ÿ [Roberto Verzola is the coordinator of Interdoc, a loose international network of non-government organizations (NGOs) which is tracking the impact of the emerging global information economy on developing countries and on social movements. He is also the secretary-general of the Philippine Greens, a political formation dedicated towards building self-sufficient communities guided by the principles of ecology, social justice and self-determination. He makes a living operating an electronic mail service for NGOs, and is an electrical engineer by training.] Towards A Political Economy of Information by Roberto Verzola We are all familiar with the typical story of an isolated village at the edge of the forest. Some villagers have to go to town to buy a few necessities, and maybe to stock the village store. Others need to go to sell some products for cash. Villagers start to feel that the foot path to town is insufficient for their needs. Village activists may even pursue the issue and organize the people to demand a better road. Eventually, public opinion is swayed, and a petition is submitted. The government, the villagers are pleasantly surprised, is amenable to the idea. Road-building eventually starts. As completion date nears, the village organizes a welcome party for the first vehicle that is coming in. A few days later, the village wakes up to the rumble of engines and smell of diesel exhaust. The vehicles have come. And they are logging trucks, carrying men with chain saws. Who needs the highway that is under construction? We have all heard of the marvelous information highway and the miracles that it is supposed to bring. In this context, we all live in a village at the edge of the forest. We know about the benefits we might be able to get by bringing the highway to the edge of the forest, to our village. Some of us have even led the effort to build the road that will connect our village to that highway. But are we aware of the problems and are we prepared to handle the threats that this highway will pose to our village? Had the village in the story been better informed -- or more wary -- they could have learned about the logging concession covering much of their forest. In fact, they could have organized with neighboring villages to oppose and stop the logging concession, which turned out to be a bigger issue than the road itself. Like the logging road, the information superhighways are being built not because we in the village need them, nor because we asked for them. They are being built because they are needed by the equivalent of logging concessionaires, who have staked huge prior claims over wide tracts of forests they want to harvest. To see the forces behind these information highways, we need to go back and analyze the history of the foremost information economy of today, from which much of the global information superhighway emanates. We need to look at the economy of the United States. The transformation of the U.S. economy It was sociologist Daniel Bell who first pointed out that the United States was moving towards what he called a "post-industrial" economy. The new stage has been variously called a "service" economy, a "knowledge-based" economy, and a "technocratic" economy. We now know that Daniel Bell was describing the emergence of what we call the information economy. In 1956, for the first time, white-collar workers outnumbered blue-collar workers in the United States. In 1967, the information sector accounted for 46% of the U.S. GNP and 53% of the income earned. In the 70's only 10% of new U.S. jobs were provided by the goods-producing sector. By 1983, only 12% of the U.S. population was directly engaged in manufacturing activities, while 65% was engaged in information work. In the 90's recent statistics reveal the growing pervasiveness of the information sector. In 1994, for example, more data calls than voice calls were being made over the U.S. telephone system. This year, it is expected that, for the first time, more electronic mail will be sent than postal mail. Indeed, today, there is no doubt that the information sector dominates the U.S. economy. It is the leading sector in employment, growth, and exports. Increasingly, it is also becoming the strongest voice in U.S. politics. More and more, the domestic and international agenda of the U.S. government are being set by spokesmen and representatives neither of the agricultural nor the industrial but of the information sector. Eventually, we can expect that more business transactions will be done on the Internet than on any other medium. When that time comes, the dominance of the information sector will be complete. This is a basic, fundamental transformation within the U.S. economy. This transformation is the engine that drives today's globalization. From it emanates the intent and the funds to build information highways that will reach the remotest corners of the globe. It is now necessary, to give us better insight into the nature of information economies, to analyze in deeper detail this type of good called information. Let me quickly give some examples of what we call information goods: books; music and videos; software; inventions, designs, and ideas; and genetic information. Many would be surprised by the inclusion of genetic information in this list. However, genetic information has all the qualities of information. It is non-material, and it is easily duplicated. Some special qualities of information goods Information goods have a special quality. They don't wear out. They are not used up. One can give them away without losing them. Information is non-material. Electronic information is easily copied, and it doesn't cost much to copy. Most important of these is the low cost of duplication. This is most easily seen in computer software, where the cost of copying a diskette is nearly zero. It is also obvious for music and video tapes. Duplicating a book may be more expensive, but new technologies now make it possible to scan a book, generate an equivalent text file, and then to duplicate the text file a very little cost. As soon as information is converted into electronic form, the marginal cost of another copy becomes