The Competitiveness of Nations
in a Global Knowledge-Based Economy
March 2003
Harry
Hillman Chartrand
The Labour
Theory of Knowledge & Its Corollary:
The Knowledge Theory of Capital
The Labour Theory
of Knowledge & Its Corollary
As we have seen, the labour theory of value maintained theoretical dominance from the time of Adam Smith to Karl Marx. In summary, the theory claimed the just price for a good or service was directly related to its labour input. Furthermore, the theory extended to define capital as embodying successive generations of labour leading to the current ‘state of the art’ by ‘round-about means of production’.
It was, however, rejected by mainstream or market economics in favour of a modified hedonic theory of exchange involving a stable equilibrium of constrained utility maximization by consumers and constrained profit maximization by firms. Rejection was based on, among other factors, the apparent empirical impossibility of quantifying the historical accretion of labour into capital (Dooley 2002). The proposed market solution, however, was heir to its own measurement problems centred on: How do you count utiles? Three compromises had to be made.
First, calculation was ordinal by level of preference (i.e., ranked 1st,
2nd, 3rd…) rather than cardinal (i.e., counted 5.3, 5.4, 5.5...). This innovation led to indifference curves
and geometric analysis of constrained maximization realizing the Euclidian
perfection demanded of ‘science’ by Descarte. Second, when Betham’s assumption of a technical means of
measuring utiles without intermediation by a human
subject then utiles were
reified as
money and dollar democracy was born. Third,
the definition of capital remained unresolved.
This was succinctly stated by T.K. Rymes of
Assuming circular causality, one would expect that faculties of knowledge
– Reason, Revelation, Sentiment and Sensation – to become socially institutionalized
as ‘knowledge domains’ of one form or another. This process I call ‘pragmatic
epistemology’. Nation states have in
fact created specialized funding agencies to foster and promote specific
domains. In
Such grant-giving councils are economic agents that direct public monies towards the development of new knowledge – both for its own sake as well as for its contribution to the economy. The decision by such councils of what institutions, programs, projects or individuals to support is generally made through peer evaluation including officer grants made by practionners in the service of the councils (Chartrand 1987). This grant-giving system by peer evaluation parallels the independent practice of peer review of articles before publication in disciplinary journals. Using the Canadian experience, I identify three primary knowledge domains:
· The Natural & Engineering Sciences (NES);
· The Humanities & Social Sciences (HSS); and,
· The Arts.
Each rises up like a mountain above the lowlands and valleys of the traditional industrial economy. Each has its own historical and institutional foundations; each reaches up to a summit of excellence - individual and institutional. In the NES and HSS, the traditional institutional peak is the university. In the Arts, it is the fine arts academy, museum, music conservatory and production company. It is in these artistic, cultural and scientific ‘ivory-towers’ that most new knowledge is created, collected, compiled, conserved and/or coalesced into a nation’s stock of knowledge capital. From these icy peaks rivers and streams of knowledge flow down winding circuitous paths or through channels deeply chiseled into the historical bedrock of each nation-state. In the valleys and lowlands the waters merge, mingle and mix to irrigate all sectors of a nation's economy.
In practice such knowledge becomes applied as technology in the original
Greek techne
meaning art and logos meaning reason,
that is, ‘reasoned art'’. The NES
generate physical technology, that is, how to manipulate the natural world. The HSS generate organization technology, that
is, how to manipulate the human-made world. The Arts generate aesthetic or design
technology, that is, how to manipulate the human heart and soul to achieve what
the Greeks called kosmos,
the right ordering of the multiple parts of the world.
Beyond the pragmatics of identifying knowledge domains with current institutional structures, the proposed trio accords with a traditional epistemology. From as early as Galileo, a traditional distinction has been made between the primary, secondary and tertiary elements of knowledge, or experience. Primary knowledge concerns facts or quantities such as size and extension in space, number, weight or mass, motion and time. These elements of knowledge are regarded as belonging to the ‘real’ or physical world. They are accessible to observation, experiment and measurement. This is the domain of the NES.
Secondary knowledge, or qualities, pertains to sensations such as colour, taste, smell and form as well as larger concatenations of these qualities. Qualities are held to exist only in the mind of the observer, i.e. they are produced by the perceiving mind out of physical experience; they do not exist in the objective world. Accordingly, even if qualities are real, they are not directly accessible to the scientific method (Sloane 1991). This is the domain of the Arts.
