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Source link: http://archive.mises.org/13688/goods-scarce-and-nonscarce/

Goods, Scarce and Nonscarce

August 25, 2010 by

Nonscarce goods are a great gift courtesy of the structure of the world, a boon to humankind, a vast treasure of resources — tools for making the world a relentlessly better place. FULL ARTICLE by Jeffrey Tucker and Stephan Kinsella

{ 114 comments }

Jonathan August 25, 2010 at 8:48 am

Would contract that ask employee not to reveal secret production information about the firm where he work would be legal?

Can contract protect firm from their employee about revealing nonscarce information?

Stephan Kinsella August 25, 2010 at 9:27 am

My view is the Evers-Rothbard title theory of contract is basically correct–I elaborate on it in my JLS article A Libertarian Theory of Contract: Title Transfer, Binding Promises, and Inalienability. See also the “Trade Secret” section (note 90 etc.) of Against Intellectual Property.

Under this view, there are at least two ways to look at this. First, the employer can require as a condition of employment that the employee contractually obligation himself to pay certain monetary damages to the employer, in the event he reveals certain confidential information.’

Another possible way to look at it is that the owner of property–say, a factory–has the right to grant or deny permission to people to use it. If someone uses the property without permission it is a form of trespass, which is a crime or tort, with associated damages or penalties. The permission can also be conditional–you may use my factory for XYZ purposes but not ABC uses. I the employee knowingly does ABC with the property it is an unconsented to use and arguably at type of trespass, and may be treated as such (though in my view this would probably still just be handled by contract instead: the contract would say that IF the employee does ABC with Employer’s property, THEN certain monetary damages are owed–just a title transfer).

The problem I see with treating the trade secret breach as a trespass instead of contractual damages issue is that when the employee is at his home or off company premises and reveals information, he is not trespassing since he is not using the company’s property (information is not property, it’s just knowledge). So this can only trigger a contractual damages payment. For there to be trespass he would have to misuse company property. But when he is using the company property and learning its trade secrets presumably this is consented to. But suppose he uses company property (building, rooms, computers) to access information he is not supposed to have access to–in this case, he is committing trespass to acquire the confidential information. In this respect he is just like a burglar who breaks in and acquires information by an act of aggression (trespass, breaking and entering). When there is a crime or tort, there are certain penalties or consequences to the malfeasor–monetary damages (restitution) at the least, and possibly retribution or incarceration (for more on this see my JLS article Punishment and Proportionality: The Estoppel Approach).

Note, however, that once the employee does make the information public, there is nothing the previous “owner” of the information can do to stop third parties from using this information (this is the law right now, by the way, with respect to trade secrets: once the information is no longer secret, it’s just not a trade secret any more. The only remedy is against the former employee. See also the discussion in Against IP of “Cooter” and the oil information in the “Contract vs. Reserved Rights” section.

Walt D. August 25, 2010 at 5:10 pm

Not when you have a you have a Government entity, such as the State of California, involved. They can hold that parts of the contract that restrict things such as competition are null and void.
They can also limit “at will” clauses. In fact they can limit anything they see fit.
This is what is so pernicious about the State.

Jkillz August 25, 2010 at 10:31 am

My intellectual development on this issue began with an essay I wrote called “Art and Copyright”. When I discovered Kinsella’s work, it was merely the next logical step in my thought — though admittedly I was dismayed, like all young people are, to find out I was not in fact the first to come up with the idea.

I know I’m the choir on this issue, but this is a thoroughly convincing article. Well done.

Matthew August 25, 2010 at 11:34 am

Hear, hear. Top notch article.

Reigning Bramble August 25, 2010 at 10:38 am

Working as I do in the internet industry, I am vitally interested in these issues. Here are some real-world examples from my work on which I would be interested in hearing your views.

1. A company has developed a code-base (we call it a framework) that can be leveraged to facilitate the creation of desktop, mobile or Web applications. The company licenses this framework to third-party programmers. Part of the licensing terms require that the third-party programmers not distribute the framework to others.

2. A company publishes a downloadable software program. It is freely available and fully functional. But as a condition of downloading, the downloader must agree not to use the software past a certain trial period without paying the publisher.

3. Another downloadable software program, this one programmed to disable itself after certain trial period if a special code is not entered. The publisher sells these codes. Purchasers are prohibited by contract from sharing the codes with others.

4. The case of the iPhone: The program downloaded is completely unrestricted. However, restrictions built into the operating system of the device that runs the program prevent users from downloading these unrestricted programs unless they have paid a fee. Further the device user must agree not to tamper with the OS restrictions that protect the downloadable programs.

Can all these situations be managed by private contract, similar to a standard non-disclosure agreement (which is very common in our industry)? Can the publisher seek injunctive relief in the case of breach? Are “click-to-agree” user license agreements valid and enforceable?

Also, you say that confidentiality can only be enforced against the original party to the contract, and that once the secret is divulged, it can no longer be protected. But could a software publisher require a user to enter into a new confidentiality agreement, something like situation 2 above, before being permitted to open the copied software?

And finally, do you have an opinion about the morality or advisability of these admittedly convoluted attempts to make a scarce good out of a non-scarce good? I know you will suggest the open-source model, but we have never found that to be viable. My philosophy has always been that in order to make money, it really helps to have a price. The products we create are technically non-scarce, because reproducible, but they require so much work, and sell for so little money, that we have to restrict access to them in order to make any money off them. And if we don’t make money, they will become truly scarce, as in nonexistent, because we won’t be able to make them any more.

Thanks!

Mike Vine February 3, 2011 at 11:13 pm

I just want to say that this comment cuts right to the heart of what was going through my head as I read the article in question. I’m sorry to see it went unanswered by the authors or others.

And surely if breach of contract only applies to the thieving party, and not the millions of recipients of such theft, there is a strong incentive to fund a “fall guy” to make a program, song file, or tv show available to all. The authors might not think this is a problem, but then we return to the issues raised in this comment about the scarcity of creative effort.

nate-m February 4, 2011 at 12:31 am

Working as I do in the internet industry, I am vitally interested in these issues. Here are some real-world examples from my work on which I would be interested in hearing your views.

1. A company has developed a code-base (we call it a framework) that can be leveraged to facilitate the creation of desktop, mobile or Web applications. The company licenses this framework to third-party programmers. Part of the licensing terms require that the third-party programmers not distribute the framework to others.

Scratch the idea of a license and replace it with a contract.

However keep in mind that if the code did get leaked to the public then other people are not going to be covered by the contract. You can’t expect people to abide by a agreement they never agreed to.

2. A company publishes a downloadable software program. It is freely available and fully functional. But as a condition of downloading, the downloader must agree not to use the software past a certain trial period without paying the publisher.

You have to get them to agree to the restrictions before you allow them to download it. If they leak it then your only recourse is to go after them to recoup your damages.

3. Another downloadable software program, this one programmed to disable itself after certain trial period if a special code is not entered. The publisher sells these codes. Purchasers are prohibited by contract from sharing the codes with others.

Same situation as 1 and 2, slightly different details. This one you can deal with by giving people unique keys, and signing your software with the appropriate cryptographic techniques. Not that it is going to make much of a difference.

