Monday’s edition of the Cato Institute’s daily podcast features an interview with Robert Laughlin, a Nobel Laureate in physics who wrote a book called The Crime of Reason about the ways that national security, patent, and copyright laws are restricting scientific research and the pursuit of knowledge. While I was in DC a couple of weeks ago, I had the opportunity to attend a talk he gave on the subject.
During his career, Laughlin experienced firsthand the strict regulatory regime that was erected to limit the spread of knowledge about the atom bomb. Under the Atomic Energy Act, first enacted in 1946, knowledge about certain aspects of nuclear physics is “born classified,” and anyone who independently discovers such knowledge is prohibited from disseminating it. Laughlin’s provocative thesis is that these laws served as a template for modern regulatory regimes that limit the spread of knowledge in other areas. These regimes include regulation of chemical and biological research on national security grounds, and also (to some extent) patent and copyright rules that restrict the dissemination or use of certain ideas for the benefit of private parties.
I’m sympathetic to his thesis that we should be concerned about the dangers of laws that restrict research and free inquiry. And as an eminent scientist who has first-hand experience with such regulations, Laughlin is well-positioned to throw a spotlight on the problem. Unfortunately, his argument gets a little muddled when he turned to the subject of economics. Laughlin takes a dim view of commerce, characterizing it as a deceptive form of gambling. In his view, markets are a kind of amoral war of all against all, in which we get ahead by deceiving others and controlling the flow of information. Laughlin thinks that despite the baleful effects of strong copyright and patent laws on scientific research and free inquiry, we simply can’t do without them, because it’s impossible for anyone to turn a profit without such restrictions:
In the information age, knowledge must be dear. The information age must be a time of sequestered knowledge. Why is that? Simple: you can’t get anybody to pay for something that’s free. If it’s readily available, no one will pay you for it. Therefore, the essence of the knowledge economy is hiding knowledge and making sure that people pay for it.
This claim surprised me because there are lots of companies that have managed to turn a profit while building open technological platforms. So during the question-and-answer session, I pointed out that there seemed to be plenty of technologies—the Internet being the most prominent example—that have succeeded precisely because knowledge about them was not “sequestered.”
Laughlin responded that:
If you want someone to buy software from you, you have to make it secret because otherwise they’ll go on the Internet and get it for free. You say that there are successful models of software that don’t work on that model. You bet there are. But to my knowledge, all of them are functionally advertising.
It may be true that most firms that build open technologies rely on advertising-based business models, but it’s not clear what that has to do with his broader thesis that profits require secrecy. Google may be “only” an advertising company, but it’s an immensely profitable one. IBM’s contributions to free software projects may be a clever marketing gimmick to sell its hardware and support services, but it seems to be an immensely successful marketing gimmick. And indeed, the 20th century saw Hollywood earn billions of dollars selling advertising alongside free television content. I don’t think Rupert Murdoch stays up at night worrying that most of his profits “only” come from advertising.
More generally, as Mike Masnick has written at some length Laughlin gets things completely backwards when he claims that an information economy is one in which information is expensive. To the contrary, the cost of information is falling rapidly and will continue to do so. What is getting more valuable are goods and services that are complementary to information—hardware devices, tools to search and organize the information, services to help people manage and make sense of the information, and so forth. A world of abundant and ubiquitous information isn’t a world in which we all starve. It’s a world in which more of us make our living making goods and services help people get more value out of the information goods they have available to them. Both Google’s search engine and IBM’s consulting services fit this model.
Finally, it’s important to keep in mind that we don’t face a binary choice between today’s excessive copyright and patent laws and no protections at all. Software has enjoyed traditional copyright protections since the 1970s, and to my knowledge those laws have not caused the kinds of problems that Laughlin talks about in his book. It is more recent changes in the law—notably the DMCA and the expansion of software patents—that have proven highly controversial. Rolling back some of these more recent changes to the law would not leave software companies bereft of legal protections for their products. Software piracy would still be illegal.
In short, I’m pleased to see Laughlin publicizing the risks of overzealous information regulations, but I think his pessimism is unwarranted. We can have a legal system that protects national security, promotes economic growth, and preserves researchers’ freedom of inquiry. Audio and video of the full Cato event is available here.
