Perelman article in MR

Louis Proyect lnp3 at
Thu Jan 9 08:30:55 MST 2003

Monthly Review, January 2003

The Political Economy
of Intellectual Property
by Michael Perelman

Michael Perelman teaches economics at California State University, 
Chico. This article is based on his book Steal This Idea: Intellectual 
Property and the Corporate Confiscation of Creativity (Palgrave, 2001). 
His other books include The Pathology of the U.S. Economy Revisited: The 
Intractable Contradictions of Economic Policy (Palgrave, 2002) and The 
Invention of Capitalism: The Secret History of Primitive Accumulation 
(Duke University Press, 2000).

The dramatic expansion of intellectual property rights represents a new 
stage in commodification that threatens to make virtually everything bad 
about capitalism even worse. Stronger intellectual property rights will 
reinforce class differences, undermine science and technology, speed up 
the corporatization of the university, inundate society in legal 
disputes, and reduce personal freedoms.

We have no precise measure of the extent of intellectual property, but a 
rough calculation by Marjorie Kelly suggests the magnitude of 
intellectual property rights. At the end of 1995, the book value of the 
Standard and Poor (S&P) index of 500 companies accounted for only 26 
percent of market value. Intangible assets were worth three times the 
value of tangible assets.1 Of course, not all intangible assets are 
intellectual property rights, but a substantial proportion certainly is.

While the legal protection of intellectual property might seem 
inseparable from contemporary global capitalism, until fairly recently 
capitalists were equivocal about such things. During the first six 
decades of the nineteenth century, corporations in the United States 
were not inclined to respect such intellectual property rights. For 
example, they often paid as little as possible, or nothing at all, to 
inventors. In addition, the United States did not even recognize 
international copyrights.

The free-marketeers of the nineteenth century vigorously opposed 
intellectual property rights as feudalistic monopolies. Their view of 
intellectual property rights mostly dominated political economic opinion 
in the United States until the massive depression of 1870s weakened 
faith in market forces. In the context of the economic crisis, business 
was desperate for anything that would return profits to what they 
considered to be an acceptable level.

At first, business owners tried forming cartels and trusts to hobble 
competitive forces. In response to vigorous protests, Congress passed 
the Sherman Antitrust Act. However, corporations were able to use 
patents, which were perfectly legal, as a convenient loophole to evade 
the intent of that law. Through patent pools, they could divide up the 
market and exclude new competitors. In this way, intellectual property 
rights were important in establishing monopoly capitalism.

The strengthening of intellectual property rights accelerated once again 
as the bloom wore off the post-Second World War “Golden Age” and the 
United States’ export surplus disappeared. Behind closed doors, 
corporate leaders successfully lobbied the government to strengthen 
intellectual property rights that would give advantages to their 
industries. Just as in the late nineteenth century, business saw 
property rights as a means of increasing profits when economic 
conditions began to sour. The public never had a clue about the extent 
to which the government had given away important rights.



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