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Tuesday, September 23, 2008

The Complement Cooperative

posted by on September 23 at 18:21 PM

Complement%20Cooperative%20Logo.jpgWell, that was a lot of money chasing nothing.

It’s not as if we’re lacking in problems needing solutions—climate change, energy scarcity, almost every meaningful commodity priced at historical highs. A vast pool of money and a growing list of problems—why wasn’t the connection ever made? Why didn’t at least some of this wealth go toward solving these problems?

We could be riding high on American ingenuity. But we’re not.

Let’s say you and I start a company with the goal of replacing petroleum-based jet fuel. We engineer a bug that spits out something pretty close to kerosene. Excellent. Since we’re a company, we immediately patent the invention.

Now what? While we’ve just figured out a key step, our invention by itself cannot replace jet fuel. We need more pieces—the technology to refine our proto-fuel into something we could put into jets, the bioreactor technology to grow our bugs, a factory and its land, a distribution network, sales to airlines, and so on.

That’s a lot of pieces; we only own one right now. If we raised the money and assembled all of these to the point where we could actually sell an useful product, we’d be first. We don’t want to be first.

If we show it can be done, what would stop someone in China or India or somewhere else in the world from stealing all of this technology and competing with us? (Our present global economy isn’t exactly brimming with respect for intellectual property.) Without the cost of buying up patents—the costs of developing the technology—they’d easily outcompete us. By being first, we end up broke.

We’re better off selling our patent. We could sell this patent to someone who wants to turn it into a product—but they’d run into the same problem we would on that path.

The most likely buyer of our patent would be someone who desires our technology to never be turned into a product—someone who already makes jet fuel from petroleum. Patents, in our post-intellectual-property world, are more valuable as a defensive weapon. To a large extent, this is why all the wonderful scientific knowledge and technical ability pouring out of R&D labs fails to translate to something useful for humanity.

(More after the jump or at dearscience.org, including my exciting solution to this problem….)

Think of all the companies that would benefit from a competitor to petroleum jet fuel: airlines, airplane manufacturers, hotels, restaurants, theaters… and if it benefits tourism, it benefits governments. For all of these, jet fuel is an economic complement.

The global economy suffers from antiquated complements. Energy sources. Commodities. The markets for many of these tricky complements are highly monopolized. Alternatives require the combination of many different technologies into a chain. By buying up one piece of the chain, the dominant company can prevent the competition from existing.

Broad swaths of the global economy would benefit from the cracking of these monopolized complements—just not the people who would have to be first in actually developing these alternative technologies. So the chains don’t get built. How do we get around this market failure?

I have a crazy idea: Since we’re rapidly socializing our economy—at least the financial industry—we should consider starting a new GSE, the Complement Cooperative.

The co-op would produce financial entities whose goal is to assemble these chains—“alternative to gasoline” or “alternative to jet fuel”—and give the entire chain away. Just like anyone can download Linux and install it for free, anyone could take the technologies in the chain and start a company—secure in the knowledge that someone has already shown that the chain works.

These Complement Co-op funds would take their endowments and contract out to labs to develop the key missing technologies or buy up patents as they enter the market. Throw in some talented patent lawyers, rooting around for prior art to destroy blocking patents. If we want to be really aggressive, the Complement Co-op could be given the right to use eminent domain to forcibly buy blocking patents—paying fair market value for the intellectual property—to promote the public good of new competition.

Combine a government-sponsored Complement Cooperative with a lending agency promoting the formation of new companies based on these given-away technologies, and you have a monopoly-crushing machine.

If the co-op’s entities are giving away the technology, how will they be kept solvent? By raising money from the industries that would benefit from the new technology chain.

In the above jet fuel list of potential beneficiaries, you’d hit them all up. The returns would come not from licensing fees, but from reduced costs on key inputs for their industries. Sovereign funds of governments would be delighted to invest, if the new product could help their economy or serve as a weapon against commodity-based rival nations.

This isn’t “risky.” If you have a sense of the likelihood of success of a given fund—how big are the technological hurdles?—as well as the potential reduction in costs—by breaking up a monopolized commodity market—you could calculate a probable return on investment for these sorts of financial instruments.

It’s a crazy idea, but less crazy than the farce that was our financial industry—the insane financial derivatives that crashed the market this time around. We have to adjust how we think of intellectual property. New inventions are still of use. We need to just help the market feel the value again. Something like the Complement Co-op would do it.

