How Intellectual Property Hampers the Free Market
Advocates of free-market capitalism commonly believe in the legitimacy of intellectual property (IP) because IP rights are thought to be important to a system of private property.
But are they? There are good reasons to think that IP is not actually property—that it is actually antithetical to a private-property, free-market order. By intellectual property, I mean primarily patent and copyright.
It’s important to understand the origins of these concepts. As law professor Eric E. Johnson notes, “The monopolies now understood as copyrights and patents were originally created by royal decree, bestowed as a form of favoritism and control. As the power of the monarchy dwindled, these chartered monopolies were reformed, and essentially by default, they wound up in the hands of authors and inventors.”
Patents were exclusive monopolies to sell various goods and services for a limited time. The word patent, historian Patricia Seed explains, comes from the Latin patente, signifying open letters. Patents were “open letters” granted by the monarch authorizing someone to do something—to be, say, the only person to sell a certain good in a certain area, to homestead land in the New World on behalf of the crown, and so on.
It’s interesting that many defenders of IP—such as patent lawyers and even some libertarians—get indignant if you call patents or copyright a monopoly. “It’s not a monopoly; it’s a property right,” they say. “If it’s a monopoly then your use of your car is a monopoly.” But patents are State grants of monopoly privilege. One of the first patent statutes was England’s Statute of Monopolies of 1624, a good example of truth in labeling.
Granting patents was a way for the State to raise money without having to impose a tax. Dispensing them also helped secure the loyalty of favorites. The patentee in return received protection from competition. This was great for the State and the patentee but not for competition or the consumer.
In today’s system we’ve democratized and institutionalized intellectual property. Now anyone can apply. You don’t have to go to the king or be his buddy. You can just go to the patent office. But the same thing happens. Some companies apply for patents just to keep the wolves at bay. After all, if you don’t have patents someone might sue you or reinvent and patent the same ideas you are using. If you have a patent arsenal, others are afraid to sue you. So companies spend millions of dollars to obtain patents for defensive purposes.
Large companies rattle their sabers or sue each other, then make a deal, say, to cross-license their patents to each other. That’s fine for them because they have protection from each other’s competition. But what does it do to smaller companies? They don’t have big patent arsenals or a credible countersuit threat. So patents amount to a barrier to entry, the modern version of mercantilist protectionism.
What about copyright? The roots literally lie in censorship. It was easy for State and church to control thought by controlling the scribes, but then the printing press came along, and the authorities worried that they couldn’t control official thought as easily. So Queen Mary created the Stationer’s Company in 1557, with the exclusive franchise over book publishing, to control the press and what information the people could access. When the charter of the Stationer’s Company expired, the publishers lobbied for an extension, but in the Statute of Anne (1710) Parliament gave copyright to authors instead. Authors liked this because it freed their works from State control. Nowadays they use copyright much as the State originally did: to censor and ban books. (More below.)
IP, American Style
The American system of IP began with the U.S. Constitution. Article 1, Section 8, Clause 8 authorizes (but doesn’t require) Congress “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Despite modern IP proponents’ claims to the contrary, the American founders did not view intellectual property as a natural right but only as a policy tool to encourage innovation. Yet they were nervous about monopoly privilege, which is why patents and copyrights were authorized only for a limited time. Even John Locke, whose thought influenced the Founding Fathers, did not view copyright and patent as natural rights. Nor did he maintain that property homesteading applied to ideas. It applied only to scarce physical resources.
Granted, some state constitutions had little versions of copyright before the American Constitution. (See Tom W. Bell, Intellectual Privilege: Copyright, Common Law, and the Common Good, part 1, chapter 3, section B.1.) On occasion, the language of natural rights was used to defend it, but this was just cover for the monopolies they granted to special interests. Natural rights do not expire after 15 years. Natural rights are not extended to Americans only. Natural rights wouldn’t exclude many types of innovation and intellectual creativity and cover only a few arbitrary types.
And what is the result of this system? In the case of patents we have a modern statute administered by a huge federal bureaucracy that grants monopolies on the production and trade of various things, which means holders may ask the federal courts to order the use of force to stop competitors. But the competitors have not done anything that justifies force. They merely have used information to guide their actions with respect to their own property. Is that compatible with private property and the free market?
Examples of Censorship
In the case of copyright the result has been actual censorship, as recent examples will show. According to Engadget, Russian authorities, with Microsoft’s approval, used IP law as a “pretext for seizing computers and other materials from political opponents of the government and news organizations.” In another case Susan Boyle, the English singer from Britain’s Got Talent, was prevented from singing a Lou Reed song on America’s Got Talent because of copyright. Then there was the case in which a 1922 German silent film, Nosferatu, was deemed a derivative work of Bram Stoker’s Dracula and ordered destroyed.
One of the most outrageous cases concerns the novel Sixty Years Later, Coming Through the Rye, Frederik Colting’s sequel to J. D. Salinger’s The Catcher in the Rye. Salinger got the courts to ban publication of the book on copyright grounds. “I am pretty blown away by the judge’s decision,” Colting said. “Call me an ignorant Swede, but the last thing I thought possible in the U.S. was that you banned books.”
These examples will be dismissed as abuses of an otherwise good law, but it’s the law itself that is the abuse.
Although natural rights are often invoked, the most common argument for IP, even among libertarians, is utilitarian, or “wealth-maximization,” which was the approach of the Founding Fathers: IP monopoly encourages innovation and therefore creates net wealth. In other words, the benefits outweigh the costs.
No doubt the patent system imposes costs on American society. I’ve estimated the net cost at $38–48 billion a year, and this is probably conservative. The costs include patent attorney salaries, fees, litigation, increased insurance premiums, and higher-priced products—plus innovation and research lost when companies concentrate on patentable innovations and allocate fewer resources to more basic scientific research, or when an entire field is avoided for fear of patent-infringement lawsuits.
Anyone who argues that patents yield a net gain is obliged to estimate the total cost (including suppressed innovation) as well as the value of any innovation thereby stimulated. But IP proponents never provide these estimates. I’m no empiricist—my opposition to IP is based on principles of justice and property rights—but IP advocates make the empirical claim that we are richer because of the patent system. They say we have more innovation at a low price. Yet virtually every empirical study I’ve seen on this matter is either inconclusive or finds a net cost and/or a suppression of innovation. (I ignore here the valid Austrian objection that costs and benefits are subjective and not measurable.)
Thus a good utilitarian would have to conclude that patent and copyright laws are harmful.
Creation
Some IP advocates do make a serious natural-rights case on the grounds that the innovator has created some new, valuable thing—a song, a painting, a novel, or an invention. Because he created it, the argument goes, he is its natural owner. But this conflates the source of property rights with the source of wealth. As Ayn Rand—a strong proponent of IP—recognized (in “The Metaphysical Versus the Man-Made,” Philosophy: Who Needs It):
The power to rearrange the combinations of natural elements is the only creative power man possesses. It is an enormous and glorious power—and it is the only meaning of the concept “creative.” “Creation” does not (and metaphysically cannot) mean the power to bring something into existence out of nothing. “Creation” means the power to bring into existence an arrangement (or combination or integration) of natural elements that had not existed before.
In other words, individuals create wealth by using their intellect, creativity, and labor to transform already owned scarce resources into more valuable configurations. In a free society a producer owns the resulting products because he owned the factors transformed in the production process. The idea behind production adds nothing to the ownership claim that wasn’t already present.
Control of Physical Property
In fact, assigning property rights in ideas and other immaterial things, such as patterns or recipes, ends up restricting other people’s rights to control their physical property. Copyright and patent holders thus become, in effect, co-owners of others’ property, courtesy of the State. This is illustrated in the copyright censorship examples provided. And it is seen in cases where a patentee uses the courts to shut down competitors.
Another way to understand the error in treating information, ideas, and patterns as property is to consider IP in the context of human action. Ludwig von Mises explained in The Ultimate Foundation of Economic Science that “[t]o act means: to strive after ends, that is, to choose a goal and to resort to means in order to attain the goal sought.” Knowledge and information of course play key roles in action. As Mises puts it, “Action . . . is not simply behavior, but behavior begot by judgments of value, aiming at a definite end and guided by ideas concerning the suitability or unsuitability of definite means” (emphasis added).
Moreover, “[m]eans are necessarily always limited, i.e., scarce, with regard to the services for which man wants to use them.” This is why property rights emerged. Use of a resource by one person excludes use by another. In contrast, ownership of the information that guides action is not necessary for performing the action. Two people who each own the ingredients can simultaneously make a cake with the same recipe.
