Guess who was the world’s top pirate of intellectual property in the 18th and 19th centuries

[This piece appears as Chapter 3 of my book Towards a Political Economy of Information, published in 2004. I am posting it here because of current efforts by the U.S. and other advanced countries to tighten even further what is already a very strict global intellectual property protectionist regime.]

U.S. piracy in the 19th century

Nineteenth century America was a major center of piracy. The principal target of U.S. pirates was the rich variety of British books and periodicals. The U.S. was a perennial headache among British authors and publishers, because foreign authors had no rights in America. American publishers and printers, led by Harpers of New York and Careys of Philadelphia, routinely violated British copyright and “reprinted a very wide range of British publications.”

James Barnes, who wrote an excellent book on this subject (Authors, Publishers and Politicians: The quest for an Anglo-American copyright agreement 1815-1854, Ohio State University Press, 1974), said that the Americans were “suspicious about international copyright,” and were afraid that recognizing international copyright meant “exploitation and domination of their book trade.” Barnes noted that “as a young nation, the United States wanted the freedom to borrow literature as well as technology from any quarter of the globe, and it was not until 1891 that Congress finally recognized America’s literary independence by authorizing reciprocal copyright agreements with foreign powers.”

Throughout the 19^th century, a group of American authors and Anglophiles led a persistent but futile campaign to get a copyright treaty between the U.S. and Britain ratified. But their efforts were overcome by a much stronger lobby for free access to British publications. Authors like Noah Webster of the U.S. and Charles Dickens of Britain campaigned vigorously, but time and again, the U.S. Senate rejected proposed laws or treaties that would have granted copyright to foreign authors in the U.S.

Indeed, strong laws existed for the protection of local authors, but foreign authors had no rights in the U.S., and all foreign works were fair game for American publishers and printers.

As Barnes put it, “If Americans thought of the topic [i.e., copyrights] at all they were concerned with protecting domestic copyright and not the rights of foreigners. As a country, nineteenth-century America was akin to a present-day underdeveloped nation which recognizes its dependence on those more commercially and technologically advanced, and desires the fruits of civilization in the cheapest and most convenient ways. Reprinting English literature seemed easy and inexpensive, and so America borrowed voraciously.”

Barnes continued: “In 1831, ‘An Act to Amend the Several Acts Respecting Copyrights’ was signed. It extended the copyright term from fourteen to twenty-eight years, with the option of renewal for an additional fourteen. If an author died, his widow or children could apply for the extension. For the first time, the law allowed musical compositions to be copyrighted. But not a word on international copyright. In fact, foreign authors were explicitly barred from protection, which in essence safeguarded reprints.”

Even the U.S. president at that time, John Quincy Adams, was himself “strongly opposed to international copyright.”

On the global financial crisis: system reliability should take precedence over efficiency

[I am posting this old piece because of its direct relevance to the 2008 global financial crisis. It was first distributed in 2001 and subsequently included as Chapter 23 in my book Towards a Political Economy of Information.] The gist of this piece is the proposal to make reliability as important a criterion for decision-making as efficiency. The piece provides the theoretical basis of such policies as economic protectionism, import/export control, capital flow regulation and other State regulatory tools.]

In an earlier letter to the Human Ecology Review[2], I proposed reliability as an alternative criterion for socio-economic decision-making instead of efficiency. This paper pursues that idea further.

Definitions

Efficiency is a measure of how well transformation of matter or energy occurs. To be efficient means to get the most from the least. The higher the efficiency, the better the transformation is occurring. Efficiency is usually computed from the ratio of useful output to input. To be accurate, the computation must take into account all inputs to a process; otherwise, the computed efficiency may exceed 100%. This will imply that the transformation process itself is creating new matter or energy, which contradicts fundamental laws of physics.

Since energy transformation always produces waste heat, the energy efficiency of any process is always less than 100%. If some of the material outputs are not usable (e.g., wastes), then the sum of the useful material outputs will be less than the sum of the material inputs too, and the material efficiency of the process will likewise be less than 100%.

Economists often express the inputs and outputs of a process in monetary terms, because their interest is in processes where the monetary outputs exceed the monetary inputs. Furthermore, economists often compute the difference instead of ratio between outputs and inputs, because their interest is in absolute monetary amounts instead of ratios. In such cases where the focus is on absolute amounts, this paper uses the term “gain” instead of “efficiency.” An example of gain is the producer’s profit, which is revenues minus costs. Another example is the total utility to the consumer of a set of goods minus the total price of these goods.

Because both are measures of output relative to input, gain is closely related to efficiency and is used whenever absolute magnitudes are more important than relative magnitudes.

Among business firms, gain is really of more interest than efficiency, the best firms being those who manage to squeeze the last marginal bit of gain (i.e., profit) from their business operations.

Among natural persons, the output of interest is not necessarily matter, energy, or money but a vaguer concept like welfare, utility, or happiness, which makes measuring efficiency or maximizing it harder.

