Intellectual Capital

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Intellectual Capital

In 1970 the General Motors workers’ strike cut the U.S. GDP by 4 percent and is estimated to have been the reason for the poor 2 percent growth that the country experienced in the following years.

Today the decline of all U.S. automotive industries affects just one percentage point. Almost all of the GDP is in services, in the tertiary sector. In this sector, intellectual production resulting from education is growing, not to mention that today almost nothing is produced without the direct intervention of the latest computer inventions from academia, from agricultural production in exporting countries to heavy industry, mostly set in countries known as emerging or developing.

For much of the twentieth century, cities such as Pittsburgh, Pennsylvania, flourished as industrial centers. They were rich and dirty cities; such was the legacy of the Industrial Revolution. Today Pittsburgh is a clean city that lives and is known for its universities.

In the past year, the ‘research corridor’ of Michigan (a consortium made up by the University of Michigan and Michigan State University) contributed 14 billion dollars to the state from benefits generated by their inventions, patents and research. These benefits have grown over the last year and still more in proportion in a state that was the home of the big automotive industries of the twentieth century, which are in decline today.

That means that a part of the direct benefits from one year’s production of ‘intellectual capital’ of a university in 27th place and another one in 71st place in the national ranking, equals the total monetary capital of a country like Honduras. This intellectual production factor explains, in large part, why the economy of New York City and its metropolitan area alone is equivalent to the entire economy of India (in nominal international terms, not in domestic purchase power), a country of over a billion inhabitants and a high economic growth due to its industrial production.
Today 90 percent of U.S. GDP is derived from non-manufacturing production. The monetary value of its intellectual capital is 5 trillion dollars, nearly 40 per cent of total GDP, which amounts in itself to all the items together in the dynamic Chinese economy.

If the American empire, like all empires, has incurred and, directly or indirectly has pirated the raw materials from other countries, the fact remains that especially today the emerging countries pirate a large part of the copyrights of American inventions. Not to mention that U.S. trademark counterfeiting alone subtracts from the original products $ 200 billion annually, which exceeds by far the total GDP of countries like Chile.
Looking at this reality, we may predict that the increased risk of emerging countries is to rest the current development in the export of raw materials; the second risk is to trust too much on industrial prosperity. If the emerging countries do not deal with investing heavily in intellectual production, they will confirm, perhaps in a decade or two, the international division of labor that sustained most of the big economic disparities in the 19th and 20th centuries.
Now it is fashionable to proclaim in the media around the world that America is finished, broken, three steps far from disintegration into four countries, two steps from final ruin. I get the impression that the methodology of analysis is not entirely accurate because, as revolutionary Ernesto Che Guevara criticized those who praised the effectiveness of socialist industrial production over capitalist production, it confused desire with reality. Guevara himself complained that this passion disturbed any objective criticism or prevented us from seeing that the central human goal was not simply to increase the production of things.

When making predictions about the year 2025 or 2050, people used to project the present conditions onto the future scenario. This underestimates the radical innovations that even a prolonged status quo can produce along with the inevitable change on any present condition. In the early ’70s, analysts and presidents like Richard Nixon himself were convinced that the emergence and ultimate success of the Soviet Union over the United States was inevitable. The ’70s were years of recession and political and military defeats for the American empire.
I think that since the end of last century we all agree that the 21st century will be a century of major international balances. Not necessarily more stable, perhaps the opposite. It will be good for the American people and particularly for humanity that this country stops being the arrogant power that has been for much of its history. U.S. has many other merits to which to dedicate itself, as history also shows: a people of professional and amateur inventors, a people of Nobel prizes, an excellent university system and a class of intellectuals that has opened pathways in diverse disciplines, from humanities to the sciences.

The dramatic rise in unemployment in U.S. is its best opportunity to accelerate this social conversion. In all international rankings, American universities occupy most of the first fifty positions. This monopoly cannot last forever, but right now that is where its principal advantage lies. Nevertheless, there is still a more crucial point.
Probably we will need to focus on “how” to develop a better understanding of “intellectual property” and its real importance in our global economy, but it is not a bad idea first to think a little about “why.”
For instance, why produce too much useless stuff, why consume too much beautiful trash, such as a cheap blind that has to be replaced every semester, because it is cheap and because it does not resist normal use, both in behalf of “keeping the economy moving”. That is, in short, why are wasting, burning and throwing away the new source of wealth? And so on and so forth.

For both questions, universities have one of the most important roles. Traditionally, the “how” is in the hands of technicians. The “why” has traditionally occupied most of the humanists? Scientists used to be between both of them.

Unfortunately, there are too many people without enough time to do that, too many isolated and hyperconnected individuals, too worried and too busy, thinking all the time about how to do the same thing always faster, bigger or smaller, brighter and better… Even in the academia.

Dr. Jorge Majfud, Lincoln University. July 2009.

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