Capitalism and the Internet

The Internet is open to all, but capitalism demands an owner of everything and payment for everything. This new privatisation of ideas has provoked widespread indignation and sense of injustice. Tight control over intellectual property rights can actually slow down innovation. New technology has transcended the standard capitalist business model. We need to get rid of capitalism in order to unchain human creativity. The Internet shows us a glimpse of what is possible under socialism. Don't let them take it away from us!

“As much as three-quarters of the value of publicly traded companies in America comes from intangible assets, up from around 40% in the early 1980s. ‘The economic product of the United States,’ says Alan Greenspan, the chairman of America's Federal Reserve, has become ‘predominantly conceptual’.” (According to The Economist survey, A market for ideas: a survey of patents and technology. October 22nd 2005)

What are these “intangible”, “conceptual” assets that make some people very rich and are such a large part of corporate wealth? Much of this wealth is called intellectual property - property in ideas. The main forms of intellectual property are trademarks, patents and copyright.

By some measures Microsoft is the biggest firm in the world. Bill Gates is certainly the world's richest man. Yet Microsoft is not valued principally in physical capital assets, as was the case with big corporations in the past. What Microsoft claims to own is ideas, ideas that we all need to run factories and offices and to communicate with each other.

In a previous article ( Intellectual property rights – the modern day enclosure of the commons) we dealt with what is unique in the production of ideas for the capitalist system. Ideas are not rival in consumption. As Thomas Jefferson put it, passing light on to another candle does not diminish the light from your own. Jefferson thought this was a good enough reason why ideas should not be treated like coal, candles and other commodities, but should be allowed to circulate freely for the common good.

Capitalists on the other hand would like to trap light in a box so as to sell it to people, if they could. They want to make money out of ideas as well. Otherwise, they argue, nobody would bother to think things up! To some extent they can commodify ideas, for instance by renting them out on a database or putting them on a DVD or selling them in a book or journal.

Still they come up against two important sticking points. First, people invent things and come up with new ideas because it is in their nature to do so, though it is true that capitalists will try to make money out of the inventiveness of others. And secondly inventive people want to share their ideas as widely as possible. Not only that, it is precisely by sparking our ideas off against the ideas of others that progress takes place.

Ideas are naturally part of the common heritage of humanity. In that respect they are like the commons of old - land for grazing, fishing and fuel that was regarded as common property for hundreds of years. The coming of capitalism, the process that Marx called primitive accumulation, was in large part the expropriation and enclosure of this common property by the rising capitalist class. This made the common people dependent on working for the rich to scrape a living, having been deprived of the resources necessary to work on their own account.

We are witnessing what could be a second wave of enclosures, the expropriation of our creative commons. Marx pointed out in his coverage of the bloody and catastrophic process of the first enclosure movement (theft) that was first carried out in the fifteenth and sixteenth centuries by “individual acts of violence” against the law. "The advance made by the eighteenth century shows itself in this, that the law itself becomes the instrument by which the people's land is stolen." (Capital, Volume I, page 885)

The historian E.P. Thompson discussed the role of law in Britain in the eighteenth century, during the first enclosure movement, in his book Whigs and hunters. He concluded, "As the century advanced the law became a superb instrument by which these rulers were able to impose new definitions of property to their even greater advantage… on the other hand law mediated these class relations through legal forms." (Whigs and hunters, page 264) This is what is happening again. Law is once more an important lever for the capitalist class to steal what we have always regarded as ours.


The first form of intellectual property is the trademark. The justification is that it is supposed to be a mark of origin. In one famous legal case Bollingers, the champagne people, took Babycham to court for advertising their drink as “champagne perry” (it is pear cider). Champagne, it was decided, refers to the sparkling wines of the Champagne region in France. This seems fair enough, though you'd have to be pretty daft not to notice the difference from drinking Babycham.

