Pivotal Point: Ideas as Property

In an earlier blog, I wrote about Jared Diamond’s theory that agriculture was the pivotal point in deciding why Europe (instead of Africa or native America or the Aborigines) went on to dominate the world.  That leads to the next question: why did the next big transformation, the Industrial Revolution, largely happen in England, not some other European country?

William Rosen’s answer to that question is part of his terrific book, The Most Powerful Idea in the World. It all started when the British began to think there was a way for anyone to become rich. At that time, “everything of value… was either land or the produce of land”. Since land was limited, by definition, it could be redistributed, but not created anew. Was there some other way?

Enter Edward Coke. He carved out a law that legalized patents that could be awarded to the “person who introduced the invention to the realm”. Next on the scene was John Locke, who felt that “rightful property is derived from the labor of man”. On top of that, Locke added the game changing perspective that labor was “as much of mind as of muscle”. This combination of Coke’s law and Locke’s philosophy of ideas as property opened the playing field to anyone who could come up with a new idea/ process/ mechanism that was commercially attractive. And ideas, unlike land, were unlimited.

Suddenly people of all backgrounds had an incentive to come up with ways to improve and/or find ways to do new things. More people trying increased the odds and speed of finding the next great idea. If certain ideas required money, which the smart guy didn’t have, he could hope to find a business partner who would fund him in return for a share of future revenues from any patents. One of the most famous people who benefited from these possibilities was James Watt.

With the prospect of riches via ideas, scientists too were drawn to the mix: their knowledge and understanding of concepts could help create a new idea/ invention. Conversely, figuring out how/ why an invention worked increased the knowledge base that in turn might lead to other things. The virtuous cycle of science and technology had begun.

The other consequence and benefit of this “ideas as property” concept came from a feature of the patent system: to be granted a patent, one had to reveal one’s idea in detail. This meant that the idea itself was now available to all, even if they couldn’t use it. But often, the mere sharing of such knowledge helped launch the next new idea/ concept.

So ok, England had hit upon the “ideas as property” concept first. But surely, the French or the Dutch could have enacted similar laws, right? Why then didn’t they contribute as much to the Industrial Revolution?

The Netherlands, though innovative (they were among the first to have stock markets) was a small country. That meant a patent for a new invention/ product had a smaller market. That meant less money to be made. And so the patent system didn’t make sense for the Dutch: fewer patents in turn meant less knowledge sharing, and so the virtuous circle of knowledge and innovations never really took off in the Netherlands.

The French at the time were too busy fretting and later reacting to the excesses of the monarchy. When the French Revolution followed, the concept of “ideas as property” was feared in France: would the new aristocrats now be idea owners instead of land owners? Jean-Jacque Rousseau, one of the influential philosophers behind the French Revolution, argued against technological progress! His reason: since only some gifted person would invent the next technology, such a system would promote inequality and eventually tyranny! And of course, several aristocrat scientists were killed. All of which meant that the French took a long time to enact a patent system, a delay that allowed the English to march way ahead.

Sometimes, it turns out, even if an idea or concept can be copied easily, it still needs other societal variables to be just right…