Cyberlords: The Rentier Class of the Information Sector
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by Roberto Verzola
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About the author:
Roberto Verzola is a member of the Philippine Greens, and runs a small e-mail network for Philippine non-government organizations. He has written a number of articles on intellectual property rights and the emerging global information economy
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The information sector of an economy is that sector whose products consist principally of information goods.
Information goods are non-material goods.[1] They are most easily distinguished by the fact that they can be stored in various media and when stored in electronic media, their cost of reproduction becomes negligibly low. Some examples of information goods include software, music, video, databases, books, machine designs, genetic information, and other copyrighted or patented goods.
When the information sector of an economy becomes more dominant than either its industrial or ecology sector, then that economy has become an information economy.[2] A good example of such an economy is the U.S. economy.
Information: low reproduction cost
The basic production process in the information sector involves the use of mental workers or intellectuals to produce information goods. They are often aided in this process by additional information processing tools, at the heart of which is usually a computer. Once the first copy is created, an information product can then be transformed for storage on various media. The most flexible form of storage is electronic media. Once stored in this form, the product becomes very easy to reproduce at very little cost. If the information is stored in digital format, then perfect reproductions of the original can be made over unlimited generations of copies.
It is the recent electronic and digital revolution which has made possible the emerging dominance of the information sector in some countries.
The ease with which information, especially in its electronic format, can now be reproduced leads to the basic conflict within the information sector. On the one hand, information users tend to share copies of information products freely. On the other hand, information producers tend to hinder the free exchange of information, so that they can maintain the extremely high profit margins possible from the negligibly low reproduction costs.
The extra-high margins of a successful information-based company are best seen in Microsoft, which grew to a billion-dollar firm within a decade after it released its first software product. This is a feat which probably has no equal among industrial firms.
The high profit margins among information firms likewise draw finance capital from industrial and agricultural sectors. The transformation of the U.S. from an industrial to an information economy reflects this movement of investment capital towards the information sector, confirming the observation that investment capital tends to flow towards business prospects with the highest rates of return.
Monopolistic information economies
The U.S. information economy is a monopolistic information economy, because the propertied classes of the dominant information sector assert their control over information through monopolistic mechanisms called intellectual property rights (IPR). The main forms of IPR are patents and copyrights, both of which are statutory monopolies, i.e., monopolies acquired by virtue of government statutes. These State-granted monopolies cover the exclusive rights to use, manufacture, copy, modify, and sell the product. Recently, under the GATT/WTO, these rights have been expanded further to include the exclusive right to rent and to import the products.
These statutory monopolies, which are gradually being strengthened and extended as the political and economic power of the propertied classes of the information sector grows, are in direct conflict with the information freedoms sought by the vast majority of information users. These freedoms include the freedoms to use, to share with others, and to modify information. Information monopolies are also in conflict with the basic nature of information itself as a public good.
In the future, non-monopolistic information economies may emerge, which will remunerate intellectual activity through means other than monopolistic mechanisms such as patents, copyrights, and other IPR. In such an economy, the nature of intellectual rewards will be in much better harmony with the nature of information itself.[3] This analysis covers monopolistic information economies. For convenience, the shorter term ‘information economies’ will be used for the rest of this article to refer to monopolistic information economies.
Classes in the information sector
Just like the ecology and industrial sectors, the information sector gives rise to various economic classes based on the individuals’ position in the production, distribution and use of information. An analysis of these classes will give us useful insights about the underlying economic interests and typical attitudes of various social groups in the sector.[4] The following major classes can be identified:
Cyberlords. The cyberlords are the propertied class of the information sector. They control either a body of information, or the material infrastructure for creating, distributing or using information. Cyberlords are a rent-seeking capitalist class.[5]
The first category of cyberlords are the IPR holders, who have staked their monopoly rights over a specific body of information, and who earn their income by charging royalties, license fees, or other forms of rent from those who want to use this body of information. Cyberlords include the owners of software companies, database companies, audio, video and film companies, genetic engineering firms, pharmaceutical and seed firms, and similar companies who earn most of their income from IPR rents.
