Invention, a Social Process

There is no isolated, self-sufficing individual. All production is, in fact, a production in and by the help of the community, and all wealth is such only in society. Within the human period of the race development, it is safe to say, no individual has fallen into industrial isolation, so as to produce any one useful article by his own independent effort alone. Even where there is no mechanical cooperation, men are always guided by the experience of others. —Thorstein Veblen

These words from one of America’s eminent philosophers are well spoken. The long march of technology leading up to the present sophisticated level is based upon thousands of earlier discoveries—fire, smelting, the wheel, lathe, and screw—and untold millions of improvements on those basic innovations.[1]

Many primitive, but revolutionary, technologies were discovered by Asian and Arab societies. Greek, Roman, and other cultures improved upon these methods, which were, in turn, used by later cultures. As social processes build upon the insights of others, Stuart Chase’s list of inventions of 5000 years ago barely touches the subject:

The generic Egyptian of 3,000 B.C., though unacquainted with iron, was an expert metallurgist in the less refractory metals. He could smelt them, draw them into wire, beat them into sheets, cast them into molds, emboss, chase, engrave, inlay, and enamel them. He had invented the lathe and the potter’s wheel and could glaze and enamel earthenware. He was an expert woodworker, joiner and carver. He was an admirable sculptor, draftsman and painter. He was, and is, the world’s mightiest architect in stone. He made sea-going ships. He had devised the loom, and knew how to weave cotton to such fineness that we can only distinguish it from silk by the microscope. His language was rich, and he engrossed it in the handsomest system of written characters ever produced. He made excellent paper, and upon it beautiful literature was written…. He had invented most of the hand tools now in existence…. He had worked out the rudiments of astronomy and mathematics.[2]

There were also wedges, drills, wheels, pulleys, and gears, all were necessary before modern machines were possible. There had to be countless earlier inventions, back to the control of fire, before the Egyptians could have reached even that level of technology.

Not only does every modern invention rest on millions of insights going back to antiquity, its development requires thousands of people with special talents.

For example, a British scientist’s accidental discovery of penicillin has benefited almost every person in modern civilization. More people worked to develop and produce this antibiotic for the wounded in WW II than worked on the atomic bomb, and they were all funded with public money.

Yet the drug was patented by an American who recognized if he obtained a patent he would have a monopoly with a capitalized value that would lay claim to vast wealth although he had neither created nor produced anything.[3]

Every innovation is a part of nature. Just like land, oil, coal, iron ore, or any of nature’s wealth, if something is to be discovered it had to have been there all the time. As technology is a part of nature that has been discovered, everybody should share its fruits.

Inventions not only use the insights of millions of people throughout history and prehistory, they require the support and skills of millions of present workers as well. Stuart Chase estimated at least 5,000 people were involved in contributing data to the writing of his book and they depended on others for their knowledge.

These people provided tools, materials, and services: pencils, paper, graphite, rubber, lead, typewriters, telephones, cars, electricity, typing, printing presses, book distribution, banking, and so forth.

The people directly involved in Chase’s knowledge required educators, authors of textbooks, and their educators, ad infinitum. Every one of these consumer items required the labor and skills of thousands of people, some in distant parts of the world, such as producers of rubber or tin.

Though the labor charge of some is infinitesimal, each is real and definite. Collectively they accumulate a substantial, though incalculable, value.[4]

While the contribution of any one person to the pool of social knowledge is truly small, the wealth diverted to those who own the patents to social knowledge can be substantial.

It has been estimated that, if the developing world were capitalized to the level of the developed world, the royalty claims would be $1 trillion a year.These royalties would normally be going to people who “own” these efficient technologies but neither invented anything nor labored productively for this wealth.

They are designed commercial chokepoints structured into property rights law as applied to nature’s wealth and technologies, denying others their proper share, is the monopolization of these tools of production (technology) permitting huge overcharges that siphon wealth produced by others to owners of patents.

Consider how expensive consumer products would be if the use of wheels, levers, gears, fire, and thousands of other early inventions required the payment of royalties.

By our calculations, half the costs of consumer products operate the offices and staff overseeing the patent monopoly system, the stock market, or go to patent holders (which is very rarely the inventor).

