Why European Universities Must Not Follow America's

The American model has produced rentier capitalism and functional illiteracy—Europe's universities must return to their civilising mission.

https://www.socialeurope.eu/why-european-universities-must-not-follow-americas



Manuel Muniz wants European universities to become like their American counterparts and to focus on making Europe more economically competitive. His article in Social Europe of 21 November rests on two assumptions: that American universities have been making the US economy strong, and that universities exist to serve the interests of capitalist economic growth. Both deserve scrutiny. Consider each in turn. One can argue that the US economy has not been performing well for many years. But setting that aside, it is far from clear that its universities have been responsible for whatever growth the country has experienced. More consequential were the institutional changes that transformed the nature of intellectual property rights.

The decisive shift came in 1980 with the passage of the Bayh-Dole Act, which for the first time allowed universities to own, sell and license patents on federally funded research, previously the prerogative of government. Henceforth, corporations could reduce investment risk by cutting their own research expenditure and buying up government-funded but university-owned, or academic-owned, patents. The Act amounted to the socialisation of risk and the privatisation and commodification of technological profits. In effect, the public as taxpayers paid for the risk of investment in research and development, while corporations were able to avoid the cost and risk. One consequence has been that, outside tech and pharmaceuticals, most large American corporations have ceased or minimised spending on innovative research, thereby boosting profits that have flowed to their shareholders and other investors—not to their workers, whose real wages have stagnated for the past 40 years or so.

The intellectual property revolution

The effect of Bayh-Dole was later hugely amplified when six chief executives of major American corporations, headed by Pfizer’s Ed Pratt, shaped what became TRIPS—the Agreement on Trade-Related Aspects of Intellectual Property Rights—which came into force in 1995 as part of the newly established World Trade Organization. TRIPS globalised the US intellectual property system and ended any pretence of a free market economy. Most pertinently, it resulted in a multiplication of global patents, to the initial benefit of US corporations. A patent gives monopoly profits to its owner for 20 years, with the possibility of extension to 40 years in the case of pharmaceuticals. In other words, unless the owner of a patent licences it to others, nobody can use the knowledge behind that patent to produce goods or services. That is not a free market.

The system has boomed, accentuating rentier capitalism and greatly increasing the wealth of today’s plutocracy. Before 1995, fewer than one million patents globally were filed each year. Now approaching four million are filed annually, and nearly 20 million patents are in force. In the interim, major US corporations, aided by private equity and Wall Street, have indulged in what is known as “patent hoovering”—buying up hundreds of smaller firms solely for their patents and stringing them together to extract vast rents. The key point for assessing the claim that European universities should become like America’s is this: the reason the USA has gained is not due to its universities per se, but to the plunder of the so-called intellectual property system, which is morally and economically unjustified. Reputable studies have shown that stronger IP protection is not associated with more innovation or economic growth, but merely with more inequality.

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