Tertiary knowledge, or values, are not perceivable from the outside world
but are rather innate ideas, divinely implanted or invented by the subjective
observer (
In what follows, I will outline the relationship between faculties of knowledge and their relative status in each domain using a concept derived from computer science involving the status of ‘drives’, i.e., devices that store information. In a desktop computer there is a Primary Master/Slave and a Secondary Master/Slave configuration, i.e., there is a Primary and a Secondary configuration in each of which a hard drive serves as master to, e.g., a CD-ROM slave. This concept will be used to identify the unique relationship of faculties of knowledge in each domain. I will then outline its nature and a brief history.
Before do so, however, some background about the role of the university
is in order. The self-governing university, i.e. independent of Church and State,
emerged in the Occident during the twelfth and thirteenth centuries of the common era. At its
beginnings, the university was an incorporated association of teachers, as in
Before long, scholars and students grouped themselves into faculties, according to the different branches of knowledge. The original branches of knowledge, or faculties, were based on the seven Liberal Arts consisting of the trivium (the three part curriculum: grammar, logic, rhetoric) and the quadrivium (the four part curriculum: geometry, arithmetic, astronomy, music). The practices of medicine and law were later admitted. Their ‘vocational’ status, however, made them somewhat distant from the main academic body. Not admitted, excepting medicine, were the Mechanical Arts of weaving, blacksmithing, war, navigation, agriculture, hunting, medicine, and the ars theatrica. From that time to the present, the university has enjoyed unparalleled social and political autonomy. This autonomy is reflected in tenure, i.e. lifelong appointment, justified to permit scholars to pursue their intellectual interests free from the threat of dismissal for unpopular political or religious views.
In general, and allowing for the gradual movement of the Humanists into the university, this pattern of curricula held until after the Scientific Revolution of the 17th century. Then the University was, in effect, reshuffled into two primary knowledge domains – Moral & Natural Philosophy – together with the practices of law, medicine and music.
In the late 18th century, a reorganization of the German
university system resulted in the physical sciences being formally recognized as
a distinct knowledge domain and the so-called ‘research university’ was born. This institutional innovation spread quickly
to the
The Social Sciences emerged out of Moral Philosophy beginning in the 19th and early 20th centuries. As this process matured, the Humanities coalesced as a distinct knowledge domain. Other than music, the Arts were not admitted until after the Second World War when faculties of fine arts including dance, drama and the visual arts were created. The university enjoys a near monopoly in the certification of, or degree granting to, students in all three knowledge domains.
Natural & Engineering Sciences
The NES assigns dominance to Reason with Sensation and Revelation subordinate and Sentiment suppressed. The primary master is Reason and the primary slave is Sensation; the secondary master is Revelation, the secondary slave, Sentiment. It is the Primary Master/Slave relationship: Reason/Sensation that characterizes the NES - quantity.
There are three primary natural science disciplines – biology, chemistry and physics. Each breaks out into an increasing range of sub-disciplines and cross-disciplines, e.g., biochemistry. In each there are distinct engineering specialties, e.g., chemical, genetic, mechanical and, electrical engineering. Concerning the proliferation of specialized NES sub-disciplines, Thomas Kuhn concluded:
… [o]ver time a diagram of
the evolution of scientific fields, specialties, and sub-specialties comes to
look strikingly like a layman’s diagram for a biological evolutionary
tree. Each of these fields has a
distinct lexicon, though the differences are local, occuring
only here and there. There is no lingua
franca capable of expressing, in its entirety, the content of them all or even
of any pair.” (Kuhn 1990, 7-8)
The peculiar relationship between Reason and Sensation in the NES represents a fundamental change from the ancient and medieval worlds. As we have seen, from ancient times there has been a schism between those who worked with their heads and those who worked with their hands. A first span across this gulf was laid in the Renaissance; an additional one was laid in the 16th and 17th centuries when the ‘experimental method’ of the high artisans and instrument makers seduced schoolmen and Humanists. This marriage of head and hand inaugurated modern ‘instrumental’ science (Zilsel 1940, 1941, 1945; Houghton 1941; Newman 1989). The spirit of playful fascination with new instruments and devices at this time is cleverly captured in Umberto Eco’s 1994 novel: The Island of the Day Before (Eco 1994).
This marriage of head and hand is known as the ‘Zilsel
Hypothesis’ in the history of science (Zilsel 1945). Two other hypotheses explain why it was in
It was Robert Boyle during the 1650s who placed the laws of the physical universe in stasis above and beyond the meddling of human and God (Jacob 1978). The act of Creation had, once and forever, established the Laws of Nature. Having set the machine in motion God withdrew and Nature became the legitimate object of the increasingly complex and disinterested machines of experimental natural philosophy. This separation of Nature from religion was, as will be seen below, preceded by the separation of politics from religion initiated by the Humanists in the 16th century, especially by Machiavelli (1469-1527).