Those huge overcharges create excessive stock market values which become the capitalized blocs of unearned wealth owned by monopolists that, through restructuring exclusive titles to nature’s wealth, patents in this case, to conditional titles, disappear as they are transformed into efficient, relatively equally-shared, use values.

Inventors rarely receive much reward for their discoveries and innovations. The few who are compensated receive but a small share of the tribute charged by those who own this social wealth.

That a small number of powerful people monopolize inventions, and ever afterwards siphon to themselves the wealth produced by others, defies both decency and justice. This was well known to prominent inventors and industrialists such as Thomas A. Edison and Henry Ford. Both “agreed that all patent laws should be repealed since they benefit the manufacturer and not the inventor.”[5]

We disagree with patent laws being repealed. They should be redesigned to be a part of a modern commons within the inclusive property rights of full and equal rights in which any person can use that technology by society paying those inventors well and placing those patents in the public domain.

From Hand Looms to One Attendant For 150 Power Looms:

In final analysis, the foundation of most law is power expressed through military strength. Long before governments protected patents, they were protected by violence.

“The struggle against rural trading and against rural handicrafts lasted at least seven or eight hundred years…. All through the fourteenth century regular armed expeditions were sent out against all the villages in the neighborhood and looms or fulling vats were broken or carried away.”[6]

Those early claims to technology, enforced by violence, were the forerunners of today’s industrial patents.

Those who would control technology have just become more sophisticated. They encode these exclusive rights in legal titles. Being accustomed to it, and unaware of society’s large losses, we accept this as normal.

The growing efficiency of textile machinery started the Industrial Revolution. Primitive looms were improved upon by inventions such as Kay’s flying shuttle, Hargreave’s spinning jenny, Crompton’s “mule,” and the power loom.

Between 1773 and 1795, the labor time to process 100 pounds of cotton went from 50,000 hours to 300 hours, an efficiency gain of 16,666%.[7] That efficiency gain within a time span of only 22 years exposes how the owners of these technologies quickly dominated world trade.

Quite simply, technology was not shared. It was monopolized through restricting the rights of production to the owners of patents.

The widespread use of machine weaving came about only because the technology was copied and the patents ignored.

That 16,666% gain in 22 years is dwarfed by 150 power looms in Formosa weaving 24 hours a day under the watchful eyes of only one agile female operator on roller skates.[8] This is a gain of hundreds of thousands, if not millions, of times in efficiency.

The labor component in the price of a yard of cloth produced by modern industry is small. This includes the labor to smelt the ore and fabricate the machines which is stored in that capital.

The economically powerful will say they are not claiming the production of anyone else’s labor as there is hardly any labor involved.

But this is exactly how wealth is siphoned to those who monopolize the tools of production. The price charged for those products is far above the cost of production and others are forced to trade large amounts of their labor for what was produced with that small amount of labor.

Society is denied the full benefit of cheap industrial goods when labor is charged more than they are paid to produce that product. If a product requires one hour’s labor to produce and distribute, and then sells for three hours’ of labor value, it effectively siphons away the value produced by two hours of labor.

If production is traded to a country where equally-productive labor is paid one-third as much to produce the product, it siphons away nine hours of labor value.[9] Standard economics and accounting do not measure this overcharge which shows up in stock prices far beyond intrinsic value.

If that cloth were priced relative to the price paid labor to produce it, including fair interest for the stored labor value represented by that machinery, then it would be priced within reach of the world’s low-paid labor.

A bushel of wheat required three hours to produce in 1830 but only 10 minutes in 1900.[10] A call to Montana State University in Bozeman revealed that in 1986 it took only 3.2 minutes of labor to produce one bushel of dryland Montana wheat. Other crops have similar efficiency gains.

Railroad labor costs per ton-mile in 2008 are roughly only 2% that required 70 years earlier, and that 500% efficiency gain is dwarfed by the five million percent gain in transportation efficiency over the horse and wagon only 180 years earlier.

The public did receive a large share of the labor savings in textiles, agriculture, transportation, and other technologies. With the common people’s newly won rights, the U.S. Constitution and Bill of Rights, and with the enormously wealthy and sparsely inhabited lands of the Americas, the gains were just too great for the powerful to claim them all.

However, due to the failure to increase the buying power of all labor in step with the productivity of capital, there is more production forgone and wasted than that which society so gratefully receives.

