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Against Monopoly

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Monopoly corrupts. Absolute monopoly corrupts absolutely.





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High School Senior's Questions about IP

[From Mises blog, Dec. 7, 2007]

I received an impressive inquiry from a high school senior: "I am contacting you to ask if I can interview you for my senior project paper, which is a persuasive paper about why copyrights are invalid and impractical. I will have between 5-10 questions regarding intellectual property for you to answer." I said sure; and she sent on her questions, which were:

1. What would you say is the most powerful argument against copyrights and patents? 2. What would you respond with to someone who argues that resources do not have to be finite or scarce in order to be allocated as property? 3. How would you respond to Lysander Spooner's argument that property is wealth that is owned, and wealth includes ideas since they can be manifested into tangible wealth? 4. What about the argument that people own their minds, so they own the mental products? 5. Some anti-IP people believe in a right to first sell. Would you say that the original creators should have a right to sell the creation first? Why or why not? 6. What would you respond to someone who claims that if there were copies all around, the original inventor wouldn't get as much profit as he should have?

My replies are below.

Question 1. What would you say is the most powerful argument against copyrights and patents?

As I elaborate in In Defense of Napster and Against the Second Homesteading Rule and Against Intellectual Property (both available here), humans need to use scarce or "rivalrous" resources -- for example, tangible things like land or food or clothing -- to survive. The nature of these things is that only one person can use or control the resource. Thus, there is a possibility of conflict over the use of these things. For people to live peacefully and productively in the world, we need to be able to find ways to use scarce resources without fighting over them. This means that each scarce good--each thing that might be the subject of conflict--is assigned one unique owner, someone with the exclusive right to control that resource. The rules for determining who is the owner have to be objective, fair, and just, in order to be generally accepted and serve the function of reducing conflict. It is for this reason that ownership is thus assigned to the person with the best claim to the thing in question--the most objective "link" to it. This is the libertarian-Lockean idea of "first use"--whoever first possesses or uses a thing--that is, establishes objective property "borders" with respect to the resource--is the owner. Any other rule is non-objective or arbitrary. For example, if the first user did not have the best claim to the resource, then whatever rule you use to assign property rights, property is not secure because some latecomer could just take it from the current owner. So any property assignment rule at all presupposes the first-user idea--the idea that an earlier user, ceteris paribus, has a better claim than any other user. Which implies the first user -- the homesteader -- has the best claim of all. Any other rule in effect violates the notion that latecomers have an inferior claim to earlier users. For example, a thief who steals property is in effect a latecomer. And mere verbal decree is not sufficient either, for one or two reasons: first, because (with respect to unowned resources), it's not an objective use of the thing; it does not establish any visible link; and any number of people could make such a claim, in contradistinction to first possession, which can only be done by one person, and which is objective and visible; and second, because (with respect to already owned resources) this amounts to theft, or a latecomer ethic.

Now, given this understanding, we can see that any just and peaceful and prosperous society requires the assignment of ownership rights in scarce resources in accordance with the libertarian homesteading or "first use" principle. Now ideas -- creative works protected by copyright or inventive designs or recipes or processes of patent law -- are not scarce resources. Any number of people can have a copy of a song; or can use the same method or design, with their own bodies and property. To assign rights in such things--called "ideal objects"--means setting up enforceable claims in these intangible things--but force is a tangible, real thing that can only be applied to other real (scarce) things. In other words, because ideas are scarce, assigning rights in ideas necessarily is accomplished by assigning ownership rights in scarce resources. So, for example, the holder of a copyright to a novel has a partial ownership right over the bodies and tangible property of everyone else in the jurisdiction, because he can stop them from using their bodies or property in a certain way. The owner of the patent for a mousetrap can stop you from using your own body and wood and metal to make a mousetrap having a similar design to his patented design. But as we have seen above, recognizing such rights contradicts the only just and objective property assignment rule, since it overrides the ownership rights already established in already-owned things. I homestead property, and own it; then someone else acquires some rights to control my property merely by a decree of the state, in effect, merely by their thinking of a way to use their own property, which is not "first use" of the resources they now claim ownership of.

So, in short, the problem with patent and copyright is that it amounts to theft of rights to scarce resources.

Question 2. What would you respond with to someone who argues that resources do not have to be finite or scarce in order to be allocated as property?

