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Source link: http://archive.mises.org/11599/new-book-innovation-intellectual-property-and-economic-growth/

New Book: Innovation, Intellectual Property, and Economic Growth

February 3, 2010 by

The new book Innovation, Intellectual Property, and Economic Growth, by
Christine Greenhalgh & Mark Rogers, looks interesting:

What drives innovation? How does it contribute to the growth of firms, industries, and economies? And do intellectual property rights help or hurt innovation and growth? Uniquely combining microeconomics, macroeconomics, and theory with empirical analysis drawn from the United States and Europe, this book introduces graduate students and advanced undergraduates to the complex process of innovation. By addressing all the major dimensions of innovation in a single text, Christine Greenhalgh and Mark Rogers are able to show how outcomes at the microlevel feed through to the macro-outcomes that in turn determine personal incomes and job opportunities.

From a quick skim of ch. 1 (available here), it appears to adopt a mainstream approach–finding out whether there is market failure or a public goods problem (see Hans-Hermann Hoppe’s “Fallacies of the Public Goods Theory and the Production of Security,” in The Economics and Ethics of Private Property for criticism of the concept of “public goods”), and then asking whether we can fix it with some kind of state invervention. The same old “the market is not perfect, so let’s let the thugs with guns have more power” song and dance.

But at least they recognize you have to take costs into account (see my Reducing the Cost of IP Law; There’s No Such Thing as a Free Patent; Yet Another Study Finds Patents Do Not Encourage Innovation; and What Are the Costs of the Patent System?):

In addition, understanding whether these monopoly costs of IPRs [intellectual property rights] are less than the benefit to society emanating from the spur that IPRs give to innovation will provide a major theme for parts II and IV of this book.

My guess: they’ll conclude that some IPRs can help address the market failure/public goods issues and give rise to some kind of net benefit, but not our current IP system; so then we’ll have a laundry list of “reforms” that would tweak the current laws to reduce the cost enough so that there is a net benefit. Just a hunch. Unfortunately, at $45 even in e-book format, I don’t think I’ll read it until it comes out at a more reasonable price.

{ 17 comments }

Silas Barta February 3, 2010 at 6:29 pm

Unfortunately, at $45 even in e-book format, I don’t think I’ll read it until it comes out at a more reasonable price.

You mean you have inhibitions against just pirating it?

Bruce Koerber February 3, 2010 at 7:44 pm

I can’t believe that these authors think that their ebook is worth $45.

I can guarantee you that some of the information in their book is built upon a worn-out paradigm which significantly reduces its value.

I suggest saving between $32 and 38.50 and instead read about the divine economy theory, which is cutting edge.

Gil February 3, 2010 at 8:31 pm

Is this the part where anti-I.P. folk argue that although lack of I.P. where a shady competitor can threaten the reputation of a reputable doesn’t really matter as I.P. is wrong and some loss of innovation is okay.

newson February 4, 2010 at 1:55 am

gil,
at least silas can argue properly. watch him and learn.

clay barham February 4, 2010 at 11:54 am

Innovators come from pebble droppers with courage to pursue their dreams as cited in Save Pebble Droppers & Prosperity on Amazon and claysamerica.com. They are the stand-alone visionaries who are self-reliant, like Howard Roark in his jury summation in Ayn Rand’s Fountainhead, in an environment where individual self interests are more important than are community interests, the latter which Obama, Rousseau and Marx prefer. claysamerica.com

Curt Howland February 4, 2010 at 12:30 pm

Silas,

I’ve noticed that “illegally” downloading material is the common reply of those who do not understand the negatives of government monopoly grants.

…and Microsoft apologists. Really. In many, many forums where I have suggested that the price of commercial software is far above its utility, that the free (as in no cost) F/OSS programs like Linux and OpenOffice.org have a much greater return on investment, the people who say that commercial software is “so much better” answer with “if you don’t like the price of the software, just pirate it.”

Asking how someone who objects to government monopoly grants on principle why they don’t “just pirate”, is ignoring that the argument is being made by a person to whom principle matters.

Silas Barta February 4, 2010 at 3:14 pm

@Curt_Howland: I was just pointing out that Stephan_Kinsella’s principles don’t require him to respect others’ IP (well, except when he delegates his IP rights out to publishers in exchange for money), so why is he acting like it’s some kind of rule he has to obey?

