The value of intellectual property - part 2

This is a continuation of a blog post started yesterday.

I hadn't realized that a draft of GPL version 3 would be released on Monday, making the timing of this series more fortuitous than I initially intended. The question I posed yesterday was whether intellectual property was important in knowledge economies, particularly given that a nanotech future boosts the importance of knowledge as an asset. The software economy is the most well-known knowledge economy in existence, and the forces backing the GPL represent the side of the debate that believes innovation is best served by spreading the free commons to the exclusion of intellectual property.

I don't consider that claim to be particularly contentious, as clearly, the GPL does what it can to hinder enforcable IP claims (enforceable in the sense of licensing requirements or fees for use). How else to explain explicit attacks on DRM systems, rejection of patents, or provisions ensuring that any extensions be licensed under the GPL. Yes, developers choose whether or not to use a GPLed product, but the designers of the GPL chose to write a license that does as much as possible to create a software universe free of intellectual property.

So, everyone has a choice, but what I have never felt was sufficiently answered was why the GPL side chose to oppose IP. The "why" of this antipathy is particularly hard to discern given that the discussion usually gets couched in the language of rights. Given that rights aren't provable (they "just are"), one would have about as much chance of settling a question of rights as proving the existence of god.

So, in hopes of pulling back the curtain a bit, consider whether the following statement is TRUE or FALSE: The software economy, oriented as it has been around proprietary software, has been a tremendous source of innovation over the past 25 years.

Clearly, I think the answer is "TRUE," and I have trouble believing that anyone - including Richard Stallman - could claim otherwise with a straight face. No one can look at the past 25 years of computing history and discern stagnation and lack of creativity. Software has been so successful that it has sunk hardware as the center of gravity in the computer industry, a shift that some companies saw (Microsoft) and other companies didn't (IBM).

The causes of this creativity were simple. Proprietary software companies compete to create better ways to satisfy the needs of their customers, and in so doing, earn the financial benefits derived from "ownership" of the intellectual product. Those financial benefits turn the interests of the developers towards the interests of the customer. Furthermore, companies have a unique ability to determine the interests of the customer in the first place, given the nature of the consumer / supplier relationship. Volunteer projects would have difficulty matching these benefits, and that's the reason that an astounding amount of "use value" (to borrow Eric Raymond's term) is derived from proprietary infrastructures. That's a blitzkrieg outline of the reasons, but I talk about them at length in a series of four articles responding to Eric Raymond's "The Magic Cauldron."

I do concede benefits from a cooperative model, a side of the debate I will discuss in my post tomorrow (or thereabouts). Those benefits, however, don't mean there is no benefit to be derived from proprietary software, nor that the benefits of a cooperative model somehow take precedence. Market systems based on ownership of physical assets are a proven driver of human innovation. Similarly, market systems based on ownership of intellectual assets are equally a driver of human innovation.

Part of the reason some have difficulty with the notion of "intellectual property" is that they find it strange in ways that "ownership" of a physical asset is not. In reality, both are equally strange, in that both are imaginary constructs that have proven useful. The fact that I "own" the cell phone in my pocket isn't something inherent to the cell phone. It is a legal construct created through a system of laws that serve as the framework within which economic activity takes place.

Market systems aren't natural. They are a scientifically-constructed legal scaffolding as engineered as the blueprint of an Airbus jet or the latest automobile rolling off the BMW factory line. Just as a jet or automobile design is a response to physical laws, the shape of the legal structure is a response to basic economic axioms - such as the fact that individuals have more information about their own circumstances than anyone else, and thus make better choices as to how to satisfy their own needs. However, the precise laws are not natural or even obvious. They live or die based on whether they maximize or hinder the efficiency of the economic process.

This is why anarchy rarely leads to a capitalist utopia. You need very specific laws in place to enable the robust economic activity typical of modern economies. At the root of these laws is the concept of property ownership.

Ownership of physical property is an arbitrary construct that has been proven to work. By giving individuals exclusive legal right to dictate how a stretch of land, a phone, a house or a car is used, they grant the individual the full expression of his choice making capacity as well as benefits that accrue from use of that property. This creates incentives to innovate, and given that individuals are best positioned to make choices about their own needs, the economy benefits in the aggregate.

Intellectual property ownership is equally an arbitrary construct. The question on people's minds shouldn't be whether or not it is natural for an idea to be owned by anybody. There's nothing natural about ownership of ANY kind, intellectual or physical.

The question should be whether the notion of owning an idea helps to spur innovation sufficiently to justify "legal fenceposts" around an idea.

I would say it does, and in a nanotech future as described in my previous blog post where the essence of value is the information - or idea - underlying a product, the useful fantasy of "idea ownership" will become even more important.  Patents, copyright and other constructs associated with intellectual property will grow in importance, as these constitute the legal stakes in the ground that create the boundaries of "intellectual property" that serve as spur to further innovation.

That being said, the utility of the property fantasy does have limits. Clearly, intellectual assets have characteristics that demand they not be treated exactly like physical property.

Next Up: The benefit of the information commons - part 3