4. The case of the iPhone: The program downloaded is completely unrestricted. However, restrictions built into the operating system of the device that runs the program prevent users from downloading these unrestricted programs unless they have paid a fee. Further the device user must agree not to tamper with the OS restrictions that protect the downloadable programs.

If you can get them to sign a agreement and agree to the restrictions prior to you selling them it is the only real moral and ethical way to do it. You can just put the restrictions on it and sell it to them, but there are plenty of other businesses that would be happy to provide services to break your restrictions for a small fee.

Can all these situations be managed by private contract, similar to a standard non-disclosure agreement (which is very common in our industry)? Can the publisher seek injunctive relief in the case of breach? Are “click-to-agree” user license agreements valid and enforceable?

You can do whatever you want under a contract if you can get the other party to formally agree to it prior to usage. The problem you face is how you are going to enforce the contract and recoup damages if the other party breaks it.

One way it could possibly work is that you require insurance for the purchaser prior to signing the contract. That is if the other party fails to live up to it’s agreed upon responsibility then you will get your damages recovered by their insurance company. That way you let the insurance company deal with the details of monitoring and compliance checking.

Obviously this approach is a lost cause for consumer goods and software. No insurance company would in their right mind would risk so much money on something so risky and doomed to failure without huge premiums. For larger professional institutions then remaining in good standing with the business community is much more critical. Between businesses such agreements can be very practical and lucrative. You don’t have to give a shit on who is a safe bet or not… that is the insurance company’s problem. You just have to worry about whether or not the insurance company is creditable.

If the company your dealing with has a insurance company backing them up that you approve of then it’s safe to do business with them, no questions asked.

Also, you say that confidentiality can only be enforced against the original party to the contract, and that once the secret is divulged, it can no longer be protected. But could a software publisher require a user to enter into a new confidentiality agreement, something like situation 2 above, before being permitted to open the copied software?

Contracts can only cover the actions of people that agree to them. Anything else is immoral.

And finally, do you have an opinion about the morality or advisability of these admittedly convoluted attempts to make a scarce good out of a non-scarce good? I know you will suggest the open-source model, but we have never found that to be viable. My philosophy has always been that in order to make money, it really helps to have a price. The products we create are technically non-scarce, because reproducible, but they require so much work, and sell for so little money, that we have to restrict access to them in order to make any money off them. And if we don’t make money, they will become truly scarce, as in nonexistent, because we won’t be able to make them any more.

There are a lot of ways to make money here.

I know how the internet works. There are literally new web and application frameworks falling out of company’s asses on a daily basis. How many does the world really need?

Also keep in mind that although (morally and practically) you can force the world to conform and make a untenable business model work for you by all agreeing to ignore the fact that software is infinitely reproducible… You yourself is not restricted by any copyright either.

If somebody approaches you and wants to have some application backend or library or whatever built for their in-house purposes? Just pluck one off the web or from IBM or whoever and modify it to suit their purposes. Without copyright you will lose all these big proprietary silos of code that all do just about the same things in similar ways… and you just end up with the world programmers sharing code based on business need. When it is useful to share resources to reduce costs.. you can do so. When it is not then you do not. You can take whatever binaries and code or whatever else you need and use it for the task at hand… just like anybody else can.

Programming then becomes a trade or a service.

Do you think that building a skyscraper is expensive and difficult? Do you think that the painters, plumbers, electricians, and all the hundreds different companies figure the best way to get compensated for their work is to sit out side and demand payments for every person that uses a service they built or put together? Does a doctor that replaces a heart valve charge monthly licensing fees for it? Was it not expensive, extremely difficult, and time consuming to make the artificial heart and cultivate the skills necessary to do the work?

Business needs don’t go away because all of a sudden copyright is abolished. They still need their software, their web frameworks, their database software, etc. etc. They will still have to pay people to write it, customize, and build it. Programmers will be paid to code and they will be compensated for their work one way or another. If it was possible to have one company write a generic piece of super software that filled all business needs and could be copied around the world and put all programmers out of business then they would of already done that. No… the reality is that well over 90% of all the coding that goes on is done for customizing existing software to fit specific business purposes. It does not matter if it is proprietary or not. The vast majority of resources the world devotes to programming goes into taking existing software and making it work for a unique business need.

The copyright has created huge market distortions and artificial markets. Yeah sure it is extremely lucrative system for a certain portion of the market and when it goes away it will hurt those people financially.. but it will also save a whole lot of money and time for a much larger audience all of which will be devoted to more productive endeavors.

Michael McLees August 25, 2010 at 11:07 am

A Lady Gaga CD is a non-scarce good. Fair enough. So why is there even an issue? Because the potential sales of the CD are scarce. There are finite amounts of people in the world with finite amounts of money to spend on CD’s. This scarcity is universally ignored or marginalized, but it is the root of the debate. So now that we have a scarcity, we need to come up with a fair system for distribution. That’s what IP is meant to do.

Your job is not to show that CD’s are non-scarce goods, but rather to show that an anti-IP environment is the just system for their distribution.

JGiles August 25, 2010 at 11:14 am

No. “Sales” are not a scarce good; they aren’t a good at all. They’re a voluntary exchange. “Sales” cannot be bought and sold, or traded, and to speak of a “fair system for distribution” of sales is nonsensical. Nobody gets to decide who gets “sales”, except the people buying things.

IP is an attempt to do just what you are asking for; try to force people to buy from only certain producers. Kinsella is trying to say that’s immoral and philosophically unjustifiable; I don’t agree. MY argument is that it makes no damn sense, economically speaking.

“Your job is not to show that CD’s are non-scarce goods, but rather to show that an anti-IP environment is the just system for their distribution.”

No. My job is to argue that a lack of IP leads to EFFICIENT distribution of music, whether in CD form or digital form, efficiency being defined as the largest number of people gaining the largest amount of wealth possible. “Just” has nothing to do with it.

Michael McLees August 25, 2010 at 12:27 pm

Efficient distribution, eh? Sounds to me like the precursor to a failing Utilitarian argument.

JGiles August 25, 2010 at 12:34 pm

Utilitarian? No. Utilitarianism is a system for determining moral worth. I say that “morality” is an inherently subjective concept, and that whether any particular person thinks a thing is immoral is entirely irrelevant to economics.

Failing? You need to demonstrate that, not assert it.

Michael McLees August 25, 2010 at 12:41 pm

You argue that a lack of IP leads to the most efficient distribution of goods. That’s a Utilitarian argument. It fails because you’re required to hold that up even in the face of unjust circumstances, such as a Communist forcing the wealthy to evenly distribute all their money to their neighbors without the hassle of bargaining or exchange. That’s unjust and immoral, despite the “efficient distribution”. That’s why you’re not going to find compelling Utilitarian arguments on either side of this debate.

JGiles August 25, 2010 at 12:51 pm

Except your argument is false.

“You argue that a lack of IP leads to the most efficient distribution of goods. That’s a Utilitarian argument. It fails because you’re required to hold that up even in the face of unjust circumstances, such as a Communist forcing the wealthy to evenly distribute all their money to their neighbors without the hassle of bargaining or exchange. That’s unjust and immoral, despite the “efficient distribution”.”