Material progress is made precisely because information is not scarce. It can be infinitely multiplied, learned, taught, and built on. The more patterns, recipes, and causal laws that are known, the greater the wealth multiplier as individuals engage in ever-more efficient and productive actions. It is good that ideas are infinitely reproducible. There is no need to impose artificial scarcity on ideas to make them more like physical resources, which—unfortunately—are scarce. As Frédéric Bastiat observed, “All innovation goes through three stages. One possesses unique knowledge and profits from it. Others imitate and share profits. Finally, the knowledge is widely shared and no longer profitable on its own which thereby inspires new knowledge.”
Patents artificially prolong the first stage at the expense of the others. Thus, IP is inimical to progress, prosperity, and freedom.
This article is derived from remarks at the 2010 Mises Institute Supporters’ Summit.
Comment by D. Frank Robinson on 25 May 2011:
Consider the strife that was engendered when a church tried to use force to exclude competing ideas of god, rituals, morality and a perpetual ‘copyright’ on a holy book.
Comment by James Madison Fan on 25 May 2011:
The concept that IP is tainted due its abuse by ancient monarchies is absurd.
Modern law owes its roots to ancient Monarchies. The Codes of Hammurabi (King of Babylon) are at the core of Law as are the Codes of Justinian (Corpus Juris Civilis – Roman Emperor). If the litmus test for a law is its supposedly tainted origins in the courts of Kings and Emperors then we shall have no law at all.
Using this same logic the concept of Title dates back to the same monarchs Mr. Kinsella laments ergo the deed to his home is invalid so I hope he’s not particularly attached to it or the money he spent on it. .
The origins of Law aside, Mr. Kinsella avoids discussing the value of labor. When I build a chair I am paid for my time even if the materials are not mine. If I am not paid for building chairs it is called “slavery.” Even if Mr. Kinsella is not willing to admit my story, characters, and setting have value he cannot dispute the value of the time I spent writing the story.
Based on Mr. Kinsella’s logic the full value of my time is the purchase price of the average hard cover book or paperback novel (around $20 and $6 respectively) and for this scant sum you get full rights to my work even to the point of removing my name, plagiarizing it, and selling it as your own. In Mr. Kinsella’s Libertarian Party you have to pay market rate for cobblers, roofers, plumbers, painters, electricians, and other workers but authors labor for the love of their art alone.
He also fails to address recouping investment on Research and Development. If I’m CEO of Dupont and we spend $100 billion over 10 years researching the cure for cancer how can we have any hope of making back what we invested, much less earn a profit, if other companies can reverse engineer the product without investing anything? Great risk must yield great reward to justify the investment. As a stock holder and a businessman this is axiomatic.
The unfortunate truth is philosophy must yield to the demands of the real world regardless of if your name is Marx, Rand, or Kinsella.
Comment by Joe Schmoe on 25 May 2011:
Re: James Madison Fan
I’ll respond to your points in turn.
“Modern law owes its roots to ancient Monarchies.”
The concept of law, which is essentially a major part of social cooperation, doesn’t rely on Monarchies or states either as the root cause or as a fundamental stepping stone.
Just because the Code of Hammurabi is the oldest surviving example of contract law in application doesn’t mean it is the origin of it. No, the real explanation as to the origins of contract law is that it is a fundamental tool for social cooperation and thus the survival and prosperity of the human race. Doubtless the Code of Hammurabi wasn’t entirely conceived of by Hammurabi himself but was a function of an attempt to codify existing practices, the politics (whatever they may be) of the day, and perhaps some wisdom and foresight.
“Based on Mr. Kinsella’s logic the full value of my time is the purchase price of the average hard cover book or paperback novel (around $20 and $6 respectively) and for this scant sum you get full rights to my work even to the point of removing my name, plagiarizing it, and selling it as your own.”
Find a better example than books… pirates may not write their names on other peoples work but the result is practically the same when they scan a book onto one of the many torrent sites, and yet popular books still make money for both the publisher and the writer (mostly because hard copies are in many ways more convenient and easier to read). And second-hand sales were the functional equivalent of plagiarization in their heyday, denying the author the chance at another sale. Are we worried about a man making a bootleg copy of a popular authors work and trying to pass it off as his own?
Or maybe you’re worried about the Big Bad Giant Faceless Publishing Corporation, out to rob fledgling authors of their rightful works? I don’t understand who else could steal an authors work, unless he gives out his manuscripts for free. I can’t see how a well-know author can have his great stories robbed of him by several smaller plagiarizing/publishing companies, since half of his or her booksales are on opening day anyways (and I already mentioned how people giving away the book for free doesn’t stop the profit from happening).
And who’s going to bother plagiarizing the unknowns? Half the good stories and authors I find come as the result of browsing a bookstore for a half an hour, reading the backs of random books. Don’t you think publishing firms would like to secure exclusive deals with the major book retail stores saying that they’ll provide ‘advance copies’ of ‘popular books’ if they promise to never sell plagiarized copies (and since the first publisher is going to have first crack at selling the book, its easy to show who really owns it)?
So the only problem here is the fear of some Big Bad Publishing company who steals the works of unknowns before they’ve had a chance to publish it at all, likely when the young author sends them his or her initial draft. I doubt any author at all would risk sending in any manuscripts if that were the rule rather than the exception. The obvious response, from a legitimate company eager to do honest publishing work, would be to offer to agree to sign a contract (just because IP laws are gone doesn’t mean we can’t have contracts) stating that they’d agree to give the author payment if they decide they like the manuscript enough to publish.
Such a company would steal up all of the good authors before the competitors could even blink, if it came to that. And what does or doesn’t constitute a breach of this contract can be left up to courts to decide, if the fear of a tarnished reputation alone wasn’t incentive enough for the publishers to play nice. The free market is more resourceful than you think.
So what creativity is stifled in the current environment? Not much, really, because IP laws don’t really have a meaningful impact or influence. The police don’t come to my door and drag me away if I’m a 16-year-old girl writing about romance between Harry Potter and his friends and sharing it with my friends. If I sell a story about graceful elves and steely-eyed dwarves, Tolkiens ancestors (or whoever owns the rights to his work nowadays) don’t sue me for copyright infringement. The fact that IP laws are only really capable of stopping visible actors like publishing firms and respected authors (who, as I’ve already explained, have little incentive to begin with) means creativity thrives and publishers have plenty of books to sell.
“In Mr. Kinsella’s Libertarian Party you have to pay market rate for cobblers, roofers, plumbers, painters, electricians, and other workers but authors labor for the love of their art alone.”
Most do today. Few authors, or other artists besides, make it out of their one-bedroom apartments by writing books alone.
“If I’m CEO of Dupont and we spend $100 billion over 10 years researching the cure for cancer how can we have any hope of making back what we invested, much less earn a profit, if other companies can reverse engineer the product without investing anything?”
Please find a better example than pharmaceutical R&D, or a cure for cancer for that matter. The majority of the time and money spent on medical research is spent thanks to the regulatory climate. And nobody is going to spend 10 years researching a cure for cancer any time soon because finding a ‘cure’ with our current level of knowledge is slim at best until you get into discussions on nanorobotics.
But okay, suppose its not pharmaceuticals or cancer. What do doctors do? Well, the same things they’ve always done. When a nutritionist from a health clinic wants to serve his or her clients better, he does what every nutritionist does: research. He collaborates with fellow nutritionists, looks for research from other nutritionists, or he might fund or preform some hard research himself. He might ask a biologist what happens when you feed a mouse a high xxx diet in response to a customer doing the same and getting a bad result, and go on to learn the importance of not eating xxx. Or whatever. Several smaller steps, with an understanding of the whys developed over a long period of time and experience. I would know, having an uncle who explained just that to me as a nutritionist himself (general nutrition tends to lend itself to the incremental model since most of it is either common knowledge of the field or the product of community-wide consultation and discussion).
These incremental steps are far more useful than the gigantic, 10 year research programs the pharmaceuticals do. For one, feedback is immediate: you know almost immediately whether telling people to go on a low carb diet is a good idea or not based on the results of your advice (quickly weeding out fraudulent ideas or poor research), so you can immediately begin to take the next step. Second, it’s collaborative rather than isolated: you can integrate the up-to-date knowledge of the entire scientific community into your service rather than use research that you made over the last ten years or so to make a product for another 5 or so.