Patent laws evolved specifically to claim title to the gains of technology. With multiple patents, and occasionally with only one key patent controlling markets, the owners of technology siphon to themselves large amounts of the production of others’ labor.

Ownership of a key technology, the telephone, was Bell Telephone’s advantage when that monopoly was established. Inventions not controlled by Bell, such as the dial phone, were suppressed for many years.

The telegraph and telephone reduced communication costs by an amount comparable to the savings created by new technology in textiles and transportation. These efficiency gains of technology, protected by patents, produced the monopoly profits that established Bell Telephone, a corporation larger than any in textiles or transportation.

At 10 times the capacity for 10% the cost, 1% the cost per unit of capacity, assuming powerful low frequency spectrums able to pass through mountains are reserved for social use, a communications highway has the potential of reducing communication costs to 1% that of today. Under those efficiencies, still advancing rapidly, the whole world has the potential of gaining their freedom.

Henry Ford’s assembly line was a milestone in industrial technology rapidly picking up the pace of the Industrial Revolution:

The factory is not a new tool but an organization of production that eliminates the periods of idleness in the use of tools, machines, and human beings that are characteristic of agrarian and artisan production.

In the artisan’s shop the saw, chisel, file, and so forth are idle while the hammer is being used. In the factory all the tools are simultaneously in use in the hands of specialized workers; production is “in line” rather than “in series.”

But production in line requires a large scale of total output before it becomes feasible. The division of labor is limited by the extent of the market, as Adam Smith told us. Efficient transportation, urbanization, and international trade provided a market of sufficient scale.[11]

During 1913 alone, the time required to assemble an automobile dropped from 728 minutes to 93. Until that year, the wage rate averaged $2.50 for a 10-hour day.

Ford doubled the daily wages of his workers and reduced their hours from ten to eight, all while lowering the price of his cars.[12] This was unheard of in those times and drew much criticism from business and the press.

What Ford knew, and others did not, was the profits were so large that, with that 800% efficiency gain, the wages could have been increased to almost $20 per day.

Ford was strongly opposed by his managers and other investors. But Emerson had reached Ford on the morality of not maximizing the profit potential of his monopoly.

Attempts were made to monopolize the emerging auto industry. George Baldwin Seldon, a patent lawyer, understood that, as the law was structured, patents laid claim to wealth produced by others. In 1899,

he set his mind to working out the precise legal definition and wording of a patent that would give him the sole right to license and charge royalties on future automobile development in America…. Seldon had gone into partnership with a group of Wall Street investors who saw their chance to cut themselves in on the profits of the growing American car industry.[13]

The near success of Seldon and his partners in patenting the automobile illustrates the basic injustice of the current patent structure.

Neither Seldon nor these investors had anything to do with the invention of automobiles. The first ones had been built in Europe 14 years earlier and virtually hundreds of auto companies were already in existence.

Yet, if anyone had succeeded in patenting the process of building automobiles, every purchaser of an automobile would have had a part of the production of his or her labor siphoned to the owners of that patent who had invented nothing and had done no productive work.

Seldon’s attempt at patenting the principle of the automobile is being successfully accomplished today in the patenting of processes.

Corporations are being formed to patent embryo transfers, gene splicing, other advanced medical procedures, even title to human genes and genes of plants domesticated by primitive societies thousands of years ago. Any doctor who wishes to use these new procedures and any farmer who grows a patented plant has to obtain a license and pay a royalty.[14]

Patenting Human Genes and 7000 year old technology

The current race to patent human genes clearly outlines the monopoly cost of patent laws. There are thousands of human genes directly affecting human health. As patent laws now stand, some corporation is going to have a patent on, and thus own, each gene.

Let us say that there are 300 genes to be studied in a standard gene test and the royalty to be paid to each patent holder only $1 per gene. If a couple wishes to test themselves for defective genes before conception or their unborn child shortly after conception, the cost would be $300. Sixty minutes, July 29, 2001, suggested the possibility of $1,000 royalties. This added tax, though common to medical equipment and drugs, has not previously been added to the cost of an operation or food crops.

If ownership of procedures and food plants had been established years ago, every bill for an operation and the cost for every plate of food would have had royalties added. Only those licensed by the patent holder could perform operations or raise crops. In the process, the rights of all others are reduced, some to the extent of death or hunger.

