Intellectual monopoly capitalism as a new stage of global capitalism
Intellectual rents enjoyed by the innovator were supposed to disappear once the rest of the industry adopts the new technique. They disappeared if the secret was broken, the patent expired or when another firm innovated, overcoming the innovating firm’s advantage. The fundamental change of our epoch is the continuous reinforcement of knowledge monopolies leading to a perpetuation of the core, maximizing rentiership over time.
Intellectual monopoly is not only - nor mainly - a result of giant corporations’ in-house R&D. Their knowledge monopoly is based on appropriating and monetizing knowledge results from their multiple innovation networks. Intellectual monopolies strategically decide which steps of their production and innovation networks belong to their core business and what should be outsourced. Intellectual monopolies also outsource innovation steps by actively engaging in open access or open science initiatives, monetizing knowledge commons. By organizing global corporate innovation networks of continuous innovation, a reduced group of corporations systematically renews and expands intellectual monopoly (thus, rents). The result is increasing intellectual rents in fewer hands, which are not even partially given back to the public through corporate taxes since tax avoidance is easier for companies that are intensive in intangible capital (Bryan et al., 2017; Pozsar, 2018).
Besides outsourcing knowledge (cum innovation) production, their capacity to manage knowledge production opens multiple alternatives that they use at their discretion. Acquiring technology through mergers and acquisitions (M&As) stands out, with big pharma and high-tech giants as prominent examples. In this case, the full innovation process - thus associated risks - is outsourced to other firms. Finally, in the digital age, harvesting big data is another prominent source of intangible assets.
Depending on the diversity of knowledge management techniques and on the multiplicity of monopolized technologies, intellectual monopolies differ in scope. Some are focused on narrow niches - such as Siemens’ dominance of artificial intelligence (AI) for life and medical sciences inventions or SGCC’s lead in Al-related inventions for energy management (World Intellectual Property Organization, 2019). Meanwhile, others expand their power, dominating multiple - sometimes even general-purpose - technologies. GAFAM and BATH are examples of the latter.
All in all, intellectual monopoly capitalism can be conceived as the stage in capitalism where capital accumulation (and distribution) is led by a core of intellectual monopolies that base their accumulation (and power) on their permanent and expanding monopoly (and assetization) of predated knowledge. In the rest of this section, we further elaborate on some of this epoch’s main features.
Intellectual monopoly capitalism is a global phenomenon
Concentration driven by monopolizing intangible assets is not just a US phenomenon. Unlike different authors from mainstream and heterodox economic perspectives who have restricted their study of recent concentration and intangibles to the United States (Covarrubias et al., 2020; Lambert, 2019; Orhangazi, 2018; Schwartz, 2016, 2019; Zingales, 2017), here we think of capital accumulation at a global level and explain national differences always in relation to the global trend.9 Such a general understanding is necessary to analyse the overall implications and depth of the current transformation. This book is an attempt to study capitalism, power and innovation, integrating three levels of analysis: global, national and network. At the national level, it distinguishes between core and peripheral countries.10 At the network level, it focuses on how intellectual monopolies plan, organize and predate from their innovation networks, thus also including a broad set of subordinate firms and other institutions.
In more concrete terms, intellectual monopoly capitalism is a global phenomenon with different expressions around the world. The persistently uneven distribution of innovation in the world is a structural truth that intellectual monopoly capitalism is worsening. Intellectual monopolies originate in core countries, in particular in the United States, but their effects are spread all over the world. By 2019, the top ten companies accumulated 13.5% (and the top 100, 47%) of the world’s Business Expenditure in R&D (BERD). This top ten included six US (all GAFAM excepting Facebook plus Intel and Johnson & Johnson), one South-Korean (Samsung), one German (Volkswagen), one Chinese (Huawei) and one Swiss (Roche) corporation (European Commission, 2019). In the case of patents, 72 out of Clarivate Analytics (2019) top 100 innovators originally came from the United States and Japan.
Intellectual monopolies are capitalist planners
Intellectual monopoly power extends beyond the market and takes the form of capitalist planning of production and innovation. We define planning as the capacity of certain firms to organize long-term capital accumulation beyond their legally owned capital. Intellectual monopolies plan the production and innovation processes of subordinated firms and other organizations (such as universities and public research organizations) by directly controlling management’s critical parameters. They also define R&D agendas, clauses of exclusivity, commercial credit conditions, quality standards and other regulatory matters.
GVC leaders provide early examples of the planning capacity enabled by monopolizing access to knowledge. These leading corporations monopolize knowledge on how to reintegrate the chain and on who can do what to make the GVC work (Durand & Milberg, 2020). Furthermore, this book argues that intellectual monopolies (whether or not they lead GVC) command R&D, modularized in steps. They keep the exclusive knowledge over the whole process, including who is best suited for each knowledge module and how to integrate those modules if successful results are achieved. Hence, the intellectual monopoly may not be so “innovative” in-house, but still collects intellectual rents from its exclusive knowledge over the organization of the innovation process. Its rents are further extended by predation since intellectual monopolies monetize R&D results achieved by other actors participating in their innovation networks. Additionally, intellectual monopolies are increasingly becoming data driven. Their advantage lies in planning a vicious circle where they keep the exclusive access to new sources of centralized data that are processed and analysed - at least in part - with knowledge that was produced as a commons, but that these corporations privately monetize.
Overall, we are now living in a system where capital accumulation itself is driven and sustained by a global structure of sabotage based on intangibles’ predation and assetization. This process is controlled and planned by a few giant corporations that have become intellectual monopolies. As different chapters in this book show, they even monetize knowledge that is still being produced as a commons in universities, public research organizations and open access or open source communities. This further limits knowledge spillovers while evidencing that those giant corporations’ accumulation is based on rentiership and predation. Indeed, knowledge still triggers spillovers but only for a few organizations that keep a circumscribed monetization capacity. Thus, the effects on economic growth are also circumscribed to intellectual monopolies.