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 Chalmers Johnson on the Myth of Free TradePosted on Jan 24, 2008
(Page 4) 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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By Joe, January 28 at 6:39 pm # Gregorio post- Gregorio- In its broad Western sense, “federalist” suggests strong central control. Can you clarify?
By Gregorio, January 29 at 3:36 pm # Re: federalism and individualismJoe, Federalism is a form of social organization based upon strong central control, as you note. Free market individualism has long been thought to be antipathetic to federalism. Now look at history. The states’ rights Republicans, the party of Lincoln, have usurped confederalism (states’ rights) in favor of federalism every time, with individuals now including corporate persons; the small federal government getting bigger under Republican presidents than under Democratic presidents; strong federal control over the economy occurring as wage and price controls under Nixon; the pursuit of the dictatorial unitary executive by Republican neocons like Cheney and Wolfowitz whose Department of Homeland Security and Justice Department encroaches upon individual liberties otherwise guaranteed by the constitution; a Defense Department driven by military-industrial pressures and thriving on no-bid contracts - all the trappings of federalism from the states’ rights people. Confederalism, on the other hand, gives precedence to the constitution where the federal government oversees the states to insure they stay within the bounds of the bill of rights that protects individuals. It just so happens that the alleged states’ rights free marketeers push for strong central control, not out of concern for the individual free market of Adam Smith, but to perpetuate and intensify the oligopoly that Lincoln made possible. A confederation would not and could not have a large standing army, a federation can, by resorting to individual income tax over and above anything the individual has to give to the state he lives in.
By Anna Churchill, January 28 at 4:36 pm # Back to Basics PShttp://www.schumachersociety.org/buddhist_economics /english.html
By Anna Churchill, January 28 at 4:12 pm # Back to BasicsAnyone remember EF Schumacher? Buddhist Economics? It is interesting to see that by default the idea of regionalism and all that implies will come home to roost--after the fall, of course. I keep waiting for when it will be proposed that neighborhoods create home kitchen garden clubs utilizing all that unused land that surrounds even the most modest home in the US. In Europe, where land is scarce every scrap of dirt in one’s back garden is often used to grow parsely or a tomato--here it all goes to waste. What does this have to do with the issues in the article? Everything.
By allanR, January 28 at 11:11 pm # Johnson and Subsidies“I’ve always been amazed at how much better the food outside the US is...(they use local ingredients when the price is competitive with shipping factory ingredients)...” I think you support Johnson’s argument for the use of subsidies. The Europeans have subsidized small farmers for a long time, as have the Japanese their small rice farmers, thus allowing those consumers the luxury of fresh, unadultered produce. What the Europeans and Japanese dont do is subsidize gigantic agribusiness. For their subsidies the U.S. taxpayers get plastic food. And there seems to be not end in sight.
By Joe, January 27 at 10:43 pm # You guys are breaking my heart. jackpine savage--for your amusement, here is one duty assigned the Philippines Bureau of the Treasury: Under Republic Act No. 6657: quote from DC’s post: Douglas-- you have once again scared the living fuck out of me. I’m too big to fit under my desk. What to do.