Like firms, economies today also tend to maximize gain (i.e., efficiency and inputs), not only efficiency. To maximize gain, one can increase the inputs to a process, or the efficiency by which the inputs are transformed into outputs, or both. Expanding one’s global reach is one way of increasing inputs. The economies-of-scale argument (higher efficiency through larger scale of operations) also supports a global strategy. Thus, gain-maximization strategies directly lead to globalization.

Because economies include all firms and natural persons, macro-efficiency is very difficult in practice to maximize or even simply to measure. To cope with this problem, economists have settled on a curious rule for improving the efficiency of economies step by step: improve somebody’s welfare without reducing anybody else’s, and keep doing this until nobody’s welfare can be further improved without reducing somebody else’s. This is the economist’s Pareto efficiency, which is obviously lower than full theoretical efficiency, but is itself a theoretical construct that is hardly ever seen – not even approximated – in reality.

Efficiency and economic theory

Despite these theoretical problems, efficiency is probably the most common criterion for economic decision-making in modern society. Nearly all modern economic policies cite efficiency as their ultimate goal, even if measuring it can be quite difficult.

Efficiency is the rationale for the idea of competition in a free market. It is also the reason cited for dismantling the welfare policies of the State and the welfare state itself. It is cited as the reason for privatization programs. Advocates for the international division of labor and economies of scale cite efficiency as their goal. Globalization, which extends the economies-of-scale idea to its utmost, also invokes efficiency as reason.

When policy-makers select between alternative options, efficiency is often at the top of the list of criteria for selection.

Critiques of efficiency

The efficiency criterion has been criticized from at least three vantage points: 1) from efficiency advocates themselves; 2) from the social justice viewpoint; and 3) from the ecological viewpoint.

The first critique comes from within the advocates of efficiency itself. This critique retains efficiency as its main criterion for policy formulation, but points out flaws in the way efficiency is computed and efficiency estimates distorted, usually due to the incomplete accounting of inputs and outputs. Incomplete accounting occurs by ignoring non-market transactions or by externalizing costs.

An example of non-market transactions is subsistence production, where a considerable portion of the output is for direct consumption. Unless such production is accounted for, a subsistence economy may appear an inefficient, low-output economy. In fact, production for consumption is quite efficient because it saves marketing, storage and distribution costs. An important subset of production for direct consumption is household work, the non-accounting of which is a major critique of women’s movements against current economic systems.

Still another example of incomplete accounting occurs in U.S. agriculture, which prides itself in its increasing “efficiency,” with less than 10% of its population producing food for twice its population size. Yet, the energetic efficiency of U.S. agriculture has actually gone down over the decades: at the start of this century, it required less than one calorie input to produce a calorie of food; today, it needs more than 10 calories to produce the same amount.

Costs are externalized by passing them on to politically-weak social sectors, to the environment, or to future generations. This can lead to false impressions of high efficiency and mask gross inefficiencies within the system.

All such incomplete accounting distort efficiency comparisons.

The social justice critique

The social justice critique of the efficiency criterion suggests as a higher criterion the concept of equity. According to this critique, efficiency does not ensure equitable sharing of the output and often results in a reduction in equity (i.e., increasing gap between rich and poor).

This critique often presents efficiency as a problem of production (how to allocate input resources to maximize output), and equity as a problem of distribution (how to allocate the output to minimize the gap between rich and poor). Thus, from the vantage point of many equity critics of efficiency, maximizing efficiency and ensuring equitability are parallel objectives which may or may not conflict.

The ecological sustainability critique

The third critique of efficiency comes from the vantage point of ecology. According to this critique, efficiency only looks at a linear process that transforms input A into output B. This critique points out the problem of a linear process: the continuous transformation of input A into output B will gradually use up A and accumulate B. How will A be replaced? Where will B go? The more efficient such a linear process becomes, the faster A is used up, the faster B accumulates in the ecosystem. In a real world, a linear process is eventually an unsustainable process.

Just as the social justice critique insists that the output B must be equitably distributed, the ecological sustainability critique insists that the linear process must be turned into a cyclical one, so that the final output of the process eventually goes back to become fresh input into another – or even the same – process. This is what Barry Commoner called “closing the circle.”

A new critique of the efficiency criterion

This paper proposes a fourth critique of the efficiency criterion, from the vantage point of engineering and systems design. Such vantage point is becoming increasingly useful, since economic systems today are as much a product of social engineering and conscious design as they are a product of unplanned evolutionary development. This new critique also complements the social justice and ecological sustainability critiques of efficiency.

In engineering and systems design, another criterion for design optimization is often deemed more important than efficiency. This is the criterion of reliability.

While efficiency and reliability are related, they are not the same. Efficiency is a measure of how well a system transforms its inputs into useful output. It is usually expressed in terms of the ratio of useful output to input. Reliability is a measure of how long a system performs without failing. It is usually expressed in terms of a mean time between failures (MTBF). It may also be expressed in terms of the probability of non-failure.