“Utilitarianism (also: utilism) is the idea that the moral worth of an action is determined solely by its utility in providing happiness or pleasure as summed among all sentient beings.”

First; My ideas are not Utilitarian, because I do not present them as an ethical theory. Indeed, I REJECT the validity of universal ethical theories. My economic ideas are motivated by pure pragmatism. In addition, I am entirely unconcerned with “happiness”, which is not something I can control or measure in any way. I’m concerned with wealth.

Second; “unjust circumstances” is, as I have stated, an objectively meaningless phrase. YOU think it’s unjust, and I think it’s unjust, but obviously the Communist doesn’t think it’s unjust or he wouldn’t be doing it.

Third; forcing the wealthy to distribute all their money evenly is not, in fact, an “efficient distribution”. It does not create more wealth, it merely shuffles wealth around. My statement was, “efficiency being defined as the largest number of people gaining the LARGEST AMOUNT of wealth possible.” The idea that Communism creates the “largest amount” of wealth has been repeatedly and thoroughly debunked. As such, it is not as efficient a system as the free market, which DOES create the largest amount of wealth of any economic system we know of.

Michael McLees August 25, 2010 at 2:01 pm

You’d be correct if it weren’t for marginal utility. This is not to say that marginal utility can be used to justify taking someone’s property; it just shows that your analysis is lacking.

JGiles August 26, 2010 at 6:10 am

I’d be correct but for marginal utility? Pray explain.

JGiles August 26, 2010 at 9:33 am

Ah, I see what you mean. You’re referring to the fact that “wealth” is also subjective; the poor have a higher marginal utility for money than the rich, so it’s arguable that “wealth” is created by redistribution from the rich to the poor.

Very well then, I’ll expand my reasoning for you. The idea that Communism creates the largest amount of economic growth and development has been repeatedly and thoroughly debunked. And it’s economic growth that allows for more wealth to be created in the future. As such, it is impossible for Communism to create more wealth, in the long run, than the free market.

I didn’t think I’d have to go through that, since we’re all libertarians here, but oh well. Regardless, marginal utility in no way, shape, or form refutes my position.

Nina Paley August 25, 2010 at 3:00 pm

A Lady Gaga CD is a non-scarce good.

No. A CD is a scarce good. The information it contains is non-scarce. If you steal someone’s physical Lady Gaga CD, they don’t have it any more. If you just make a new copy containing the same data, no harm is done, except to an outdated monopolistic business model.

So why is there even an issue?

The reason there is an issue is because people are unable to distinguish between scarce and non-scarce.

Michael McLees August 25, 2010 at 3:27 pm

OK. You got me. Replace CD with “music” and the point is the same.

Silas Barta August 25, 2010 at 4:53 pm

It’s a good thing we have you around, Nina_Paley, to point out these vital distinctions that have so clearly eluded everyone and negatively impacted our ability to communicate on this issue.

Michael McLees August 25, 2010 at 5:38 pm

Considering that on this board, I did the same exact thing to a person on whether Google’s phone OS is called Droid or Android, I’m in no position to complain about it.

Walt D. August 25, 2010 at 5:48 pm

It seems like it is OK to free load as long as you are creative about it.
1. Is it OK for me to let 10 friends into a movie theater through a window to watch movie for free as long as the theater is half empty and nobody notices?
2. Is it OK to tape or broadcast a Lady Gaga concert if someone else let me in the side door?
3. Suppose I own an apartment in a high-rise that overlooks Wrigley Field. Is it OK to use a high def camera and stream the ballgame over the internet?

Peter August 25, 2010 at 10:31 pm

1. Maybe. You could be the theater owner. More likely, you and your friends are trespassing in the theater, but that has nothing to do with the film — the theater could be closed, and no film playing, the situation would not change. Or it needn’t be a theater; letting your friends in through the window of someone else’s home where you’ve been invited for dinner, etc.

2. Sure. (You may be trespassing in the venue, but that has nothing to do with your taping)

3. Unless you’re part of some agreement not to, why wouldn’t it be?

Israel Curtis August 25, 2010 at 8:21 pm

Nina Paley is a scarce good. A digitized bundle of bits that when strung together make the pixels on a screen dance is not a scarce good (as evidenced by the fact that they were duplicated quite a few times just to get from Nina’s screen to yours). Nina’s particular ability to make pixels dance convincingly and in an entertaining fashion is a maybe not a scarce good itself, but it is unique, uncommon, and cannot be put to infinite use. Thus the pseudo-paradox that the multiplication of her film and its viewing by millions does not dilute the value of her ability, but increases our appreciation of it.

Sorry – couldn’t help myself. Glad to see you here ;-)

Jeffrey Tucker August 25, 2010 at 11:08 am

Reigning Bramble, these strike me as questions of business management, not really issues of property. That you see the essential issue of scarce vs. nonscarce gets to the core point of the article itself. There is nothing “wrong” with selling a nonscarce good or managing a company in a manner that retains some aspects of the nonscarce thing as a proprietary matter, but this is something that should be done within the matrix of market exchange rather than regulation.

Reigning Bramble August 25, 2010 at 1:30 pm

Thanks for your reply. I realize these are practical matters, but bringing them up shows me that you are not advocating a position advanced by many in the anti-IP crowd, who suggest that ANY attempt to turn a non-scarce resource into a scarce good is wrong. As I understand you, you seem to be saying that owners and publishers can use contracts and other non-coercive methods as they see fit in order to “scarcify” their products. (Whether that’s advisable or counter-productive would be a separate question). From what I’m seeing of some of the comments here, it looks like some people are confusing your position with that of the hippies and communists who dominate IP discussions in digital contexts.

I suppose that if we follow your position logically, it would require us to support company policies that said hippies and communists find abhorrent, such as Apple’s right to disable or “brick” an iPhone that they’ve determined has been modified to circumvent IP restrictions. Given prior consumer consent, this would seem to be permissible, but we would have to draw the line at letting Apple use the courts to criminalize what is only a breach of contract.

I still would be very interested to hear Mr. Kinsella’s opinion whether a new license agreement can be enacted by a “click-to-agree” screen with a new, unauthorized user.

Love all your work. Thanks.

Adam

Anthony August 29, 2010 at 11:37 pm

“click to agree” screens can be bypassed… a simple software crack could do it.

Aubrey Herbert August 25, 2010 at 11:25 am

How anyone still believes in IP is beyond me.

Peter Surda August 25, 2010 at 11:53 am

People believe in the imaginary because the belief itself caters for important psychological needs.

Curt Howland August 25, 2010 at 7:00 pm

I try to keep in mind that those who believe in Intellectual Property are not stupid, or evil.

This was hammered home when I saw how angry someone who believes in I.P. became when they believed they had been robbed. His reaction IS to consider those who do not believe in I.P. are evil and stupid, and deliberately malicious.

It’s a problem of First Principles. He believes his I.P. is exactly as real and tangible as his car, his house, or his bank account. He referrs to what we call “copyright” as “a lock on my front door”.

If you can imagine such a First Principle, you can understand why he would believe in I.P.