It is interesting to note that Boyle’s personal physician, William Petty, wrote extensively about the labour theory of value. “For Petty, land and labour were the original source of all commodities: “Labour is the Father and active principle of Wealth, as Lands are the Mother” (Dooley 2002, 2).
Openness and exchange between head and hand, however, began to close almost immediately due to, among other things, the ‘Houghton Hypothesis’, i.e., the aristocratic influence of Cavalier ‘Virtuosi’ including one of the founders of the Royal Society, John Evelyn (Houghton 1942). By the Victorian Age the two worlds were sealed off again into their ancestral solitudes (Houghton 1952). It was at this time that vocational training in the English-speaking world became formalized in institutions of higher education called polytechnics created by the founders of the Industrial Revolution who, for religious reasons, could not attend the universities of the day.
The men responsible for technological innovations . .
. during the beginning of the Industrial Revolution were nonconformists who had
been excluded from the universities and learned their science indirectly while
pursuing their trade. In other words, the coupling between science and
technology was very loose and did not rely on the established system of higher
education. (Senate Special Committee 1970: 21)
The success of vocational institutions like the Manchester Polytechnic
resulted, in many cases, in their absorption or transformation into
universities. For example, the
Manchester Polytechnic became the
In the NES, Sensation is in the service of Reason. As with be seen below, this contrasts with the Arts in which Sensation is master and Sentiment slave. The contrast can be characterized as extroversion and introversion. In the case of the NES, Sensation is directed outward by Reason towards the external world. In the Arts, Sensation directs Sentiment inwards towards what James Hillman calls The Thoughts of the Heart (Hillman 1981).
The HSS assigns dominance to Sentiment with Reason and Revelation subordinate and Sensation suppressed. The primary master is Sentiment, the primary slave Reason; the secondary master is Revelation, the secondary slave Sensation. It is the Primary Master/Slave relationship: Sentiment/Reason that characterizes the HSS - values.
The Humanities or rather Humanists first appeared in
Unlike northern
Nonetheless the Humanists began serious investigations, some of which eventually entered the university, e.g., philology or ‘comparative linguistics’ that may be called the first ‘social’ science. While some Humanists attended university, originally they were not part of the university. Their natural environment was secular, not scholastic or religious. In effect, Humanist separated secular human life, especially politics, from religion, e.g., Machiavelli.
Humanism, based on the premise that Man, not God, was
the measure of all things, declined for three reasons. First, it was identified with the Republic
and when the political fortunes of
The modern social sciences began within Moral Philosophy where they continued until the 19th century. As noted by Kenneth Boulding:
Adam Smith, who has strong claim to being both the
Adam and the Smith of systematic economics, was a professor of moral philosophy
and it was at that forge that economics was made. Even when I was a student, economics was
still part of the moral sciences tripos at
Through the course of the 19th century the success of the NES led many
moral philosophers to adopt, as best they could, the methods of the apparently
more successful natural philosophers who were renamed ‘scientists’ in 1833 by
William Whewell (Snyder 2000). There were, however, two contrary tendencies.
The first was towards a unified single, social
science, e.g., the sociology of Comte. The
second was towards specialization. In
the end, the second triumphed. Today the
Social Sciences breakout into a very wide range of disciplines and
sub-disciplines funded by the Social Sciences & Humanities Research Council
of Canada including: administrative studies, archaeology, communications &
journalism, criminology, demographics, economics, education, geography,
industrial relations, information science, law, library science, political
science, psycholinguistics, psychology, recreology
& physical education, science policy, social work, sociology and urban
& regional studies (Chartrand 1980).
The Humanities and the Social Sciences share a common concern with human
values. Whether it is formal ethics or
the costs of monopoly power, both sub-domains use Reason in the service of
Sentiment. And in both, the pursuit of
fame has given way, as the primary Sentiment, to the contribution to knowledge.
The Arts assigns dominance to Sensation with Sentiment and Revelation subordinate and Reason suppressed. The primary master is Sensation, the primary slave Sentiment; the secondary master is Revelation, the secondary slave Reason. It is the Primary Master/Slave relationship: Sensation/Sentiment that characterizes the Arts - qualities.
