Important: If you reached this web page via a link, other than to the Home page, you must go to the Home page to acknowledge the rules of the domain.

Back to Unedited Philosophy Quotes and Ramblings about Intequinism.


Topic: Effective Creation and Development of Ideas and Intellectual Property in relation to the effect it has on New Capital.

Title: Ideas to New Capital or New Capital of Ideas or New Capital from Ideas or Honesty, logic, creativity and Intequity.



1.         Introduction.. 1

1.1      Background. 1

1.2      Problems identified. 5

1.3      Objective of study. 19

2. Literature review.. 23

2.1      History. 23

2.1.1       Intellectual Property, Moral, Legal and International Dilemmas.   Edited by Adam D. Moore   23

2.1.2       A History of Money from Ancient Times to the Present Day – Glyn Davies. 45

2.1.3       The Role of the Judiciary in the Enforcement of Intellectual Property Rights: Intellectual Property Litigation under the Common Law System with Special Emphasis on the Experience in South Africa.- LTC HARMS.. 61

2.2      Creativity. 63

2.2.1       1966 - Creativity and Academic Achievement – Joseph C. Bentley. 63

2.2.2       1973 Ability and Creativity in Mathematics – Lewis R Aiken, Jr. 63

2.2.3       1973 Honesty and the Creative Process – Charlotte L. Doyle. 69

2.2.4       1981 Pluralism and Truth in Religion – Karl Jaspers on Existential Truth.. 72

2.2.5       1993 Towards A Theory Of Organizational Creativity Woodman_Sawyer_Griffin    80

2.2.6       2002 Rethinking Truth – Phillip Higgs and Jane Smith.. 89

2.2.7       2009 Theories of Creativity – Carlisle Bergquist. 96

2.2.8       The Sources of Innovation – Eric von Hippel. 97

2.3      Developing. 107

2.3.1       The EUROPEAN RESEARCH UNIVERSITY - An Historical Parenthesis?. 107

2.3.2       2008 AcademicCooperationWithAfrica - Eds Schamp Eike W. and Schmid Stefan    126

2.4      Intequity. 140

2.4.1       Brands and Branding – Clifton Rita with others – Second Edition. 140

2.4.2       Capital Ideas Evolving – Peter L. Bernstein ISBN 978-0-471-73173-3 (cloth). 142

2.4.3       Democratizing Innovation – Eric von Hippel. 148

2.4.4       2002 From Ideas to Assets – Investing Wisely in Intellectual Property Edited by Bruce Berman   150

2.5      Accounting. 191

2.5.1       2005 Intangible Assets – Valuation and Economic Benefit – Jeffrey A. Cohen    191

2.6      Taxation and Cooperation. 198

2.7      Hermeneutics. 198

3.         Research methodology. 199

4.         Planned structure and bibliography of each chapter. 200

4.1      Chapter 1: Research Proposal 200

4.2      Chapter 2: Philosophy and historical development of intellectual property and ideas. 200


4.4      Chapter 4: Developing Ideas. 204


4.5      Chapter 5: Current remuneration and sharing of economic benefits as a result of idea generation. Creation of money and how it relates to ideas. 206

.. 209

4.6      Chapter 6: Accounting and Revenue considerations. 209


4.7       Chapter 7: Taxation regime and cooperation between countries with regard to research and development. 211


4.8     Chapter 8: Recollection of hermeneutics. 212

4.9      Chapter 9: Conclusion.. 212

5.         Time-frame and resources. 213

6.         Bibliography. 214

1.              Introduction

1.1           Background


Natural resources, ideas, labour and capital are the four most important ingredients of a successful changing economy. Equitable compensation for contributions of these four factors contributes to sustainability without unpleasant upheavals. This dissertation deals with ideas.

Entrepreneurship is not normally a factor of production in South Africa. ‘The field of entrepreneurship in South Africa has certain unique although limiting characteristics, including an unconvincing enabling environment, a weak entrepreneurial culture and an emergent, and therefore limited, body of knowledge surrounding the topic of entrepreneurship. Consequently, entrepreneurship in South Africa does not hold a strong position in terms of entrepreneurial activity and, in fact, is generally approached with a degree of scepticism. At the same time, Maas (GEM) (Maas & Herrington 2006: 12) indicate categorically that an increase in entrepreneurial activity is highly dependent on effective entrepreneurship education. This study confirmed the fact that education per se may increase the current Total Entrepreneurial Activity rate of 5.29% in South Africa, as compared with 14.8% in other developing countries’ (Antonites & Wordsworth, 2009, p. 69)

A free market economy philosophy which is educated in South Africa which includes the idea of entrepreneurship, is reality in South Africa, but markets are not free and free competition does not exist. Free markets are a prerequisite for entrepreneurship to be effective because entrepreneurial opportunities exist because entrepreneurs supply better value for money products and services than the ones before. If this possibility does not exist it excludes the entrepreneurial idea in reality. ‘The search for “truth’(sic) or “truthful knowledge” is the overriding goal of science. Whereas in everyday life we search for knowledge that will help us cope better with the challenges and demands of each day (a very pragmatic interest), the aim of science is to generate truthful (valid and reliable) descriptions, model and theories of the world. I have referred elsewhere to this as the epistemic interest of science (Mouton, 1996, Chapter 7). “Epistemic” is derived from episteme, the Greek word for “truthful knowledge”. Although it is, of course, not possible to produce scientific results that are infallible and “absolutely” true for all times and contexts, we are motivated, as scientists, to constantly strive for the most truthful and the most valid results.”’(Mouton, 2001, p. 138)

After ideas have been generated the capital and currency to develop the ideas are created or advanced to fund the development of the ideas. The development process, which is funded by capital, supplies work.  The labour brings the ideas and natural resources together to form assets. Speedy implementation of new ideas, with subsequent competence benefits to the economy, is important to be competitive and to supply work opportunities. Effective implementation of ideas can secure South African ideas for the benefit of South African citizens first and foremost. A sustainable system of compensation for idea generation motivates citizens to be creative in an economy. Simon Anholt discusses branding of nations in the book Brands and Branding. He wrote: ‘What really makes a difference is when a critical mass of the business and organisations in a place becomes dedicated to the development of new things: new policies, new laws, new products and services, new business, new buildings, new art, new science, new intellectual property.’ (Clifton, et al., 2009, p. 209) Without ideas there would not have been any of the products and inventions which make our lives easier and distinguish our species from other species.

Trademarks and brands save time during the purchase decisions of consumers due to trust (Clifton, et al., 2009, p. 22) in the trademark and brand. Trusted trademarks and brands usually offer value for money products and good quality versus cost ratios. Warren Buffet told a group of investors in Germany that brands are the most important factor in deciding where to invest.(Clifton, et al., 2009, p. 5) It confirms my opinion that Intequity© is a strategic issue for a country. 20 Years ago the intangible part of the combined market capitalisation of Standard & Poor’s companies were 30%. In recent years it has risen to 80%. Globally brands are estimated to account for approximately one-third of all wealth(Clifton, et al., 2009, p. 5). The value of Intellectual Property (‘IP’) which does not appear on balance sheets in all circumstances is part of this difference.  Trademarks and brands are referred to with words like brand equity and the currency of a company (Clifton, et al., 2009). I refer to the accredited value of IP as Intequity©. Intequity is a term which is used for the value of IP assets which does not appear currently on balance sheets.

In South Africa currently place names are changing and the marketing value of these names has to be built up anew. In other countries for example France a marketing value can be attached to place names for example to Champagne (Rangnekar, 2009, pp. 537-539).’The United States, however, does not accept the idea that champagne is an indication of origin and there term “champagne” may be used for any sparkling wine, whatever its provenance. But this has its dangers. Belgian customs authorities confiscated and destroyed some American champagne as being counterfeit when it passes through a Belgian harbour...A Rottweiler from time to time bites his master.’(Harms, A Few Negative Trends in the Field of Intellectual Property, 2009, p. 542)

Intellectual Property is an integral part of the formal and informal business sectors and plays an integral part in decision making when investors decide where to invest their savings and when investment managers decide on ways to utilise investors’ funds.

Property rights to, and ownership of IP is an issue with diverse views. Currently the World Intellectual Property Organisation (‘WIPO’) is spreading their views and policy about ownership through a network of countries with cross-border agreements. The organisation has its head office in Switzerland. The name WIPO explains what their leadership’s aspirations are of spreading the WIPO philosophy.

Intellectual is defined as ‘1. of or relating to the intellect, as opposed to the emotions.’(Makins, et al., 1994, p. 803) Intellectual Property is defined as ‘an intangible asset, such as a copyright or patent.’ (Makins, et al., 1994, p. 803)


1.2      Problems identified.

IP practices are developing in South Africa and the legality of ownership of IP is developing. Law practitioners have varying opinions about the nature of IP. Particularly, the borders within which rights to IP operate are not clear. Securing financial gain from the generation of ideas is problematic and uncertain. Availability of capital for development during the early stage of ideas is very scarce. This situation exists while new capital is generated world-wide to develop ideas. This capital funds the living expenses of many people as payment for development work done by them. It often happens that good ideas are not used, shortly after it was generated because of a lack of knowledge and/or capital. The ideas are then sometimes lost to other countries. Although ideas are significant in a successful economy, currently idea generation does not receive due credit and people are not compensated for ideas even though the ideas contribute to wide welfare. The generators of ideas are often not included in the development process. How often do you hear the statements ‘It is only an idea’ or ‘Everybody has ideas’. This situation leads to a descending human culture with subsequent lower Intequity values.

‘The Innovation Fund is mandated to promote technological innovation through investing in late stage research and development, Intellectual Property protection and commercialisation of novel and inventive South African technologies.” (Innovation Fund) The Innovation Fund is controlled by the National Research Foundation (‘NRF’).

A ‘funding gap’ exists in the development of ideas, from the idea generation phase until after the proof-of-idea phase. I will call it the Info Stage. Most venture capital financing takes place after the proof-of-idea period. In the current Information Age it is crucial to have the necessary information and knowledge to ethically and successfully make funding decisions. The Info Stage of a project is one of the most important phases, because, it is during this phase, which the information is gathered, which determines, whether an investment should be made to further an idea. The length of the period, during which information is gathered, and the ownership of the IP, following the idea, lost or established, is influenced a lot with capital. Capital influences research and the availability of natural resources and labour. If no capital is used during the Info Stage, an idea is filtered by people’s discussions in general. The information becomes scattered amongst many people in such a case. It is a lengthy uncompetitive process and ownership of IP, following the idea, is lost when no capital or proactive action influences the Info Stage. Small and Medium Enterprises and creative people, often, do not have the capital to finance research during the Info Stage of their ideas.

The Johannesburg Stock Exchange and Alt X supply only capital where a profit history exist, thus there is no capital available for developing ideas. The financing the Info Stage of projects receives currently in South Africa, is mainly through formal research, to which many people with good ideas do not have access or knowledge about.

The way a culture perceives innovation determines innovation and capital growth. If innovation is of low priority, the culture will not be competitive in a free market, which operates without legal infringements. If innovation is motivated by a culture the culture will be greater, because technology is currently evolving. Economic creativity is not protected against thievery in South Africa. South Africa has not been dependant on creativity, like the first world, partly because of historical dependence on export of raw materials.

Ideas are currently common property in the USA(Moore, 1997, p. 3). If copyrights are territorial it is possible for other countries to harvest ideas in South Africa and then develop it legally because they are better organized and has capital available more readily. South Africa’s developmental process of ideas does not compete effectively with some other countries and therefore South Africa loose potential income. ‘Copyright is territorial.’(Harms, A Few Negative Trends in the Field of Intellectual Property, 2009, p. 540) According to the e-mail from Prof Tana Pistorius on January 19, 2010 at 15h02 copyrights are not territorial.

There are no laws which prohibit the transfer of ideas amongst countries. Copyright which automatically settles on entities in a big part of the world except for example the USA is a right which is defensible with civil law procedures after paying high costs. Civil law procedures are out of reach of most people because of cost factors. If a government protects copyright directly with criminal procedures instead of only civil procedures it could be argued that it is an advancement of human rights. ‘For the sake of perspective: Microsoft lodges about 3 000 patent applications annually; IBM earns more than US $1 billion in patent royalties per annum; and according to one estimate more than 50 per cent of the foreign earnings of the United States is by way of IP.’(Harms, A Few Negative Trends in the Field of Intellectual Property, 2009, p. 543). There is a possibility that copyrights which are registered and developed in the USA and Trade Secrets kept there, actually originated elsewhere in a country where automatic copyright settles. This is clearly a situation which can cause conflict between the USA and another part of the world. It depends on the methods used to gather information. If Intelligence agencies gather information on new ideas by way of infringing on human rights for example privacy, a case can be made to declare the IP rights void. ‘South African law and the common law can best be illustrated with reference to passing off and the protection of confidential information: South African law, like the civil law, recognises a general delict of unfair competition while the English common law has no general unfair competition tort. However, the approach in South Africa to unfair competition is heavily influenced by common law precedents.²¹...The rights usually in issue are freedom of expression, the right to privacy and the right to property.²(Harms, The Role of the Judiciary in the Enforcement of Intellectual Property Rights: Intellectual Property Litigation under the Common Law System with Special Emphasis on the Experience in South Africa, 2004, p. 484)(Harms, The Role of the Judiciary in the Enforcement of Intellectual Property Rights: Intellectual Property Litigation under the Common Law System with Special Emphasis on the Experience in South Africa, 2004, p. 484)

‘My company, Intellectual Ventures, is misunderstood. We have been reviled as a patent troll—a renegade outfit that buys up patents and then uses them to hold up innocent companies. What we’re really trying to do is create a capital market for inventions akin to the venture capital market that supports start-ups and the private equity market that revitalizes inefficient companies. Our goal is to make applied research a profitable activity that attracts vastly more private investment than it does today so that the number of inventions generated soars...Our 650 employees include scientists and engineers, patent analysts and attorneys, finance experts, and licensing sales agents. To raise capital, we have an investor relation team. Our topic generation teams continually study trends in technology development and new discoveries in science to try to identify the best opportunities for investment. Their conclusions guide three distinct groups. The first is our in-house invention effort, which involves 30 staff inventors (myself included) and a roster of more than 100 extraordinary consulting inventors who work part-time for us. The second is our external inventor network of more than 1 000 inventors in seven countries. The third is our acquisitions group, which buys existing patents or stakes in them.’(Myhrvold, 2010, pp. 41,47)

Corporate citizenship refers to the responsibilities which parties have due to their involvement in the economy. It refers first and foremost to a party’s citizenship of a country in current law. IP and particularly the development of ideas is a grey developing area in which corporate citizens have to use constraint not to abuse powerful positions to the disadvantage of other citizens. This is a consequence of the problem which is created by global groups which operate over borders. If a foreign company employs local citizens, the ideas which were generated by the citizens and which are owned by the foreign company can be used legally to disenfranchise the fellow citizens of the country. If exorbitant prices are asked for the products, legally, it can have a negative influence on the people of the country. If a local citizen is involved with practices which disadvantage the other local citizens because he is responsible to the owners of the foreign company due to his employment, there is a Rubicon line which can be crossed. If this line is crossed treason can be involved because of a citizen’s first and foremost responsibility to his fellow citizens according to current nationalistic law principles. Corporate responsibility therefore creates a paradoxical situation of uncertain citizenship in some circumstances. It is ironic but in some cases empires were built as a result of favoring foreign connections to local ones. ‘Countries such as the UK, France, China and the Netherlands, which have had empires in the past, may still be enjoying the benefits of decades or centuries of busy cultural, political, social and commercial transactions with far-flung countries, even if the unpleasant military and political details are long consigned to the history books.’(Clifton, et al., 2009, p. 212)

It can be argued in countries where freedom of speech is allowed that nationalism has no place in a moral globalized business world because it is moral to side with a person, with similar ethics and belief, in another country, rather than with a fellow citizen with opposing ethics. Copious profit from trading ,however,  can then become relevant to cancel the culture of siding with foreign morality. “It is not where we are or where we come from that is important, but what we care about. According to Henley Centre research, 60% of Britons have less in common with their neighbors than the folk who share their hobbies. Online, it is easy for people to track down groups across the world to which they can belong, to relate to like minds and like-minded brands on a specific dimension or passion.”(Clifton, et al., 2009, p. 225) In South Africa the 60% in the above quote is certainly different because of different demographics. This situation complicates the nationalist law principle in a global community with frequent interactions between people from different countries and consequential transference of ideas.