Big Pharma only exists because when big investments are mandatory like they are in the current medical regulatory climate (just getting the permission of the FDA to sell your drug is a financial and regulatory nightmare in and of itself) and big returns are likewise guaranteed by exclusivity laws, big companies tend to perform well doings so. Once we remove the regulatory barriers and the reward system, we’re likely to see several smaller, incremental steps in health research.
Look, this may have come across as long-winded and maybe it didn’t respond to your main point, but when you ask a whole bunch of what ifs or throw a bunch of examples out there to try and show that it doesn’t work in the ‘real world’, I’ll respond to the examples. You could find a hundred or so more examples and you’re bound to find an industry or whatever that I can’t provide an immediate answer for (and may never be able to either). But that doesn’t prove much. You can claim all you want that it ‘doesn’t work in the real world’ but what you’re really saying is that the market hasn’t had enough time to adapt to the new climate enough so that the solution is obvious.
Here’s how I think of it: some people want to write and thus sell books; other people want to read and thus buy books. There’s incentive on both sides, so it will happen whether you can see how or not.
Comment by Rudd-O on 25 May 2011:
> When I build a chair I am paid for my time even if the materials are not mine. If I am not paid for building chairs it is called “slavery.”
When you build a chair you are working with materials that are either yours or were legitimately given to you and you exclusively by someone else. No such thing happens when you think of something new.
Comment by Chesterton on 26 May 2011:
How does this approach to IP apply to music and movies which are pirated for sale on street corners or distributed through the internet? Or is this something different? I don’t understand why it should be legal for someone to make a copy of a DVD, then post it online for someone who didn’t purchase it to view it? Shouldn’t the people who risked their money to make the movie be entitled to a profit through the legal sale of that movie? And isn’t the bootlegging a form of theft of potential sales from the maker of the movie?
Comment by Augie on 26 May 2011:
The problem with the natural law and free market theories is they only work in an ideal economy where everyone is kind and honest.
If I publish a book and hoped to give seminars a bigger fish can come and modify my book without recourse. He can then plan 25 local seminars and take your idea and product because he has more money to do so quicker–thereby depriving you of your work and future hopes.
So we have the great mediator, the government and the courts, to act as the threat against pirates. The problem with this the little guy is still the loser because he cannot afford to fight a bigger challenger–only to scare him with letters from an attorney with the threat of force.
Comment by Kevin B on 27 May 2011:
“The problem with the natural law and free market theories is they only work in an ideal economy where everyone is kind and honest.”
But government works best when everyone is unkind and dishonest.
Hey! I can say stupid things too!
Comment by Stephan Kinsella on 27 May 2011:
James Madison Fan:
“The concept that IP is tainted due its abuse by ancient monarchies is absurd.”
My argument against IP does not rely on facts about the historical origins, but there is certainly nothing wrong with being informed of and thinking about such origins. It is illuminating and informative, and can at least show that the remnants of the old system ought to be closely scrutinizes–as I’ve done.
“The origins of Law aside, Mr. Kinsella avoids discussing the value of labor. When I build a chair I am paid for my time even if the materials are not mine. If I am not paid for building chairs it is called “slavery.” Even if Mr. Kinsella is not willing to admit my story, characters, and setting have value he cannot dispute the value of the time I spent writing the story.”
There is no property right in labor, nor in value. see http://blog.mises.org/16570/cordato-and-kirzner-on-intellectual-property/ and http://blog.mises.org/16426/hume-on-intellectual-property-and-the-problematic-labor-metaphor/ and http://blog.mises.org/11042/rand-on-ip-owning-values-and-rearrangement-rights/ and http://blog.mises.org/3229/patents-and-utilitarian-thinking/
“Based on Mr. Kinsella’s logic the full value of my time is the purchase price of the average hard cover book or paperback novel (around $20 and $6 respectively)”
Money is not a measure of value. But in any case your time is worth whatever you can get from it.
” and for this scant sum you get full rights to my work even to the point of removing my name, plagiarizing it, and selling it as your own.”
As Benjamin Tucker said, “You want your invention to yourself? Then keep it to yourself.” http://c4sif.org/2011/04/mcelroys-contra-copyright-again/
You can keep your ideas to yourself. If you need to reveal them to the world for some monetary or psychic profit, then others now have this information.
” In Mr. Kinsella’s Libertarian Party you have to pay market rate for cobblers, roofers, plumbers, painters, electricians, and other workers but authors labor for the love of their art alone.”
I’m a libertarian, but not a Libertarian (i.e. member of the LP).
“He also fails to address recouping investment on Research and Development. If I’m CEO of Dupont and we spend $100 billion over 10 years researching the cure for cancer how can we have any hope of making back what we invested, much less earn a profit, if other companies can reverse engineer the product without investing anything? Great risk must yield great reward to justify the investment. As a stock holder and a businessman this is axiomatic.”
I don’t see a justification here in these factual assertions for the state granting monopolies to permit the holders to stop competition.
Chesterton:
“How does this approach to IP apply to music and movies which are pirated for sale on street corners or distributed through the internet?”
In my view, such copies are not a violation of anyone’s property right. It’s just competition on the market.
“I don’t understand why it should be legal for someone to make a copy of a DVD, then post it online for someone who didn’t purchase it to view it?”
The question is why should it be legal? It’s not violating any property rights.
“Shouldn’t the people who risked their money to make the movie be entitled to a profit through the legal sale of that movie?”
No one is entitle to a profit.
” And isn’t the bootlegging a form of theft of potential sales from the maker of the movie?”
It’s only theft if the first party has a property right in “potential sales.” But he does not have property rights in money owned by potential customers.
Comment by Jeff Galt on 27 May 2011:
1) Bastiat’s quote undermines the author’s argument. Note that step #1 in the Bastiat cycle of creation requires the creator obtain a profit as an inducement to create. That profit opportunity diminishes as the idea is disseminated to the broader public until it has no value (only scarcity creates value). Since an idea, especially given the information technology available today, can be disseminated virtually instantaneously, absent some regimen for protection of IP, there is no opportunity to profit from an idea. Without the opportunity for profit, Bastiat’s cycle comes to a crashing halt.
2) The author’s cost benefit analysis is sorely lacking. By definition, the value of IP in the pharmaceutical industry is at least equal to the sum of all revenue earned by the industry (free persons don’t pay for something they don’t believe will provide at least that much in value in return). That is a very large number. On the counter side of the scale, the author implies that the current system suppresses innovation, yet offers no proof. Yet the proof should be readily obtainable. There are lots of countries int he world with no, or very weak, IP laws. China comes to mind immediately. If IP laws stifle innovation, one would expect China to be a leading source of new ideas. The reverse is observed. Those countries with the strongest IP laws have the greatest amount of innovation.
3) Finally, would the author agree that I have the right to engage in a contract with another person of the following type: I agree to disclose to that person an idea in exchange for (a) money AND (b) an agreement not to disclose the idea to anyone else. Furthermore, if that person discloses the idea to another person, would I have a cause of action against him and would the author support a court of law finding in my favor? Assuming the answer is yes, than the author has conceded that my idea is my property and can be protected via contract law. Note, the above scenario does not preclude a third party from independently creating the same idea.
Comment by Jeff Galt on 27 May 2011:
One more point: Is the author’s article copyrighted or are we free to plagiarize it? How about the Freeman itself?
Comment by Chesterton on 27 May 2011:
Please correct my inaccuracies here, but I understand the argument against ip as this: a musician receives his profit from the record company with which he has a contract, not from the consumer directly. Once distributed, those combinations of sounds are outside the head of the musician and in the ears and minds of the public. Our thoughts are our own to do with as we please, so if we choose to combine the sounds exactly as we heard them and offer the resulting music for sale under our name, we are free to do it?
Am I understanding this correctly?
Comment by golden trumpet on 27 May 2011:
“Susan Boyle, from Britain’s Got Talent, was prevented by copyright from singing on America’s Got Talent”
She is not the only one. She is the seen according to Fredrick Bastica
I and many others are the unseen.
I managed to get to the stage in front of the American’s got talent judges. I performed on my trumpet “Just a Gigalo” while juggling. UNforunately, they couldn’t use that song due to copyright. They wanted me to play When the Saints go marching in which is public domain. While I know the song, I never played it while juggling. Needly to say, without being able to practice I failed miserably on stage. Oh well, If you are going to fail, fail BIG and I don’t think I could have fail any bigger than in front of 18 million people
Comment by James Madison Fan on 27 May 2011:
Joe,
Law, like any tool, can be used for both good and ill depending on who is wielding it. An axe can chop wood as well as necks. Trying to discredit IP by linking it to abuse by Bloody Mary is as ludicrous as trying to discredit axes by linking them to abuses by her father, King Henry Tudor. The value of a tool resides in its use, not its abuse.
