Do the work, you're due a reward

April 6, 2001

In the third of our series on intellectual property issues, Danny Quah tells Alison Goddard how the profit motive can drive innovation.

Hard-nosed commercialism is no bad thing in universities, says Danny Quah, professor of economics at the London School of Economics.

"There are people who hold the view that the creation of much of human knowledge has been driven by scientific instincts, the desire to be recorded as the inventor or creator of an original idea, by the desire to publish," he says.

"This picture of the scientist as a noble artist is a relevant one only when the scientist is able to live comfortably and feed his family. In this country, the higher education system has not seen the levels of funding that we see in the United States or that we have seen historically.

"The scientist as a noble artist is no longer feasible in this country. Every scientist is now driven to commercial collaboration. As an economist, I do not necessarily think that is a bad thing."

Quah is the brains behind the concept of the "weightless economy" - a term he prefers to the "knowledge economy" because, he says, knowledge has always underpinned economic activity. In the weightless economy, the value of economic activity lies in bits and bytes rather than atoms and molecules. It includes intellectual property such as ideas, designs, computer software, electronic libraries and brand names. In this environment, one needs to stimulate the creation of knowledge while ensuring that such creation is well rewarded.

"We need a happy medium. We need to reward scientists who are creative and enterprising. We do not want to stifle the dissemination of their ideas," Quah says.

He seeks to balance providing free access to information with ensuring commercial reward. His academic work and presentations are publicly available - but anyone who wants more than Quah's academic work will have to contact his agent.

In the interests of openness and easy exchange of information, Quah supports the Blue Ribbon civil liberties organisation and its free speech online campaign. He has also designed his website at the LSE to be accessible to all, independent of which browser is used or when it was last updated. It is a design that is approved by the World Wide Web Consortium - the organisation run by the web's inventor, Tim Berners-Lee.

Unlike Berners-Lee, however, Quah believes that the web would not have become the success it is today without the involvement of business. He says: "It is fallacious for Tim Berners-Lee to think he has stepped out of the commercial system. Cynics would say that the only reason Berners-Lee is known is because commercial interests wanted to make money out of the web. Otherwise (its use) would be limited to 20 laboratories."

The tension between public benefit and private good is one that has been exercising Quah's mind of late. "If you feel information should be available for free and should be as widely disseminated as possible, your case is built on the idea that any time you curtail dissemination, you are reducing social efficiency.

"For social efficiency, you want everything to be distributed to where marginal benefit equals marginal cost. As long as somebody out there continues to benefit from the content - electronic libraries or information on the web - then it should be available for free. This is the principle that underlies why governments, historically, have financed libraries.

"Against this argument would be (the question): if the information is available for free, how do you finance its creation?" The system of patents and copyrights is one way of allowing those who create knowledge to profit from it, and Quah believes it has been successful at doing that.

"A scientist does the research in secret and patents the product. Once he has patented it, then for the duration of the patent, others are welcome to read about what he has done but he has a legal monopoly on its application. That works very well for commercial production in an industry-driven world.

"The scientist gets monopoly rent that accrues to him because the idea is not available for commercial production without his permission. This is a very private-sector, commercial-instincts, profit-driven resolution of the tension between incentives and efficiency.

"For the library, that would mean that the information is not available for free, however. This would subvert the desires of people such as Berners-Lee who believe in the widespread dissemination of social ideas."

Traditionally, the public has funded the creation of knowledge for the public good. Governments, on behalf of taxpayers, pay for knowledge to be produced by allocating money for scientists to spend on research of their choosing and by procuring directly commissioned research.

In a globalised world, however, a national system is no longer wholly appropriate for funding research for the public good, Quah argues. "You could say it is this country's taxpayers who have paid for this knowledge and that everybody outside the country is free-riding on this knowledge. Then you could argue that scientific research should be done at a world level rather than a national level."

This would, of course, be problematic, not least because different countries have different attitudes to intellectual property, Quah points out.

"China has decided to locate somewhere else on that trade-off between incentives and social efficiency. It says it is not going to play the intellectual property game - anything it comes across it will copy or clone at low marginal cost and make it available to the billion Chinese people. It has gone for the most socially efficient outcome."

But he adds: "China has had a peculiar relationship with technology. By some measures, 14th-century China was very technologically advanced. But it was advanced not for commercially driven reasons but because the national government thought it was cute to have scientific ideas developed. The system of incentives was driven entirely by patronage. There was no view that, afterwards, the ideas would be commercially exploited."

The United Kingdom is a long way from resolving the issues surrounding intellectual property, from finding the right balance between the public good of free access to information and the commercial necessity of paying for the creation of that information, Quah says.

"The fact that scientists are driven to commercial collaboration sharpens their instincts and makes the drive to come up with a useful result ever more pronounced, and that is a good thing. However, after the idea has been created, it is protected by the instincts of the commercial agency, and that is not a good thing as it is no longer used so widely in society as it should be.

"The core issues have yet to be resolved, and we are nowhere near solving them satisfactorily," he concludes.

Next week: intellectual property in the United States.

  The ownership of knowledge, back to contents

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