Anti-Counterfeiting Trade Agreement and Intellectual Property

north america / mexico | economy | opinion / analysis Tuesday February 23, 2010 22:53 by Gavin Gleeson - WSM - personal capacity

The ACTA (Anti-Counterfeiting Trade Agreement) is a trade agreement being negotiated by the Obama administration through the United States Office of the Trade Representative. The trade agreement is particularly interesting on a number of points. First, it's interesting because it's secret. The public has not been allowed to view any of the candidate treaties. Not only is it secret, but it also is being negotiated without congressional oversight. The justification for it being negotiated in secret by the executive is ostensibly that it does not change any existing domestic law in the United States.

However, candidates for the treaty negotiations which have been leaked make this claim rather dubious. To begin with, third party liability is included in the treaty. Third party liability means that internet service providers (ISPs) can be made liable for the content which is distributed on their network. ISPs currently have immunity in the US and all EU states.

The treaty would force ISPs to put in place methods of enforcement. Alleged copyright infringement or other counterfeiting would be subject to something similar to the "Three strikes" law existing in France. It would require revocation of services by the ISP regardless of whether the allegation was true.

All of this is rather draconian and is occurring without even the usual ritual of democratic legitimacy. Given the usual tendency for congressional capitulation to moneyed interests, it's somewhat striking that even the congressional rubber stamp has been bypassed.

To find the answer, we have to look beyond the immediate circumstance to a general trend which has been accelerated by the recent economic crisis. Though stock market commentators and the media have been proclaiming the end of the crisis, the causes of the crisis are still very much in evidence.

Since the time of Adam Smith the role of international economics has been known. Socialists of the last century, largely due to Marx, were well aware of the international nature of capital. However, the power of the nation state still had some sway. Levies and tariffs on trade could be used to protect native industries and to reduce the flow of goods internationally. Yet capital is always pulling at the reins, attempting to break free of the constraints placed on it by national economies and national currencies. It is reined in through war and crisis but each time it is pulled back, the nation states' capacity to do so is weakened, and the interconnectedness of the global economy has increases, not monotonically, but with a very definite globalising trend.

Now, however, the knowledge economy has moved to the fore. Production in this sphere is no longer tied to the extraction of raw materials, farming and factories. It's no longer tied to the distribution and service economy that springs up as an adjunct to material production. Instead, knowledge has become an ever larger part of the economy - for its own sake.

This economy is an ever growing percentage of the entire economy. The investment in fixed capital for production has means that industry is ever more efficient, requiring less labour and costing less as time goes on. The quantity of food produced by a single human with modern farming techniques is vastly higher. The number of people required to man a car assembly line is vastly lower. We can only expect that as this trend continues, the knowledge economy will become entirely dominant.

Knowledge can be transmitted easily with almost no distribution cost and has international value. It is an ideal candidate as commodity for international trade if only for a few problems. You take up the problems in the next paragraph - don't need it here. Knowledge is infinitely reproducible, and with digital technology, these reproductions are essentially identical to the original.

These qualities make knowledge a somewhat problematic commodity. It is a commodity that can be copied infinitely, and so after the initial production, displays no real scarcity. In virtually every economic theory, from Marxism to marginalism, the price of such a good should be effectively zero. It is only through some sort of regime of imposed scarcity that such a commodity can be given an appreciable price.

The basis for intellectual property (IP) trade is thereby undermined by its intrinsic nature. The extent to which this is a crisis for producers can easily be seen in the counterfeiting markets which occur everywhere from Haifa to Hong Kong. This good, while a seemingly perfect candidate for international trade, has slipped through the fingers of capital.

Capitalist investors in content production, including Hollywood, the record companies, the software companies, the e-book production companies, purveyors of financial reports and others, have had some success in controlling the free exchange of information within the borders of the nation state. At least they have done so to the extent that they can report significant profits. This has been achieved by employing the legal apparatus to ensure compliance with a system of arbitrary scarcity. Scarcity is imposed by threat of criminality and fines.

The solution advocated by capital, in ACTA or whatever treaty is eventually adopted, is to create a system for imposing such a regime internationally. The simplest mechanism is to place liability on the internet service providers, making them the de facto enforcers of the system of scarcity.

What might an alternative look like? How might content producers manage to produce works without requiring payment for those works based on their scarcity? The answer to this problem lies in the old economy. It is through the reorganisation of our economic basis that we can finally free knowledge production from the arbitrary constraints of scarcity. Instead of requiring payment for knowledge production based on how well we can control who sees it, we need to invert the process entirely. We should be showing people what content we want produced and diverting goods to supply them with the ability to do so.

A team of software engineers working on an innovative new program have the potential to simplify work for hundreds or even thousands. What is needed is for their subsistence to be provided while they develop it, and in a way not tied to the eventual scarcity of the product. A much better way to determine suitability of fundinct such a project would be to allow people to express their interests in such a project. Similarly, this type of funding could work for scientific research or even film production.

But this change is not a simple reform. It would require control of the entire apparatus of finance be put into the hands of consumers. It would require that the consumers themselves dictate where funding goes, irrespective of the capacity to obtain profit.

It is in fact a revolutionary change, moving the economy to an administration of things, for instance the productive basis of society, rather than the administration of people evidenced by a system which litigates people into compliance with the rules.

This revolutionary change will not come about by itself. The likelihood is that ACTA will be passed in a manner to the liking of the capital interests which back it. It remains however a possibility, a possibility that will only come to pass if we create it.