Interdisciplinary Reflections on ‘Patents as Capital’ with Erkan Gürpınar

 

This blog post is the third and final part in a PASSIM blog series where invited scholars reflect on patents as capital from an interdisciplinary perspective.

Dr Erkan Gürpınar is Assistant Professor in Economics at the University of Ankara. His disciplinary background is in Economics (BSc, Msc Middle East Technical University & PhD Univ. of Siena) and Development Studies (MSc Uppsala University). During his PhD, he was a visiting researcher at the Centre of Development Studies of the University of Cambridge between 2011-2012.

His website can be found here: https://eb.asbu.edu.tr/en/staff/dr-ogr-uyesi-erkan-gurpinar

 

 

1. why do you study patents?

I study patents because they affect and shape the organizational structure of knowledge-based economies at micro and macro levels. Modern economies are knowledge-intensive, and we have seen a dramatic increase in the importance of knowledge as a means of controlling production. The accumulated knowledge about methods employed in production processes is of utmost importance. Patents, and in a broader sense, intellectual property rights are central elements for the organization of production within such knowledge based economies. They have the power to (partially) determine who owns – hence controls – the usage of accumulated techniques and knowledge of any community. Patent regimes have long lasting effects on production organization at the local as well as international level, for example developed vs developing nations, employers vs employees, multinationals vs SMEs. Moreover, the extension of patents to the realm of basic knowledge and public research is a relatively novel development that has implications for production organization and the future of open science and universities.

 

2. how do you understand patents as capital?

Traditionally in economics, capital has been treated as a physical phenomenon. Economic theory does not try to explain the history (and evolution) of capital as a concept. Patents, and intellectual property in general, are indicative of the limits that such a narrow approach to the theory of capital entails. An alternative understanding of capital goes beyond physical equipment and tangible assets, and includes intangible assets and immaterial wealth as legitimate parts of the definition of capital. Indeed, the obsession with tangibles in the definition of capital is historically rooted in the rise of industrial societies, in which the possession and utilization of material wealth are central to the organization of production. The classical division between capitalists and workers rest on this fact. Today, such an analysis is incomplete. Immaterial wealth is even more important in some leading sectors, such as information and communication technology and biotechnology.

Patents as capital should be understood in its historical context. Intangible assets are crucial parts of the production process. Although economics now embraces some of the conceptual developments of capital (e.g. human capital), economic theory overlooks the tacit character of useful knowledge and the legal disputes surrounding it. In economics, capital as knowledge cannot be understood properly without taking into account its legal, historical and organizational dimensions.

 

3. how does your work relate to this understanding?

In line with Thorstein Veblen, I argue that the term capital should be defined by observation rather than by deduction. Modern economies, at least in the developed world, are knowledge- intensive. Therefore control over useful (workplace) knowledge is important for managerial reasons. Such a control, in turn, has an effect on the distribution of income across different groups in society. An analysis of such an immaterial wealth cannot be confined to human capital, since it is embedded in organizational structure of firms. Immaterial wealth will be local and ‘sticky’ depending on the choice of a firm’s different technologies, its legal environment, as well as country of operation. It is unevenly distributed across employees, firms, sectors and regions. Furthermore, the extension of intellectual property regime to the realm of basic science and public research is an example of how legal decisions affect the institutional structure within various economies. By extending Veblen’s approach to capital to knowledge-based economies, I propose to re-define the term capital to include patents, as well as trade secrets and restrictive (non-compete) covenants. The analysis could then be used to explain changes triggered by knowledge-based economies. By doing so, I hope to contribute to the debates on the successes and failures of high-tech sectors and clusters (e.g. Silicon Valley), the role of legal regulations on knowledge, their effects on economic growth, and the distributional and efficiency implications of alternative organizational structures in knowledge based economies.

 

4. what do you think are the benefits and drawbacks of studying patents from an interdisciplinary perspective?

Diverse disciplines, such as economics, law, history and management, have studied patents. Not dissimilar to other interdisciplinary debates on rationality and rational actor, there is not any consensus on the definition of the core concepts. This makes interdisciplinary exchange difficult. And yet, an interdisciplinary approach is unavoidable since only a holistic view on the origin, development and the current state of the patent system can help us avoid just-so stories about the relevance and efficiency of patent regimes. This requires an interdisciplinary exchange: while legal scholarship could shed light on the role of patent systems on technology and notions of innovation, historical analysis can point to the developments of important changes to the patent system in the last two centuries. Moreover, economics could analyze the efficiency of patent systems in relation to the challenges faced by knowledge-based economies. Last but not least, insights from the discipline of management could show why knowledge and its ownership via patent systems are vital elements in the organization of production, and why treating knowledge as mainly freely available information may be incomplete. Patents and other forms of intellectual property represent a battle ground for interest groups around the world. An interdisciplinary approach can help us to understand scale and scope of such an antagonism and also possibly derive policy implications for the knowledge-based economies of the future.

 

5. your questions to others in the workshop group (if there is anything you’d like others to comment or discuss)?

What do you think about the definition of capital in economics textbooks?

 

Would you like to comment on Erkan Gürpınar’s reflections? Please do so below or on twitter. @passimproject

 

 

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