We need to start a new engine behind our economy. One hundred billion dollars—one tenth what we’re contemplating, about on order of what we paid for the tattered remains of AIG—would be more than enough to get something like the Complement Co-op started. We should do it.

RSS icon Comments

1

This is a marvelous idea. Any ideas for how to make it happen? It would be a terrible shame if this idea just rotted on Slog.

Posted by east coaster | September 23, 2008 6:50 PM
2


I'd say if you want to succeed, you should get your Mom, who is, say, a mining heiress, to call her friends at the jet fuel company and give you a license to sell your jet fuel. Then you would go out and buy competitors who may have a better existing formula. Then get your dad, who works for the biggest law firm in Washington, to seal the deal and make sure all the dirt is under the rug.

Then, eventually, you will work with the jet fuel company on a "new better formula" but then claim that they "don't know what their doing" and take the IP for yourself.

After that you will never change your formula but will have grown "too big to fail". You'll keep releasing the same crappy stuff for 2 decades only give it names like Dossier and other stuff.

Then, finally, you will do a commercial with Jerry Seinfeld, and try to get people to think you actually shop at Top Food and carry your own groceries to the SUV.

It's the American Way!

Posted by John Bailo | September 23, 2008 6:59 PM
3

Science, your socio-capitalistic ideas make me fuzzy inside.

Posted by Super Jesse | September 23, 2008 7:04 PM
4

Anyone can download Linux and install it for free. With a little know how. Hell, who needs Lunix? Anyone can download GCC and write their own operating system. As long as they know how.

I recommend you start with cutting your own hair. Once you master that, move on to other easy tasks anyone can do, like Lunix.

Posted by elenchos | September 23, 2008 7:16 PM
5


#4:

Funny you mention that.

I've been greatly enjoying Suse 11.0

Fantastically simple install. Beautiful interface.

I was watching Hulu videos last night and also the documentary "Yes Men" using the VideoLan player.

http://www.opensuse.org

You know what surprises me is all these Northwest "radicals" who rant and rave about Republicans all day long either use Vista or OSX.

Why not go full bore and use Linux...or are you all hypocrites....don't answer....we know already.

Posted by John Bailo | September 23, 2008 7:20 PM
6

You know, I really think you may be onto something here, it's kind of like a government chartered efficiency think tank. It would definitely make sense to have something like this around now that we're starting to product better nanotech. Materials science is a burgeoning field.

It would also help ensure that, as we get closer to a technological singularity, that the old guard of monopolies can no longer stifle progress and have to get on the bus as well.

Considering that the general scientific consensus is that we are beyond the point of no return with global warming, we not only need to make *drastic* fundamental changes to our air pollution habits. But we also need to be inventing things to undo some of the damage we've done already. And we need to invent these technologies yesterday. Incentivizing the creation of entirely new markets and their complements is a VERY good idea.

Posted by Super Jesse | September 23, 2008 7:22 PM
7

intellectual property should be taxed just as many other forms of property are either in ownership or transfer of ownership.

Posted by Bellevue Ave | September 23, 2008 7:27 PM
8

It seems like you've left scientists' greed out of the equation. And the privatization, through corporate funding, of universities' scientific departments. Neoliberalism and WTO's TRIPS.

You wouldn't need to create this new agency if the public, rather than universities desperate for cash or corporations, controlled the patents on scientists' inventions. But to introduce something into the commons like that would require 1) providing adequate public support to public universities; 2) having scientists not feel entitled to become wealthy entrepreneurs of their scholarship; 3) overcoming corporate opposition; and 4) overcoming corporations' political flacks, especially when it comes to global trade agreements and intellectual property rights and fair vs unfair competition.

Since your plan doesn't address any of that, it is pie-in-the-sky and DOA. Which is to say I dig your socialist inclinations, but they need to come with a power analysis of why ideas like yours are not going to happen absent the development of a movement to challenge corporate power over our public institutions.

Posted by Trevor | September 23, 2008 7:29 PM
9

Trevor, take intellectual property taxes and make them fund our public universities. if universities don't make money off their research due to corporate idiocy the least they can do is at least gain the tax money from it.

Posted by Bellevue Ave | September 23, 2008 7:39 PM
10

Jonathan, while your idea sounds pretty good to me, you'd run into problems if you try to use the eminent domain power to forcibly purchase patents. That pretty clearly violates our treaty agreements with most of the world.

