Marxism International

One of the great things about being a one-party dictatorship is that you can quickly take action to decisively head off precipitate crises.    Say what you will about the Chinese Communists; they have shown a deftness and agility in confronting problems that would have sunk a capitalist economy long ago.

It is one of the things that separate China from its large and unwieldly neighbor, India.   For the latter, there is that vexing problem, made dangerously acute during a national crisis, of achieving unity in diversity.    There, everyone, especially competing interests among the rich (not to mention foreign investors) have a veto power on virtually anything the state proposes, even if it is vitally necessary for the good of the country as a whole.   

China, by contrast, is a unitary hard state (China’s civilization is in fact inseparable from its state) and can pursue a single goal with determination, mobilizing maximal national resources in its achievement.

There have been dramatic illustrations of this skillful mobilization of people and institutions in the recent past (perhaps none quite so striking as the response of Beijing at the onset of the Asian currency crisis of 1998).   Since revaluation (China replaced the currency peg of the renminbi with a “floating system” on July 21st), the government has deftly managed its currency flows while tightening rules for foreign ownership in a style reminescent of Stalin’s.   In matters ranging from employment to health care to transportation to energy, the “Chinese model” demonstrates that the much-maligned “command economy”, competently employed, is absolutely indispensable in achieving and maintaining a dynamic national economy.

This is an issue that applies to so-called “intellectual property rights” (IPR), currently revered in the West by the same people who used to extol dissident trade unions under Actually Existing Socialism.   Not because such organizations were terribly concerned with the welfare of industrial workers (they weren’t), but rather due to the fact that publicizing their “struggles” here in the West was a convenient means of exciting popular indignation and hostility toward Communism.   Once the offending regimes were removed, the West and its local agents set about destroying both labor unions and workers’ standards of living with gusto, both in eastern Europe and at home.

The current brouhaha over copyright protection should be seen in this light.   In fact, practically all developing societies have played fast and loose with the rules when it came down to the free-range practice of appropriating the creations of others for private profit.    Charles Dickens never received a dime of royalties for his works published in America.   

When it comes to raising living standards or reducing poverty or increasing the national wealth for hundreds of millions of people who have yet to taste the fruits of much of the last century let alone the current one, the (relatively) unbiased observer can understand Beijings reticence to rush madly into every disputed copyright violation.

So China steals, or copies.   Everything from razor blades to farm tractors.   So what?   As Oded Shenkar points out; “fake goods are a natural economic motivator”   Free borrowing is absolutely essential to the Chinese economy.   The Chinese are still emerging from a semi-feudal economy and a pre-Stalinist system of industrialization.   Though huge advances have been made in the decades since 1949, the country still has a huge problem sustaining a stream of innovations.   Furthermore, it lacks a system of law that can credibly meet western demands for IPR protection.   And the likelihood of China adopting a western-style legal system — if ever — is practically nil.

Let’s face it.   The manufacture, distribution and sale of fake products is a huge and lucrative business, both for China and its billions of customers around the world.   Beijing is not likely to willingly adopt punitive measures toward counterfeiters that their fiercest critics in the West abjured when they were in a comparable stage of development.   Especially when such fakery is done on the cheap; there are no royalties, or liability costs, and — best of all– someone else (and a potential adversary at that) foots the bill for the R&D.  

It’s perfect.

So why should China pay more than lip service to the vigorous prosecution of copyright violators and knock-off artists?   It shouldn’t.   Doing so, first of all, would be to court massive unemployment and social unrest.   Secondly, innovation and experimentation with existing standard products would be adversely affected, thus hindering the development of new products within the indigenous economy.   But, most importantly of all, it would set a dangerous precedent in altering a fundamental law of China’s “market socialism” and might even compromise the rights of Chinese IPR holders, as well as those foreign firms who facilitate the legal transfer of technology. 

And legal opinion is split as to whether exporting a fake product even constitutes a sale under Chinese law.

What is coming to be universally acknowledged is that we are entering a period where the enforcement of copyright — at least in forms envisaged by Wall Street — will be a pipe dream.   Corporations will continue to try new and ingenious ways to thwart the copycats.   Innovations in the realm of technology, governance and knowledge compartmentalization can temporarily disable and delay the illicit appropriation of new products, but in the end such attempts will probably prove futile.  

Intellectual property rights, like other rights which arose under the auspices of western capitalist development, will in all likelihood have to undergo substantial modifications in real-world markets before they become tenable on a global scale.   And probably not before China itself is ready to advantaegously adopt them.