Assigning rights to non-scarce things necessarily infringes on rights to scarce things, since IP rights are enforced with force, real force, in the real world, against real things. For example, the copyright holder can force the "infringer" to pay money to him; or can get an injunction forcing him to stop using his body and (scarce) property in a certain way. Assigning rights to non-scarce things acts much like inflation of the money supply does: the more you do it, the more you dilute and reduce the value of real property (money). Question 3. How would you respond to Lysander Spooner's argument that property is wealth that is owned, and wealth includes ideas since they can be manifested into tangible wealth?

Wealth is too nebulous a term to be used here and is unnecessary. It appears to mean value; but as Hoppe and Rothbard show, value is not ownable or owned. The owner of property has no property right in the object's value, since its value lies in how others' appraise it. (Hoppe argues this in his TSC, as I note in my Against IP article, at text at note 79.) See also Rothbard's explanation for why there are no rights to one's reputation--because a reputation is what others believe about you, and you don't own their minds or opinions. (I think this is in Ethics of Liberty.)

Question 4. What about the argument that people own their minds, so they own the mental products?

This line of reasoning is based on the confusing notion that creation is an independent source of property rights. This error is similar to the confused idea that we own things we mix our labor with because we "own" our labor. We own -- have the right to control -- various scarce resources, such as our bodies and other scarce resources we homestead or acquire from previous homesteaders. We do not own "labor"; labor is just an action, an activity of the body. To be sure, when one first uses unowned property, and thereby homesteads it, he is engaging in a type of "labor"; but we do not need to rely on the confusing metaphor that we "own" our labor. By working to emborder or possess an unowned resource, one thereby establishes a visible link with the property, thus establishing a better claim than any latecomer, i.e. ownership. This chain of reasoning does not imply or rest on the idea that we "own" our labor.

As for creation, it is often maintained that one can acquire ownership of things by either finding (homesteading), contract (acquiring it from a previous owner), or by creating the thing. But this is confused: creation is not an independent source of ownership. In fact, a bit of reflection shows that it is neither necessary nor sufficient. If you own a resource and re-shape it into some new, more useful, more valuable configuration (say, you "create" a mousetrap using your wood and metal; or you "create" a statue by carving up your hunk of marble), then you own the resulting "creation" simply because you were already the owner of the material that constitutes it. So it is not necessary to think of creation as a "source" of ownership rights. Likewise, if you carve a statue into someone else's property, then you do not own the resulting statue; rather, the owner of the marble is entitled to have his marble back, and perhaps damages for trespass. So creation is not sufficient for ownership either.

In fact, the only legitimate ways of acquiring title to a given scarce resource is to either homestead it from its unowned state, or to contractually acquire it from someone who already owns it and who can trace his title back to an original act of homesteading. This fully exhausts all ways of coming to own scarce things. This is because matter cannot be created by man, but only rearranged.

Now let me note one other thing. Rothbard explains in Ethics of Liberty why there is not really an independent right to free speech; there are only property rights. There is no "right" to free speech that gives you the right to speak on others' property--you must have the consent of the owner. And if you own property, you can do whatever you want on it, including speak--not because you have a "right to free speech" but because you can do whatever you want with your own property so long as you do not invade others' property rights.

So back to your question: we do not own the mental products of our mind for several reasons. First, owning one's body, just as owning property gives you in effect a (derivative) right to speak on it, allows you to use it to do useful things, such as come up with ideas, or even sell your services, or labor. There is no need to engage in the confusing fiction or metaphor that you "own" your labor, or you "own" the "products" of your mind. Second, "products of the mind" is far too vague of a concept. It is so broad that if property rights were granted in them, they would swamp and override all real rights in real things. And finally, if the products of your mind are scarce, you presumably own them because they result from reworking material you already owned (if not, as in the stolen marble example, you do not own it at all, but someone else does). And if they are not scarce, they are not the subject of property, since granting property in them is impossible, and can only be accomplished by eroding property rights in others' things. Question 5. Some anti-IP people believe in a right to first sell. Would you say that the original creators should have a right to sell the creation first? Why or why not?

I believe you may be referring to the doctrine of common law copyright. As a practical matter, if you have an idea or manuscript, you can use this to leverage payment to reveal it. But if you are foolish enough to let the information become public, it is too late to do this. As Benjamin Tucker noted: "You want your invention to yourself? Then keep it to yourself." (see on this Wendy McElroy, Copyright and Patent in Liberty).

Question 6. What would you respond to someone who claims that if there were copies all around, the original inventor wouldn't get as much profit as he should have?