But if you do not share that First Principle, if you consider “copyright” a government monopoly grant, even if you believe that “copyright” is a good thing for some other, maybe utilitarian, reason, such an individuals reaction would seem irrational at best.

…Exactly the same way the people who do not share his First Principle seem to him to be irrational, at best.

I believe the greatest tragedy in all this is that such a discussion of First Principles is so very hard to establish. As Peter Surda notes, it becomes an emotional argument, rather than from reason.

No argument from emotion ever stays polite.

Eugene August 25, 2010 at 12:52 pm

You had me until I got to the part about the “magic bagel” metaphor. The short response is that without economic incentives to create manufactured goods, or create literary works, we would not continue on our evolution to higher living standards. We can’t cork the genie now that she’s out of her bottle! In hindsight it would have been “nice” if we went back and set the ground rules as follows: “No profiteering off inventions of literal goods or works such as novels, songs and so forth! Let’s all share in one big global commune!” Too late for that!

The longer response, to avoid boring you, is summed up like this:

If the owner of the “magic bagel” obtained its power by ten years of hard labor, and sharing that bagel with the world would make major changes in our standards of living, then would we the people want to leave it to chance? In other words, would we be willing to allow the owner of that bagel to take it to his grave, because he may feel that unless he’s compensated for his tens years of hard labor to obtain the magic in that bagel that empowers it to replicate itself infinitely, then the hell with humanity… he will exclusively possess it to the grave? Worse, when he dies, the bagel loses its magic and cannot replicate, so murdering him for the benefit of humanity is not an option.

I have a feeling you have an “out” for this argument; that if the owner of the magic bagel, for whatever reason, holds it “hostage” to humanity — demanding compensation for its use — that falls outside the rubric of your “Goods, Scarce and Nonscarce” argument! In other words, eliminate patent and copyright protection, but have society “deal” with those selfish invention and intellectual property owners (from inventors like Edison to composers like Mozart) on a case by case basis. It’s sort of like “trade secret” laws that force companies to keep a non-patentable item, tangible or intangible, a secret until they do a dance with prospective buyers. If spies get in and steal that knowledge, all bets are off and the trade secret can’t be bartered or sold.

In summary, what you’re proposing seems to ignore the great human price, through years of effort, R&D investment, and sweat equity (like spending night and day writing a novel for years). Why would I spend years of blood and sweat on a masterpiece, to have someone in China make gratuitous copies and make a fortune distributing those copies online? Personally, I would rather take that masterpiece to the grave than suffer that indignity. Anyone who claims otherwise is either a liar or has very low self-esteem. Compensation is about earning currency that obtains scarce resources. If artists, inventors and others developing intellectual goods, tangible or non-tangible, cannot be compensated for their hard work, they send a signal to the next generation there is nothing in art, invention, and education needed to get there. Factory work is more profitable. A society where a few wealthy people who simply take out hit contracts on competitors who steal their ideas, over minions of low paid workers, supersedes a society that rewards intellectual excellence and achievement.

Some don’t like people feeling entitled to compensation for years of developing their idea, invention or intellectual masterpiece — because people should expect nothing but a warm fuzzy feeling in return. Eliminating laws that protect copying, 3D or otherwise, allow them to sit back, relax, and let others sweat and toil for years to create an automobile or wonder drug, so they can quickly copy and get paid to distribute it. Sweet. You create an invention without legal rights to protect it. I copy your invention, and get paid to distribute it. Then I step over you near the curb as I’m leaving a French restaurant on Wall Street to get into my Rolls Royce, not even thanking you for spending years at MIT to get a degree, then decades to develop the cure to cancer that I simply stole, eh, copied, and was legitimately paid to distribute to millions worldwide!

Nathan August 25, 2010 at 2:06 pm

“[W]ithout economic incentives to create manufactured goods, or create literary works, we would not continue on our evolution to higher living standards….Why would I spend years of blood and sweat on a masterpiece, to have someone in China make gratuitous copies and make a fortune distributing those copies online? Personally, I would rather take that masterpiece to the grave than suffer that indignity. Anyone who claims otherwise is either a liar or has very low self-esteem.”

Good thing we had copyright law in place for the last few thousand years, or else we wouldn’t have the classic works of Plato, Sophocles, Homer, Euripides, Aristophanes, Herodotus, Caesar, Livy, Tacitus, Josephus, Plutarch, St. Augustine, Dante, Chaucer, Kyd, Shakespeare, etc. Oh wait…

Curt Howland August 25, 2010 at 7:03 pm

Funny, I saw an argument from someone who supports I.P. recently who said,

“Don’t take my stuff, it’s mine. There’s plenty of public domain to take from that doesn’t take food out of my family’s mouth.”

So I.P. is inviolate, unless it’s not inviolate. Or something like that.

Matthew August 25, 2010 at 2:09 pm

Eugene, you’re dismissing all notions of ethics and justice, and you’re focusing myopically on one sliver of the incentive scheme that would exist in a world without IP.

Indeed, as the creator of a masterpiece, you would have the right to “take that masterpiece to the grave than suffer that indignity [of having your work copies].” But just because you feel that way doesn’t mean that everyone else does too. I might despise a particular type of music, but that doesn’t mean I can decree that no one shall ever listen to said music.

In my view, you rightly describe a non-IP world where, all else equal, there would be less financial incentive to develop new ideas, but, for one, you totally ignore all the inefficiencies that come with government-enforced monopoly on IP rights. Further, you ignore the very real likelihood that an unfettered free market would (i.e. will) come up with ways to incentivize such development to fulfill the desires of society.

Eugene August 25, 2010 at 10:32 pm

I agree, perhaps fearing what I know not, and not having faith in God. Of course if one is Christian there are so many scriptures in Romans and other places that refer to the imperfect government as God’s instrument for good (I guess we agree sewage, garbage pickup, street services and other government taxpayer funded infrastructure is good?) and so on and so on.

I would love to see a Star Trek universe where as Picard said, people aren’t in it for the money but to be part of something greater. I also feel such a utopia is possible. However, the Star Trek universe and future technological and moral utopia is built on a past of deceit, corruption and murder, just as our modern democracy and U.S. Constitution is built on such (and let’s not get into the slavery and other aspects back then, that it took a lot of selfish motivation of political interests to tease out of the system).

I’m a pragmatist. I want what you want (I think) and believe in impossible miracles to save humanity in its darkest hour. I also like the sentiments behind Stephan’s article here at Mises.org. It’s just that in some respects, it’s like a beautiful glass house. My primordial side reaches for a brick, then my sentimental side drops the brick and feels guilty for even questioning the logic.

Ok I’ll abruptly add a thought: What is wrong with J.K. Rowling (of Harry Potter fame) getting fabulously rich, after so much personal struggle in her life to create her novels, thanks to international IP laws? You and I both know the Chinese would have unceremoniously copied her works and sold them for pennies on the dollar over the Internet if the IP laws gave them one inch to wiggle in. We both know that. Now, would she have been a worthy sacrifice in an alternate reality where the White House not only invites Stephan to dinner, but Congress embraces his worldview and does away with IP laws? Honestly, like another commenter said, do you truly know the hearts of the great composers and artists of the past and up to our modern times… do you know for sure that alternate reality, retroactive a thousand years, wouldn’t be a artistically and literary sterile world resembling Orwell’s 1984? Or do you just hope not.