In order for a company or country to be competitive in a global economy the speedy development of ideas which were generated in the company or country is important. Currently in South Africa such a speedy development process does not exist. A speedy coordinated development process becomes more crucial with a global communication system because ideas spread faster. Chronologic sequences are normally longer than logic sequences because of disinformation and a lack of transparency which render an economy less competitive in developing ideas. Where ideas are not developed consciously as fast as possible in a competitive world economy or secured for later use, the creator of the idea and his surrounds benefit less.

Trademarks and brands influence consumers, due to image considerations. When a consumer pay more for a cap with a Nike trademark than for a cap without a trademark from the same street vender it is a logical assumption to make that the decision to buy the cap with the Nike trademark was because of the image, which was created by Nike’s advertising campaigns. The stitching and cloth quality of the two caps can be assumed to be not very different. Roughly 10% of world trade takes place in counterfeit products (Clifton, et al., 2009). The percentage trade in counterfeit ideas is much higher because idea generation is not protected by law. Trademarks and brands can have a negative effect on individuals when owners ask exorbitant prices because of monopolies. The good quality versus cost ratio then stops and eventually leads to the demise of the brand.

According to the Times magazine there is an inverse relation between logic and memory. Idea generation or creativity is labour of minds, which is partly a result of logic, which in turn is partly a result of honesty. To stay honest is difficult and takes a lot of energy. Creativity is often not seen as productivity which should be compensated. Christianity portrays honesty as a singular godly attribute and therefore many shun it in favour of disinformation and an easier short term route. Some people then sin or deceive deliberately because they think the sin will free them from this godthought which is portrayed in Christianity. The thought culminates at Revelation 19:11. The fear which is caused by the religion leads to an uncompetitive economy because creativity is discouraged and lost because deceit leads to illogical thoughts, which are not based on reality but rather on thoughts and memory to conceal. It also leads to a digression of people and society in general. Communication then digresses to a stage where information is not effectively transferred. Most people want to be informed investors. The transfer of meaningful information is central to communication. Most of us want to base our investment decisions on truth and reality or in other words on what actually happens. To lead with disinformation gives an advantage but the longer term result of deceit is the loss of logic abilities and creativity because capacity is used for storage of disinformation, which under truthful circumstances would not have been necessary to store. There is a time difference between actual order and logical order of events. The reason of this difference can be partly explained by the results of disinformation, which changes the timeframe in which logical sequences take place. Lies bend time. People who try to stay honest are logically capable of generating most useful ideas, because their brains are not storing memories of unreal events, they made up, which they want to remember. These people sometimes do not mix in the circles where capital is available to develop ideas and they do not normally develop the ideas they generated. The consequence is that many originators of ideas do not share sufficiently in the benefits the ideas bring forth. I say sufficiently because the income some of them receive is not sufficient to motivate creative behavior in the commercial world in South Africa. People are then, depending on their makeup, forced to take other routes to survive and put food on the table, with a consequential loss of creative abilities in the commercial world and with a consequential weakening of South Africa’s competence in the global economy. To stay honest is difficult because of pressures by society to be dishonest in order to make a living.

In Holland for example they refer to Intellectual Property as Geestelijke Eiendom (Harms, A Few Negative Trends in the Field of Intellectual Property, 2009, p. 540), which means Spiritual Property if translated directly to English.

Dishonesty leads to short term gains but over the long term it has a negative effect on creativity and sustainability. This leads to a slowing or halt of creation of own technology. A nation can then become dependent on technologies which were developed in other countries, which they have to purchase. To be able to purchase the technology they need to borrow foreign currency because the foreign nation wants to be paid in their own currency for their own technologically advanced products. Dishonesty became a debt trap. When the country cannot produce enough from mining natural resources to balance trade, ideas have to be developed to replace the export of natural resources.

 “As global competition becomes tougher and many competitive advantages, such as technology, become short lived, the brand’s contribution to shareholder value will increase. The brand is one of the few assets that can provide long-term competitive advantage. Despite the commercial importance of brands, the management of them still lags behind that of their tangible counterparts. Even though measurement has become the mantra of modern management, it is astonishing how few agreed systems and processes exist to manage the brand asset.” (Clifton, et al., 2009)The value of a brand is the opportunity saving which exist through savings of future advertising and marketing expenses. A brand’s value cannot be entangled with the value of an organisational structure and human capital of an organisation.

Ideas implemented, usually make current products less useful. If a motor vehicle manufacturer for example brings a new model on the market to soon, the previous model loses some of its usefulness and value. If a manufacturer does not protect the new idea, as a trade secret, when the manufacturer does not bring the new model on the market, a competitor can use it. This puts the manufacturer in a difficult situation because the manufacturer does not want to bring a new model on the market but it also does not want to lose the idea to a competitor. Trade Secrets and how it functions in society and the effect it has on capital values is not common knowledge.

“All over the world, university campuses are offering their research facilities, and priceless academic credibility, for brands to use as they please. And in North America today, corporate research partnerships at universities are used for everything: designing new Nike skates, developing more efficient oil extraction techniques for Shell, assessing the Asian market’s stability for Disney,……….” (Klein, 1999, p. 99) This quotation reflects part of what is happening. Take note of the words “All” and “everything”.


“Dr. Betty Dong, a medical researcher at the University of California at San Francisco (UCSF), compared a brand-name drug with brand-name money. Dong was the director of a study sponsored by the British pharmaceutical company Boots (now called Knoll) and UCSF. The fate of that partnership does much to illuminate precisely how the mandate of universities as sites for public-interest research is often squarely at odds with the interests of branded fact-finding missions. Dr. Dong’s study compared the effectiveness of Boots’ thyroid drug, Synthroid, with a generic competitor. The company hoped that the research would prove that its much higher priced drug was better or at least substantially different from the generic one – a claim that if legitimized by a study from a respected university, would increase Synthroid sales. Instead, Dr. Dong found that the opposite was true. The two drugs were bio-equivalent, a fact that represented a potential saving of $365 million a year for the eight million Americans who were taking the name-brand drug and a potential loss to Boots of $ 600 million (the revenue from Synthroid). After the results were reviewed by her peers, Dr. Dong’s findings were slated to be published in the Journal of the American Medical Association on January 25, 1995. At the last minute, however, Boots successfully halted publication of the article, pointing to a clause in the partnership contract that gave the company veto rights over the publication of findings.” Later it was exposed in The Wall Street Journal and the paper was published in April 1997 two years behind schedule. Two other cases are mentioned in Naomi Kleins’ book. “The only element out of the ordinary in these three cases od stifled research is that they involved academics with the personal integrity and the dogged tenacity to publicly challenge their corporate “partners” and their own employers – factors that eventually led to the truth coming out through the press.”…..”According to a 1994 study conducted on industry research partnerships at U.S. universities, most corporate interference occurs quietly and with no protest. The study found that companies maintained the right to block the publication of findings in 35 percent of cases, while 53 percent of the academics surveyed agreed that ‘publication can be delayed’”........”Why have university professors remained silent, passively allowing their corporate “partners” to trample the principles of freedom of inquiry and discourse that have been the avowed centerpieces of academic life? (Klein, 1999, pp. 99-103)

Fair equal opportunity competition is central to a free market economy philosophy. If ideas can be speedily implemented and idea generators are compensated for generating ideas the free market economy and free competition will work better to supply quality products at reasonable lower prices. Free market theory and reality in South-Africa with specific reference to IP is far apart. Good ideas which should be implemented to make the market economy effective through competition are not implemented speedily. Generators of ideas often do not eventually share in the economic benefits brought forth by their ideas because of capital and/or knowledge limitations. The generator of an idea is the individual who through logical thought processes created the thought.

Intellectual Property has a significant effect on the market values which are used in the calculations to determine required rates of return and discount rates of management accounting calculations. Market prices of shares include IP, because the market discounts the available information. Balance sheet values sometimes include IP values, because IP is shown in balance sheets only when it was purchased according to International Financial Reporting Standard 3. If IP was not purchased, but internally developed it may not be included on the balance sheet according to International Financial Reporting Standard 3. Direct opposing philosophies exist with regard to IP. Transparency with regard to IP is not enough for investors to take informed decisions. Trade secrets have to be protected to sustain businesses.

The above situation complicates the calculation of required rates of return and discount rates for investment- and cash flow analysis. Market values are very unstable and fluctuate to such an extent that reliable investment decisions are practically difficult, because the discount rates fluctuate due to the fluctuating market values in the rate calculation. To use balance sheet figures are also complicated, because sometimes IP values appear on balance sheets but not always.

Cost of Capital in South Africa is substantially higher than in first world countries. It is the case partly because, on average development of ideas is done less effectively than in the first world countries. If ideas are developed in a more effective way more frequently the average project income of capital providers in South Africa will rise and they will be able to therefore decrease their required rates of returns.


1.3      Objective of study.


Plagiarism prohibitions, according to European continent law are an international right which authors have (Moore, 1997, p. 7). The treatment of royalty payments with regard to international copyrights and other IP is not general knowledge and this dissertation will hopefully shed light on the issue and possible ways to protect ideas and create Intequity capital.

The link between ideas and the issue or supply of capital is not generally well understood, and this dissertation will expand understanding of the link. Consequential better understanding of the cost of new capital will be a result of the research.

The investigation of the relation between honesty and logical thinking could expand understanding of creativity and intelligence. Students who struggle with the logical aspects of management accounting will benefit from the research.

Hypothesis: Honesty affects innovation

An official market place for ideas and Intellectual Property is currently envisaged as a solution to some of the above problems. This dissertation will give background knowledge to give an informed opinion about a solution to the problems in a planned Doctors degree.

Hopefully the research will help to change the cultural belief that innovation is a childish attribute and that it should not be recognised financially. The legal fraternity which does not protect income from creation of ideas, partly because a thought is not seen as work and not worthy of compensation, could be influenced if the research shows that the creation of logical good thoughts is a result of stressful, burdensome and difficult kept honesty. The current legal view about compensation in relation to idea generation is based partly on the writings of John Locke.(Moore, 1997, p. 27)The Lockean labor theory is the first justification for ascribing ownership of property according to the United States of America Constitution(Moore, 1997, p. 108)“Although patents do not have a similar exemption for personal use, patent protection is subject to a judicially created exception: the patent holder has no right against the person whose ‘use is for experiments for the sole purposes of gratifying a philosophical taste or curiosity or for instruction and amusement.’ Such limitations are motivated, in part, by pragmatic considerations as to the difficulty of policing such infringements.These limitations, however, also serve the perhaps primary objective of intellectual property: to ‘promote the Progress of Science and useful Arts’ by increasing society’s stock of knowledge. Both concerns are best served by limiting property rights over ideas.”(Moore, 1997, p. 113) The “labor-desert” or “value-added” theory of Locke says that people should be compensated if they contribute something of value to the utilities society use.(Moore, 1997, p. 120) This is an argument in favour of intellectual property rights and income rights for idea generation.

The thought that the idea is the less important is disputable. One could argue that the idea was the more important of the two because without the idea there would not be any utilities. Generating the idea is also an important attribute which distinguish humans from animals. Animals do not have hands. If humans did not have hands and could not communicate understandably it would have been much more difficult to implement ideas.  Human development is dependant on hands and idea generating minds and both should be compensated. In a competitive economy compensation will determine what is done according to Locke’s labor proviso. Without compensation for idea creation the economy will not be competitive. If the idea did not originate, the hands would not have had anything to do. Therefore, generating the idea, adds significant value because it creates work and helps to create utilities. The idea generating mind and the hands do not have to be part of the same human being. The handwork creates only the utility with not as much work being created by the handwork. During the handwork new ideas are generated but these ideas are mostly “obvious” and does not add unique value. To generate novel ideas and obvious ideas are not as common as handwork because of the honesty factor. The more honest persons are, the more likely they are to create ideas, because of logic, which is a result of honesty. The more people are dishonest, the more difficult it is to stay honest for people who want to be honest. To stay honest is difficult and therefore creating the idea because of persevering with honesty falls under Locke’s labour proviso which says compensation is warranted because of the unpleasantness of labour. To stay honest is an unpleasant labour of the mind. Without the idea, there would be no utility, therefore the “value-added” proviso is also fulfilled which warrants compensation for generating ideas. The idea generator often is an individualist and the handworkers are often a group. Between the idea generator and the handwork group there is the group who possess most of the Intellectual Property. The possessors also control most that is happening, with special reference to the level of compensation of the idea generator and the handwork group. Obviously the possessors think they have abundant financial security. Financial security is a factor which many idea generators and handworkers strife to, in order to increase their standard of living and expected perceived dignified retirement.

