Why an information economy is not an IP economy

NOTE HXA7241 2011-12-04T12:57Z

This is a prompt to think differently about information, IP, and their economic arrangement.

Governmental persons sometimes talk of how we are entering a new kind of post-industrial age: an information economy, an economy dominated by knowledge work and production. Well, we already have an exemplar, leading the way – software. But it says something they do not want to hear – or at least their corporate sponsors do not.

The big lesson of software production seems to be: get rid of IP copy-restriction. The biggest way to increase production is not by giving producers more money – as the monopoly mechanism of IP is built to do. Money is comparatively weak. The biggest way to increase production is by sharing products – information thrives on itself – and that is the opposite of IP.

That is the funny thing. IP really only works with products that are substantially non-informational. IP is actually a form of old material industry – it is not post-industrial at all. When you have an economy that really is purely informational, IP does not make sense. IP is the obstruction to an information-economy.


IP does exactly the opposite of what you want in an information economy. Here are three ways to begin to see that:


As information technology improves, the cost of IP grows. And since that technology has exploded in power, the cost of IP has consequently grown enormously too.

When information was in paper books, it was difficult to copy. Copyright did not really restrict copying since people could not make copies anyway. But now information is digital the real cost of copying is practically zero. That means the artificial restrictions of copyright stops people realising a large benefit that would otherwise be available.

The gain that technology offers is exactly what IP blocks.


The most vital ingredient in production of new information seems most likely not extra monetary incentive, but other information. The more complex the product, the more concentrated the accumulation of other informational inputs.

And information has a special magic that money does not: its value can be endlessly multiplied. A single amount of money can only pay for one piece of information production. But through copying, a single amount of information can contribute to an unlimited number of pieces of information production.

IP obstructs this most important ingredient of production and its immense leverage.


Economic growth means more productivity; that is, not that we simply make more, but that we can have more good stuff for less cost or input.

The greatest source of that is the copyability of information. Copies give the whole value of the product, but for none of the cost: increasing copying is virtually ideal growth. Every new copy used adds the full value of the product into the economy at near zero cost.

An efficient economy would maximise copying, and a growing one drive towards that. An IP economy restricts it.


It could be responded that the standard economic model of IP accommodates all this: it is a trade-off of production and access, so we just need to find the optimal balance. But information is too important to be compromised into an unnecessary trade-off. It is the essence of information to be copied – that is what it means. Wanting to have information copied less is like wanting wheels to be less round. We should start viewing things differently and developing new, less information-obstructive, economic arrangements.