“money and fame can follow from gold medals, but only as a by-product.”

C’mon. Couldn’t that be the primary motivation? That and the prospect of getting an income in the run-up to the games to train full-time out of lottery funds and by sponsors. By accounts in the news, gold medal winners stand to attract an income of up to £5m over the next few years from lucrative advertising contracts and modelling with the possibility of later media work as expert commentators.

Try this: “When Great Britain went to Beijing, the team benefited from £235m investment in training programmes in the years running up to the Olympics – that’s a fourfold increase on what was spent [in the run up to Athens],” says Prof David Forrest, a sports economist at the University of Salford.

“We spent an extra £165m and got 17 more medals, so that’s about £10m a medal.”
http://www.bbc.co.uk/news/business-19144983

Contrast that with the cuts in spending on healthcare 2011/12:

“Although one of the coalition’s fist big policy announcements was to declare that mental health ought to have ‘parity with physical health in the NHS’, investment in mental health for working-age adults dropped by 1%, once inflation is taken into account, to £6.63bn. For the elderly the recorded fall in real terms spending was 3.1% to £2.83bn.

“In total, spending on mental health services in England dropped by £150m, the first fall since 2001. However this drop comes after a decade of rising investment: in 2001 just £4.1bn was spent on working-age adults mental health.” [Guardian website 7 August]

You don’t have a clue what capitalism is. Capitalism is a means of arranging the economy, not of promoting values.

Capitalism makes no preference between pursuing internal or external aims as you define. It just doesn’t force anyone to sacrifice external gains for what you define as worthy internal gains.

If people want to spend their time so they can get money to spend on beer and tv then they are free to do so. If they want to pursue athletic greatness they are free to do so as well.

CEO’s get more money than cleaners because society at large believes fewer people have the qualifications to be a CEO, and that it is a harder job, than being a cleaner. It’s not a value judgment about whether it’s better to be an excellent cleaner or a crap CEO.

You just seem deeply confused about what capitalism actually is.

No.

Agree with your basic message. Although the Olympics are competitive, there are clearly aspects that are egalitarian, internationalist and healthy in all senses. What has disappointed me is that it’s become clear from various message boards that some of my fellow left wingers are so much on ‘protest autopilot’ that they can’t see a good thing when it’s in front of them.

What? Are you insane. Aside from the points made above, most of the athletes are complete corporate shills, hawking products for numerous global companies. Even the commentators, like Steve Redgrave are at it, whoring for visa (see Private Eye). A capitalist’s dream.

We’ve come a long way from the likes of true greats like Ed Moses (122 races unbeaten in nearly ten years which will never be beaten) and Miruts Yifter.

Possibly the most pretentious twaddle I’ve read on here.

It took me a while to understand Chris’s argument (and I do not claim to follow all of it), but it is undeniable that Olympic participants are outsiders. They’ve made a life choice that denies them a place on the standard statistical plot. If you were analysing minorities, they might be hard to spot in a small sample.

Capitalism (as defined by Chris) is organised around delivering the requirements of ordinary BY ordinary people. Most of the time, that is what happens in life: my supermarket loaf of bread is ordinary, delivered by a process that ensures it is ordinary.

Markets mean that, as a discerning consumer, I can buy a different loaf that is not ordinary. I’m not sure how markets apply to workers: as a consumer, I can pick from loads of bakeries; it’s a bit trickier if I am a baker looking for a new job.

For the consumer, the local choice is between 100 loaves; for the baker, the local choice is between three employers. And how do you demonstrate your brilliance as a baker when the three employers only want to to pump out standard product?

@5. Ted Maul: “What? Are you insane.”

You missed the question mark on the final one, Ted.

Is Chris Dillow insane? The bloke is bonkers, plain awkward and profoundly ignorant on occasions. I wrote those ugly words with my tongue in cheek. Chris Dillow’s writing makes me smile, and I will always find a point with which to disagree. He made it that way for my pleasure.

Nope. Didn’t get that at all.

£9billion says the Olympics was a commercial exercise rather than athletic.

“And how do you demonstrate your brilliance as a baker when the three employers only want to to pump out standard product?”

Make and sell your own brilliant product?

‘Capitalism is a means of arranging the economy, not of promoting values.’

I agree with the first part of your sentence but not the last bit, – everything we do is surrounded by some value judgement, we do not operate in a vacuum. And this is the case for the Olympics, they are operating within specific cultural and social values of which we cannot escape.

@ 9 RichardT

“Make and sell your own brilliant product?”

A good idea in principle, but those other three bakers, who have more money than you, are going to sell below cost until they drive you out of business, then put their prices up again once you’ve gone bankrupt.

There’s this myth that capitalism means “may the best man win”. Its real-world effect is more like “let the man with the biggest stick win”.

@ Stephen W.
You say “Capitalism is a means of arranging the economy, not of promoting values.”
Capitalism might not intend to promote particular values. But all systems have unintended effects, one of which is to promote particular values. Saying this is not a leftie point; it’s one made by Deirdre McCloskey. (And I agree with her that some of the values promoted by capitalism are good ones.)
You say that capitalism “doesn’t force anyone to sacrifice external gains.” I agree, it doesn’t. But I’m not talking about force, but about incentives. Capitalist incentives often favour mediocrity over excellence. Again, my point is not a leftie one – it’s the standard “incentives matter” line.
I chose Anna Watkins as an example for a good reason; she’s working towards a maths PhD, and would be much richer had she become a mediocre quants trader than an excellent rower. She chose to follow non-monetary rewards, but those are non-capitalist incentives.
Note that I’m NOT saying here that the pursuit of excellence is necessarily a good thing; there’s much to be said for routine mediocrity, not least that it gives us our daily bread.
And – for the benefit of any mentally retarded right-libertarians – note that I’m not defining capitalism here as a free market economy (though some of my points apply to that too), but to actually-existing corporate capitalism, which in some respects sharpens the incentives operating against excellence.

“but those other three bakers, who have more money than you, are going to sell below cost until they drive you out of business, then put their prices up again once you’ve gone bankrupt.”

So we’re assuming that all markets are robust oligolopies with crippling entry barriers.

And yet, new entrants seem to appear and thrive with some regularity.

“let the man with the biggest stick win”

Which explains why Britain retains its dominant place in world shipping, IBM mainframes rule the world, etc. etc.

By this estimate from CEBR of the overall loss from staging the London Olympics, the games have definitively been anti-capitalist:

“Some of the elements in the cost benefit balance sheet are coming together. The net direct costs are roughly what the (revised) budget came up with – around £10bn. There are some offsets from ticket sales but these seem to have been more than cancelled out by lost tourism revenue. There has probably been a further loss of productivity from people not coming in to work and some timing effects from people taking holidays during the Olympics. Our rough estimate is that there is also a net long term GDP loss of £1bn. So taking the two together, the costs will probably pan out at around £11bn.”
http://hereisthecity.com/2012/08/11/forecasting-eye-the-olympic-balance-sheet-it-cost-11-billion-but/

I chose Anna Watkins as an example for a good reason; she’s working towards a maths PhD, and would be much richer had she become a mediocre quants trader than an excellent rower. She chose to follow non-monetary rewards, but those are non-capitalist incentives.

Man discovers human diversity. Mistakes it for anti-capitalism. Not being funny, but where have you been that you’ve forgotten that people have dreams that they want to achieve? Can ye neh recall wanting to be a fireman or astronaut as a child?

Besides, from the sounds of it she can be a mediocre quants trader after she retires from being an excellent rower, the retirement age for athletes is usually much much younger than more sedate boring professions.

With the London Olympics, we are evidently into yet another case of where the gains are privatized while the costs (as @14 above) are mostly nationalised – try this in Saturday’s FT:

Champions on track to a golden future
http://www.ft.com/cms/s/0/f8da6c14-e30d-11e1-bf02-00144feab49a.html#axzz23F5nQ3yV

On the other hand you could argue that the Olympics exemplify the Situationist concept of the society of the spectacle – you are allowed the role of onlooker, but not of participant. That latter is for the elite – the athletes, or the political class – but ordinary people are permitted no agency, no scope to influence events and determine the conditions under which they must live.

As far as it can manage, capitalism seeks to exclude ordinary people from any meaningful role in shaping the society they live in, and most of all it makes every effort to exclude them from any possibility of redistributing wealth and power. To which end occasional super-spectacles like the Olympics have a useful role to play in papering over the yawning cracks in a class-based society with a spurious sense of national unity.

@ 13 Richard T

“So we’re assuming that all markets are robust oligolopies with crippling entry barriers. ”

Not all of them, no. And in reality, not the bread market. But I assumed the “three bakers” scenario was a metaphor for a more general trend.

The point is that capitalism is often claimed to work in such a way as to 100% reward people for offering good products (higher quality, better value, whatever), and that this is simply wrong because of things like entry barriers and monopolies. Having a good product IS an important factor in market success, but so is the sheer power of having lots of money.

Back in the 16-bit era there was a videogame console called Turbografx. One of the reasons that the product failed was that Nintendo, its chief competitor, refused to work with game developers who produced games for Turbografx. As Nintendo was the larger company, many developers wouldn’t take the risk. That’s a good example of a company succeeding in the market by flexing its muscles rather than making more competitive products.

“And yet, new entrants seem to appear and thrive with some regularity.”

Sure. Others fail. I’d be interested to see a study into just how much better than the competition a start-up needs to be to supplant a rival that has first-mover advantage, or just more advertising funds.

“Which explains why Britain retains its dominant place in world shipping, IBM mainframes rule the world, etc. etc.”

Sigh. It’s not a choice between “markets are perfectly competitive” and “markets are not at all competitive”. There’s such a thing as middle-ground. .

So the Olympics are non-Capitalist. That I would accept, being a major sporting and cultural event, not an economic summit. They’re certainly not anti-capitalist, given the ethic of competition and reward, not to mention the vast sums of money involved.

“I chose Anna Watkins as an example for a good reason; she’s working towards a maths PhD, and would be much richer had she become a mediocre quants trader than an excellent rower. She chose to follow non-monetary rewards, but those are non-capitalist incentives.”

Right. But you’re confusing what capitalism is again. Capitalism in no sense demands that people pursue money, or defines what things people think should be worth a lot of money. It just leaves people the option. The fact is that most people choose to pursue money, seeing as how people like nice things, and there’s enough riding on being a quants trader to make it better rewarded than a professional runnner or rower or whatever. But that’s just because people value quants trading above rowing. If everyone valued rowing, then rowers would be millionaires. See football.

There’s nothing un-capitalist or anti-capitalist about it. If you choose to take up a poorly rewarded profession then you get poorly rewarded. It’s not uncapitalist to do so. It might be non-capitalist, in the sense that you’re making your decisions for reasons other than monetary reward. But that’s not anti-capitalist in the sense of being opposed to capitalism in any way. It’s just part and parcel of the system and a choice you make.

19

I’m not sure that competition and reward in the sporting arena is specifically capitalist, competative tournaments in the mediaeval period and before were quite common.

I would suggest that having to purchase seats to watch the events, or alternatively a t.v. or computer in order to view differentiates today’s olympics as consummersist, and therefore, capitalist.

Talk about the privatization of the gains from the London Olympics, I previously forgot to mention this news report from back in January 2008:

The full scale of the bumper salaries being paid to London 2012 Olympic chiefs has been revealed.

Senior executives at the Olympic Delivery Authority are being paid up to £110,000 each more than previously thought. Seven have salaries in excess of £200,000, more than Gordon Brown, who earns £188,848 etc etc
http://www.standard.co.uk/news/amazing-2012-gravy-train-6655421.html

The froth about the medals won by Team GB has fortuitously distracted attention from this unwelcome news which surfaced during the Olympics:

“The UK’s trade gap widened sharply in June, to its worst level since comparable records began in 1997.

“The deficit, which measures how much imported goods and services exceed exports, rose to £4.3bn in June from £2.7bn in May.

“The rise was driven by a 4.6% month-on-month fall in the value of UK exports to eurozone and non-European Union countries.” [BBC website 9 August 2012]

I’ve no doubt whether that or the collection of medals is going to have greater impact on the well-being of most of those hard working ordinary folk after the games are over.

As for a policy of changing the National Curriculum for Schools to include compulsory competitive team sports in primary schools to capitlaise on the legacy from the games, I’m more worried about the downstream consequences of this news report in the FT in August 2010:

“The National Curriculum test results also revealed that in spite of an improvement in English and maths, more than a third of pupils still left primary school without a proper grasp of the basics in reading, writing and maths.”

Don’t agree with much of the article.

” In this sense, though, Olympians are rare, because most other people pursue the external goods of money, power and fame. ”

Most people do not pursue anything external. What they do is pursue their own personal utility and a by-product of that pursuit of self-interest can be money, power and fame.

Why does someone dedicate years of their life to become a world class rower and not a quant trader earning more money?

It is not for the love of sport.

It is not to win medals for the geographical area where they were born.

It is not because they are anti-capitalist.

It is because they gain more utility from doing that compared to their alternatives. They gain more utility from being a rower than the money they may have to forgo.

I think confusion arises because people always want to invent higher motives for others when they see them do unusual things. The pursuit of utility is self-interest and our betters tell us that is wrong. Therefore, we get a load of tripe spoken about sports persons motivated by altruism. As an altruism sceptic, I am unconvinced that any sports person is ever motivated by anything other than the pursuit of their own utility. The person who gives the hungry beggar a tenner is not motivated by altruism. They gain more utility from the smug satisfaction than the tenner is worth to them. The person who sells all their goods and goes to work amongst the poor in the developing world gains more in utility than they lose in the cost of doing just that. Athletes are neither capitalist or anti-capitalist they are just human and motivated by the same utility maximising as everyone else.

How elite sports like the Olympics operate is pretty much how markets operate. Good ideas are new information and are absorbed through copying which disperses the new information. Bad ways of competing do not win medals so they are discarded in favour of the good ideas which rise to the top because they are superior to the inferior technique. For an example see Dick Fosbury.http://en.wikipedia.org/wiki/Fosbury_Flop

Everyone jumped the high jump a certain way until he came up with a superior technique. Copying the new information was the mechanism to make inefficient ideas redundant.

Capitalist markets are like Olympic sports by constantly testing new ideas and discarding ideas that do not work. If your competitors come up with new production or administration ideas and you conservatively resist they will drive you out of business. Therefore, there is a tendency for the most efficient ideas to be dispersed through copying.

The argument for markets is not that they always get everything right. Moreover, big company bureaucracy will not be anymore efficient than a local authority bureaucracy. However, competitive pressure processes forces a dispersal of good new knowledge and eventually drives out the old. In contrast, statist organisations have very little incentive to adopt new practices and will usually resist anything that threatens to make them obsolete. In some cases we would quite like public servants to be hesitant before accepting change. It would not do for heart transplant surgeons to be easily swayed by changed that had not been rigorously tested. Valid points about public sector organisations are not about they are full of bad people or paid too much. On the whole they are usually overmanned, which can lead to undermanning in some sections and gross overmanning in others, with little incentives to put it right.

The Olympics and sport in general is a perfect example to me how markets or capitalism seeks to do things better through learning from others.

Richard W overlooked to mention a feature of capitalist markets which Adam Smith noticed. With fraud and insider trading, price-fixing and other measures to evade competition has been abundantly manifested in capitalist markets in recent years:

“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies, much less to render them necessary.”
From Adam Smith: The Wealth of Nations; (1776), Book 1, Chapter 10, Part 2

I’m not sure that there are parallels in the Olympic Games now that performance-enhancing drug-taking has been suppressed by random testing but we have seen the fixing of cricket matches to win bets.

Younger readers here may not be aware of the history of the scale of state drugging of athletes in East Germany (German Democratic Republic) in order to win medals in international sporting events. Try this: Doping in East Germany
http://en.wikipedia.org/wiki/Doping_in_East_Germany

The motivation for these officially sanctioned doping practices to achieve excellent sporting performances is still far from clear but exhibitions of sporting prowess seem to be a regular feature of totalitarian regimes.

Copying the new information was the mechanism to make inefficient ideas redundant.

Capitalist markets are like Olympic sports by constantly testing new ideas and discarding ideas that do not work. If your competitors come up with new production or administration ideas and you conservatively resist they will drive you out of business. Therefore, there is a tendency for the most efficient ideas to be dispersed through copying.

The internet called that plagiarism when Johann Hari did that…

Also patents and copyrights impede this process. They should be scrapped immediately.

Quite an interesting post.

Do the Olympics celebrate capitalism, or liberalism? Is there a difference?

Personally, I’m not sure if there is.

Capitalism relates to private ownership of the means of production etc and the means for allocating resources between competing uses while liberalism relates to a political ideology which emphasises the importance of protecting personal liberty. A thoroughly illiberal government may preside over a capitalist economy.

The Olympic Games have been staged in countries with oppressive, totalitarian regimes – such as Nazi Germany in 1936: opinions are divided on whether the economy there was run on socialist lines or not.

Leni Riefenstahl made a famous film of the 1936 Berlin Olympics:
http://www.youtube.com/watch?v=aLkBhux3f9c&feature=relmfu

That’s one approach, but it’s narrow. Liberalism is a historical phenomenon coincident with capitalism. Can you assign historical events so that one is caused by capitalism and another by liberalism? I don’t imagine that in practice you can.

vimothy: “Liberalism is a historical phenomenon coincident with capitalism.”

I doubt that claim is accepted by historians.

Economic history texts for Britain report that by 1500, half the land in England was already enclosed. Historians estimate that the Black Death plague of 1348- killed off about a third of the population so labourers to work the lands of their feudal overlords (which could be monasteries) became very scarce – some villages were entirely depopulated and fell to ruin.

This boosted development of a cash economy as labourers were placed to respond to opportunities to improve their status. Wages rose in response to the unsatisfied demand for workers. The Statute of Labourers was a law enacted by the English parliament under King Edward III in 1351 in a vain attempt to control rising wages. We can see in this the beginnings of market capitalism but government of the time was by no means “liberal”.

The consensus is that the industrial revolution started sometime towards the end of the 18th century – following an earlier agrarian revolution – but the first Reform Act to correct some of the many anomalies in the franchise wasn’t until 1832. There is no general statistical evidence showing that the timing or pace of economic development depends on democratic or liberal government.

We shouldn’t confuse liberalism with deregulation of markets. Authoritarian government may reduce market uncertainty by ensuring greater protection of property rights than democratic government thereby creating a business environment more conducive to investment by capitalists.

@ 25 Cylux

“Also patents and copyrights impede this process. They should be scrapped immediately.”

Scrap patents and you lose a lot of innovation. We’d be screwed for new medicines, for a start. Developing a medicine and getting it regulatory approval costs something in the area of a billion dollars. Why would you put that money in if you get no advantage over competitors for your troubles? Why would you invest even a million bucks?

Similarly, what with the internet and everything, authors of novels would make about three quid from their work.

We’d be screwed for new medicines, for a start. Developing a medicine and getting it regulatory approval costs something in the area of a billion dollars. Why would you put that money in if you get no advantage over competitors for your troubles?

That is why cheap generic medicines are illegal here yes. We must pay for brand names or else.
Plus I understand history has been rewritten regarding Jonas Salk, apparently he didn’t refuse to patent his polio vaccine for moral reasons despite his question of ‘would you patent the Sun?’ implying otherwise, no, allegedly it couldn’t be patented because of prior art. The fact that I found this information from a bio-tech lobby group’s page is, I’m sure, completely unrelated to any questions as to its veracity.

‘Do the Olympics celebrate capitalism, or liberalism?’

The idea of the Olympics first emerged in the 8th century in Greece, when most western countries were in the dark ages and ruled by absolute monarchs. Both liberalism and capitalism were somewhat later.

@30 Chaise: “Scrap patents and you lose a lot of innovation. We’d be screwed for new medicines, for a start. Developing a medicine and getting it regulatory approval costs something in the area of a billion dollars.”

The overall social costs and benefits of closing down or restricting the life or scope of patents and copyright are contentious and depend on the balance between benefits and costs.

Not all innovation is socially worthwhile and there are social costs from restricting competition or from holding back the course of technical development – note how often IT companies have engaged in patent exchanges. Some companies choose to avoid the costs of patenting and rely instead on first-mover advantages in launching new products or to protect process innovations.

Try this on the non-patenting of Penicillin and the Salk vaccine for polio: http://archive.mises.org/5216/patent-and-penicillin/

Btw Jenner didn’t patent his discovery of a vaccine to protect against smallpox c. 1795 and smallpox has by now been eradicated.

In the news, Cameron has made the shrewd move of appointing Lord Coe as the Olympics legacy ambassador. Also in the news is the announcement of an annual grant of £125m for “elite sports” from lottery funds and the Treasury, which hopefully puts a cap on it.

“UK Sport guaranteed £500m over next four years, while PM appoints Lord Coe as ‘legacy ambassador’ for Games”
http://www.guardian.co.uk/sport/2012/aug/12/david-cameron-extends-olympic-funding?newsfeed=true

There really are more important priorities: “Just one in six pupils in England has achieved the new English Baccalaureate introduced by the government, England’s league tables show.” [BBC website January 2011]

Chaise Guevara says: “Good idea in principle, but those other three bakers, who have more money than you, are going to sell below cost until they drive you out of business, then put their prices up again once you’ve gone bankrupt.”

… and has chosen a spectacularly bad example to illustrate a generally bad point.

The part of London where I live (not Islington) is very well served by large supermarkets and in particular by the smaller high-street versions of the same chains. Yet there is a thriving small chain (3 shops I think) specialist bakery and another specialist bakery all making good sales. The supermarkets ignore them. They don’t aggressively drive them out of business. They don’t even compete with these guys.

Their competion in the bakery line is the small old-fashioned independant, which makes a comparable and probably inferior product to the supermarket’s in-store bakery at a higher price, and does’nt deserve to survive.

This in an area with lots of estates and just the odd pocket of the bruschetta-munching crowd.

There are lots of similar examples from other markets – cycle making for a start. Or brewing – what happened for instance when Watneys introduced Red Barrel? The Campaign for Real Ale happened, that’s what, and the consequent revival of small breweries all over the country. That’s still going on.

The fact is that ‘the market’ knows quality and will choose it when it can, much to the chagrin of people like the food chemists and accountants at Watneys who came up with a crap beer, and also to the confusion of the practitioners of Marxism of the vulgar variety.

Cast off the old clunking cliches Chaise old mate.

Bob,

Have you ever thought of writing for Wikipedia?

@ 35 Julian

“Chaise Guevara says: “Good idea in principle, but those other three bakers, who have more money than you, are going to sell below cost until they drive you out of business, then put their prices up again once you’ve gone bankrupt.”

… and has chosen a spectacularly bad example to illustrate a generally bad point. ”

Yes… except that I didn’t choose the example, and I’ve already said I don’t think this actually applies to the bread market, and that I assume that the “three bakers” scenario was a metaphor for a more general trend.

Do keep up.

I provided a real-world example @18 of a company killing the competition not by quality, but by sheer clout. Did you decide it was easier to take a metaphor literally than to address an actual example?

“The fact is that ‘the market’ knows quality and will choose it when it can, much to the chagrin of people like the food chemists and accountants at Watneys who came up with a crap beer, and also to the confusion of the practitioners of Marxism of the vulgar variety.

Cast off the old clunking cliches Chaise old mate.”

I think if you’re going to complain about “clunking cliches”, you should try not to talk in cliches yourself. You seem to be venerating a hypothetical version of “the market” that has no flaws but which sadly doesn’t exist. Quality is a factor. It’s just not the only one. Look up “monopoly”, “entry barriers” and “first-mover advantage” and get back to me when you’ve got an idea of how things work outside your own head.

@ 31 Cylux

“That is why cheap generic medicines are illegal here yes. We must pay for brand names or else.”

Where is “here”? Because if you’re talking about the UK you’re very much mistaken. I popped a generic pill based off a branded medication just this very morning.

More generally, the problem here is that you’re identifying (quite correctly) the flaws of the patent system without considering the positive sides. I notice you haven’t answered my question of why a pharma firm would bother spending billions on research if it was unable to recoup those losses due to imitators.

Don’t get me wrong: drug patenting makes me uncomfortable. It is intuitively offensive to have a system in which we have the tech to heal people, the wherewithal to distribute said tech affordably, and yet the law prevents this from happening. Furthermore it leads to *really* nasty and cynical practices, like where a company holds off on releasing a new drug that improves survivability for a few years because it owns the current class-leader and wants to milk it while it’s still in patent. But the overall effect of getting rid of drug patents would be catastrophic: drug research would pretty much be limited to government initiatives and university projects (without serious corporate funding), and that’s not where the money is.

@ 33 Bob B

“The overall social costs and benefits of closing down or restricting the life or scope of patents and copyright are contentious and depend on the balance between benefits and costs.”

Agreed: there’s always room to improve the system.

“Btw Jenner didn’t patent his discovery of a vaccine to protect against smallpox c. 1795 and smallpox has by now been eradicated.”

If he had patented it under current laws it would also have been eradicated by now. And do bear in mind that many life-saving medications, possibly the majority, don’t cure the disease or prevent it from spreading, but merely address the symptoms. Drugs to treat diabetes are fantastic, but they don’t do anything to eradicte it (in fact they might make it more common by helping diabetics live long enough to pass the condition to their children; off the top of my head I’m unaware of to what extent, if any, diabetes is inherited).

@38 The point of my original comment, such as it was, was that if copying or ‘learning from others’ was an intrinsic part of the efficient functioning of markets and capitalism, then why do all the major capitalist nations have laws and regs forbidding copying, and indeed their societies regard copying/plagiarism as a sin?

Furthermore if I develop a successful product, and someone else is able to copy and produce said product better and more cost effectively than me, or even just reach a far greater customer base, then by the laws of the market, should I not have my arse handed to me by this competitor? Rather than have the dead hand of the state protect my profits by stopping him?

@35 Julian
I raised the three bakers example that you have misunderstood. This is what I said @6:
“Markets mean that, as a discerning consumer, I can buy a different loaf that is not ordinary. I’m not sure how markets apply to workers: as a consumer, I can pick from loads of bakeries; it’s a bit trickier if I am a baker looking for a new job.

For the consumer, the local choice is between 100 loaves; for the baker, the local choice is between three employers. And how do you demonstrate your brilliance as a baker when the three employers only want to to pump out standard product?”

Huh, a few commenters added, why don’t they set up their own bakery? That is an option if they have access to capital AND if they might be good at running a business. But they might just be a bloke or woman interested in doing something really well.

I don’t argue for retaining out dated work practices so that somebody gets paid for practicing their hobby. What I do see as as a problem is the elimination of work skills by “process”.

“Process” is much loved by managers because they perceive it as a way to do things more efficiently. Bankers who exchange customer service representatives for telephone help lines have a lot in common with Soviet five year planners: both believe that skill can be replaced by process. Real world experience tells us that skill — along with understanding and manners — must be part of the way of doing business.

@35: “Or brewing – what happened for instance when Watneys introduced Red Barrel? The Campaign for Real Ale happened, that’s what, and the consequent revival of small breweries all over the country.”

The partial success of CAMRA and survival of some regional breweries disguises the fact that booze and pubs is a corporatist business. Nine out of ten UK pints are brewed in chemical factories. Local pubs exist only because of legal restrictions on the pubcos and by necessity, local pubs have to buy a lot of their product (fizzy lager) from the big boys. Artisan brewers come and go, and the most successful are victims of their own success: too big to stay small, but not big enough to expand without partnership with a booze conglomerate.

Ironically, one of the leading figures in CAMRA is Roger Protz who must be smiling at perpetual revolution in the pub trade. Or grimacing.