If people only did things for money – or failing that for advertising – as Laughlin suggests – then no-one would ever post a comment from “anonymous”
I was very worried by the implicit assumption in this debate – that no-one ever does anything of value either “for its own sake” or for the good of humanity. When I look at the free software movement I see those two motivations as the prime movers – and the financial motivation as quite secondary. Commercial open source really only came along when altruistic free software had gained critical mass.
This is circular. Why should we define the “information age” as necessarily meaning that there must be an economy based around selling knowledge? Maybe we just want to live in an age where the tools to collect, transport and exchange information are readily available and then just let that go where it goes. The trouble with Laughlin’s reasoning (and lot’s of people fall for the trap) is that the companies that managed to make a lot of money selling software, also managed to write the rulebook in order to boost their own ability to make money. Now everyone takes that rulebook and presumes it must be the only way anything can work. This is part of a larger mindset of presuming that things that cannot be directly converted to money, don’t exist. I see that as a very dangerous and simplistic mindset.
There was a long period of human history where knowledge was still freely exchanged, and plenty of new inventions were created, and people still made profits (but they used a different rulebook). Anything invented in ancient Greece, or ancient Rome (which is a whole heap of maths, geometry, military technology, civil construction technology, political science, etc) could not be patented, nor could it be copyrighted. Right up to the Enlightenment, fairly much the same rules applied. Lots of human progress was made. In the early days of software, it was NOT covered by copyright yet still plenty of software was written (all the fundamentals parts of unix were written in an open and non-proprietary environment where software was exchanged at no cost with minimal protection, BSD was exchanged between uni students and AT&T were restricted from selling software by law).
In the modern age, Open Source competitors in the marketplace are working at something of a disadvantage to proprietary companies precisely because the modern rulebook has been designed for the purpose of creating the ideal environment for proprietary companies to sell closed source software. If we throw away Copyright and Patents, there would still be companies making money, but they would be competing on different terms (like customer service, or personalised software, or combined software and hardware for example).
Modern companies like Digium provide support for their Open Source software as well as selling hardware add-ons and their enhanced “enterprise” addition. I don’t think you could call their core product merely an advertising model, because their Open Source edition is still a very complete product and lots of people use it.
MySQL is another example, with their dual-license making money on support and also on people who want to sell proprietary software with a MySQL backend.
Then there’s Red Hat who charge a support fee, but you can use CentOS if you prefer. RedHat protect their trademark strongly (which they have no choice about, because trademark law requires them to) but they offer a generous license on all their software.
Sun have published a lot of software (and design specifications, which are just as valuable) under a variety of open licenses. Sun make money on hardware (but their SPARC chips have always had open design specifications, and their market has always been open to competition), but also on services and packaged solutions (bundling hardware, software and services).
Then there’s many companies using Open Source internally and making profits from their core business, which happens to involve computers somewhere but selling software is not where they make their money. Most companies don’t publish the details of their internal system structure so it’s hard to say exactly how many are using Open Source.
In the 1990s, RSA was patented, but only in the US and it was litigated but there was never a court decision. Similar problem with PGP. I wrote part of one of the “to be scanned” books since software was a “munition” but a book of source code wasn’t.
You may not have lived through that, but Phil Zimmerman and others were under the same scary threat.
My immediate response, which is only a little glib, is that Laughlin doesn’t understand how $%#@$%^$% much information and data are out there. The haystack (the informational counterpart to the cloud) keeps most everything hidden and/or secret without anyone having expend a lot of extra effort. It’s no surprise that the most successful sites out there are aggregators and search engines — whether for news, products to buy, topical information, whatever.
Physics in particular is marked by having a few basic facts and principles from which people skilled in the art (ahem) can derive pretty much everything they need to know to solve any particular problem. Experimental physics less so, but still very much based on first principles. Pretty much every other field in the world, not at all. Sure I have access to the entire source of the Linux kernel, Emacs and the compilers for dozens of programming languages and application frameworks, but if I want to get something done in my own chosen field rather than spend months or years becoming an expert in some tiny subdomain, I’m going to go to someone else for the information I need. And I’ll gladly pay them for their expertise, either directly or indirectly (say, through advertising).
Of course, copyright and other law have important places in such an ecology, in particular preventing profit by misappropriation.