Moore identifies that one of the major concerns with regard to the creation of IP is compensation for creation.(Moore, 1997, p. 93) I agree fully that compensation is one of the most important issues which need change with regard to IP issues. The reason is that the current system encourages people to become dishonest because we are not compensated for IP created. A big part of IP is controlled by secrecy and the common law. Most secrets are open for misuse because it is not subjected to the scrutiny of society. If secrets are open for society it becomes possible to misappropriate it. It depends therefore on the people who are involved and their morals and not on the system. Currently the system causes immorality because creation is not sufficiently compensated. Creation has to be sufficiently compensated in order for morality to flourish. If it is overcompensated immorality can set in, which is often the case if a person does not control new riches within societal boundaries. What came first the chicken or the egg? What came first, the new system or the new morals? New morals which are accepted generate a new change of a system. This could imply that the chicken came before the egg and that the egg is the method which spreads chickens over earth. Evolutionary changes could cause a flying bird from a chicken’s egg. This flying bird would then lay eggs which will spread the new specie over earth.

Understanding the subject better will promote speedier development and implementation of ideas in South Africa with consequential benefits to society in general and to the balance of payments. It should contribute to lowering the cost of capital because of more successful idea management and project development.

The link between cost of capital, the right to printing of money, development of ideas, research funding, accounting treatments, logical ability and honesty will be investigated to better understand realities of creation.

‘..are best qualified for the increasingly important challenge of measuring non-financial factors,..’(Tilley, 2010) A study of non financial matters which influence capital will contribute to a better understanding of how non-financial matters influence accounting.


2. Literature review


The literature review is divided between the proposed chapters of the dissertation as mentioned at 4. (Planned structure and bibliography of each chapter).


The literature review consists of quotations from and own thoughts whilst reading the following books which was included in the planned bibliography in 4.

2.1  History

2.1.1      Intellectual Property, Moral, Legal and International Dilemmas.   Edited by Adam D. Moore

Chapter 1 – Introduction by Adam D. Moore

Page 2: “ At the most practical level the subject matter of intellectual property is largely codified in the Anglo-American copyright, patent, and trade secret law, as well as in the moral rights granted to authors and inventors within the continental European doctrine.”

It is not the entire landscape of IP law.

Part I – The Moral Foundations of Intellectual Property

Chapter 2 - Justifying Intellectual Property by Edwin C. Hettinger

USA - Copyright

Page 2: In the United States of America copyright is protected under federal law or the 1976 Copyright Act. Section 102 of the Act determines the subject matter as follows:

“Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.”

Page 3: The system does not protect the abstract idea because an idea can be expressed in different words. If the idea could not be separated from the expression, copyright protection is not valid. This is called the ‘merger doctrine’. Plagiarism however can be applicable even if the expression is different from the original.

Page 4: An important restriction on the bundle of rights is fair use. This refers to for example the use of intellectual property by educators.

Page 19 (Edwin C Hettinger): The duration of a copyright is the author’s life plus fifty years. These rights are not universally applicable, however. Fair use is applicable which gives for example educators, researchers and libraries special privileges to use copyrighted material.

USA Patent law (Page 4)

Page 4: Patents give twenty years exclusive monopolies. Patents exclude obvious knowledge.

Page 5: “Unlike copyright, patent law protects the totality of the idea, expression, and implementation. Moreover, the bundle of rights conferred by a patent excludes others from making, using, or selling the invention regardless of independent creation.”

Own: In South Africa infringements on copyright and patent law is not a criminal offence and therefore it is very expensive to enforce the law with civil proceedings. Patents are not investigated for validity by the Companies and Intellectual Property Registration Office of South-Africa. The courts and negotiations, at high cost for persons, are therefore the authority to decide on validity.

Trade Secrets (Page 6)

Page 6: “A trade secret is almost unlimited in terms of the content or subject matter that may be protected and typically relies on the private measures, rather than state action, to preserve the exclusivity.”

Page 6: “Although trade secret rights have no built-in sunset, they are extremely limited in one important respect. Owners of trade secrets have exclusive rights to make use of the secret but only as long as the secret is maintained.”

Moral Rights: Continental System of Intellectual Property (Page 6)

Page 7: “Independently of the author’s economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would prejudicial to his honor or reputation”

Page 7: These rights go beyond the Anglo-American rights.

Own: Pride, which is one of the seven deadly sins of the Roman Catholic Church, becomes more relevant with the Continental System.

Justifying Property Rights - Edwin C Hettinger  (What he says is not always clear)

Page 17: Edwin C. Hettinger argues that because intellectual property can be used to satisfy a need by more than one person at the same time it makes intellectual property less relevant.

Own: It does not make sense to say that something has to be done just because it is possible. Our morals hinder us from doing some things. Hettinger’s opinion is subjective and he does not draw the relation between the income from IP and a home purchased with the income on page 28. He argues from the viewpoint of a citizen who receives accommodation and food irrespective of the person’s income. It sounds like a communist viewpoint where all people receive more or less the same accommodation and food from the state.

Page 27: John Locke’s argument’s says that IP or benefit should depend on the fruits of one’s labour and desert. Desert refers to what one deserves due to the effort rather than ability. Beauty and utility is seen as less important than effort. Locke further argued about the effects of appropriating more benefits than can be used. Leaving benefits for other people and not causing spoilage of benefits because it could not be used are mentioned.

Page 34: “We must begin to think more openly and imaginatively about the alternative choices available to us for stimulating and rewarding intellectual labor” Hettinger gave as a reason for his statement that the practical results of IP law is not always the result which is required.

Chapter 3 - Trade Secrets and the Justification of Intellectual Property: A comment on Hettinger - Lynn Sharp Paine, Pg 39

Page 17 to 56: Own: From Edwinne C. Hettinger’s and Lynn Sharpe Paine’s essays the clear distinction between copyright protection and patent protection on the one side and trade secret law on the other side comes forth. Copyright and patent protection encourages the disclosure of information which is protected for a fixed period and trade secret law penalises the disclosure of information. If information is disclosed the protection can be foregone under some circumstances under trade secret law. Trade secret law is grounded in common acceptable morals generally seen, as for the general good of society. Ideas are seen as IP of the creator under trade secret law and therefore to be communicated to others as the creator sees fit. If ideas are lost due to espionage or other immoral practices which infringe on the rights of individuals it is unacceptable and remedies exist in trade secret law. It seems that in the USA, IP law are enforced by the government and seen in a criminal sense. In South Africa it is not the case and IP law is only enforceable through civil actions. It is perhaps the most relevant factor which makes IP law of negligible use to an individual with limited financial resources in South Africa.

Chapter 4 - The Moral Foundations of Intangible Property - James W. Child, Page 57

Page 59: Own: John Locke wrote about morally leaving resources for others, he wrote: “For he that leaves as much as another can make use of, does as good as take nothing at all.” I assume by “another” he meant others or all other people. Locke was a 17th century  philosopher (Wikipedia). He reasoned that human beings has no instinct  (Wikipedia), a similar opinion as that of Eugene Marais in his book Soul of the Ape.

Page 60: “Locke begins by saying labor can increase the value of land tenfold, then a hundredfold, and, at one point, a thousand fold. The point is that the value produced by labor is a far greater source of inequality than any slight discrepancies in size of original appropriation. If you appropriate two acres while I appropriate only one and we both leave our land unimproved, you have twice what I do. But, if I get maximum value out of my land by great industry and application of reason, I might end up with five hundred times your wealth while owning only half your original amount of property. Locke, however, makes clear that he is totally indifferent to even such radical disparities in wealth, so that equality per se must be completely irrelevant to him.”

Own: I agree sometimes with this statement and it makes creativity much more relevant in the light of creativity as a result of a moral attribute, honesty, which is difficult to uphold and should therefore be compensated fairly in a sustainable society. It is however relevant how the information to improve the value was attained. If it was attained by spying and breaking the law the ownership is questionable and the moral justification does not exist according to trade secret law. Locke must have included creative thought or another legal method of acquiring knowledge as a means to increase the value in his reasoning because it is unlikely to increase the value of land 500 fold with physical labor on one’s own, especially without capital. With sufficient capital the creative labor could be employed. When Intellectual Property becomes relevant and correct Intellectual Property rights are enforced the issue about land becomes less relevant because by being ethically honest, intellectual property or intequity will be appropriated.

Page 72: James W. Child said the following about Intellectual property: “We have an inexhaustible ‘frontier’ from which we can continue to appropriate such property without denying anything to our fellow human beings. Indeed, the accumulation of wealth in this manner can (and should) be a Pareto-improving process, in that it makes some better off while making no-one worse off”

Own: The above is not valid. It happens often that new Intellectual Property replaces current Intellectual Property and directly has a negative economic effect on the owner of the old. The creators of new IP are often excluded from the financial gain it brings forth.

A pareto improvement happens when two parties to a transaction are both in a better situation after the transaction.

Own:  The period which is considered after the transaction is important because a person can for example through his whole life improve his current position by buying a motor vehicle as soon as the previous vehicle starts to give problems. His current position is better with the new vehicle, but during his old age he might not have financial security because he purchased vehicles during his life because there was no public transport. The pareto improvements should be evaluated over a long period.

Locke’s proviso in summary says if after appropriation of property ‘enough and as good’ is available to others…………………………………...

Chapter 5 - Page 81: Toward a Lockean Theory of Intellectual Property - Adam D. Moore

Page 83: He mentions the main difference between intellectual property and physical property to be the attribute of intellectual property which can be used by many people at the same time whereas with a physical thing like a computer, it can only be used by one person. Software and hardware.

Own: These two things normally go together. Software and hardware. A recipe and food. A process and metal in a machine.

Page 187: Tom G Palmer highlights the importance of interdependence between technology developments and developments in intellectual property rights. The first printing press and the first digital storage device changed intellectual property rights because duplication became  more relevant.

Adam D. Moore also says that all matter already exists but that Intellectual Property is being created.

Own: His statement ignores metaphysical uncertainties. Very few people know if it is possible to create matter if a person has enough belief.

He says Intellectual Property is infinite.

Own: I read or someone told me that by the year 2036 progress will not take place because mathematically it will have reached a point of no advance. Like a “versadigde oplossing”

Page 89: “There is a monotonic relationship between the probability of an opportunity (and its results) and the value of the opportunity. This is to say as the probability goes up so does the value and vice versa. In a world of uncertain opportunities (and uncertain results), opportunities are not worth their results; they are worth something less. Compensation for lost opportunities may cost less than it would otherwise appear. While it is probably the case that there is more to bettering and worsening than an individual’s level of material well-being including opportunity costs, I will not pursue this matter further at present.”

Page 90: “The commons or the state of nature is characterized as that state where the moral landscape has yet to be changed by formal property relations. Indeed, it would be odd to assume that individuals come into the world with complex property relations already intact - that individuals or groups have property rights to the universe or parts of the universe. Prima facie, the assumption that the world is initially devoid of such property relations seems much more plausible. The moral landscape is barren of such relations until some process occurs.”

Page 90 and 91: Adam D. Moore made the following “proviso on original acquisition” (Moores’ words): “If an acquisition makes no one worse off in terms of her level of well-being (including opportunity costs) compared to how she was immediately before the acquisition, then the taking is permitted.”

Own: This means to me that no original acquisition should be permitted because if opportunity costs are included, it includes taking away an opportunity which could have been appropriated by someone else because they were busy at the time and could therefore not pursue or create the thought. See the next quote from Page 93. They should however be able to create logical thoughts. This implies that a person can only appropriate IP after all other humans have digressed to a state where they could not think logically.

Page 93: “When an individual creates an intellectual work, she may, herself, bring about greater opportunities and wealth for her fellows that serve to compensate them for lost opportunities.”

Page 91: Moore then said; “If correct, this account justifies rights to intellectual property. When an individual creates an original intellectual work and fixes it in some fashion, then labor and possession create a prima facie claim to the work. Moreover, if the proviso is satisfied, the prima facie claim remains undefeated and rights are generated.”

Own: He distinguishes between labor and possession which generates ownership rights. Labor, according to the Lockean proviso is not disputed often. Appropriation, which establishes ownership, is most often a philosophical dispute. Original appropriation of IP is a result of painstakingly staying honest by laborious mental reaction.

Page 93: Moore identifies that one of the major concerns with regard to the creation of IP is compensation for creation.

Own: I agree fully that compensation is one of the most important issues which need change with regard to IP issues. The reason is that the current system encourages people to become dishonest because we are not compensated for IP created. A big part of IP is controlled by secrecy and the common law. Most secrets are open for misuse because it is not subjected to the scrutiny of society. If secrets are open for society it becomes possible to misappropriate it. It depends therefore on the people who are involved and their morals and not on the system. Currently the system causes immorality because creation is not sufficiently compensated. Creation has to be sufficiently compensated in order for morality to flourish. If it is overcompensated immorality can set in, which is often the case if a person does not control new riches within societal boundaries. What came first the chicken or the egg? What came first, the new system or the new morals? New morals which are accepted generate a new change of a system. This could imply that the chicken came before the egg and that the egg is the method which spreads chickens over earth. Evolutionary changes could cause a flying bird from a chicken’s egg. This flying bird would then lay eggs which will spread the new specie over earth.

Page 93: “Rather than trying to justify every particular appropriation by appealing to a Pareto-based version of the proviso, we might try to justify an institution or system.”

Page 94: “Within the Anglo-American tradition the regimes of patent, copyright, and trade secrets each serve to protect and maintain private property relations in intellectual works.”

Own: The system can also be misused to gather intellectual property illegally and secretly from people who could not, due to financial constraints, enforce their trade secret rights. In South-Africa this is especially worrying because the IP system is a civil matter without protection of individuals from the state as in criminal matters. The contribution of the state to protection is limited to the supply of courts and an IP recording office. CIPRO does not decide on the legality of patents. Without financial clout an inventor is at the mercy of secrecy. Intellectual Property rights are localised rights which in a system of secrecy make it possible to sell IP over borders without compensating the inventor. Not compensating the inventor in a capitalist society encourages the inventor to create more because he has to survive by his own means until he gives up creating. This leads to immorality and eventually to a decrease in creativity because, to survive and have a fulfilling life, he has to throw his morals over board, depending on his ability to persevere.

