Is it okay to copy? Intellectual property, learning and development

In Tuesday’s post on China’s industrial policy I mentioned the country’s lack of enforcement of Intellectual Property Rights (IPR) as a feature of its development. The US in particular, but also other rich countries, have complained about this for many years.

IPR policy, such as the creation of patents, is intended to encourage innovation by allowing firms to reap profits from the creation of new knowledge and therefore provide them with incentives to innovate. This sounds like a good thing. But managing an IPR regime requires careful judgement. If new ideas are protected for only a short period, firms may not have sufficient monetary incentives to innovate; if they are protected for too long, competition will be stifled and the diffusion of the innovation across the relevant sector or economy, as rival firms compete for a share of the market by copying or adapting it, will be slowed.

Badly designed IPR regimes can therefore slow growth in economy-wide productivity. Innovating firms often have an incentive to lobby policymakers to introduce lengthy and comprehensive patent protection, to their benefit, but to the detriment of the economy and society as a whole. Continue reading

Advertisements

Industrial policy and Chinese development

The rapid growth and transformation of the Chinese economy since 1978, when policymakers began a programme of economic reforms, has been extraordinary. Up until the last few years, GDP growth averaged around 10% per year, lifting hundreds of millions out of poverty. This represents the largest episode of poverty reduction in human history. China, as the largest manufacturing nation, has become the ‘workshop of the world’.

With a population of 1.4 billion, and an economy relatively open to international trade, these changes have and will continue to have an enormous impact on the rest of the rest of the world. For this reason, we should take a great interest in China’s continuing evolution.

Donald Trump, both on the campaign trail and since becoming US President, has placed great emphasis on getting some sort of ‘better deal’ between the US and Chinese economies. His administration has criticised China for taking advantage of the US on trade and the use of technology. But should China’s rise be a worry in these respects? Or is the US being hypocritical? In fact today’s rich countries all intervened in the economy and used forms of trade, industrial and technology policy to promote their growth and enable periods of ‘catch up’ with those at the frontier. China has been no exception. Continue reading

Karl Marx – an intro

Following last week’s brief introduction to Keynes, here is one for Karl Marx, along the same lines. This year is the 200th anniversary of Marx’s birth and his work remains important to an understanding of the modern world.

I found this video interesting as it contains some ideas and perspectives on Marx that I hadn’t come across before, so it is well worth viewing.

As the narrator explains, much of Marx’s writing was on capitalism rather than what should replace it, at least in any detail. His magnum opus, Capital, is hard-going but remains an extraordinary achievement, while his and Engels’ earlier work, The Communist Manifesto, is pretty short but also very much a fiery and passionate diatribe.

Marx praised capitalism’s productive powers and, remarkably, predicted that it would sweep the world. He was also its foremost critic, and the video does a good job of outlining many of the flaws he identified.

John Maynard Keynes – a brief intro

Here is a nice video introduction to the life and work of John Maynard Keynes, whom many regard as the greatest economist of the 20th century. Keynes’ goal was to save the capitalist system from its worst defects, particularly mass unemployment, through intelligent government interventions, at both the national and international level. For Keynes, it was more about economic reform than revolution.

As an economics student I was strongly influenced by leftist Keynesian ideas, which I later found out are broadly termed post-Keynesian. I often tried to make that come across in my essays. Some of my teachers didn’t like that, as such ideas tend to be outside the mainstream.

Since then, I have explored political economy more widely, including the work of Marx and modern-day Marxists. I have become a little disillusioned with Keynesian policies, or at least the prospect of our political masters coming together to put them into practice. I now see industrial and social welfare policies as equally important at the national level, both for the developed and developing nations.

As a result, I have become less of a post-Keynesian, and more aware of the limits to successful interventions under capitalism. I try to be more flexible ideologically, but I still find Keynesian ideas useful and they remain important to progressive thinking.