Academic journal article
By Adkisson, Richard V.
Journal of Economic Issues , Vol. 38, No. 2
One of the tenets of institutionalism is that innovation is of prime importance in driving social progress (Ayres  1978). To Clarence Ayres, innovation was the process of creating a "novel combination of existing devices and materials in such a fashion as to constitute a new device or a new material or both" (113). He went so far as to define this tool-combination principle as a "law of progress" (119). One implication of Ayres' "law of progress" is that retardation of technological innovation would retard or halt social/cultural progress. To the extent that the innovative process becomes ceremonially encapsulated, there is potential to slow the interaction and application of technology and, thus, slow the pace of social progress.
Ayres' respect for technical innovation is shared by others. Historically, Robert Heilbroner found that "looking back over the vast process of capital accumulation which ... lifted first England and then America into the long flight of industrial development, there is little doubt that the impelling force was the succession of inventions and innovations which successively opened new aspects of nature to human control" (1962, 99). More recently, Norwegian Minister of Finance Sigbjorn Johnsen told the OECD Conference on Creativity, Innovation, and Job Creation that "history tells us that innovation and change is the prime engine of human progress" (1996). Likewise, the sitting U.S. president recognizes the importance of technological innovation. George W. Bush said, "In this century, the greatest environmental progress will come about not through endless lawsuits or command-and-control regulations, but through technology and innovation" (2003).
Recognizing the importance of innovation, the granting of intellectual property rights (IPRs) has been long viewed as one way to encourage innovators to innovate. Innovators are granted exclusive control over the use of their innovations, including the right to sell or otherwise generate income through their control of the property rights. Income thus generated provides financial support and incentives to innovators. Without suggesting that IPRs have no role in encouraging innovation, the proposition put forth here is that ceremonial deference to market-based solutions to social problems threatens to elevate intellectual property rights to a ceremonial status beyond their instrumental potential. If this is true, strengthened IPRs could limit innovation or steer it in directions that limit social progress in the United States and the world.
Ceremonial encapsulation occurs when ceremonial values (1) are allowed to alter or otherwise limit the application of technologies instrumental in the process of social problem solving. A simple, perhaps harmless, example of ceremonial encapsulation is the refusal to use the number 13 when applying the instrumental technology of numbering seats in airplanes or floors of buildings. Carried further the stakes could become higher; perhaps, for example, treatments for infectious diseases not administered on the thirteenth day of the month or power-generating plants shut down during the thirteenth hour of each day. Paul Bush identified three types of ceremonial encapsulation: the "past-binding" type, the "future-binding" type, and the "Lysenko" type (1987). Of concern here is the "future-binding" type where "the introduction of technological innovations into the life processes of the community is carefully coordinated with the formulation of an appropriate mythology and related ceremonial practices that rationalize and enforce the legitimacy of the control over the technology of the vested interests that have captured it" (145).
Intellectual Property Rights in Perspective
Intellectual property rights (IPRs) have been granted in Europe since at least the fourteenth century (David 1994). IPRs are intended to correct a market failure caused by the public-good characteristics of many innovations. …