The second category of cyberlords are the infrastructure owners. They own or control the industrial infrastructure for creating, reproducing, distributing, or using information. They earn their income by charging rents for the use of these infrastructures. This category includes the owners of communications lines and equipment, radio and TV stations, Internet service providers, theater distributors and owners, cable TV operators, and other firms through which information controlled by the first category is reproduced, distributed, or used. Strictly speaking, these infrastructure owners are an industrial rather than an information class, but are doubly-classed as cyberlords because they are a rent-seeking class who play a key role in the distribution of information.
However, these industrial cyberlords may not share the same rabid advocacy for IPRs that characterize the IPR-holding cyberlords, especially when IPRs impede the wider use of the infrastructure from which they derive their own income. This category is generally in alliance with the first; nonetheless, the distinction between them may become important occasionally, in the struggle against the cyberlords of the first type, who are the true cyberlords of the information economy.[6]
We can also include in the cyberlord class those highly-paid professionals who earn their living under the employ or in the service of cyberlords. The best examples are the top-level managers as well as the lawyers who serve cyberlords and who derive their income mostly from payments by the cyberlords they work for. Lawyers, in particular, are absolutely necessary for copyrights and patents holders because these IPR instruments are basically legal artifices which can only be implemented through government action. These highly-paid hirelings acquire the class status and the ideological outlook of the cyberlords they serve.
Information cyberlords can be classified into big cyberlords, middle cyberlords and small cyberlords.
The big cyberlords earn most of their income from information rents. The mark of the big cyberlord stratum is that it did not create some or even most of the body of information protected by its patent or copyrights. They were instead created by hired staff, contracted out or bought from other companies. Big cyberlords normally start out as a small or middle cyberlord. As they acquire economic power, they find it more convenient to pay others for existing information products than to create new ones themselves from scratch. When they do so, they turn into a big cyberlord. Big cyberlords often buy into or buy out smaller cyberlords not only to acquire new products but also to suppress potential or actual competition. The best example of a big cyberlord is William Gates, the principal owner of Microsoft and the richest person in the world.
Big cyberlords all over the world are scouring the public domain for information products that they can privatize and monopolize through IPRs. Some have already acquired the exclusive electronic reproduction rights to the paintings and other cultural artifacts in the world’s best museums. Others are engaged in a race to patent genetic information of all kinds, including parts of the human genome. Still others are turning their eye on the vast information outputs of governments, which are normally in the public domain.
Like Microsoft, most corporations owned by big cyberlords operate globally. These firms comprise a big portion of the hidden forces driving the process of globalization. Because the social nature of information keeps asserting itself and information products tend to spread themselves globally as soon as they are released, cyberlords need a global legal infrastructure for imposing their information monopolies and extracting monopoly rents. Thus, they push the globalization process incessantly to ensure that every country, every nook and corner of the globe, is within the reach of their mechanisms for extracting monopoly rents.[7]
The biggest information cyberlords are based mostly in the U.S., Europe, and, to a lesser extent, Japan. In these countries, the highly-advanced industrial infrastructure, together with extremist concepts of private property, have given their cyberlord class a huge, commanding lead over cyberlords elsewhere.[8] Their presence is felt globally, and because they tend to suppress local efforts to acquire new technologies at the least cost, big cyberlords are a major hindrance to the development efforts of most national economies.
Like the big cyberlords, middle cyberlords earn most of their income from information rents. However, the incomes of middle cyberlords come principally from the rent income generated by the body of information much of which they created themselves. Successful authors, inventors, and songwriters, who live off the royalties from their works, belong to this category.
Small cyberlords earn substantial income from information rents, but their income is not sufficient to support themselves and their family, so they have to supplement it with incomes from other sources. Most local information cyberlords belong to this category.
This stratum keeps trying to graduate to the middle cyberlord status, because they have internalized the ideology of the cyberlord class. This ideology arises from the basic dream of the cyberlord class, which can be summed up as follows: "create a good idea or ‘expression of an idea’, stake a monopoly claim over it through a patent or a copyright, and then live off the rents for the rest of your life." Small cyberlords are in perpetual pursuit of this dream, and a few may manage to become middle cyberlords.
Compradors. They are the merchant capitalists of the information sector. They earn their living by selling for profit patented or copyrighted products. They very often come from the merchant classes of the industrial and ecology sectors, and may retain their businesses in these sectors. These merchant classes are attracted to move into the information sector because the extremely high profit margins enjoyed by successful cyberlords gives resellers better margins too.