The reason the torrents haven’t had a drastic effect is most business is still done in “Brick and Mortar” stores and IP laws have been rules to apply to the Net (Napster Suit). At this point the torrents have essentially the same effect on sales as any other piracy and counterfeits because most people are still playing by the same rules they always have.
The reason books are a good examples is it is difficult to quantify owning a song much less an idea. A book is a contained unit that requires work to produce so there is less danger of getting lost in a nebulous philosophical debate about Einstein owning Relativity (He was a professor and got paid but this seems to elude some people).
I write a story. It takes me 1000 hours. I should be compensated. I am a self employed entrepreneur that is taking the chance someone will enjoy the product I created in this time, the same as the man that turns wood into a chairs. The value of the chair does not reside in the wood it is made out of. The value of the chair resides in the time and skill it takes to turn the wood into a chair.
Yes I am worried about someone making a bootleg copy and trying to pass it off as his own because without IP there is no such thing as plagiarism much less a “bootleg copy.” Without IP everything becomes public domain so you can’t claim to own a story you spent 1000 hours writing any more than I can claim to own the equation 2+2=4.
I’m definitely worried about the big bad corporations but they aren’t nameless or faceless. Ford Motor Company stole the idea for intermittent windshield wipers from Robert Kearns. Home Depot stole a saw safety device from Michael Powell. Disney stole the “Lion King” from the Japanese TV series “Kimba the White Lion.” (Simba/Kimba???) Even with IP theft of this nature is rampant.
You offer that the courts can decide breach of contract. This assumes the contract exists prior to the book being authored. Typically publishers don’t’ contract with authors. The authors write a story and submit it for publication. The Freeman works the same way. I submit an article and if they decide to publish it then I get paid, otherwise it is an exercise in creative writing. If 100 magazines like what I wrote then I get 100 checks. If a magazine publishes my article but doesn’t pay me, IP allows me to sue.
Please excuse me for cutting this short. I’m pressed for time. I’ll examine the rest of your excellent reply on Tuesday and try to address some of the other posts as well.
Comment by Michael Richards on 27 May 2011:
Actaully, after watching Korean Dramas I began to realize how movie companies could profit while still making their work free. Korean dramas basically advertise the product within the show and place those companies in an appealing way that easily meshes with the show’s theme. Also, at the end of the show they have banners which show the companies being advertised. Lastly, these shows are totally free to watch on Hulu.com
As for authors, there is an organization called kickstarter which allows authors of comics to have readers pre-pay to have the comic published. I can see the publishing field going in this direction with the absence of IP laws.
Lastly, on the right of the author to gain profits from their work I would like to point out that there is no such thing as rights to profit in any form of labor. This argument would state that all losses are immoral which is an absolute absurdity IMHO.
Comment by Stephan Kinsella on 28 May 2011:
Jeff Galt:
“1) Bastiat’s quote undermines the author’s argument. Note that step #1 in the Bastiat cycle of creation requires the creator obtain a profit as an inducement to create. That profit opportunity diminishes as the idea is disseminated to the broader public until it has no value (only scarcity creates value). Since an idea, especially given the information technology available today, can be disseminated virtually instantaneously, absent some regimen for protection of IP, there is no opportunity to profit from an idea.”
There is no basis for this claim. Entrepreneurs are creative and find ways to profit: first mover advantage, bundling with service, reputation effects. Your argument is that the profit is not “enough.” You have no grounds for this claim and cannot know what is enough. And you have no grounds for thinking that a state IP system will even increase this overall, or whether any possible increase is more valuable than the societal cost of the IP system.
“Without the opportunity for profit, Bastiat’s cycle comes to a crashing halt.”
One wonders why you posted this comment, not being rewarded in dollar terms.
“2) The author’s cost benefit analysis is sorely lacking. By definition, the value of IP in the pharmaceutical industry is at least equal to the sum of all revenue earned by the industry”
Revenue is a dollar or money measure. Money is not a measure of value. See Mises. You are making a category mistake.
“If IP laws stifle innovation, one would expect China to be a leading source of new ideas. The reverse is observed. Those countries with the strongest IP laws have the greatest amount of innovation.”
Of course these are ceteris paribus propositions and there is no reason whatsoever to think IP law is the explanation for the difference in US and Chinese innovation esp. since many other obvious explanations are at hand such as differences in history, culture, and overall property rights systems.
“3) Finally, would the author agree that I have the right to engage in a contract with another person of the following type: I agree to disclose to that person an idea in exchange for (a) money AND (b) an agreement not to disclose the idea to anyone else.”
Yes,but this does not get you IP. I discuss this in detail in my Against Intellectual Property. IP binds third parties. Contracts do not.
Further, no one would agree to such ridiculous terms in purchasing a book or music.
“Furthermore, if that person discloses the idea to another person, would I have a cause of action against him and would the author support a court of law finding in my favor? Assuming the answer is yes, than the author has conceded that my idea is my property and can be protected via contract law.”
This is complete confusion. Just b/c I have a right to sue you for breach of contract does not mean there are property rights in ideas. where does this raw assertion come from?
“One more point: Is the author’s article copyrighted or are we free to plagiarize it? How about the Freeman itself?”
I can’t speak for Freeman but yes, my article is copyrighted: the federal gov’t automatically gives me a copyright in it, due to the system you apparently favor; and provides no way for me to relinquish it. I did not assign it to the Freeman but instead gave them an implicit license to publish it by submitting it to them. I would relinquish my copyright that your government gave me, if i coud, but I cannot. All I can say is you are free, in my view, do do what you want with it. Incidentally, plagiarism has nothing to do with copyright. You here display the arrogant ignorance I have seen literally hundreds of times on the part of IP advocates. You really have no idea what you are talking about yet you have a vociferous opinion.
Chesterton:
“Please correct my inaccuracies here, but I understand the argument against ip as this: a musician receives his profit from the record company with which he has a contract, not from the consumer directly. Once distributed, those combinations of sounds are outside the head of the musician and in the ears and minds of the public. Our thoughts are our own to do with as we please, so if we choose to combine the sounds exactly as we heard them and offer the resulting music for sale under our name, we are free to do it?
Am I understanding this correctly?”
Well that is not the argument and it has nothing to do with the where the musician gets his profit from; that’s up to him. The idea is that information is not property; there is nothing wrong with learning, emulating, copying, or competing.
James Madison:
“I write a story. It takes me 1000 hours. I should be compensated.”
I disagree completely. this is unlibertarian, un-free market. You have no right whatsover to be compensated. this is the leftist, socialist, entitlement mentality. If you want money figure out a way to get it. that’s your job, not the state’s.
” I am a self employed entrepreneur that is taking the chance someone will enjoy the product I created in this time, the same as the man that turns wood into a chairs. The value of the chair does not reside in the wood it is made out of. The value of the chair resides in the time and skill it takes to turn the wood into a chair.”
Things do not “have value.” Value does not “exist.” It is not a substnace. It is not owned. Value is subjective. Human actors value things, and they demonstrate this by their action. You are talking pseudoscientific nonsense.
“Yes I am worried about someone making a bootleg copy and trying to pass it off as his own because without IP there is no such thing as plagiarism much less a “bootleg copy.””
Plagiarism has nothing to do with IP. I am sure you would whine about someone copying and selling “your” story even if they keep your name on it, right? So it’s not plagiarism that concerns you. So why bring it up?
” Without IP everything becomes public domain so you can’t claim to own a story you spent 1000 hours writing any more than I can claim to own the equation 2+2=4.”
Right!
“I’m definitely worried about the big bad corporations but they aren’t nameless or faceless.”
Being worried is not an argument.
” Ford Motor Company stole the idea for intermittent windshield wipers from Robert Kearns.”
You cannot steal ideas because they are not owned. Kearns still had his idea.
Comment by Sheldon Richman on 29 May 2011:
From FEE’s inception, Leonard Read had an open-reprint policy, no specific permission required. As Stephan points out, one cannot renounce a copyright under the law. Plagiarism, as he also says, is different from copyright infringement. It’s the misrepresentation of someone else’s work as one’s own. If I publish The Fountainhead with Ayn Rand’s name on it, I engage in no misrepresentation whatever. One can plagiarize without violating copyright by, say, using a brief passage of someone’s work. Without attribution it is plagiarism. With attribution it is “fair use” under the copyright laws. The freed market would have many nonviolent ways to deal with plagiarists.