 “Pareto efficiency, or Pareto optimality, is an important concept in economics with broad applications in game theory, engineering and the social sciences. The term is named after Vilfredo Pareto, an Italian economist who used the concept in his studies of economic efficiency and income distribution. Informally, Pareto efficient situations are those in which any change to make any person better off is impossible without making someone else worse off.” (Wikipedia)

Part II – Intellectual Property Issues and the Law

Chapter 6 - The Philosophy of Intellectual Property by Justin Hughes Page 107

Page 108: The Lockean labor theory is the first justification for ascribing ownership of property according to the United States of America Constitution.

Page 108: “The main alternative to a labor justification is a ‘personality theory’ that describes property as an expression of the self. This theory, the subject of Part III, is relatively foreign to Anglo-Saxon jurisprudence. Instead, its origins lie in continental philosophy, especially the work of Georg Wilhelm Friedrich Hegel.”

Page 110: “Much intellectual Property is produced only after considerable financial investment,..........”. “It would not be surprising if historical studies showed that most holders of copyrights and patents come from at least middle-class backgrounds. Own: I assume Hughes refer here to the USA.

Page 110: “While ancient Roman laws afforded a form of copyright protection to authors, the rise of Anglo-Saxon copyright was a saga of publishing interests attempting to protect a concentrated market and a central government attempting to apply a subtle form of censorship to the new technology of the printing press.”.....................’’Gathered information’ is another genre of intellectual property.”

Page 112: “Although the ‘inputs’ for the res of intellectual property are social – the education and nurture of the creator – the assembling of the idea occurs within the mind of the creator, which produces something beyond those inputs.”...................”Intellectual Property also may be thought of as the use or the value of an idea.”

Page 113: “Although patents do not have a similar exemption for personal use, patent protection is subject to a judicially created exception: the patent holder has no right against the person whose ‘use is for experiments for the sole purposes of gratifying a philosophical taste or curiosity or for instruction and amusement.’ Such limitations are motivated, in part, by pragmatic considerations as to the difficulty of policing such infringements.These limitations, however, also serve the perhaps primary objective of intellectual property: to ‘promote the Progress of Science and useful Arts’ by increasing society’s stock of knowledge. Both concerns are best served by limiting property rights over ideas.”

Own: For some other people the primary objective of ideas and IP is to earn their living in order to pay payments. The idea is therefore their source of income. There should be income rights on ideas to motivate generation of new ideas. This will contribute to a more effective implementation according to the primary objective of intellectual property in the USA.

Page 116: Three propositions in Locke’s labor theory can be used to justify IP. They are mental labour, a common pool of logic ideas, which is not significantly devalued by appropriation of the idea and non waste by appropriating not too much.

Page 119: In explaining Locke’s view about the nature of labor Hughes said: “......labor is defined as an unpleasant activity not desirable in and of itself and even painful to some degree.” ...................................”The normative position states: the unpleasantness of labor should be rewarded with property. In this  proposition the ‘should’ is a moral or ethical imperative, which is not based on any consideration of the effects of creating property rights. In comparison the instrumental (own:utilitarion) argument is directly concerned with those effects. It proposes that the unpleasantness of labor should be rewarded with property because people must be motivated to perform labor.”

Page 119: “The instrumental (own:utilitarian) argument clearly has dominated official pronouncements on American copyrights and patents.” (Own: Hughes said this about the courts of America and the constition of the USA) “Congress is granted the power to create intellectual property rights in order ‘To promote the Progress of Science and useful Arts.’ As President Lincoln remarked, ‘the inventor had no special advantage from his invention [under English law prior to 1624]. The patent system changed this............ It added the fuel of interest to the fire of genius in discovery and production of new and useful things.’”

Own: From the above it is clear that Hughes sees the motivation to create utilities - factor as the main reason for intellectual property rights in the USA as explained by courts and the constitution. First the property rights motivate or create creativity and the creativity created then creates utilities.

Page 118: Hughes also said: “For most people creation is less fun than recreation” (own: relaxation)

Page 120: The “labor-desert” or “value-added” theory of Locke says that people should be compensated if they contribute something of value to the utilities society use. Own: This is an argument in favour of intellectual property rights.

Page 122: Before they allow a patent in the USA the improvement of the utility should not be “obvious” to an “average person schooled in the art”.

Own: What is obvious to one person is not obvious to another. According to me the most important factor which determines obviousnes is honesty as explained elsewhere.

Page 125: ”............, let us treat the creation of a finished intellectual product as a two-step process. One step is thinking up the ‘idea,’ used here in the usual sense of the creative element or unique notion. The second step is the work necessary to employ the idea as the core of a finished product............................Edison had the idea of a light source produced by electrons traveling through a filament within a vacuum. He and his workers then spent weeks finding the proper filament material, the proper vacuum, and the proper electrical charge. These two steps represent the difference between idea and execution. Sometimes this difference is not readily visible or, when it does exist, the part we identify as the idea may seem the less important of the two components.”

Own: The thought that the idea is the less important is disputable. One could argue that the idea was the more important of the two because without the idea there would not be any utilities. Generating the idea is also an important attribute which distinguish humans from animals. Animals do not have hands. If humans did not have hands and could not communicate understandably it would have been much more difficult to implement ideas.  Human development is dependant on hands and idea generating minds and both should be compensated. In a competitive economy compensation will determine what is done according to Locke’s labor proviso. Without compensation for idea creation the economy will not be competitive. If the idea did not originate, the hands would not have had anything to do. Therefore, generating the idea, add significant value because it creates work and helps to create utilities. The idea generating mind and the hands do not have to be part of the same human being. The handwork creates only the utility with not as much work being created by the handwork. During the handwork new ideas are generated but these ideas are mostly “obvious” and does not add unique value. To generate novel ideas and obvious ideas are not as common as handwork because of the honesty factor. The more honest persons are, the more likely they are to create ideas, because of logic, which is a result of honesty. The more people are dishonest, the more difficult it is to stay honest for people who want to be honest. To stay honest is difficult and therefore creating the idea because of persevering with honesty falls under Locke’s labour proviso which says compensation is warranted because of the unpleasantness of labour. To stay honest is an unpleasant labour of the mind. Without the idea, there would be no utility, therefore the “value-added” proviso is also fulfilled which warrants compensation for generating ideas. The idea generator often is an individualist and the handworkers are often a group. Between the idea generator and the handwork group there is the group who possess most of the Intellectual Property. The possessors also control most that is happening, with special reference to the level of compensation of the idea generator and the handwork group. Obviously the possessors think they have abundant financial security. Financial security is a factor which many idea generators and handworkers strife to, in order to increase their standard of living and expected perceived dignified retirement.

Page 126: It is not possible to generalise about ideas and the value they have because each idea is different.

Own: Each idea has a different value because of differences in utility value, labour unpleasantness value, place value and time of origin value (original or not). There are two reasons why it is difficult for some to realize the value of one’s own ideas in South Africa. Firstly to raise capital to develop ideas is difficult and secondly because protection of trade secrets is dependant on civil cases. Many venture capitalists require first that an individual supply capital before they will get involved in financing IP. For an individual to protect his trade secrets against industrial espionage without capital is impossible.

Page 132 and 133: There are no property rights for most ideas because it would warrant enormous transfer of wealth and there would then not be “enough and as good” ideas for other people to use.

Own: Property rights which makes the limitation of use possible and income rights need not be simultaneously applied. It is possible to apply only income rights to ideas without applying property rights. This will encourage creation of utilities as expected of IP rights in the USA IP law.

Page 134: “One rule of thumb is that the more generally required by society an idea is, the more important and less subject to propertization it becomes.”

When Locke said “enough and as good” he referred to physical land during a period in which he opposed with his theory a monarchical system which infringed on people’s rights of land use.  (Wikipedia)

Own: Because there are few property rights for ideas, normally idea generators are not compensated. This leads to deteriorating morals as explained before and to David-and-Goliath situations. To develop products requires ideas, labour, natural resources and capital. The ideas which anybody can use are in the “common” sphere. Idea generation fulfill Locke’s labour proviso of unpleasantness and the utility measure but because there is not “enough and as good” available appropriation of ideas are not possible according to the law. The two extremes in the production process are the idea and the capital. Without the idea no product will come to being. Without the capital no product will come to being. The labour and natural resources are paid for by the capital and normally this is available on the market at a cost. The generators of capital and printers of money (monetary system)  and their group at the extreme non-creative unconscious side have free access to ideas because allowing intellectual property rights for the ideas would create monopolies disadvantageous (they will have to pay to use the idea) to the monetary system group and their “monopoly” of printing money and developing ideas into monopolised patents. They get interest from printing and lending money and profits from patents they developed with the money they have easy access to and the ideas they have free access to. This income pay their expenses and living costs and planned retirement because they have the monopolies on the creation of money and patents. The monetary system can print the money to develop ideas and through patent rights create monopolies for the machines they can create because they have the monopoly of printing new capital (money). The creation of monopolies work to enrich the group of people who are beneficiaries of the monetary system. If a monopoly works against the group of the monetary system it is not allowable. The idea generators at the extreme creative side have not easy access to capital to develop their ideas because they may not appropriate patents and they are not compensated in relation to the utility and unpleasantness value of the idea creation because it will create monopolies for the ideas by appropriation of ideas against the interests of the monetary group. If an income right would be created on an idea it does not hinder the distribution or the use of the idea necesarrily. A income right on an idea would make enforcing payment of royalties to the originator of the idea possible as in the case with patents. An IP right can include or not include the right to limit the use by others. The reasoning that an IP right on an idea is not acceptable because it will create a monopoly is invalid because the right could exclude the right of limiting use by others. The practise of not accepting income rights on ideas, penalises creativity because the creator is not compensated for the effort. In the American system of IP rights where the argument in favour of IP rights stems from the promotion and development of science and arts and utilities, this argument actually favors income rights to the creator of the idea due to the application of the creator’s idea by others, because it will encourage the creation of novel ideas and resultant utilities.

Hegelian Justification for IP (Continental)

Page 141 to 146. Hegel said a person can only be completely free if the person maximises self actualisation of his will. What he wants, he should be able to attain in order to be free. His will and personality is thus the motivation for property rights, because he wants to own and earn something to have dignity or financial security as an example.

Own: Hegel’s philosophy seems to be very subjective and depends on the will of each individual himself. It is a system but not a system because there are few generalisations. In reality it means that only a person who wants to live according to the law can actually be free according to Hegel. His will of wanting to live within the boundaries of the law comes from within and not from outside and therefore he is free. If the will of a person is to live outside the boundaries of the law he is not free because he will be in constant conflict with the authorities if he does what he wants. If he does not do what he wants it can be hardly said he is free. This is similar to what Jesus said. Love is to respect the law.

Page 152: A painter or a writer for example can identify more readily with a creation of his than a person where the result of that person’s labour was not influenced by his personality. According to Hegel the painter or writer has a bigger claim on ownership of his creation than the other laborer. The reason is that the laborer’s “process” was more “subject to external constraints” and personality was “less apparent” in the “creation”.

Page 159: In France and Germany the following apply: “For both copyright and patent owners, there is the right to be properly identified with one’s creations. For copyright owners, there also exists an inalienable right to guard the integrity of a work against change that would damage the author’s reputation or destroy his intended message.”

Page 164: “ Both of the grand theories for intellectual property – labor and personality – have their own weaknesses. The labour justification cannot account for the idea whose inception does not seem too have involved labor; the personality theory is inapplicable to valuable innovations that do not contain elements of what society might recognize as personal expression. The personality justification has difficulty legitimating alienation, while the labor explanation may have to shuffle around Locke’s non-waste condition.”

Own: The labor theory justifies IP income rights but not property rights to a thought or an idea due to the unpleasant process of staying honest which leads to logical creativity. Hegel’s personality justification also warrants income rights to ideas because honesty is a personality attribute which causes the creation of ideas.

Chapter 7 - Page 179: Intellectual Property: A Non-Posnerian Law and Economics Approach  by Tom G. Palmer

October 25, 2010

Page 179

‘The new technologies include personal computers, digital encoding, optical storage, virtually instantaneous electronic communication, photocopying, optical scanning, computerized databases, and many more.’

Page 180

‘Not only have these new technologies radically changed many industries, they have contributed to the explosive growth of a new “industry” among economists and lawyers, as well. Much of this work is characterized by overtly uitilitarian—even Benthamite—concerns. The assumption is that the principal or even sole criterion for evaluating intellectual property law is its contribution to aggregate utility, and that the legal regime governing ideal objects should aim explicitly at a utilitarion result, maximising net utility by balancing off the welfare gain from innovations induced by intellectual property rights againts the welfare losses resulting from the restrictions on the dissemination of such innovations.

One of the most explicit of the proponents of this view is Judge Richard Posner. In spite of his criticism of Jeremy Bentham over the common law,³ Although Posner significantly parts company with Bentham over the common law³, with Bentham he sees the law’s function as maximization odf some quantity: in place of the norm of utility maximization, Posner offers “wealth maximization”⁴ This change, however, takes place within a framework that remains decidedly Benthamite; judges are still exhorted to aim at an explicit overall goal other than seeking justice in particular cases. Wealth is substituted for utility as the maximund, but the jurisprudential approaches remain consistent. As Posner remarks, “The basic function of law in an economic or wealth-maximisation perspective is to alter incentives.”⁵ In other words, the role of law is constructivistic and internventionistic, an attempt to reorder economic institutions to attain a particular end.

Posner and his colleague William M. Landes have applied this model to the development of copyright in an attempt to explain “to what extent the principal features of copyright law can be explained as devices for promoting an efficient allocation of resources” and to show that “the principal legal doctrines” are “reasonable efforts to maximise the benefits from creating additional works minus both the losses from limiting access and the costs of administering and enforcing copyright protection.”⁶ Landes and Posner offer both explicit positive analysis of the law (purporting to show how it promotes economic efficiency) as well as exhortations to judges to apply the law so as to attain this end. For example, in discussing difficulties in applying the “idea versus expression” distinction central to copyright law to computer programs (to which the distinction is problematic), they state: “We hope the debate will be resolved not by the semantics of the words ‘idea’ and ‘expression’ but by the economics of the problem, and specifically by comparing the deadweight costs of allowing a firm to appropriate what has become an industry standard with the disincentive effects on originators if such appropriation is forbidden.”⁷

Own: It seems as if they compare opportunity income and expenses on national basis, across legal entities.

Page 212

‘³ For Bentham’s attitudes to the common law, see G. Posthema, Bentham and the Common Law Tradition (Oxford: Clarendon Press, 1986).

⁴ Posner, Economics of Justice, 48-87, 88-115. For criticism of wealth maximization as a normative principle, see J. Coleman, Markets, Morals, and the Law (Cambridge: Cambridge University Press, 1988), 95-132. For a criticism (from a contractarian perspective) of the principle of wealth maximisation as a descriptive principle, see K. Scheppelle, Legal Secrets: Equality and Efficiency in the Common Law (1988)

⁵ Posner, Economics of Justice, 75.’