This class can be roughly divided into two. Monopolistic compradors make money by paying cyberlords for the right to sell patented or copyrighted goods. Thus, they derive their income from information rents and are therefore supportive of cyberlord interests.
Non-monopolistic compradors make money by reproducing and selling patented or copyrighted material, without paying the monopoly rents claimed by cyberlords. In a way, they help break the information monopolies imposed by cyberlords.
Because of the political clout of cyberlords, the non-monopolistic compradors are often harassed and suppressed, to discourage them from their trade and to turn them into monopolistic compradors. They are frequently the targets of surveillance, legal suits, raids, and other forms of government and cyberlord harassment. Yet, there is no lack of non-monopolistic compradors who trade in copyrighted and patented materials, making these materials more accessible to the public which would otherwise be unable to afford them. Even under the worst forms of authoritarian rule, non-monopolistic compradors will continue to ply their trade by forming an underground network to break the cyberlord monopolies. These compradors can be allies of information users against the cyberlord class. Many of them, however, eventually surrender to the power of cyberlords, arrive at a profit-sharing arrangement with them, and turn into monopolistic compradors.
Intellectuals. Intellectuals are the main creators of information in the information sector. They earn their living through mental labor, creating new and useful information. The intellectual class may be further subdivided into three strata.
The upper stratum earns some income from information rents but this is not substantial. Most of their earnings are from business contracts for information work, rather than IPR rents. This stratum will often defend IPRs because its members already derive income from information rents and hope to get more income from such rents in the future.
The upper stratum’s rent income from IPR distinguishes it from the middle stratum, which has no such rent income.
The middle stratum gets its income from business contracts for information work. Some members of this stratum may retain their fixed-wage jobs, although the bigger portion of their income already comes from their contractual work. This can be common especially among intellectuals in government.
This stratum earns no income from information rents, but members of this stratum sometimes successfully negotiate to retain ownership over their body of work, to prevent the other contracting party from making commercial use of their work. This represents an incipient cyberlord thinking that is strengthened or suppressed depending on their success or failure in retaining full ownership over their work in these negotiations and in extracting rent income from their body of works. In the main, however, this stratum does not closely identify with the interests of monopolistic cyberlords.
The middle stratum differs from the lower stratum in that it is profit-making rather than wage-earning, and that a member of this stratum may have other intellectuals under its employ.
The lower stratum consists of the wage-earning intellectuals, who earn most of their income from fixed-rate payments such as wages and salaries. They may occasionally get additional remunerations such as bonuses for especially useful intellectual work, or side contracts from which they may earn considerable sums. But they earn the bulk of their income as wage-earners.
Should their work result in patentable or copyrightable materials, their hiring contracts normally specify that such materials become the property of the company they work for. Because they are usually in no position to negotiate when looking for a job, they accept such contracts as a matter of course. The majority of intellectuals belong to this stratum of the intellectual class.
Information users. Members of this group use information but are not generally involved in the creation of information products. Whatever information they generate are either automatically shared with others, or kept confidential. The idea of staking a monopoly on a body of information so that they can make money out of it is quite alien to this group. Because they generally earn their income from elsewhere, information users are actually not a single class nor a monolithic group, but a cluster of classes in the ecology, industrial and information sectors. In so far as they are all information users, however, they actively seek the information freedoms of using, sharing, and modifying information. Information users are therefore the main force in the struggle to free information from cyberlord monopolies.
The basic conflict
The key issue that separates classes in a monopolistic information economy is the issue of IPR, which reflects their class roles in the production, distribution and use of information. IPRs are a highly monopolistic form of controlling information flow, and are therefore totally incompatible with the nature of information as well as the desire of information users to use, share and modify information freely.
Cyberlords are very strong advocates for expanding these monopoly rights, while information users want to limit these rights as much as possible. In so far as IPR infringements impinge on their profit margins, compradors will take the side of cyberlords. But in so far as monopoly rents themselves impinge on their profit margins, other compradors will oppose IPRs. Intellectuals may dream of owning some body of information in the future, from which they can themselves extract information rents, but in the main realize that this cannot be their main source of income, and that they themselves need access to many bodies of information which are currently monopolized through patents or copyrights.