Comment by Julien Couvreur on 30 May 2011:
How do you make money creating stuff without IP? By being ingenious.
In the case of a cancer-curing drug, I would consider bringing the patients into a clinic for a month. The drugs would be dispensed there, patients would be under a confidentiality agreement, and competitors couldn’t get their hands on the formula or a sample. This is the equivalent of building a wall around a drive-in movie theater. Yes, this is costly, but so is IP. Also, entrepreneurs would compete to find a cheaper and more ingenious solution.
Comment by James Madison Fan on 31 May 2011:
Rudd-O,
The value of the chair is not in the wood and fabric that makes up the chair. The value of the chair is in the craftsman’s skill and intricacy of the design. The value of the story is not in the ink an paper it is printed on. It is in the craftsmanship of the person writing the story.
There need not be a physical byproduct to warrant payment. To my knowledge Michael Eisner has never drawn a cartoon, acted or directed a movie, or taken a ticket at a Disney. If physically tangible results are required to earn a paycheck then managers should earn less than the people they supervise.
Comment by Joe Schmoe on 31 May 2011:
“Ford Motor Company stole the idea for intermittent windshield wipers from Robert Kearns.”
Were we better or worse off as a result of a large corporation manufacturing a good idea? No offense, but if Robert couldn’t mass manufacture the idea, it doesn’t help anyone if he just sits on the copyright and doesn’t do anything with it. If he could mass manufacture it, why didn’t he? You could probably blame the company for some underhandedness, sure, but I’m not going to make a victim out of the little guy purely fore being the little guy.
“Home Depot stole a saw safety device from Michael Powell.”
See above.
“Disney stole the ‘Lion King’ from the Japanese TV series “Kimba the White Lion.” (Simba/Kimba???)”
And they also allegdely ‘stole’ the ‘idea’ for Lost City of Atlantis from another old Japanese TV series. They also employed a bunch of people and made a good movie that audiences enjoyed. Same general storyline? I’ll hand you that. Could/would/did the Japanese have made an American movie out of their show? No. But Disney did, and it spawned a sequel to boot.
I suppose we should be wary of the next time someone writes about graceful elves with pointy ears. Look, every single author alive plagiarizes most of his/her ideas, his/her writing techniques, and his/her plot conventions off of others, just he/she draws influence from enough different authors that its hard to pin it down specifically.
“Even with IP theft of this nature is rampant.”
I fail to see the problem. Your idea doesn’t help anybody if it just sits in your head or on the drawing board. Those who don’t understand businesses don’t seem to understand that an idea doesn’t make a product that people want to, or are even able to, buy. Ask any video game developing company how much a ‘good game idea’ is worth: they’ll say its worth absolutely nothing whatsoever, because a good game idea doesn’t make a good game by itself.
Re: “If you want money figure out a way to get it. that’s your job, not the state’s.”
Comment by Joe Schmoe on 31 May 2011:
Look, to claim that an idea is worth something is betrays a fundamental ignorance of what businesses generally do. I will accept the argument that photocopying someones book and then selling it doesn’t add much value and deprives the author of a sale. But then again, so do second-hand sales, so clearly we consider physical copies a right to ownership. But the reality is that ideas are worth nothing.
Even in pharmaceutical R&D, ideas aren’t worth anything. To make a drug out of an idea that pops into someones head one day requires a significant investment in time and money. The idea itself is worth little to have, since it often comes as the product of a flash of inspiration, or perhaps a hint of a possibility in some scholarly text perused out of whatever reason. The money spent in R&D confirming the idea is paltry, but leaps and bounds in value beyond the idea.
To say that because the idea came first, it is the most important is fallacious. Billions of ideas never reach the hands of consumers, or they do but many years later under the efforts of a completely different individual.
Ask any major video game developer how much a ‘good game idea’ is worth. The answer? They’re a dime a dozen. Everyone has them, everyone thinks their idea is amazing and great and just what everyone needs for a perfect game, and most of them are wrong, because they haven’t made it work yet. When you take a product all the way from a theoretical stage through to a consumer-side sale, then you can talk about how much ideas are worth.
Sure, ideas are pretty instrumental; without them the product would never have been made. There are literally hundreds of other factors you could say the exact same thing about, such as:
-Marketing; you need to inform the consumer that your product exists and justify why it is worth it
-Manufacturing; you need to make it, and with that comes a nightmare of logistical hassles
-Distribution; you need a system in place (or you need to make one) that gets the product to the consumer efficiently and conveniently
All actors involved in making, marketing, and distributing a product or service perform an essential role; even the torrenter who scans your book online is providing a valuable service to those who can’t obtain it another way. I’ll admit to torrenting a few books that I couldn’t find any other way a few years back (despite the fact that locating the torrent itself took a few hours), but the proliferation of online merchants these days means that finding a book and getting it shipped to me within a few days is not out of the question, and Amazon.com is far more convenient than scanning through list upon list of the fifteenth torrent website that day.
Movies these days might come with a convenient digital copy to save onto your laptop for use away from home, and many television broadcasting companies are moving their shows online to appeal to the hundreds of thousands looking for on-demand programming. Consumers want convenience, and if that need is not met by the company who sells the product they’re looking for they’ll find someone else who will, and if they get it for free, well, that’s just a bonus.
Because IP laws are not very enforceable due to the existence of the internet, we see companies being forced to adapt to the needs and desires of their consumers.
Comment by Mike on 1 June 2011:
Weak. The principle of private property extends to intellectual property also. It’s origins are quite irrelevant, it’s implementation also. Kings can make use of natural law as easily as commoner.
PRINCIPLES determine legitimacy of concept, not who uses them.
Next you’ll say plagiarism is justified by the same (dubious) theory.
Comment by Sheldon Richman on 1 June 2011:
@Jeff Galt, note what Levine and Boldrin write:
“Historically, intellectual monopoly in pharmaceuticals has varied enormously over time and space. The summary story: the modern pharmaceutical industry developed faster in those countries where patents were fewer and weaker…. [I]f patents were a necessary requirement for pharmaceutical innovation, as claimed by their supporters, the large historical and cross-country variations in the patent protection of medical products should have had a dramatic impact on national pharmaceutical industries. In particular, at least between 1850 and 1980, most drugs and medical products should have been invented and produced in the United States and the United Kingdom, and very little if anything produced in continental Europe. Further, countries such as Italy, Switzerland, and, to a lesser extent, Germany, should have been the poor, sick laggards of the pharmaceutical industry until recently. Instead, the opposite was true for longer than a century.”
Comment by Sheldon Richman on 1 June 2011:
@Mike: “PRINCIPLES determine legitimacy of concept, not who uses them.” Mr. Kinsella already addressed that. Look above.
Comment by James Madison Fan on 1 June 2011:
Chesterton and Augie,
Exactly.
Comment by Tim C. on 1 June 2011:
This is just another example of just how intellectually paralytic IP Marxist like Mr. Kinsella are. The state does not grant rights, it recognizes them and protects them. Even David Nolan said that anarchism is libertarianism taken to the point of being unworkable
Comment by Stephan Kinsella on 1 June 2011:
Tim, you don’t need to be an anarchist to oppose IP. And it is not quite precise to say the state does not grant rights but only recognizes and protects them. What the state does is grant and protect positive rights. Some of these rights are compatible with our libertarian or natural rights, and some are not. For example a state law against murder is roughly compatible with our true rights, in form if not in execution. But a state law guaranteeing a right to medical care is not. So the mere fact of existing state positive law does not in and of itself tell you whether that law is justified, whether the underlying right implicit in that positive law is a genuine libertarian right, or a false state-invented right. So your observation proves nothing; the debate is still whether state positive law re copyright and patent are or are not compatible with our libertarian rights. You need an argument, not a statute, to prove this.
Comment by Anonymous on 1 June 2011:
Mr. Kinsella,
Since most laws have similar origins I didn’t see any purpose in bringing up the abuses of a woman who has been dead nearly half-a-millennia. It appeared to me that your intent was to “poison the well” against IP as the child and tool of tyranny whereas I see IP as a necessary defense against plutocratic corporate tyranny.
I often wonder if Ludwig was against IP why the Von Mises Institute holds copyrights?
Mr. Kinsella wrote: “There is no property right in labor, nor in value.”
