At a Defenders of Property Rights conference hosted by The Heritage Foundation this week, Jim Pinkerton called some of his colleagues at the New America Foundation "quasi-Marxists" for promoting a "commons" approach to property, specifically intellectual property. Those seemed like fighting words, not unlike Bill Gates' recent reference to "modern-day sorts of communists," which was faulted so vehemently by "commonists" in academia and their allies in the media that it left one wondering how close to the bone Gates had struck.

Any "commons" advocate you speak with will say they support markets. The "commons" would incorporate many things -- access to and individual control of digital media, free access to spectrum and its resultant uses such as broadband, non-proprietary software and open code, direct access to proprietary networks -- but some of those things would involve government intervention in the market. For example, "commonists" vigorously support municipal broadband networks, which by their very definition involve the (local) state's central control, just as Karl Marx envisioned. But it's safe to say that while some of the followers of the "commons" movement would love to see a socialist government, the "commons" leaders never go that far. And for good reason -- they don't have to, for they've found a way to introduce socialism without direct state control, endorsing a Schumpeterian thesis in a way the Austrian economist never would have imagined.

My colleagues at PFF have inspired me to study further the teachings of the great 20th Century economist Joseph A. Schumpeter. While he wrote many influential books, and gave us such compelling theories as "creative destruction" -- an entrepreneur-driven model that disrupts the existing economic flow, one which my colleagues frequently point out is quite fitting for today's digital revolution -- he's perhaps best known for Capitalism, Socialism and Democracy. His last great work has been criticized for its assumption -- he never offered a flat-out guarantee -- that socialism would overtake capitalism, because capitalism by its nature is driven by self-interest, not the interest of the system as a whole, and because large corporations were institutionalizing and centralizing the very entrepreneurial innovation he saw as central to the growth of capitalism.

In Schumpeter's Vision: Capitalism, Socialism and Democracy after Forty Years, economist Arnold Heertje offers perhaps one of the most succinct summaries of the praise and criticism of Schumpeter's theory of socialist inevitability:

Some contributors agree to a certain extent with Schumpeter's point that capitalism itself destroys its essential social strata but others have a tendency to argue against it. The well-known Schumpeterian view that capitalism creates an army of critical and frustrated intellectuals who by their negative attitude contribute to the decline of capitalism is touched upon by nearly all authors. Such intellectuals have to establish an atmosphere in which private property and bourgeois values are daily subject to attack by journalists and public opinion. Looking back to the general economic atmosphere of the 60's and 70's, the contributors acknowledge without hesitation the element of truth in Schumpeter's vision. Not one of them, however, considers it a decisive ground for the decay of capitalism. Most authors point out that socialism seems to show an increasing lack of attraction as an alternative.

Heertje's assessment was published in 1981. Any economist examining the crumbling economies of the Soviet Union, Eastern Europe and China at that time would agree that socialism was losing its allure. Fast forward eight years and Eastern Europe has shed that skin, followed by the Soviet Union a mere two years later. But look at China, home of about one-quarter of the globe's population, and note they have kept in place the governmental apparatus of socialism while allowing capitalism to flourish under the socialist government's watchful eye. A democratic form of socialism has been voted into office in many European and Latin American countries. Economists and political scientists can argue the merits of those approaches; I merely mention them to say that just as Heertje used the advantage of perspective time gave him in viewing Schumpeter, perhaps we can use that same advantage to reassess Heertje's conclusion.

Heertje -- and Schumpeter -- looked to the past in their analyses and assumed that there had to be a direct correlation between the structure of a government and the economy deployed in that country. It was reasonable for them to do so, as that correlation nearly always existed. (Schumpeter brought a bit of personal experience as well, as he very briefly served as Austria's finance minister after the nation was carved out of its former empire after World War I.)

It appears that promoters of the "commons" have concluded that they don't need a complete restructuring of the U.S. government to achieve their ends. Their coordination with European advocates in blocking EU patent rules, their alliances with anti-globalist elements in Latin America, and other international perspectives reveal that they view their commons as a global entity, beyond national borders and national governments.

As such, all they need to succeed is to (1) continue to apply pressure through media and society to force industry to acknowledge the commons and accede to it, and (2) ensure the government doesn't thwart the growth of the commons. On that first point, one only need look at the proliferation of so-called public-interest groups fighting for the commons. One can also look at the allies and board members of those groups, the large numbers of tenured professors in academia pounding the point in books, essays and columns. And one can look to the media, which frequently provides an unfiltered platform for the "commonists" to get their message across. What did Heertze say? Oh yes: "Such intellectuals have to establish an atmosphere in which private property and bourgeois values are daily subject to attack by journalists and public opinion."

Heertze's emphasis of a fight on property leads us to the second point. To encourage open source software, "commonists" seek to undermine the patent system. To encourage the entry of more content into the "commons," they seek to prevent digital media from being accorded the same IP protection -- and government prosecution -- one would find with preexisting media.

Note that to promote this utopian gathering of code and content, "commonists" must resist the power of intellectual property. Is it any surprise that to ensure a successful implementation of socialism, private property must be the first thing to go? I think not. A common argument among "commonists" is that intellectual property is not real property. It's wise of them to make this argument, for it hides the socialist roots of their thinking. But the fact that they attack IP the same way Marx attacked private farms and factories, I think, demonstrates how similar IP and real property actually are. They are doing exactly what Heertje said they need to do.

Free-market economists traditionally focus on property as one of the key elements of a functioning economy. Schumpeter spent less of his time dwelling on property, as he saw it as an element of the static "circular flow," and he was far more interested in the "creative destruction" that would disrupt the flow and create new growth and wealth. But evidence suggests IP is in fact the 21st Century's "creative destruction." It is through IP that the status quo is disrupted, consumers benefit from new goods and services at lower prices, and yes, the owner of the IP wins through temporary monopoly power. That is a highly successful model and one worth preserving, whether you define IP as Schumpeter's entrepreneurial disruption or as the property so valued by his early mentors such as Eugen von Böhm-Bawerk in the Austrian School of economics.

posted by Patrick Ross @ 10:29 AM | Free Culture Movement

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