The primacy assigned to Sensation by the Arts has troubled society from the very beginnings of western civilization. As Plato warned:
… we must remain firm in our conviction that hymns to the gods
and praise of famous men are the only poetry which ought to be admitted into
our State. For if you go beyond this and
allow the honeyed muse to enter, either in epic or lyric verse, not law and the
reason of mankind, which by common consent have ever been deemed best, but
pleasure and pain will be the rulers in our State (Plato, Book X, 1952:
433-434).
It is ironic that it was not Art but Economics, specifically Bentham’s hedonic calculus, that in the late 19th century made pleasure and pain “the rulers of our State”. Fear of Art was reinforced, not diminished, with the rise of Christianity. As one of the three great world religions subscribing to the Ten Commandments (Judaism and Islam being the other two), Christianity explicitly prohibits worship of ‘graven images’. Among all three ‘peoples of the book’, censorship of the image traces back to Moses and the Golden Calf. In the book (the meaning of the word - Bible), the Word is sacred but the image, at best, is profane and at worst is evil incarnate.
This metaphysic suppression was reinforced by the fact that what today we call the Arts were Mechanical, not Liberal. Other than ‘hymns to the gods and praise of famous men” the Arts were tasked by Aristotle with the imitation of Nature. By this criterion, until the Renaissance artist/engineer/humanist/scientist and their development of perspective, it was obvious that human-made Art was inherently inferior to Nature. Once the imitator successfully approximated the original (in appearance) the Arts, specifically the visual arts, attained a significantly higher social status and the visual artists attained celebrity. The godlike power of creating out of nothing began to be attributed to the visual artist initiating the Western cult of the genius.
Imitation continued to be the test until the late 18th century
when the Fine or Beaux Arts coalesced and were rationalized through the new
philosophy of aesthetics created by Baumgarten - his
new science of sensual knowledge to balance logic as the science of
intellectual knowledge (Kristeller 1952, 35). The word aesthetics itself derives from the
Greek aisthesis - the activity of perception or sensation - which at root means
“taking in” and “breathing in” - a “gasp”, the primary aesthetic response (Hillman 1981).
The successful imitation of Nature by the Arts combined with the success
of the NES in revealing her secrets led to what is known as “Querelle des Anciens et
des Modernes” or the battle of the Ancients and the Moderns. This marked the beginning of the 18th century
Enlightenment and the end of the Renaissance (Kristeller 1952, 19). Who are superior, the Ancients or the
Moderns? The answer -
the Moderns.
The primary but reversed position of Sensation - slave - in the NES and –
master - in the Arts serves to highlight four differences between these two
knowledge domains. First is the use of
concepts and precepts. In effect, Science
knows while Art does:
Whereas Art begins with desired effects and finds
causes to create these effects and no others, Science starts with presumed
causes and seeks effects to confirm or negate these causes. Art organizes
ignorance by precepts while Science organizes knowledge by concepts (Nevitt 1978, 7).
A second difference is that new knowledge in the Arts does not necessarily displace the old. Rather King Tut still sells; Shakespeare is still performed; Bach is played more today than in the 17th century. At the same time, Egalitarian Realism or poke-in-the-eye art as well as Mapplethorpe’s homo erotica photography and Andres Serrano’s ‘Piss Christ’ find an audience in spite of the Culture Wars of the 1980s and 1990s (Chartrand 1991). These correspond to the so-called ‘Science Wars’ during the same period (Fuller 2001).
Third, subject to Reason in the NES, Sensation is restricted to ‘what is’. In the Arts, Sensation is master and an avant garde has existed since the mid-19th century that seeks change for change sake; it seeks novelty (Scitovsky 1976). The Arts embody the impulse toward the new and original, a self-conscious search for future forms and sensations to the point that the idea of change and novelty overshadows the dimensions of actual change. The artist no longer, as in the past, affirms a moral-philosophic tradition but rather searches for a new sensibility, a search which society actively encourages. What is imagined in the mind of the artist today becomes the reality of tomorrow (Bell 1976: 33-35).
Fourth, the role of Reason as master in the NES made entry into the University relatively easy. In the case of the Arts, however, with the exception of music (due to its Pythagorean connection with mathematics) and literature (rhetoric and grammar), the Arts were not part of the ancient or medieval liberal arts curriculum (Cantor 1969: 66-67). The Arts were and still are considered ‘crafts’, i.e., they involve experiential learning. It was not until the Renaissance that the fine art academy was established as a formal center for visual art education. And this was done completely independent of the university (vom Busch 1985, 3). In theater and dance, there was no formal training in any English-speaking universities until the late 19th and early 20th centuries (Robinson 1982, 178-179, 191-192). The traditional independent status of the music conservatory within the University is further evidence of the separate institutional pattern of learning pursued in the Arts.
