by Dr. J.W. Smith
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For centuries, as modern economies developed, the hidden hands of the alert and powerful were busy structuring laws and property rights to gain, or retain, title to wealth-producing sectors of the economy. Stock markets, as well as patent laws, were being subtly structured to monopolize technology.
Invention is 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. Men are always guided by the experience of others." The long march of technology leading up to the present sophisticated level is based upon thousands of earlier discoveries-fire, smelting, the wheel, lathe, wedges, drills, pulleys, gears-and untold millions of improvements on those basic innovations. Many primitive, but revolutionary, technologies were discovered by Asian and Arab societies.
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, its fruits should be shared by everybody. Inventions not only use the insights of millions of people throughout history and prehistory, the invention of each required the support and skills of millions of present workers. Though the labor charge of some of these is infinitesimal, each is real and definite.
That the owners of patents are entitled to royalties exposes the origin of the term. Patent rights to land and inventions were conferred upon favorites by kings and queens, with the understanding that the person so favored would share the profits-royalties. In short, the origin of patents is indistinguishable from the paying of bribes for the privilege of doing business. Such bribes were the precursors of today's patent royalties.
Where the ownership of patents is lucrative, the actual inventors rarely receive much reward or even credit for their discoveries and innovations. That a small number of powerful people monopolize the inventions of others-and ever afterwards siphon to themselves the wealth produced by others-defies both decency and justice.
Inventors and the public can attain full and equal rights to new inventions through restructuring patent laws to permit any person to use any technology by simply paying a royalty. That simple change would create a modern technology commons. Better yet: the extent of use of a patent can be calculated and the inventors paid a capitalized cash value. This simple accounting method would eliminate 99% of patent accounting costs.
Though few make the connection, the major share of profits on patents are harvested through the stock market. That stock markets are crucial to raising investment capital in a modern economy is a myth. Most stock traders have no contact with new issues of stock and those who do are primarily taking an already established private company public. Most corporate investment needs are financed from profits, liberal depreciation schedules, and borrowing.
As currently structured, investing in stock markets is primarily a bet on which corporation will most successfully expand its share of national and world markets. Those bets are not investments in production; they are bets on which company can best monopolize technology and thus monopolize market share.
A nation's wealth is measured by, and siphoned to titleholders through, capitalized values. Shares in corporations are priced relative to how profitable they are expected to be-their capitalized value. Millions of hours are spent by speculators (they call themselves investors) trying to figure out which company is going to increase its capitalized value. The game is calculating profits that will translate into capitalized value. It is viewed as a simple method of keeping score. But claiming the production of others' labor-through profits from shares in the nation's industry as technology continually replaces labor-is the underlying theme. Values that were once claimed by labor are now claimed by the shareowners of the new industrial technology.
That the current market structure is one of subtle monopolies can best be understood by outlining the efficiency gains of a modern technology commons. Options, futures, and other derivatives are gambling chips in a worldwide casino. But as soon as every company has the right to pay a royalty and use any technology, those monopolies disappear and there is nothing to gamble on.
Instead of one company having to shut down because another company with a superior patent captured their market, all companies can use that patent. Companies must now compete through maximizing their efficiency and that will drive the price of consumer products to its lowest possible level. There will be adequate profits on management and capital but no monopoly profits.
As soon as there is nothing to gamble on, the stock markets will settle down to the secure investments they should be. To allow for risk, the returns on stock will be slightly higher than the returns on bonds. It must be emphasized that true speculation in new industries and new technology will be strengthened. All with a bend towards speculation will invest in the potentials of new technology. In the next column we will be addressing tying currency values to a basket of commodities to eliminate fluctuations in currency values and reclaim the unearned wealth lost to currency markets ($500 trillion in bets per year laid on the table).
With the full and equal rights of a modern technology commons, the wasted labor and capital in the markets disappears. The unearned billions of dollars that once were claimed through this subtle monopolies are instantly distributed to all through lower consumer prices. As these talented citizens move into productive jobs, the average days worked per week can shrink.
Capital no longer destroying capital through exclusive use of a new technology will provide great gains. Factories can now retool with the newest technology rather than shut down. The capital saved can build new factories to service new customers on the periphery of the former imperial-center-of-capital. For those new factories to have customers, labor on the periphery of empire must be paid equally for equally-productive labor as addressed in earlier columns.
The only way all can attain full and equal rights to technology is if all are aware of the massive gains in economic efficiency from a simple change in patent laws. Inform your friends, form your discussion groups. People are good. Prove to philosophers and negotiators in the wealthy world the enormous efficiency gains from full and equal rights to utilize technology and many will recognize they have been misinformed and support you.
Our next column will address reclaiming full and equal rights through restructuring to a modern money commons. These modern commons of democratic-cooperative capitalism will increase economic efficiency equal to the invention of money, the printing press, and electricity.