Stephan Kinsella August 25, 2010 at 2:33 pm

Eugene,

You had me until I got to the part about the “magic bagel” metaphor. The short response is that without economic incentives to create manufactured goods, or create literary works, we would not continue on our evolution to higher living standards.

This is quite obviously false. It is clearly false that without IP law there would be NO innovation and artistic creation. It is literally impossible to argue this with a straight face. There has been innovation and creativity throughout human history, regardless of IP law. Cavemen would never have moved on to more advanced societies unless there was some innovation and creativity.

You cannot say there is no incentive either, without IP law: Clearly there are some incentives: the desire to create; the lure of being first to market; whatever. You may say it’s too low, but you cannot say it’s zero.

So, at most you can say that there would be LESS innovation and creativity without the “incentive” provided by IP law. Yet none of you making this repeated implied “argument” ever try to prove this. You just say it. You don’t know there would be less innovation absent IP law. How could you know this? It is indeed possible, and some studies conclude this, that innovation is actually decreased by IP law. And even if innovation is increased in some marginal, net way, how do you know the value of the additional amount produced, minus the loss of some innovation, is greater than the (obviously nonzero) cost of the IP system?

Utilitarians and IP advocates never answer this. See my interchange here with David Friedman; even he does not rise to the challenge. No one even tries: both b/c they have no idea even to do it (so they don’t know how to satisify their own burden of proof), and probably b/c they have a justifiable fear that the numbers run the other way–as virtually all the studies that are attempted conclude!

Anyway, so what if you were right–is the point of law justice, or to “arrange the right incentives”??

Silas Barta August 25, 2010 at 4:40 pm

This is quite obviously false. It is clearly false that without IP law there would be NO innovation and artistic creation.

And, like clockwork, Stephan_Kinsella immediately responds with this old strawman. It’s as relevant as me saying, “It is clearly false that without libertarian property rights, there would be NO production.”

Of course there would be some innovation without IP, and some production without physical property. It’s just that IP and physical property both allow more pareto-improving moves than their absence.

From now on, I’m going to accuse every IP opponent of believing that communes never produced anything, and nobody has every given a gift before.

Peter Surda August 25, 2010 at 5:50 pm

Silas, you still don’t get it. Austrians reject utilitarian arguments. It is IP proponents, including you, that invoke utilitarianism, Stephan merely shows that their own assumptions do not lead to the alleged conclusion.

Russ the Apostate August 25, 2010 at 6:05 pm

“Austrians reject utilitarian arguments.”

I thought that Austrian economics, strictly speaking, is a “science”, and as such, does not make value judgments on any basis? Or did you mean to say that libertarians reject utilitarian arguments?

Eugene August 25, 2010 at 10:41 pm

Russ the Apostate, I love your moniker. In the Christian sect I was once in, being an apostate was worse than murder, in that apostasy was a mortal sin. At least if you murdered someone, and ideally were executed for your crime, you had the hope of a resurrection. I shouldn’t digress but couldn’t resist.

To redeem this reply on topic, you hit the nail on the head. I’m on the mailing list of Mises.org and once joined for a year (I think it’s renewable so I may not be a member now) precisely because of the “science” aspect of Austrian economics that makes no value judgments and takes no prisoners. All of a sudden the room is filled with prisoners of guilt (well, perhaps not really).

Confession: I have an idea for a novel that I’ve created in Dramatica Pro and written almost 200 pages of, that everyone in my little “inner circle” thinks may really sell (if I get around to writing it, same ol’ excuses). One thing that motivates me is the J.K. Rowling effect if a successful novel. It’s like winning the lottery. Now in a church that would be heresy, yes, apostasy. But this is the Austrian school of economics with no value judgments.

But in all fairness to Stephan, this is a blog at Mises.org and freedom of thought is a hallmark of Austrian ideology to their credit.

Russ the Apostate August 25, 2010 at 11:01 pm

“Russ the Apostate, I love your moniker. In the Christian sect I was once in, being an apostate was worse than murder, in that apostasy was a mortal sin.”

Yes, that’s why I chose it. I am a former anarcho-libertarian (still libertarian, no longer anarchist). Some here apparently consider that leaving the one true religion is as horrific as Christians once considered apostasy (and some Muslims still do; an offence punishable by death).

Back on topic, though, I think some here sometimes confuse Austrian theory with libertarianism, and confuse libertarianism with their own brand of it. But even anarcho-libertarians do not necessarily reject utilitarian thought. David D. Friedman, for one. I think the summary dismissal of arguments simply by virtue of the fact that they are utilitarian is ridiculous.

mpolzkill August 26, 2010 at 12:08 am

“Some here apparently consider that leaving the one true religion is as horrific as Christians once considered apostasy”

This must be directed at me, as almost no one else even speaks to this anonymous clown other than about minutiae. I have a problem with all lying propagandists, and he is maybe the worst one here. About all he does is shill for the monstrous security state afoot and attack far more worthy libertarians. This “apostasy” exists entirely inside his own head: I have no idea what it is he thinks he has left, it has been obvious to me for a long time now that he is barely acquainted with libertarian literature.

Jesse Forgione August 26, 2010 at 12:35 am

@Russ the APoxOnTheState,

So… you used to think that gangsters didn’t have the right to initiate violence against innocent people, but then you changed your mind?

Peter Surda August 26, 2010 at 4:29 am

No, he just became a utilitarian. To paraphrase Hoppe, the utilitarian defence of minarchy vs. anarchy is that in anarchy there is an underproduction of security.

Jesse Forgione August 26, 2010 at 7:11 am

There is no conflict between a principled libertarian position and a rightly understood utilitarian position (after all, there is no “ought” that doesn’t contain an “is”).

Even a utilitarian who understood just the simplest economic concepts could figure out that any product will be produced more efficiently by an unhampered market.

Moreover, the presence of the state makes us much less secure, and everything it does violates our rights. And besides it’s own crimes against us, it creates the conditions for huge numbers of other people to become criminals.

Even if you’re just a utilitarian who wants to feel more secure (and it’s true, utilitarians are pretty insecure) you should logically still want to get rid of the gangster-parasites who destroy everything in their path.

Matthew Swaringen August 25, 2010 at 6:07 pm

I think the point about Kinsella’s strawman is probably valid, but when you say things like this at face value without any actual discussion to prove your point… who can blame anyone for not having your real argument?
“It’s just that IP and physical property both allow more pareto-improving moves than their absence.”

What is the “IP” that we are talking about? Lets just stick to literature. Are you talking about the word, sentence, paragraph, book or the plot/concept? What does it take for a specific piece of literature to be IP, and why is less than that not IP? If you can start by defining IP in this one area and then move on towards attempting to prove that we get more value by having IP in literature at that point maybe there is something that you can at least sell from your pareto-improving criteria.

