Against Monopoly

defending the right to innovate

Monopoly corrupts. Absolute monopoly corrupts absolutely.

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Paul F. Cwik on IP and Austrian Economics: A Comment

At the recent Austrian Scholars Conference 2008, held March 13-15 (scroll down at the Preliminary Schedule in pdf), Stephan Kinsella chaired a session on the monopoly formerly known as intellectual property. (Okay, this wasn't the actual title.) Paul F. Cwik gave a paper "Is There Room for Intellectual Property Rights in Austrian Economics?" (pdf--scroll down on the left; I couldn't get the other link to work, so I linked to this), in which he argued that there is, and against the position staked out by Kinsella in his paper "Against Intellectual Property". Here is a blog post on it.

The crux of Prof. Cwik's paper is that IP is a public good, based on a natural right to property, and can be fenced off, just as Austrians argue that other public goods can be. His defense of a natural right to IP (he uses copyright as the paradigmatic example, and follows Murray N. Rothbard in claiming that anything created, including an invention, can be copyrighted) essentially consists of the assertion that the created thing, say the word order of a book, is the product of one's labor and should therefore be protected against anyone else's copying it.

Without getting into the public goods debate, which is secondary to the natural rights argument anyway, why does Jones' application of labor to newly homesteaded or otherwise justly owned property give him the right to block Smith or anyone else from making and/or selling or otherwise commercially using their justly acquired copies of his creation? Merely asserting that he has this right, as Prof. Cwik does, doesn't make it a sound argument. After all, neither Smith nor anyone else claims the right to prevent Jones from using his copies of his new creation. Everyone agrees that Jones has the right of first disposal of his property, including the right to sell copies of it. Contrary to what Prof. Cwik thinks, Jones' first mover advantage and the ability to sell complementary and derivative services based on his creation gives him a powerful edge over potential competitors (which of course he is free to squander, hello WebVan and Pets.com--meet Fresh Direct and Petsmart), and enables him at least to have a shot, if not a guarantee, at earning back his cost of capital in a competitive market.

Also, I have a beef with John Locke, Murray Rothbard, and Prof. Cwik. Locke held that a laborer owns his labor; Rothbard et al. have followed him over this cliff. No one owns labor per se, which is an action. How do you own an action? What laborers sell is their labor services; an actor sells his acting services, an assembly line worker sells laborer services, say building a car or at least some action along the assembly line.

So much, then, for the doctrine that he necessarily owns the fruits of his labor, if this is meant literally. If an auto worker tried to walk out at the end of the week with a car that just rolled off the assembly line, I'm guessing he wouldn't get far. His compensation is a wage and contractually attached benefits.

This is also true for Crusoe, laboring on a deserted island. He isn't selling his labor services in a labor market, but he is applying them to whatever he is making, perhaps a fishing net.


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