Yes but Property is only one of three of Locke’s criteria. Failing to pay for labor is a violation of my right to Liberty, not Property just as murder is a violation of my right to Life rather than Property.
The typical employee trades his time (Liberty) for money (use to buy Property). If you can’t justify infringing on my right to Property without compensation (theft) then you can’t justify infringing on my right to Liberty either (slavery).
Mr. Kinsella wrote: “Money is not a measure of value.”
I know value is subjective but real world examples make it easier to conceptualize. Most people deal with concrete numbers so it makes the discussion more accessible.
Mr. Kinsella wrote: “But in any case your time is worth whatever you can get from it.””
I agree. Where we disagree is in the mechanism and if it is compatible with Libertarian doctrine.
In response to the article by Ms. McElroy while ideas may be in abundant, good ideas are not. “Common sense is quite rare.” – Voltaire
It is a good thing Shakespeare and Bach did not adhere to Mr. Tucker’s writings or the world would be a far more wretched place.
You definition of a monopoly is too broad. A monopoly exists when there isn’t a substitute for a good or service so the company can set market price. If I Copyright my Fantasy story there are plenty of other Fantasy novels out there so competition is alive and well. McDonalds has a Trademark for the name McDonalds but there are plenty of places to buy burgers so that doesn’t qualify either. Pfiser has a Patent on Viagra but there were other ED treatment before it was discovered so while it was a very popular it wasn’t a monopoly. In truth this virtual monopoly prompted a dramatic increase in R&D into other ED treatments resulting in a wide range of products including LaVitra, Cialis, MUSE, and others. As such IP fostered discovery and competition rather than hindering it. This is not to say that IP cannot create monopolies but it is the exception rather than the rule. .
Comment by James Madison Fan on 2 June 2011:
The above is mine. Something happened when I posted it yesterday and it appears my name didn’t populate and the formatting was jumbled.
Comment by Robby on 2 June 2011:
@ Mike, You say “Weak. The principle of private property extends to intellectual property also.” However, you fail to realize that property rights are presupposed by ownership. In that sense, if I exchange my rightfully owned property, say a book I wrote, for some something I value more, say $50, then I no longer own the book but rather the $50. In other words, if I can still claim ownership to the book I wrote, can the person I exchanged with still claim ownership to the $50?
Comment by Anonymous on 2 June 2011:
Mr. Kinsella,
Follow up to reply to Jeff Galt and I dated 28 May:
Your reply to Mr. Galt is evasive and patronizing. .
You simply dismiss a valid observation as ceretis paribus rather than addressing a perfectly valid observation that seriously wounds your stance.
Mr. Galt’s point is that greed runs Capitalism so why are you offering that IP is a special case where altruism will replace greed as a motivator?
Both Mr. Galt and I have provided real world evidence that protecting IP is beneficial while I have yet to see similar evidence from your side demonstrating how IP is harmful besides two musicians that were unconvinced by having to modify their choice of song.
I’m glad you are happy to relinquish the copyright. Are you going to return the money they paid you, if any? Using your criteria you don’t own this article so it doesn’t make sense for them to pay for it. Same with all your other writing as well. The satisfaction of contributing to the public debate should be food for the soul even if it won’t put food on the table.
Information may not be property but that doesn’t mean it should be free. I spent a fair amount going to school to get the information between my ears and I get paid handsomely to share it. The only thing that separates me from the guy making minimum wage digging ditches is the information I’ve accumulated and my ability to use it. That’s the difference between skilled and unskilled labor.
I can name a couple dozen jobs that provide little or nothing besides information. Should Astronomers work for free because they don’t provide a physical product? How about Archeologists and Paleontologists? I can’t think of many uses for a Incan pot shard or dinosaur coprolites.
The hostility and ad hominem were not appreciated.
I fail to see how offering that getting paid for doing a job demonstrates a “leftist, socialist, entitlement mentality.” I didn’t say the government should pay me for the work or disinterested parties. If you want to read the book then you should pay for it the same as you would for any other goods or service I sell or perform. Please avoid the temptation to put words in my mouth.
Offering that the chair has value and labor has value is not “pseudoscientific nonsense.” You like to hide behind esoteric philosophical constructs and I’m trying to reintroduce you to the real world. In this economy we typically exchange products for money. When hen you turn raw lumber into a chair those that don’t live in an ivory tower say you have added value to it. I’m here to discuss the validity of IP not “whine” about argot.
Comment by Stephan Kinsella on 3 June 2011:
Anonymous [James Madison Fan?]:
“Since most laws have similar origins I didn’t see any purpose in bringing up the abuses of a woman who has been dead nearly half-a-millennia. It appeared to me that your intent was to “poison the well” against IP as the child and tool of tyranny”
I assume you mean Rand. She is still a key figure in the pro-IP views of many libertarians. IT’s beyond me what there is to criticize in my decision to discuss her views.
“whereas I see IP as a necessary defense against plutocratic corporate tyranny”
I don’t see any argument here, just confusion and assertion. Corporations in fact use IP to become larger and more anti-competitive.
“I often wonder if Ludwig was against IP why the Von Mises Institute holds copyrights?”
Mises was not against IP, nor was he for it AFAIK. As for your latter question one tires of answering it, as it is both disingenuous and ignorant. First, whether or not the Mises Institute (or I, or Sheldon) hold copyrights has nothing to do with whether copyright is justified. It’s not as if we have some metaphysical power to alter the moral fabric of the universe by our choices and actions. Second, as I explain here http://blog.mises.org/9240/copyright-is-very-sticky/
, copyright is automatic. People have copyright because your state gives it to us and won’t let us get rid of it. Third, Mises puts all its work up as unencumbered as is possible given your state’s system via the creative commons attribution only license. So you don’t know what you are talking about.
http://blog.mises.org/9240/copyright-is-very-sticky/
“Mr. Kinsella wrote: “There is no property right in labor, nor in value.”
Yes but Property is only one of three of Locke’s criteria. Failing to pay for labor is a violation of my right to Liberty, not Property just as murder is a violation of my right to Life rather than Property.”
Locke was wrong to say you own labor, or that you need to in order to own property. see http://blog.mises.org/16426/hume-on-intellectual-property-and-the-problematic-labor-metaphor/ and http://blog.mises.org/16570/cordato-and-kirzner-on-intellectual-property/
Failing to pay for labor–this is confused. A labor contract is a one way transfer of title to money, conditioned on an event (the performance of a certain action (“labor”) by the recipient). If you perform the specified action then the title to the money transfers to you; at that point you own the money. If the other party refuses to hand it over he is stealing your money, not your labor.
“The typical employee trades his time (Liberty) for money (use to buy Property). If you can’t justify infringing on my right to Property without compensation (theft) then you can’t justify infringing on my right to Liberty either (slavery).”
This is crankish. You can tell by the initial caps in Liberty and Property etc.
“I agree. Where we disagree is in the mechanism and if it is compatible with Libertarian doctrine.”
Why do you capitalize Libertarian? We are not talking about the LP’s platform.
“In response to the article by Ms. McElroy while ideas may be in abundant, good ideas are not. “Common sense is quite rare.” – Voltaire”
More equivocation. By “scarce” we mean economic scarcity, i.e. rivalrousness. Good ideas may be rare but they are not rivalrous.
“It is a good thing Shakespeare and Bach did not adhere to Mr. Tucker’s writings or the world would be a far more wretched place.”
No idea what you are talking about.
“If I Copyright my Fantasy story”
You can’t copyright anything. it’s not a verb. It’s a right granted automatically by the state, just like your right to receive medicare. YOu don’t “medicare right” something, do you?
“McDonalds has a Trademark for the name McDonalds but there are plenty of places to buy burgers so that doesn’t qualify either.”
What has TM to do with copyright?
“In truth this virtual monopoly prompted a dramatic increase in R&D into other ED treatments resulting in a wide range of products including LaVitra, Cialis, MUSE, and others.”
How in the world do you know?
And so what? How does that justify the state granting monopolies that protect the recipient from competition and infringe on others’ property rights?
Anonymous:
“Mr. Galt’s point is that greed runs Capitalism so why are you offering that IP is a special case where altruism will replace greed as a motivator?”
I have no idea what you are talking about or why you crankishly capitalist Capitalism or how these incoherent disconnected assertions justify the state granting monopoly privileges to protect the recipient from market competition.
“Both Mr. Galt and I have provided real world evidence that protecting IP is beneficial while I have yet to see similar evidence from your side demonstrating how IP is harmful besides two musicians that were unconvinced by having to modify their choice of song.”
