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Source link: http://archive.mises.org/10748/radical-patent-reform-is-not-on-the-way/

Radical Patent Reform Is Not on the Way

October 1, 2009 by

But though various details of the patent system continue to morph pursuant to political pressures and legal trends, the essential aspects of the patent system have not changed at all: The scope of what is patentable has not shrunk appreciably. The term is still about seventeen years. Patents are still enforceable by injunction. The groundless presumption of validity is alive and well.

Patent defendants who win usually pay their own legal fees, as before. Defending patent lawsuits continues to be incredibly expensive. Lobbying goes on as before. Companies continue to need to obtain patents if only for defensive purposes.

Obviousness and novelty remain the standards for patentability — and these standards are still vague, nonobjective, and subject to unpredictable interpretation by an inept and bureaucratic government agency, by state courts, and by technically inept juries. And the patent system is still widely believed to be legitimate and necessary even while it is widely derided as seriously flawed. FULL ARTICLE

{ 47 comments }

staff2 October 1, 2009 at 10:11 am

Patent reform is a fraud on America…
Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.

Ohhh Henry October 1, 2009 at 10:45 am

From the “truereform” blog linked above:

“what we need is 1) shorter patent pendency, 2) patent prosecution based on law – not politics, 3) competent and qualified management of the patent office free of political appointments, and 4) restoration of the teaching, suggestion, motivation basis for determining patentability.”

You want the government to award and enforce monopolies. Government is run by politicians. Yet you wish the process of granting monopolies to be free of politics?

Dale B. Halling October 1, 2009 at 11:14 am

Staff2 excellent points on patent reform.

Ohhh Henry, Patents are not a monopoly and anyone who suggests that they are either does not understand the rights obtained with a patent or is pushing a political agenda. Patents only give the holder the right to exclude, they do not give the holder the right to make something, let alone a right to a market. A monopoly is a right to a market. For more information see http://hallingblog.com/2009/05/31/the-myth-that-patents-are-a-monopoly/

Ohhh Henry October 1, 2009 at 11:31 am

Quibble noted. Now back to the main point.

You want the government to award and enforce [certain advantages in the marketplace]. Government is run by politicians. Yet you wish the process of granting [certain advantages in the market] to be free of politics?

Mark October 1, 2009 at 11:46 am

I’m not sure that list showed what Kinsella wanted it to show. Human development sure has gone a lot faster since the patent system was created. ;)

Jeffrey Tucker October 1, 2009 at 12:01 pm

“Human development sure has gone a lot faster since the patent system was created.”

You could say the same about the rise of the state generally. It is a matter of understanding the right relationship between cause and effect.

Stephan Kinsella October 1, 2009 at 2:29 pm

Dale Halling says “Patents are not a monopoly and anyone who suggests that they are either does not understand the rights obtained with a patent or is pushing a political agenda. Patents only give the holder the right to exclude, they do not give the holder the right to make something, let alone a right to a market. A monopoly is a right to a market.”

Halling appears to be either economically illiterate or dishonest. As I explained here, patents are of course monopolies. A monopoly is simply state power used to stop competition, which is one thing a patent can be used for. The post office for example has a monopoly. Not because they exist and have the “right” to deliver mail, but because the law makes it illegal for others to compete with them. This is what patents do.

Peter Surda October 1, 2009 at 3:04 pm

Dear Dr. Halling,

may I ask you what definition of the word “monopoly” you are using? Because it certainly is different from what the Austrian economic school uses, and also different from what http://en.wikipedia.org/wiki/Monopoly says (which is quoted from Friedman, who belonged to the Chicago economic school). So you already have two definitions by two economic schools that say something else than you. And yes, according to both of these, patents are a monopoly.

Of course, by redefining a term arbitrarily, you can defeat any argument.

Cheers,
Peter

Fred McTaker October 1, 2009 at 3:57 pm

@Dale B. Halling: I could use the same language to say that “AT&T obviously doesn’t have a monopoly, because other phone companies exist. They merely have the right to exclude other phone companies from using /their/ lines.” The fact remains that I don’t have any choice but to subscribe to traditional POTS phone service from AT&T. Even if I use VoIP and deal with another ISP, that ISP is forced by government-dictated market conditions that the ISP use AT&T to “service” the DSL connection. It is another question to whether AT&T should be allowed to “own” lines that cross my property, but the fact remains that AT&T has a monopoly hold on my local copper-wire connection market. In the same way, Time-Warner holds a monopoly on my local coaxial-cable connection market. Those monopolies may be incidental to other provisions and market forces, but they are still monopolies.

@Stephan Kinsella: I think patents are beyond reform. They are inherently flawed, and can not be fixed to meet the Constitutional requirement of “promoting the progress.” I think we should abandon patents in favor of developing a system of “Registered Trade Secrets.” Registered secrets would go into the public domain after about 20 years, the same as patents, but wouldn’t affect any person or business not privy to those secrets. Licensing would stay relatively the same, but it would be a trade for revealing secrets (with some automatic NDA provisions), in return for fees and licensing agreements. The license payments would be for early access, not government-enforced artificial exclusion. Independent invention would not be stifled, and government could use the registry to be of more help with industrial espionage cases.

Patents were never inherently valuable to society — their only value was in comparison to trade secrets, which may never reach the public domain. The whole point is to give inventors (not trolls) an incentive to put their works in the (eventual) public domain. Registered secrets that are released to the public after a pre-defined timeout would have the exact same social value as patents, with little to none of the drawbacks that make patent law such a farce today.

J. Chris Folsom October 1, 2009 at 4:39 pm

@Steve

“Halling appears to be either economically illiterate or dishonest”

Or a raving psychotic. I’m willing to give mr. halling the benefit of the doubt and assume that he actually believes the things he is saying (which is to say he is mentally ill not a liar).

You can clearly see that schizophrenia is at work here when you read the next sentence, which defines a patent as a monopoly after stating that it is not a monopoly. “Patents only give the holder the right to exclude.”

As long as you continue to debate statists as if they were sane human beings, you’re going to be coninually frustrated by the fact that they can’t comprehend simple ethics or logic.

If you want to fix a problem, you must first be able to understand it.

Bala October 1, 2009 at 11:18 pm

Dale B. Halling,

I am unable to understand a fundamental point about patents which I request you to clarify.

It is possible for 2 people (A and B), working independently and based on similar or different and unrelated sources, to come up with the same idea. Why is it that it is alright for 1 of them (A, the one who filed for and got the patent) to act on that basis and enjoy the fruits of his actions while it is not so for the other (B)?

To discuss this further, I need to define something fundamental in my thought process. To me, Liberty means the freedom to act as long as such action does not translate into initiation of force against another individual.

With this definition, B’s act of coming up with the same idea as A had and then going on an producing goods based on that idea, thus earning profit, is not a violation of A’s Liberty because B, by acting, has not initated any force against A. However, excluding (taking your own wording) B from using the idea because A has a patent means that B is either

1. prevented from acting on his own idea

or

2. if he acts thus, a part of the fruits of such action will have to be given to A and if B fails to do so voluntarily, the government shall take away a part of B’s fruit and give it to A

In either case, there is a case of initiation of force against B even though he has not initiated force against A. B’s Liberty has thus been violated though he has not violated anyone’s Liberty. What’s worse is that in the second case, his property rights are also violated.

Could you please explain how patents can be called legitimate under these circumstances?

bernardpalmer October 2, 2009 at 4:40 am

Radical Patent Reform Is Not on the Way.

I agree. It’s already here.

http://www.cashrampatent.com is an online alternative patent system that presupposes that the present patent system will disappear once all the world’s fiat currencies crash. The present system whereby governments provide the Force to protect a patent was always bound to fail simply because governments cannot run any business properly. And lets face it the present system is just a feeding trough for lawyers.

The idea behind CashRamPatent is that eventually only business themselves can look after the validity of a patent claim. Also by making it cheap to register a patent (AU$10) it gives those 99.9% of inventors the opportunity to get there ideas out there for all to see. Plus it also gives the patent examination process to anyone who wants to comment and pass a vote. No more waiting 2 years for an examiner. A three quarter majority against any patent would take away the grant.

Last but not least it is important for everyone that the life time of a patent be drastically reduced. In the CashRamPatent system the grant is for 5 years only. There is an optional period of 2 years where the patent owner has the sole right to manufacture. The remaining 3 years allows anyone to use the patent on agreeing to pay 10% of any profit they make to the patent owner. This is to insure competition comes in early.

CashRamPatent also includes a free service to help inventors find producers and a Real Bills component for financial backers but by using gold only.

All payments are made by using the CashRamSpam micro payment system which has been online now since 2002.
http://www.cashramspam.com

Dale B. Halling October 2, 2009 at 8:45 am

Dear Peter Suda, according to Wikipedia “In economics, a government-granted monopoly (also called a “de jure monopoly”) is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement.” Since patents are clearly “government granted”, then this is the appropriate definition. Since a patent does not even provide the holder the right to sell their invention, it clearly does not grant an exclusive privilege to a firm to be the sole provider of a good or service.

Admittedly, some economists define a monopoly as anyone who has monopoly power. Under this definition of a monopoly any property rights, including ownership in your house or car results in monopoly power. This definition of a monopoly leads to the conclusion that all property rights are or have an element of monopoly power. I reject this definition of a monopoly as meaningless.

Dale B. Halling October 2, 2009 at 8:55 am

Dear Bala, your concern about independent invention is common. However, the same principle applies in real property. If you an I both spot a deer, but you kill or capture the deer first, you are the owner of the deer and I have not right to the deer. This principle also occurs in science. If I were to conceive special relativity without any knowledge that Einstein had already discovered special relativity, this would not make me the discoverer of special relativity. I did not add any information to the store of human knowledge, by my independent discovery. The same is true of inventors, just because someone independently comes up with an idea after the inventor, does not make them an inventor. An inventor is the person who adds to the store of human knowledge. Being second, even without knowing that you are second does not add to the store of human knowledge or make you an inventor. The patent laws require the inventor to be the first in the world to create an idea.

girl scout October 2, 2009 at 9:12 am

@ Folsom
according to your uncivil comment to Halling, a state sponsored university tenured professorship is a monopoly. I would enjoy the use of one, applying your rejection of such, I should just show up and teach the class. oh, and collect the salary. what if 1000 of us show up to “use” the salary? does the university have an obligation to pay us all?

matskralc October 2, 2009 at 9:14 am

If you an [sic] I both spot a deer, but you kill or capture the deer first, you are the owner of the deer and I have not [sic] right to the deer.

Unfortunately, this is an inapplicable analogy.

Independent invention is more like Bala and I each spotting a deer in the woods, but because Bala spotted his first he gets to decide if I have a right to the one I spotted.

matskralc October 2, 2009 at 9:15 am

Each spotting two different deer, in case that is not clear.

Stephan Kinsella October 2, 2009 at 9:42 am

Halling: “Dear Bala, your concern about independent invention is common. However, the same principle applies in real property. If you an I both spot a deer, but you kill or capture the deer first, you are the owner of the deer and I have not right to the deer.”

This highlights the problem. There is only one deer; it is a scarce resource; to permit such resources to be used without conflict someone has to be assigned ownership; obviously the first one to homestead the deer has a better claim than the second guy.

This has nothing whatsoever to do with inventions. If A invents a way to use his property and B later thinks of a similar idea and patents it, there is no reason in the world that B has a right to use force to stop A from using his own property in this way. A already owned his property–like in the deer case, he came first. B is simply claiming a right to the “idea” that he independently invented. This is utterly absurd.

“The same is true of inventors, just because someone independently comes up with an idea after the inventor, does not make them an inventor. An inventor is the person who adds to the store of human knowledge. Being second, even without knowing that you are second does not add to the store of human knowledge or make you an inventor. The patent laws require the inventor to be the first in the world to create an idea.”

Halling, ostensibly a patent attorney, should know this is a misstatement of the law. First, the US patent system is unique in giving priority to earlier inventorship; other countries have a first to file based priority system. Which system a country adopts is simply arbitrary. Second, there are exceptions in the US–there is a limited prior user right in the case of business method patents. Does Halling think this exception should be abolished? If not, then why shouldn’t there be a more general prior user or independent invention defense?

Third, US law does not require you to be the first inventor. For example, suppose A invents a method (say, a method for mixing chemicals) and uses it in secret to produce a high-quality chemical. He keeps the method secret (trade secret). 10 years later B independently invents a similar method and patents it–then gets an injunction to shut down A. Why is this just, Halling? B is not even first. He is first to file… but you imply you are in favor of a first-to-invent system.

Dale B. Halling October 2, 2009 at 11:02 am

Dear Mr. Kinsella, I have shown that the “scarcity theory of property rights” against patent is flawed both logically and factually. See my posts Scarcity – Does it Prove Intellectual Property is Unjustified? http://hallingblog.com/2009/06/22/scarcity-–-does-it-prove-intellectual-property-is-unjustified/
Scarcity and Intellectual Property: Empirical Evidence for Invention http://hallingblog.com/2009/06/25/scarcity-and-intellectual-property-empirical-evidence-for-inventions/
Scarcity and Intellectual Property: Empirical Evidence of Adoption/Distribution of Technology http://hallingblog.com/2009/06/25/scarcity-and-intellectual-property-empirical-evidence-of-adoptiondistribution-of-technology/.

These posts show that the empirical evidence does not support the scarcity theory of property rights. The posts also show that the “scarcity theory of property rights” does not explain how property is to be allocated, how property rights in an object or idea are created, why slavery is wrong, why murder is wrong, etc. While the labor theory of property rights explains this and more. Trading the scarcity theory of property rights for the labor theory of property is like trading the theory that “what goes up must come down” for Newton’s Law of gravity. The fact of the matter is that the proponents of scarcity have confused cause with effect. A system of private property results in efficient allocation of resource, but it is not the reason for private property – it is the effect of private property.