And if it’s against your principles to copy the works of those who don’t want them to be copied without permission … um, gee, how exactly would an IP free world be different to you? You’d still have to respect the wishes of those who ask that their work not be copied, right? Or are you willing to secretly violate “hey, don’t copy our stuff, please” but not “hey, don’t copy our stuff, it’s under copyright”?

Peter Surda February 4, 2010 at 7:20 pm

Dear Silas,

> so why is he acting like it’s some kind of rule he
> has to obey?
Beats me. Maybe because he does not have the spare money for a copyright infringement trial or prefers not to go to jail. But you’re right, it makes so much sense to assume some deep philosophical dichotomy as a reason for his inaction.

> … gee, how exactly would an IP free world be
> different to you? You’d still have to respect the
> wishes of those who ask that their work not be
> copied, right?
You would not have to respect them. Some still might. But the outcome would be different. The threat of a trial or jail would only be present if there was an underlying contract. Otherwise, there might be loss of reputation, economic and social boycott and other indirect activities. You would have a choice just like you have now, merely there would be less violence involved in the options.

Silas Barta February 4, 2010 at 7:35 pm

@Peter_Surda:

Maybe because he does not have the spare money for a copyright infringement trial or prefers not to go to jail. But you’re right, it makes so much sense to assume some deep philosophical dichotomy as a reason for his inaction.

Exactly. Contra Curt_Howland, it’s not some kind of *principled* decision on Stephan_Kinsella’s part. That’s all I was trying to establish.

You would not have to respect them. Some still might. But the outcome would be different. The threat of a trial or jail would only be present if there was an underlying contract. Otherwise, there might be loss of reputation, economic and social boycott and other indirect activities. You would have a choice just like you have now, merely there would be less violence involved in the options.

But that’s exactly how you intend to enforce *physical* property in the absence of the State. So, um, how does your position on IP actually *differ* from your position on physical property?

-You want them both “enforced”, to the extent they can be, without the government.

-Everything you find wrong with both of them, has to do with the government’s involvement.

I’ve asked this question to less intelligent posters and gotten muddles answers. Can you do better?

Anonymous February 4, 2010 at 9:49 pm

I actually was just given this book and asked to review it. I’d like free-market opinions on it if there are others out there who are actually going to read it.

Also, anyone have another source of a possibly more rigorous refutation of “public goods theory”?? While Hoppe is logically convincing, I was hoping for something more. To take the lighthouse scenario…

Let’s say some not-so-nice guy in our free-market economy has bought the lighthouse. This guy also owns a pharmaceutical company. His pharmaceutical competitors are across the ocean. He starts charging enormous fees for use of the lighthouse to make it prohibitively expensive to import the rival firm’s medicine. People get sick, he charges higher prices, etc. He starts buying up other businesses whose competitors are also across the sea and starts the same tactics. Pretty soon our area around the lighthouse looks like North Korea…

Ok, maybe not so simple, but can’t we envision such a scenario where the private ownership of certain goods is less desirable for the well being of everyone and therefore we can distinguish it as a public good (owned or supported by a government kept in check by a democratic system).

If anyone can help me here it would be appreciated.

Peter Surda February 5, 2010 at 2:23 am

Dear Silas,

the difference, as I envision it, in enforcing rights in a stateless society with physical versus immaterial goods is in initiation of force as a retribution for damages by a third party. With physical goods, retribution by force is not an initiation of force, with immaterial it is. For an example see the “Cartoon Wars” episodes of South Park ( http://en.wikipedia.org/wiki/Cartoon_Wars_Part_I and http://en.wikipedia.org/wiki/Cartoon_Wars_Part_II ).

Stephan Kinsella February 5, 2010 at 11:03 am

Peter, good point. Here’s another way to think about the incoherence of IP (and of pro-IP “arguments”): I’ve pointed out many times the hypocrisy of IP advocates, who denigrate the need for scarcity as a criteria for property; they say that intangible, non-scarce “creations” are “just as much” property as are real things. In fact, some say they are MORE fundamental than rights in lowly material things–Rand and Galambos say this; Tibor Machan even implies it. Yet, when they want to enforce rights in IP they want to use physical force, against physical things–the body or property of the IP “infringer.” Why the need to stoop down into the lowly physical world to enforce these IP rights, if IP “things” are “ontologically” “types of things” that “can be owned”?

