Production rather than preferences should play the leading role in the theory of markets, as in the book’s analysis of volatility and policymaking. Production is not only the fount of social wealth, it is organized by firms whose decisions are guided by a clear ordering principle, their profitability. There is moreover an institution, the market, that can weed out the firms that fail to pursue profits effectively. But the purging of inefficiency by the market confronts policymakers with the dilemmas of Schumpeterian creative destruction. Policies that compensate firms and their owners for any declines in profitability will also dampen the threat of bankruptcy; the enforcement of productive efficiency can require unfettered competition. An application to international trade illustrates some of the challenges: For foreign competition to lead to productive efficiency, domestic prices must be aligned with world prices, which will push some firms into liquidation.

The problems that afflict Pareto efficiency can be overcome if the criterion is rebuilt on preference-free foundations. A policy change passes the ‘availability test’ if it allows agents to afford whatever they purchased originally: Agents might not then be better off but no one can legitimately object to the change. One way to pass the availability test is to give agents the right to repeat their original transactions; a reform of rent control serves as an example. A second strategy stabilizes prices for consumers while letting the prices that firms face promote efficiency in production. A deregulation of a public utility, for example, can preserve consumer prices while giving firms an incentive to innovate. These policy alternatives show how to resolve the Schumpeterian dilemma of creative destruction: They harness the progressive feature of capitalism, that it fosters technological change, while protecting the individuals who can be harmed by the same forces. Conventional laissez-faire policies are in contrast difficult to justify even from within the orbit of traditional economic theory and can generate bitter social conflict. An application to opening an economy to free trade shows how to combine the advantages of technological change while satisfying the availability test.

This chapter introduces the economic perspective on sweatshops and some alternatives available to workers. It explains the ethical standard – the welfare of Third World sweatshop workers and other poor people in the countries where sweatshops are located – that will be used throughout the book, and it provides an overview of what will be covered in the coming chapters.

This chapter reviews the various organizations that comprise the anti-sweatshop movement and what policies they advocate. It provides a history of the origins and growth of the anti-sweatshop movement.

This chapter provides an introduction to Intellectual Property, Innovation and Economic Inequality. It begins by discussing the problem of economic inequality, including the scale of that problem, types of economic inequality, and extant research on such inequality. The chapter then outlines the structure of this volume, which is divided into three parts: (1) theoretical, empirical, and policy issues; (2) intellectual property and national inequality; and (3) intellectual property and global inequality.

This chapter criticizes the oversimplification of the binary North–South debate on intellectual property, innovation, and global inequality and highlights the wide geographic, sectoral, and income inequalities within middle-income countries. It begins by explaining why the arrival of these countries has called into question the North–South debate. The chapter then moves from the widely studied subject of global inequality to the underexplored topic of national inequality. Focusing on the intellectual property context, the discussion highlights the considerable subnational variations in the economic and technological conditions of middle-income countries. To combat national inequality, this chapter concludes by recommending interventions in three areas: (1) international norm-setting, (2) national policymaking, and (3) academic and policy research.

Low- and middle-income countries (LMICs) are confronted with a new world order in which the major economic powers that promoted multilateralism have moved toward nationalism, localization of production, and de-legalization of dispute settlement in favor of balance of power diplomacy. A counterpart to this trend is declining interest in developmental assistance. It remains to be determined how countries that are not part of the new great power dynamic will acclimate to this new world. LMICs have the opportunity to leapfrog in the current technological environment. A key challenge is securing adequate capital investment, including through the private sector. There is a trend among the capital-exporting countries to negotiate bilateral and plurilateral agreements with LMICs that preclude regulatory measures requiring technology transfer as a condition of foreign direct investment. Because individual private investors within LMICs may lack substantial bargaining power, these agreements diminish LMICs’ capacity to secure favorable terms for technology transfer. LMICs confront terms of trade that favor high-income countries and, more broadly, the ascendance of managed trade policy among economically powerful states. These factors portend the perpetuation of the marked disparity in the distribution of global income and wealth. There are no “magic bullet” solutions on the horizon.

This chapter reviews available economic theories and empirical evidence about the potential roles intellectual property (IP) rights play in generating or reducing economic inequality, emphasizing international data. Basic evidence demonstrates the simultaneous growth in internal income inequality across countries and increasing IP protection in the prior 25 years. It is tempting to assign causality from IP to inequality but doing so confidently is challenging and has not yet been accomplished systematically. Through encouraging technology diffusion, global IP reforms likely contribute to convergence in average incomes between advanced economies and select emerging and developing countries.

This chapter explores the impact of intellectual property on increasing income and wealth inequality internationally and domestically, with a focus on law and legal methodology. It begins by setting the scene and background of international intellectual property protection. The chapter then examines the potential of taking into account considerations of income and wealth distribution in the process of interpreting intellectual property rules and explores the potential of the principle of equity. It turns to the overall balance of rights and obligations from an angle of fostering investment in innovation and proposes to recognize creative imitation in the overall equation. It also suggests recalibrating rules on the duration of patents, copyright, trademarks, and trade secret protection. The latter is not subject to limitation and time and may thus contribute to unjustified economic rents detrimental to human investment. This chapter suggests to introduce ceilings of protection and refer to the principle of unjust enrichment in conceptualizing these concerns.

The process of constitutionalizing intellectual property rights highlights absurdities associated with unequal and asymmetrical power relations within the politics of intellectual property and exposes the inherent conflicts between international legal harmonization and unbalanced trade powers in intellectual property constitutionalism. This chapter begins by demonstrating the gap between the mere existence of a constitutional equality provision and its application on the ground. The chapter then examines how inequality is a defining concept in intellectual property that can be articulated in many forms. It discusses intellectual property constitutionalism and highlights the lack of scholarly attention to intellectual property in formal constitutions and the implications. This chapter further demonstrates the incorrect assumption that adding intellectual property rights to a constitution will provide better protection for these rights and discusses how this assumption is predominantly a result of global political inequality and asymmetrical power relations. The chapter evaluates the ideological motivations of countries to adopt intellectual property as a socio-economic right in their formal constitutions. It further introduces and empirically analyzes the results of the collected data. This chapter concludes by discussing the inequality-related consequences of unbalanced constitutional commitments in the intellectual property area.

Introduces the economic crisis that the US is currently experiencing and the reasons why industrial policy is the right solution to it.

The WTO is founded on commitments that governments make to each other in the General Agreement on Tariffs and Trade. These rules provide a structure for international trade in which governments are generally restricted in when they can raise tariffs on imports and whether they can discriminate among their trading partners. This chapter examines the contemporary framework for international trade and its main rules, including national treatment, bound tariffs, and most-favored nation, as well as the WTO’s dispute settlement process. The Shrimp-Turtle case provides an illustration of how these rules interact with international politics to create new political dynamics.