Page 181

‘In the course of this chapter, I will present a “non-Posnerian” law and economics approach to intellectual property rights; patents and copyrights are forms, not of legitimate property rights, but of illegitimate state-granted monopoly. Insofar as my approach is a law and economics approach, it is influenced by the more mainstream law and economics of the jurist Bruno Leoni⁹ and the economist F.A. Hayek,¹⁰ rather than by the “wealth maximisation” approach of Judge Posner. Although the bulk of this chapter offers an alternative model of the development of intellectual property, it is implicitly a criticism of the Posnerian/Benthamite approach.’

Page 182: The roots of intellectual property law was the creation of monopolies by protecting (Own: or securing) new inventions in Europe. One of the earliest cited patents was in Venice in 1469 for a printing press.

Chapter 8 - Page 225: Property, Monopoly, and Intellectual Rights by Michael I. Krauss

Page 225 -232 Own thought: Krauss and Palmer have opposing views about the rights which copyright and patent law give in the USA. The difference originates in the fact that generators of ideas have no income right they can enforce against patent holders and copyright holders who make use of the ideas which originated from within the generators.

Chapter 9 - Page 243: The TRIPS Agreement: Imperialistic, Outdated, and Overprotective by Marci A Hamilton

“In a system where infringement is so easy, copyright protection will only be as strong as its enforcement mechanisms. The existing on-line universe has yet to land upon an enforcement scheme that will safeguard the value of authors’ works distributed on the network. The fear that they will be copied en masse is so real in the current environment that some publishers and artists may not realise their works on-line. These artists are proving what standard copyright analysis has assumed for decades: adequate copyright protection encourages the distribution of creative works,, while iadequate copyright protection lowers the birthrate of such works.”

Own: The statement of Marci A. Hamilton above supports my opinion that to raise the intequity value of a company or country idea generation need to be protected and compensated. Currently ideas are in a free domain and therefor the economy will not be competitive. Idea generation is currently not being encouraged. A further motivation to protect idea generation is the implications the protection has on morals and truth. Honesty is an attribute of a creative society and to be competitive, maximum balanced creativity is important.

Insert from other publication: The Global Information Infrastructure (GII) promoted by the Global Information Society (GIS) is an intiative in which the World Trade Organisation (WTO) and the World Intellectual Property Organisation have an important role. The inisiative aims at connecting communication infrastructure and databases of the world with sufficient protection of intellectual property across the international infrastructure.  (Arnold, 2007)(Page 274) The Berne Convention originated much of the IP protection. The USA adopted the Berne Convention in 1988. In the USA non-commercial copyright infringement is a criminal offence.  (Arnold, 2007)(Page 172)

 Page 252: Copyright law includes the principals of fair use and the first sale doctrine. It means that in some instances paying royalties are not applicable for example when a library makes a book available to members of the library, because the library owns and purchased the book at it’s “first sale”. The TRIPS agreement will make it possible in the envisaged GII to ask royalties for the browsing of a publication on the Internet. It could change the current standing of the first sale doctrine and fair use.

Page 252: “The hackers have concluded that copyright law is likely to perish because of the GII’s enforcement problems. This is a premature entombment. As discussed below, if the world community works together, the on-line community can be sufficiently policed to ensure fair remuneration to authors and artists.”

Own: Authors will also then be policed in order to earn a fair income.

Page 257: “The encoded message within TRIPS is that change, creativity, and originality are positive goods. In short, revolution and freedom are central to the highest standards of human existence. As this message finds its way into unfamiliar hearts, the copyright industries hope to take more than they have ever been able to take in the past. This will be a clash worth watching. If only we were nothing more than spectators.”

Chapter 10 - Page 265: International Copyright: An Unorthodox Analysis by Hugh C. Hansen

Page 265: “Copyright law is ‘territorial’. Each nation determines the scope of protection and rights subject only to bilateral and multilateral agreements, which, before the Uruguay Round of the GATT negotiations and the adoption of the agreement on Trade-Related Aspects of Intellectual Property (TRIPS), were essentially unenforceable.”

Page 266: “The nations of the world can be divided broadly into three groups based upon their relationship to the production and consumption of intellectual property products: (1) net sellers-exporters; (2) those with the resources and industries to become net sellers-exporters; and (3) net users-importers. The first group, whose main member was the United States, wanted broad protection world wide. The second group, which included some members of the European Community, also wanted broad protection world-wide and, in addition, wanted to increase protection domestically to give more incentives to their industries to create and compete domestically and abroad. The third group, mainly developing and newly industrialized nations, sought to limit protection at least within their borders.”

Page 268: “a third truth is that so-called ‘national treatment’ is the way to increase protection for all and that ’reciprocity’ is the nationalistic work of the devil.8” “8. .............................’National treatment’ is a phrase that means that in a country X a work originating in a  foreign country will be given the same protection as works created in country X. ‘Reciprocity’ means that in country X a work of foreign origin will only be given the protection to which that work is entitled in its country of origin.”

“The faith in national treatment, which required action as well as belief, was harder for the righteous to adhere to fully. The United States inserted a resiprocity provision in its sui generis legislation to protect semiconductor computer chips. The EU inserted reciprocity provisions in the proposed Database Directive and the term directive. Even the Berne Convention allows for reciprocity in some circumstances. However, the slips and falls of our leaders do not mean that religious truths are false, only that the flesh is weak. The TRIPS Agreement, recognizing this, requires national treatment.11

Page 273: “........................... , and political leaders sometimes lose the stomach for war. Time will tell.”

Part III – Information and Digital Technology

Chapter 12 - Page 299: The Virtues of Software Ownership by David H. Carey

Page 299: “Three broad approaches seem to dominate recent work in ethics: the consequentialist, the deontological, and the emphasis on character or virtue. The consequentialist approach evaluates an action (rule, policy, etc.) by its net consequences or effects. On this appraoch, for example, good policies are those that on balance do more good than harm for the people affected. The deontological approach, in contrast, appeals to universal principles on which a decision should be based rather than the actual outcome of that decision. On this approach, for example, a decision has moral worth if it respects a right, fulfills an obligation, or follows from a duty. Typically, such rights, obligations, or duties have a universal and necessary quality; that is, they would hold for anyone in a given situation, even if undesirable consequences would result form recognizing them. Finally, the third approach (that of so-called ‘virtue ethics’) emphasizes long-term, habitual character traits (virtues and vices) rather than actions, policies, or principles.

On consequentialist grounds, for instance, one might argue that if allowing some algorithms to be patented benefits society in the long run more than it costs society temporarily to forgo unrestricted use of those algorithms, then such patents are morally defensible. The consequentialist approach reflects the spirit and motivation of U.S. law more than the other two approaches do. In contrast, elsewhere in the world (among other signatories to the Berne Convention), intellectual property laws smack more deontology. The French, for instance, appeal to what they call droits morals such as paternité – the inherent right of a creator to control the treatment of his or her creation, analogous to the alleged right that parents have with respect to their own children. On this approach, to infringe on a copyright is to violate a personal right, not merely to fail to uphold a social bargain.”

Chapter 14 - Page 321: National and International Copyright Liability for Electronic System Operators by Charles J. Meyer

Page 323:  “Internationally, copyright protection is recognized in the multilateral treaties of the Berne Convention, the Universal Copyright Convention (UCC), and in various bilateral treaties.”

Page 330: “There is no general, sui generis copyright law between countries. The international law that exists is a result of multilateral and bilateral treaties. When countries have a copyright agreement, there are two types of protection that can be given: national treatment or reciprocal treatment.” .............” For ease of applicability and uniformity within a country, most treaties give national protection.”

Page 331: “ Before these treaties, and still for non-member countries, there was no international copyright protection.”

Page 331: The Universal Copyright Convention was a United States initiative which came into force during 1956. During 1997 the United States had copyright protection relations with 110 countries.

Page 331: “The works must be first published by a national of a member country or be first published in a member country. The Berne Convention leaves the matter of when a work is considered published, such as a requirement of tangible form or of general distribution, to legislation for each member country, while the UCC defines publication.48

Chapter 15 - Page 349: The Economy of Ideas: Everything you Know about Intellectual Property Is Wrong – John Perry Barlow

Page 360: “Copyright expert Pamela Samuelson tells of having attended a conference last year convened around the fact that Western countries may legally appropriate the music, designs, and biomedical lore of Aboriginal people without compensation to their tribes of origin since those tribes are not an ‘author’ or ‘inventor’”

Page 364: “ Someone claims to have patented the microprocessor before Intel. Maybe so. If he’d actually started shipping microprocesors before Intel, his claim would seem far less spurious.”

“It is now commonplace to say that money is information. With the exception of Krugerrands, crumpled cab fare, and the contents of those suitcases that drug lords are refuted to carry, most of the money in the informatized world is in ones and zeros. The global money supply sloshes around the Net, as fluid as weather.”......................................”However, as we increasingly buy information with money, we begin to see that buying information with other information is simple economic exchange without the necessity of converting the product into and out of currency. This is somewhat challenging for those who like clean accounting, since, information theory aside, informational exchange rates are too squishy to quantify to the decimal point.”


2.1.2      A History of Money from Ancient Times to the Present Day – Glyn Davies


Page 181: “A short-lived issue of Chinese leather-money, consisting of pieces of white deerskin of about one foot square, with coloured borders, each representing a high value of 40 000 cash, dates from as early as 118 BC. There ensues a very considerable gap of 900 years before we hear of the next significant reference, this time to paper banknotes of a modern type, in the reign of Hien Tsung (806-21)”

Page 181: Davies mentions hyperinflation in China around 1000 CE together with large quantity printing of paper money.

Page 220-222: Around the 1500 great debates where taking place in England with regards to the interest rate on borrowed capital. Eventually, in London for example, interest of 10% per year was legal. During the early 1400’s in Europe, City States borrowed from the public and interest was argued to be a fee to replace lost profit.

Page 223: Because variations in the flow of precious metals played such an important role in international trade and the foreign exchanges, it should occasion no surprise that the foremost theoretical developments of the period came to be known in England by the term ‘bullionism’. What money is to ‘monetarism’, so bullion was to bullionism, its theoretical great-grandparent.

Page 229: “During periods of monetary stability the general public does not bother about monetary theory and the theorists lie dormant. It is generally only during periods of substantial financial changes that interest is aroused as to the true nature and causes of such events. The usual result is to produce some up-to-date variation of the quantity theory appropriate to the particular circumstances obtaining at the time. The quantity theory has been the most popular of the general theories of money because it is almost infinitely adaptable.”

Page 231: At several places reference is made to the influence of coin debasement on rising prices. Nicholas Copernicus (1473-1543) said the value of money depends on the quantity and not the metal it is made of. Copernicus said it is the duty of the royals to control the quantity of coins to keep the value of money and also inflation stable.

Own: Debasement normally implies greater quantities of coins because silver and gold were mixed with other metals in order to manufacture greater quantities of coins. (N+1) = (r+1)(i+1). The formula for the nominal interest rate of money clearly indicates what the effect of inflation is on the cost of capital. If inflation goes up the cost of capital rises. Logically other factors which will affect the value of money are the availability of the money. In the current economy, for example, the availability of credit and the willingness of the public to borrow will affect the availability and circulation of a currency. If half of all the units are in the safekeeping of one person then the quantity in circulation will be less and the value higher. If the circulation is less it could also mean that the acceptability as a means of trading could become lower, which could lower the value of the money and logically prices will rise then because more of the currency will have to be tendered for the same goods.

Page 232: The population size affects inflation and disease and births.

Own: The population growth will affect the number of transactions and the circulation of money and the inflation and the cost of capital.

Page 231: During the 1400’s in Europe a distinction was made between bullionist theories and mercantilist theories for the value of money. The bullionists said the value depends on the physical gold a country hold as stock and the mercantilists said the quantity of the money determines the value.

Own: Keynesian theory says the influence of government policy which influences the demand for currency influence the value of money. The theory I had during 1999 combined the three theories of bullionism, mercantilism and Keynesianism.

Page 232: “By the beginning of the seventeenth century therefore it was becoming clear to practically all the writers on money (and they were many), whether they might be considered bullionists or mercantilists, that a persistent influx of precious metals would bring with it serious inflationary consequences.”

Own: During the 1700’s in Europe they pressed coins of precious and not so precious metals. To have a clear formula to calculate the value of a currency the currency should not include any precious material, because the valuable commodities and goods should be above the line and the currency below the line according to my theory. I will call my theory the Deel theory of money. Deel means in Afrikaans to divide by. Depreciation of the commodities above the line is an important part of the calculation.

Page 233: “Perhaps the single most important sign that England was determined to develop her own financial institutions rather than rely on foreign banks was the building of the Royal Exchange in 1566. This was the inspiration of Sir Thomas Gresham (1519-79) and it received the royal seal of approval when it was officially opened by Elizabeth I in the following year.”...................”The most highly skilled workmen and the most highly skilled operators on the foreign exchange market (with the outstanding exception of Gresham himself) were at first foreigners, especially Italians, Germans and increasingly the Dutch. Gresham had learned his skill mainly in Antwerp where he lived, on and off, for twenty three between 1551 and 1574, operating both on his own account and as a royal agent. There he learned the art of large-scale lending and borrowing as well as foreign exchange so thoroughly that he frequently out-performed his foreign tutors.”

Page 235: “Although the origins of double-entry bookkeeping appear to be uncertain, the system had been in operation for well over a century before the first Italian book on the subject was printed and published in Venice in 1494......................... The new form of bookkeeping gave a further stimulus to the wider use of Arabic numerals.”

Own: The system which granaries used in ancient Egypt to account for balances of corn accounts was a double entry bookkeeping system because they deducted and added corn from and to the accounts of persons who kept corn in the granaries, as a means of payment. In the place of using money, grain was used for the Giro transactions. It is therefore possible that double entry accounting originated as a result of the Giro granaries of Egypt. At that time the book entry reflected the grain. This supports my thought that money is just a reflection or should be a reflection of an asset or assets. The Deel theory formula of money also reflects this.