You have no evidence at all; you are forgetting Bastiat’s lesson to consider the cost of the unseen too. In fact the empirical studies that exist all run against your pro-IP empiricism: see http://www.stephankinsella.com/2009/07/02/yet-another-study-finds-patents-do-not-encourage-innovation/
“I’m glad you are happy to relinquish the copyright.”
Your state won’t let me relinquish it.
” Are you going to return the money they paid you, if any?”
Disingenuous question. Irrelevant. do you think I, Stephan Kinsella, by my own actions, have some ability to change moral law?
“Using your criteria you don’t own this article so it doesn’t make sense for them to pay for it.”
I don’t own the article. No one does. Ideas are not ownable. They paid me because they agreed to transfer money to me if a certain condition was fulfilled (in this case, my submitting a file). I don’t need to own the information that was submitted to fulfill the condition. The condition could have been that I tell them my favorite number. Does that mean I had to own the number 4 in order to get the money promised? YOu are confused about contracts.
“Information may not be property but that doesn’t mean it should be free. I spent a fair amount going to school to get the information between my ears and I get paid handsomely to share it. The only thing that separates me from the guy making minimum wage digging ditches is the information I’ve accumulated and my ability to use it. That’s the difference between skilled and unskilled labor.
“I can name a couple dozen jobs that provide little or nothing besides information. Should Astronomers work for free because they don’t provide a physical product? How about Archeologists and Paleontologists? I can’t think of many uses for a Incan pot shard or dinosaur coprolites.”
None of these disjointed, incoherent assertions or questions justifies state grants of monopoly privileges that use the force of the state to protect the lucky recipient from market competition.
Comment by Robby on 3 June 2011:
Excellent points Mr. Kinsella.
Comment by John Zube on 4 June 2011:
Chris Anderson, FREE, The Future of a Radical Price, Random House Business Books, 2009, was a bestseller and also offered, slightly condensed, free online. It makes a very good case for offering many ideas, texts and even things free or at a ridiculously low prices. It pays, indirectly.
The arguments pro & con copyrights & patents have been going on for a long time. Perhaps they can only be brought fast to a conclusion, like many other libertarian controversies, by expressing them in another format, that of digitized “argument mapping”. Details are online but, to my knowledge, no libertarian argument maps are as yet online, although they provide an excellent enlightenment opportunity.
To spread good ideas,lastly to the benefit of everyone, and also the utilization rate of talents, my father advocated since the 1930′ties, an Ideas Archive and a Talent Centre, as a proper market for both, that would bring demand and supply in these fields together. The most important ideas and talents, in our time, are the libertarian ones, in my view, and thus the libertarian versions should be started first. The tools for this exist and they are already very affordable. E.g. portable 1TB drive memories for less than $60. I offer three books on the subject, free as email attachments, until they appear on a disc or online. Also the draft of a 2010 book of mine on how to market libertarianism better than was done so far. jzube@acenet.com.au
Among the libertarian ideas to be promoted are those on how to earn more money without making use of copyrights and patent laws. A digital anthology on all these alternatives is long overdue. jzube@acenet.com.au – I have no longer a right to the above website it was nevertheless continued by my website provider. Some of my material is on http://www.butterbach.net and more on http://www.panarchy.org
Comment by Eiji Wolf on 5 June 2011:
Taken into a logical extreme: what about schools?
They teach things that were – at one time or another – created, discovered etc.
Would a school have to pay roaylties to Pythagoras’ or Newton’s relatives if they want to teach basic maths or physics?
The idea of owning ideas is, in this context, truly ridiculous.
On the other hand, let’s say that someone takes Adam Smith’s Wealth of Nations and (slightly) edits it to better fit the contemporary knowledge base and thinking, changes the title and puts their own name on it… most people would consider it plagiarism (and IP advocates – theft); how about that?
Or what about taking a whole opus (book, symphony…) and only changing the title and author’s name? Would natural law consider this a fraud, theft, or harmless behaviour? And why?
I’m truly stumped, as similar examples seem to contradict each other…
Comment by Stephan Kinsella on 5 June 2011:
John Zube: for a collection of ideas as to how to make money in the face of easily copyable information: see: Innovations that Thrive without IP; Funding for Creation and Innovation in an IP-Free World; Examples of Ways Content Creators Can Profit Without Intellectual Property
Comment by Wendy McElroy on 8 June 2011:
Typically excellent job Stephan. Thank you.
Pingback by Wem nützt das Urheberrecht? | on 12 June 2011:
[...] gegen den staatlichen Schutz von sogenanntem Intellektuellen Eigentum (Intellectual Property, IP) fasst Steven Kinsella in der aktuellen Ausgabe des „Freeman“ zusammen. Ausgehend von des Geschichte des IP als Instrumente der Günstlingswirtschaft und politischen [...]
Pingback by Does government protection of intellectual property harm the free market? | NetRight Daily on 13 June 2011:
[...] were favored by the governing class. As law professor Eric E. Johnson noted in a recent article in The Freeman, “The monopolies now understood as copyrights and patents were originally created by royal [...]
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Comment by Tim Shetler on 22 June 2011:
I just wanted to say that I thought this was a very interesting – that is to say, thought-provoking – article. Though I can’t say I am convinced that we should do away with patent and copyright laws, after reading the article it seems clear enough that so-called intellectual property rights are not rights in the proper sense.
I wanted to throw this out there, as no-one seems to have mentioned it yet. A lot of classical music was written before there were copyright laws. Composers borrowed very freely from each others’ works, and it often happened that the newer work was better received than the old. It certainly seems that copyright laws would have put a damper on much of this creativity.
Here’s something else that comes to mind. What is so special about having an idea first? Not necessarily originality. Not necessarily the work involved. Usefulness? Again, no difference. The only thing I can think of is that the sooner an idea is developed the more people there are who haven’t died yet and can still benefit from it.
Pingback by Patents and Copyrights Run Counter to Free Market Principles on 30 July 2011:
[...] Read: How Intellectual Property Hampers the Free Market [...]
Comment by Wakana Sakai on 5 October 2011:
This article is correct in it’s reasoning. To all of those who disagree with it’s reasoning, here is MY response. & before you ask, I don’t care if anybody else uses this response, but only if they agree to NOT try to stop OTHERS (example = me) from using this response.
People that make a product or provide a service have the right to sell or rent their product or service. However, they can NOT FORCE anybody to own or use their product or service.
Comment by Wakana Sakai on 5 October 2011:
I wish that there was a way for us to edit our own posts in the comments section. I hope that this site adds a way to do so, perhaps by identifying the ISP address that a commenter uses & giving that ISP address 30 minutes to edit their own comments.
Anyway, here’s a few more things that I will add.
Learning information from a school/college/university is NOT the ONLY reason to go to a school/college/university, because that information can be found somewhere else for free, such as online. The OTHER reason that people go to a school/college/university is to earn a diploma/degree/whatever. Somebody cannot get a diploma/degree/whatever online for free from a LEGITIMATE school/college/university. & an HONORARY diploma/degree/whatever is not the same thing as an earned diploma/degree/whatever.
An author has the right to send a writing/book/whatever to a publisher. The writing/book/whatever has to be either be UN-PUBLISHED or be something that that author has the right to have RE-published.
If an author does that, then if that publisher decides that they want to publish the writing/book/whatever that that author has sent them, then that publisher has the right to offer to sign a contract with that author that says that they agree to pay that author if that publisher decides to publish the writing/book/whatever that that author has sent them.
In this situation, plagiarism is discouraged by the fact that the writing/book/whatever is either UN-PUBLISHED or is something that that author has the right to have RE-published. There is NO way for anybody to plagiarize an UN-PUBLISHED writing/book/whatever. Therefore, if anybody sends a PLAGIARIZED writing/book/whatever to a publisher & claims that THEY are it’s author or that they have the right to have it re-published, the truth will eventually be exposed.
Comment by John on 25 November 2011:
Stephan Kinsella “No one is entitle to a profit.”
You just blew my f***in mind. That is a very valid point. HOWEVER, as an artist, I do have a few concerns which others have mentioned but I have not seen a satisfactory response to yet so I will provide a couple scenarios and I’d like to see your take on this:
1) I record a CD that takes me about a year to finish. I make 50,000 copies of the CD and sell it for $10 a piece, to net me $500,000. On the back of the CD I include a little contract. As a condition of buying the CD, I tell the purchaser that they cannot make copies and dilute the value of the remaining CDs which haven’t been sold yet. Any infringement of the contract would lead to xyz action taken by 3rd-Party Arbitrator 123. Is this not a perfectly valid way of protecting my investment of time and money into buying the recording equipment and blank CDs, and spending a year writing and recording the CD?