Today the Arts consist of four primary disciplines and their component
sub-disciplines including: the literary, media, performing and visual
arts. Each in turn operates in five
distinct functional areas including: the amateur, applied, entertainment, fine
and heritage arts (Chartrand 2000).
Knowledge flowing from the three domains (whether from the profit, nonprofit or public sectors) is abstract and intangible. It is not like a car or a house which can be locked and secured against theft. In economic terms, knowledge is non-excludable. Furthermore, if someone gains knowledge it does not reduce that available to others. In economic terms, knowledge is non-rivalrous. These characteristics run counter to the usual legal concept of property rights:
In the technical language of jural
relationships, Western law tends to ascribe to the possessor of the thing: (1)
the right to possess the thing with a duty in everyone else to stay off, (2)
the privilege of using the thing with no right in anyone else to prevent that
use (coupled with a right in the possessor to prevent others from using the
thing), (3) a power to transfer any or all the possessor’s rights, privileges,
powers, and immunities to anyone else (who would in the technical language be
described as liable to the exercise of the power), and (4) an immunity from
change by anyone of those same rights, privileges, and powers (so that everyone
else is disabled from changing them). (Donahue 2003)
If: (i) others cannot be excluded from access except by secrecy; and, (ii) use by others does not reduce the amount available to an owner; then how can knowledge be converted into economic property that can be bought and sold in markets?
There are two ways. First, as suggested, there is secrecy, i.e., hiding it and restricting its availability. The second is State sponsored intellectual property rights (Chartrand 1997, 1998, 2001).
Formal intellectual property rights (IPRs) such as copyrights, patents, registered industrial designs and trademarks, are created by the State as a protection of, and incentive to, creativity which otherwise could be used freely by others. In economic terms, without such legislated rights, knowledge suffers the free-rider problem. In return, the State expects creators to make their work available and that a market will be created in which such work can be bought and sold. But while the State wishes to encourage creativity, it does not want to foster harmful market power. Accordingly, it builds in limitations to the rights granted to the creator. Such limitations embrace both time and space. Rights are granted:
· for a fixed period of time, i.e., either for a specific number of years or for the life of the creator plus a fixed number of years; and,
· only for the fixation of creativity in material form, i.e., it is not ideas but rather their expression in material form (a matrix) that receives protection.
Eventually all intellectual property (all knowledge) enters the public
domain where it may be used by anyone - without charge or limitation. This public domain or ‘knowledge commons’
exhibits characteristics different to those of the physical commons, e.g.,
depletion of fish stocks. By nature and
by law, the public domain for knowledge tends to grow and increase. In fact, IPRs are primarily
justified as a way of increasing the public domain. Even during the period in which rights are in
force, there are exceptions such as ‘fair use’ or ‘fair dealing’ with respect
to copyright. In the case of patents,
national statutes and international conventions generally permit ‘research’ using
the patented product or process by profit, nonprofit and public agents. Governments also retain the authority to waive
all patent rights in “situations of national emergency or other circumstances
of extreme urgency…” (WTO/TRIPS 1994, Article 31b).
The evolution of IPRs has not been, however, as neat and simple as the above description may imply. Furthermore, enforcement is, relative to physical or tangible property, especially problematic.
Two years before publication of the Wealth
of Nations perhaps the most momentous decision in the modern history of
knowledge was reached in 1774 by the Law Lords of England in the case of Donaldson
v. Beckett: does an author have a natural and perpetual copyright? – No! (Chartrand 2000) This decision, however, did not reach the
rebelling colonies in
The transition from concepts of physical things to concepts of business assets, [that] could not be fully completed until the idea of ownership was shifted from the holding of physical things to the expectations of profit from the transactions of business. (Commons 1925, 275)
In the same year, 1774, across the
The Physiocratic theory of
economic policy is fundamentally related to a theory of property: state
relations in which private property is the dominant institutional form but
wherein the public interest is manifest in the continuing modification or
reconstitution of the bundle of rights that comprise private property at any
given time. (Samuels 1962, 161)
Thus the Physiocrats intended to ‘load the dice’
of the marketplace in order to raise the ‘commanding heights’ of the economy and
build up its strategic sectors, in their case, agriculture. They intended the conscious manipulation of
capitalist self-interest – accumulation of marketable property - to foster and
promote the economic growth and development of France - their Royaume Agricole.
