Original URL: http://www.theregister.co.uk/2009/12/04/manchester_manifesto/

Who owns science? Manchester Manifesto can't answer

Some questions are bigger than others

By Tim Worstall

Posted in Science, 4th December 2009 10:47 GMT

Who owns science could be an interesting question: who should own science even more so. Sadly, the latest attempt at asking exactly these is less than interesting in its answers.

The Manchester Manifesto (pdf) is a report from the Great and the Good over how we should change the intellectual property system so as to make it accord with "current best practice". They want to make it easier for poor countries to get hold of new technologies so they suggest they should be given to them.

Unfortunately, it simply repeats the rather dreary usual list of bien pensant talking points and fails entirely to provide either the necessary description of the basic problem or to offer anything much in the way of radical solutions to it.

That basic problem is that science, knowledge, is a public good. No, this is economist's jargon and it does not mean something that's good for the public: nor something provided publicly or something the public would like and not even is it the same as “the public good”. A public good is something which is non-rivalrous and non-excludable. Now that Newton's scribbled down his equations about gravity we can't stop certain people from using them and if they do use them it doesn't stop us from using those same equations: non-excludable and non-rivalrous.

Our problem is that such public goods are terribly hard to make money out of. If we can't stop someone else from using them how can we charge for them? And therein lies that problem: if we can't charge for the use then how do we raise the money to find out all this wonderful new knowledge?

The general conclusion is that we should do two things. First, we should subsidise the production of public goods. We do this with such things as basic scientific research, the blue skies thinking. We also do it to an extent with things like education: yes, this might be for the public good, it might be provided by the public to the public but there's also an element of it being one of these “public goods”.

Being a member of a society where all are (near, in some cases) literate and numerate is something generally beneficial and near impossible to charge for. Thus even Adam Smith pointing out that basic education should be taxation funded.

The second is that we should fiddle the system somehow in order to reduce the underprovision of these public goods. An example here would be creativity and invention. A truly free market solution would be like the open source movement: once created anyone can use the code. Excellent and admirable and it's given us some great products (including much of what makes this here internet work) but that's not enough.

So we've this (imperfect) system of patents and copyrights to deliberately throw a spanner into the free market. We create property rights and legally enforce them: the aim is to increase the amount of money that can be made from creation and thus increase the amount of creation we get. It's emphatically not a reward to someone who has done some creating: it's to encourage the next person with a bright idea to do that next piece of creating.

There are of course downsides to this spanner in the works: the creation of artificial monopolies means that some creation is limited by the banning of derivative works. The sweet spot of such a system would be when the amount of new creation encouraged was greater than the derivative work banned: something which it is hard to argue the current system does when, say, Wodehouse's first novel, The Pothunters, released in 1902 will be in copyright until 2045. Patents with their 17 year life (and of course their extremely important corollary, the full release of methods at patent time) might be closer to what a desirable system would have.

One thing that does very much get missed is that while people are indeed being rewarded for their innovations and some people do very well indeed out of them, the amount in total that goes to the innovators is near trivial. This paper by perennial Economics Nobel also-ran William Nordhaus (with the snoozy title Schumpeterian profits in the American economy: theory and measurement) tells us quite how trivial: innovators only end up with three per cent or less of the wealth they create. The other 97 per cent goes to the rest of us in the new products, lower prices, longer lifespans and all the rest that the innovations allow.

We should also be careful in our definitions of invention and innovation. William Baumol is the economist here and he defines invention as well, the invention of new things. This encompasses everything from the blue skies scientific research through to the writing of a new Linux driver and the iPhone.

This can be, as he points out, done by a number of different systems: the Soviets produced some pretty spiffy technological wonders after all. Innovation however is the getting of these spiffy new wonders into the hands of those who would use them. With this terminology we get that three per cent going to the inventors while the 97 per cent that we get comes from the innovation: the actual use of the new gewgaw being what raises our productivity and makes life better.

The basic idea is pretty obvious: we wouldn't buy the new things if they weren't worth more to use than the cost us, the surprise is in quite how high the benefits to us of continued invention and innovation are. And as Baumol goes on to point out, this strange creation of liberal capitalism (or call it free market capitalism if you like) is the one and only economic system which has managed, consistently and over not just decades but centuries, fostered this innovation. Invention can be done by other means but we've not yet found a system that can beat the current one for innovation.

So, when we get two Nobel Laureates (one in medicine, one that faux Nobel of economics) leading a research group into the structure of the incentives around science, looking at patents and copyrights, how we should be structuring the whole shebang, do we get a discussion of these fundamentals?

Sadly, we don't. We at no point get a discussion of public goods (“the public good” is mentioned but as above, that's something quite different), innovation is constantly invoked when they mean invention and by and large we get a very damp squib leavened with the usual guff we always seem to get from British academia.

“We call for further research towards achieving more equitable innovation... Greater cooperation between all actors is required; alongside development of theory, there is a clear need for practical engagement with actors at all stages of the innovation process...”

That's pretty much the meat of their conclusion. Very small beer indeed - and yet they get 50 of the Great and Good to sign on to it. Something of a missed chance there, I would say. ®