Innocuous Innovation - The Rise of the Maintainers

Combine the Global Financial Crisis, Occupy Wall Street, and now the Panama Papers, and there is a revolution at foot in economic thought.  In the last decade, we have seen the failure of macroeconomic models, un-precedented government policy to stimulate the economy, and a tax system which supports the widening gap between rich and poor.  The failings of economic theory laid bare.  The next puppy up for drowning might be innovation.

"Entire societies have come to talk about innovation as if it were an inherently desirable value, like love, fraternity, courage, beauty, dignity, or responsibility. Innovation-speak worships at the altar of change, but it rarely asks who benefits, to what end?" Lee Vinsel & Andrew Russell

Something is in the air.  If the winds blows away from innovation, then the privileged position of IP in public discourse could be compromised.  As I'm constantly banging on, economists and governments view IP as a means to stimulate innovation.  The core argument in favour of innovation is better.  It takes a few steps to get from innovation to better.  The current argument is that better is a higher standard of living, which comes from economic growth, which is spurred by productivity, and the best way to increase productivity is through innovation.

What's wrong with this picture?

There are a number of problems with this logic.  First, is better really a higher standard of living? Not necessarily.  We quickly adjust to higher standards of living. They may provide a temporary increase in happiness, but once the buzz is over, we return to our baseline happiness. Have a think about your computer.  In the 80's, I was happy to spend 15 minutes booting up a Commodore 64 with cartridges so I could play Space Invaders.  Now I'm annoyed if my laptop takes more than 30 seconds to wake up. Even in health care, our expectations rise with standards.

Second, economic growth may not be the best measurement of higher living standards. If more doesn't make us happy, then why focus on more? The past decades of rapid technological innovation have been accompanied by a rise in inequality. The tech industry, a hotbed of innovation, is anything but diverse and is disproportionately benefitting the privileged few.   Other economic growth consequences include increased pollution, diseases of affluence (e.g. obesity) and longer working hours.  Standard measures of growth don't capture these.

How to grow economies
Third, there is an interesting discussion starting in productivity, which roughly measures economic efficiency. Austerity measures, in which governments reduce their spending in response to poor economic performance, are popular at the moment. (Never mind that the most influential economic paper which set out the case for austerity turned out to have a fatal spreadsheet error uncovered by a student.) These measures don't seem to be working and governments are quick to blame productivity. Economist Geoff Tily recently raised this point and suggests that we shouldn't be focusing on productivity, which is on the supply side of the economy, but on demand. Austerity has reduced demand and productivity is merely the scapegoat for lack of growth.  But if productivity, which improves with innovation, isn't the problem behind economic growth, does the whole argument fall apart?

A fourth attack is the idea that it's not innovation, but maintenance that is key to the economy. Vinsel and Russell argue that innovation has become a meaningless buzzword and that instead, we should focus on work performed by maintainers.  It's not innovation that keeps the wheels turning, but, "how the human-built world is maintained and sustained—so often by unnamed, unseen, and underpaid labor."  The focus on technology and innovation, which increases inequality and has questionable growth impacts, ignores that the real work is more mundane maintenance. They argue for more balanced social and policy approaches that recognises this.

What this means for IP
Collectively, these arguments chip away at our innovation obsession.  If it becomes accepted that productivity is not the problem, and/or if policy focuses more on maintenance, then innovation will no longer be at the forefront of economics and policy.  The basis of IP as policy has been innovation and its economic impacts.  Losing this core argument would compromise IP's cherished position in public discourse in developed economies. A loss of popularity, and IP becomes a economic, legal and political backwater. [Merpel has been reading her tea leaves, which have not picked up this vibe.]

A second impact could be that we need to rethink our justifications for IP.  For economics, innovation may only be part of the IP puzzle.  This is already a discussion in trade marks (and here) and TK, where innovation and growth arguments are not a good fit. Further economic justification could be found in concepts of utility, or even, gasp, fairness. For the legal discipline, which has maintained a healthy scepticism towards economic and innovation theories of IP, perhaps this is less disturbing.

Your Katonomist is not entirely swayed by these arguments, but she is sympathetic to some of these points.  She senses the beginnings of a (perhaps long overdue) change in economic thought.  At the very minimum, this emerging critique of innovation and productivity should encourage our IP community to critically re-visit our core beliefs.

A Kat pat to the anonymous economist who pointed me to Tily's productivity article.

Interested readers may enjoy the below video from Professor John Reenen at the LSE, who also researches IP (e.g. patents & home bias and patents and firm performance). Filmed in 2013, he explains how innovation, human capital and infrastructure should be the focus of growth policies.