Finally, the Physiocrats did not only view
property rights as instruments of economic policy, they viewed the entire
foundation of the economy – what is bought and sold, how and where – as legal
in nature and subject to public policy control and manipulation to further the
public good:
Thus did the Physiocrats
implicitly recognize that the basic economic institutions (the organization of
economy) are legal in character; that law is an instrument for the attainment
of economic objectives and that economy is an object of legal control. (Samuels 1962, 162)
The shift in the nature of business assets from tangible property to the expectation of making a profit combined with the manipulation of property rights as economic policy finds its most developed expression in intellectual property rights, i.e., the right to buy and sell knowledge. This includes patents and trade secrets:
The similar principle has been worked out in the law of patents and trade secrets. A secret process or invention, not yet given to the public nor patented, remains by operation of common law, the exclusive property of the inventor, and his secret cannot be wrested from him by fraud or communicated to or used by others through breach of confidence. Yet “whenever the inventor permits the invention to pass beyond the legally defined limits of his exclusive possession, his right to it ceases and the right of all mankind to it begins.”
In
other words, the old distinction between the possession of physical property
and liberty of contract becomes the distinction between the behavior of those
persons who are subject to command and obedience and the behavior of those
persons who are subject only to persuasion or coercion. “Economy” is the exclusive holding for one’s
own use, according to one’s own will, but the thing now held for one’s own use
is not a physical thing, the manuscript, nor even the printed book, nor the
physical objects embodying an invention, but is the behavior of persons over
whom the owner retains the power of command and obedience, since they are his
employees, agents, friends, who are bound to obey his commands in their use of
the manuscript, book, or secret process.
(Commons 1924, pp. 281-2)
In essence, the above applies in
The French Revolution was very different.
Essentially everything was swept away especially the law. Before the Revolution, Roman law governed in
the south of
The rationalizing tendencies of the French Revolution went much further than that of the American:
After the Revolution, codification became not only
possible but almost necessary. Powerful
control groups such as the manors and the guilds had been destroyed; the
secular power of the church had been suppressed; and the provinces had been transformed
into subdivisions of the new national state. The Napoleonic Code, therefore,
was founded on the premise that, for the first time in history, a purely
rational law should be created, free from all past prejudices and deriving its
content from “sublimated common sense”; its moral justification was to be found
not in ancient custom or monarchical paternalism but in its conformity to the
dictates of reason. (Encyclopedia Britannica 2003)
The result was the Napoleonic or Civil Code that came into force in
1804. It remains, in one form or
another, the dominant legal system in the non-English-speaking world including
Some commentators have suggested that, for practical purposes, a convergence is occurring between the two systems:
One of the striking results of this survey of property
law in the West has been to recognize the extent to which the differences
between the civil-law systems and the Anglo-American systems are not of great
practical significance. Despite substantial differences in the history of the
two systems - differences that are still manifest today in the different
vocabulary and different devices that the two systems use to solve legal
problems - it was frequently possible to say either that the two systems arrive
at the same practical result or that the practical results in the two systems
are converging. (Donahue 2003)
One significant difference between the two, however, is the rights of legal and natural persons. A nature person is a living human being; a legal person is a body corporate. The vast bulk of productive assets in First World countries are owned by fictitious legal persons such as corporations, companies, sociétés, Gesellschaften that are created under general incorporation statutes that allow such a ‘person’ to engage in a wide variety of profit making and charitable activities. In the most general terms, under the Anglo-American tradition legal and nature persons enjoy the same rights; under the Civil Code they enjoy different rights. It is with respect to knowledge - especially copyright in the Anglo-American tradition and author’s rights in the Civil Code tradition - that this difference is sharpest.
On the one hand, and in keeping with the ‘Cult of the
Genius’ (Woodmansee 1986), both share the sentiment
that:
…
intellectual property is, after all, the only absolute
possession in the world... The man who
brings out of nothingness some child of his thought has rights therein which
cannot belong to any other sort of property… (Chaffe 1945).
This focus on the individual as creator is even
reflected Article I, Section 8 of the U.S. Constitution, known as the “Intellectual
Property or Copyright Clause”, that states:
The Congress shall have Power . . . To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
On the other hand, under the Anglo-American tradition, all rights flowing from the creator’s work, i.e., from “the only absolute possession in the world”, are subject to contract and can be extinguished in the natural person and fully transferred to a legal person, i.e., a corporation. Under the Civil Code, however, a natural person, as creator, enjoys certain rights that are “inalienable, unattachable, impresciptible and unrenounceable” (Andean Community 1993). Such imprescriptable rights relate to the ‘personality’ that a natural person possesses but a legal person does not. In effect the American Revolution was not completed. Its eloquence in defense of the individual – all men are created equal – remains compromised by extending the rights of natural persons to bodies corporate that are, in Common Law, the very guilds and corporations of which Adam Smith was so concerned.