Stephan Kinsella October 2, 2009 at 11:22 am

Halling:

“I have shown that the “scarcity theory of property rights” against patent is flawed both logically and factually…. These posts show that the empirical evidence does not support the scarcity theory of property rights. The posts also show that the “scarcity theory of property rights” does not explain how property is to be allocated, how property rights in an object or idea are created, why slavery is wrong, why murder is wrong, etc. While the labor theory of property rights explains this and more. Trading the scarcity theory of property rights for the labor theory of property is like trading the theory that “what goes up must come down” for Newton’s Law of gravity. The fact of the matter is that the proponents of scarcity have confused cause with effect. A system of private property results in efficient allocation of resource, but it is not the reason for private property – it is the effect of private property.”

Mr. Halling, you are gravely mistaken. Your posts show nothing of the sort; they are nothing but a confused mishmash of scientistic fallacies. Your very comment “the empirical evidence does not support the scarcity theory of property rights” shows how confused you are: “empirical evidence” cannot prove or disprove a given normative theory of property rights. You may be a fine patent attorney but you suffer, like too many of your ilk, from engineers’ syndrome. Why you guys don’t just keep quiet if you don’t want to take the time to learn a bit about political philosophy and economics is beyond me.

As Rothbard wrote: “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a “dismal science.” But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.” –

For more on Engineers’ Syndrome, see C.P. Snow’s “The Two Cultures” and Misesian Dualism

Engineers’ Syndrome

Libertarian Activism–comments [engineers, etc.]

Yet More on Galambos

Shay October 2, 2009 at 11:47 am

Stephan, the links at the end of your post just now are broken, saying something about the post being removed/renamed/unavailable.

Bala October 2, 2009 at 8:00 pm

Dale B. Halling

” I did not add any information to the store of human knowledge, by my independent discovery. The same is true of inventors, just because someone independently comes up with an idea after the inventor, does not make them an inventor. ”

Your argument is most flawed. Are you saying that only the person who invented something (figured out an idea) first has the right to act on the idea and that others may act on it only by their permission? Are you implying that by the sheer act of inventing something, one individual gets the right to infringe upon the Liberty of un-named and an uncounted number of individuals? That to me sounds as bizarre as it gets.

You are engaging in circular reasoning when you refer to the existing patent system to justify it. Very avoidable and self-defeating, in my opinion.

Further, in your reply to Stephan, you tried to show that the “scarcity theory” against patent laws is flawed. Even granting your position (unlike Stephan), how does that negate my point that patents are an infringement of Liberty?

If you read my posts, you will realise that my opposition to the concept of IP is on grounds of Liberty alone. I don’t think referring to anything else (like scarcity theory) is an answer to my post. If at all, I see it as a shameful attempt to drag me into a different discussion that neither of us can win and which you can therefore prolong for as long as you wish. I hope you can see how academically dishonest that it.

Your post is the yet another reason I am urging Stephan to limit his discussion on IP to the Liberty principle and not allow people to side-track the discussion the way you are trying to.

Stephan, I am sure you are listening. Are you beginning to see what I mean when I say ‘Stick the the Liberty principle to defeat the very concept of IP”?

Gil October 2, 2009 at 11:53 pm

Well to be hardcore Bala – do patent holders have to justify the system on Utilitarian grounds at all? After all, private real property don’t have to justify their property ownership on Utiliitarian grounds. Suppose a farmer and his family homesteads fertile land and a lake by fencing it off and begins to farm the land in an inefficient, organic way that’s land and labour intensive? Imagine the farm is so inefficient that the food output from the farm is lower when nomadic hunting/gathering people would extract food from the same place, can the nomads argue their liberty was destroyed by this farmer? They are now trespassers if they try to access the same land and they can’t access the resources on the land because the farmer has no intention of selling his produce rather he intends only to feed himself and his famliy. Suppose the farmer was knowingly doing all this because he wants his family and ultimately his tribe to solely occupy this area and has the ulterior motive of pushing out surrounding tribes – has he broken any Libertarian laws? Or were the previous nomads foolish in not homesteading the land themselves and settling down before a jerk of a farmer and his fellow tribe moved in?

Bala October 3, 2009 at 2:55 am

Gil,

” do patent holders have to justify the system on Utilitarian grounds at all? ”

If you ask me, I would say no. Or rather, it would serve no purpose. The reason is simply that no utilitarian justification would overcome the moral case against patents as being an infringement of Liberty.

That apart, your pointless story about the farmer and the nomads just indicates that you are clutching at straws. When you do so, remember that straws do not make good flotation devices.

If I may make a suggestion, stop hesitating and just jump over to the camp of Liberty. The ride is not going to be easy but it is the correct thing to do.

Dale B. Halling October 3, 2009 at 9:27 am

Bala,

You idea of liberty is skewed as best – anarchy is not liberty. Your desire to steal the efforts of inventors is not moral, it is not liberty, and it is not good for the economy.

sweatervest September 4, 2011 at 4:10 pm

“anarchy is not liberty”

Anarchy does not imply liberty, but liberty implies anarchy (taken to mean no rulers).

“Your desire to steal the efforts of inventors”

You can steal an effort!? Can I steal the color blue? What about love?

“is not moral”

It’s immoral to imitate? This always reminds me of little school-children who get pissed off when some other little kid wears the same outfit they do. “Hey, you stole my idea!”

“it is not liberty”

Ahh so it is not liberty to be able to recognize what other people are doing as useful and to do it yourself. But it is liberty to do something useful in front of everyone and then insist that none of them imitate you!

“and it is not good for the economy.”

But it is good for the economy to outlaw imitation and insist that everyone pay each other to do so? Well, that sounds really inefficient considering that people could perform just as useful actions at a lower cost without outlawing imitation.

Bala October 3, 2009 at 11:46 am

Dale B. Halling,

” You idea of liberty is skewed as best ”

My definition of Liberty is this – The freedom to act as I choose to as long as such action does not amount to initiation of force against another individual.

Now, please tell me what is skewed about it.

” anarchy is not liberty ”

Where did I speak of Anarchy? I think you are either imagining demons or trying to side-track the discussion. I am not sure I am ready for that.

” Your desire to steal the efforts of inventors ”

It is not my desire I am talking of. It is the principle that I am free to form any concepts at all by observing the world around me. I can even form concepts by looking at your property as long as I am not initiating force against you in doing so. To say that I should not form certain concepts that you think I should not or to demand that even if I form such concepts, I should not seek to act as my mind says I should is to demand that I subordinate my mind to your wishes.

In sum, the principle of your “argument” is that one man should have the “right” to force another man to subordinate his mind to the former’s wishes. That is nothing more than the definition of slavery. Thus, you desire that those who produce ideas may have the right to subject all others who use products that use their ideas to slavery.

And why do I form concepts based on my observations? Because I am human and it is in my nature to form concepts based on what I perceive and then use the concepts so formed to guide my actions. There is no other way a human can live and to demand that a person live otherwise is to demand that he lives a sub-human existence. If you demand that I do so so that you may derive your benefit, you shall be deemed the moral equivalent of a cannibal.

