Chapter 5: Regulatory Capitalism, Business Models and the Knowledge Economy
Janet Hope, Dianne Nicol and John Braithwaite We saw in Chapter 1 that the emergence of regulatory capitalism is predicated upon a knowledge economy governed by networks. Knowledge economies are fuelled by innovation. In the global knowledge economy of the twenty-ﬁrst century, the dominant institutional mechanism for fostering innovation is intellectual property; but intellectual property rights are not the only possible means of encouraging innovation. Instead of being granted a series of patents, Thomas Edison might have been given a tax holiday on proﬁts derived from the fruits of his inventions, or a share of the taxes other companies paid as a result of exploiting a licence to use the inventions. He might have been awarded something akin to a national creative arts fellowship, or rewarded for his contributions through a statutory automatic licensing scheme like the copyright collection schemes administered in Australia by the Australian Performers Rights Association for musical works and the Copyright Agency Limited for literary works. In fact, the heavy reliance on standardized monopoly privileges that characterizes innovation policy in today’s global economy is a relatively recent phenomenon. Historically, a more institutionally nuanced approach prevailed.1 The sovereigns of the Middle Ages used their power over the creation of privileges to develop non-exclusive forms of reward such as tax exemptions or bonus payments. Venice, for example, used special funds or special positions to reward those who were skilled in the making of canons (Mandich 1960). Even when these privileges took the form of exclusive rights...
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