nearly zero. It can be broadcast over the radio spectrum or disseminated over the Internet at essentially zero cost per copy. What is the implication of near-zero duplication cost? It means that people tend to freely share information. Many people have taken an altruistic view towards information: I won't lose anything if I share my copy; why should I deny it from one who needs it? In fact, the right to exchange information freely is considered a basic right. The Internet, for instance, began with a culture of freely sharing information. It is this culture which enabled it to spread into many countries, who were attracted by the availability of so much freely accessible information. Even today, there is a very strong culture of free sharing on the Internet. On the other hand, if one were able to sell the same copies of information, the near-zero cost of duplication means that extremely high profit margins can be realized in selling information. This is the basic formula behind all successful information companies, from entertainment, to software, to biotech companies. It is this high profit margins possible from information products that draws investment funds from agriculture and industry to the information sector. It is the magnet that leads to the transformation of an industrial economy into an information economy. However, these two implications of near-zero duplication cost are in direct conflict with each other. If people could copy information freely, there would be no need to buy information, and it would be impossible to realize the high profit margins possible from selling information. This is the most basic conflict with the information sector and within an information economy. Three economic sectors give rise to three worlds With the full emergence of the information sector, we can now identify three major sectors in every economy. These three sectors are the agricultural sector, the industrial sector, and the information sector. The agricultural sector is the sector of living goods and related services. Here, we work with the production and consumption of living matter. This is a very special sector, which I personally prefer to call the ecology sector. The industrial sector is the sector of non-living, material goods. This sector requires the most in terms of energy and raw materials, as it involves the extraction of raw materials from nature, and the transformation of dead matter through human labor and machine power into finished products. The information sector is the sector of non-material goods. The goods of this sector have very high information content. Frequently, they are practically pure information, like the software on diskettes. This is already the dominant sector in the U.S. and to a lesser extent in Europe and other highly advanced countries. These three sectors give rise to three types of economies, and thus to three worlds. Agricultural economies continue to have their agricultural sector as their dominant sector. Industrial economies have their industrial sector dominant. And the information economies have a dominant information sector. Almost 90% of information owned today through patents and copyrights are in the possession of the information economies. The interplay between these three types of economies comprises the dynamics of the world economy today. It is an interplay that is marked by a mix of competition and cooperation, exploitation and dependence. The world economy is increasingly being dominated by information economies, and the major economic debates today reflect the conflict between the interests of emerging information economies on the one hand, and the newly industrialized as well as the agricultural economies on the other hand. Of course, secondary conflicts continue to exist between industrial economies and agricultural economies, as they have existed in the 19th century and the first half of the 20th century. Trade among the three worlds: winners and losers Let us look at the nature of trade between agricultural, industrial and information economies. Consider the following typical products: sugar, television set, software. Consider the products to be worth $300 each, and are therefore tradeable with each other. At 15 cents a pound, an agricultural country needs 2,000 pounds of sugar to earn $300. An industrial economy needs to produce one color television to earn the same $300. An information economy, one the other hand, has to sell one copy of a $300 program like WordPerfect to earn the $300. In short, an information economy like the United States can come to the Philippines, and trade one copy of its WordPerfect for our 2,000 pounds of sugar, or for one of Taiwan's color television sets. Yet, how long does it take to produce 2,000 pounds of sugar, compared to another copy of WordPerfect? How many Filipinos have to work, how many days, to produce value that is equated to a product which can be copied by one person in a few minutes? An information economy can produce, with minimum of input in labor and raw material, exchange value that agricultural and even industrial countries must produce at considerable inputs of labor and raw materials. Another way of saying this is that information economies are in a position to realize huge margins of profits when trading with other economies; therefore, they are also in a position to extract huge amounts of wealth from their trading partners. We can already see how developing countries are becoming captive markets of information economies. Last August 1995, the monopolistically-owned Windows 95 operating system was introduced. This operating system renders obsolete all currently existing PC software and hardware. All such systems are now considered "legacy" systems. Many of us have become captive to this never-ending cycle of software and hardware replacement and purchase. A connection to the Internet is not much different. The introduction of the World Wide Web (WWW) has made it "necessary" for Internet users to upgrade their 2,400 bps modems to 14.4 and then to 28.8 kbps modems. Now they are talking of ISDN, which will obsolete much of the current crop of Internet access hardware. Imagine the huge markets