Trade secrets concentrate

Information inequality is the most efficient mechanism for wealth concentration ever devised. Trade secrets don’t just protect competitive advantage—they create permanent information asymmetries that transform knowledge into extractive power.

──── The concentration mechanism

Trade secrets operate as legal monopolies on actionable information. Unlike patents, which eventually expire and require disclosure, trade secrets can theoretically last forever while revealing nothing.

This creates a fundamental asymmetry: those who possess actionable information can extract value from those who don’t, indefinitely.

Coca-Cola’s formula remains secret after 140 years. KFC’s seasoning blend continues generating profits from information scarcity. High-frequency trading algorithms extract billions from millisecond information advantages.

The value isn’t in the information itself—it’s in the exclusive access to that information.

──── Information rent extraction

Trade secrets enable pure rent extraction from information asymmetries:

Algorithmic trading firms profit not from creating value, but from knowing information microseconds before others. Proprietary databases extract subscription fees from information that should be publicly available. Manufacturing processes maintain artificial scarcity through secretive techniques.

This is economically equivalent to charging tolls on information highways that companies didn’t build.

──── The secrecy industrial complex

Entire industries exist solely to maintain information asymmetries:

Corporate intelligence firms gather competitive information while protecting client secrets. Non-disclosure agreement specialists create legal frameworks for information hoarding. Trade secret litigation firms profit from disputes over information ownership.

Security consulting companies sell services to protect information that often should be public. Information classification systems create artificial scarcity around knowledge.

The infrastructure for maintaining secrets often costs more than the secrets themselves are worth.

──── Regulatory capture through opacity

Trade secrets enable regulatory capture by making oversight impossible:

Financial algorithms remain secret, preventing regulators from understanding systemic risks. Chemical formulations hide environmental and health impacts behind proprietary protections. AI decision-making systems operate as black boxes that regulators cannot examine.

Companies don’t just avoid regulation—they make regulation technically impossible through strategic opacity.

──── Labor value extraction

Trade secrets systematically extract value from workers who generate the knowledge:

Non-compete agreements prevent workers from using knowledge they created. Trade secret classifications transform worker expertise into company property. Information compartmentalization prevents workers from understanding the full value of their contributions.

Workers create the knowledge, companies own the knowledge, and workers must pay companies to access knowledge they created.

──── Innovation theater

Trade secrets often protect mediocrity rather than innovation:

Recipe variations that are chemically identical get treated as revolutionary secrets. Minor algorithm modifications become proprietary competitive advantages. Repackaged public research gets classified as breakthrough innovation.

The secrecy creates an illusion of innovation that justifies premium pricing for incremental changes.

──── Information laundering

Companies use trade secrets to launder publicly-funded research into private profits:

University research funded by taxpayers gets licensed exclusively to corporations. Government-funded algorithms become proprietary trading systems. Public health research gets transformed into trade secrets for pharmaceutical companies.

Public investment in knowledge creation becomes private profit through strategic secrecy.

──── Cross-border information arbitrage

Trade secrets enable global information arbitrage that extracts value from regulatory differences:

Tax optimization algorithms remain secret while extracting value from regulatory complexity. Transfer pricing methodologies hide profit-shifting techniques from authorities. Regulatory avoidance strategies get protected as competitive intelligence.

Companies profit from information that helps them avoid contributing to the societies that enabled their success.

──── AI opacity multiplication

Machine learning amplifies trade secret concentration effects:

Training data becomes proprietary, creating permanent advantages for early adopters. Model architectures remain secret, preventing competitive analysis. Algorithmic decision logic operates as unexaminable black boxes.

AI systems transform human knowledge into proprietary algorithms that extract value from the societies that created that knowledge.

──── Financial information cartels

Financial institutions use trade secrets to maintain information cartels:

Credit scoring algorithms remain secret while determining access to capital. Risk assessment models hide bias and methodology from those being evaluated. Market-making algorithms extract profits from information asymmetries they create.

The financial system profits from keeping secret the mechanisms that determine economic access and opportunity.

──── Knowledge enclosure movements

Trade secrets represent a new form of enclosure, transforming shared knowledge into private property:

Traditional farming techniques get patented and classified as trade secrets. Indigenous knowledge becomes proprietary through biopiracy. Community-developed software gets enclosed within proprietary systems.

This is the intellectual equivalent of fencing off the commons.

──── Democratic deficit creation

Trade secrets undermine democratic decision-making by hiding information necessary for informed choices:

Voting system algorithms remain secret, preventing verification of electoral integrity. Policy impact models stay proprietary, hiding the basis for government decisions. Public-private partnership details get classified as commercially sensitive.

Democracy requires informed consent, but trade secrets make informed consent impossible.

──── Technological feudalism

Trade secrets create technological feudalism where information ownership determines social hierarchy:

Platform algorithms control information access for billions while remaining secret. Supply chain optimization systems determine economic opportunities while hiding their logic. Recommendation engines shape human attention and behavior through opaque mechanisms.

Society operates according to algorithmic rules that society cannot examine or change.

──── The measurement paradox

Trade secrets make it impossible to measure their own economic impact:

We cannot quantify the cost of information asymmetries because the information needed for that measurement is itself secret. We cannot evaluate the efficiency of secret systems because their operations remain hidden.

The systems designed to extract maximum value from secrecy also make it impossible to measure that extraction.

──── Resistance limitations

Traditional approaches to addressing market concentration fail with trade secrets:

Antitrust enforcement cannot break up information that remains invisible. Regulatory oversight cannot govern systems it cannot examine. Market competition cannot emerge when competitive information remains secret.

The tools for addressing economic concentration become ineffective when concentration operates through information asymmetries.

──── Alternative value frameworks

A system optimized for information sharing rather than information hoarding would look fundamentally different:

Open source development demonstrates that collaborative information sharing often produces superior results. Scientific research advances through information disclosure, not secrecy. Democratic institutions function better with transparency than opacity.

But transitioning from information concentration to information sharing requires confronting the economic interests that benefit from current asymmetries.

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Trade secrets represent the ultimate form of capital concentration: the ownership of information itself. Unlike physical assets, information can be reproduced infinitely at near-zero cost, making artificial scarcity through secrecy a pure extraction mechanism.

The trade secret system transforms knowledge—humanity’s greatest shared resource—into a tool for perpetuating inequality and concentrating power.

When information becomes property, society becomes divided between the informed and the uninformed, with economic power flowing permanently from the latter to the former.

The question isn’t whether trade secrets provide competitive advantages. The question is whether a society that allows information to be permanently enclosed can maintain democratic governance or economic equality.