The key to the transformation of a monopolistic information economy towards a non-monopolistic information economy is to replace monopolistic IPRs with other means of rewarding intellectual activity. This transformation will of course be opposed to the very end by the cyberlord class, which furthermore is politically and economically very strong. As the privatization process subsumes under cyberlord monopolies more and more of what is now public domain information, the public of information users will acquire a higher level of political consciousness, and this struggle will eventually express itself as the main conflict in a monopolistic information economy. As such, it will increasingly manifest itself in cultural, economic as well as political fronts.
A class strategy against monopolies
The class strategy that can defeat the powerful cyberlord class, involves advancing a set of demands that will isolate the big cyberlords and their closest comprador allies, neutralize or win over the middle and small cyberlords, and to win over and mobilize the entire intellectual class with special attention to its middle and lower strata, to unite with the vast majority of information users. This united front should also involve other classes and social groups in the industrial and ecology sectors who are themselves information users or whose thinking and orientation are in conflict with some aspects of IPRs. The latter group include indigenous peoples, farmers, women, and the religious sector. Without such a united front, it will be extremely difficult to defeat the information monopolies of the big cyberlords, and the latter would be able to use their increasing economic and political power to consolidate, codify and further expand their statutory monopolies.
With a well-formulated set of demands, the powerful cyberlord class can be politically isolated, and existing laws can be restructured to liberalize access to monopolistically-owned information. The long-term goal is to dismantle monopolistic forms of information ownership and to replace them with non-monopolistic forms which are more in harmony with the nature of information itself. This will eventually enable users to enjoy the full information freedoms that will unleash creativity not only among the intellectuals but among information users themselves.
The formulation of such a comprehensive set of demands, which in effect becomes the basis of political strategy and tactics in the emerging class conflicts within the information sector, deserves a separate piece. However, several demands can be identified now, because they have emerged historically and must necessarily become part of the overall set of demands against information monopolies.
Compulsory licensing. The most important demand for breaking the information monopolies of cyberlords is the retention of compulsory licensing and the expansion of its coverage.
Compulsory licensing works as follows: Somebody who wants to use/commercialize patented or copyrighted material approaches NOT the patent or copyright holder, but the government for a license to do so. The government grants the license, whether the original patent or copyright holder agrees or not, but compels the licensee to pay the patent/copyright holder a royalty rate that is fixed by the government (or by law). Many countries in the world have used and continue to use compulsory licensing for important products like pharmaceuticals and books.[9]
Compulsory licensing (also called mandatory licensing in some countries) is a demand of many countries who want to access technologies but cannot afford the price set by patent/copyright holders. While this internationally-recognized mechanism was meant for the benefit of poorer countries, even the U.S. and many European countries use it.
Most small cyberlords, because they often have neither the capital nor the production facilities to commercialize their creations themselves, welcome compulsory licensing, although they will try to negotiate for higher royalty rates. They welcome it because compulsory licensing will ensure them of some income from their creations. Compulsory licensing is the demand that can split the cyberlord class and win over or neutralize the small cyberlords and some of the middle cyberlords. The big cyberlords, who have the capability to commercialize products themselves, are violently opposed to the idea of compulsory licensing, because it is a powerful threat to their monopoly over information. It is an indication of the political power and influence of cyberlords that they managed to thoroughly emasculate the concept of compulsory licensing in the GATT/WTO agreement.
Non-monopolistic compradors welcome compulsory licensing because it legalizes their anti-monopolistic trading activities, protecting them from legal harassments, raids, and other attacks initiated by big cyberlords.
No patenting of life forms. This demand emerged out of the popular campaigns against genetic engineering and recombinant DNA technologies. It has become a major global issue, as biotechnology in general and genetic engineering in particular continue to take that slippery slope leading corporations towards the direct manipulation and commercialization of human genetic material. True to their cyberlord nature, owners of biotech firms are racing against each other in patenting DNA sequences, microorganisms, plants, animal, human genetic matter and all other kinds of biological material. Cyberlord representatives have already managed to insert in the GATT/WTO agreement protection for patents on microorganisms and microbiological processes.
This is a very powerful demand because biotech cyberlords impinge on religious and moral issues as well as on indigenous community knowledge. Genetic engineering also threatens to give rise to a whole new class of harmful viruses, germs, microorganisms and higher life forms which have no natural enemies. This demand can unite a wide range of sectors against the cyberlord ideology.