Own: Foreign trade is influenced by currencies and the cost of capital of the currencies. Normally when South-Africa buys high value foreign assets via the international monetary system South Africa has to borrow the foreign currency. South-Africa then pays interest on the borrowed capital and profit on the purchase of the assets. When South-African companies sell high value assets for example gold it is sold in United States Dollars. South-Africa does not earn interest on the sale through the lending of South-Africa Rands to finance the purchase. The United States Dollars earned by the gold companies can be used to purchase foreign assets, which could be nationalized by a foreign country. If the US$ were first exchanged for Rands to purchase the gold the US$ would have been foreign reserves which are controlled by the South Africa Reserve Bank. Currently the US$’s are controlled by the gold companies. It seems though that South Africa could earn more by forcing the foreign buyers of gold to first borrow Rands and pay interest on the Rands to purchase the gold with Rands, instead of selling the gold in US$. If foreign buyers first borrow Rands to purchase gold, South Africa will not have exposure to a depreciating US$ which are held in reserve by the Reserve Bank or gold mines. Can a foreign country be forced to borrow local currency instead of buying the currency on the market? I doubt it, it has to be the choice of the foreign country, based on market rates whether it borrows or buy local currency to transact in it. The demand for the goods and commodities of a country and the balance between the interest rate and the availability of the local currency on the exchange market will partly determine how a foreign country gets hold of local currency to transact locally. The availability of the local currency on the exchange market will depend on the currency in circulation and the issue of new units of the local currency by the reserve bank. Foreign expensive assets sold to South Africa are normally financed by borrowing foreign currency. China normally sells their goods, which they call commodities for US$ to foreigners.

The cost of capital is influenced by its availability. New capital is represented by assets and in many circumstances it is currency, as the means to purchase an asset. Its availability depends on the willingness of the reserve bank and development agencies to issue new units. The availability also depends on the circulation of the currency on the open market. And thirdly the availability depends on the interest rates charged by commercial and merchant banks for lending the currency. The cost of Intequity is related to the cost of capital.

Pages 1-242: During the mid first millennium international trade took place mainly with commodities like gold coins and silver coins.

Own: It is understandable because in those years it would have been a much greater risk to accept paper money from a foreign country. Coins which were not made of a valuable commodity like gold could be debased by a foreign country’s monetary policy and was not as acceptable as commodity based coins. Foreign paper money’s value depends on the stability of that country’s monetary system and foreign paper money is not legal tender in a local country.

Gresham's law is commonly stated: ‘Bad money drives out good’, but more accurately stated: ‘Bad money drives out good under legal tender laws.’ This law applies specifically when there are two forms of commodity money in circulation which are required by legal-tender laws to be accepted as having similar face values for economic transactions. Gresham's law is named after Sir Thomas Gresham (1519 – 1579), an English financier during the Tudor dynasty.” (Wikipedia)(September 29, 2009)


Own: A good example of this is Rands and Kruger Rands. Both are legal tender but Kruger Rands are not used for buying and selling of goods. Mostly Kruger Rands are exchanged for Rands or another currency.


Page 246 - 247: During 1695 in Britain, John Locke the philosopher was in favour of keeping the standard weights of coins and Isaac Newton was in favour of debasement. Lock’s opinion was based on the given unchanging standard weight of valuable metals. Locke’s view was accepted. This eventually led to the acceptance of the gold standard. Christmas day, 1699, Newton was promoted from Warden to Master of the Mint.

Page 257: “A new public bank would thus achieve the dual related aims of reducing the rates of interest through breaking the goldsmiths' monopoly.”..................“Thus the Bank of England was born out of a marriage of convenience between the business community of the City, ambitiously confident that it could run such a bank profitably, and the government of the day, desperately short of the vary large amounts of cash urgently needed to carry on the long war against Louis XIV, the most powerful ruler in Europe.”

Page 257: The Bank of England was formed around 1690.

Page 259: “The Bank of England came into being by the Ways and Means Act of June 1694 and was confirmed by a Royal Charter of Incorporation (27 July 1694).”..............”The Act was also known variously as the 'Tonnage' or 'Tunnage' Act, because the taxes were to be raised from both ships and wines, for the carrying capacity of ships was then commonly measured either by the 'weight of water displaced method', or, which came to the very much the same thing, the number of large casks or 'tuns' of wine........”

Page 261: “Freame and Gould (Forerunners of Barclays)”

Page 261: “The Million Bank was also founded in 1695 and combined its main activities of dealing with lotteries and annuities with more general forms of banking. However it also soon relinquished its banking, but it continued to carry on acting as an investment fund for the government securities for a century.”

November 16, 2009 – Own: While I was preparing Financial Statements of Africahead Development I made a note to the statements saying it is not possible to account for losses of Intellectual Property which was self-created because according to IFRS the asset may not be accounted for.

November 19, 2009

Page 286: “Country banking and the industrial revolution to 1826 – Professor Pressnell's authoritative and comprehensive research on this subject (1956) has confirmed Edmund Burke's contemporary view that by the middle of the eigteenth century, which is approximately the traditional starting date of the industrial revolution, barely a dozen banking houses existed in England and Wales outside the London area.”

Page 287: “Furthermore banks were not required to have licences to issue notes before 1808, and not every bank issued notes, though the majority of the country banks did so. ............................... . Growth became really strong from the 1780's, rising from 119 in 1784 to 280 by 1793, while the number of licenced banks in the peak year of 1810 was 783, which together with the unlicenced banks gives a total of over 800. …...................... .This increased momentum of bank formation lends support to Rostow's view that between 1783 and 1802 Britain experienced the world's first 'take off into self-sustaining growth'”

“The fascinating variety of the origins of country banking may be gleaned from the following list of some of the main industries or occupations in which their founding partners were engaged when they first became bankers: army agents, agents for packet boats, and attorneys; barristers, brewers, butchers and button-makers, chandlers, church treasurers, coal factors, colliery owners,........................ .Perhaps the strangest of such origins is that of Fryer's Bank in Wolverhampton, formed when an oak chest full of French gold coins left behind by the followers of Bonnie Prince Charlie in 1745, was eventually opened by Richard Fryer in 1807 to provide the initial capital used for investing in what by then had become one of the most fashionable of ventures, banking (Sayers 1957).”

Page 289: “One of the main reasons for setting up a bank was the simple one of securing on a regular and reliable basis the wherewithal to pay for goods and services, given the unreliability of supply and the very poor quality of most of the official metallic money supply and the limited geographic coverage, lack of knowledge of or faith in the notes of the Bank of England, especially during the periods when its notes were issued only in large denominations.”

Page 289: “Barclays originated in the rural corn-growing area of East Anglia where John and his brother Henry Gurney set up a banking house in Norwich in the 1750s. This famous Quaker family, through its relations, friends and co-religionists, spread its influence widely to as far as Keswick and Ireland, as well as establishing in London what was to become the largest bill-broking firm of the mid-nineteenth century.”

Page 294: “The first great era of token production during the Industrial Revolution began with the issue in 1787 by the Anglesey Copper Company, using the high-quality ore from its local Parys mine, of a very attractive 'Druid Penny' which could be exchanged for official coin at full value, if so desired, at any of its shops or offices. Soon practically every town in the country was producing its own tokens, often buying the blanks, dies and designs from Birmingham and elsewhere.”

Page 296: “................while notes, even of the Bank of England, were not deemed worthy of consideration of legal tender status. ….......... .In between the restrictive Acts the supply of unofficial paper swelled to meet the growing demand in a fundamentally new way which meant that no longer had the provincial businessmen to go cap in hand to the monarch, or to Parliament (or even to London as they had to in previous and in later years) in order to increase the money supply. Instead the money was being created locally, on the spot, when, where and to the degree demanded. This most useful but unstable volume of credit was being created 'by the needs of trade', or in modern terminology, endogenously by the effective demands of business and not exogenously by the central monetary authority – by the market rather than by the Royal Mint.”

Page 298: “The external drain was considerably intensified when the grossly inflationary issues of assignats (paper notes originally based on the value of Church and other lands confiscated by the French revolutionary government) were replaced in July 1796 by a gold-based currency. This had the effect of drawing bullion back from Britain.”

November 22, 2009

Page 405: “The Radcliffe Committee in 1959 examined four alleged gaps in the finance available for the following sectors: agriculture; exports; research and development; and money transfers.”

November 23, 2009

Page 431: “The term 'monetarism' was coined by Professor Karl Brunner (1916-89) as a convenient label for the counter-revolution against the Keynesian economics that had dominated theory and policy in many countries, but especially Britain, for much of the three or four decades after 1936. This counter-revolution was triggered by Milton-Friedman's famous Restatement of the Quantity Theory as early as 1956, and thanks to Brunner, made quicker progress in Switzerland and West Germany, countries of markedly low inflation.................... .”

Page 432:”'The new challenge to Keynesian policies.......not only argued that Keynesian theory cannot handle inflation, but also that Keynesian policies are themselves the cause of inflation;..........”

Page 433:” The anti-monetarists could claim that their repeatedly stated view (e.g. see Kaldor 1970) that there was no close correlation between the money supply and the rate of inflation was thereby proven; in contrast the monetarists could – until 1987 – claim, that despite the unfortuante slippage of the money supply brake, their genral policy of bearing down on inflation was working.”

Own: My Deeltheory of money and inflation explains why there is a close correlation between the money supply and inflation.

Page 439: “Although the quantity theory is the world's oldest explanation of the relationship between money and prices and was known to the ancient Greeks and has had a continuous existence in Europe since the sixteenth century, yet official statistics categorizing the money supply into narrow, medium or broad bands were not published in the UK until 1970 - ….............”

The United States of America – Monetary Development

November 24, 2009

Page 485: “from the economist's standpoint counterfeit notes and coins, so long as they are accepted, carry the same power as their legal counterparts. Legally the counterfeiter is always a malefactor, but economically speaking he may often be a public benefactor.”

Page: “From 1848 for nine years an enormous increase in gold gave one of the clearest examples in history of the stimulative power of good-quality money. Business and especially banking confidence built an excessive super-structure of credit on this golden foundation, leading in the autumn of 1857 to 'what has been called the first really world-wide crisis in which all the feverish and gold-dazzled activities of the mid-fifties ended' (Clapham 1970, II, 226).”

Page 486: “....... 5 January 1858. Certainly the American economy was immeasurably stronger than it had been twenty-one years earlier when every bank was forced to suspend specie payment of notes.”

Page 495: “It is against this international background, battling valiantly but vainly against the tide, that America's 'blundering enrapturement' with bimetallism as part of its great money question has to be judged (Nugent, 1968)”

Own: It seems as if Glyn Davies, the writer of this book, when he wrote it tended towards a bullionist's belief.


December 1, 2009

Page 555: “France's first venture into public banking was instigated by John Law (1671-1729). He was born in Edinburgh, where his father was a goldsmith and a banker. ...................... .After some ten years' absence he returned to Scotland where in 1705 he published his unconventional but inspiring ideas in a book entitled Money and Trade Considered: With a Proposal fro Supplying the Nation with Money. Metallic money was unreliable in quantity and quality, often inflicting restraints on trade. Banknotes, issued and managed by a public bank, were superior and would remove the harsh brakes imposed by an insufficient supply of precious metals. ................... .His ideas were rejected in his own country but, after he returned to France in 1713 and gained the ear of the Duke of Orleans, were eventually put into practice, largely because of the parlous state of French public finance.

Page 556: “Law's 'system' thus became in effect a vast state trust controlling banking, the national debt and a great part of the country's foreign trade. For a while the system worked with the startling success and the nation, as well as the speculators, prospered. Law himself made a fortune, and after conversion to Roman Catholicism was made Minister of Finance. However by the spring of 1720 the overissue of notes, combined with excessive speculation in the shares of the new companies, led to a drain of precious metals from France to London and Amsterdam. On Law's advice the Regent attempted to stem the tide by enforcing payment in notes only, while maximum personal holdings of coin were to be limited to 500 livres. ….................. . The Mississippi Bubble had burst and Law's system had gone into reverse.”

Page 556: “.........absorbed by the Bank of France in 1800 and 1803 respectively. The bills of these public discount houses and of the many private houses supplemented a growing flood of state paper issued by the hard-pressed revolutionary governments in the eleven years from 1789 to 1800. The most notorious of such issues were those of the assignats. One of the first acts of the revolutionary government in November 1789 was to take over the ownership of Church lands, and on the basis of this security to issue bonds casrrying 5 percent interest, with purchasers being 'assigned' on redemption a portion of land to the value of the bond. …................assignats simply became state-issued, inconvertible fiduciary notes.”

Page 560: “Whereas Britain had erected an inverted pyramid of bank credit upon a small gold base, with open market operations and bank rate impinging on the bank multiplier to bring about the desired variations in the quantity and price of credit, France built a more stolid, columnar structure resting on a broad base of gold, with far less use of open market operations or of variations in the rate of discount.”


Page 573: “As the present writer emphasized (to the Wilson Committee), 'there is considerable justification for the view that the inadequacy of bank support (in Britain) for industry extends far back to the early days of the twentieth century' (quoted in Edwards 1987,31). In every locality in Germany local, regional and nationwide banks compete to supply local industrialists with their particular requirements.

Page 574: “Even Dr. Feldenkirchen is forced to concede that instead of speaking of a 'dependance of industrial enterprises on the banks' – which he tries to dispute – we should speak 'rather of a mutual interdependence' (1991, 135). It was this special relationship between banks and industry that helped Germany to achieve such spectacular growth in the half-century up to 1914,.......”


Page 583: “It is abundantly clear from the Japanese example that the close involvement of banks in industry, if properly developed, does not,as feared in Britain, inhibit or endanger the growth of the banking industry – a fear once more strongly but falsely paraded during the 1990-2 recession. (It was not lending long to British industry but rather to property companies and Third World countries that led to the large banking losses in Britain and America, …..........................Japanese history provided the world's most powerful demonstration of the mutual benefits that banks as well as their industrial customers gain from their close interrelationship , and at the same time exposed the myth, nurtured for  a century by conventional British bankers and complacent governments, that only through their cold and cautious avoidance of long-term commitments to industry could British banks avoid failure.”

Own: This does not say a lot for British products because it could mean that British products is not competitive enough against German and Japanese products. My thoughts of honesty, logic and creativity. There are many things which influence success therefor I am very weary to ascribe the success of the Japanese and German industries to the cooperation between the banks and industry, nevertheless such a relationship might be crucial for success. If the relationship does not exist it could mean that somewhere else there is a problem which hinders such a relationship. If both parties does not add value it could be problematic. I thought that the German industrial world is dominated by engineers. It was surprising to me that they cooperate a lot with bankers in Germany.

Page 585: “Two of the main methods by which the Bank of Japan had achieved these results were by its consistent downward pressure on interest rates for privileged purposes and its encouragement of the special banks set up to provide long-term loans to industry.”