” is not moral ”

Looks like you and I have different definitions of the word “moral”. Stealing is not moral in my dictionary too. The difference is that forming concepts based on my perceptions, using such concepts to decide on a course of action and acting as per those decisions is moral as long as I am not harming myself or initiating force on another individual in the process. To call this process stealing is to categorise the entire process of education as an act of stealing. Is that what you are trying to say?

” and it is not good for the economy ”

And since when did the benefit to the economy become the standard of evaluating the morality of an individual’s action? Since when did my actions need the sanction of the “economy”, whatever you mean by that? Free men do not live by the sanction of others.

Your meaningless post only shows that you have run out of ideas and are trying your level best to try to divert the discussion. Unfortunately for you, I am not falling for those tricks. So try refuting my arguments instead.

MHnTX October 3, 2009 at 12:53 pm

“property rights are indeed undercut by patents. And even on utilitarian grounds, it could be argued that the patent system imposes an overall net cost on the economy”

I fail to see how a pharmaceutical company developing a drug that cures cancer or the common cold or a scientist inventing a process to launch cargo into space for a dollar a pound could possibly be considered a net cost increase to society when the product itself would not even be in existence prior to the inventor’s idea making it possible. And any debate of holding back innovation or retarding price reductions for society afterward seem to be made moot by the fact that without the inventor society would not have had the value to talk of manipulating and looting in the first place.

“1.9 million years ago – Grog invents using fire to cook food. Arrgg sees this and imitates it. Soon, the practice spreads. Ditto with living in caves, using spears to kill animals, building “houses,” and dressing in cured animal hides. Nobody sues anybody. No patent system has been invented yet.”

One could also argue that Grog, the discoverer, was not a sweet little selfless Disney character. Upon discovering the magic of making fire, he was also a clever enough capitalist to understand the potential advantage this would give him ,and so he held his secret very close as a way to extract extra benefit and privilege and power among his tribe. The tribe, seeing Grog’s fire as a great benefit, might justifiably, in their own rational self interest, also seek to protect Grog from attackers from within and without the tribe, as without Grog’s great magic they would all be back to living in the cold and eating raw meat.

Arrgg, the stronger, on the other hand, could have arguably been one of the first plunderers and looters in history too. Seeing the benefit of Grog’s fire and envious of the great benefits Grog derived from it, and not at all happy that he or others should have to pay for such a thing, instead decides to trespass on Grog’s territory, steal the secret, and in true Michael Moore fashion, make the secret cheaply available to all… thereby removing any reasonable expectation of safety or security for further quality inventors and discoverers, hence holding back the discovery of the light bulb by almost a full two million years.

The patent system we have today may be in serious need of repair but IMO the anti-IP movement is looking more and more like the ‘libertarian’ anarchists intellectual “Jump the Shark” moment.

Peter October 3, 2009 at 6:58 pm

anarchy is not liberty

That would depend how you define anarchy. If by “anarchy” you mean what the components of the word actually mean: “ἀν·αρχή” – no (political) rule – then “anarchy” and “liberty” are synonymous (what else could you mean by “liberty”?). If you mean something like “no (behavioural) rules” (ἀ·νόμος) or “chaos” then (a) your statement above is correct, but (b) you have an incorrect definition. (Either way, you’re wrong!)

Dale B. Halling October 3, 2009 at 9:15 pm

According to you I should be able to copy Mark Twain’s book “Tom Sawyer” the day after it comes out without paying a royalty. After all you are human and allowed to conceptualize. That doesn’t sound like stealing – it doesn’t sound like you are using force. If I decide to harvest apples from your apple orchard, I haven’t initiated force against you, so you should not be able to enforce your fictional property rights against me.

Actually, yes your ideas do sound like stealing and are clearly immoral. According to your theory I can plagiarize ideas, steal ideas, and freeload off the creators of this world with impunity.

Free markets and freedom are based on the concept that a person owns himself and therefore the products of his labor, including both his physical and mental labor. The labor theory of value explains private property rights – including intellectual property rights, criminal law, who owns property, and how it is distributed. Mr. Kinsella’s scarcity theory of property does not explain how property is to be allocated, why one person is deemed to have ownership, and does not explain criminal law.

Ayn Rand’s comments on intellectual property might be illuminating to you. She states, in Capitalism: The Unknown Ideal, 130. “What the patent and copyright laws acknowledge is the paramount role of mental effort in the production of material values; these laws protect the mind’s contribution in its purest form: the origination of an idea. The subject of patents and copyrights is intellectual property.

An idea as such cannot be protected until it has been given a material form. An invention has to be embodied in a physical model before it can be patented; a story has to be written or printed. But what the patent or copyright protects is not the physical object as such, but the idea which it embodies. By forbidding an unauthorized reproduction of the object, the law declares, in effect, that the physical labor of copying is not the source of the object’s value, that that value is created by the originator of the idea and may not be used without his consent; thus the law establishes the property right of a mind to that which it has brought into existence.

It is important to note, in this connection, that a discovery cannot be patented, only an invention. A scientific or philosophical discovery, which identifies a law of nature, a principle or a fact of reality not previously known, cannot be the exclusive property of the discoverer because: (a) he did not create it, and (b) if he cares to make his discovery public, claiming it to be true, he cannot demand that men continue to pursue or practice falsehoods except by his permission. He can *copyright the book in which he presents his discovery and he *can demand that his authorship of the discovery be acknowledged, that no other man appropriate or plagiarize the credit for it—but he cannot copyright theoretical knowledge. Patents and copyrights pertain only to the practical application of knowledge, to the creation of a specific object which did not exist in nature—an object which, in the case of patents, may never have existed without its particular originator; and in the case of copyrights, would never have existed.

The government does not “grant” a patent or copyright, in the sense of a gift, privilege, or favor; the government merely secures it—i.e., the government certifies the origination of an idea and protects its owner’s exclusive right of use and disposal.”

Bala October 3, 2009 at 10:27 pm

Dale B. Halling,

NOW….. the discussion is getting interesting. Especially your reference to Ayn Rand. It is precisely this point that we should be discussing. Once this is resolved, I am sure the issue would be much clearer. However, I am a little tied up for now and will respond in a day’s time. Until then, please bear with me.

Interestingly, I was until recently where you are. It was the identification of a teeny-weeny contradiction in Rand’s statements that brought me to the realistion that IP is a violation of Individual Liberty and should be discarded. Just bear in mind that mine is a completely moral position. I will soon elucidate it. Thanks in advance for the patience.

Stephan Kinsella October 3, 2009 at 10:53 pm

Halling:

According to you I should be able to copy Mark Twain’s book “Tom Sawyer” the day after it comes out without paying a royalty. After all you are human and allowed to conceptualize. That doesn’t sound like stealing – it doesn’t sound like you are using force. If I decide to harvest apples from your apple orchard, I haven’t initiated force against you, so you should not be able to enforce your fictional property rights against me.

Actually, yes your ideas do sound like stealing and are clearly immoral. According to your theory I can plagiarize ideas, steal ideas, and freeload off the creators of this world with impunity.