Greening the information sector

Social movements are beginning to respond to the specific issues involving the information economy. An illustrative set of responses can be seen in the programme of the Philippine Greens for a non-monopolistic information sector (Society, Ecology and Transformation by the Philippine Greens, 1997).

The Greens see the information sector as very important because of its special nature: information is a social good and it can be shared freely once it is created; and since information is a non-material good, the limits to material growth do not apply to information growth. The Greens consider their in harmony with this nature of information.

The following are the major elements of Philippine Greens’ programme for the information sector:

1. The right to know. It is the government’s duty to inform its citizens about matters that directly affect them, their families or their communities. Citizens have the right to access these information. The State may not use ‘national security’, ‘confidentiality of commercial transactions’, or ‘trade secret’ reasons to curtail this right.

2. The right to privacy. The government will refrain from probing the private life of its citizens. Citizens have the right to access information about themselves which have been collected by government agencies. The government may not centralize these separate databases by building a central database or by adopting a unified access key to the separate databases. Nobody will be forced against their will to reveal any information they do not want to make public.

3. No patenting of life forms. The following, whether or not modified by human intervention, may not be patented: life forms, biological and microbiological materials, biological and microbiological processes.

Life form patenting has become a major global issue, as biotechnology corporations move towards the direct manipulation and commercialization of human genetic material. Biotech firms are engaged in a frantic race to patent DNA sequences, microorganisms, plants, animal, human genetic matter and all other kinds of biological material, as well as in all kinds of genetic modification experiments to explore commercial possibilities. We much launch strong national and international movements to block these monopolistic moves and experiments, and to exclude life forms and other biological material from our patent systems.

4. The moral rights of intellectuals. Those who actually created an intellectual work or originated an idea have the right to be recognized that they did so. Nobody may claim authorship of works or ideas they did not originate. No one can be forced to release or modify a work or idea if he/she is not willing to do so. These and other moral rights of intellectuals will be respected and protected.

5. The freedom to share. The freedom to share and exchange information and knowledge will be recognized and protected. This freedom will take precedence over the information monopolies such as intellectual property rights (IPR) that the State grants to intellectuals.

A specific expression of the freedom to share is the “fair-use” policy. This policy reflects a historical struggle waged by librarians who see themselves as guardians of the world’s storehouse of knowledge, which they want to be freely accessible to the public. Librarians and educators have fought long battles and firmly held their ground on the issue of fair-use, which allows students and researchers access to copyrighted or patented materials without paying IPR rents. They have recently been losing ground due to the increasing political power of cyberlords.

6. Universal access. The government will facilitate universal access by its citizens to the world’s storehouse of knowledge. Every community will be enabled to have access to books, cassettes, videos, tapes, software, radio and TV programs, etc. The government will set up a wide range of training and educational facilities to enable community members to continually expand their know-how and knowledge.

7. Compulsory licensing. Universal access to information content is best implemented through compulsory licensing. Under this internationally-practiced mechanism, the government itself licenses others to copy patented or copyrighted material for sale to the public, but compels the licensees to pay the patent or copyright holder a government-set royalty fee. This mechanism is a transition step towards non-monopolistic payments for intellectual activity.

Many countries in the world have used and continue to use this mechanism for important products like pharmaceuticals and books. Compulsory licensing is an internationally-recognized mechanism specifically meant to benefit poorer countries who want to access technologies but cannot afford the price set by IPR holders, but even the U.S. and many European countries use it.

8. Public stations. Universal access to information infrastructure is best implemented through public access stations, charging at subsidized rates. These can include well-stocked public libraries; public telephone booths; community facilities for listening to or viewing training videos, documentaries, and the classics; public facilities for telegraph and electronic mail; educational radio and TV programs; and public access stations to computer networks.

Another approach in building public domain information tools is to support non-monopolistic mechanisms for rewarding intellectual creativity. Various concepts in software development and/or distribution have recently emerged, less monopolistic than IPRs. These include shareware, freeware, “copyleft” and the GNU General Public License (GPL). The latter is the most developed concept so far, and has managed to bridge the transition from monopoly to freedom in the information sector. In the personal computer arena, for example, the most significant challenger to the absolute monopoly of Microsoft Windows is the freely-available Linux/GNU operating system, which is covered by the GPL.

The first step in breaking up monopolies may be competition. But competition eventually leads to domination by the strong and those who can compete best, leading us back to monopolies. Isn’t it better to transcend competition and move further towards cooperation? This means a stronger public sector and sharing meager resources to be able to afford expensive but necessary facilities. In the information sector, this means building information infrastructures, tools and contents which are in the public domain.

9. The best lessons of our era. While all knowledge and culture should be preserved and stored for posterity, we need to distill the best lessons of our era, to be taught – not sold – to the next generations. This should be a conscious, socially-guided selection process, undertaken with the greatest sensitivity and wisdom. It is not something that can be left to a profit-oriented educational system, circulation-driven mass media, or consumption-pushing advertising.

[From Society, Ecology and Transformation by the Philippine Greens, 1997]