Chain Gangs and Cat Litter Kenneth Arrow recently noted:
The information base embedded in production workers, managers, and technical personnel is an important part of the market's valuation of the capital of a firm. An extreme case is the valuation of computer software firms, some of which have become giants comparable to large industrial organization, at least as measured by the stock markets. Essentially, their physical assets and indeed their marginal cost of production is trivial. Their expenditures are for acquisition of information, but much of this information is held essentially in the minds of their employees. It has to be asked why the forces of competition do not erode the profits and therefore the value of these firms. [Arrow 1996, p. 126] Arrow continued with the observation that treating "embedded information ... [as] capital depends on slow mobility of information-rich labor” (ibid., p. 127). Why, then, should labor be slow to take its information to the highest bidder? Should we not applaud workers who act according to the much vaunted logic of profit maximization?
The answer is that corporations mobilize all the powers at their disposal to limit what workers can do with their information. In effect, the granting of property rights to information means that the corporations need to control the people in whose brains that information resides.
Consider the case of Petr Taborsky, an undergraduate college student in chemistry and biology, who took a job as a laboratory assistant at the University of South Florida College of Engineering in 1987. The lab employed him to do testing for a project studying methods to make sewage treatment cheaper and more efficient (Anon. 1996b).
On his own, Mr. Taborsky discovered a way to turn a clay-like compound, similar to cat litter, into a reusable cleanser of sewage, a process that has many potentially valuable applications. He said that he made his discovery after the project had ended and that he did conduct any of his experiments as part of his job.
The project's principal investigator, Robert P. Carnahan, maintains that Mr. Taborsky was part of a research team and that the discovery stemmed from the team's decisions. The university said the sponsor of the project, a subsidiary of Florida Progress, a utility holding company, had all rights to the research.
A jury convicted Mr. Taborsky of grand theft of trade secrets in 1990. He was sentenced to a year's house arrest, a suspended prison term of 3 1/2 years and probation for 11 1/2 years, as well as 500 hours of community service. Mr. Taborsky violated the terms of his sentence when he obtained three patents related to the research. He was assigned to chain-gang duty for two months, although he was transferred later to a work-release center in Tampa.
The litigation continues. Mr. Taborsky still faces civil and criminal charges. In addition, the ownership of the three patents is still in dispute.
This case has ominous overtones. The university seems to accept that Mr. Taborsky made the discovery on his own. If he had done so at the behest of the project management, his employers would have ample documentation to invalidate Mr. Taborsky's claim to intellectual property. In addition, had Mr. Taborsky's employers been aware of any great expertise on his part, they probably would have paid him more than his minimal salary of $8 per hour.
The case seems to revolve around the question of who owns the rights to Mr. Taborsky's brain. I suspect that Mr. Taborsky would not have taken an interest in the subject of his discovery if had he never been employed by the university. Even so, if Mr. Taborsky had made the discovery on his own, after he ceased working for the project, then his claim would seem to be on solid ground.
How then can employers defend their right to intellectual property unless they have access to the brains of their employees even after their employment has ended? So here we have a clever student condemned to laboring on a chain gang over a dispute about the inner workings of his brain. The possibilities for panoptic intrusion are limitless.
In another notable case, IBM fired an employee, Virginia Rulon-Miller, a sales manager for dating someone who worked for a competitor (Rulon-Miller v. International Business Machines 1985). At the time, the courts found in favor of the employee, but that decision is more than a decade old. Today, the courts are far more sympathetic to the actions of business. Had she been a scientific worker, the temptation to terminate her would be even greater.
-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu