Capitalism 3.0: Chapter 8 (About the EoE)
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Capitalism 3.0: Chapter 8
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Sharing Culture
He who receives an idea from me, receives instruction himself without lessening mine, as he who lights his taper at mine, receives light without darkening me.
—Thomas Jefferson,1813
So far I’ve focused on the commons of nature and community. In this chapter I explore the third fork of the commons river, culture. By this I mean the gifts of language, art, and science we inherit, plus the contributions we make as we live.
Culture is a joint undertaking—a co-production—of individuals and society. The symphonies of Mozart, like the songs of Lennon and McCartney, are works of genius. But they also arise from the culture in which that genius lives. The instrumentation, the notation system, and the prevalent musical forms are the dough from which composers bake their cakes. So too with ideas. All thinkers and writers draw on stories and discoveries that have been developed by countless men and women before them. To paraphrase Isaac Newton, each generation sees a little farther because it stands on the shoulders of its predecessors. In this way, all new work draws from the commons and then enriches it. To keep art and science flourishing, we have to make sure the cultural commons is cared for.
In addition, unlike most natural commons, the cultural commons is inexhaustible. Shakespeare’s plays can be “used” again and again without diminishing them. The same is true of Newton’s theories, Beethoven’s string quartets, and the information on the World Wide Web. Indeed, the more we use these assets, the more value they bestow. And thanks to technology—from Gutenberg’s press to Marconi’s radio to the globe-spanning Internet—sharing this wealth has become increasingly easy.
Today, unfortunately, this cultural commons, like the commons of nature and community, is being enclosed by private corporations. The danger is that corporations will deplete the soil in which culture grows. The remedy is to reinvigorate the cultural commons.
Paying Our Pipers
Artists and scientists need to eat. In the past, wealthy private patrons supported them. They still do today, as do government and universities, but the sum of their gifts is insufficient. So where can additional money come from? The answers affect not just the quantity of art and science, but the quality.
Consider literature first. Prior to Gutenberg, books were copied by hand, mostly by monks, and there weren’t many of them (books, that is). As printing spread, authors sold their writings to printers for a flat fee. Printers sold as many copies as they could, and kept the proceeds.
The Statute of Queen Anne, passed by the English Parliament in 1710, gave authors, not printers, title to their works. Such title was in the form of an exclusive right for fourteen years, with an option to renew for the same period. Thereafter, works would enter what we now call the public domain, and anyone could reprint them without further compensating the author. The idea was to reward authors sufficiently to induce them to write, but once they’d been fairly paid, to have literature circulate as widely and as cheaply as possible.
A leading advocate of this new arrangement was John Locke. As with landed property, Locke sought to balance the interest of the laborer who adds value with that of the commons that stores and shares value (Value theory). In a memorandum to Parliament, he argued that it was “unreasonable and injurious to learning” to grant exclusive rights to print classic texts; the “liberty, to any one, of printing them, is certainly the way to have them the cheaper and the better.” As for “authors that now live and write,” he proposed “to limit their property to a certain number of years after . . . the first printing of the book.”
In this spirit, the U.S. Constitution gave Congress authority “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.” Shortly thereafter, in 1790, the first American copyright law gave authors the same deal as in Britain: exclusive rights for fourteen years, with an option to renew for another fourteen. After that, their work entered the public domain. The idea wasn’t so much to expand intellectual property rights as to set boundaries on them. Indeed, what we call intellectual property today was then considered a monopoly privilege granted by the state, not a right belonging to a creator.
For nearly two centuries, this arrangement worked brilliantly. There was no lack of creativity on either side of the Atlantic. But starting about thirty years ago, large entertainment companies began tipping the balance from the public domain to the private. Led by the Walt Disney Company, the corporations pushed Congress to extend copyright terms, first to seventy-five years and then to ninety-five. (The extensions occurred whenever Mickey Mouse was about to enter the public domain.) One consequence is that the public domain has been marginalized; corporations now take from the commons and give nothing back. Another is that the experience of culture has been altered; we’re now consumers of culture rather than participants.
This isn’t to say that corporate art is bad art; much of what Hollywood produces is astonishingly good. The trouble is that, with its massive advertising and distribution budgets, it tends to overwhelm local and live art. There’s more intimacy, spontaneity, and experimentation in this kind of art. Local art also builds community, not only among artists but among audience members too. The challenge is to have both this kind of art and corporate art.
One can imagine a culture in which free concerts in parks, poets in schools and libraries, independent theaters and film-makers, and murals and sculptures by local artists in public spaces thrive alongside corporate entertainment. There’s no lack of artists who’d participate in such a culture, or of nonartists who’d appreciate it. The problem is how to pay for it.
What we need is a parallel economy for noncorporate art. Fortunately, models of such an economy exist. For example, there’s the San Francisco Grants for the Arts program, funded from a tax on hotel rooms. Since 1961, the program has distributed over $145 million to hundreds of nonprofit cultural organizations. It’s a prime reason the city pulses with free concerts, murals, film festivals, and theater in the park.
Then there’s the Music Performance Trust Fund, set up in 1948. To settle a dispute with the musicians’ union, the recording industry agreed to pay a small royalty from recording sales into a fund supporting live concerts in parks, schools, and other public venues. The fund was, and continues to be, administered by an independent trustee. In 2004 it sponsored over eleven thousand free concerts throughout the United States and Canada. Thanks to this system, sales of corporate-owned music support the living culture on which the recording industry ultimately depends.
These models could be scaled up. As a revenue source, consider what companies like Disney get with their copyrights. They get ninety-five-year protection for their movies, they get those FBI warnings on our DVDs, they get the U.S. government extending intellectual property rights worldwide, and they get police busting street vendors for selling “pirated” DVDs. That kind of protection is worth big bucks. Yet the companies’ price tag for it is exactly zero. (They do pay taxes, but so does everybody else.)
What if, instead of supplying copyright protection for free, we charged a royalty on sales of electronically reproduced music, films, and video games? This could be supplemented by charging broadcasters for their exclusive licenses, and advertisers for their invasions of our brains (see the following section). The resulting billions could be distributed, through a National Arts Trust, to local arts councils, which in turn would support community arts institutions and artists.
Under this system, corporations would give back to a commons they now take from for free. More art would be live and local, and more artists would be employed. We’d have corporate and authentic culture at the same time.
What to Do About Advertising
Mind-time is precious to me. I resent it when random outsiders, trying to sell thneeds, get inside my brain. I resent it even more when they get inside my children’s brains. What they claim is free speech, I experience as mental trespassing, and so do millions of others. As Kalle Lasn has written, “Our mental environment is a commons like air or water. We need to protect it from unwanted incursions.”
Advertising—and by this I mean all forms of commercial attention-seeking—is part of the dark side of surplus capitalism. (I say this as one who, during my own career, modestly added to the din.) It’s one of those borderline activities that’s necessary, or at least acceptable, in moderation, but becomes dangerous when it spirals out of control. The trouble is that advertising escalates inexorably. Every new product needs to announce itself. Moreover, the greater the ambient noise, the more each ad has to shout in order to be heard. If anything is a “tragedy of the commons,” this is it (though here, again, the commons is victim, not cause).
Here are a few statistics that confirm what everyone knows. Children in America see, on average, one hundred thousand television ads by age five; before they die they’ll see another two million. In 2002, marketers unleashed eighty-seven billion pieces of junk mail, fifty-one billion telemarketing calls, and eighty-four billion pieces of email spam. In 2004, a Yankelovich poll found that 65 percent of Americans “feel constantly bombarded with too much advertising and marketing.”
Advertising isn’t just an occasional trespass of one person against another; it’s a continuous trespass of relatively few corporations (the one hundred or so that do the most advertising) against all the rest of us. These companies want to—indeed have to—increase their sales, and for this they need access to our minds. But mind-time is a scarce resource. We have only so many hours of it a day, and so many days in our lives. Because of this scarcity, every neuro-minute occupied by an ad is one less neuro-minute available for our own thoughts and feelings. Every ad thus has an opportunity cost, a cost we experience but advertisers don’t pay.
Ads also have other side effects. They bias us to high-priced branded products, to junk foods rather than healthy foods, and to spending rather than saving. They diminish our self-esteem by suggesting that we never have enough or look good enough. And ultimately, they diminish our natural wealth by increasing pollution and depleting resources.
As individuals, we can do a few things to protect ourselves against ads: we can turn off our television, delete email spam, and toss junk mail in the recycling bin. But that doesn’t dampen the collective noise, or do much to reduce the external costs of ads. To do that we need economy-wide volume controls.
At present, there are no such controls. Though the airwaves belong to the people, no public agency limits TV advertising time. Until 1982, the major networks adhered to a voluntary code limiting ads to 9.5 minutes per hour in prime time. Then, profit maximizing took over, and the networks dropped their code. Today, a typical “one-hour” prime-time show has about forty-two minutes of content and eighteen minutes of ads and promotions, nearly twice the advertising intensity of two decades ago.
What if we managed advertising as we manage, or could manage, physical pollution? If corporations want to pollute our minds, they’d have to pay for the right to do so. As with physical pollution, the transactions could be brokered by a trust. This guardian of our inner commons would set caps on total trespasses and sell tradeable advertising permits to corporations. Our psychic costs would then show up as advertisers’ monetary costs. There’d be less advertising, more peace of mind, and if we so earmarked the revenue, more money for commercial-free broadcasting and the arts.
An advertising cap-and-trade system could have another benefit as well. At present, there’s only one macroeconomic valve for regulating the pace of economic activity: the Fed’s handle on money. If the economy is too hot, the Fed raises interest rates; if it’s too cool, the Fed lowers them. The trouble with this valve is that it has unpleasant side effects. When interest rates go up, so do credit card bills and mortgages, and millions of households suffer. But if we dampened an overheated economy by lowering the volume of advertising, we’d get the benefits of higher interest rates without the pain. In fact, households might save money by buying less.
The Airwaves
The airwaves, also known as the broadcast spectrum, are a gift of nature that modern technology has turned into a valuable resource. As a medium for sharing information and ideas, airwaves have enormous advantages over paper and wires. The problem in the early days was that signals often interfered with one another. If two nearby transmitters used the same or adjacent frequencies, a radio listener would hear two sound streams simultaneously. America’s approach to this problem (though not Britain’s or Canada’s) was to give free exclusive local frequencies to private broadcasters, subject to periodic hearings and renewal.
The quid pro quo for this gift, according to the Communications Act of 1934, was that broadcasters would serve “the public interest, convenience, and necessity”—whatever that might mean. The airwaves themselves would remain, in theory, public property, with the Federal Communications Commission (again in theory) acting as trustee.
Private broadcasters grew large and profitable under this arrangement. But over time, as their advertising revenues soared, their public-interest obligations declined. In the 1980s, the FCC dropped the Fairness Doctrine, which required broadcasters to air both sides of controversial issues. Educational programming also waned.
In the 1990s the spread of cell phones created huge new demand for airwaves. Instead of giving frequencies to cell phone companies for free, Congress wisely chose to auction them, raising billions of dollars for the federal treasury. Broadcasters, however, lobbied hard for more free spectrum, and in 1996 Congress gave it to them, ostensibly for digital TV. This was the $70 billion giveaway I described earlier.
Today, digital technology makes it possible for “smart” receivers to pick out only the signals they need. Signal interference thus is, or soon could be, a thing of the past—which makes exclusive licenses unnecessary. The airwaves could be an open access commons with virtually no capacity limits, a possibility that makes broadcasters, phone, and cable companies extremely anxious.
Some broadcasters have another idea. They want to privatize the airwaves, with ownership assigned to them. Under this plan, the free licenses they received for digital TV would become permanent entitlements usable for any purpose. Broadcasters could then sell their entitlements to cell phone companies and pocket the windfall. The big winners would be General Electric (NBC), Disney (ABC), and Rupert Murdoch (Fox). Other beneficiaries would include Pat Robertson (Christian Broadcasting Network) and Lowell “Bud” Paxson (Pax TV). When a reporter asked Paxson why he should receive millions of dollars for selling the public’s airwaves, he replied: “I was a farmer and I got lucky. Now people want to build a mall on my farm. God bless America.”
If Congress treated the airwaves as a common asset, it would lease most of them at market rates for limited terms to the highest bidders. The billions of dollars thus raised could buy free airtime for political candidates, fund noncommercial radio and TV, and help sustain the arts.
Alternatively, Congress could turn the airwaves into an open access commons like roads and streets. Using technologies like wi-fi (wireless fidelity), everyone could enjoy high-speed Internet access for almost nothing. As of early 2006, nearly 150 U.S. cities were deploying or planning public wi-fi networks. These efforts are hampered by the fact that the frequencies allotted to wi-fi don’t travel as far, or penetrate buildings as well, as do the frequencies given to broadcasters. A bill to open unused TV channels for wi-fi has been introduced by a group of senators, but it faces stiff opposition from broadcasters, telephone, and cable companies.
The Internet
The Internet is a human-made commons that, for all intents and purposes, can be used without limit. It’s arguably the most remarkable technological achievement of the twentieth century, given that it revolutionizes commerce, community, and culture in one swoop. As with other valuable commons, it’s coveted by private corporations. The battle in coming years will be between those who want to privatize big chunks of the Internet, and those (including many corporations) who want it to be as free, universal, and open as possible. What’s unusual is that this is one of the few battlegrounds where those on the side of the commons have an early edge.
One looming battle concerns access—in particular, bridging the “last mile” between the Internet and the millions of people (billions worldwide) who could use it, but now don’t. When the Internet began, the last mile was typically crossed by telephone. A user would dial up an Internet server and log on. However, because telephone wires were sized for voice signals, they can’t carry high volumes of data at high speeds.
In due time, cable companies began offering their thicker cables to Internet users. Phone companies also came up with a system—DSL—that squeezes more data through their skinny wires. There are thus now two good ways to get high-speed access to the Internet—if you can afford roughly $30 a month, or $360 a year. Since not everyone can afford this, however, we have what some people call a digital divide—a financial barrier to universal access.
This is where the airwaves come in. Using digital signals, it’s now possible to bridge the last mile to the Internet through the public’s own airwaves. Not only that, it’s incredibly cheap to do so, using technologies like wi-fi. At the same time, another technical breakthrough is imminent: the Internet—including this last wireless mile—will soon be “thick” enough to carry data, telephone calls, and television pictures. In theory, a small public investment could bring all these services to the doorsteps of virtually everyone. There’d be no more need for private TV networks, telephone and cable companies. The so-called information highway would be, like public streets, truly open and free.
This is an extraordinary possibility. Americans now pay some $300 billion a year for telephone and cable services; perhaps half of this could be saved. That’s the equivalent of raising every worker’s take-home pay by about $1,000 a year. It should be cause for celebration.
What’s more, free universal Internet access would be a boon to the corporate side of the economy—another example of a commons having positive external benefits. Think of an urban shopping street, or Main Street in a small town. Merchants on these streets depend on foot traffic; the more passersby, the more sales they make. If someone put checkpoints or tollbooths on these streets, merchants would scream. So it is with the Internet. Everyone doing business on the Internet wants more traffic. Making the Internet free to all would be the best thing that ever happened to merchants.
Except, of course, for the phone-and-cable duopoly. In several states, these powerful companies have pushed through laws prohibiting cities from offering wireless Internet service, and they’ve sponsored a similar ban in Congress. The companies say their right to profit trumps the consumer’s right to save money and a city’s right to serve its citizens. Many politicians still buy that argument, so the end of this story has yet to be written.
A similar battle looms over what’s called “net neutrality.” At the moment, the Internet—like the telephone system—treats all content equally. No one’s data is discriminated against, and no one’s gets favored either—your personal website is treated the same as Google’s. However, cable and phone companies want to create a two-tiered Internet, with some content providers getting slow speed and others—who pay the phone and cable companies—getting high speed. That would mean more revenue for the companies, but also a permanent divide between corporate content providers and everyone else. Congress is now considering bills both to allow and to ban such tiering, and the outcome as this is written is uncertain.
Patently Unscientific
Enclosure of the commons has also been occurring in the world of science. Here, too, the Founders’ intentions were clear. Ben Franklin, no slouch when it came to the dollar, never sought a patent on his most famous invention, the Franklin stove. “As we enjoy great advantages from the inventions of others,” he wrote, “we should be glad to serve others by any invention of ours.” Thomas Jefferson, who served as first head of the U.S. Patent Office, believed the purpose of the office was to promulgate inventions, not protect them. He rejected nearly half the applications submitted during his term. (Eli Whitney’s cotton gin made it through.)
As with copyrights, this stringent approach to patents worked well for a long time. America didn’t lack inventiveness in the nineteenth and early twentieth centuries (and let it be remembered that we stole much of our early technology from the British). But from midcentury to the present, patenting has become a national pastime. The Bayh-Dole Act of 1980, which let universities get patents on tax-payer-funded research and license those patents to corporations, opened the floodgates. Corporate money rushed into academic labs, and with it came a corporate mindset. Where scientists once shared their discoveries openly, many now fear to discuss them, lest someone beat them to the patent office. Today, some say, the secrecy is so intense and the thicket of property rights so dense that the advancement of research has noticeably slowed.
