Fritz Machlup, Review of Patents and Industrial Progress (1942)

Fritz Machlup’s scholarly book review examines George E. Folk’s defense of the existing patent system against recommendations of the Temporary National Economic Committee (T.N.E.C.). Its central objection concerns the difference between economic analysis and advocacy: Folk assembles favorable testimony and attacks critics without establishing the economic consequences of patent protection. Machlup begins by identifying the book’s purpose:

This is a piece of propaganda literature for the maintenance of the present patent system and against the "revolutionary recommendations" (p. 59) adopted by the Temporary National Economic Committee.

The review moves from disappointed expectations through an account of the book’s organization to a methodological criticism. Machlup had expected a study of the patent system’s economic significance. Instead, he finds an effort to refute or disparage the committee record’s anti-patent statements while reproducing pro-patent testimony almost in full. His observation that quotations occupy approximately two-thirds of the book matters because the accumulation of testimony substitutes for an independent investigation.

Machlup’s breakdown of the contents makes that imbalance concrete. Folk devotes 56 pages to the Department of Justice’s case, including automobiles, glass containers, fiber-glass, and beryllium; 30 to opposing Walton Hamilton’s Patents and Free Enterprise; and 146 to the Department of Commerce’s case, especially favorable testimony from patent officials and other witnesses. Further sections oppose compulsory licensing, discuss other T.N.E.C. recommendations, and collect material on patents and antitrust law. Machlup allows that the appendix’s excerpts from Supreme Court decisions may be useful as a compilation. This limited concession distinguishes documentary or legal usefulness from the economic inquiry promised by the title.

The decisive issue is what expert testimony can establish. Engineers, businesspeople, and patent lawyers may possess substantial knowledge within their respective fields, but their opinions about patents do not thereby demonstrate effects on unemployment or living standards. Machlup challenges the passage from technical and professional authority to conclusions about social benefits. Reprinting convictions, however distinguished their proponents, does not supply the reasoning necessary to assess those conclusions.

I do not criticize the book and its methods of "analysis" because it defends the patent system. In this attitude the author may or may not be right. I have the same respect for an advocate or an opponent of a policy if only the analysis which he presents is well-reasoned, keen, scholarly.

This qualification prevents the review from becoming a straightforward argument against patents. Machlup leaves the substantive policy question open while insisting that either position must meet the same scholarly standard. His criticism concerns a mode of persuasion that presents a predetermined defense as an investigation.

What I am opposed to is propaganda in the disguise of analysis. The book perhaps contains legal arguments, but it contains no economic analysis.

The glass-container industry supplies his concrete illustration: Folk’s assertion that alternative machines and processes remain available to entrants possessing sufficient capital and know-how strikes Machlup as an emphatic defense made despite awkward evidence. The review does not independently resolve that industry’s competitive conditions; it exposes the inadequacy of treating such reassurance as an economic explanation.

Machlup closes by turning Folk’s accusation against Hamilton back upon Folk himself: commitment to a preconceived view has distorted the presentation and reduced its usefulness. The review’s lasting methodological point is that collected testimony and legal argument cannot, without further analysis, establish the economic case for a policy. Its sharp tone serves that distinction rather than a settled verdict on the patent system itself.