• Choose a category
• All
• Classic-Fiction

By Root 666 0

little saving finds its way to innovators. Victorian British inventors lived under a regime that spent a large proportion of its outgoings on interest payments, in effect sending a signal that the safest thing for rich folk to do with their money was to collect rent on it from taxes on trade. Today, plenty of money is wasted on research that does not develop, and plenty of discoveries are made without the application of much money. When Mark Zuckerberg invented Facebook in 2004 as a Harvard student, he needed very little R&D expenditure. Even when expanding it into a business, his first investment of $500,000 from Peter Thiel, founder of Paypal, was tiny compared with what entrepreneurs needed in the age of steam or railways.

Intellectual property?

Perhaps property is the answer. Inventors will not invent unless they can keep at least some of the proceeds of their inventions. After all, somebody will not invest time and effort in planting a crop in his field if he cannot expect to harvest it and keep the profit for himself – a fact Stalin, Mao and Robert Mugabe learned the hard way – so surely nobody will invest time and effort in developing a new tool or building a new kind of organisation if he cannot keep at least some of the rewards for himself.

Yet intellectual property is very different from real property, because it is useless if you keep it to yourself. The abstract concept can be infinitely shared. This creates an apparent dilemma for those who would encourage inventors. People get rich by selling each other things (and services), not ideas. Manufacture the best bicycles and you profit handsomely; come up with the idea of the bicycle and you get nothing because it is soon copied. If innovators are people who make ideas, rather than things, how can they profit from them? Does society need to invent a special mechanism to surround new ideas with fences, to make them more like houses and fields? If so, how are ideas to spread?

There are several ways to turn ideas into property. You can keep the recipe secret, as John Pemberton did for Coca-Cola in 1886. This works well where it is hard for rivals to ‘reverse-engineer’ your secrets by dismantling your products. Machinery, by contrast, betrays its secrets too easily. The British pioneers of industrial textile manufacture largely failed in their attempts to use trade secrecy laws to protect themselves. Though customs officers searched foreigners’ possessions for plans of machinery, New Englanders like Francis Cabot Lowell sauntered innocently about the mills of Lancashire and Scotland ostensibly for his health while frantically memorising the details of Cartwright power looms, which he promptly copied on his return to Massachusetts. The dye industry relied mostly on secrecy till the 1860s when analytical chemistry reached the point where rivals could find out how dyes were made; it then turned to patents.

Or, second, you can capture the first-mover advantage, as Sam Walton, the founder of Wal-Mart, did throughout his career. Even as his retailing rivals were catching up, he was forging ahead with new cost-cutting tactics. Intel’s dominance of the microchip industry, and 3M’s of the diversified technology industry, were based not on protecting their inventions so much as on improving them faster than everyone else. Packet switching was the invention that made the internet possible, yet nobody made any royalties out of it. The way to keep your customers, if you are Michael Dell, Steve Jobs or Bill Gates, is to keep making your own products obsolete.

The third way to profit from invention is a patent, a copyright or a trademark. The various mechanisms of intellectual property are eerily echoed in the apparently lawless and highly competitive world of real recipes, recipes devised by French chefs for their restaurants. There is no legal protection for recipes: they cannot be patented, copyrighted or trademarked. But try setting up a new restaurant in Paris and pinching the best recipes from your rivals and you will rapidly find that this is not common land. As Emmanuelle