Russ the Apostate August 25, 2010 at 6:34 pm

I think Silas’ opinion (and, if so, I share it) is that everyone here knows what he means by IP, just like everyone knows what is meant by property, and so your and Peter’s request for a rigorous definition is just a disingenuous attempt to analytic-philosophically niggle your opposition to death.

Matthew Swaringen August 25, 2010 at 6:55 pm

Russ, why do you assume I’m disingenuous? It’s abundantly important if you are going to make a utilitarian argument about IP to say what you are actually talking about. I really have utterly no idea what specifically either of you are talking about.

That’s why I asked to narrow this topic down just to one specific area, literature, so we can debate on specifically what constitutes IP in that one area. I really have no idea what you believe. None. I don’t know if you think my post qualifies as IP. I don’t know if you believe only one sentence qualifies as IP.

I do believe that you are probably not saying a single word qualifies as IP. But do you believe that the concept of my post, the “idea” behind it is IP? Probably not? But then, if you don’t believe the concept is IP, then the basis for the utilitarian argument (that incentive is necessary via ownership of a given quantity of specific text) is undermined, because you have allowed substitutes (in other words, texts that are based on the same concept but stated differently).

This also brings into scope what and how you’d deal with challenges like paraphrasing (someone reading my words and developing a slightly modified post but that is still similar enough that it’s visibly based on mine).I’m getting into areas here that may not even have anything to do with your actual argument unfortunately.

This is why I’m trying to narrow the scope of the position. Are you arguing IP is just the post or is the post not long enough or complex enough so I have to write a book for it to qualify? Even if I were disingenuous it should be an easy enough question to answer I’d also like to know why you define that point as IP as oppose to points “prior” to that (why a book is but not a chapter, or why paraphrasing is not ok but other substitutes are ok).

Russ the Apostate August 25, 2010 at 7:18 pm

“Russ, why do you assume I’m disingenuous?”

Two reasons.

1) If you really didn’t understand what IP was, you wouldn’t say you are against it. You would, at most, say that you’re agnostic on the matter. Saying that you are anti-IP, and at the same time don’t know what IP means, is akin to a person saying he doesn’t know what “God” means, and in the same breath saying he is an atheist.

2) You are trying to disprove the easy cases (e.g. novels, movies, albums, software) by means of the “lifeboat” cases.

Peter Surda August 26, 2010 at 4:11 am

Russ, what is so wrong on requiring rigorous definitions? Besides, as a falsificationist, I do not actually require overly rigorous definitions. I would be content, for the purposes of the discussion, with a broad concept that however eliminates all that is not IP. I.e. a superset containing IP, while the complement of the superset does not contain IP.

I have come to the conclusion that it is impossible. Abstract concepts cannot be addressed by the set theory because they do not have boundaries and therefore often behave paradoxically. I think one of the reasons is that they reference things, in addition to being interpretable as things. You cannot use the phrases like subset, superset, complement on abstract concepts. Let’s say there is an abstract concept, we’ll call it Harry Potter. Let’s say it is owned by someone. In order for this to be meaningful, we need to divide abstract concepts into two sets (complements): “Harry Potter”, and “not Harry Potter”. But you cannot refer to the set “not Harry Potter” without invoking the concept of Harry Potter. It’s recursive and a catch 22. In order to avoid it, you must not avoid it. Maybe a simpler example. I say: I analysed samples 1-100 out of 200 and did not find a certain feature. This not only says that a feature is not present in the first 100, but that the feature, if present at all, must be present in the samples 101-200. So, paradoxically, the data contains information about that which it does not refer to. It’s like if an apple contained seeds which are not inside the apple. Or, even better. If I copy a book but switch the background/foreground colours, the “pattern” of the “copy” should logically be the complementary one rather than the original. But people do not typically make that conclusion.

So, I have established the paradoxical nature of abstract concepts and the impossibility of using set theory with them. Yet, IP proponents continue to apply arguments to IP which depend on the set theory. It is up to them to “fix” the issues.

Peter Surda August 26, 2010 at 4:16 am

Saying that you are anti-IP, and at the same time don’t know what IP means, is akin to a person saying he doesn’t know what “God” means, and in the same breath saying he is an atheist.

I’m an atheist and I don’t know what “God” means. However, I know some of the things that it doesn’t mean. Falsificationism, not verificationism.

Matthew Swaringen August 26, 2010 at 6:44 am

“If you really didn’t understand what IP was, you wouldn’t say you are against it. You would, at most, say that you’re agnostic on the matter.”

I’m against it at pretty much any level I previously referred to, but there is always the chance you’ll define something else or that you’ll be able to explain why it’s beneficial at a given point.

Since you and Silas seem to want to debate this from pareto-improvement I think you should at least define where you see this improvement and why. You mentioned that you don’t like anarcho-libertarians because they reject utilitarianism entirely. I don’t.

That said, I have a high bar for what I consider sufficient utility to counteract the potential penalties of this idea. I admit you or Silas are going to have to cross it to convince me.

Unfortunately, since you insist on leaving this question open, there can be absolutely no debate.

“You are trying to disprove the easy cases (e.g. novels, movies, albums, software) by means of the “lifeboat” cases.”

I’m sorry but I’m unfamiliar with the “lifeboat” term you are using here. Are you saying I’m going to point to the exceptions to the rule to establish the precedent? I wouldn’t say that. Certainly, I’ll expect you or Silas to have answers to why these exceptions are possible given “lack of incentive” that you or he might claim exists. I don’t consider exceptions a lack of proof however.

But, first, you have to define what IP is in just this one category, and then you should define how it generally benefits us. Like any good utilitarian, I expect a lot of statistics and comparisons to non-IP states showing the validity of your claims to improvement along with an attempt at explaining how these were equivalent (ceteris paribus)

Jesse Forgione August 26, 2010 at 7:20 am

“1) If you really didn’t understand what IP was, you wouldn’t say you are against it. ”

Conversely, if you did understand what IP was you would say that you are against it.

Silas Barta August 26, 2010 at 9:32 am

Thank you, Russ_the_Apostate, for voicing my normal reply in my absence. I’m glad people like you are around to debate the IP issue. Not because you agree with me (you don’t), but because you are capable of recognizing shoddy arguments against IP and don’t feel obligated to defend them.

Matthew Swaringen August 26, 2010 at 5:55 pm

Apparently included amongst shoddy arguments for you and Russ are asking questions about exactly what your position entails.

Apparently you are both so worried (despite the fact Russ is against IP) that I might be disingenuous that they seem utterly incapable of answering what must be simple questions.

Even if I really am disingenuous, I’m not the only one that’s going to read your response. Do you imagine that anyone else in the world reading the responses from you to is going to see this tremendous merit of pro-IP arguments when IP proponents can’t even say what they are arguing for in a single area.

I’m not expecting you to tell me everything, I’m just looking for a part, and yes, I intend to ask more questions after you tell me the answer to that one and I’ll probably make an argument against it too, but if you are both on the utilitarian side here (him against, you for), why is this question about what IP is so evil. Do you both really imagine that we all use terms the same exact way?

I know things IP could mean, I’m not denying that. I’m just not sure what it means to you, how it’s delineated from that which is not IP, etc.