Consider a world without scarcity. Scarcity means rivalrousness–the possibility of conflict. So a world with no scarcity is hard to imagine exactly but it could be one in which people are sort of ghostly; or, one in which people are super-invulnerable and have the ability to create at will whatever objects they want, in the blink of an eye. A world so that no one can force others to do anthing, or harm them, or “take” anyting from them. If I see your “car” I can conjure up one for myself–yours is not taken. Etc.

Now, in such a world–and don’t call it absurd, since the IP advocates assure us that things other than scarce things are ontologically “real” too–the IP advocates would still say that there are property rights in intellectual creations. Right? If I create a painting, then if others duplicate it without my permission they are “trespassing.” But how would such a right even in principle be enforced, in a non-scarce world? You could not use force to stop the infringer. You could not penalize him. You could not “take” any of his property as “damages.” So IP would be completely unenforceable in a world without scarcity.

In other words, IP needs a world of scarcity in order to exist. Yet IP proponents claim that IP “objects” have independent existence, that scarcity is not necessary, etc. They even claim IP is more primary than property in lowly material things. Ridiculous.

Silas Barta February 5, 2010 at 11:24 am

@Peter_Surda:

the difference, as I envision it, in enforcing rights in a stateless society with physical versus immaterial goods is in initiation of force as a retribution for damages by a third party. With physical goods, retribution by force is not an initiation of force, with immaterial it is.

Ah, they’d be different because you’d defined them that way. That clears things up … I think. (Though not why Curt_Howland would respect IP in a state-free society.)

@Stephan_Kinsella: It wasn’t a good point.

Consider a world without scarcity. Scarcity means rivalrousness–the possibility of conflict.

You’re saying there’s no conflict between pro- and anti-IP with respect to an intellectual work??? Then what are we arguing over?

Look, there’s a difference between justifying one side’s claims (say, the anti-IP side’s) in a conflict by appeal to some other principle, versus claiming that his position is necessarily justified because … there is no conflict. The latter is just a category error: you can’t justify a position in a conflict by saying there is no conflict. That’s just not how it works.

You can sure write an 80 page essay amplifying that confusion, though!

Stephan Kinsella February 5, 2010 at 11:57 am

Silas:

“You’re saying there’s no conflict between pro- and anti-IP with respect to an intellectual work??? Then what are we arguing over?”

Depends on what the IP guys are asking for. If they really think ideas are real objects, let them use those objects for enforcement. I don’t mind. But if you then start asking to control my physical resources, in a way that conflicts with the Lockean homesteading principle, as a libertarian, I object.

“Look, there’s a difference between justifying one side’s claims (say, the anti-IP side’s) in a conflict by appeal to some other principle, versus claiming that his position is necessarily justified because … there is no conflict.”

Actually, we dont have to justify anti-IP. We just point out that IP is not justified. The burden is on you. You are the ones proposing a homesteading rule for scarce resources that undercuts the libertarian one.

Peter Surda February 5, 2010 at 12:09 pm

Dear Stephan,

you wrote exactly what I realised after writing my previous post. There is only one more thing I’d like to add to show the inconsistency in IP theory: assuming a restitution should be proportionate to the “damage” caused, then IP infringments should be compensated by immaterial goods too instead of material ones. So a consistent IP proponent should either retaliate by “infringing back” just like in the cartoon I mentioned, or by demanding immaterial goods that the infringer “owns”. Obviously, this approach, while consistent, would make IP practically irrelevant. Indeed, as those infringed upon demand material goods as a restitution, they themselves demonstrate that they value them higher than the immaterial.

Curt Howland February 5, 2010 at 12:23 pm

Silas, you seem able to tell what other people’s thoughts and motivations are. Why don’t you tell me why I’m not interested in the products of people who don’t want me as a customer?

Peter Surda February 5, 2010 at 3:52 pm

Dear Silas,

I think you interpret my argument too “deep”. I was not explaining the why, but what, as it was my impression that this was your question.

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