Property Rights in the Knowledge Economy: An Explanation of the Crisis

Abstract

Some of the roots underlying the recent crisis may be found in the global convergence towards a model characterized by strong property rights and an extremely limited role attributed to “open science.” The modern economy has increasingly moved from an open science – open markets model toward a closed science – closed markets model. Paradoxically, while a non‐rival resource like knowledge becomes the most relevant input, small firms and new entrants find it increasingly difficult to be competitive with large and well established organizations. Such a model is progressively increasing the costs of investment in new knowledge, with important negative consequences in terms of overall performance of the economy. We argue that in the knowledge economy, overcoming inequality and the economic crisis can be part of a single coherent policy. If some essential knowledge is moved from the private to the public sphere, this is has not only desirable inequality‐decreasing consequences but can also contribute to re‐launching the economy, creating the conditions for a sustained development. In a knowledge economy, a supermultiplier could couple the traditional effects of Keynesian spending in time of crisis with the multiplying virtues human knowledge, moved from the private to the public sphere.

Keywords: Global Imbalances, Intellectual Property Rights, Financial Crisis, Knowledge Economy

JEL Classification: D210, F210, J240, L250, L430