1709 and the first trademark law in 1862.
It is not obvious that providing incentives to inventors and accepting the social costs of monopolies increase innovation or do anything more than enrich corporations who can file endless patent infringement suits and slow down change by making frivolous but patentable minor changes in old techniques. According to Chang, “The patent lobby talks nonsense when it argues that there will be no new technological progress without patents.” For example, nonprofit organizations, such as universities, subsidize a great deal of research. Several classical students of innovation, such as the economist Joseph Schumpeter, discounted the importance of patents. Schumpeter believed that the natural if short-lived monopoly that comes with invention was more than enough. One thing is certain: Extending the term of protection for existing work, which is advocated by all the Bad Samaritan rich countries, cannot create new knowledge.
The United States is the most serious protectionist. In 1998, the U.S. Copyright Term Extension Act extended the period of copyright protection from the life of the author plus 50 years to the life of the author plus 70 years. The Disney Corp. led the fight for this extension since the copyright on Mickey Mouse, created in 1928, was due to expire. As a result the new law became known in some circles as the Mickey Mouse Protection Act.
Despite the enormous sums paid to lawyers for work on patent law, it should be understood that as a practical matter patents are important in only three industries—computer software, entertainment, and the pharmaceutical industry. But they are a critical stumbling block for economic development. Some 97 percent of all patents and the vast majority of all copyrights and trademarks are held by economically advanced countries, which use them to deny medicines, textbooks, and computers to underdeveloped countries, exploit epidemics such as HIV/AIDS to extract excess profits, and kick away the ladder for countries trying to catch up. As Chang concludes, “The most detrimental impact [of the patent system] lies in its potential to block knowledge flows into technologically backward countries that need better technologies to develop their economies. Economic development is all about absorbing advanced foreign technologies.” Among the best things we could do today to help the Third World would be to shorten the period of protection, drastically raise the originality bar, and make compulsory licensing and imports of generics easier.
With “Bad Samaritans,” Chang has succinctly and comprehensively exposed the chief structures of economic imperialism in the world today. What is now required is the leadership to undermine and dismantle the barriers that keep so much of the world so poor.
Chalmers Johnson, president of the Japan Policy Research Institute and professor emeritus at the University of California, San Diego, is the author of numerous books, including “Blowback: The Costs and Consequences of American Empire,” “The Sorrows of Empire: Militarism, Secrecy, and the End of the Republic,” and “Nemesis: The Last Days of the American Republic.”
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