No justice, no law

by Ron Coleman | June 22, 2008 12:55 pm

On the eve of the Beijing Olympics — which is nothing if not a branding, merchandising and licensing bonanza to which athletes are invited — a nervous Chinese government official writes in the Wall Street Journal that that the era of Chinese counterfeiting is about to end, actually, and here’s why[1]:

How will we do this? In the following four ways:

[2]Still with us? A lot of chin music, really. An hour later and we again feel hungry. Why?

One would think that a totalitarian regime would have no trouble implementing policies such as these. They are just rules, after all. The problem is that China has opened to free enterprise, but it has not opened to the rule of law.

Free enterprise plus political repression — reliance on coercion throughout legal, administrative and social institutions — will not, in the long run, work in a large economy. And in the short run, at least, the result is endemic corruption. This is because finance and wealth are no longer tightly regulated, yet government control of coercive and enforcement power is still absolute. Bribery is entirely rational in such a system. Symbolic “examples” wherein random, or locally disfavored, offenders of the “new law and order” are meted harsh public punishments are substituted for systemic change.

For these reasons, widespread counterfeiting in China will not end until a meaningful social consensus develops that playing by the rules, in the long run, benefits everyone — not because those profiting wildly from doing it will reform themselves, but because the social institutions that are supposed to stop them will operate properly at every step. That won’t happen until China has true political and cultural freedom and a billion stakeholders in the system instead of a slim elite.

Meanwhile, the victims of counterfeiting, which includes both IP owners and a meaningful percentage of unwitting counterfeit purchasers (i.e., of industrial, pharmaceutical and other non-prestige counterfeits), can ask a similar question regarding the demand side: Besides more “stepped up enforcement” and an endless expansion of “IP rights,” what social, legal and political adjustments need to be made on our end of the counterfeiting transaction, as well?

Originally posted on LIKELIHOOD OF CONFUSION:®[3], my usually not so political blog about intellectual property.

  1. here’s why:
  2. [Image]:

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