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Monday, 7 March 2016

Open Source Dogs

Brew Dog Pint, Callum Hopkins
Are we in a post-capitalism world? Is IP a katalyst for change? What does that even mean? According to a recent article on Scottish microbrewery BrewDog's open-source approach, post-capitalism is here. London housing prices would suggest otherwise, but the rejection of capitalism in favour of open-source, commons approaches sparks some interesting debates.

Capitalism is an economic system based primarily on private ownership.  People own things.  IP is a capitalist hyperbole as ownership is not merely of physical things, but intangible things. This is in contrast to communism, which is government ownership, and socialism, which is collective ownership. My favourite means to explain these systems are cows.
  1. Capitalism - You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.
  2. Socialism - You have two cows, you give one to your neighbour.
  3. Communism - You have two cows, the state takes both and sells you some milk.
In practice, there are no pure economies.  Even in countries which look capitalistic, such as the U.S., the economy is mixed.  The strange case of American 'government cheese' demonstrates the mixed economy. For most of the last century, the US government bought dairy milk to support the price of milk (communism). The milk was processed and sold at a below market price or given to the poor (socialism) as "cheese." Government policy and culture largely determine a country's economic system. The default system in most modern economies is capitalism.

Post-capitalism would mean a different market system, although one that is yet defined.  A post-capitalist market system could be sans IP. Open source, collective IP ownership ostensibly looks like a rejection of IP, capitalism and private ownership, but a scratch under the surface suggests otherwise.   Brew Dog has just published 200 detailed recipes of their microbrews. As open source approaches spread from digital media to other parts of the economy, does Does Brew Dog's recipe strategy signal the dawn of a new IP era? Probably not.

Plans for Saturday, Flickr 
To start, open source, in its broadest sense, is collective ownership as an alternative to private ownership.  A bit like a rebellious teenager, open source must have rules to rebel against. It is defined by its rejection of one system, rather than creation of another. [Merpel, taking a break from napping, suspects not everyone will agree with this view.] Creative Commons, for example, is based on the copyright system.   This is inevitable, as copyright law is ubiquitous.  All IP is rights carved out of the commons.  Open source is an attempt to construct commons within IP rights, within the commons.  So meta.

A second point is that, as Brew Dog's strategy suggests, going open source can be financially rewarding in other ways.  The press coverage alone must be worth the potential downside of revealing recipes. It also helps build the brewery's brand as the anti-brewery, bolster their Equity for Punks crowdfunding pitch and spur backyard brewers to try their own hand at making their recipes. It's the kind of marketing money can't buy.  Beer is a hedonic product (a product that provides both pleasure and pain, as with every buzz comes liver damage), and its marketing is highly emotional. The the stick-it-to-them, iconoclastic approach of rejection of IP is likely brand-building.

This titillatingly titled paper, "Not Just Sex that Sells: Religious Rhetoric and References in Contemporary Beer Branding," argues: "The dichotomous depiction of the beer  industry (dividing breweries along lines of “big” and “micro”) asserts an identification of capitalism’s preoccupation with profit. Whereas ‘big beer’ concerns itself with profit, microbreweries devote themselves to craftsmanship."  Brew Dog's open source marketing is fundamentally capitalistic and defined by its rejection of 'big'.

It's also questionable as to how much the company really loses by revealing their recipes, and if it will affect their rapid growth (Brew Dog started in 2007 and posted revenue of nearly £30M in 2014.) This Kat cannot claim to be a brewing expert, but it's hard to imagine that the home brewer will perfectly match Brew Dog's beer, or that other brewing companies lack the knowledge contained in the recipes.  The branding of beer is likely more important than the beer itself and protects against price competition, and Brew Dog has not gone open source on its trade marks.  All very much in keeping with capitalism.

Despite the image, Brew Dog's actions do not provide an alternative to capitalism and likely increase profit. But there is a problem with this analysis, it starts from capitalistic perspective and judges its outcomes from a capitalistic perspective, as do all discussions on IP.  It is a reason discussions on collective ownership, such as traditional knowledge, are so problematic. But we don't seem to have a better framework.

