February 26, 2021

The Role of Open Source in Addressing Inequality

This is my second blog post for the UVA class LPPS 4720.

Inequality manifests itself in many different ways, but I will only address one of these in this post: access to information. The 21st century, the so-called “Information Age”, is a time where connection to the Internet along with basic literacy enables an unprecedented number of people to freely participate in the “Human Colossus”. However, even with the Internet, the abuse of strict intellectual property laws can restrict free access to information and perpetuate inequality. As said in page 217 of the UN 2019 Human Development Report, “economic institutions and laws created in the 20th century to manage industrialization in developed economies may need to be reconsidered in the 21st century”.

In a 2013 New York Times opinion page, Joseph Stiglitz argues that ‘some of the most iniquitous aspects of inequality creation within our economic system are a result of “rent-seeking”: profits, and inequality, generated by manipulating social or political conditions to get a larger share of the economic pie, rather than increasing the size of that pie’. The intellectual property system in the US (which inspired many similar systems around the world) encourages people and companies to restrict access to certain information. One example of this (which Stiglitz thoroughly discussed) is the issue of Myriad trying to patent two genes, a naturally occurring phenomenon, and using these patents to massively inflate the price of their gene tests which prevented many people from affording them. This is not only morally reprehensible and contributes to inequality, it is also now illegal thanks to a Supreme Court ruling.

One can argue that publicly traded companies are responsible for the welfare of their shareholders and therefore seek to maximize short-term gains, which is exactly what the current intellectual property system prioritizes. However, if a company wants to succeed in the long-term, it needs to ensure that it can generate value, which is best achieved through sustained innovation. According to the above cited UN report, “in the last few decades a higher concentration of patent ownership, echoing the broader pattern of market concentration, has contributed to declines in knowledge diffusion and business dynamism”. The diffusion of and equal access to knowledge contributes to a healthy economy which in turn benefits businesses. Corporate success does not have to be a zero-sum game—it is possible to create a system that promotes equality and contributes to the success of public corporations.

One possible solution to this problem is an Open Source approach. In the case of Myriad, sharing their genetic findings instead of filing for patents would have prevented a 30% drop in their share price after the Supreme Court ruling and incentivized the company to produce more ground-breaking innovations, further increasing its value and share price. In fact, as Stiglitz argues, “Myriad’s own discovery—like any in science—used technologies and ideas that were developed by others”, and “[had] that prior knowledge not been publicly available, Myriad could not have done what it did”. Myriad’s abuse of the patent system, if allowed to continue, would have stagnated innovation and prevented the advancement of science—which is the very justification for the patent system’s existence in the first place. The advancement of science and technology is a major reason why equality has advanced so far in the past few decades. I’m not arguing that patents are universally bad, just that they are more likely to be abused in the name of short-term profit, discouraging innovation and perpetuating inequality. If history is any indication, monopolies rarely survive for long in modern capitalistic societies.

© Samarth Kishor 2020

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