You could, instead, get compulsory licenses under TRIPs if the patent is really being used to block, but that'd inevitably lead to litigation. Better toss in a few extra billion for patent attorneys.

Posted by AnonymousCoward | September 23, 2008 9:13 PM
11

Golob, I like your ideas, sir. We've seen this tried on a very limited scale with patent pools (software, other), but this could be applied to many more things. It's kind of like an open venture capital firm that any interested party can join. Of course, the end goal is the technology and not just the capital in this case.

- a "Northwest 'radical'" and Linux user. Keep it coming, Bailo.

Posted by bearseatbeats | September 23, 2008 10:41 PM
12

@9: The universities try as best they can to tightly manage intellectual property developed with their resources, and get cuts of public-private partnerships. In fact they salivate so much over the fact that the sciences are self-sustaining that they have given dwindling attention to the humanities.

That's part of the problem. If universities are dependent upon that revenue coming from private enterprise, they're going to resist creating a trademark commons. If you tax the commons too much to make up for the lost revenue, it undermines the whole point of taking the profit system out of this kind of product innovation. Similarly corporations invested in reproducing social inequality and environmentally unsustainable consumption habits will relentless attack any idea to make public goods they trade in. Until you can develop a language for mobilizing the public against corporate interests, you'll be powerless to develop alternatives that aren't immediately coopted.

Posted by Trevor | September 23, 2008 10:43 PM
13

The only problem I see with this is that is is still dependent on the archaic notion that we can "innovate" our way out of the problems associated with civilization.

Finding new and clever ways to continue consuming resources at our current rate is not the solution.

Even the most ambitious recycling program (or whatever buzzword you want to insert) in the world wouldn't fix the problems we have visited upon ourselves and the natural world.

The answer will come in a sharp decline in our consumption of resources (finite or not). It's not about what kind of jet fuel, it's about a culture that believes in manipulating the natural world (bugs are a natural resource too) in order to continue its boundless exploitation.

If we continue to believe that we can enjoy products from a large scale system of production without experiencing any of the problems inherent in that system (problems that cannot be fixed by developing new ways to consume the same resources), we will see the same problems over and over again.

Posted by AW | September 24, 2008 6:22 AM
14

so AW, when are you decreasing your consumption?

Posted by Bellevue Ave | September 24, 2008 8:45 AM
15

I obviously don't have the whole world figured out, I'm just saying that until we re-frame the discussion to talk about abandoning lifestyles that depend on products that cannot be made using the earth we stand upon, we will not have achieved "sustainability"

Civilization, and capitalism (obviously) are based on the promotion of endless consumption. There is a finite amount of energy on this planet. We cannot simply repackage it or funnel it through a different production stream in order to lessen our impact on the natural world.

The only way to "solve" the problem, is by dismantling the culture that supports the consumption of products made by someone other than ourselves, using resources that we did not ourselves extract.

Like I said, I'm not claiming to have all the answers or to be the most sustainable person in the world. I am a vegan who doesn't drive, but I'm using a computer right now, and I drink coffee.

I'm just saying that if we're going to talk about solutions here, we can't talk about them within the context of the current system. We have to abandon the idea that the world is ours to consume, and focus instead on "innovating" our way back to building our own homes and growing our own food.

While Jonathan's assessment is the sexiest repackaging I've seen in a while, it's still a band aid for a larger problem.

Posted by AW | September 24, 2008 10:47 AM
16

@15-

Are you suggesting that we all give up consuming things unless we made them ourselves? That we give up all the efficiencies and gains from trading with other people? Take a basic economics course and you'll learn that that will never happen. Or better yet, try living without trading for anything, making everything yourself, and see how you like it.

Posted by east coaster | September 24, 2008 2:43 PM
17

Anyway, Jonathan, after reading all the comments on Slog I hope you take this idea to a blog with smarter commenters. This is a good idea to address the serious problem of blocking patents which is stifling economic progress and I hope you won't be discouraged by a bunch of idiots here, most of whom seem to have no idea what they are talking about.

Posted by east coaster | September 24, 2008 2:50 PM
18

east coaster:

Thank you. I'm not discouraged. I only write for a few blogs.

If you really love this, submit it to digg, reddit, metafilter or the ilk?

Posted by Jonathan Golob | September 24, 2008 3:37 PM

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