Halling here just makes assertions and gives no arguments. He does not seem to realize an argument is required. He does not even seem to realize what question-begging is–since he engages in it extensively, in his comments that it’s “stealing”, and in his assertions that it’s “clearly immoral.” Well, that settles it then!

Jason Gordon October 4, 2009 at 9:40 am

Halling:
“It is important to note, in this connection, that a discovery cannot be patented, only an invention. A scientific or philosophical discovery, which identifies a law of nature, a principle or a fact of reality not previously known, cannot be the exclusive property of the discoverer because: (a) he did not create it, and (b) if he cares to make his discovery public, claiming it to be true, he cannot demand that men continue to pursue or practice falsehoods except by his permission.”

But he can demand they use inferior, wasteful, and outmoded technology except by his permission?

Is there a difference between “discovering” a mechanical configuration that performs a desired task, e.g. a mousetrap, versus “discovering” a mathematical configuration that performs a desired task, e.g. Hooke’s law?

Legal positivism aside, I submit that there are simply no hairs here to split.

Dale B. Halling October 4, 2009 at 11:10 am

Yes, Stephan providing evidence and arguments for one’s position is required for a useful discussion, however all you ever provide is name calling. Your position allows one to steal the product of other people’s minds. It does not force people to use substandard technology, it just does not allow you to steal the product of other people’s thoughts. Of course, it you do not believe that the creator of an invention has done anything special, why would you want to copy it? Stealing ideas is the same as stealing physical property.

By rejecting the value of the human mind, your have more closely aligned yourself with Marx’s physical labor theory of value than the free market. If your ideas are adopted, it will lead to the same disastrous consequences that occur wherever Marx’s ideas have been tried.

Shay October 4, 2009 at 11:45 am

Dale, when you talk of stealing ideas, the only thing I can think of is somehow erasing the idea from a person’s mind after you have learned it. But I really doubt you mean this. I’m thinking you mean copying an idea, which means that the first guy still knows of the idea and can use it. But doesn’t this mean that “theft” is the wrong word to use?

Stephan Kinsella October 4, 2009 at 11:57 am

Halling: “Your position allows one to steal the product of other people’s minds.”

You seen incapable of realizing that question-begging is fallacious. What we disagree on is whether it is stealing. Do you not even realize this is the debate?

“Of course, it you do not believe that the creator of an invention has done anything special, why would you want to copy it?”

Why does “doing something special” imply “I have a property right”?

“Stealing ideas is the same as stealing physical property.”

Really? The same? Stealing usually means taking something from someone so that he does not have it any more. But if I see your method for fishing and emulate it, you still have the knowledge. I didn’t take it from you.

“By rejecting the value of the human mind,”

I don’t reject the value of the human mind. Your comment is ridiculous and unfounded.

Are you unable to mount even the semblance of a rational argument on behalf of the statist IP privileges you support?

Dale B. Halling October 4, 2009 at 1:01 pm

Stephan, perhaps you studied trademark law. When someone uses your trademark, they do not deprive you of it – physically. When you copy the Matrix movie and sell it to others you do not deprive them of it physically, but you deprive them of their invention, of their artistic creation, or of their brand.

Since I own myself, then I own the products of my labor both physical and mental. You only copy my inventions (mental labor) because you wish to profit from other people’s efforts without compenstating them. This either makes you a thief or a parasite.

Jason Gordon October 4, 2009 at 2:37 pm

Halling: “You only copy my inventions (mental labor) because you wish to profit from other people’s efforts without compenstating them. This either makes you a thief or a parasite.”

Perhaps you can elaborate on the fundamental difference between discoveries and inventions by perusing the timeline for the field of quantum computing.

How does a scientific advancement become theft or parasitism in the absence of a preceding innovative building block becoming registered for government protection? (Set aside false claims of discovery/authorship/attribution.)

Stephan Kinsella October 4, 2009 at 3:24 pm

Halling:

“Stephan, perhaps you studied trademark law. When someone uses your trademark, they do not deprive you of it – physically.”

Yes, and trademark law is justified only insofar as the seller defrauds his customers. It should not give a cause of action to his competitors. If you had read my systematic critique of IP law you would realize this; but you obviously haven’t, since you are just spouting the pro-IP line and are not really interested in whether it’s valid or not, and even in understanding the views of your opponents. To be clear: I completely understand your pro-IP position. No one can claim I do not. But you do not even (care to) understand your opponents.

“When you copy the Matrix movie and sell it to others you do not deprive them of it physically, but you deprive them of their invention, of their artistic creation, or of their brand.”

What are you jabbering about?

“Since I own myself, then I own the products of my labor both physical and mental.”

Wrong. Owning your “self” means you have the right to exclude others from using your body. If you had read my monograph you would see that you are merely repeating the flawed “creation” view of rights.

” You only copy my inventions (mental labor) ”

there is nothing wrong with copying mental labor–it’s called “learning.” Something you should do more of.

Bala October 5, 2009 at 9:16 am

Dale B. Halling,

I have to agree with you on one thing – “to copy Mark Twain’s book “Tom Sawyer” the day after it comes out without paying a royalty” is immoral.

However, having read almost everything that Ayn Rand had said and considering that you too are shooting from her shoulder, let me try to give you a slightly different perspective on that statement of agreement.

As I understand what Rand said, Morality is a code of values guiding man’s actions when faced with choices. Under this definition, Morality is something that operates ONLY at the level of the individual.

Morally, the act copying Mark Twain’s book without paying royalties the day after it is published is a poor choice because the work is not mine. I shall derive no true rational happiness out of the act of copying the book, distributing it and collecting the profits except that I would have done the job efficiently.

Further, my doing so would deprive Mark Twain of the income he would have got in the form of royalty if even some of the people who bought the book I printed instead bought the one printed by the publisher who pays Twain a royalty. This would be a severe jolt to Mark Twain who would then think twice about writing another book because he may find that his time may be better spent pursuing other and more beneficial activities. In the process, I too lose the opportunity to read more books of his, provided I too derive happiness from doing so.

Thus, weighing the pros and cons, such an action does reduce my own long-term well being and happiness and if I am a rationally selfish person, I should not engage in the act of printing and selling Mark Twain’s book without his permission and without paying him a royalty.

I hope that tells you that it is not that I am interested in “stealing” (though as Stephan says, calling it that is question begging).

That said, let me bring in the other important point. If you have read your Rand properly (as I think I have), she has defined Morality as a code of values. As per Rand, the highest value to any man is his Life. Life is a sequence of self-generated and self-sustaining actions. The purpose of life is life.

To sustain life, man, like every other living being, needs to act. Since man’s concepts and values are not automatic, he needs to form them using his rational mind. The concepts and values thus formed help man identify the best course of action under any circumstance. The end result of this process of concept formation and thinking is action. The purpose of such action is to seek value – value that sustains his life.

To sustain his life qua man, man needs two fundamental conditions to be satisfied
1. The Liberty to form concepts based on the percepts he receives from his environment and
2. The Liberty to act on his choices
Preventing him from doing either of these is to condemn him to death.

