Intellectual property, technorents and the labour share of production

Abstract

How does the capture of explicit monopoly rent via intellectual property rights interact with the capture of additional profit via monopsonistic labour markets, and with what consequences? Most analyses of changes in the labour market focus on the distributional struggle between capital and labour over the wage share. This paper examines how the distributional struggle among firms over shares of aggregate profit has affected the labour market, generating rising income inequality. Over the past 40 years, struggles over shares of the value generated in a given commodity chain have driven de jure but not de facto vertical disintegration of those value chains. Firms vertically disintegrated by outsourcing non-core production and support activities, by in-sourcing contingent labour, and, where possible, by adopting a franchise model of corporate organization. The franchise model enables core firms to exert near total control over firms that are technically separate legal entities, while avoiding legal and social responsibility for the workers (and owners) of those subordinate firms. Vertical disintegration has produced three ideal typical kinds of firms whose differing ability to capture value and thus profit stems from their different forms of control over other firms in the value chain. Vertical disintegration generated labour shedding and employment contingency. Differential value capture has concentrated profit into firms with relatively small headcounts, reducing the degree to which profits are (partially) redistributed among workers.

Data as asset? The measurement, governance, and valuation of digital personal data by Big Tech

“…The International Accounting Standards (IAS) define intangible assets as "an identifiable non-monetary asset without physical substance" [IAS 38]. Intangible assets are increasingly considered to be the driver of economic performance for most contemporary firms (e.g., Lev, 2019), or the main mechanism to secure profitability through intellectual property claims (e.g., Durand and Millberg, 2020;Rikap, 2020;Schwartz, 2020). Another important, yet distinct, intangible asset is "goodwill", which can be defined as the net price paid for an acquisition after accounting for the "fair value" of the acquired firm's identifiable assets and liabilities (including contractual rights) (Lev, 2019); as such, goodwill includes all assets that cannot be separated or distinguished from the firm itself (Nitzan and Bichler, 2009).…”

Big Tech: Four Emerging Forms of Digital Rentiership

“…Scholars are writing about rentiership in the digital economy across several fields, including STS (e.g. Srnicek, 2016;Langley and Leyshon, 2017;Birch, 2020aBirch, , 2020bBirch et al, 2020;Komljenovic, 2020Komljenovic, , 2021Rikap, 2020;Sadowski, 2020;Schwartz, 2020). Much of the earlier research focuses on digital platforms as the key site for conceptual development; we expand the analytical focus to digital ecosystems, which are heterogenous assemblages of diverse techno- economic components including devices, platforms, users, developers, legal rights, contractual agreements, standards, and so on.…”

“…It is not that these firms are necessarily monopoliesor even will become monopolies; rather, their expected control over existing and developing assets provides the rationale for investors to expect higher future returns, which translates into higher capitalization (Durand and Milberg, 2020). This cycle of higher capitalization, lower borrowing, and acquisitions lead to lower discount rates as competitive risks are reduced, even if greater control does not translate into greater future revenues (Schwartz, 2020). The main Big Tech example of this is Amazon (Galloway, 2018), although Uber and Lyft represent other examples within a broader definition of Big Tech.…”

“…Our perspective is different; we take the Polanyian position that markets are instituted, they and the rules on which they depend are madejust as rents are madeand that this may entail forms of government fiat, or private governance (Birch, 2020a). So, for example, intellectual property rights are a clear example of the former (Schwartz, 2020), while the private contractual arrangements (e.g. terms and conditions agreements, privacy policies, etc.)…”

What Do Franchisees Do? Vertical Restraints as Workplace Fissuring and Labor Discipline Devices

“…Trickle-Down Power: From Product Markets, to Franchise Opportunities, to Labor Markets Schwartz (2020) argues that owners of intellectual property rights like trademarks sit atop the economy, earning monopoly rents from the product market while capturing additional profits from the labor market through vertical dis-integration strategies, including franchising and monopsonistic power over upstream suppliers. With regard to franchising, Schwartz argues, as this article does, that the business model "decapitates" the small business class, and turns small business owners into "ferocious advocates for labor repression" (Schwartz 2020, 16).…”