Re: [OPE] intermission: value of knowledge

From: Adler Paul <>
Date: Mon Nov 09 2009 - 19:36:12 EST

Thx Paul. What about the difficulty of identifying SNLT for the
knowledge assets used in the production of new knowledge? Do you agree
that this too is represents a limit beyond which the commodity form
loses traction?

On Nov 9, 2009, at 4:22 PM, Paul Cockshott wrote:

> I agree with your general point that easily reproducible knowledge
> revolts against private property
> ________________________________________
> From: [ope-
>] On Behalf Of Adler Paul []
> Sent: Monday, November 09, 2009 5:52 PM
> To: Outline on Political Economy mailing list
> Subject: Re: [OPE] intermission: value of knowledge
> Going back over the series of posts on the value of knowledge, it
> seems like there's a pretty deep difference of views here, and I
> wonder if we can get to the root of it. I think Paula A and I are on
> the same wavelength, but since she may disagree with my formulation,
> I'll just speak for myself.
> But let's start with Paula's example: imagine a capitalist publisher
> hires an author to produce a work of fiction (the publisher doesn't
> realize it, but it turns out that the author was James Joyce and the
> book he writes was Ulysses). How can the SNLT of this kind of
> commodity ascertained?
> Paul C. says the publisher can calculate the average number of working
> hours that an author puts into writing a novel (let's say 2000 hours).
> And they know something about the average complexity of labor among
> writers (let's say, BAs with English majors). Then, to set the price,
> all the publisher needs to know is the size of the print run: that's
> hard to do, and only ever statistically accurate, but that's true for
> any commodity.
> And we can reason the same way about a new pharmaceutical drug: Jerry
> asks (Nov 5) how to count that labor that goes into pharma R&D? But
> Paul C. is surely correct in saying that pharma firms know what
> proportion of projects end up with an approved drug, and how many
> hours of R&D labor are typically required to get a drug to market, so
> they can quite appropriately count the labor-time invested in the
> failed projects as part of the total labor-time required to come up
> with the successful drug. (I think Jerry's concern about oligopoly in
> pharma is a separate issue.)
> But I still don't see how SNLT for a specific increment of knowledge
> development can be meaningfully defined. My main concern is that the
> knowledge resources that these novel authors and these pharma
> companies rely on are (a) absolutely essential to successful fiction
> writing and pharma innovation, but (b) impossible to value. They are
> impossible to value because they are not used up by being used: I
> don't see how you can attach a value to such a resource. So any price
> attached to these knowledge assets is entirely without material
> grounding -- it is entirely conventional. "Fictional" values.
> Where intellectual property rights are strong, firms can value these
> assets at their market price (e.g. license fees), but how are these
> license fees set? In reality, license fees are set in an entirely
> conventional way that bears no relation to SNLT. As best I can tell,
> technology licenses are usually paid for in the form of a royalty, set
> rather arbitrarily at around 5% of the sales price of the product for
> which the licensed technology is being used -- in other words,
> entirely without regard to the costs of producing this knowledge. This
> royalty setup is sometimes accompanied by a one-time lump sum payment,
> but the main determinant here (as best I can tell) is the effort
> required of the licensor to effectively transfer the knowledge -- not
> the effort (let alone SNLT) involved in creating the knowledge in the
> first place.
> So I am not seeing how the capitalist firm can transfer the value of
> the assets that are required to produce such knowledge-intensive
> commodities as novels or pharmaceuticals. The SNLT of any commodity
> includes a fraction of the SNLT embodied in these assets. If these
> assets cannot be priced appropriately, their value cannot transferred
> to the new products, and as a result the system lacks a crucial
> stabilizing and orienting mechanism.
> If SNLT cannot be ascertained, prices will still form of course, but
> they are formed in an entirely 'conventional' way, without any
> relation to the real labor requirements. The market mechanism
> therefore tends to be come "unhinged".
> Like Jurriaan, I see knowledge as particularly recalcitrant to the
> commodity form. Labor was recalcitrant too -- but by dint of
> dispossession, labor was forced into the commodity form. Knowledge
> seems even more recalcitrant, since the assertion of property rights
> is even more difficult here. Only few forms of socially-useful
> knowledge have been brought under the law of intellectual property:
> for the others, the nature of knowledge itself makes the assertion of
> legal ownership rights infeasible or ridiculously expensive. On the
> other hand, where intellectual property rights are successfully
> asserted, this regime of private property in knowledge has huge social
> costs that far outweigh the private advantages -- and these social
> costs weigh not only on the relatively powerless (such as poor people
> infected with HIV/AIDS who can't get access to drugs) but also on
> firms that would profit from being able to use this knowledge (see
> Heller on the "anti-commons" that is blocking progress in the
> biosciences due to the proliferation of patents).
> This contradiction is deepening... (a) because productivity growth
> relies increasingly on knowledge assets rather than other types of
> assets that have been more successfully subordinated to the commodity
> form (labor, land, mineral resources), and (b) because knowledge is
> increasingly in digital form and its "non-excludability" feature
> correspondingly reinforced (protectability is harder to assure and the
> costs of diffusion much reduced).
> Paul
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Prof. Paul S. Adler
Management and Organization Department
Marshall School of Business
University of Southern California

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Received on Mon Nov 9 19:40:03 2009

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