Austrian economics teaches us that values are subjective, and that the only way to determine an objective price is on the market. See on this Rothbard's Utility and Welfare Economics, e.g. The only way to know how much profit someone "should" make is to see what people are willing to pay them for. Part of the market is the need to incur costs of exclusion. If you don't put a lock on your business, people will steal it. If drive in movie theaters didn't incur the cost of putting little speakers for each car, then people would free ride by watching it from outside. To decide whether a given endeavor is worthwhile, one must take all costs into account, including costs of exclusion. The more creative find ways to exclude that have a low enough cost and that exclude a sufficient number of free riders so that the business can be profitable. For those entrepreneurial plans that have too high a cost, they should not be engaged in. So we see people finding ways to profit from their ideas, given the free rider problem--so rock bands give away their music for free (it plays on the radio, e.g.) so they develop fans who will pay to see them play live in concert (but even here, there are costs of exclusion--the ticket selling and enforcement mechanism, say). Or television shows are broadcast for free and paid for by advertisting. And so on.

[Mises blog post; SK cross-post]


Comments

Stephan, you're still attached to the notion of an idea or intellectual work as a supernatural object, a universal all pervasive pattern. There is no such thing.

There is an intellectual work that exists in a person's mind, and may be set down by that person in a physical medium. This is a discrete object. It has no natural effect beyond its physically localised fixation. Because it is discrete, it can be owned and possessed, the information as much as the matter.

The ownership of intellectual work, its nature as property, needs no government to allocate rights over. It is the property of the person who creates or discovers it, for they can naturally exclude others from access to it. If I write a poem I can naturally exclude you from access to it. I can prevent you copying it.

You'll no doubt then say that I can't supernaturally prevent you writing an indistinguishably similar poem. And I'll agree, but then, unlike you, I don't recognise the concept of supernatural, universally pervasive objects, and the notion of allocating ownership over them (or not).

Obviously, once I've given you access to my IP, I can't prevent you copying it, but we can still prevent others copying what is now exclusive to us.

Ideas are scarce, limited by the scarcity of human beings to originate them. The fact that one can copy those ideas without limit does not make the ideas non-scarce. The fact that you can produce a trillion copies of the works of Shakespeare for a few pennies does not make Shakespeare's works non-scarce. The non-scarcity of digital copies is a red herring when it comes to understanding intellectual property.

Incidentally, one does not lose one's right to liberty, even as another's guest - one always retains one's freedom of movement and speech. Your natural right to privacy does not give you the power to subject your fellow man to your will within it, only to eject them from your privacy. Thus you cannot gag a guest, but you may eject them if you do not like what they say.

"Stephan, you're still attached to the notion of an idea or intellectual work as a supernatural object, a universal all pervasive pattern. There is no such thing."

Then what is it? What is the number 4 or the color red, if not a universal all-pervasive pattern?

"Ideas are scarce, limited by the scarcity of human beings to originate them. The fact that one can copy those ideas without limit does not make the ideas non-scarce."

Well, yes, it does make them non-scarce, if you stick to the definition of scarcity that most of us use. If you substitute your own definitions, you can claim whatever you want, but you'll have a hard time participating in a sensible discussion.

"The fact that one can copy those ideas without limit does not make the ideas non-scarce." True, possibility of cheap copying does not imply scarcity, possibility of parallel usage by multiple parties without conflict does.
The only way to know how much profit someone "should" make is to see what people are willing to pay them for. Part of the market is the need to incur costs of exclusion. If you don't put a lock on your business, people will steal it. If drive in movie theaters didn't incur the cost of putting little speakers for each car, then people would free ride by watching it from outside. To decide whether a given endeavor is worthwhile, one must take all costs into account, including costs of exclusion.

The first sentence in bold is a false premise, and the second a red herring. Things like the free rider problem and exclusion costs introduce inaccuracies in the price measured by the free market. Because of these inaccuracies, some "endeavours" are undertaken while they are not socially worthwhile and some are not undertaken though they are. Removing exclusions costs makes the price measured in the market more accurate, not less.

The problem with copyright is not that it removes exclusion costs. That would be a good thing, increasing the accuracy of the price measured by the market, and thus making some worthwhile endeavours be engaged in that with the distortion of exclusion costs might not be.

Copyright, rather than removing exclusion costs, is in the business of removing monopoly costs -- the costs of maintaining monopoly. It does not prevent a non-customer from free-riding on your intellectual property. It prevents customers of your intellectual property from making copies and redistributing them. Copyright prevents a customer of your intellectual property from entering into competition with you.

Restricting competition is generally considered a bad thing. The only reason we accept a state-granted monopoly for authors and inventors is that we are afraid that without it, they would not author or invent enough. Evidence that this fear is a reasonable one is sparse. In any case, it is hard to objectively measure (on the market or otherwise).


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