The only way to infringe upon a man’s Liberty is to initiate force on him. Thus does the principle of “non-initiation of force” originate.

The concept of Liberty has a “positive” and “negative” aspect. The “positive” aspect is that a man may undertake any action as long as he is not initiating force against another man. The “negative” aspect is that others may not initiate force against him. This is the moral and political concept of Liberty.

The concept of property logically derives from the principle of Liberty thus outlined. Man is at liberty to seek the values he chooses either by gathering or by producing. As long as he is not initiating force against another man, no one may prevent him from doing so. Once he has acquired these values, there is only two ways to take the value away from him.

1. Trade with him – give him some other value in exchange for the value he has
2. Initiate force against him to make him give up the value for nothing or for some thing of less value

The former is moral because it preserves his Liberty. The latter is immoral because it is an infringement of his Liberty.

This, IMO, is the moral concept of Property Rights – not from labour; not from creation or anything else similar. The concept of Property is the recognition that initiation of force is not a proper means of dealing with other men.

Rand also said “Law is a means of subordinating society to Moral Law”. While this is a very nice statement, what she (IMO) missed out is that society to a man is just a certain number of other individuals and that the ONLY Moral Law that others need to follow with respect to an individual is to refrain from initiating force against him. She herself said that no man has any obligation to another other than respecting his individual rights.

In other words, the only Law that man needs is one that ensures that others do not infringe upon his Liberty and that if they do so, they will not get away with it. No law may be promulgated that violates individual liberty of those who have not violated that of others, even if it may claim to protect certain other rights.

Specifically on the point of Intellectual Property and the “copying” of inventions, Rand’s error was fundamentally to ignore the simple (though not obvious) point that in forming a concept, man is not initiating force against anyone else. This error is especially intriguing, coming from a person who have given a very sound epistemology of reason in her book “Introduction to Objectivist Epistemology”.

For instance, if you come up with an invention, incorporate it in a product and then sell the product to me, the first thing that happens is that the product becomes my property. When I subsequently study that product, I am not initiating force against you because I am engaging in a study of my own property. If in the process, I form the concept of how your invention works, I am completely at liberty to do so because I am acting as per my nature as man – a rational animal with a volitional consciousness seeking to organise his percepts into an intelligible system of interrelated concepts. If I then choose to give physical shape to the concept by arranging materials (which I procure by trading with those that have them, thus making them my property) suitably, I am being morally correct because surviving by producing value for consumption and trading is moral; it is the natural state of man.

The concept of IP seeks to hold as punishable, the act of forming concepts and acting on such concepts even though the process does not involve any initiation of force by the individual on any one else, least of all on the person who “produced” the idea. By seeking to initiate force on such men to restrain them from being human, it is a gross violation of their Right to Liberty.

To claim otherwise is either an error of omission (that goes for Rand) or an error brought on by a deliberate evasion of reality.

In sum, even if one uses Ayn Rand’s conception of Individual Rights, IP is an abomination because it is antithetical to the concept of Liberty. Let us be very clear on one point – Life > Liberty > Property. This is a very simple inequality to understand. Just take a look at the structure of the penal systems followed in civilised societies to get a grip on this. Simple crimes are punishable with fines (loss of Property). Graver ones are punishable with imprisonment (loss of Liberty). The gravest ones are punishable with death (Loss of Life). Get the point? Life makes Liberty and Property necessary while Liberty makes Property possible.

newson October 5, 2009 at 10:30 am

let’s be realistic. first, who would publish “tom sawyer” one day after it’s released? only already successful works are attractive to the “pirate”. so by the time the renegade publisher commits to print, the authorized publishers have already recouped, at least partially.

second, whilst the author may be missing out on royalties, his name and reputation are likely to be more widely spread by the pirate (costs being lower, therefore the work is accessible to a poorer demographic, too). the person who buys a knock-off today, may be the same person who buys an authorized hard-back next year.

paris hilton should demonstrate to anyone that fame is a marketable commodity, even to those of modest talent. smart people like mark twain was should have no problem in capitalizing on this goodwill.

Bala October 5, 2009 at 11:07 am

newson,

While I do agree that the outcomes you have identified are indeed possible, as an individual, I may still desist from reproduction. That is still to say that it is a completely personal decision and different people may react differently. It is definitely not justification to deem the act of “unauthorised” reproduction as criminal and punishable.

And yes. You are right in identifying that Dale Halling is tilting at windmills when he talks of copying a book the day after it is published.

Michael A. Clem October 5, 2009 at 2:13 pm

It’s just painful watching you guys drag Dale Halling kicking and screaming from his vague and general points to specific and relevant points of the argument.
It’s important to be specific, I think, to clarify the issues. Newson brings up good points, but not ones relevant to the moral argument.
Forget “Tom Sawyer”. It’s public domain. Anyone can publish it and not pay Samuel Clemens or his heirs a penny.
Let’s take, say Stephen King, instead. It is not wrong to copy his latest novel for my own personal use. Perhaps I want a copy of it on my computer, or perhaps I think manually copying it will help me understand writing and make me a better writer.
It is wrong to copy his latest novel, and publish and sell it with my name as the author instead of his, because that would clearly be fraudulent. No IP law is necessary to deal with that.
It would not be wrong for me to take the same plot, style, or characterization of his novel and write my own novel with those same elements. Ideas are not property–we can only be concerned with specific implementations of those ideas. King’s novel would be one implementation, my novel would be a different implementation.
Would it be wrong if I published a novel that used the same characters as his, perhaps even the same settings, but with a different plot? Here we get into murky waters–how much of his novel is truly “his”, and off-bounds to other writers (without his permission) and how much is freely available to others to use? These are the kinds of issues that need a clear understanding to sort out.
Is it wrong to publish it, with his name on it, but not pay him anything for doing so? Actually, yes, I think there is a problem with that, but I must emphasize, that that doesn’t justify calling his novel his “property”. And that’s the problem with IP laws. To deal with an obvious injustice, they’ve tried to create a whole new class of artificial “property” that conflicts with traditional property, and then lawyers, of course, have tried to stretch that to cover more than it should, thus creating new injustices.
Sticking to fraud, tort, defamation of character and other common law developments should be enough to deal with obvious injustices, without allowing the law to go too far the other way.
Was the 1940′s Captain Marvel an infringement on the Superman character? CM was obviously a copy to a degree, but the Captain Marvel stories were quite different in other regards than the Superman stories. That didn’t stop National Periodical Publications from essentially bankrupting Fawcett with lawsuits. That’s the kind of injustice that IP law can’t seem to cope with.

Bala October 5, 2009 at 7:56 pm

Michael A. Clem,

” That’s the kind of injustice that IP law can’t seem to cope with. ”

Someone who agrees with the concept of IP would not see that as injustice. In example of this kind that you show, they will only look for aspects that vindicate their stand. I can tell you this for sure because until recently, I was in the other camp.

newson October 5, 2009 at 8:24 pm

to bala,
the history of copyright was the turning-point for me. it was a very shabby arrangement, but time and existing practice tends to blind us to the original agenda of the interested parties (rulers and the publishing industry).

http://questioncopyright.org/promise

Bala October 6, 2009 at 12:17 am

newson,

Nice read. Thanks for the link. However, a glance at the comments, especially the ones that object to the idea behind the article and that support copyright laws, shows me that I am yet right.