December 2, 2009

Page 595: “Monetary policy may have its limitations, but it need not be impotent. If accompanied by appropriate improvements on the supply side, it still has a role to play on the demand side to help in bringing the world's second most powerful economy closer to its imposing potential.”

This sentence I realised on my own. It is basically the explanation of my Deeltheory. The monetary side is below the line and the supply side or goods side is above the line. Friedman below the line Keyns above the line. The cooperation and effective support of each other in Japan and Germany promoted the success of their economies after the second world war according to Glyn Davies who wrote A History of Money.

Third World Money and debt in the twentieth century

Page 607: “Free trade and laissez-faire were largely discredited and therefore discarded when the international gold standard broke up in the 1930s. Nevertheless external trade and payments continued to  exert their customary force as key factors in colonial monetary development at a time when the world split up into two main monetary blocs, the sterling area and the dollar area. …............ .The sterling area comprised all those countries between which payments were mainly or entirely made in sterling, which therefore kept their reserves in sterling and which found it convenient or imperative to rely on the financial services of the City of London, which had long been (and still remains) the largest foreign exchange market in the world. …................ .All members kept their currencies fixed to sterling and kept their exchange reserves, or almost so, in the form of sterling balances in London.”

Page 614: “According to research carried out for the Central Bank of Nigeria over 80 percent of the loans made by expatriate banks during the period 1963-8 matured (nominally at least) within three months, and 95 percent within twelve months. In 1970 just over half of their loans went to purely expatriate enterprises of mixed ownership (Nwankwo 1980, 75). Although the total lending by indigenous banks was very small compared with that of the expatriates, the bulk of their lending was to Nigerians (77 percent),....

Page 620: “Despite political independence, the old colonial banking system has been generally replaced with very similar systems which allow privileged borrowers the lion’s share of available finance at low real rates while depriving the vast majority of indigenous farmers and industrialists of the finance they need. Professor Mckinnon gives examples from Ethiopia of moneylenders charging rates of interest of from 100% to 200% in the rural areas while in the urban areas banks were charging importers 6 per cent and manufacturers 8 or 9 per cent....Sixthly and finally, the Shaw-McKinnon thesis gives support to the ‘trade not aid’ and ‘bootstrap’ approaches to development. The authors show that much (though not all) aid is perverse in its results,... ”

Page 622: “The modern monetary and banking systems exported from Europe by its bankers in order to finance the growing trade in palm oil, cocoa, coffee, jute, tea, rubber, tin and so on were superimposed ona number of vastly different indigenous financial foundations, ranging from the predominantly primitive monetary economies of much of Africa and the West-Indies to the much more complex and long-established financial practices of India, China and South-East Asia.”

Page 632: “Adam Smith, foreshadowing Rostow by three centuries, emphasized the crucial role of capital in development as follows: ‘Every increase or diminution of capital tends to increase or diminish the real quantity of industry, the number of productive hands, and consequently the exchangeable value of the annual produce of the land and labour of the country, the real wealth and revenue of all its inhabitants.’ Smith also succinctly encapsulated the later prolix preaching of the IMF and World Bank when he went on to warn that ‘Capitals are increased by parsimony, and diminished by prodigality and misconduct’(Wealth of Nations, Book ii, ‘On the Accumulation of Capital’ 301)”

Page 632: “... underlines the world debt crisis of the last two decades of the twentieth century.”

Page 638: “As part of the swing of the pendulum, Keynes is no longer king; but his insight into the relationship between saving and investment taught us that saving is not a fixed sum determining investment – but rather that investment (if efficient, as we have now learned), enlarges the global income so as to provide the higher savings required.”

February 17,18, 2010

12. Global Money in Historical Perspective

Page 647: “During this period the pound sterling gained considerable prestige by being less frequently and less drastically debased than most continental currencies. In this connection, however, we should remind ourselves of the point emphasised in chapter 4, that the countries which experienced the greatest economic growth were also those which had indulged in the most severe debasement.”

Page 655: “The lesson has been learned worldwide, though at great cost, that it is countries, with low inflation that have achieved high growth rates and therefore low unemployment.”

Own: The two statements above seams derogatory because if a currency is weakening normally inflation goes up. This happens because of higher import prices. I assume there is a lag between the depreciation of a currency and the job creation because the development products do not immediately replace the imports (few jobs). Low inflation and an appreciating currency seams to lead to long term stable growth if management is good or revolution circumstances if management is bad, and a depreciating currency leads to revolution circumstances if management is bad and to growth if management is good. J

Page 656: “ It has taken two generations  for the truth finally to be fully accepted by the general public and by the political decision makers – first, that the apparent short-term benefits of inflation are outweighed by its long-term costs; secondly, that inescapably one of the keys to a successful economy is control of the money supply in its changing forms; and thirdly, that this can be achieved only by limiting national governments’ sovereignty through setting up independent central banking systems....’crucified on a cross of gold’...’held to ransom by money monopolists’...’made bankrupt by high interest rates’...”

13. Further towards a Global Currency

Page 661: “If Britain had raised the gold content of the sovereign by about 1 per cent, if the USA had made a similar adjustment in the opposite direction and if France had raised its seigniorage charge slightly to 1 per cent, then, said the optimists, the whole of the civilized world would have followed this lead and the ideal of a universal single money system would have resulted.”

Own: Per cent

Page 662: “Thus in a letter to the king of Naples on 6 May 1807 the first French emperor wrote: ‘Brother! When you issue coins . . . in this way there will be monetary uniformity all over Europe [as with de Gaulle, Britain was non-European] which will be a great advantage for trade.’ The same letter was written to other heads of state.”


Page 665: “Like Britain, Denmark and Sweden have so far remained outside the Eurozone. Denmark held a referendum on entry on 29 September 2000 and, to the surprise of the government, the larger trade unions and most big business, decided by a significant majority of 53% to 47% not to join the Eurozone. Sweden similarly has up to now remained aloof, while Norway and Switzerland are not in the EU.”

Page 673: “. . . David Chaum, one of the world’s leading experts on computerized currency.”

Page 674: “Freedom of trade coupled with flexible finance has provided a far more efficient allocative and productive system than any alternative, such as command economies, as numerous examples conclusively prove, from Athens as opposed to Sparta in the ancient world to the USA contrasted with the USSR in modern times.”

Fin: February 18, 2010

2.1.3      The Role of the Judiciary in the Enforcement of Intellectual Property Rights: Intellectual Property Litigation under the Common Law System with Special Emphasis on the Experience in South Africa.- LTC HARMS


June 10, 2010

Page 483

‘IP legislation in South Africa goes back to 1860, the date of the first Patent Act.¹ In 1916, it adopted the then applicable Commonwealth standards. Since then it has kept up with international developments and its laws have been updated regularly, since 1978 with special reference to EC directives (because the EC is its biggest trading partner)² and since 1993 with regard to the TRIPs Agreement. In addition to the usual IP legislation, special anti-counterfeiting legislation has been in existence for more than a century. A more comprehensive and modern anti-counterfeiting statute was adopted in 1997. Although South Africa became a republic only in 1961, it had joined in its own right the Berne Convention in 1928 and the Paris Convention in 1947. A bilateral agreement on copyright was concluded in 1924 with the United States. IP enforcement in South Africa has a long history.’

Page 484

‘South African law and the common law can best be illustrated with reference to passing off and the protection of confidential information: South African law, like the civil law, recognises a general delict of unfair competition while the English common law has no general unfair competition tort. However, the approach in South Africa to unfair competition is heavily influenced by common law precedents.²¹’

‘Some IP rights have a common law origin but the common law has been replaced by statutory law—in later years in consequence of international obligations.³ The original common law precepts have little, if any, residual value. There is in South Africa, for instance, no common law patent or common patent law³¹; likewise, there is no copyright (author’s right) except to the extent recognised by statute.³² On the other hand, unregistered trade mark rights have continued to exist side by side with the system of registration and may trump registered rights.³³’

Page 485

‘IP laws tend not to criminalise IP infringement. If they do, and there is an overlap between civil and criminal liability, the rightholder in a sense has a choice whether to pursue the one or the other route (or both). The difference between civil and criminal proceedings and the exercise of the choice of remedy is a matter requiring further discussion. One exception to the general rule is contained in the Copyright Act,³ which criminalises piracy, i.e the making of infringing copies with knowledge of the copyright. IP infringement is more generally criminalised by means of anti-counterfeiting laws.³(Similar exceptions are sometimes found in trade mark laws.) Counterfeiting amounts to fraud: a misrepresentation coupled with criminal intent, but anti-counterfeiting laws protect registered trade marks and copyright only.’


2.2  Creativity

2.2.1      1966 - Creativity and Academic Achievement – Joseph C. Bentley


September 29

Page 269

“This study attempts to clarify relationships between creative abilities and academic achievement. Creativity Test Scores, Millers Analogies Scores (MAT), and achievement scores representing Guilford's categories of Cognition, Memory, Divergent Thinking and Evaluation were obtained for 75 graduate students in education. Re sults indicated that creative test scores correlated sig nificantly with divergent thinking and evaluative abilities; no correlation was found between creativity and cognitive and memory scores. MAT scores correlated with all men tal operation categories, although the relationship was less for divergent thinking and evaluative categories. No differences were found between MAT scores and cr?atives scores in predicting academic achievement. Since most academic examinations favor memory and cognitive abilities, it was concluded that the highly creative student is often penalized unduly.”

Own: “No correlation was found between creativity and cognitive and memory scores”.

2.2.2      1973 Ability and Creativity in Mathematics – Lewis R Aiken, Jr.


28 September 2010

Page 405

“In any event, affective and cognitive variables interact in a complex way to influence performance in mathematics. Therefore, it is important to consider the effects of attitudes, temperament, and other personality variables, as well as the sociocultural context, in discussing mathematical ability and creativity.”

“The concept of mathematical "types" or dispositions has been promoted by laymen and professionals alike. For example, it is not uncommon to hear a student explain his poor performance in mathe-matics as being due to the lack of a "mathematical mind." Similarly, the Russian psychologist Krutetskii (1969b) refers to children who are gifted in this subject as having a "mathematical frame of mind." According to Krutetskii, such children find mathematical meanings in many aspects of reality and tend to categorize things in terms of mathematics and logic.”

Page 409

“Getzels (1969) classifies definitions of creativity into three categories: those that refer to (1) a manifest product which is novel and useful (MacKinnon, 1962); (2) an underlying process which is divergent but fruitful (Ghiselin, 1952); (3) a subjective experience which is inspired and immanent (Maslow, 1963). With respect to mathematical creativity in particular, the following definitions have been offered:

1. Creative thinking is thinking which results in additions to knowledge (Carlton, 1959).

2. Creativity is the ability to produce original or unusual, applicable methods of solution for problems in mathematics (Spraker, 1960).

3. Creativity is the ability to combine ideas, things, techniques, or approaches in a new way (Romey, 1970).

4. Creative mathematics is the ability to analyze a given problem in many ways, observe patterns, see likenesses and differences, and on the basis of what has worked in similar situations decide on a method of attack in an unfamiliar situation (Laycock, 1970).

The first two definitions are concerned with the creative product, and the last two with the creative process.”

Page 411 – 412

“A wide range of correlations between creativity and IQ, varying with the particular instruments and the group tested, has been reported. Consistent with earlier findings, Lanier (1967) and McGannon (1972) found the correlations of certain tests of general creativity (Remote Associates Test, Torrance Tests of Creative Thinking) with intelligence test scores to be low (.20 to .40). In contrast, Banghart and Spraker (1963), Prouse (1967), and Evans (1965) reported moderate correla-tions (.40 to .60) between intelligence and their measures of mathe-matical creativity. Although Borgen (1971) found the creativity tests prepared by Guiiford and his associates to be significantly related to arithmetic achievement, the correlations between scores on Torrance's tests and mathematics achievement are usually rather low (Cicirelli, 1965; Lanier, 1967). Finally, Evans (1965) and Banghart and Spraker (1963) also found significant correlations between their mathematical creativity measures and tests of achievement in mathematics.”

Page 412


“The low correlations of general creativity with intelligence and academic achievement were not unexpected…Furthermore, Bentley (1966) states that tests of intelligence and achievement favor memory and cognitive abilities and consequently penalize highly creative students…Another possible cause of the low correlations between creativity and traditional tests of ability or achievement is the moderate reliability of most creativity tests, typically in the .80's. Also, the correlations among different measures of creativity are themselves frequently low, a fact that helps explain conflicting results obtained in studies employing different instruments…Yamamoto (1965) also concluded that the evidence from factor analysis does not confirm the existence of a separate creativity factor. Thorndike (1963), however, found some evidence for a broad factor of creativity separate from general intelligence.

Page 412 - 413

“In any event, the debate over the magnitude and meaning of the relationship of creativity to intelligence and achieve-ment continues.”

Page 413

“Intelligence and achievement are not the only variables related to mathematical creativity. Numerous organismic, personality, and socio-cultural factors have been studied as causal or contingency variables in investigations of mathematical ability. In the next two sections of this paper, some of the physiological and psychosocial factors that have been associated with mathematical ability and creativity will be considered.”

Page 414

“Although the influence of heredity on mathematical abilities is debatable, at least one psychologist has offered a tentative physiological explanation for individual differences in these abilities. Krutetskii (1969 a, c) suggested that mathematical stimuli and activities affect the capacity or strength of nervous processes in a different way from other kinds of stimuli or activities. In addition, the nervous systems of some people may be more sensitive to stimuli having mathematical charac-teristics (relations, symbols, numbers) than to other stimuli. Their brains, in other words, are more easily "oriented" toward relationships and symbols and respond optimally to these kinds of stimuli. As a consequence, such individuals can form associations involving mathe-matics with less effort and retain them longer; they are also more resistant to fatigue that is specific to mathematical activity.”

“Research results show that, on the average, girls tend to score higher than boys on tests of verbal fluency, arithmetic fundamentals, and rote memory, whereas boys are superior in spatial ability, arithmetic reasoning, and problem solving (see Aiken, 1971; Werdelin, 1961). But sex differences in abilities are less pronounced in the early grades, and there is a general differentiation of abilities with age and experience.”

