Sunday, June 22, 2014

Capitalism and Intellectual Property Rights

Pharmaceuticals and publishing are the two most striking areas of failure in the capitalist system which, for the most part, has encouraged the creation of new things and improvements on the old, and has brought those things to a competitive market at prices that favor the sale of quantity – in other words, cheaply so the quality of life can be good even for the poor. 

Wal-Mart may not have the most glowing record as an employer but its ability to make good food and clothing available at very low prices is evident.

But the protections of that broad field of production defined as intellectual property has become highly problematic in an age when that very sort of property is disseminated by the internet which has a strong bias in favor of pricelessness – in both meanings of the word.

I’ve written before about the book publishing industry – in particular the major trade publishers in the United States, especially those massive conglomerates that center upon Random House and Viking/Penguin (now reduced, thanks to merger, to just Random House.) 

Instead of cooperating with Amazon, lowering prices and going for quantity sales, they fought Amazon, determined to keep control of their pricing and to keep their prices high. 

The discount model of retailing has long shown that low prices and quantity sales can result in higher overall profits, but the publishers, grasping after an old fashioned dignity, could not see the value of that business model (although their predecessors in management certainly did in coming forth with good quality paperbacks very cheaply – but now even the paperbacks are expensive.) 

These publishers missed entirely the advantages of the e-book which costs six cents to maintain and send out -- with Amazon as distributor (in place of warehousing, shipping and 40% to the bookstore) taking just 30% of the price above the six cent cost.

Of course those people in the arts and sciences who write, who do research and devise new things, must be paid; they must be recompensed and rewarded for their time. 

But it’s not the creators who are gaining the outrageous profits, it’s the publishers, the corporations, and specifically the executives of those corporations, for heaven knows the stock holders and those corporate workers who are not at the higher levels of management aren’t enjoying big pay-outs.

Pharmaceutical firms rank as the worst, charging prices that only the most cynical corporate policies could invent. 

It's unconscionable that firms that create and control medications that are required to cure deadly diseases should fix their prices so high that only the very rich can afford them. 

One might see in this a managerial class arrogance that effectively is committing a selective genocide of the poor and those who are only moderately well off. 

But another area of nearly equally unconscionable pricing has come to my attention. That of the publishing of scientific research – articles at the cutting edge of research across all fields. Articles necessary for that very advancement in which capitalism so prides itself.

Robert Darnton, in his article “A World Digital Library Is Coming True!” in The New York Review of Books (May 22, 2014), despite his encouraging title, informs us of the following: “The average price of a year’s subscription to a chemistry journal is now $4,040. In 1970 it was $33. 

A subscription to the Journal of Comparative Neurology cost $30,860 in 2012 – the equivalent of six hundred monographs. 

Three giant publishers – Reed Elsevier, Wiley-Blackwell and Springer – publish 42% of all academic articles. In 2013 Elsevier turned a 39% profit on an income of 2.1 billion pounds from its science, technology and medical journals.”

(I highly recommend that anyone interested in serious discussions of what’s happening in the world subscribe to The New York Review of Books – which is in no way limited to just reviewing books but takes a sweeping and in-depth view of what is important to all of us.)

These outrageous publishers of scientific papers are dependent upon scientists, researchers, universities for their journals’ content. Why would anyone, knowing their work is going to be so limited in distribution – and so abused for the benefit of corporate management – chose to publish with them? 

Prestige is a significant factor. These publishers, back in the days when they had decent corporate policies, became the grantors of academic imprimatur – if it was published by them it was to be taken seriously. 

But now one must consider that what is published by them perhaps need not be taken seriously – for the authors must know that few in their fields can afford to see what they’ve written.

The United States Congress has attempted to answer this problem, repeatedly putting forward legislation that would require that research paid for by government grants and subsidies be made available free of charge – after all the research has already been funded by the tax payers. 

But the high prices publishers charge mean they have plenty of funding for lobbying to keep their prices high – and to our shame, too many of our legislators can be bought. Else neither the high prices of needed drugs nor the high prices of research information could be sustained beyond a single legislative session.

Congress, Robert Darnton tells us, succeeded in requiring that research funded by the National Institute of Health be free of charge at PubMed Central—but lobbyists got a one-year moratorium on publication. 

That means any company using the research to bring out a new product must pay the publisher’s exorbitant price or miss the competitive market.

Ugly, isn’t it. And directly counter to our liberal notions of a free market. It seems only the rich -- individual people or corporations -- should be allowed to survive.

But the positive title to Darnton’s article has a basis. The very scientists  who write the articles upon which the costly journals depend are now rebelling. 

In 2010 the faculty at the University of California boycotted the Nature Publishing Company when it informed the university’s library that it was raising its prices by 400%. The faculty of UC, over the years, had contributed 5,300 articles to that ungrateful publication.

Even more to the point, Harvard, MIT, the University of Michigan, Johns Hopkins and the University of California at Berkley and San Francisco have moved to the use of “open access journals” (which means free of charge.) They have even created funds to cover the processing fees, which apparently can be considerable in converting an academic article filled with odd characters and spacings into something uploadable to the internet.

Realizing that readership is far more important than the old and formerly respectable name of a publisher, these universities have opted for that “free exchange of ideas” that constructive innovation and the success of capitalism requires. 

Darnton, citing John Houghton, a specialist in the economics of information, tells us that in 2006 “a 5% increase in the accessibility of information would have produced an increase in productivity worth $16 billion.”

At what cost to us all does anyone still indulge in the delusion of the prestige of publishing in the old and now ridiculously over-priced academic journals?

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Katherine Ashe is the author of the Montfort series, a four-volume novelized biography of Simon de Montfort, the founder of modern democracy:

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