The Kid Salami August 26, 2010 at 6:10 pm

Matthew – I’m reading it and what you ask doesn’t make sense to me. If you say you can reject copyright because you can’t, a priori, define exactly what it is in general, then I can reject property rights on the same basis.

I could provide examples, as i have in fact done on this blog, but instead why don’t you prove me wrong by defining what “property” is and the principles/rules we can apply to a given scenario to see if there has been a property rights violation or not.

Matthew Swaringen August 26, 2010 at 8:46 pm

“I could provide examples, as i have in fact done on this blog, but instead why don’t you prove me wrong by defining what “property” is and the principles/rules we can apply to a given scenario to see if there has been a property rights violation or not.”

I’m not going to try to give an all-inclusive answer to this (because I didn’t ask for it with IP), but I’ll start with this:

What can be property is that which is appropriated for usage by any person such that it cannot be used at the same time or same place by another. Some things that can be appropriated are undesirable to appropriate, but the ability to do so makes them have property potential.

A diamond can be property because it can be appropriated by a person, and when it is another person cannot also have that same diamond at the same time.
Land can be property because if one person is using land for one purpose (to build a house, to make a farm, etc.) it cannot be used for some other purposes at the same time.

That said, if you can send something through or over land that doesn’t interfere with someone’s ability and capability to use the land I don’t see a trespass (electromagnetic waves, airplanes, etc.)

What is and is not in the scope of property itself I think is ultimately a matter of norms that will be defined by market and circumstance. Trespass itself, as well as penalties for trespass, should be decided upon by the same market system we would use for pricing goods. Therefore, precise matters like how far into the heavens or how far below the earth property descends will be decided by market processes.

You may consider a plane flying 40k feet over your house trespass personally, but are you going to be able to find any private DRO that will go after the airplane manufacturer, user, etc? I doubt it. Perhaps if enough people are willing to pay to stop planes flying 40k overhead the DRO might consider installing anti-aircraft batteries but it’s extremely unlikely.

You might consider electromagnetic waves a trespass, but are you able/willing to pay to install the necessary shielding everywhere to prevent them from going to your house? It would be market forces who would decide the trespasser here, since there are potentially competing property rights (rights to a specific electromagnetic wave range in a broadcast area vs land rights – this assumes your shielding prevents others from getting reception, if not I doubt anyone would care).

I think someone could make the argument that IP could be handled this way, but I think the difficulties of detection would prevent that in most cases, making it impractical. I imagine you might see communities that via contract enforce certain principles on this matter.

The Kid Salami August 27, 2010 at 3:39 am

“What is and is not in the scope of property itself I think is ultimately a matter of norms that will be defined by market and circumstance.”

I agree 100% with this statement. My problem is that this seems to be inconsistent with your request earlier:

“What is the “IP” that we are talking about? Lets just stick to literature. Are you talking about the word, sentence, paragraph, book or the plot/concept? What does it take for a specific piece of literature to be IP, and why is less than that not IP? If you can start by defining IP in this one area and then move on towards attempting to prove that we get more value by having IP in literature at that point maybe there is something that you can at least sell from your pareto-improving criteria.”

Why can we leave the exact definition of property to “market and circumstance” but not leave the exact definition of IP in literature to “market and circumstance”, as you seem to be suggesting?

That is, if I write a book about a child wizard who, say, becomes a football player and wins the world cup, well the idea to use a child wizard may or may not have been stolen but I think that “market and circumstance” will deem this “ok” reagrdless.

However, if I publish a book that contains the identical words to Harry Potter in the identical order except for a difference of one full stop, we can safely say that I needed a copy of the original to write it and “market and circumstance”, if the people want this, can say this is a “theft” of some kind. I’m not saying they should or they shouldn’t – but if the law evolves such that the most popular free market arbitration bodies deem the latter case to be a theft of some kind, despite the fact that you can’t frame all this with abstract reasoning and define a priori an exact threshold, who are you to say you know better than the market?

Matthew Swaringen August 27, 2010 at 1:08 pm

I think my last paragraph kind of answered your question here, that IP could be handled by a combination of market agreements including norms decided upon by the desire of people and the agreement of people to stand arbitration on these matters.

Certainly if people take something verbatim and attempt to sell it as their own or if they paraphrase without changing anything that people agree makes their version valid that people will probably not purchase from that individual. Provided enough of the market believes this attempt is theft, I think DROs would resolve disputes on these matters accordingly.

This is not like the current form IP takes. IP is not market driven but instead driven by government mandated monopoly and licensing. My problem with IP is not that I believe no one should be able to restrict copying in any way, shape, or form. I’m fine with the idea of having contracts telling users not to copy for example, although that only goes as far as the person with which they have an agreement.

My problem with IP as it exists now is that I believe it destroys individual freedom to attempt to restrict copying via invasive means and pervasive laws governing private behavior.

It is implemented via the monopoly on force (government), and therefore investigation of IP incidents is a matter where ISPs and other 3rd parties are required to supply evidence that could not be required of them in a free market system. They might provide it willingly, but I think many of these agents would be operating under contracts that they not disclose the activities of their users.

If you move on to patents, I don’t imagine a free market system condemning someone who independently came up with the same idea as another for some quaint invention. I could be wrong, but I don’t think that’s a norm most people would hold. I think you could well see market forces via DROs seeking compensation for that which requires expensive research and development.

But, again, this is always with the balance of individual consumer autonomy and choice. If people don’t like what these DROs are doing, the DRO itself may not get the business necessary to validate these kinds of decisions.

Matthew Swaringen August 27, 2010 at 1:16 pm

I forgot to say why I’m against IP here. It is not that I don’t think it’s possible market forces could arrive at current conclusions (although I think this is incredibly unlikely). I just don’t think it is desirable for this to occur personally. I’m allowed to hold personal views I hope, lol. I get what you say with “who are you to say you know better than the market?” but … aren’t I part of that “market”? So I think I have just as valid a reason to determine those norms as anyone else.

I think they should be decided by the market as opposed to governments, and I realize this might go against me but I don’t think it’ll look anything like what we call IP now. Whatever we do get I think will be significantly closer to individual communities ‘ desires.

Mark D Hughes August 25, 2010 at 1:56 pm

Another outstanding article Jeff.
The work that you (and others before you like Stephan) have done on this exciting topic is inspiring.

I have one small criticism/suggestion, however. Early on in the essay you write:

“airspace and radio airwaves[7] are intangible scarce goods and therefore potentially held as property and therefore priced, while fire is an example of a tangible good of potentially unlimited supply.”

I understand fully what you are aiming at here, unfortunately, fire is not actually “tangible.” It is, in fact, a chemical process. More specifically, it is the fast oxidization of some tangible thing by way of the chemical process of combustion. The result is the release of both light and heat — or fire as we commonly know it. As such, fire is a transition stage between one form of a thing and what is left after that thing is oxidized rapidly through combustion.

May I suggest an alternative example of “a tangible good of potentially unlimited supply” is air itself (not airspace which you are correct in characterizing as intangible scarce goods).

