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A blog entry a couple of days ago noted a WSJ article that said "India is becoming an intellectual property powerhouse," and quoted various entrepreneurs on the need for better IP protection, based on hard calculation of Indian interests.
Well, somebody has not gotten the word, because India delivered a statement at the recent WIPO meeting that is 180 degrees the other way. A sample:
The legal monopoly granted to IP owners is an exceptional departure from the general principle of competitive markets as the best guarantee for securing the interests of society. The rationale for the exception is not that the extraction of monopoly profits by the innovator is . . . good for society . . . . Rather, that properly controlled, such a monopoly, by providing an incentive for innovation, might produce sufficient benefits for society to compensate for the immediate loss to consumers as a result of the existence of a monopoly market instead of a competitive market in a particular product. Monopoly rights, then, granted to IP holders is a special incentive that needs to be carefully calibrated by each country, in the light of its own circumstances . . . . The paragraph is disturbing because the view of IP it conveys has so little relation to reality. To wit:
1. A legal monopoly is not an economic monopoly. I had a "legal monopoly" on the house I just sold -- I owned it, and no one else could use it. But that gave me no market power in the sense that I could name my own price. (If only!) I was competing with dozens of different, but substitutable, houses. Similarly, in the real world, very few pieces of IP confer economic monopoly power.
2. The depiction of the trade-off between a monopoly market and a competitive market for IP is incoherent. IP protection is granted to establish the conditions under which creation can take place. If protection is not granted, then the product will not be created (or, more precisely, many fewer products of a given class will be created), and there is no market of any kind.
3. In my view, and admittedly most U.S. academicians do not agree, granting rights to IP holders is not purely an act of grace by the sovereign utilitarian state. There is a BIG element in it of Lockean right to the fruits of one's labor. Arguably, IP presents a purer case for Lockean rights than does physical property, because intellectual creations do not render resources unavailable for use by others; indeed, IP rights expand the idea commons, and enlarge the possibilities for others. (For more on this point, go here.)
4. India has been "calibrat[ing]" rights in practically everything for the past 58 years. That is called planning, and it is a major reason why India remains an underdeveloped country. Such calibrating cannot be done. Get the institutions right -- and property rights and markets are chief among these -- and development has a fighting chance. But get the institutions wrong and all hope is dead. As they say, read the whole statement -- and weep.
posted by James DeLong @ 1:40 PM | International
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