So, dogs, cows, cheese and beer - will open source provide an alternative to capitalism? I suspect not, however it does introduce a Paradox. Or, at the very least, a question mark.

[Merpel is very upset by this discussion of dogs and has decided instead to focus on brewing her next batch of Catnip Mousetrappist IPA.] 


dogg said...

As Viterbi (Qualcomm founder) explained, sometimes patents are not the best way to go to market :

I wonder what Elon Musk thinks about that...

PJ Proudhon said...

IP is incompaible with both capitalism and comunism. A monopoly contradicts the underlying principle of competition, any property more so on spiritual goods is unacceptable under the doctrine of equality.

Capitalism worked fine up to a point to encourage competition and technological progress. In many fields, computers but more importantly pharmaceutics we have reached technological saturation. The last invention in chemistry which had a remarkable effect on life expectancy was penecilin, now we are down to viagra, and by now even the patents on that have expired.all that needs to be done is to make it cheap. The single most effective boost to agricultural production was Habers' Nitrogen form air about a hundred years ago. Genetic enigineering has turned out a hype.

One of the technologically most advanced societies which started space travel and which built the H bomb managed to motivate their scientists and engineers by honor and pride. Today we drown someone who has "invented" something as trivial as FB in billions simply because capitalism no longer finds anything useful to be done with these billions. Or electrical cars the batteries of which are charged with electricity produced under loss from fossil fuel. At the same time many people in an allegedly advanced society as the French one heat their houses with a nobel source of energy such as electricity.

The problem we are faced with today is not progress but sharing the fruits of already achieved progress and labour in a fair manner. Property and more so intellectual property is no solution. It is the problem because it renders beneficial ideas unnecessarily expensive.
Ip does not further creativity. Mozart wrote what he wrote without any legal means to enforce his rights in a politically fragmented Germany and an absolutistic Austria where everything anyhow belonged to the emperor.

Patents and capitalism historically were an English idea. Not their best one, compared to those of Scott, Maxwell, Cavendish......
Ironically enough Newton invested his profit received for his incredible discoveries in shares on slave ships. May he rot in hell despite his achievements.

THE US anon said...

PJ Proudhorn,

I was following you when you stated that both (pure - my addition) capitalism and communism is incompatible with IP.**

But you lost me with a reference to "spiritual goods."

Also, your notion of "technical saturation" is a poor substitute for what (here in the States) is known as obviousness.

Your view of penicillin is incredibly (and easily shown to be) wrong.

You are attempting to place some type of "worthiness" value on IP, and that is simply NOT what is proper. There is a reason why patents are negative rights (as opposed to positive rights) and there is a reason why market forces dictate MORE value for Viagra. OTHER people can "vote" with their dollars. This is FAR LESS your view of "capitalism cannot find" and far more the Invisible Hand of Adam Smith.

Likewise, your view of agricultural progress is incredibly (and easily shown to be) wrong.

Your judgement - including especially the desire to place judgement - is errant.

Likewise you rather bland conclusory statement of "Ip does not further creativity" simply has NO basis in reality. If it indeed were true, you should be ready to provide even one modern advanced society that has rejected IP laws.

The truth, instead, is quite the opposite.

** Both pure capitalism and communism abhor IP systems, but for different reasons. Communism because of the notion of personal property, and pure capitalism because of the notion of personal property belonging to someone else that might threaten an established entity outside of those drivers that an established entity controls.

Nicola said...

This is an interesting discussion. From an ownership of property perspective, IP is compatible with capitalism. However, the regulations that create IP are not compatible with a laissez-faire notion of capitalism. Hmm...

Jp Proudhon said...

@US Anon

You postulate a few axioms. You don't have to reason axioms that is the beauty of axioms. But at least they should be consistent.

Increase of life expetcancy is dominated by the reduction of infantile mortality and motherhood mortallity, mostly imfectuous. My father's life expectancy was 25 years higher than mine when he was born pre-pencillin. My father finally lived to an age which is my life expctancy once he survived the childhood deceases. This is totally in line with statitics in the western world. Countries such as Cuba undisturbed by IP even f a Cuban photographer claims the copyright on the famous Che Guevara picture have the same life expectancy as Chile, Mr. Fridman's laboratory, not even far away from that of the US, despite their propension for cigars and rum.