In the case of copyright, the Common Law adopted, with a shortening of duration and recognizing the author as the source, the customary bargains and business practices of the pre-existing printer’s copyright (Chartrand 2000). Put another way:
... The European edifice of author’s rights rests on two pillars: the author’s economic rights and moral rights. Economic rights allow the author to assign or license to others the right to use the work... and are the principle means by which an author reaps profit from the work. Moral rights grant the author continuing control over the work despite its exploitation... In this scheme of things, the author is front and centre stage; later exploiters and users of the work are secondary players and stand in the wings.
Anglo-American
law takes a more pragmatic approach to copyright. Copyright is essentially a
vehicle to propel works into the market: it is more an instrument of commerce
than of culture. It is geared more to
the media entrepreneur than the author.
It is ready to grant copyrights not just to authors but to secondary
users who add value to the work: record companies, broadcasters, movie studios,
and even printers... Unfair competition rather than authors’ rights seems to be
the guiding force behind copyright.
Whether rights should be extended to a work is more a question of
political pragmatism depending on the strength of a particular interest group
... In such a scheme, economic rights are emphasized: moral rights are unheard
of, save insofar as particular complaints can be slotted into some common law
theory or statute designed to prevent unfair competition. Unless an author has
retained some moral rights by contract, the assignment or licensing of the work
pro tanto terminates his or her involvement
with it (Vaver 1987: 82-83).
The clash between Civil Code author’s rights and
Anglo-American copyright fuel an ongoing controversy between the
Intellectual property rights do not protect ideas but rather their expression fixed in a tangible material form called a ‘matrix’. A matrix is a material in which something is enclosed or embedded. A tangible material form is something that, traditionally, could be seen, touched or otherwise perceived by a human being and, furthermore, it had to have some permanence. One last requirement is that any expression so fixed in a matrix be original. Four questions arise. First, why are ideas not protected? Second, what constitutes a matrix? Third, what constitutes perception of a matrix? Fourth, what is the function of a matrix relative to the knowledge embedded therein?
Justice Yates in his dissenting
opinion in the 1769 case of Millar v. Taylor laid out the argument of why
ideas can not be protected. This
argument was, in effect, accepted in the crucial 1774 decision in the
case of Donaldson v. Beckett (see above, Evolution):
Mr. Justice Yates had very clear and definite notions as to the limits of property, but a reference which he makes to the civil law throws a stronger light on his view of the whole subject than any of his direct reasoning. What the Institutes have to say relating to “wild animals,” he observes, “is very applicable to this case.” And he then proceeds to draw a comparison between these two singularly related subjects. Animals ferae naturae are yours “while they continue in your possession, but no longer. “ So those wild and volatile objects which we call ideas are yours as long as they are properly kenneled in the mind. Once unchain or publish them, and they “become incapable of being any longer a subject of property; all mankind are equally entitled to read them; and every reader becomes as fully possessed of all the ideas as the author himself ever was.” (Sedgwick 1879)
Ideas are therefore not the object of intellectual property rights because they are like wild animals that once free belong to no one and everyone at the same time, i.e., they are in the public domain. It is only their specific expression fixed in material form – commonly known as a work – that qualifies for protection.
What constitutes a matrix has proven problematic. Examples drawn from the recent history of
copyrights in
Examples concerning patents in the
In the case of genetic patents, the U.S. Patent Office denied patenting
of living material including genes until 1980.
At that time the Supreme Court in the Diamond v Chakrabarty
case reinterpreted the existing
law, i.e., there was no change in the law itself. The case involved a patent for a genetically
engineered microorganism that breaks down crude oil. The Court observed that Congress had the power
to limits such patents but by failing to legislate specifically about genetic
patents it had, in effect, allowed gene patenting. This landmark case set the stage for patenting,
at least in the U.S., of more complex life forms such as the Harvard mouse (a
patent for which was recently rejected by the Supreme Court of Canada). The
In the case of software patents, the Patent Office resisted patentability because computer programs were considered mathematical algorithms, not processes or machines. The Patent Office changed its policy in 1981 due to the case of Diamond v. Diehr in which the Supreme Court ordered the Office to grant a patent to an invention even though computer software was involved. The Court found the program was not just a mathematical algorithm but rather a process, specifically for molding rubber. The Patent Office continued to be troubled about distinguishing a computer program from an algorithm. In the 1990s the Federal Circuit Court tried to clarify the question by requiring that an invention be examined as a whole and finding that an invention using a computer to manipulate numbers representing concrete or real world phenomenon is a process relating to tangible material forms and is patentable. In 1996 the Patent Office adopted its Final Computer Related Examination Guidelines making a computer related invention patentable if the program is used in connection with a specific machine or product. (Beck & Tysver 2000).
