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Source link: http://archive.mises.org/9245/james-watt-monopolist/

James Watt: Monopolist

January 16, 2009 by

Was James Watt’s patent of the steam engine a crucial incentive needed to trigger his inventive genius, as the traditional history suggests? Or did his use of the legal system to inhibit competition set back the Industrial Revolution by a decade or two? Here is a case study–by the authors of a wonderful new work on patents and copyrights–in how “intellectual property rights” do grave damage to the market economy. FULL ARTICLE

{ 23 comments }

Mike January 16, 2009 at 8:15 am

“[Excerpt from "Chapter 1: Introduction" in Against Intellectual Monopoly by Michele Boldrin and David K. Levine. Copyright © 2008 Michele Boldrin and David K. Levine. Reproduced with the permission of Cambridge University Press. Additional information may be obtained here.]”

I know, I know, Stephan explained this yesterday. Still, I laughed.

jeffrey January 16, 2009 at 8:48 am

Even funnier is the endless correspondence that led to the above thing. The authors found the whole thing hilarious too.

ktibuk January 16, 2009 at 1:02 pm

“[Excerpt from "Chapter 1: Introduction" in Against Intellectual Monopoly by Michele Boldrin and David K. Levine. Copyright © 2008 Michele Boldrin and David K. Levine. Reproduced with the permission of Cambridge University Press.

The above is a legislative necessity please do disregard it and copy the material freely. There will be no prosecution on the behalf of the owners of the copyright of this book.]”

There fixed it.

It is not that hard, not to be a hypocrite no matter what some apologists claim.

scineram January 16, 2009 at 1:53 pm

Not necessarily. I think Cambridge University Press disagrees with content of he book.

greg January 16, 2009 at 3:20 pm

Without the patent system, many ideas that result in new products would not come to the market. A good example is drugs. If we had no protection, drugs like Viagra would not be developed and there would be fewer satisfied people on this earth.

N. Joseph Potts January 16, 2009 at 3:46 pm

Greg -
You know a lot (Viagra wouldn’t be developed) about what would NOT happen if not for what WAS and IS.

Would you happen similarly to know anything about what HAS NOT been developed because of the patent laws that exist and have existed for a long time? Or (a different way of saying the same thing), what WOULD have been developed had patent laws not existed? For my part, I consider there to “be” a great deal of these good and valuable things.

We await your pronouncement with interest.

SweetLiberty January 16, 2009 at 5:20 pm

Greg’s argument is logical. Would you, N. Joseph, invest in a pharmaceutical company that had no period of exclusive rights to a drug requiring a great deal of money to research, develop, and test only to see that as soon as it was invented, it would become public property and could be marketed as a generic or under other brand names?

Francisco Torres January 16, 2009 at 6:03 pm

Greg’s argument is logical. Would you, N. Joseph, invest in a pharmaceutical company that had no period of exclusive rights to a drug requiring a great deal of money to research, develop, and test only to see that as soon as it was invented, it would become public property and could be marketed as a generic or under other brand names?

No, it is not logical, because it BEGS THE QUESTION: He’s already assuming what he wants to prove. He already assumes that, without patents, people would not invent anything, in order to assert that viagra would not have been invented. This is circular thinking.

Oh, BTW, your question is loaded – you are also assuming things in the question, which means you are not really asking something, but asserting it.

SweetLiberty January 16, 2009 at 6:16 pm

Um, I am really asking the question – would you invest in the company or not? It is a real question based upon the hypothesis that IP laws are abolished. I will assert that, at the margin, I believe the incentive to invent would deminish. This has been explored in greater depth on the other blog here: http://blog.mises.org/archives/009244.asp and the real consequences of public domain have been addressed by David Leeman and Peter Cohen for two. Oh, BTW, you have evaded the core of the argument and simply attacked the semantics without venturing an opinion – a very safe position, but not very useful.

Timothy foster January 16, 2009 at 7:33 pm

Does this hold true?
So the idea of IP from a Austrian prospective is basically that while IP (the thoughts in your head) is owned (your thoughts are your own) if you share it (tell, show, make available to the public) and/or they have the similar IP (similar thoughts in there head) then they have all rights to use it?
This differs from actual property because can not be shared in this way (if you tell, show, or even make public your property it doe’s not mean that every one else owns your property)?

Francisco Torres January 16, 2009 at 9:41 pm

SL,
Um, I am really asking the question – would you invest in the company or not?

You’re asking a different question now. Your first question already had an assumption – that it would take a great deal of wherewithal to generate and market a drug, but you cannot assume that such is the case sans IP and patent laws. This one only asks if one would invest.

