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This book argues that the current international intellectual property rights regime, led by the World Trade Organization (WTO), has evolved over the past three decades toward overemphasizing private interests and seriously hampering public interests in access to knowledge and innovation diffusion. This approach concentrates on tangible and codified knowledge creation and diffusion in research and development (R&D) that can be protected via patents and other intellectual property rules and regulations. In terms of global policy initiatives, however, it is becoming increasingly clear that the WTO in particular is mostly a conflict-resolution facility rather than a global governance body able to generate cooperation and steer international coordinated policy action. At the same time, rent extraction and profits streaming from legal hyperprotection have become pervasively important for firm strategies to compete in a globalized marketplace. “Knowledge Governance: Reasserting the Public Interest” offers a novel approach – knowledge governance – in order to move beyond the current regime.
The remarkable improvements in living standards achieved over the last two centuries by a good portion of the world's population have been made possible by advances in knowledge – at the applications end, advances in practical know-how but with these often supported by dramatic advances in basic understandings of how the natural world works. These advances have been the result of a cumulative collective process. Inventors and scientists working today to advance the state of knowledge base what they do on the knowledge created by their forebears. The key to making technology and science systems work productively has been to establish and enforce a governance structure that on the one hand provides incentives and rewards for success to those working to advance knowledge, and on the other hand keeps both established and new knowledge largely open for those who can use and further advance it.
Over the years there have developed two quite different governance systems for doing this. One is the system of public science, which emphasizes open publication and rewards of recognition to scientists whose work is understood to have advanced knowledge significantly. The other is the system of largely private technology development, where successful inventors are rewarded by patents and other means through which they can appropriate a share of the economic benefits their work has allowed, but in which, customarily, their ability to control access is limited in time and scope.
The field of knowledge is the common property of mankind
Why did Schumpeter neglect intellectual property rights? For contemporary Schumpeterians, this question, posed by Mark Blaug in 2005, could be seen as an embarrassing one. How could the “father” of competition by means of innovations manage to miss completely the analysis and discussion of what in today's scholarship is one of the most – if not the most – influential incentive for corporations to innovate continuously? Blaug's own answer to that question is very direct, sharp and does not embarrass at all. It also calls attention to the central issue discussed in this chapter:
It never occurred to anyone before, say the 1980s, that such disparate phenomena as patents for mechanical inventions, industrial products and processes (now extended to biotechnology, algorithms and even business methods), copyrights for the expression of literacy and artistic expressions in fixed form and trademarks and trade names for distinctive services, could be generalized under the heading of property rights, all conferred by the legal system in relation to discrete items of information resulting from some sort of appropriate intellectual activity.
(Blaug 2005, 71–2; italics added)
For the purposes of the argument I will develop in this chapter, there are two crucial elements implicit in Blaug's answer. First, that at the time Schumpeter was writing Capitalism, Socialism and Democracy, the balance between private interests and the public domain was completely different from what it has become today.
As we enter the second decade of the twenty-first century, the economics profession is grappling with how to better respond to an extremely deep financial-turned-fiscal crisis, and there is no end in sight to that debate. That context has forced at least part of the mainstream of the profession to seek for a new “identity,” and concepts which were at the core of the mainstream theory – such as the efficient market hypothesis and markets as self-regulating entities – are under severe scrutiny, while Keynes's ideas are fully back in business and Hyman Minsky's Financial Instability Hypothesis regains prestige in academic circles as well as among policymakers and money managers. On the policy front, the identity crisis is equally profound. The once taken-for-granted benefits of financial globalization are being replaced by the urgency of better supervision and regulation of banks and other financial entities, and different modalities of capital controls are now part of the IMF's tool kit for dealing with the instability now associated with the complete openness of countries' capital accounts (Skidelsky 2009; Sheng 2010; Grabel 2010).
In the “nonfinancial” side of economics, a less strident but equally important shakeout is also starting to happen. Research on open-source innovation by Harvard and Stanford legal scholars such as Yochai Benkler and Lawrence Lessig and on consumer-based innovation by MIT economist Eric von Hippel and his research team are throwing new light on matters like growth dynamics, innovation patterns and the interaction of competition and collaboration among firms and consumers.
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