created for the information economies. The emerging new colonialism What we are witnessing is the emergence of a new type of colonial relation that can exist between an agricultural economy and an information economy, where the former becomes the source of cheap raw materials and a market for highly profitable information products. Indeed, this new type of colonial relationship can even exist between an information economy and an industrial economy, where the industrial economy serves as a market for expensive information products and a source of relatively cheaper and lower-margin industrial products. This is a further development of the old-style colonial relationship between industrial and agricultural economies, which continue to exist in many parts of the world. This new type of colonialism will exploit agricultural countries even more as their genetic resources are considered a "heritage of mankind" and therefore practically free. It will ravage their agricultural sectors with patented genetically-engineered agricultural products of advanced countries. Even emerging newly-industrializing countries like Thailand or India can fall victim to this new type of colonialism. In fact, most countries are now captive to new binding agreements like the GATT/WTO, which provide the legal infrastructure for the world dominance of the emerging information economies by protecting their monopolies over information on the one hand, and prying open new information sources (biodiversity, the professions) and markets (telecommunications, media, and services), on the other hand. The special role that the Internet will play in this scheme is as the global infrastructure for the distribution of the information goods, which advanced information economies will be selling to the rest of the world. Information ownership: Intellectual property rights I referred earlier to one special quality of information: that it is very easy to copy. This is true of books, videos, tapes, software, compact discs. This is also true of ideas, designs, inventions and genetic information. This is in fact the basis of the extremely high profit margins possible in the information sector. When you can sell at $100 what you can produce for less than a dollar, which is what successful software companies like Microsoft do, you are bound to enjoy fantastic super-profits. But this is also the "weakness" of information goods. Many people simply copy them. Recent developments in information technologies have made copying easier and easier. As soon as a new version of a computer program is released, it is immediately copied and shared by users from Manila to Moscow, from Hongkong to Honduras. To preserve the potential for high profit, information economies must prevent information sharing. They have therefore developed an elaborate legal structure based on the concept of intellectual property rights, which are essentially monopoly rights, which gives them the power, backed by the State, to prevent the copying and sharing of information, to maintain an artificial scarcity, and preserve their monopoly super-profits. Those who own information goods through such monopoly mechanism as intellectual property rights are the new rentier class of the information sector. The monopoly concepts of intellectual property rights, which include patents and copyrights, are the main form of ownership in the information sector and in information economies. Together with the infrastructure for distributing information goods (the information superhighways), information economies have also imposed on the rest of the world, through GATT, a legal infrastructure for recognizing their monopoly claims over information. The conflict between information economies on the one side and industrial and agricultural economies on the other side, manifests itself in this debate on intellectual property rights. Whenever U.S. diplomats and businessmen open their mouths, they never fail to refer to intellectual property rights as a major issue where they pose non-negotiable demands. Protection for intellectual property rights has become the number one U.S. demand in all bilaterial and multilateral negotiations. In fact, it is natural spread of information, and the need by information economies to chase information goods, identify their end-users, and to charge these end-users for usage, that is the real engine of today's globalization. Whether information companies like it or not, information automatically globalizes itself as it is shared among people who find it useful. Thus information companies find that they must institute international systems of ownership, controls, and policing, if they want to prevent the free sharing of information and regain their profit margins over their information products. Intellectual property rights, which is an issue about ownership and control of information, is a central issue in the struggle of poor countries against domination by information economies. Piracy: good or bad? It is to the interest of developing countries, both the agricultural and the newly-industrializing economies, to dip freely into the world's storehouse of knowledge and adopt technologies where they might be useful for the country's development. When it was still a developing country, in the 18th and 19th centuries, the U.S. was one of the worst pirates of British books and publications. When it was trying to catch up with the U.S. and Europe, Japan also freely copied Western technologies. Taiwan did the same. So did Korea. Yet, the U.S. and Europe would lead us to believe that piracy is morally wrong. They do not want us to pirate their books, their software and their designs. They say we pirate their intellectual property rights. Yet, they continue pirating our intellectuals. Advanced countries think nothing of pirating our best scientists, engineers, technicians, and other professionals. They patent or copyright the works of these intellectuals and then sell them back to us at high prices. They also pirate our genetic resources. Their scientists roam the world pirating biodiversity resources like microorganisms, plants, animals and even human DNA. They then claim monopoly ownership over