Firms are very protective of their trademarks. Warner Brothers tried to sue the Marx brothers because their film “A night in Casablanca” was too similar in title to the Warner Brothers' quite different film “Casablanca”. Groucho Marx replied, "You claim that you own Casablanca and that no one else can use that name without permission. What about 'Warner Brothers?' You probably have the right to use the name Warner, but what about the name Brothers? Professionally we were brothers long before you were." But trademark law is a minor irritant compared with the way patent and copyright law is being used to enclose the creative commons by big business.


Copyright law was developed primarily to protect publishers from piracy - not authors. The law was hated by the common people, who saw that it made books a luxury item by awarding publishers a monopoly. There were limits to copyright in books. Firstly, copyright lasted for a defined time. Secondly, if I buy a novel and pay a bit more than if the work is in the public domain (like these Dickens books you can buy for £1) because the publisher has been granted a monopoly, when I pass it on to a friend or take it down the Oxfam shop the book is now beyond the reach of the publisher. This is called the rule of first sale. Thirdly copyright, as it applies to the printed word, is subject to the right of fair dealing (called “fair use” in the USA), such as quoting part of a book or article in a critique or review, or copying for research purposes.

Think how different the case is with databases. If a firm or library pays for access to a database, they are renting. They never get to own the material. They have to keep paying every year to continue having access to the archive. Unlike the 'fair dealing' restriction on copyright for books, digitally held information cannot be quoted and may be kept out of the public domain for ever. Usually if you access a database, the first thing you'll usually encounter is an end user licence agreement, claiming that you are signing away all rights to the content. The legal status of these agreements is doubtful, but the intention - to intimidate you - is quite clear.

The period of copyright has also undergone continuous extension. In the USA it currently lasts for seventy years after the death of the author. In terms of modern technology, that is for ever. The US Digital Millennium Copyright Act (DMCA) makes it a criminal offence, punishable by ten years in prison, to remove the copyright protection mechanisms by which big business protects its intellectual property 'rights' from us.

The DMCA was passed in 1998 as part of the 'harmonisation' of intellectual property laws, which is part of the World Trade Organisation negotiations. As an agent of big business, the WTO is trying to make intellectual property laws stricter all over the world.


Patents are another form of intellectual property that has undergone extraordinary extension as part of the attempted enclosure of the creative commons. Patents are regarded as a reward for inventiveness. For a limited period, the inventor can charge people for using his invention. Fair enough? In the first place people do not necessarily invent things to make money. They invent things because it is in their nature. The Internet is testimony to the inexhaustible enterprise of human beings, and overwhelmingly the content has all been provided free. As a testimony to human inventiveness being a more important motivation then greed, most inventors have died in poverty.

Patents are owned by firms. No firm has ever invented anything - people invent. Bill Gates is not an inventor. He is an entrepreneur. He buys other people's ideas. If you get a job with Microsoft, you sign an agreement that passes over anything you invent to Microsoft's ownership. Bill Gates uses the law to preserve his monopoly in ideas. Microsoft spends $100 million every year in lawyers' fees.

We associate patents with inventions, such as drugs. The concept has been extended grotesquely in recent years to cover plant breeders' rights and even human life – about 20% of our DNA has been patented – i.e. it is owned! The bio-pirates RiceTec even claim to own basmati rice, which has actually been around for centuries.

The patent system gives big companies the power over life and death. In such cases they cannot even be compelled to license a drug that does the same job as the branded product to another firm. (This is called a generic.) Swiss firm Roche owns the rights to Tamiflu, probably the only cure against avian flu. We are repeatedly warned that an avian flu pandemic could kill tens of thousands of people, yet there's not enough Tamiflu to go round.

Michael Bailey of Oxfam comments, "The situation is absurd. A government will have to make a move because Roche seemingly can't deliver. It is a classic case of intellectual property law not working. It seems Roche is holding on as long as possible before allowing generic companies the right to produce, so it can make as much cash as possible."

Patents have also been extended to computer software. Software is written in code. That is the language computers talk to each other in. Claiming ownership of a code is equivalent to claiming ownership of the English language. In any case it seems absurd that anyone can own a row of ones and zeros.

Commentators have noted that the patent system is ridiculous and swallows up huge resources in research and development. First, an advance in knowledge is captured by a firm as their private property. Next they have to find and patent anything else that will do the same job. Rival companies devote the time of their research teams in turn to busting the first's patent protection, not trying to find a cure for cancer. In the case of computer software, innovation is inevitably sparked by the co-operation involved in using and improving a programme – not by concealing it from the competition.

Bill Gates rants against critics that they are “new, modern-day sort of communists… (who)… don't think that those (intellectual property) incentives should exist.” He's a multi-billionaire. How much more of an incentive does the man need?

He was formerly of a different opinion in the past. "If people had understood how patents would be granted when most of today's ideas were invented and had taken out patents, the industry would be at a complete standstill today… A future start-up with no patents of its own will be forced to pay whatever price the giants choose to impose."

Straight from the horse's mouth! In 1991 Bill Gates was able to spell out how capitalist property relations, in the form of intellectual property law, were a fetter on the development of the productive forces. What has changed? Now Gates is on top of the heap instead of being a young challenger and uses legal bullying to preserve his monopoly. (Both quotes are from The Economist survey mentioned at the beginning of the article).

Enclosing the Internet?

Anyone who has used the Internet over the past decade or so will notice how it has become much more commercialised in recent years. Pop-ups, adverts, commercial sites and sales over the net have become standard. Do a search on Scholar Google and you will find you have to pay to access a lot of the material. And how does the Google search engine make money? Mainly from advertising revenue. Those irritating adverts are in fact sponsored links.

It was not always thus. The Internet was welcomed as a common carrier of ideas, as a site of the free exchange of ideas and a site of free enquiry. As our article Intellectual property rights – the modern day enclosure of the commons shows, the Internet is a classic example of a common – an area that we enjoy and use in common. One characteristic of a common is that it exhibits a network effect, a sort of scale economy. The more people join in, the better it works for each of us.

It may be argued that the Internet is full of stuff from cranks and obsessives. This is not just a feature of the Internet. If you go down the local pub you are quite likely to bump into cranks and obsessives too. What is new about the net is that gets equal air time, a chance to put a point of view and for ideas to be seen and discussed on equal terms with the ruling ideas of the capitalist class. By contrast, when did you last see a copy of Socialist Appeal on sale at WH Smiths? Sellers of left wing papers have to hang around on the pavement trying to catch people's eye and risk being moved on by the Old Bill.

There is now a battle on for the future of the Internet. For the past twenty years capitalists have been looking at the phenomenon and wondering how they can make money out of it. Although commercialisation has crept in, it remains marginal. The basic principle is one of free access, and millions of us have got very comfortable with being able to access a vast library of ideas every time we go into our back room and turn on a switch.

Can the big corporations enclose the commons that is the Internet? If so, how? The jemmy they want to use to break in to the Internet commons is intellectual property law. An Internet site or an item on a site is a message on a software package. Some big firms provide proprietary software for use on the Internet – that is they claim to own the software and won't let anyone else use it.

Bill Gates was actually slow to pick up on the significance of the web early in his career. But he managed to haul himself from behind by deploying the monopoly power of Microsoft. Now he has Internet Explorer as standard in the Microsoft Office. It's not great, but you probably use it because it's there on your desktop. All Microsoft applications use proprietary software. They are patent protected. That means that very highly paid lawyers threaten to sue you to within an inch of your life if you try to use any of 'their' ideas.

All Bill Gates' ideas were bought or stolen from someone else. But, as we explained above, the software package is in code, in effect the language in which ideas are communicated. And Bill Gates claims to own that language!

All this is radically at odds with the original ethos of the Internet, an ethos energetically defended by some of the most creative individuals working in this area. That is the tradition of free or open access software. Inventors saw themselves as giving a gift to the rest of the world, just like the peasants who actually developed the basmati rice strain.

The point about open access software is that anyone can see how it works, they can modify it to their own needs and they can share it with others. A second advantage is that, since people can see how the package works, they can suggest improvements. So it's likely to work better. This is equivalent to the peer review process by which the contributions to scholarly journals are assessed. Intellectual peers survey the article. This should be a badge of quality. It doesn't always work as academe is a cliquey place. (Don't even bother trying to get a Marxist economics article in an orthodox economic journal.) It's more likely to work on the Internet, which is not cliquey. But any article, including this one, and any piece of software, benefits from a once over from someone else.

The defenders of freedom on the Internet are divided into those who advocate free access and the people who want open access via a general public licence. The latter is not communism – the general public licence provides that anyone can take up the technology provided they pass it on to the next user – but it taps in to the well-spring of creativity we see with the new technology. This in effect means that the software is someone's property but they'll let you use it as long as you play by the rules of the open access game. The open access argument is that the bad guys will use the argument of the landed gentry that, 'since this common land doesn't belong to anybody, I'll have it'. They would no doubt approve the quote from Lenin, who said, “If you live among wolves, you must howl like a wolf.” And it is true that Microsoft has appropriated, modified and patented some bits of free software.

Entertainment and big business

We have seen the rise of multi-media conglomerates. The merger of Time Warner with AOL a few years ago was a classic example (though it was a catastrophic failure for the capitalists involved). A company whose main wealth consisted of ownership of films and music sought to ally with a firm with Internet expertise. It is no coincidence that as a handful of giant firms come to dominate the media business, intellectual property legislation is drafted in their interests.

One of the most aggressive defenders of 'their' intellectual property is the RIAA (Recording Industry Association of America) bullying music filesharers on behalf of the big four recording companies (EMI, Universal, Warner and Sony BMG). The record companies have no doubt won themselves a new army of fans with front page pictures of weeping thirteen year olds fined thousands of dollars for the 'crime' of downloading music. Their victims are well aware that CDs can be manufactured for pennies – in other words the record companies are ripping us off.

The reaction of the recording companies is, in any case, absurd. People want to hear music before they buy. If the stuff they are putting out is any good, people will pay for a permanent copy. The film industry fought Video Cassette Recorders through the courts for years as 'an infringement of their copyright' in film. After they were finally forced to admit defeat, they worked out that VCRs actually increased the profit from their film archive.

Just as with the original enclosure movement, the new privatisation of ideas has provoked widespread indignation and sense of injustice, and not just among the socialist left. And, just as enclosure produced poaching as a reaction to stealing the commons, so the big boys are going to have to eat up time and resources protecting their ill-gotten gains. Time Warner look after their film archive like dragon's gold as a prime asset. The irony is that they and the rest of the film industry only located to California to escape Edison's patents on film projectors and production studios in the first place. In the USA copyright now extends for seventy years beyond the life of the author. This is said to be an incentive to creativity. It is not obvious how someone who has been dead for sixty nine years can be creative. Yet in the nineteenth century America became the leading economic power by shamelessly stealing ideas from Europe. Now they complain China is doing the same to them.

The Economist survey spells out how tight control over intellectual property rights can actually slow down innovation. In other words capitalists like Bill Gates can be bad for capitalism. Gates sells closed software systems. His attitude is, take it or leave it.

One problem of buying in closed system software is what The Economist survey identifies as 'interoperability'. In other words the PCs in the workplace should be able to talk to each other and operate as a system. But Gates refuses to licence the 'protocols' to others to interact with his software.

Open systems like Linux allow the user to modify the programme to their own needs. Their superiority shows how the new technology has transcended the standard capitalist business model. We need to get rid of capitalism in order to unchain human creativity. The Internet shows us a glimpse of what is possible under socialism. Don't let them take it away from us!

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