@ 40 Cylux

“The point of my original comment, such as it was, was that if copying or ‘learning from others’ was an intrinsic part of the efficient functioning of markets and capitalism, then why do all the major capitalist nations have laws and regs forbidding copying, and indeed their societies regard copying/plagiarism as a sin? ”

Oh, ok. I’d say that in reality there’s a balance to be struck between allowing people to build on each other’s ideas, and ensuring that innovators have the chance to be rewarded for their work.

But yeah, certain people do try to claim the exchange of ideas as if it’s an inherent, almost religious part of capitalism. Which it ain’t.

“Furthermore if I develop a successful product, and someone else is able to copy and produce said product better and more cost effectively than me, or even just reach a far greater customer base, then by the laws of the market, should I not have my arse handed to me by this competitor? Rather than have the dead hand of the state protect my profits by stopping him?”

By the free-market philosophy, yes. This is one of the downsides that people such as Julian blind themselves to when touting their suspiciously simple solution to all of life’s complex problems.

@31. Cylux: “Plus I understand history has been rewritten regarding Jonas Salk, apparently he didn’t refuse to patent his polio vaccine for moral reasons despite his question of ‘would you patent the Sun?’ implying otherwise, no, allegedly it couldn’t be patented because of prior art.”

My understanding is that a patent applies to the manufacturing process (how it is made) rather than to what is made. Salk presumably exploited an existing process to create a proof of concept vaccine. He or his sponsors had the choice at that time to tweak the process (to create a new patent) or to publish sufficient data for others to make it. They made the latter decision so Salk deserves credit for generosity of spirit.

@40. Cylux: “The point of my original comment, such as it was, was that if copying or ‘learning from others’ was an intrinsic part of the efficient functioning of markets and capitalism, then why do all the major capitalist nations have laws and regs forbidding copying, and indeed their societies regard copying/plagiarism as a sin?”

If company A works out how to make something useful, it is reasonable for company B to make a competing product. If company A’s product is protected by a manufacturing patent, company B has to work out how to make it using a different process.

In the early 1980s, Compaq set up a team to replicate the functionality of the BIOS of IBM’s PC. Other companies had created PC clones by copying the IBM PC BIOS but Compaq found engineers who were completely ignorant, telling them to produce a chip that provided the same output for the same input. That was fair and completely legal.

Compaq were forced to create their own BIOS but they made it better. Patent law encouraged company B to create a new solution.

At other times in history, patent law has been interpreted in very restrictive ways. Acceptance of James Pickard’s crankshaft/crank arm patent is difficult to comprehend.

@Chaise #42:

Oh, ok. I’d say that in reality there’s a balance to be struck between allowing people to build on each other’s ideas, and ensuring that innovators have the chance to be rewarded for their work.

But the patent system isn’t the way to do strike that balance. From virtually the dawn of the Industrial Revolution to the present day, patents have stifled innovation. From Watt to SCO, patent monopolists have impeded technological progress (or, in the latter case, tried to).

@ Robin

1) How would you propose striking said balance without patenting?

2) Can you provide a response to my question @30 to Cylux?

My Game Makers Olympics….

http://haringeygreens.blogspot.co.uk/2012/08/london-2012-olympics-workers-and.html

@Chaise #46:

1) How would you propose striking said balance without patenting?

The idea of patents is that researchers are given a window of opportunity as a monopoly to exploit their idea in return for making the idea available to society for use once the patent expires. This ensures that the inventor is fairly rewarded for his efforts, but society gets both progress (because the inventor has to produce to get his profit) and in due course the idea itself.

The practice of patents is somewhat different. Newcomen and Watt, at the dawn of the Industrial Revolution, were the original patent trolls. They sat on their patents, charging exorbitant licence fees and preventing any independent progress in areas covered by their patents. Watt even had his patents’ lifetimes extended, but still didn’t produce very much himself.

The effect of such behaviour is to waste inventor’s’ efforts in trying to design around the patent, and, if this is not possible, to deny society the progress that is supposed to be part of the deal.

I don’t know that that balance necessarily needs striking; but if that is the question, there are very serious doubts that a patent system is even part of the answer.

2) Can you provide a response to my question @30 to Cylux?

http://blogs.plos.org/speakingofmedicine/2012/03/07/pharmaceutical-rds-costly-myths/

@ 48 Robin Levett

“I don’t know that that balance necessarily needs striking; but if that is the question, there are very serious doubts that a patent system is even part of the answer.”

Those serious doubts aren’t much use without at least a vague proposal for what to do instead. Currently all I’m getting here is perfection fallacy. The patent system achieves your aims (let innovators profit but make sure society gets the benefit), albeit very imperfectly. But you currently have no alternative, which means your proposal has a perfection rating of zero.

“http://blogs.plos.org/speakingofmedicine/2012/03/07/pharmaceutical-rds-costly-myths/”

OK, but that specifically says that it’s counting me-toos and modified versions of existing brands. That wasn’t what I was talking about, although I think I was unclear about that. Me-toos don’t represent innovation, which is what we’re trying to protect in the first place. Also, it’s not clear whether your study includes the costs of potential new drugs that don’t get anywhere, which have to be counted in the costs unless you have a soothsayer on staff.

So the question is: discounting me-toos and modified drugs (which are relevant but should be calculated differently) in terms of both research and output, how much is spent on new drug R&D, divided by the number of new drugs launched? Your study doesn’t say. It’ll be a hell of a lot more than $24m though.

But let’s say that my figure was vastly OTT and that the real cost is only $100m. Even then, why would a company spend that money if it would lose the majority of its sales to Dr Reddy’s, making cheap generics at lower cost in India?

@Chaise #49:

The patent system achieves your aims (let innovators profit but make sure society gets the benefit), albeit very imperfectly

That’s rather my point – it’s not at all clear that it even does that. Certainly, at times of (what would otherwise be) rapid progress, it actively hinders the aim of society getting the benefit. There’s a decent argument that Watt and Newcomen held back industrialisation by 30-odd years by being patent trolls. As for software patents…

It also offers no means of allowing a better mousetrap to be built if that better mousetrap uses any patented component of any existing mousetrap.

But you currently have no alternative, which means your proposal has a perfection rating of zero.

Does there need to be an alternative? Seriously? Is the alternative of not having patent protection, so that the inventor’s advantage lies in getting quicker to market with a better design, that imperfect? In the second half of the 18th century, there would have been no shortage of inventors producing better steam engines had Newcomen and then Watt not held things back.

So the question is: discounting me-toos and modified drugs (which are relevant but should be calculated differently) in terms of both research and output, how much is spent on new drug R&D, divided by the number of new drugs launched? Your study doesn’t say. It’ll be a hell of a lot more than $24m though.

Read the linked Biosocieties article. The pharmaceutical companies don’t allow independent verification fo their figures, so it’s not easy to answer that question.

<blockquote.But let’s say that my figure was vastly OTT and that the real cost is only $100m. Even then, why would a company spend that money if it would lose the majority of its sales to Dr Reddy’s, making cheap generics at lower cost in India?

At page 14 you’ll find the following passage:

The deeper problem is that current incentives reward companies for developing mainly new medicines of little advantage, and then competing for market share at high prices; rather than rewarding development of clinically superior medicines with public funding, so that
prices could be much lower (Light, 2010).

which suggests that patents aren’t helping the position. The reason why it incentivises me-toos is because developing a variant on an already-known chemical extends patent protection on what is pretty much the same R&D – albeit there is a marketing cost to convincing consumers that the “new” chemical is indeed a wonder drug.

The irony, as the authors point out, is that because the major cost is in trials, the drugs that give least advantage over existing alternatives are the most costly – because they need much larger trials to show the advantage.

The company would spend the money because it knows it can make it back quickly before Dr Reddy gets his analysis finished and his factory tooled-up.

@ 50 Robin Levett

Thanks, that’s interesting (and btw, I wasn’t condemning the alternative of “just get rid of patents” out of hand, I simply wasn’t clear that that WAS your proposed alternative).

Very good point RE incentivising variants that have mild but demostrable benefits over the class leader. Hypothetically, how would you feel about keeping patents but severely limiting their duration – say one year from first sales – in order to give innovators a more solid first-mover advantage?

@Chaise #51:

Very good point RE incentivising variants that have mild but demostrable benefits over the class leader. Hypothetically, how would you feel about keeping patents but severely limiting their duration – say one year from first sales – in order to give innovators a more solid first-mover advantage?

I’m not sure whether single-year patents would offer any advantage. Remember, the patent process requires publication of relevant details of the invention; giving later arrivals the opportunity to get ready to go when the patent expires. Would they be any quicker to market if the inventor, while having no patent protection, didn’t have to publish those details so that they had to work out the process for themselves?

There’s also a substantial cost to patent registration.

Software patents, BTW, are an abomination unto the Lord, and should not exist in any rational universe.

50

Just one small point, industrialization or the industrial revolution, refers to rapid social change not technological inventions, it just means the creation of industries (whether or not technology is involved within those industries) this created the division between production and consumption. So, baking cakes becomes an industry but it originally used exactly the same methods and equipment as was available to domestic households.

Watt and Newcomen may have held back technical advancement/change in certain industries but the driving force of industrialization was the agricultural revolution and a massive increase in landless labour, this was the direct result of better farming methods.