By Joe, January 27 at 4:43 pm # Chalmers Johnson has a grasp of the connectedness of events and policy, a reality few US economists or lawmakers have incorporated into their thinking. Just by example, imagine Johnson signing legislation he has not even read..a common practice, I believe, in Washington. Pride in the usefulness of his mind would prevent my example, Johnson, from ever committing such a sin. HJ Chang, whose approach is the focus of this article, is one of a rare breed and is a blessing to this world. I have some problems with a few of the notions promoted here, though, mostly by author Johnson. Unless I am misunderstanding his argument, he encourages the heavy old-school hand of protectionism with such devices as tariffs on imports, this as one means of handling one’s economic problems. The problem with this is that manufacturing is never coming back to the US, so why burden consumers with more expense? Simply controlling spending and going back to a currency based on tangible commodities, say metals, would be far more effective and simpler to administer. It would also avoid the reprisals other nations would feel compelled to impose if only because they already feel the US is an overbearing member of the world community. As for his disdain for the patent process, simply improve it. Have it protect individuals only, not corporations. The 50-70% of R&D;research funded by the federals here is money wasted because, simply, our kids are stupid. They generally know nothing about history, math or writing. Our schools are, due to incompetent teachers, disasters overall. They demand conformity K-12 but offer no compelling reason for learning, no enthusiasm. The choked flow of technical and industrial knowledge to Africa, the example above, is not due to the patent system. It is due to individuals unwilling to share wealth or influence. Chalmers Johnson calls this class of individuals “neoliberals.” This is a confusing term for anyone trying to figure out the situation described. I feel easier calling it what it is: racist elitism. Finally, I just don’t understand the statement, “Commentators who denigrate the Philippines as East Asia’s only Catholic and therefore Latin American-type culture forget that only a half-century ago it was the second richest country in Asia (after Japan).” This is baffling to me on several levels, since I lived there for a time. The Philippines was occupied for maybe 300 years by the Spanish, then Terrorized by Pres. McKinley and his nutty hatchet man, Teddy Roosevelt (yes, the guy up on Mount Rushmore).
By GW=MCHammered, January 27 at 9:05 am # This reckless greed of the few harms the future of the many Never in human affairs have so few been allowed to make so much money by so many for so little wider benefit. Across the globe, societies and governments have been hoodwinked by a collection of self-confident chancers in the guise of investment bankers, hedge and private equity fund partners and bankers who, in the cause of their monumental self-enrichment, have taken the world to the brink of a major recession. It has been economic history’s most one-sided bargain. Last week’s financial panic was further evidence of the extreme foolhardiness with which global finance has been organised and managed. The staples of a settled life - jobs, pensions and house prices - are all under threat. The remuneration structure is a disaster. Hence the casino character of many new financial markets, which essentially operate as bookmakers accepting differing bets on future prices. Underneath their technical names - monoline insurance, derivatives, debt securitisation - lies little more than bookie principles and practice. Thirteen years ago, I tried to blow the whistle on financial market liberalisation in my book The State We’re In. It was obvious then what is even more obvious now: financial market freedom embeds short-termism, guarantees lower investment, works against business building and innovation, generates booms and busts, inflates house prices, creates system-wide risk and excessively rewards those who work in them. We need the financiers to serve business and the economy rather than be its master. http://www.guardian.co.uk/commentisfree/story/0,,22477 31,00.html
By al734, January 26 at 7:59 pm # Economics then cultureMarx is smiling: “...suggest that Protestant-work-ethic-type cultures are the results of economic development, not their cause...”
By Gregorio, January 25 at 2:34 pm # Winds of change coming too late?The intellectual atmosphere is incrementally changed by ‘little articles on blogs’ that tell people like you and me there are those in the rarified atmosphere of academia who question what is taken for common wisdom. These people should be celebrated. The nineteenth century notion of social Darwinism upon which libertarian, free market thinking alleges to be based, a notion that has endured for over a century and is part of neoliberalism, is increasingly discredited by biologists as both un-Darwinian, but also conflicting with nature and evolution as they are increasingly understood. Stephen J. Gould tried to point this out in the 1990s, that the predominant ethic in nature is symbiosis in the struggle with the physical world by nature’s creatures. Parasites and microbes that kill their hosts imperil their own future.
By Pathman25, January 25 at 1:03 pm # Expat: Did you see this article? Very sad. US and Thailand: Allies in torture
By Alex, January 25 at 12:16 pm # Multi-national not necessarily ImperialI agree with Chang and Johnson, that the “protectionism” of the early US economy helped foster and develop the business community within US borders. I don’t agree that the change is a function of imperialism as much as a function of multi-national corporations (MNC). Free trade is a boondogle promoted by the MNCs for the benefit of MNCs.
By GW=MCHammered, January 25 at 9:21 am # Dire Straits nailed today’s headlines 25 years ago: Warning lights are flashing down at quality control The caretaker was crucified for sleeping at his post The work force is disgusted downs tools and walks |
Newsroom Carnage Continues at The Washington Post
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