The following was an invited paper at the convention of the Connecticut Distance Learning Association, September 1998.

From Marx to the Chicago School

James Stodder, Ph.D., Economics

Rensselaer Polytechnic Institute at Hartford


 New Forms of Wealth, New Rules of Property

In a Marxist view, periods in economic history are defined by new forms of productive wealth, forms qualitatively different enough to require:

o       New technical knowledge ("forces of production"), in order to operate this new productive wealth and

o       New forms of social property ("relations of production"), in order to protect and improve these new forms wealth.

This first sort of innovation, in the technical sphere, would typically be before the accommodating social adjustment, Marx claimed.

Today, this Marxist view of economic history is actually quite commonplace, although it comes in the form of conservative scholars of the "Law and Economics" tradition of the University of Chicago (e.g. Professor Robert Bork of Yale, Ronald Reagan’s failed appointment to the Supreme Court).

The principle difference between the Marxist and the conservative Chicago view of property is a conflicting view on the evolution of capitalism.

Marx predicted that capitalism would be unable to adapt to ownership broad and "social" enough to encompass the new technologies of mass production. Business historians in the Chicago tradition, however, point to the modern "publicly held" corporation, and the explosion of mutual and pension fund ownership as precisely a broadening of ownership – or to put it in Marxist terms – a "socializing of the means of production."

Capitalism is now struggling to adapt to a new form of productive wealth – intellectual property in a digital form. The joint-stock corporation was the child of mass production, a legal fiction of a "person" large enough to own what was too large and risky for any real person to hold.

Copyright was a legal form appropriate for the intellectual property of mass production -- sheet music, records, books, and films. But it is a highly hierarchical and centralized, "capital intensive" form of intellectual property not appropriate, and ultimately not even defensible, in the face of the hugely decentralized and low-cost environment of self-publishing on the web. 

The thesis of this paper is that new forms of intellectual property cannot be based on the idea of a book – a piece of work that is finished once-and-for-all, hopefully to be reproduced "mindlessly" many times over the life of its creator. Such a right is semi-permanent, fixed for at least the life of its author, possibly longer.

 "Copyright," as the name implies, enabled authors and publishers to protect the copy-ability of the new printing technology. Rather than being a fixed right, however, the new forms of intellectual property are so highly malleable and revisable that they must be protected by renewable contracts between an ongoing "content provider" and participant-users. A user can have specific rights as a developer and disseminator of the intellectual property in which s/he is engaged.

 Copyright law has always been an attempt to balance the interests of writers and readers, (or, to use today’s words, of "content providers and users." It is not just a question of protecting the rights of the author – the doctrine of "fair use" recognizes that overzealous protection would make a text too expensive or even legally dangerous to use. This balancing of interests in copyright is seen even in other narrower and more restrictive forms of intellectual property -- the law governing patents and "trade secrets."

 Basic Positions in the Property Rights Debate


At least four basic positions have be staked out in the emerging debate over property rights and related issues of encryption. This is a debate that will establish the ground rules for owning and controlling the most important new form of productive wealth, intellectual property on the web. (An annotated bibliography of some of these sources appears at the endnotes of this essay.)

An interesting example of the conflict between these first two groups, the copyright holders and the information conduits, is seen in the recent initiative by Caltech to encourage its professors to refuse to sign copyright agreements with journals publishing their research. Caltech, Yale, and other leading research universities seem to feel that they should not have to pay for published copies of research they themselves have produced, in effect paying twice, and then be strictly limited by the publisher as to the uses to which they can then put those publications.

The original researchers themselves have also noted that their research may be more usefully circulated, and commented upon by their peers, when published free on line rather than in scholarly print journals. This

Caltech controversy was aired in the Chronicle of Higher Education on

September 18, 1998, and shows that the "protection" of copyright or content owners is not always synonymous with the rights of content providers.



Intellectual Property as a Voluntary Contract

The difference between a contractual agreement about the use of property and stronger forms of law is that effective contracts are continually renewed and are basically self-enforcing. If I steal a man’s car or his copyrighted material, then this is a crime whether or not the man himself is aware of the theft for many years. A contractual agreement to provide a service, on the contrary, presumes an ongoing agreement, and will only break down when there is a major disagreement about terms. The resolution of such conflicts is typically a civil and not a criminal matter, unless there is fraud.

Intellectual property on the web has much about it that requires this sort of ongoing and bilateral relationship. As all "maintainers" of web pages or on-line courses know, the product tends to decay rather quickly if it is left alone for too long. As Douglas Brent argues in his remarkable essay in the early on-line journal EJOURNAL web-based presentations are more like the great epics retold by pre-literate oral culture, than the finished "masterpieces" of written literature. In this earlier epic world plagiarism was not only, as the old saying goes, "the highest form of flattery" – it was also the only mode of recording!

The infinite edibility and reproducibility of hypertext, makes for a "bad" book – because it is so easily plagiarized – but it is also the very basis of most good web-based text. We need new forms of intellectual property that can make the best use of these new technical features.

To find a more contemporary analogy, a webpage author is usually less of a recording artist and more of a performance artist. The art is really in the doing and the interaction with users, not a fixed thing in itself. This seems to imply contract as the legal underpinning this voluntary cooperation.. Encryption can be used to "watermark" and identify specific performances and "audience interventions" – a class discussion, for example – and one would only have rights to participate further in or to reproduce that particular event.

The idea of intellectual property protected by contract and civil law, rather than by criminal penalties, implies that the dynamic of growth is attraction to voluntary and ongoing projects, rather than the threat of sanctions. This does not mean that the law should be without civil penalties, however, the very least of which would be a banning from further participation. As to the idea that good contracts are largely self-enforcing, the "policing" of unlicensed reproductions may be enforced largely by other users who object to someone who has not "paid his dues," as well as by ever-vigilant "search robots" that prowl the web.

A cypher-punk community of freely exchanging artists is not likely to replace all forms of copyright. But contractual can help to protect an expanded sphere of personal and community relations, and even loyalty, around shared projects.

I will close on a darker note. The difficulty of protecting intellectual property without such contractual relations, given the ease of reproduction, leads me to fear for the future if "benignly" voluntary contracts cannot be established. If centrally policed copyright law is impossible, as many advocates of strong-privacy would argue, then the only alternative may be "forcible" contracts -- also voluntary in a sense, but only safe if one pledges allegiance to the strong.

Microsoft’s apparent contempt for most legal sanctions, and its ability to enlist an army of loyal dependents makes it look as if the only law it believes in is that established by its own strength. Medieval feudalism was also a system of property protected by traditional "contracts," rather than by a strong central state. But it was "protection" in the sense of a racket, built around local warlords and the universal threat/opportunity of their predatory raids. If contracts "in the small", a flourishing market of web artisans and craftspeople, do not prosper, then this may be the only form of intellectual property "protection" we have left.

 Endnotes: Web Sources for Debates about Intellectual Property          (An annotated web-bibliography)