The institutional structure of the United States is under stress. We might be in dangerous economic straits if the dollar were not the principal international reserve currency and the eurozone in deep fiscal trouble. We have a huge public debt, dangerously neglected infrastructure, a greatly overextended system of criminal punishment, a seeming inability to come to grips with grave environmental problems such as global warming, a very costly but inadequate educational system, unsound immigration policies, an embarrassing obesity epidemic, an excessively costly health care system, a possible rise in structural unemployment, fiscal crises in state and local governments, a screwed-up tax system, a dysfunctional patent system, and growing economic inequality that may soon create serious social tensions. Our capitalist system needs a lot of work to achieve proper capitalist goals. – Judge Richard Posner*
Why is the U.S. Federal authority fighting as it is, at home and around the world, to put in place draconian protections on patents and copyright? What is the economic meaning of copyright mandates such as ACTA, SOPA, and CISPA, and how do these legislations tie in to America’s hollowing-out of the State authority and the ‘real’ economy?
The reason is simple. The US has transitioned from being an industrial economy to a service economy and is beginning to take even further steps – to becoming a ‘post-industrial, information-based economy.’ By this point in the life-cycle of the service economy, the profit-motive of US corporations has destroyed most of this nation’s domestic ‘real’ production capacity by off-shoring massive parts of their production and development capability to China, India and other low-cost countries. Further movements in this direction will continue to degrade national potential.
Detroit no longer produces cars. Many of the cars made in the US are made by foreign companies. Plastics, paints, minerals, batteries, solar panels, wind turbines, cell phones, steel, computer chips, iPads, clothing, etc. come from China and other southeast Asian nations. Eminently powerful US corporations such as Nike, Apple, Intel, and particularly IBM achieved their current share values by entirely spinning off their physical production capacities and resorting to contractor-offshoring and the in-house production and ownership of intellectual property.
Even the US military has resorted to offshoring. The Pentagon now employs at least one civilian contractor for every service member on the battlefield. Even though half of the Pentagon’s budget pays for these private contractors, 82 percent of them are not U.S. citizens. In 2007, 7 of the top 10 corporations doing business with the U.S. Government in Iraq were not even U.S. companies. By late 2009, the breakdown of contractors in Afghanistan comprised roughly 9 percent U.S. employees, 16 percent third-country nationals, and 75 percent local nationals. By now in the post-Rumsfeld military, more than half of the American defense budget is going to foreign corporations. These civilian contractors are in many cases performing tasks, albeit at much higher cost, that the army used to do itself in-house.
The following is an excerpt of personal communications between a friend who is on deployment to Afghanistan and myself.
Most of the people on base here are local nationals or foreign nationals. Unless the job is technical or supervisory, the person is not going to be from the U.S. Virtually all menial labor is contracted to local nationals. Most of the foreign nationals work as either vehicle operators, food service, laundry, or other jobs where they interact with US troops on a daily basis and a basic working knowledge of English is required. Most of the laundry people are from Uganda, most of the bus drivers are Nepalese, and most of the chow hall workers are Indians. The Afghans work jobs that do not require knowledge of English. The Americans in the supervisory positions are grossly overpaid. For instance, the individual responsible for the chow hall, an African-American woman with only a high school diploma, is making roughly $120K a year out here. I gleaned that just from talking to her. The system is broken and built just to line the pockets of the contracting companies. The whole thing is a sham. Out here, DynCorp runs the show.
In summary, the physical productivity of the public and the private sector has been hollowed out by neoliberalism. What remains? Hollywood. The music industry, the medical industry, law, software and other e-technology, marketing, finance, the education industry, the private defense industry, and natural monopolies such as telecom and utilities. The first commonality that these sectors share is their post-industrial, abstract nature. These industries don’t create ‘things’, they create ideas or add final value to actual industrial supply chains that emanate from other nations. Or they perch atop monopolies. The second commonality is that every single one of these sectors, due to their abstract, post-industrial nature, absolutely needs the protections afforded by patent and copyright enforcement – these protections are all they have left, for it is only because of government power that their abstract goods can be distributed like real goods.
Patents and copyright are not real things. They are ideas enforced by government charter. Different regions around the world have different ideas regarding the extent to which non-real goods can be traded and sold like real goods. Some regions don’t regulate the trade of non-real goods at all. Thus, in the global neoliberal economy, it is essential for post-industrial industries to co-opt governments around the world into their business models. It is essential for these industries to force governments to grant intellectual property protections equal to, or superior to, real property. The US especially is pushing this theme because intellectual property is one of the only things that our economy has left. The real industry, with certain exceptions, has departed for greener shores where higher returns on equity are to be found. The neoliberal idea is not to own the methods of production, for physical plant and equipment is too capital intensive and long-term in an era of quick speculative returns made all the quicker by economic financialization. Rather, the neoliberal idea is to own the instructions for the methods of production, and to make others pay for using the instructions. This is why the American government is simultaneously maintaining the world’s by far most powerful military force and is forcing other governments to treat IP as real products. The former projects the power necessary for the latter aim to succeed. Statism and rent-seeking in intellectual goods go hand in hand.
The American neoliberal economy needs a unified global acceptance of patent and copyright protections, or else it will fail. This explains the immense power that the US is projecting to implement ACTA and other copyright-enforcement treaties. These measures are perhaps the final card that the neoliberal economy has to play – if the rest of the world refuses to become the US’ economic lapdog, the post-industrial neoliberal economy will fail and something else will have to take its place. But, what would that be? It would take immense gathering and reorientation of national policy to revitalize the parts of the economy that have rotted under neoliberalism, which would be incredibly difficult to bring to bear given the power of the short-term corporate profit motive in the political discourse, which abhors government intrusion in its ‘free market’ decisions.
This shift to a neoliberal, post-industrial economy reliant on intellectual property does not promote free markets. Intellectual property – better understood as monopoly or exclusionary privileges that are granted to private sector interests in exchange for public goods benefits – in reality entrenches the power and privileges of large American corporations and their shareholders. Thus IP protections, where they induce technological innovation or economic growth at all, do so in areas and ways that can be controlled through patents and IP. That means, for example, that patent protections on the genetic codes developed by Monsanto in plant breeding become the main focus of corporate responses to food crises caused by climate change, rather than uncopyrightable innovations that may require changing farming practices and the promotion of other public knowledge, or otherwise pursuing practices that financial profit can’t easily be extracted from. Finance, law, and the military complex become growth sectors in an economy reliant on IP, for these are the enablers and enforcers of IP. The growth of these sectors tends to come at the expense of ‘real’ sectors, for all three are parasitic on the productive economy.
Where national policy is concerned, the Federal authority has become increasingly incoherent under neoliberalism – a natural consequence when government is staffed by people who don’t even believe in government. IP’s true reason for existence, the promotion of innovation, is now given lip-service at best by policymakers on both sides of the political aisle. The voices of those who benefit most from a reasonable intellectual property agenda, genuine entrepreneurs, artists, and small businessmen, have long since been drowned out by a cacophony of parasitic and monopolistic corporate interests. It will be incredibly difficult to shift the national debate to a discourse that even recognizes these ills and can summon the will to reject the hardline stances of these interests. However, if our economy is to remain the world’s most innovative now and for the foreseeable future, this must be done.