“The occurrence of changes in mathematical abilities with age, in the direction of greater crystalliza-tion or specificity, is widely documented (Krutetskii, 1966; Very, 1967; Dye & Very, 1968; Geng & Mehl, 1969). This observed fractionation of mental abilities as the individual matures was labeled by Dye and Very (1968) as the "Age Differentiation Hypothesis," a hypothesis that has stimulated further research (e.g., Khan, 1970). Not only is the degree of age differentiation in mathematical abilities greater for boys than for girls (Dye & Very, 1968), but it varies with the particular social or cultural group studied. Anastasi (1970) has interpreted these findings in terms of Ferguson's (1956) hypothesis that specific mental abilities result from transfer of training among the different tasks required of people in different sociocultural contexts. For example, the relatively greater emphasis in Western culture on the acquisition of verbal skills by girls, as opposed to quantitative and spatial-perceptual skills, may help explain why Dye and Very (1968) obtained a well-differentiated verbal factor but less distinct quantitative and spatial factors with girls than with boys.”

Page 416

“The personality variables that have been found to have modest positive relationships to grades in mathematics courses and/or scores on mathematics achievement tests point to a greater sense of responsi-bility, more independence, a higher status, and generally effective psychosocial adjustment for high achievers in the subject (Aiken, 1963; Cleveland & Bosworth, 1967). Students who are more successful in mathematics are also less impulsive and more reflective than low achievers.”

Page 416 – 417

“Special attention has been focused on the personalities of mathematically gifted children, who are an important human resource. As with gifted children in general, the mathematically gifted tend to be

curious, persistent, highly intelligent, and equipped with good memories (Duncan, 1961)”


Page 417

“It has been observed that as youngsters the mathematically gifted have a keen interest in mathematics and work at this subject with pleasure and without compulsion (Krutetskii, 1969d). In elementary school they are typically well-adjusted, flexible, and realistic, but highly independent and frequently unconventional in their thoughts. But, when their independence of thought and action is threatened, they tend to respond with hostility and self-assertion (Haggard, 1957).”

Page 417

“From time to time such characteristics as a fondness for music and other arts, a great interest in chess, a tendency to have unhappy marriages, and Anglo-Catholic religious preferences have been at-tributed to mathematicians (Hadamard, 1954; Smith, 1964).”

Page 419

“Newton's genius, which did not manifest itself during his childhood, was encouraged and developed in large measure by his teacher Isaac Barrow. Teachers are, of course, not the only "situational" variables that help develop creative minds. In the case of Norbert Wiener (1953), a stern and demanding father played a crucial role…The homes of mathematically creative people tend to be higher than average in socioeconomic status, more often Protestant or Jewish than Catholic (Helson & Crutchfield, 1970b), and characterized by high family pressure for achievement and parental expectations of success (Drevdahl, 1964).”

“Highly creative people are not usually noted for their extroversion, being more interested in ideas than in social activities (Cattell, 1963). A preference for working alone rather than in a group is usually manifested by creative people, because their goals and impulses often conflict with those of others (Brown, 1962).”

Page 420

“As McGannon (1972) recognizes, no one knows precisely how to organize experiences that will foster creativity.”

Own: He has a large bibliography about creativity.

2.2.3      1973 Honesty and the Creative Process – Charlotte L. Doyle


September 28, 2010

Page 43

“Psychologists don't use words like honesty and truth very often when they describe basic psychological processes. The words are difficult to define, almost guaranteed to make a metaphysical mess of things. One rare exception was Max Wertheimer. In his discussion of what he called "productive thinking," he wrote that "the feature of straightness, honesty, sincerity does not seem peripheral in such a process... even seemingly mere intellectual processes involve a human attitude, the willingness to face issues, to deal with them frankly, honestly, sincerely."' The essence of what I have to say in the paper at hand is that creative artists frequently use words like honesty and truth in describing them-selves at work: they contrast these with lies, faking, being glossy. They feel that honesty and truth are at the core of what they are doing in art.”

Page 44

“I should add that the students were quite skeptical of the Wertheimer passage on honesty. Honesty, sincerity, commitment to the truth could be judged to be de-sirable personal characteristics, the students said, but they could not be requirements of a cognitive process. An insincere person could ar-rive at creative solutions in art, in science, and in life, they thought.”

Page 47

“So Joel Spiegelman spoke of composing as a moment of truth, of his music as a mirror of himself. Jane Cooper spoke of writing poetry as honestly confronting one's experience. Grace Paley spoke of becoming an artist the day she discovered an absolute compulsion to tell the truth. Those are the data. The difficulties of understanding and defining a quality such as honesty remains a puzzle, and as psychologists, we have to struggle with it. Still, I think it is important that we take seriously what the artists say, that we not simply dismiss the result as an inter-esting, peculiar bit of verbal behavior of three artists. For one thing, other artists have been observed to make similar statements. Van Gogh, William Faulkner, Ezra Pound, and John Keats are just a few.5 It is an idea that seems to cut across time and media. In addition, the use of the terms like honesty and the context in which artists use them sug-gest something about the creative process itself.”

Page 48 – 50

This is what it suggests to me. First, it suggests that the product of the creative process is about something, it has a referent, and the re-ferent is something like the artist's experience of life, his personal vision of world and self. The referent is not clearly there in the beginning-not a self or an idea sitting there waiting to be expressed. Self-expres-sion is not just a matter of spontaneity. It is a struggle to confront one's experience honestly. It cannot be done except in a medium, and when the expression in a medium is finally clear, the artist has discovered something. Grace Paley said that she writes not when she is moved by an event but when "something buffaloes her"; Jane Cooper talked about discovering in a poem something you didn't know you had to say; Joel Spiegelman spoke of reaching out, of extending yourself, and of the difficulty of discovering the you. Second, though honesty to experience is seen as a goal, the relation between the work and experience is not obvious. The honesty is not a recitation of factual reality (Faulkner says truth doesn't have much to do with facts) but concerns an invented reality. Is the truth a meta-physical truth, a symbolic truth? This raises a whole set of fascinating questions. Furthermore, all three artists speak of dishonesty and lies and fakery in terms of form as much as content. The use of a glossy phrase or dramatic effects, the failure to work out an idea in terms of what comes before or what comes after, even the use of the word "very" where it doesn't belong--each is some sort of dishonesty and has to be rooted out. Third, since there is a task and a goal, a something to be expressed honestly, the creative process (at least in the arts, but I think also in most living cases) is a process that takes place in time - not in seconds or minutes but in weeks and years. Psychological analyses of creativity have used many different temporal units. Some study the word associa-tions that occur within seconds; others, the problem-solving that takes place in minutes; others describe creativity in terms of a total lifetime lived openly, lovingly, and without neuroses. However, in terms of art, in terms of the making of something, we are dealing with a long but finite temporal process with a beginning, a middle, and an end when the goal is reached. Fourth, the creative process is an intentioned process. Although some parts of it may involve making conscious what has not been conscious before, the artist cannot write a poem or paint a picture without in-tending to do it. It takes too much time, it is too complex a task, to do without intention. The artist must recognize himself as someone engaged in making something, and he must commit himself in terms of time and resources to his task. Furthermore, it involves the artist's selecting some of his ideas, insights, and inspirations, and rejecting others according to his own criteria. The artists told us that honesty and truth were basic criteria. Fifth, the artists see honesty as more central than other characteris-tics that are frequently mentioned as typical of creative work: original-ity and craft. All of them had respect for both, all spoke of the discipline needed to master the medium and of the fun and delight in invention, but somehow the core was honesty. Other artists have also said similar things. Marianne Moore was quoted as saying that "originality is a by-product of sincerity," and Ezra Pound that "technique is a test of sincerity."6 The words suggest that originality and craft are necessary tools for the basic task of honest statement. We can even see the oft-cited qualities of preference for complexity and tolerance of ambiguity as characteristics that are necessary because the basic task, the basic goal, requires an honest struggle through complexity and ambiguity without compromise or oversimplifying. Finally, some thoughts on honesty itself, in productive thinking, sci-ence, and art. The honesty that is the standard for the artist is a little different from the honesty Max Wertheimer spoke of in Productive Thinking (though I don't think he would disagree with what follows). Wertheimer was talking about a sincere commitment to a task, about a willingness to face its requirements. Even the ruthless confidence man of cliche, he who cleverly devises ways to trick people out of their money, must honestly face the requirements of his task: understanding the behavior of different kinds of people, being aware of how others see him, and so on. In the scientific enterprise, honesty itself is one of the requirements. No matter what a scientist's philosophy of science - ultimate truth or a heuristic theory-he may not lie about his observations. If dis-covered lying, he would be ostracized by the scientific community, as Bronowski points out.7 The artists seemed to be telling us that there is an analogous requirement in the arts, that there is a commitment to express in a concrete form, in a medium, a personal vision which com-bines thinking and feeling, a view of the world and understanding of self. They say that the work must be honest to this vision as the report-ing of data in science must be honest to what the scientist observes. How the artist develops his standard, how he ferrets out his lies, how he dredges deep for his truth- these are unanswered questions. The scientist's data are potentially public. But the artist's data are private. The truth or falseness of the finished work, the empirical product, can-not even be easily known, may never be known. Yet I think we need to take seriously, to be informed by, what the artists told us: that in terms of process this is the standard they use for themselves. Not clever-ness, or skillfulness in using the medium, or originality. Their standard is honesty. “


Own: Doyle referenced Max Wertheimer, Productive Thinking (New York: Harper & Row, 1959, p 179.

2.2.4      1981 Pluralism and Truth in Religion – Karl Jaspers on Existential Truth


June 7, 2010

Page 27

‘The present age is most evidently a “crisis” in the popular connotation of the word. It is a break, a separation, and thus an end and a loss. Jaspers describes the break as “monstrous” and as “disastrous” in its first effects.²³ “It is a period of catastrophic descent to poverty of spirit, of humanity, love and creative if the spirit itself has been sucked into the technological process.”’

Page 28

‘Thus, ironically, there has been a terrible “loss of reality in an age of apparently heightened realism.’

Own: I do not agree with the above at first glance. Most people accept the reality that with an absence of a good God, terror and violence and deceit is stronger than honesty and hard work and creativity. It is the case because the “bad” reign over the “good” because of the fear factor. Most people do not “see” God therefore they accept the worldly current reality and side with that logic in their daily actions, in order to enjoy life and put food on the table. It however causes creativity, mentioned in the first quote to disappear, which causes a debt trap for a country. Without creativity a country has to get spending power by buying weapons or by becoming slaves.

‘The West, so to speak, not only united the world by exporting its technology, but simultaneously “exported to the four corners of the earth its process of disintegration.”³

Own: Humanity belongs to a system whereby a few (number depends on the level of corruption) honest people innovates creative ideas which could be the means of greater coherence in a society. Sometimes they get sacrificed by the deceitful groupies to benefit the groupies’ interests. Perhaps Christianity has given the greatest protection to the creative in monasteries and nunneries, which is partly the reason of the innovation which took place in the West. The Christian world is however losing this creative advantage because individual creativity is not protected against malicious group behaviour. The people in the nunneries and monasteries did not have children, which could be a reason to explain the halting of creativity along with deceit. In the U.S.A. people had freedom to be truthful because in their society they allowed the saying ‘Oh my God’ It is a reflection of Revelation in the Bible and specifically the verse which says Christ will say what the name of God is on his return. In the Netherlands I think the constitution put the individual’s interests equal to that of the groupie’s interests but in South Africa the groupies’ interest is placed above that of an individual’s who is not part of the group who is committing sacrifice. The groupie and the individual are therefore not treated with equality, although they are each one person. In the constitution of the Netherlands people are treated equally because they get the same protection from the state, whether he is a groupie or an individual who does not belong to the groupie’s group. The groupie is not treated more favourably than the individual. It is thus possible to sacrifice a person for the good of a group if the sacrifice cannot be classified as a criminal offence, in South Africa. Such cases is seen as a civil matter which would cost millions to take to court and there are many other factors like fear which influence such cases The inner workings of a system are not common knowledge therefore the true treatment which the individual creators receive is not common knowledge (I had monetary payments/incentives and respect in mind when I wrote this sentence.) Maybe, in all descending human systems creators are isolated and that is the reason why humanity descends from an apex during history. In some cases it could be the individual creators who contribute to the descent through their blasphemy. In ascending human systems the individual creator is treated with due respect and due monetary gain and he does not blaspheme. The groupie and the individual in this sense can belong to the same group but the groupie belongs to another group within the group, which the individual is a member of. It is a scenario that could even be relevant within a family. The scenario repeats itself in many groups within groups within groups. If it is true what I heard about the South African and Netherlands constitutions the Netherlands constitution compare individual with individual and the South African constitution the individual with a group. Democratically the South African situation does not make sense.

In the Roman Catholic system people were removed from God. They could only interact through the church. This removal removed them thus also from the possibility of truthfulness because it was part of a God which they could not interact with except through the church. When Protestantism appeared this barrier was removed and people could identify more with being truthful because the church was no longer between a person and God. This could have perhaps been the reason for the creativity which took place after Martin Luther’s preaching. People could identify more with truth and the God thought. Truth advanced logic which advanced creativity which advanced the creation of capital.[July 9,2010]

Page 35

‘It is finally, the modern sense of history which recapitulates and concretizes the critically changed consciousness of reason and freedom.’

capitulate: to surrender, esp. under agreed conditions. (Makins, et al., 1994, p. 240)

recapitulate: to restate the main points of an argument (Makins, et al., 1994, p. 1293)

Page 45 Chapter III


Own: Faith and Truth is the names John gave to the Messiah in Revelation 19:11. I think it was translated as Faithful and Truthful.

‘While Jaspers’ understanding of religious truth is naturally exemplified and clarified in his explicit discussions of religion, it is above all in certain recurring foundational ideas that the basis for that understanding is established. It is to those foundational ideas or, better said, that foundational thinking,¹ that attention must now be turned in an effort to map out the contours of the logic of religious truth. The crisis of the present, as noted above, consists in radical shaking of all previous foundations and the emergence of new conditions governing life and thought. It is that crisis, with its urgent struggle for the recovery of faith and the unprecedented possibility of a “common framework” for the communication of historically heterogeneous faiths, which has determined for Jaspers the present task of philosophical logic- -“the discovery of a simple, essential, and comprehensive foundational thinking.”² Said another way, while Jaspers’ philosophy proposes no one system or set of doctrines, there is still a continually recurrent pattern of systematically thought and controlling ideas which are its determinative basis, “the ideas which govern its development.”³ It is, then, these ideas or patterns of thinking which establish the possibility of a plurality of true religions by distinguishing between the universality of truth in science and matters of fact and the absolute, yet never universalizable (sic), character of truth in matters of faith.’

Page 45 – 50

Own: John F Kane describes many complicated things around the God thought as portrayed in Revelation 19:11 but he never mentions the verse. He uses the words “f