Tragic commons

Once budding economists have grasped the basics of the supply and demand curves, they are quickly introduced to the concept of the “tragedy of the commons”. This plank of economic theory emphasises the need for individual property rights to be allocated and protected to allow a market economy to function “efficiently” and, to use their favourite non-real-world term, “rationally”.

The argument runs something like this. Where property rights do not exist, there are no incentives to price a resource such as land, or fish, to reflect its true scarcity value. In the end the resource will be over-exploited and eventually disappear altogether.

But simplistic notions of what has gone wrong in the past leads to vapid conclusions. In particular that property rights should be individually held and the community held “commons” will always end up being over-exploited and destroyed for short-term gain.

The reality is that the overturning of communally held property rights has generally been due to the introduction of new technology and new rules. A failure of existing rules to be enforced as power structures change.

In Anglo-Saxon Britain, land was allocated to free men even though it was “communally” held. The system was well understood and the basic custodial rules for common land survived through to the enclosure movement of the 18^th century.

Two forces of change undermined this situation. The first dates back to the Norman conquest of 1066 which introduced a feudal system of ownership of resources. The king and his nobility had ownership claims over all resources, from wild deer to peasants and the land they roamed and worked.

The second change was the revolution in agricultural technology introduced by the likes of Turnip Townshend. This made huge increases in productivity possible but only through the strict application of feudal notions of individual ownership over Anglo-Saxon notions of community ownership. Old rules were no longer enforced and a land grab ensued. In other parts of the world similar changes came about as a result of colonisation.

Fishing suffered a similar fate. My great-grandfather fished from small inshore vessels off the east coast of Scotland early in the 20^th century. Fishing was a local occupation; any rules that applied could be easily enforced and the technology used allowed for a limited catch.

The introduction of new technology in the form of trawlers changed the fishing overnight. Big boats with big engines and even bigger nets from far away destroyed that local industry. My forebears were forced to up sticks to the big smoke of Aberdeen where my great-grandfather found employment in sulphur works.

In these two cases property rights were established, understood and enforced. But there came a time when the rules changed and individuals suffered through a lack of representation or understanding about what was happening.

What does this long preamble have to do with software development?

Software developers have long relied on the property rights provided by copyright laws to protect the code they develop from exploitation by others. This situation has served the industry well. New ideas propagate very quickly, to the benefit of the economy, but the hard work and investment of turning ideas into working products has been well protected by copyright.

The open source software movement has also used copyright protection to turn the notion of individual property rights on its head and create a commons of free software. The rules that apply are clearly understood and have the full protection of the law.

However, these rules are changing. In the mid-1990s the US Patent Office made a “small” change to the way they applied patent legislation. Effectively they imposed a more feudal system by allowing patents to apply to software and business processes. My coprighted code can now be subject to a third party's patent of which I had no previous knowledge.

This allows a land grab to take place over property where rights had previously been established, understood and enforced. No software written specifically for the needs of a local customer, from scratch, can be deemed the property of a third party who may ask for a property tax (royalty) or may ask you to cease and desist from use of your code altogether. The real kicker for New Zealand companies, however, is that our clients' smart lawyers deem it necessary to load us down with liability for this situation. The developers are asked to agree to be liable for any patent violations, usually in a multitude of worldwide jurisdictions.

It has been said that no one has a monopoly in ideas. Sadly this axiom applies less and less.

If we are really serious about having a “knowledge” or creative economy, a monopoly of ideas is very bad.

What should we do?

The first option is to do nothing and wait for a job at the sulphur works to appear. It always seems surprising to me how much of the software industry has already accepted this position by default.

The other option is to influence the rule making process. Talk to legislators. Challenge specific patents applications. Negotiate better contracts. We can do this as individuals or through collective groups such as ICT-NZ or the NZOSS.

The open source community is also debating what approach to take to protect the commons in these days of changing rules. One option is to use the patent monopoly rules against themselves. A “pool” of patents has been set up and made available to developers and users of open source software. The idea behind patent pools is to create a position of power. In the commercial world they are used to defend your company against patent claims from your competitors.

It works like this, if Sun approaches IBM demanding royalties for use of Sun patents, IBM would turn around and point out the hundreds of other patents they hold that Sun could be in breach of. Mutually assured destruction follows. This patent pool approach may fend off patent threats to open source software but it is not universally welcomed and certainly does not solve the issue for smaller commercial software developers.

My own belief is that the proliferation of patents and the impact that these artificial monopolies have on many industries and economies will end up forcing a rule change back to a more sensible situation. It will require cross-industry support. Visionaries from software, biotechnology, pharmaceutical and creative sectors need to get together ensure that the impact and promise of new technology is not harnessed by the favoured few but is made as wide and deep as possible.

Telegraph Road seems an appropriate note on which to finish.