2) With no enforceable IP rights, what would stop a company from China (or any where else with a cheap manufacturing base) from copying a product, slapping an identical label on it, and selling it in US stores as the real deal? The average consumer wouldn’t really complain since the price is cheaper. The business owner won’t complain because they’re making money. The only person losing out is the person who took the time and energy to design the product in the first place. I don’t think that makes a whole lot of sense. How would any markets operate if we can’t even be entirely sure who we’re buying a product from?
As a voluntaryist I do not believe in the legitimacy of any government program, but IP rights do not have to be tied to a government patent office any more than property rights have to be tied to civil courts. IP rights is one of the few areas that I have yet to really nail down a solution for in a stateless society, so this article really made me think. Thank you for the meaningful thought exercise. I am not yet entirely convinced that IP rights don’t exist at all, but I’m certainly willing to discuss the possibility and figure out the logical reason as to why they do not exist.
Comment by Romanadvoratrelundar on 25 November 2011:
“Failing to pay for labor is a violation of my right to Liberty,”
“The typical employee trades his time (Liberty) for money (use to buy Property). If you can’t justify infringing on my right to Property without compensation (theft) then you can’t justify infringing on my right to Liberty either (slavery).”
If by your labor, you produce something that isn’t worth anything on the market, because it’s so bizarre as to be out of line with tastes, or because it doesn’t align with the values of the market you were selling it in, or whatever other reason (e.g. 140-hr rotten meat sculpture, a saltwater-collector in the middle of the ocean), you likely won’t be paid at all for it, and if you do, it will likely be far below what you hoped to get for it. Demanding that you be paid for labor that nobody finds useful is like demanding your right to a job working that Keynesian snake oil, digging ditches and filling them back in. Furthermore, there are sorts of labor like mining or housecleaning that may not yield monetary returns. Gold miners might labor for weeks on end, hoping to strike it rich, but their labor certainly doesn’t dictate that their efforts yield anything valuable.
That said, your personal property right in your land and labor transfers to the capital you produce by combining them and the capital you produce by combining your previously owned capital with your labor and/or land. You are paid when employed only because your excess of labor is more highly valued by the employer for the value it adds to his capital than your wages are, and your wages are more highly valued by you than the dis-utility of lack of money.
“It is a good thing Shakespeare and Bach did not adhere to Mr. Tucker’s writings or the world would be a far more wretched place.”
Shakespeare based many of his works on earlier writings. (As I am not a Shakespearean scholar, I can’t tell you the details of which works are based on what sources, though.) And, as pointed out by someone else above, many of the classical composers drew on earlier sources.
“abuses of a woman who has been dead nearly half-a-/millennia/” ([pseudo]emphasis mine)
While I also didn’t entirely follow the train of thought there, I suspect he’s referring to -Elizabeth I-, and unless he’s utterly confused about “millennia” (Shouldn’t that be millennium, anyway, considering that’s the singular?) he’s NOT referring to Rand. ;D Well, scratch the Elizabeth I part. Per his comment paralleling the mention of Queen Mary in the article with axes’ association with Henry VIII, he’s here referring to Mary Tudor.
My question for you, Mr. Kinsella, is whether you have any thoughts on Creative Commons Licenses in the decidedly NOT-laissez-faire, automatic copyright, world of today?
“I record a CD that takes me about a year to finish. I make 50,000 copies of the CD and sell it for $10 a piece, to net me $500,000. On the back of the CD I include a little contract. As a condition of buying the CD, I tell the purchaser that they cannot make copies and dilute the value of the remaining CDs which haven’t been sold yet. Any infringement of the contract would lead to xyz action taken by 3rd-Party Arbitrator 123. Is this not a perfectly valid way of protecting my investment of time and money into buying the recording equipment and blank CDs, and spending a year writing and recording the CD?”
Not the person you asked, but, with free contract, I don’t suppose there’s anything preventing music publishers from trying to rent their wares, although I’m not sure it would be marketable or hold up very well. I’m not so sure about your scheme, especially the troubling line “dilute the value of the remaining CDs” First off, of course, per subjective value, your CDs aren’t automatically valuable. Then, while it is true somebody’s copying your CD and selling it at say, $9.47 could undercut your set price point, it is also the case that people might think your music is crappy* and try to auction off their authentic CDs at whatever price they can get to recoup money they feel they wasted and/or trash the CD in reviews and the like, thereby perhaps meaning you get stuck with a bunch of expensive coasters. You don’t own their opinion of you and trying to restrain their broadcast of that conception infringes on their free speech.
And, as far as enforcement goes, will you allow people to copy the CD tracks onto their computer and mp3 player? What about backing up their hard drive containing the tracks? Is XYZ going to take action if a family made a personal copy so Son can listen to the CD from Dad’s music collection in the car? What if I want to make my own music video to your music?
What constitutes enforcement, anyway? Monetary compensation for damages? I’m not sure that would swing. Contract theory may seem to suggest that no further contractual activity should take place and payment given for services not rendered be re-collected, but in this case you made a single point exchange of CD and money…so how would that be settled without depriving the purchaser of their property?
My points may not be valid, but hopefully they might be useful thought exercises anyway. Cheers!
*hopefully it’s not. But much of the music I think is great is sadly neglected or dismissed by people with mainstream tastes, so of course things are subject to taste. Fortunately, capitalism does cater to all tastes, so I hope my sort of music will continue.
Comment by David Johnson on 18 January 2012:
The State and Church created copyright? Nonsense, it was the State and the State alone that created it. The church has no political power unless it allies with the State. As such it is no different from any other non-State organization. There is not one instance of any Church, acting on it own in isolation from a State, that enacted binding legislation.
I know this will pain the anarcho-austrian-atheists, but the problem is not the Church, the problem is the State!
Comment by Richard Holmes on 18 January 2012:
The economic argument for patent law is that it encourages invention. Who would bother to invent if there were not some payoff?
Comment by Stephan Jerde on 18 January 2012:
@James Madison Fan (and way too many others)
“The value of the chair is not in the wood and fabric that makes up the chair. The value of the chair is in the craftsman’s skill and intricacy of the design. The value of the story is not in the ink an paper it is printed on. It is in the craftsmanship of the person writing the story.”
No, no, no! A thousand times, no. The value of the chair is purely in the mind of the beholder.
Artistry or craftsmanship may induce someone to buy that chair over another chair, or a milk cow, or any other good or service under the sun, but that isn’t the source of the value. Its more like opportunity cost — all those things which an actor is willing to forego in order to have one particular itch scratched.
This might seem trivial, but its not. As a result of this misunderstanding, you are dangerously close to arguing the labor theory of value here!
Look back at Chapter 1 of Human Action if you don’t get it.
Comment by Joe Schmoe on 18 January 2012:
Re: Richard Holmes
And the economic argument against IP is that it discourages innovation. How can new ideas develop in a climate where the use of knowledge itself its monopolized? Science and human knowledge is advanced in incremental steps.
You cannot add the next rung to the ladder of progress if someone has removed the 5 latest rungs and filled in the holes they occupied.
Comment by Alex on 19 January 2012:
Joe Schmoe,
I’m not sure I understand your point. Is there any evidence that innovation is hampered in countries with more IP protection than in countries with less?
I repeat my argument from yesterday: libertarians always dig holes for themselves when they attempt to justify libertarian ideas with utilitarian arguments. I can think of many things that hamper trade, commerce, research and development that no one would want to get rid of, so “it hampers commerce” is by itself a very bad argument against IP.
Libertarians must acknowledge that perhaps, in some circumstances, IP law is in fact conducive to research and progress, and they must have the backbone to oppose it even in these situations. If it’s wrong then it’s wrong, even when it has economic benefits.
Thus Spake Alex.
Comment by Joe Schmoe on 20 January 2012:
Re: Alex
I was trying to illustrate that any potential economic arguments go both ways. You might be able to encourage an innovator to start a new business by granting them a monopoly, but preventing new competitors from entering into the market suppresses subsequent innovation.
Now, I recently read an ebook regarding the evidence behind IP laws and whether they stimulate or discourage innovation; I’ll have to find the name of it for you.
Comment by Alex on 20 January 2012:
I’d love to read it.
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