Expanding the fair-use policy. This has been the historical struggle waged by librarians, particularly of public libraries, who see themselves as guardians of the world’s storehouse of knowledge. Most librarians want to see this storehouse of knowledge freely accessible to the public, and they have fought long battles and firmly held their ground on the issue of "fair-use", which allows students and researchers access to copyrighted or patented materials without paying IPR rents. Recently, this ground has been suffering from slow erosion due to the increasing political power of cyberlords. The expansion of the fair-use policy can be a minor victory against the overwhelming advances of cyberlords in various fronts to expand the scope and coverage of their monopolies.
Support for non-monopolistic mechanisms. Various concepts in software development and/or distribution have recently emerged. Some, such as shareware, are less monopolistic than IPR. Others, such as "copyleft" and the GNU General Public License (GPL), are completely non-monopolistic.
Shareware works under various schemes, such as free trial periods, free distribution, voluntary payments, etc. These concepts have in effect abandoned the legal artifice of asserting one’s exclusive monopoly over copying one’s work, in favor of granting users limited rights to use, copy and distribute the material. While shareware authors have shed considerably the monopolistic ideology of cyberlords, they still balk at releasing their source code, and therefore continue to keep their users captive and unable to modify the software on their own.
The GNU GPL enables users to enjoy the fullest set of information freedoms, including the freedom to use, the freedom to share with others, and the freedom to modify information. The GPL shows how current copyright concepts may be used in the transition away from monopolistic arrangements, and points the way towards future non-monopolistic software development.[10] Software as well as books which fall under the GPL copyright may be used freely by anybody who may find them useful. They may also be shared freely with others. Finally, the software may be freely modified because the source code is included in the distribution.
Software source code is the equivalent of architectural plans in case of buildings, schematic diagrams in case of electronic equipment, or technical drawings in case of machinery. To improve software, a building, electronic equipment, or machinery, you must have these original plans to do the modifications properly. Otherwise, the original plans must be reconstructed before major modifications can proceed.
The extremes which cyberlords resort to, in order to strengthen their monopolies, can be seen from their persistent and increasingly successful demand that countries outlaw the decompilation of software.[11] Decompilation is the reconstruction of software source code. It is equivalent to reconstructing architectural plans, schematic diagrams, or technical drawings, because the original designers refused to release them to the user. By prohibiting the reconstruction of these original plans, cyberlords make it extremely difficult if not impossible for users to independently modify copyrighted or patented materials, denying users their freedom to modify the materials and enabling cyberlords to extract even more monopoly rents from users.
General wage increases. In a way, salaries and wages are a specific form of non-monopolistic remuneration for intellectual activity. This is the most relevant demand for the big majority of intellectuals, who will stay on the side of information users as long as they are assured of some reasonable remuneration for their work as information creators. In this respect, the big majority of intellectuals can unite with other wage-earning classes to raise common demands.
The list above is not complete. A comprehensive set of demands for transforming monopolistic information economies can only emerge when the various classes ranged against the cyberlords acquire an economic and political consciousness that will make clear-cut where their interests lie.[12]
Towards a new social order
These demands in the information sector must also be linked with the demands of other change-oriented classes and groups in the ecology and industrial sectors, such as farmers, fisherfolk, workers, women and indigenous peoples. The key is to bring together the widest range of people, whose unity and joint action can bring about a political structure for evolving new forms of rewarding intellectual activity. Such forms will lead in the future to a non-monopolistic information sector. The rethinking of property concepts that this will bring about will then reinforce demands for restructuring the industrial and agriculture sectors as well.
From such a confluence of social movements, enough social forces for change can emerge to bring forth a society where knowledge and culture are freely shared, where industrial machinery are carefully designed for genuine human and community needs, and where agriculture is an ecological and not an industrial undertaking.
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Notes:
1. Information goods. Information, in the most general sense, is anything that can be represented and stored as a digital series of bits (ie, one’s and zero’s). In the information sciences, information is defined in terms of resolving uncertainty about a set of possible outcomes. The basic unit of information is the bit, which resolves the uncertainty between two equally-possible outcomes. To acquire information means to reduce or to completely resolve the uncertainty. This clearly makes information a non-material entity. For a more detailed discussion of information products, please see my earlier article "Towards A Political Economy of Information".
