Intellectual Property Rights Retard Development

Das Der Spiegel have an interesting piece up on Germany’s Industrial Revolution and the weakness of copyright and patent law at the time.

Höffner’s diligent research is the first academic work to examine the effects of the copyright over a comparatively long period of time and based on a direct comparison between two countries, and his findings have caused a stir among academics.

Until now, copyright was seen as a great achievement and a guarantee for a flourishing book market. Authors are only motivated to write, runs the conventional belief, if they know their rights will be protected.

Yet a historical comparison, at least, reaches a different conclusion. Publishers in England exploited their monopoly shamelessly. New discoveries were generally published in limited editions of at most 750 copies and sold at a price that often exceeded the weekly salary of an educated worker…

Höffner explains that this “lively scholarly discourse” laid the basis for the Gründerzeit, or foundation period, the term used to describe the rapid industrial expansion in Germany in the late 19th century. The period produced later industrial magnates such as Alfred Krupp and Werner von Siemens.

In my (lengthy) post last year on The Conservative’s Development white paper “One World Conservatism”, I criticised their stance on property rights.

The Conservatives pledge to uphold property rights, however, sometimes violating property rights can lead to positive developmental outcomes. To quote Ha Joon-Chang:

Security of property rights cannot be regarded as something good in itself. There are many examples in history in which the preservation of certain property rights has proved harmful for economic development and where the violation of certain existing property rights (and the creation of new ones) was actually beneficial for economic development…

Hence, what mattes for economic development is not simply the nature of all existing property rights regardless of their nature, but which property rights are protected under which conditions. If there are groups who are able to utilize certain existing properties better than their current owners, it may be better for the society not to protect existing property rights, but to create new ones that transfer the properties concerned to the former groups.

It is nice to see history on the side of the Professor and I. Property rights are useful things for aligning someone’s effort with their reward, but on occasion this relationship breaks down and the abandonment of property rights can lead to greater productive endeavour.

For the time being, I think I will file this under Confirmation Bias, but I will continue to argue that many of the “best practice” methods recommended for developed economies operating at the technological frontier are massively unsuitable for developing economies in “catch-up” mode.

Prussia, then by far Germany’s biggest state, introduced a copyright law in 1837, but Germany’s continued division into small states meant that it was hardly possible to enforce the law throughout the empire.Höffner’s diligent research is the first academic work to examine the effects of the copyright over a comparatively long period of time and based on a direct comparison between two countries, and his findings have caused a stir among academics. Until now, copyright was seen as a great achievement and a guarantee for a flourishing book market. Authors are only motivated to write, runs the conventional belief, if they know their rights will be protected.

Yet a historical comparison, at least, reaches a different conclusion. Publishers in England exploited their monopoly shamelessly. New discoveries were generally published in limited editions of at most 750 copies and sold at a price that often exceeded the weekly salary of an educated worker.

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2 thoughts on “Intellectual Property Rights Retard Development

    1. My secret shame… I received an E for my GCSE German.

      What with grade inflation, I did so badly that 40 years ago I would have been taken outside and shot.

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