the genetic information they extract, patent them, and sell them back to us at high prices. When the U.S. sent spy satellites in space, countries complained that the U.S. was taking away strategic information and violating their sovereign control over their own territories. The U.S. insisted that it was free get this information whenever it wanted, even to sell them back to those countries, if they were willing to pay for them. U.S. commercial satellites then started beaming video programming into other countries. When those whose culture considered the video content objectionable, the U.S. i nvoked the concept of "free flow of information" to insist that it had the right to beam these programs. Yet, when local people developed a taste for U.S. programs, captured these satellite broadcasts, and distributed them locally, the U.S. started complaining why people were receiving and copying their broadcasts without paying for them. According to their twisted logic, this was a violation of their intellectual property rights. The U.S. sends its people worldwide to interview local healers and acquire their centuries-old healing knowledge, which had been passed from generation to generation. When we copy U.S. books to acquire their knowledge, we are accused of piracy. U.S. scientists freely take away all kinds of microorganisms, plants and other sources of medicinal substances from Third World countries like us. Yet, when we copy the drugs that have been developed from these substances, we are also accused of piracy. In short, information acquisition has been defined so that when it is bad for the interests of the U.S. and other advanced countries but good for us, it is called "piracy" and "freeloading", but when information acquisition is good for their interests and bad for us, it falls under labels like "free flow of information" and "common heritage of mankind." Towards a political economy of information We have barely scratched the various issues and concerns which are emerging in the light of the increasing dominance of the information sectors of advanced countries. Let me summarize the salient points of this presentation: 1. The U.S. and other advanced economies have undergone a fundamental transformation in their economy, which is marked by the increasing dominance of the information sector. 2. Information goods have special qualities which make the information sector qualitatively different from the industrial sector. Specifically, information is very easy to duplicate. On the one hand, this makes possible extremely high profit margins. On the other hand, people can easily make copies for themselves without need to pay for the information. 3. Information economies have developed a monopolistic concept of information ownership, built on intellectual property rights like patents and copyrights, which declares it illegal for people to make copies of information goods for themselves or for sharing with others without the permission of the monopoly owner. 4. The world economic and trade agenda is increasingly being set by the world's information economies. GATT/WTO is the best example. Its centerpiece is the adoption of a stricter intellectual property rights regime, which institutionalizes a worldwide legal framework for maintaining the high profit margins of information economies, and the opening of the service and agricultural sectors of GATT members, creating a vast new market for the information and biotechnology products of information economies. 5. Information economies need a global infrastructure for distributing their products. This infrastructure is now being built around the Internet, a huge worldwide network of computers and high speed data lines. 6. The dominance of the information sector depends entirely upon the high profit margins possible in this sector, which is turn rests entirely upon the monopolistic concept of preventing others from freely copying the information. This is the basic contradition within the information sector and within an information economy: information-based companies can keep their high profit margins only if they can keep people from freely copying their products, but the nature of information itself leads people to share information freely among themselves. The form of ownership is in total conflict with the nature of the good. Some of us involved in social movements are privileged enough to possess the knowhow to participate in the economic activities of the information sector. However, our participation can also affect our consciousness and draw us into the maw of this sector. We should remember that our original mission is not to make money, but to do political work and to develop a political grasp of the sector so that we can link the popular struggles in this sector with other social movements for change. We are here not to take advantage of the attractive economics of information goods, but to help develop a political economy of information. A political economy of information would analyze the basic contradiction in an information economy and its various expressions. It would identify the new economic relations and classes that emerge out of the social restratification. It would search for the motive forces that can be mobilized to initiate basic changes in the property relations. It would identify the main forces, the reliable allies, the middle forces, and the opponents of change. It would study what demands must be raised to mobilize and unite the motive forces for change. It would then try to discover new property relations that are more consistent with the nature of information goods. Developing such a political economy of information has become an immediate necessity, given the rapidity with which the information sector has established its dominance. ÿ Roberto Verzola 108 V.Luna Road Extension, Sikatuna Village 1101 Quezon City, Philippines Tel.: (63-2) 921-5165 Email: rverzola@phil.gn.apc.org [1] [2] Return to CRIT-ICT homepage [3] [4] Return to Distributed Knowledge homepage [5] ---------- Site notes: [1] mailto:rverzola@phil.gn.apc.org [2] http://dkglobal/crit-ict [3] http://dkglobal.org/crit-ict [4] http://dkglobal/crit-ict [5] http://dkglobal.org/