Intellectual Property and Corporate Power

One of the key components of my 'dissident' approach to economic science [or political economy] is my assertion that all ownable things - assets - come in four categories:

1. Keyn. anything in the category that J M Keynes described as chartalist in his definitive Treatise on Money. These are all the immaterial creations of the human mind that can be claimed as the possession of the person who invented them, or of the person who was able to capture such command over them as would be recognised in a court of law. Thus people and corporate entities [governments, local government, institutions, companies etc] come to be the 'owners' of control of the land, and owners of shares, stocks, bank deposits, patents, copyrights, brand names, trademarks etc. Most defined keyns can be sold . The most massively increasing category of keyns in the contemporary economy are items of intellectual property [or 'intellectual keyns' shown as ik in my text].

2. Quon. A material asset whose price includes both the costs of assembling the material thing and a charge for the intellectual property that the owner of the object is able to enjoy with the material thing. The owner of the ik sells the user a right to enjoy the benefits of their brand, and the intellectual property that inheres in the object.

3. Jev. A material asset whose price when resold is determined by its perceived rarity and aesthetic quality, rather than by its cost of production or its contemporary usefulness in any material sense to the owner. Thus this category covers antiques, works or art etc; which can be bought and sold and which - over time - often appreciate in retain price, so they can be assets of increasing inventory 'value'.

4. Marcom. These are commodities which are sold at prices that equal, or are close to, the cost of production and delivery [allowing for a reasonable return on capital to the producers and distributors], with no premium for any ik such as occurs in the price of a quon.

There are huge implications that arise from this differentiation of assets. I refer to two today.

A. Firms that are licensed and regulated as 'banks' have huge privileges. In particular, because they manage keynic money for natural and corporate persons they get special guarantees from the state. The most extreme version of this protection was the 'rescue' of the banking system in 2007-9, whose effects are still affecting everybody in the advanced economies. Despite the huge direct and indirect cost of 'saving' the banks, governments and their agents, the central banks [e.g. the Bank of England] have done nothing that definitively separates the socially-necessary and economically-indispensable banking functions of the huge complex firms that include banking divisions from the parts of the firm that trade in stocks and shares, bonds, investment advice, creating and trading in derivatives and futures and other speculative keyns. Thus the entire western world remains at risk from rogue trading or sheer incompetence in these pampered businesses. This remains one of the biggest risks to civilisation; even allowing for jihadism, rogue states, cybercrime, plague and famine.

B. Hundreds of thousands of people and firms own ik that has become increasingly desired by more and more people over the past twenty years. Computer games, films and records and all accessed from cyberspace, and social media have become massive foci of consumption; and although the ownership of such assets is widely diffused, a small number of points of access are used by the vast preponderance of users. Thus Google, Alibaba, Facebook and a few other leading points in the cyberworld are absolutely dominant. The creators of these platforms have established their intellectual property with immense rigour, and are constantly extending their [patented] means of checking on their customers so that they can increasingly tailor 'special offers' that will tempt them to spend their money and their time at the profitable direction of the ik owner. This gives more power over the consumers and their world to a small number of firms than has ever been held by firms that control material commodities. Economic models have not even begun to cope with it: the Econocracy have been content to monopolise their fantasies while Silicon Valley has established a much firmer hegemony than the professors can comprehend. Politicians are increasingly exercised by the new sort of power that is held by the dominant holders of the ik that shapes hundreds of millions of consumer's lifestyle; and don't know what to do about it. They can't even work out how to tax the massive cash flow that they receive.

My basic taxonomy of economic assets forms a basis on which public control, exercised by the political system of the state, can properly be established over the cybernauts within a sensible structure of political economy. One small step for man?

Google's ik

It is more than a quarter of a century since I first heard a colleague - Tony Tudor - say "I Googled it" in explanation of how the had ascertained some obscure fact very quickly. I don't remember the data in question, but I do remember exactly where I was at the time. With a quarter of a century behind me as a researcher in the history of political economy and the economy as such I recognised that I was living in a period of revolutionary change. Then, as now, there were several 'search engines' available and the demise of traditional reference libraries was confidently being predicted; but this was the first time that it was obvious to me that Google was way ahead in the market. That dominance has increased; and yesterday the European Commission struck a blow against it.

The particular issue on which the Commission's ruling was made, was whether or not Google so used its mastery of the system and the data within it that its preferred items were presented to inquirers first, when they wished to make a selection between products and services. The Commission decided that such manipulation took place, fined the firm more than two billion euros, and ordered it to mend its ways. Google 'respectfully' disagreed with that ruling.

A bigger issue, that has been the basis for much Eurobabble over many years, is the dominance of US-based 'technology' firms over the entire universe of computing software and devices that connect customers with the data or the experience that they want. A majority of the few Americans who bother themselves with this issue take the view that it is sour grapes: that the tired old continent of Europe still refuses to recognise that the US has been dominant in global technology since the first quarter of the twentieth century. The EU Commission has tried to use competition law to limit the extent to which European consumers simply use the easiest-to-access and best-known. It is simply a fact that the US giants - Google, Facebook etc - had become predominant before any Europeans had presented alternatives. 

One of my biggest gripes with formal Economics is its under-valuation [almost to the point of ignoring] the centrality of intellectual property - which I characterise as ik - in the contemporary world. The ownership and control of ik - patents, copyright,brand names, trademarks, a person's image and reputation, et cetera - is the principal source of wealth, and the biggest differentiator between individuals. The firms, most notably those in so-called Silicone Valley in California, have gained their prominent position by the novelty and innovation in their products and the skill with which they are then promoted globally. Although it is accessed through computers, smartphones etc, the ik has no physical impedimenta. The distributors of the service and the controllers of the content do not need to deliver any physical product to their global customers: they just put it out there, and claim their tribute for doing so. The European Commission, in all its pomp and glory, can do nothing about that.