Calories/ha only grow marginally in the last 50 years. Cars today consume more than in the early ninties and they will consume even more if crude oil prices stay low, which they will.

Saturation is not dictated by the low obviousness threshiold of patent offices but by the fact that nothing much happens lately. Patents do not produce progress, they do not even provide an image of it.

The fact that you (and me) may make a decent living on IP, is no indication that it is good for mankind. Nit everything which is good for me is good for mankind and vice versa. At least on that Marx was right.

dogg said...

I fail to see the communist part here. Open source does not necessarily mean IP-free. I have seen software being open sourced and at the same time being patented. Just like the beer company here released the recipe but kept the trademarks.
However both approaches, open source and IP, are used to get market share. Some patent to keep others out, some release products as open source in order to win market share by undercutting competition or to create a community around their product.

Of course, this only concerns companies which sell a product, not those whose purpose is only to get licence fees.

Regarding inventions, they are closely tied with the capacity to take risks. By that I mean that an inventor should be able to follow crazy useless ideas without risking to loose his job.
Nowadays private and public research alike do not take enough risk to invest time and money in uncertain projects which they know is not on the priority list of their decision makers.

IP may be good at assuring a rent after the invention, but does not assure that the inventor has a roof before that.

Nicola said...

My intention was to use communism to highlight it as an alternative to capitalism. I think the conclusion is that IP is an awkward fit to most economic system, although its emphasis on private ownership best suits capitalism. My favourite expression is calling IP the, "panda's thumb."

Completely agree that there are challenges in the R&D approach these days. There seems to be a push to do innovation on the cheap, which probably isn't a good strategy.

THE US anon said...

Have not read the link yet, but wanted to point out that the comment below the link earns the great lawyer answer of:

"It depends."

Referring to " a push to do innovation on the cheap, which probably isn't a good strategy" one manner of looking at this "on the cheap" is the notion of efficiency and maximization of resources. In that view, a push cannot be said to be conclusively "not a good strategy," and in fact is practically defined as being a good strategy.

Wasteful and inefficiency is NEVER good - and that notion applies fully to R&D. One of my pet peeves is the fact that Pharma employs a twisted logic of reinforcing poor R&D whenever they blindly trot out the argument of "expensive failures of their process." They habitually seek extra protections with the usual "justification" of the high cost of development, thereby shielding any (and all) inefficiencies in that selfsame development process.

I "get" that the process may be expensive - but when one remembers that competition of that expense applies to all players, that expense simply stops being a meaningful reason for extra protection. Instead of "cementing in" inefficiencies by shielding companies from bothering to come up with better (more efficient) development processes themselves (qua competition with each other), let the fallout of the market dynamics dictate who survives by rewarding those who evolve more efficient development processes.

We cannot let the subject (treatment of human illnesses) be used as some sort of "magic talisman" against the efficiency of the market. Every other market out there (in the patent sense, all other Art fields), employ the logic of protecting the innovation itself with a patent (and not shielding the tangential development process), by letting the market decide whether the fruits of that patent are realized - or not. The critical concept here is the nature of the patent itself: a negative right as opposed to some market positive right.

I do recognize some real differences with Pharma. Chief among them is the timing of payback. In almost all other art fields, the payback is achieved early in the life of the patent, and a real and substantial value evaluation must be completed at the third maintenance fee period (here in the US). There indeed may be some value left, but the level of that value (with the typical diminishing returns) is expressly built into the US fee structure to encourage early abandonment of a sizable portion of duly granted patent rights.

This is on purpose.

This is also opposite the typical pharma model.

The typical pharma model obtains its largest segment of payback AFTER that third maintenance fee payment timeframe. Thus, we see things like much more strident attempts to evergreen patent protection, as well as the attempts at "extra" protection (i.e. data exclusivity) with the aforementioned "justification" of an expensive (and inefficient) development system.

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