I will assert that, at the margin, I believe the incentive to invent would d[i]minish [if IP laws are abolished].

There is no evidence of that. There would be less incentive for rent-seeking, but there is no logical reason (not even empirical proof) to believe people would suddenly throw their arms at the air and stop inventing.

newson January 16, 2009 at 9:45 pm

to sweetliberty:
a world without fetish-oglers and priapistic old men? god forbid!

Francisco Torres January 16, 2009 at 9:48 pm

And, to answer your question – WITHOUT IP laws, I would invest because the risk is lower. By taking away the monopoly of the patent holders, it is possible to spread your risk on more products (even generics) than to place all your efforts in only one potentially patentable product, which may fail.

Kakugo January 17, 2009 at 5:44 am

The main reason patented his engine is very, very simple. The first working steam engine was developed by Thomas Newcomen, an eccentric yet genial figure, and proven to be invaluable in the Cornish tin mines: a single Newcomen engine could replace hundreds of horses used to activate the water pumps.
Many competing designs were submitted to the patent office once inventors got wind of the lucrative business based on Papin’s studies. Newcomen himself failed to obtain a patent because of a controversy with another inventor, Thomas Savery, who built an earlier but much less succesful steam engine to be used on pumps.
Watt was very aware of other competiting designs and simply wanted his “share” of the booty.

Steve Clay January 17, 2009 at 1:39 pm

@SweetLiberty: One reason why drugs are so expensive to test and bring to market: A government monopoly called FDA.

Considering medical cannabis, I think IP law is definitely encouraging the the pharmas to pressure the FDA to maintain their monopoly on medicine.

Matt Van Holdstean January 18, 2009 at 3:43 am

Does anyone else find it exceedingly ironic the the debate over the incentives created by IP laws, used the example of Viagra, a serendipitous discovery.
Thus, through the use of logically infallible Ad hominem attacks, that Greg knew not enough about Viagra’s History, and thus conclusively proves that IP laws are unjust.

a different greg January 18, 2009 at 6:16 am

I think that if IP laws and the FDA were abolished doctors would basically decide which drugs work and which don’t. If I develop a drug and I want to test it on humans, I will tell doctors about it. Doctors/pharmacists buy it from me. Patients buy it from doctors they trust. A doctor could sell it to someone who then reverse engineers the drug but by the time they have figured out how to mass produce it (months/years?) I’ve made money. And once a drug is found to be safe/popular who’s to say that people won’t be willing to pay (voluntarily) a premium for a drug sold by an innovative company (me) instead of the other company that reverse engineers drugs. After all, people find themselves much wealthier living a more productive/free society without IP and bureaucrats.

It can work. But at this point in time most people on this planet have no trust in each other. They only trust the gods/politicians.

ktibuk January 18, 2009 at 2:01 pm

“Does anyone else find it exceedingly ironic the the debate over the incentives created by IP laws, used the example of Viagra, a serendipitous discovery.”

Maybe but they didn’t discover Viagra while trying to better a detergent. So a little of common sense is also needed not just historical facts.

I HATE TAXES January 18, 2009 at 4:30 pm

Reply to A Different Greg,

“I think that if IP laws and the FDA were abolished doctors would basically decide which drugs work and which don’t.”

Wrong, if the IP laws and the FDA were abolished, it would be the PEOPLE, the CUSTOMER, the PATIENT who would decide which drugs work for himself and which don’t.

The state would no longer force you to need a prescription and the state would no longer be able to force you on psych drugs either.

You would go to your pharmacist and he would counsel you, help you determin the product and dose you need along with your doctor but you would be in complete control and charge.

Cliff Rosson January 18, 2009 at 11:46 pm

Timothy – Austrian Economists are not saying anything. These are the opinions of a few select individuals. The Austrian School of Economics so far as I know has generally leaned in the favor of IP. I wouldn’t peg the entire establishment to this however. Never the less, the book seems pretty interesting and I for one think makes a very valid point.

And to clarify, what they are saying. Physical objects which require raw materials, and labor to produce are objects of property, metaphysical objects are not.

-SweetLiberty
Obviously trading would change based on the types of rules business had to play by. This doesn’t mean that its right. Let me explain, Traders are naturally attracted to industries that receive bail-out packages from a government because it makes them feel that their investment is secured and backed. Does this somehow justify the bail-out? Nope. Also in regards to the pharmaceutical company, I believe there is a close niched cartel type of relationship between them and insurance company’s which has also effected the cost of medicine.