My observation, to make it clear, is that the campaign for copyrights has worked in the sense that there are a lot of people who think that patents and copyrights are morally correct principles. People who think thus are likely to see existing laws on patents and copyrights as morally sound but riddled with loopholes through which “crooks” who wish to steal the product of the creative people’s minds escape (Dale Halling is a prime example. I was another example till I realised the connection to Liberty.). Such people are bound to ask for stronger laws, stricter enforcement and more stringent punishment. It is not that these are evil people who are against Liberty. It is that these people believe that is the right thing to do.

In fact, after reading this article and the comments, I stand all the more convinced (and vindicated) that if at all one is to make a success of the campaign against IP and to ultimately get rid of its infringment on our Liberty, we need to also present a moral case against IP. We need to show that Patent and Copyright Laws as they exist are immoral and need to go.

Just to draw a parallel, I am indeed happy that I read Ayn Rand and her moral case for Gold as money and for Capitalism as the only moral social/political system evolved by man, prior to reading Ron Paul’s “The Case for Gold” and Rothbard’s “The Mystery of Banking”. While these latter books presented me with a fantastic historical and logical case against fiat money and government intervention in the monetary system, the arguments struck deep in my mind because I knew that the authors were morally on a solid grounding. Given that I knew what was right, understanding what was wrong with what is happening, why it happened and how one is to go back to the right path was made easy.

In my opinion, the Moral case makes the Utilitarian case more valuable. The Utilitarian case will show that the Moral is indeed the Practical, but the Moral case needs to come first.

In case you do agree with the moral case I have tried to present above, please do suggest ways by which one can expand on it (or even condense it – the objective is to make it easy to understand but still comprehensive) and use it effectively in the campaign. (I have drawn heavily on Ayn Rand’s work in doing so.) At the end of the day, the idea is to spread this message far and wide. mises.org is a good way to do it.

In case you (or anyone else including Stephan too) think that it needs correction, I think making those corrections and making a solid moral case should be one of the key steps to take.

sweatervest September 4, 2011 at 3:52 pm

Ideas are not property because they are not means employed in action. It makes no sense to “use an idea”. Therefore both value and ownership simply do not apply to “ideas”. It is meaningless to speak of the value or ownership of an idea.

The only thing you can “use” is a physical, scarce good. There is no such thing as “using” and idea, which means there is no such thing as “valuing” or “owning” an idea. Only the physical good that is the good it is because of its specific configuration can be used, valued or owned.

A clay wheel is just a bunch of a clay, and nothing more. To own a clay wheel means to own the clay that makes up the wheel and nothing more. To value the wheel more than something else is to prefer the clay that makes up the wheel to some other physical good. It is meaningless to attach value or ownership to this wheel beyond the clay that makes it up.

It is a “wheel” only because the clay is shaped to be round. If one reshaped the clay it would cease to be a wheel and, correspondingly, its value will likely change because one cannot employ the clay in the same way as one could if it was shaped to be round. This does not change the fact that they wheel is nothing but clay. They clay counts as a wheel because it is in a specific form, and derives its value from being in that form, but the value is attached only to the clay that makes it up. This is simply due to the fact that the only thing one can use, that is to employ as a means in action, is the clay.

The same goes for ownership. One owns the clay, not the fact that it the clay is shaped to be round. It is meaningless to speak of ownership of the latter, for to own means to exclude use, and so it only makes sense to speak of ownership for things that can be used, and one cannot use the fact that clay is round. One can only use the clay.

If another mold of clay is shaped to be round it will also be a wheel, and one can construct a mental category that includes all physical goods that count as a “wheel”. One can say that this mold of clay is the “same” good as this other mold of clay in the sense that they are both instances of this mental category. But the mental category itself is not a means to action and cannot be valued or owned.

This is no different than insisting, as any good economist always does, that there is no such thing as the value of “gold” or “water” per se, but only the value of this unit of gold right here and now, or this unit of water right here and now. One cannot use gold itself or water itself, one can only use a marginal unit of gold or water. Therefore both ownership and value apply only to the marginal unit.

If one molds one’s clay into a wheel, the one is only justified in doing this if he already owns the clay. He continues to own the clay after he has molded it into a wheel because it is his clay. The fact that one can establish a connection or similarity between this clay and this other clay (i.e. that they are both wheels) has no effect on this. One certainly does not gain ownership over the clay of others by molding his own clay into a wheel. To say that one does gain such ownership is at odds with the ownership rights the person had to have in order to justifiably make his first wheel! Doing so required the right to homestead clay and use it in any way that does not use without permission the physical goods of others.

If one can claim ownership over all clay by molding his into a wheel then one could claim ownership over all clay by using clay in any way. An IP proponent might object that he does not say one claims ownership over all clay by molding his into a wheel and patenting the wheel. He only claims ownership over all clay that is molded into a wheel. But this is false because to claim ownership is to restrict use and to say one owns any clay once it has been molded into a wheel is to claim ownership over all clay because it is restricting use of all clay to uses that do not involve it being molded into a wheel. It cannot be anything other than a claim of ownership over all clay.

But it’s worse than this. A wheel need not be made of clay, it can be made of anything sturdy. So patenting the wheel not only claims ownership over all clay but ownership over all goods that could potentially be molded into a wheel. This is quite clearly at odds with the original wheel maker’s right to make his first wheel, because he would also have to be the first user of any good ever. He would have to be the first actor engaging in the first purposeful action ever executed in order to be justified in making the first wheel, because otherwise someone else would have already made use of some other good, thereby making a claim of ownership over all goods at all times. The first wheel maker must rely on his right to homestead goods that are not already being used and maintain his ownership of those goods as he transforms them into more useful forms. The patent claim then contradicts this very right.

But this whole problem is easily solved by just remembering that one cannot “use” the “class of all wheels”. One does not employ the abstract concept of a wheel in action, so it literally means nothing to speak of the value of a wheel per se or the ownership of wheels per se. It only makes sense to speak of value or ownership of the thing being employed in action: the marginal unit of clay that has been molded into the shape of a wheel. The patent claim is not a claim of ownership over wheels per se, as such a claim is meaningless. It can only be a claim of ownership over all marginal units of scarce goods that could potentially be transformed into something that counts as a “wheel”. This implies one can establish ownership without use, and as soon as this is admitted the very concept of ownership breaks down. Ownership is only meaningful when it means that someone owns something until he volunteers to give up such ownership. To say someone owns something until someone else volunteers to transfer the ownership is to destroy the very concept of ownership itself.

