It is easy to show that more people innovating results in more innovation. If you see my post, Scarcity and Intellectual Property: Empirical Evidence for Inventions, it shows that number of potential invention/innovations is unlimited. All inventions are combination of existing elements (conservation of matter). The greater the number of people trying out new combinations, the greater probability someone will find a solution or innovation. This is why highly structured environments found in large corporations tend to not be innovation leaders. Democratization of Invention: Patent and Copyrights in American Economic Development, 1790-1920, by B. Zorina Khan, shows that the U.S. had the most democratic patents laws in the world. She shows (sorry I don’t have the page numbers in front of me) that this resulted in a greater percentage of the population in the U.S. to engage in inventive activities compared to European countries that had “elitist” patent systems. This conforms completely with Professor Hippel’s point of having more innovators/inventors leads to more inventions/innovations.

Wide distribution of knowledge prevents reinventing the wheel and allows people to focus on new inventions. One of the major goals of a patent system, is the distribution of knowledge. Professor Khan’s book shows how this goal was and is a part of the U.S. patent system and how it is effectively implemented. She also shows that some European countries did not design their patent system with this goal in mind. The patent system does not prevent you from building upon another person’s invention and provides you with the knowledge of their invention so you can build upon it.

It is interesting to note that even the open source community and professor Hippel have used their intellectual property rights to ensure that the information/inventions they create are used in a manner consistent with their goals. The open source community found that they had to enforce their intellectual property rights to ensure their work is used in a manner consistent with open source goals. Professor Hippel’s book is similarly protected by a license that limits how you may use it.

How you use your intellectual property rights is a personal or business decision. Sony’s decision to be overly restrictive in who could use their betamax video technology, doomed the technology to obscurity. The personal computer was more successful than Apple, because it allowed users to configure their computer in many different ways. These are important business decisions worthy of discussion related to business strategies. However, these are not arguments against intellectual property rights just the manner in which those property rights should be used to further a company’s or inventor’s goals.

An interesting business model that I foresee emerging is manufacturing being divorced from development. There are many bright engineers, software developers, and others who do want to focus on the creation of inventions not the marketing and manufacturing of devices/software. In the future, I can see companies that want to harness these independent creators openly soliciting their ideas and paying them for their intellectual property. In other words, research and development are completely outsourced. Since the independent creators have property rights in their inventions, they can be paid to specialize in development without having to be part of the bureaucracy of a larger organization that focuses on manufacturing and marketing. This is all consistent with Adam Smith’s idea that economic progress occurs when people specialize.

“…the cost of discovering these inventions and developing them into useful products is very costly (scarcity). Intellectual property encourages the investment in and efficient allocation of resources towards developing inventions.”

Sensible remarks. You seem to unjustifiably conclude however that a market forces would fail to develop an alternate model.

Can you conceive of an industrial model where most investment is channelled into extremely flexible and efficient manufacturing facilities that would offer low prototype and tooling costs to inventors (and a shared incentive to honor non-disclosure agreements) where design elegance with respect to manufacture is rewarded. A situation where the production of existing products is continually streamlined until standardization organically develops
as with most widgets and fasteners. This happens to an extent in the current system, but in isolated and largely uncompetitive ways. See this video for further thoughts: http://mitworld.mit.edu/video/262)

Obviously there are myriad alternate ways of organizing innovation and industry that don’t prevent improvements of existing parts and products. I suspect that your distrust of market mechanisms blinds you to the possibility of their being discovered and proven – so sadly you call for these unseen innovations to be crowded out with the continuation of the mercantilistic intellectual property system.

You may also want to read Ayn Rand, who escaped from the USSR. Particularly her books Capitalism the Unknown Ideal and The Virtue of Selfishness, which develop the labor theory of property in more detail. Below is a quote from her on this subject:

The right to life is the source of all rights—and the right to property is their only implementation. Without property rights, no other rights are possible. Since man has to sustain his life by his own effort, the man who has no right to the product of his effort has no means to sustain his life. The man who produces while others dispose of his product, is a slave.

Tragedy of the Commons with Respect to Inventions
Inventions and ideas are subject to a tragedy of the commons without intellectual property. In the tragedy of the commons there are two problems, one is overuse of a resource no one owns and the other is underinvestment in the resource no one owns. For intellectual property, there is no problem with overuse of ideas, but there is the problem of underinvestment in innovation. The only manner in which per capita income increases is by innovation and invention. Failure to protect intellectual property results in an underinvestment in the common resource of inventions. The potential number of inventions is unlimited (see my post: Scarcity and Intellectual Property: Empirical Evidence of Adoption/Distribution of Technology). However, the cost of discovering these inventions and developing them into useful products is very costly (scarcity). Intellectual property encourages the investment in and efficient allocation of resources towards developing inventions.

‘The empirical evidence is unambiguous that economic growth is associated with not having the most educated inventors or entrepreneurs.’
No problem with this statement right?

If you were to argue that the intellectual property method of rent extracted ‘profits’ is the most efficient and/or successful means of matching production capital with ideas, that would at least be a comprehensible way to argue the point – not that it would be possible to credibly compare the trajectory of past innovation with an alternate scenario or to calculate the opportunities gained or lost.

Your cynical use of the term “empirical” displays the fraud of your position.

If patent laws impeded growth as you suggest, you would have expected those smart entrepreneurs and inventors to move to countries with more favorable laws. By moving to a country with weak or non-existent patent laws they would have gained the advantage of no artificial scarcity of ideas and inventions. However, that is not what happened. The empirical evidence is unambiguous that economic growth is associated with strong patent laws. The logical case for the scarcity theory of property rights fails also. See my early post Scarcity – Does it Prove Intellectual Property is Unjustified?

It is just as valid to postulate that these conditions are created by capital aggregating in places with the greatest rent seeking opportunities.

Smart capital taking advantage of government enabled rents is no argument for the rents. If it were, your same utilitarian argument could be made for slavery, lack of pollution regulations, corruption and cronyism, etc.

Noting how the industrial revolution “corresponds with the advent of modern intellectual property law” does little to prove your argument. Though in fairness to you, the coincidence of “enormous increase personal income” [sic] with “the advent of modern intellectual property law” does prove mine.

The industrial revolution and attendant enormous increase personal income in western countries corresponds with the advent of modern intellectual property law.

Inventors are not “rent seeking,” but economists who push the rent seeking theory of intellectual property are.