The U.S. Patent Office has gone along with this, issuing patents for everything from one-click shopping on the Internet to genes that are 99 percent nature-made. Often, companies get patents not with the intention of developing them, but rather with the intention of suing someone else who might (a practice known as patent trolling). Figure 8.1 shows the dramatic rise in number of patents issued over the past few decades.
Consumers and taxpayers are burdened as well. Thanks to patents, pharmaceutical companies can charge monopoly prices for up to twenty years after introducing a new drug. This is said to benefit society by providing incentives for research, but according to the Center for Economic Policy Research, the benefit is greatly exceeded by the cost. Pharmaceutical companies spend about $25 billion a year on research, of which about 70 percent is for copycat drugs that mimic competitors’ brands and add no significant health benefits.
The federal government could fund 100 percent of noncopycat research—and place the resulting drugs in the public domain—entirely from cost savings to Medicare and Medicaid. On top of that, the savings to consumers from lower drug costs would amount to hundreds of billions of dollars each year.
To release science from corporate control, we need to take a twofold approach: apply more stringent standards for issuing patents, and provide more public funds for research (with the proviso that publicly funded discoveries stay in the public domain). The track record for publicly funded research has, in fact, been phenomenal. The entire computer industry was spawned by the U.S. Army Ordnance Corps, which produced the first digital computer in 1945. Similarly, the Internet emerged from the Defense Advanced Research Projects Agency and the National Science Foundation in the 1980s. It’s hard to imagine the modern world without either of these breakthroughs, or with the Internet being owned, say, by Verizon or TimeWarner.
Fortify,Then Enhance
The larger lesson of this chapter is that all three branches of the commons—nature, community, and culture—are under similar assault from corporations, and all need to be fortified. The means of fortification will vary with the particular commons. When commons are scarce or threatened, we ought to limit aggregate use, assign property rights to trusts, and charge market prices to users. When commons are limitless (like culture, the Internet, and potentially the airwaves), our challenge is the opposite: to provide the greatest benefit to the greatest number at the lowest cost. To create scarcity where it doesn’t need to exist diminishes rather than enlarges our well-being.
In both limited and unlimited commons, corporate and commons algorithms clash. In limited commons, the corporate algorithm says: use as much as you can as quickly as you can, because if you don’t, someone else will. The commons algorithm, by contrast, says: preserve the asset for future generations, enhance it whenever possible, and live off income rather than principal. In unlimited commons, the corporate algorithm says: restrict use and charge what the market will bear. The commons algorithm, by contrast, says: the more users the merrier, and the cheaper the better. In both situations, the commons algorithm conflicts head-on with the corporate one, and that’s just fine. Indeed, it’s precisely the point.
Commons algorithms need to be unleashed in real-time markets, where they can duke it out with their corporate counterparts. Managers in each sector will know what to do, and the public will know what to expect. If corporations keep winning, then add more property to the commons. Eventually, we’ll get the best of both worlds, and when there’s conflict, more balanced outcomes than we get today. We’ll also gain clarity about the real costs of current practices.
After we fortify, we should enhance; just as we take from the commons, so should we give back. Art and music can be reproduced by corporations, but they don’t come from corporations; they come from the commons. Folk music, country music, jazz, blues, garage bands—these are the roots of our musical heritage. We must nourish the soil in which these roots grow. This, not copyright extension, is the way to enrich culture.
Notes
- public domain: On the Statute of Queen Anne, see this article (Capitalism 3.0: Chapter 8) . For more information on the public domain see the website of the Center for the Study of the Public Domain at Duke Law School.
- public domain: Paul Starr, The Creation of the Media (New York: Basic Books), p. 118.
- “Our mental environment . . .”: Kalle Lasn, Culture Jam: The Uncooling of America (New York: William Morrow, 1999), p. 13.
- “feel constantly bombarded . . .”: Stuart Elliott, New Survey on Ad Effectiveness New York Times, Apr. 14, 2004. . For more advertising data, see Spending on Advertising.
- TV advertising: Gary Levin, Ad Glut Turns Off Viewers. USA Today, Oct. 12, 2005. .
- privatizing the airwaves: For Lowell Paxson’s quote, see DTV's Cuckoo Nest and the Public Interest.
- “As we enjoy great advantages . . .”: For Benjamin Franklin’s quote, see this article.
- drug costs to consumers: Dean Baker, The Reform of Intellectual Property, Post-Autistic Economics Review, July 2005.
