Role of Intellectual Property in the transition from science to service economies

Intellectual property, embodied in patents and other rights, emerged to protect innovative ideas while ensuring public disclosure

The twentieth century marked a significant shift in the landscape of knowledge production and technology development.

Gone were the days of lone inventors like Edison, Siemens, Westinghouse, and Graham Bell, who defined the nineteenth century.

Instead, this new era saw the rise of public-funded universities and technical institutions alongside concentrated technology development within the R&D laboratories of large corporations.

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The changing role of science & technology

In this phase, the capital was still expanding production. Even though finance capital was already dominant over productive capital, the major capitalists still had a strong manufacturing base.

In this phase of development, science was regarded as a public good and its development was largely concentrated in the university system or publicly funded research institutions. Technology development was largely regarded as a private enterprise.

Science was supposed to produce new knowledge, which could then be mined by technology to produce artifacts.

Emergence of Intellectual Property

To protect the valuable ideas embedded in these artifacts, the concept of intellectual property emerged.

Patents and other rights were established, serving both a private and public purpose. They offered inventors a limited-term monopoly in exchange for full public disclosure of their inventions, ensuring that knowledge was eventually shared with the public.

The transformation of this centuries-old system was driven by two major shifts in knowledge production.

Firstly, the neoliberal order reshaped universities into profit-driven commercial entities, blurring the lines between academia and industry.

Secondly, the boundary between science and technology became increasingly porous, with advances in fields like genetics seamlessly leading to patentable and marketable products. This integration drove many academic disciplines closer to production systems.

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Influence of finance capital

Finance capital began to exert its influence not only through R&D investments but also by acquiring knowledge produced in universities.

The monopoly over patents and university research enabled finance capital to dominate industrial capital, contributing to the separation of finance from productive capital.

By the end of the twentieth century, finance capital had ruptured from productive capital.

Today, global capital operates as disembodied finance capital, controlling both production and technology markets. This phase sees a distinct separation of knowledge as capital from physical capital like plant and machinery.

The transformation of capital into a rent-seeking entity, leveraging its monopoly over knowledge (patents, copyrights, industrial designs, etc.), characterizes the current phase.

Advanced capitalist countries have transitioned toward becoming rentier and 'service' economies, where control over intellectual knowledge and property rights plays a pivotal role in economic dynamics.

Impact of Intellectual Property on Corporations

This shift in capital dynamics is exemplified by companies like Foxconn/Hon Hai Precision Industries, which manufactures Apple products but holds a small share of the profits due to Apple's ownership of intellectual knowledge and property rights.

Approximately 31 percent of iPhone profits go to Apple, while Foxconn receives less than two percent.