Against Intellectual Monopoly

discrimination because, given the transport technology of the time,
the price of coal - and horses, the alternative to the Newcomen engine being
horses - varied substantially from one region to another. It assumes that
technological improvement will be stifled, because it is based on the idea
that only the Watt engine could use less coal than the Newcomen engine.
No surprise, then, that Boulton and Watt spent most of their time fighting
in court any inventor, such as Jonathan Hornblower, who tried to introduce
a machine either superior to theirs or, at least, superior to the Newcomen
engine. It will also come as no surprise to our readers that, in the Cornwall
region, where copper and tin were mined and coal was expensive, a number
of miners took to "pirating" the engine. This naturally brought about a legal
dispute with Boulton and Watt, which ended only in 1799 with the symbolic victory of the two monopolists. Symbolic, because their patent expired a
year later.

    The episode that interests us here, though, lies in the pace and nature
of innovation after the expiration of the Boulton and Watt patents.
In 1811, after the Boulton and Watt patents had expired "a group of
mine ... managers decided to begin the publication of a monthly journal reporting the salient technical characteristics, the operating procedures
and the performance of each engine."' Their declared aims were to permit
the rapid individuation and diffusion of best-practice techniques and to
introduce a climate of competition among the various mines' engineers.
The publication enterprise continued until 1904.
    One year later, in 1812, and in the same region, the first high-pressure
engine of the so-called Cornish type was built by Richard Trevithick.
Interestingly enough, Trevithick did not patent his high-pressure pumping
engine and allowed anybody who wanted to copy it.8 Trevithick's engine
happened to be as efficient as Watt's, but much more amenable to improvement. This triggered a long and extremely successful period of competitivecollaborative innovation in which different firms made small, incremental
changes to the original design of the Cornish engine. Such changes were
neither patented nor kept secret, thereby spreading rapidly among other
firms in the Cornwall area, allowing, and at the same time forcing, new
improvements from competitors.
    As a measure of the social value of competition versus monopoly, consider
the following facts. The duty of steam engines (a fundamental measure of
their coal efficiency) that, during the twenty-five years of the Boulton and
Watt monopoly (1775-1800), had remained practically constant improved
by roughly a factor of five between 1810 and 1835.
    This successful collaborative effort to improve the Cornish engine illustrates the genius of the competitive market. Because of uncertainty in coal
mining, a modest number of investors engaged in mutual insurance by
each owning shares in a broad cross-section of mines. As is the case with
shareholders in publicly traded companies, this means that each investor
was able to capture the benefit of innovation, regardless of which particular
firm or engineer made the improvement. Indeed, the employment contracts of engineers reflected these incentives. Engineers were employed on a
contract basis by particular mines to improve engines, with the understanding that they would publish their results. Investors captured the common
gains to all mines from each innovation, while engineers, having signed
away the right to monopolize their invention, profited instead from their
fees and from the advertising value of publicizing their innovations. Indeed, in many respects, this early-nineteenth-century competitive-collaborative
mine engine-improvement system is similar to the modern-day open-source
software system.9

    The period of the Industrial Revolution is, when one looks at it without
bias-shaded glasses, a mine of examples, both ofpatents hindering economic
progress while seldom enriching their owners and of great riches and even
greater economic progresses achieved without patents and thanks to open
competition. Of the many anecdotes, the story of Eli Whitney is particularly instructive. Born in Westborough, Massachusetts, in 1765, Whitney
graduated from Yale College in 1792. The following year he designed and
constructed the cotton gin, a machine that automated the separation of
cottonseed from the short-staple cotton fiber.