German industrial expansion and copyright law

7 posts

Bob Dylan Roof
A German professor argues that an absence of copyright law was largely responsible for Germany's industrial ascent, and that a strict copyright law was responsible for England's stagnation and decline.

No Copyright Law The Real Reason for Germany's Industrial Expansion?

By Frank Thadeusz

Did Germany experience rapid industrial expansion in the 19th century due to an absence of copyright law? A German historian argues that the massive proliferation of books, and thus knowledge, laid the foundation for the country's industrial might.

The entire country seemed to be obsessed with reading. The sudden passion for books struck even booksellers as strange and in 1836 led literary critic Wolfgang Menzel to declare Germans "a people of poets and thinkers."
"That famous phrase is completely misconstrued," declares economic historian Eckhard Höffner, 44. "It refers not to literary greats such as Goethe and Schiller," he explains, "but to the fact that an incomparable mass of reading material was being produced in Germany."

Höffner has researched that early heyday of printed material in Germany and reached a surprising conclusion -- unlike neighboring England and France, Germany experienced an unparalleled explosion of knowledge in the 19th century.

German authors during this period wrote ceaselessly. Around 14,000 new publications appeared in a single year in 1843. Measured against population numbers at the time, this reaches nearly today's level. And although novels were published as well, the majority of the works were academic papers.

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President Camacho

Very interesting, I wasn't aware of this...

Spengler actually argues in a similar vein-- he ridicules the fact that in most Western legal codes (and especially the Anglo-Saxon), stealing a competitor's business scheme or model is entirely "legal", whereas stealing the piece of paper on which the scheme is written is "illegal". In his estimation, Western patent & copyright law is a vestige of the West's obsession with the Classical Culture-- valuing the corporeal, Euclidean form of the object in lieu of its function . The gold standard fetish you see in certain economic circles is another example.

Niccolo and Donkey

IP laws essentially prohibit certain physical arrangements of things. (Such as the arrangements of letters in a book, or the arrangement of components in a mechanical device.)

This limits choice in action, and thus limits the ability of people to choose the best means towards getting something done. By limiting this, you reduce the overall efficiency of means and are less economically competitive.

There is also argument from incentive: "If no one is granted a monopoly for something that isn't created yet, no one will create it"

The further I study behavioral economics, the more I see arguments based on the idea of "incentivization" fail. There are cases where this is substantiated, but IP isn't one of them. Where is the shortage of recipes or clothing?

A nitpick re. the gold standard. You are correct in that there are plenty that praise gold simply because of it's form. They miss the point as to what the difference in form provides. The correct reason to prefer gold to fiat currency is because gold provides different functions. A gold standard would (ideally) constrain the state and banking elite from exercising their will, as opposed to fiat currencies which amplify the strength of their will. The function is different because of the form.
Bob Dylan Roof
Interestingly, intellectual property law emerged in the most centralized states and was the most draconian in states that were dominated by Roman law. Apart from a short-lived experiment with patent law during the Renaissance in Venice, the majority of IP laws originated in favors conferred by absolute monarchs after Westphalia, and later evolved into comprehensive statutory forms after parliaments wrested control of the state from the monarchs. (I've also read that the extreme IP laws instituted after the Revolution in France contributed to the stagnation of French innovation in the 19th century). There definitely seems to be a connection between the classical Roman law, absolutism, and IP.

In contrast, the old (individualist) Anglo common law only ever countenanced the protection of trade secrets, provided that the owner assumed the burden of protecting the secrets.
President Camacho
I understand the properties of gold which endow it with intrinsic value as a currency standard: fungibility, durability, etc. But I tend to believe that the global power of organized finance is too determined and far-reaching to be slowed down by a gold standard...

On top of this we can find pre-modern ways in which the gold standard could be manipulated and money created "out of thin air" by power-hungry leaders. Cassius and Brutus for example in their war against Mark Antony looted the temples of Asia Minor, melting down the treasures and converting them into currency with which to buy troops and ships to fight Mark Antony. During the Middle Ages, "coin clipping" was a common practice among barons and monarchs; the edges of gold coins would be filed off and added to the nobleman's coffers, with the coins sent back in circulation weighing less than originally. And the Spaniards' discovery and subsequent hoarding of gold from the New World during the 16th century was a major factor in their favor vis a vis their suddenly weakened competitors.

A modern gold standard would make it harder for governments to devalue currency, no doubt.... But, Western-style economies with their relentless striving for constant investment, growth, and "full employment" would be exposed to weakesses arguably greater than in the fiat system; the gold standard while helping savers reduces the need for constant re-investment of funds.

I'm speaking from a political perspective here... imagine armies of congoids rampaging through every city in America because their Capital One cards were shut down and the sudden contraction of the government and McDonald's has destroyed 90% of the inner city job market...
This falls prey to the broken logic of Keynesian economics; we need consumers to max out their credit cards, or the economy won't "grow".

The paradox of thrift isn't real. Savings increase the stock of investment goods and loanable funds. Ample investment still occurs without the need for currency devaluation. Comparing Canada and the US, the Canadian economy is supposed to be in shambles according to this line of thinking because the CAD went from 0.60USD to 1.00USD in the past decade. This has put pressure on exports for sure, but it's resulted in massive capital influx. Companies don't want to invest in places where their assets lose value to inflation. Capital influx and investment is driven my savings, and the gold standard encourages this. Unemployment was never a lingering issue until the state control of finance. This could be due to other factors, but I don't find this to be coincidental.

What an imposed gold standard does is weaken the ability of the state to control finance. I agree. Those who advocate it are deliberately calling for a weaker state. But this doesn't matter too much. As the finance world stumbles into chaos with the rejection of USD hegemony, currency standards based in economic law will become more prominent. This isn't really by choice.