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Prospects for 2013

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Dean Baker
New Left Project, January 2, 2013

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A large and growing share of world output is controlled not by conventional property relationships, but rather by patent and copyright monopolies that allow their owners to charge prices that hugely exceed the free market price. Progressives have generally not appreciated the rapid growth in the importance of intellectual property in the economy. In the United States, in prescription drugs alone, patent protection adds more than $250 billion a year (1.8 percent of GDP) to the cost compared with free market prices. This is close to 15 percent of all before-tax corporate profits. The total cost of all forms of intellectual property is almost certainly three times this amount.

In many areas, notably prescription drugs and software, patents are almost certainly an obstacle rather than an impetus to technological progress. In the case of copyrights, the development of the Internet and digital technology is making enforcement ever more difficult. Enforcement is likely to require increasingly repressive measures from the government, like the Stop Online Piracy Act, which prompted a grassroots revolt.

For these reasons, it is important that efforts to strengthen patent and copyright protection be beaten back both in the United States and around the world. There is some hope that countries in the developing world are growing increasingly assertive in their resistance to the imposition of intellectual property rules by the wealthy countries.

This resistance has been strongest in the case of prescription drugs, where developing countries are increasingly taking advantage of the flexibility allowed in the TRIPS agreement to force compulsory licensing of patent protected drugs. Some countries, notably India, have been subjecting patent applications to increasing scrutiny, rejecting patents that have been approved in the United States and Europe.

In 2013 we may see an acceleration of this trend with developing countries becoming more aggressive in rejecting these forms of intellectual property. They are increasingly recognising patents and copyrights as a mechanism for rich countries to extract wealth from the developing world in a way that seriously impedes economic development, and in the case of prescription drugs jeopardizes public health. In wealthy countries there have also been signs of rebellion against ever stronger patent and copyright protection, most notably with the 'Pirate' parties that have received support across much of Europe.

The year 2013 may see increasing growth and self-consciousness in this movement against intellectual property. This struggle should rank near the top of every progressive’s agenda.


Dean Baker is a macroeconomist and co-director of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University.

 

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