Every improvement in patented surgical procedures or improved crop strains would also be patented and, as technological improvement is ongoing, the patent’s monopoly would never run out.

Thus Microsoft’s tens of billions of dollars of software overcharges, all built from purchasing the DOS computer operating system for $3,000 and patenting it, led to later patents eventually valuing Microsoft at hundreds of billions of dollars.

The cost to society can be imagined if each producer or service provider had to pay a patent holder for the use of fire, wheels, wedges, levers, and gears. Inversely, the savings are evident in their free use when in the public domain.

About 7,000 patents worldwide are based upon indigenous knowledge of India. After spending millions to get one plagiarized patent invalidated, India is creating a tens-of-thousands-page Traditional Knowledge Data Library (TKDL) to be available to every patent office in the world.[15]

There is one recent and remarkable exception to this rule. In parts of Africa, “as many as sixty percent of the people over age fifty-five were partly or completely blind” from becoming infected with a parasitic worm. Possibly 18 million people were affected.

The pharmaceutical corporation Merck and Company owned the patent on a drug, Ivermectin, used to kill worms in animals. In October 1987, Merck announced they would provide this drug free of charge for Africans afflicted with this parasite. The company chairman, Dr. P. Roy Vagelos, noted, “It became apparent that people in need were unable to purchase it.”[16]

Here the loss to society from exclusive title was so obvious and devastating these corporate executives made a moral decision to save the sight of millions of people. The cost to them was negligible; the gain to society was beyond measure.

We now turn to how Half the Efficiencies of Technology are lost.

Those crucial 170 words describing an honest, efficient, capitalist economy. Does anyone have the ear of President Barack Obama’s Economic Recovery Team?

We are a cooperative publishing house dedicated to the elimination of poverty and war paying ourselves double the normal royalty and will pay higher yet as soon as we can.

We need more cutting edge researchers. If you can broaden our understanding and that of our readers, have a high-quality book within you that you wish to use in class, or just wish to reach the world, please Contact Us.

[1] Lewis Mumford, Pentagon of Power (New York: Harcourt Brace Jovanovich, 1964), pp. 134, 139; Stuart Chase, Men and Machines (New York: Macmillan, 1929), chapters 3-4.

[2] Chase, Men and Machin-+es, pp. 42-43.

[3] PBS, Nova (September 2, 1986).

[4] Stuart Chase, The Economy of Abundance (New York: Macmillan, 1934), chapter 8.

[5] Phil Grant, The Wonderful Wealth Machine (New York: Devon-Adair Co., 1953), pp. 301-06.

[6] Karl Polanyi, The Great Transformation (Boston: Beacon Press, 1957), p. 277, quoting from Pirenne, Medieval Cities, p. 211.

[7] Marx, Capital, volume 1, pp. 372-74, 428, 435, 562; Eric R. Wolf, Europe and the People Without History (Berkeley: University of California Press, 1982), pp. 273-74, 279.

[8] Richard Barnet, The Lean Years (New York: Simon and Schuster, 1980), p. 260.

[9] J.W. Smith, Economic Democracy: A Grand Strategy for World Peace and Prosperity (Fayetteville, PA, 2nd edition, The Institute for Economic Democracy, 2008), chapter 1.

[10] Howard Zinn, A People’s History of the United States (New York: Harper Colophon Books, 1980), p. 277.

[11] Herman E. Daly, John B. Cobb, Jr., For the Common Good (Boston: Beacon Press, 1989), p. 11.

[12] Robert Lacey, Ford (New York: Ballantine Books, 1986), pp. 118-40; also Juliet Schor, The Overworked American (New York: Basic Books, 1991), p. 61.

[13] Lacey, Ford, pp. 105-06; Brian Tokar, Redesigning Life? The Worldwide Challenge to Genetic Engineering (London: Zed Books, 2001).

[14] Tokar, Redesigning Life?; Stanley Wohl, Medical-Industrial Complex (New York: Harmony Books, 1984), pp. 69-71; Ivan Illich, Medical Nemesis (New York: Bantam Books, 1979), p. 245.

[15] “India Protects its Heritage Against Privatization Theft,” COMER (February 2006), p. 8. Taken from Globe and Mail (December 12, 2005)

[16] Stephen Budiansky, “An Act of Vision for the Developing World,” U.S. News and World Report (November 2, 1987), p. 14.

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