This applies no less to novels, movies and music than it does to wheels. There is no such thing as using a novel, movie or song and therefore no such thing as value or ownership of a novel, movie or song per se. There are only physical goods, such as ink and paper, or computer memory registers, that can be transformed into an instance of a particular good. Just like clay may be molded into a wheel, ink and paper may be molded into a novel. And just how one can say that this clay and that clay have both been molded into the “same” good, a wheel, one can say that this ink and paper and that ink and paper have both been molded into the “same” good, a particular novel. This certainly does not mean that when one creates the first instance of a novel with his own ink and paper that he gains ownership over the ink and paper of everyone else. To say so is at odds with the author’s right to his own ink and paper, which he needed in order to justifiably produce the first copy of his novel.

There is no “value” or “ownership” of a novel per se. It makes no sense to say that this novel is more valuable than this other novel, unless one is speaking of marginal units, i.e. a specific copy of a novel. To say that one novel is “more valuable” than another novel is like saying “gold” is more valuable than “water” or vice versa. There is no value or ownership attached to the mental category of a particular good, only to marginal units of that good.

This is simply because there is no such thing as “using” a novel per se, just like there is no such thing as using a wheel per se. One can only use this clay which has been molded into a wheel, and likewise one can only use the ink and paper that has been molded into a particular novel. Yes the ink and paper would be almost worthless in a different configuration, just like a clay molded into a square would be relatively useless. But that does not affect the fact that what is being used, and therefore valued and owned, is the clay and the ink and paper. Not the abstract concept of a wheel or a novel.

This not only establishes the moral bankruptcy of intellectual property, as it is always attempting to claim ownership over all useful goods, it establishes what is so absurd about thinking that intellectual property could lead to more production of creative goods.

The economics argument is always that without intellectual property the price of intellectual goods will drop to zero or near-zero and thus destroy the incentive to produce creative goods. This is quite true, and to claim this is concerning is insane. This is precisely the system of incentives that causes a market economy to function so well. Now the argument is never that intellectual property makes people value creative goods more. No one is suggesting that intellectual property shifts the demand curve of any creative good. Thus the only way the per unit price of creative goods would decrease is by moving down and right along a stationary demand curve, which is moving to a larger supply. That is a somewhat complicated way to say a very simple thing: when supply goes up the per-unit price goes down.

This is no less true with creative goods than with any other goods. So essentially what the IP proponents are concerned about is that without intellectual property the supply of creative goods would explode to the point that their per-unit prices drop to near-zero. So we find ourselves in quite a paradox where there are not enough creative goods to go around because there are so many creative goods to go around.

If creative goods were scarce then their per unit prices would not be near-zero. They would only drop to near-zero as they get distributed for free and cause the supply to explode, making it near effortless to obtain a creative good. If it any time there is actually a shortage of creative goods, this literally means that people are willing to spend larger and larger amounts of money on the production of more creative goods. The IP proponent is insisting that people cannot or will not do that, i.e. that they will not act economically. Something they want is in shortage, which can only mean that they are willing to pay people a solid amount to produce more of what they want, and yet they won’t do that?

Of course they will. If no one makes music because they don’t expect to make money for it then there will be a shortage of music and so long as people *want* music production they will pay to have it done. Artists will offer to make music once they are paid a certain amount up front for it, just like any other production model, and if there really is a shortage of music then people will be more than willing to pay their favorite artists to continue producing. How will people know what artists they like and not? Same way it always happens, and is happening now. They hear some of their music for free. You make a little music and advertise it, perhaps even paying people to distribute your music, and then you will gain a fanbase who will pay you to make more music.

The only reason this wouldn’t happen is because people are already satisfied with all the music they can download for free off the internet and do not consider it worth it to pay for production of further music. This is literally saying that there is already an abundance of music, and it would undermine the very functionality of a market economy for there to be strong incentives to produce something that has already been produced into abundance.

It is a very good thing that there are no incentives to produce that which already exists in abundance. If that were the case then entrepreneurs would not be more drawn the production of goods that are not in abundance and economic calculation would not function. Too much of some goods would be produced at the expense of too little of other goods.

But to be clear IP cannot raise the incentives to produce creative goods. If it did it would still not be a good thing because it would only interfere with the incentive structure of a free market and result in over-production of some goods at the expense of under-production of other goods, and some legislature can do this. This is what has happened to roads. If creative goods were financed through taxes then one would expect an over-production of creative goods at the expense of under-production of other goods. Tax-subsidizing creative production *would* increase the incentive to be a creative producer.

But IP does not does this, and actually results in *less* production of creative goods and correspondingly *lowers* the incentives to be a creative producer. This is because, as said before, IP does not shift the demand curve for creative goods but only prevents its supply from increasing dramatically and resulting in a correspond decrease in per-unit price. To raise the per-unit price (and therefore the income of a single creative producer) requires moving back up the demand curve to a smaller supply. The amount of money people are willing to spend on creative production does not change. All that changes is that the number of creative producers is dramatically lowered so that each individual creative producer receives a much larger fraction of that total amount. For the few creative producers that remain in the market, they serve to make much larger incomes than without IP. But this literally comes at the cost of the income of all the creative producers who have been pushed out of the market entirely. Only because all of their incomes drop to zero do the incomes of the few survivors go up. This does not raise the incentive to be a creative producer but lowers it by making it nearly impossible to be a successful creative producer at all.

This is no different than arguing that giving GM a monopoly on car production, which of course *will* serve to increase the income of GM, raises the incentives to produce cars and therefore results in more car production. This is obviously not the case because one is literally outlawing car production! It raises the incentives to be GM, and dramatically lowers the incentives to be any other car producer. It is the same thing with intellectual property, which aims to increase the production of creative goods by outlawing creative production (i.e. manufacturing without a patent, covering without a license, composing without double-checking every copyrighted melody, etc.)!

To see more specifically how this functions in the market of music, intellectual property in music recordings raises the per-unit price of, say, a CD. A person is willing to spend more on a CD because his option of downloading the music for free is made riskier with the threat of punishment. But of course this does not make him willing to spend more money on music than he otherwise would want to spend. It only means that he must spend a much bigger fraction of that money on each individual CD. Therefore he will buy much fewer CDs, and will of course only buy the few CDs that he wants the most. He will not buy all the CDs that he still enjoys but not enough to justify the high price. Extrapolating to the entire market, only those artists who appeal to a very large majority of music listeners will see appreciable CD sales, while those appeal to smaller and more specialized markets will be pushed out of the market because people buy the most popular artists’ CDs and then don’t want to spend any more money on their CDs and their fans will buy less of their CDs. This also produces a positive feedback in that fewer CD sales results in less advertisement and so less popular artists tend to remain obscure and unknown because people only want to spend $10 on a CD by an artist they already know about. They may risk $1 on an unknown local artist, but not $10.

And thus is the explanation for the hollowing out of the “music industry” to the point that it caters only to the most widely held tastes, i.e. “pop music”, while music appealing to smaller crowds, i.e. “artsy music”, is pushed almost entirely out of the market. Leftists always try to explain the homogenization of the music industry with some absurd claim that everyone is being “brainwashed” to like what they don’t really like. My explanation is much more sensible. When the market is restricted to only a few producers the only producers who will survive are those who cater to the largest demographic.

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