2. Information, industrial, and ecology sectors. I am referring here to the sectors of the economy that engage in the production of goods. I use the ecology sector to cover both agriculture and hunting/gathering. Fishing, for example, is a hunting/gathering activity, which is part of the ecology sector. A more complete set of economic sectors would include the personal and the financial services sectors (both which involve services more than goods). For a more detailed discussion of these three sectors of production, please see my earlier article "Redefining Our Vision For The Future."
3. Non-monopolistic forms of remuneration. These include salaries and wages, bonuses, prizes, awards, grants and other means of remunerating intellectual activity which don’t give intellectuals the exclusive right to use or copy their creation.
4. Class analysis. It is sometimes considered unfair to lump individual cyberlords into a single class, as if these people had no conscience, moral values, or social ethics. It is true that individual cyberlords, perhaps due to personal belief, religion, or political inclination, may act against their own economic interests. If they do so consistently, however, they probably will not remain a cyberlord for long. Also, most of the big and middle cyberlords run their business affairs through corporations. Obviously, corporations have neither heart, conscience nor soul. These are invariably run by managers whose pay and job security depend on how well they maximize corporate profits. Thus, it remains valid to look at the economic interests of classes, to acquire some useful insights into their most probable economic, political and social behavior.
5. Cyberlord. The word is constructed from "cyberspace" and "landlord". The information space created by all the storage and transmission media connected to the Internet is often called cyberspace. Landlords, ie, landowners who charge rent for the use of their land, are the classical example of a rent-seeking class.
6. Conflict of interest between the industrial and the information cyberlord. For instance, a lot of commercial software are freely exchanged among online users. Online providers like Compuserve or America Online either turn a blind eye on these activities or claim that they are impossible to police. Since most online providers charge their subscribers per minute of usage, it is also obvious that the more such exchanges occur, the more money they make.
7. Globalization. The Internet, the international media, the continuing pressure on countries to open up their economies to global corporations, and the GATT/WTO are examples of mechanisms that facilitate the globalization process.
8. Extremist private property concepts. A good example is the claim of scientists that if they discover a particular human DNA sequence, they can stake an ownership claim over this sequence through a patent. Such a claim means that they will have the exclusive right to use, copy, commercial, rent, import, etc. such DNA sequence. Another example is the claim of scientists, who splice a strand of DNA from one life form to another, that they have created a new life form, and thus can patent it. Such a patent represents a monopoly ownership claim not only on the particular result of such a genetic experiment, but on all subsequent life deriving from it, such as its offsprings and descendants. Still another example is the ownership by some companies of the exclusive electronic reproduction rights to some of the world’s most famous art works. Such ownership claim means that they, alone, can reproduce electronically these art works.
9. In the Philippines, we have a Book Reprinting Law, which authorizes local publishers to reprint foreign textbooks for the use of the local educational system. Philippine law also provides for compulsory licensing by local companies of pharmaceutical products. Both laws are currently under heavy attack by cyberlord lobbyists. Moves are now afoot to repeal them in order to align Philippine laws with the GATT/WTO agreement.
10. GNU GPL. GNU is a project of the Free Software Foundation (FSF), under the leadership of Richard Stallman. Its General Public License (GPL) was carefully crafted to make use of existing copyright concepts to pave the way for a non-monopolistic form of copyright. The increasing popularity among Unix users of the Linux kernel by Linus Torvalds, the GNU operating system of the FSF, and free alternatives to MS-DOS and Windows — all distributed under the GPL — shows the way for future non-monopolistic software development. Please check the Web page http://www.gnu.ai.mit.edu/philosophy/categories.html for details about the GNU GPL.
11. Decompilation. The Business Software Alliance (BSA), which represents the interests of cyberlords worldwide, has launched an aggressive lobby within the Philippine legislature to ban decompilation.
12. An effort to formulate the response of social movements to the emerging information economy was made by Interdoc, an international network of non-government organizations, in a workshop last November 1996 in Silang, Cavite, Philippines. One formulation which emerged from the workshop is as follows: "Build, improve and expand the body of public domain information infrastructures, tools and content."
July 28, 1997
2000-12-26