-ktibuk
There are other examples besides the porn industry. I wouldn’t use this point to try and discredit the argument the book makes. It just happens that porn is taboo and its an industry that most people try to avoid unless of coarse they are participants.

Prakash January 23, 2009 at 2:38 am

I don’t know why people are resorting to arguments when there are clear economic experiments happening in the world, TODAY.

Have there been any fundamental new drug discoveries from India, a country which has process but not product patents.

Have there been any fundamental consumer durables innovation in China, the nation that manufactures most of them, in any case.

Have they the resources to do it? Yes, much superior resources compared to 19th century america or britain.

Have they the market which can induce them to do it? Yes,the whole globalised world is the market.

Have they the educational capability to do it? Yes.
The IQ to do it? Yes

Then why oh why, are we loath to see any innovation of the kind mentioned.. It should be happening all the time if the hypothesis of this article holds true.

Applying praxeology from a desk only goes so far. After a while, people must peek out into the real world to see if they can search for effects that they predict.

Stephan Kinsella January 25, 2009 at 9:46 am

ktibuk:

“”[Excerpt from "Chapter 1: Introduction" in Against Intellectual Monopoly by Michele Boldrin and David K. Levine. Copyright © 2008 Michele Boldrin and David K. Levine. Reproduced with the permission of Cambridge University Press.

"The above is a legislative necessity please do disregard it and copy the material freely. There will be no prosecution on the behalf of the owners of the copyright of this book.]”

“There fixed it.”
“It is not that hard, not to be a hypocrite no matter what some apologists claim.”

Ktibuk, merely stating “there will be no prosecution” does not make it so. You are not prevented from suing someone merely because of a half-assed laymen’s attempt to change the law.

As I explained on another blog,

Mr. Wenzel,

You suggest that people who oppose IP ought to “pull” it. I am not sure exactly what kind of advice this is, since you appear to believe in IP, so you seem to be trying to make some kind of consistency advice.

I have begun to use the CC Atribution 3.0 license–on my journal, Libertarian Papers, for example. This allows others to use the work even for commercial uses, even to create derivative works, etc.–the only condition is attribution. I don’t think anyone minds this in the first place.

Now you seem to suggestion one “ought” (to be consistent?) “pull” the copyright. Well, what else ought I do? I could “attempt” CC0, too–but I’ve explained here why I don’t think this new, experimental technique won’t work. “Pulling” the copyright won’t work either–just saying you don’t have or won’t assert a copyright does not mean you don’t have copyright, and does not mean you won’t assert it. When people re-publish or use a copyrightd work, they need something legally effective that they can rely on. It’s not clear that CC0 would work. Some half-assed, layman’s amateur attempt to “pull” his copyright also won’t work. I suppose I could have a laundry list attempt to get rid of my copyright: I could do Attribution license; a viral Attribution-Share-Alike “copyleft” License; in conjunction with CC0; plus a faux-promise “not to enforce” my copyright, and an email address inviting people to write me. Or, I could simply personally “adopt” the policy of never actually suing people for copyright infringement even if they do it.

Yes, I could do all this, but it might make things worse–such a confusing situation to deal with and analyze. A simple, clean CC Attribution Only is just fine. Virtually everyone is happy to give attribution credit, so this condition is trivial, thus making CC Attribution the closest reliable thing to a copyright disclaimer.

As an example, if I were publishing a book and wanted to include article X, I would much rather it be subject to a CC 3.0 Attribution license than CC0 or having some half-assed author-scribbled note on their web page, “I Hereby Exercise My COMMON LAW RIGHTS AS A FREEMAN to PULL my cOPYRIGHT”. Why? Because this latter is just a statement; it is likely legally ineffective, except perhaps for setting up an equitable estoppel defense that I might be able to assert as a defense in a lawsuit… and the CC0 might turn out to be ineffective. Since I WANT to put the author’s name on it, i.e. give attribution, the CC Attribution license imposes NO real conditions on me at all; I am free to do what I want. I would rather have a CC Attribution license that I can rely on, even if it imposes on me the draconian condition that I provide the author’s name! Than a CC0 or poor-man’s-crank-license that are legally shaky and unreliable.

So, thanks for your legal advice, but I think it’s wanting.

I really fail to see how it harms you that some of us are voicing our views as to the problems with IP (problems an increasing number of libertarians and young people are waking up to), or with releasing our works virtually copyright free to the public.

glasnost March 19, 2010 at 7:01 pm

Well Done! I Like it!

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