What constitutes perception of a matrix?
As demonstrated above, a matrix originally needed to be perceptible by a human being, particularly by sight. The law, being inherently conservative, traditionally concluded that if the matrix was not perceptible then it was not possible to assess the other requirements for protection, e.g., originality, non-obviousness, usefulness, etc. In the case of ephemeral displays on a television or computer screen prior to 1987 in Canada, an electron might be a part of the physical world but if a lawyer could not see, touch or otherwise perceive it then it had no legal standing as a matrix (Keyes & Brunet 1977, 129).
Over time, but especially in the last quarter century, the role of instrumentation in extending the human senses has been accepted. The implication is that there is no longer any microscopic (or macroscopic) legal limit to intellectual property being fixed in material form, only a technical one.
What is the function of a matrix?
Relative to the knowledge embedded within it, the question arises as to what is the function of a matrix? Essentially a matrix can have one of three functions – utilitarian, non-utilitarian and personal. These can be used to order intellectual property rights into corresponding generic categories.
In the case of designs and patents, the matrix is utilitarian. Thus an industrial design impresses aesthetic value onto a matrix that is useful in its own right – a decorated coffee cup remains a coffee cup. A patent, on the other hand, impresses utilitarian function or ‘usefulness’ into matter itself – an electromagnetic door jam is a new type of door jam. To repeat the definition used by the U.S. Supreme Court in Diamond v Chakrabarty (above), manufacture means: “the production of articles for use from raw materials prepared by giving to these materials new forms, qualities, properties, or combinations whether by hand labor or by machinery.”
In the case of copyright and trademarks, the matrix is non-utilitarian. Thus a copyright protects expression fixed in a matrix that has no inherent utilitarian value, e.g., a book makes a second rate door jam. Similarly, trademarks (and marks or origin) embody the ‘identity’ of a company, business, district or government. Like copyright the matrix on which a trademark is embedded or fixed has no intrinsic value. Unlike copyright, however, a trademark impresses ‘good will’ earned by a business or government department or agency from citizens, clients, customers and/or the general public.
In the case of ‘know-how’ and trade secrets (the least well defined forms of intellectual property rights), the matrix is personal, i.e., knowledge is fixed in either a natural or a legal person. Know-how is essentially experiential in nature. In this sense it is like the Arts. Only a human being can have experience and hence know-how is fixed in a natural person. As will be demonstrated (below, Tacit Knowledge), such experience can, through a master/apprentice relationship, be transferred from one person to another by demonstration and practice but it cannot usually be formally articulated (see below: Codified Knowledge).
In the case of trade secrets, knowledge may be fixed in either a natural or a legal person. A trade secret, using the metaphor of Justice Yates (above), is a caged animal - ferae naturae. The cage is the contractual confidentiality provisions used by legal persons to bind employees and other agents to secrecy. It should be noted that not every country has formalized know-how and trade secrets as intellectual property rights through statute. However, some more recent international conventions do formally recognize and protect trade secrets and know-how, e.g., the Common Industrial Property Regime of the Andean Community and the WTO Agreement on Trade-Related Intellectual Property and Services (TRIPS) (Chartrand 2001).
The commercial nature of industrial designs, patents and trademarks also place them in a distinct legal category called ‘industrial property’, the subject of the first international intellectual property rights convention, the Paris Convention for the Protection of Industrial Property of 1883 (Chartrand 2001). The non-utilitarian nature of copyright, by contrast, is recognized in a separate set of international conventions beginning with the Berne Convention for the Protection of Literary and Artistic Works of 1886 (Chartrand 1998). The difference was summed up by Keyes and Brunet in the following manner:
Though copyright is expressed in terms of property, it is not directly analogous to industrial property (patents, trademarks and industrial designs), where the major concern is with the circulation of goods that have economic value apart from their intellectual content. As it deals with purely intellectual matter, c