Kind regards,

Mark D Hughes
Executive Director
Institute for the Study of Privacy Issues (ISPI)

Eugene August 25, 2010 at 3:08 pm

Mark, playing the proverbial devil’s advocate, I have a question for you about your comment:

“May I suggest an alternative example of ‘a tangible good of potentially unlimited supply’ is air itself (not airspace which you are correct in characterizing as intangible scarce goods).”

If Mars is colonized, I could see a situation where those in charge of a corporation that built the colony (including underground dwellings, roads, water and air processors, sewage and other infrastructure) charges usurious prices for “quality air delivery to dwellings and offices.” When some enterprising individual builds their own air processor (sort of like someone putting solar in their home to bypass the electric company’s escalating rates) the corporation claims legal rights to the air they are generating for their own domestic use.

Is this an accurate description of the said problem? Does the corporation have the right to exert that level of legal control over colonists on Mars because it claims some sort of “rights”? Curious as to anyone’s thoughts.

Mark D Hughes August 25, 2010 at 4:36 pm

A nice try Eugene but you’re serving oranges to my apples.

In economics, even though we don’t always state it explicitly, our analysis usually implies “ceteris paribus” conditions (literally “with other things the same”). So by moving from Earth to Mars you have changed the “other things” which alters the analysis completely. On Mars there is a general or overall scarcity of air. Given its value to us, it would thus be a genuine economic good (unlike here on Earth) to which property rights could be applied to each unit produced or acquired by way of trade of discovery. The corporation could not commandeer the air another person produced independently without violating that person’s property rights (that, of course, assumes that the colony organizers did not make all their guests sign a contract wherein they promised never to produce air).

Even on earth, however, if we alter the conditions and change the some factors we can imagine situations where air is a genuine economic good; Two examples include: compressed air for scuba diving or fire fighters, and “oxygen” kiosks in highly polluted cities (although I have never seen one, I understand that in Mexico City such kiosks exist where you pay a few pesos for a cool clean breath of fresh air).

Eugene August 25, 2010 at 10:45 pm

Doggone it, Mark, you did what my former religion calls “overcoming objections.” I was all ready to reply with information you provided in that last paragraph. Ok you win this round. ;)

Jesse Forgione August 25, 2010 at 3:23 pm

This is an old Japanese story I read as a kid about a similar principle.

http://www.treebeard31.net/2010/04/11/the-price-of-the-smell-of-food/
(I don’t know this website, but they have it posted.)

Baten August 25, 2010 at 3:33 pm

There is a tale involving Till Eulenspiegel, the german prankster of old.
I wonder who copied who? Lets remember – if we had copywright at that time, only one story would have existed…

Peter August 25, 2010 at 11:04 pm

Heh. This is a variation on the story told by Plutarch that I posted about a couple of weeks ago. The Egyptian Pharoah, Bocchoris, heard a case brought by a prostitute against a man who dreamed about her, for “theft” of her services (which he couldn’t afford in reality). He found for her, ordered the man to bring the money into court, and she was “paid” by the shadow it cast against a wall.

Baten August 25, 2010 at 3:26 pm

It’s not very easy to convince people that IP is bad and unnecessary.
I spent months with a good friend of mine struggling to get him out of his pro-IP stance – and he is quite libertarian in most of his thoughts.

Eugene August 25, 2010 at 4:13 pm

The problem with dispensing with IP is the way the “real world” works. I know I can’t prove it, but it’s the kind of thing I know in my gut. For instance, I have gone through a major back and forth debate on home security with my cousin. His family lives in a lower class neighborhood, which they choose to live in even though they could afford better. Well and good. But they leave all of their doors unlocked. They don’t believe in home security. They leave their car doors unlocked when driving the worst areas of town. They don’t believe in car security. Home invasions? Carjackings? What a crock! People just aren’t like that for the most part.How does he have me aced in this argument? Well, for over 30 years they have NEVER locked anything. They left valuables in their car, unlocked. They drive passed gangs in bad areas, doors unlocked. They never, ever lock doors or windows in their house… even on vacation! Yet they never had one thing stolen in over 30 years. The part that rankles me the most, is his arogance in claiming they DELIBERATELY do not lock anything… they even unlock doors that “paranoid” guests locked, out of the “principle of the matter”! His evidence is 30 years with no crimes against him. The statistics? What a bunch of huey, these paranoid journalists. Where do they get these figures and statistics on crime anyway, he wonders?I know in my gut he’s wrong. I know in my heart of hearts he has not been blessed, but lucky. I’m not so dumb as to refuse to acknowledge that because he’s a born again Christain, maybe God has been looking out for him! But do I really believe that deep down? No… there are things one just knows instinctively, and intuitively.I “know” for example (and I hope I’m wrong as Stephan suggested) that in the “real world” we will experience a phenomenon called “unrealized gain.” All of the wonders of technology, maybe even the means to escape this rock as Stephen Hawking suggested we must (to avoid ultimate extinction of humans from a rogue comet or alien invasion or our own ruining of the planet) could be lost if INTELLECTUAL PROPERTY or IP rights are thrown out the window.I haven’t made up my mind. If only someone could convince me we could become a more illustrious and advanced civilization WITHOUT IP?

Greg August 26, 2010 at 7:18 am

Does your friend own much of value? What kind of car does he drive? It sounds like either he’s been exceeding lucky, or all the theives that entered his home realized he has nothing worth stealing. I had my house burglarized two years ago, and I didn’t live in a terrible part of town. It isn’t very common, but it happens, and a locked door can and will thwart some of the thieves.

Eugene August 26, 2010 at 3:13 pm

“It sounds like either he’s been exceeding lucky, or all the theives that entered his home realized he has nothing worth stealing.”

Actually it’s the latter, hehe. Although it must be the former too, because a thief, on discovering they broke in for nothing, might just do him and his family in before leaving to greener pastures.

Eugene August 25, 2010 at 3:37 pm

Stephen,

You asked:

“Anyway, so what if you were right–is the point of law justice, or to ‘arrange the right incentives’??”

The issues raised in this article are moving targets, because there are pros and cons to both sides. For instance, what kind of slimeball scientist would take a cure to cancer to the grave because he didn’t receive adequate compensation? As I recall the inventor of Penecillin gave it to humanity without a patent, placing it in the public domain. He could have been rich. However, viewing each side of the issue’s vantage point (sort of like the “fly on the wall”) yields entirely different perspectives.

Having been raised with a Christian worldview, I have become painfully aware of the age old idea that we mortals are being “tested.” If we knew for a fact we could save the lives of everyone in a city if we gave our lives, would we do so? It’s messy to frame an analogy so I hope we can get passed the technical flaws in the one I’m about to give, and examine the general idea: A terrorist says from a remote location the military cannot trace: “I can see you over a video camera in Los Angeles. There is a loaded gun on the table in front of you. If you pick up the gun and shoot yourself, I will deactivate a nuclear device at the center of New York City that is set to go off in five minutes. If you don’t, the entire city will be destroyed.” The military confirms that indeed there is a nuclear device somewhere on Wall Street, it is highly radioactive, they cannot diffuse it in five minutes, and it appears to be controlled remotely.

There was a much better analogy that made a logical argument for the person knowing with almost 100% certainty that if they did commit suicide, the nuclear device would be disarmed and save a city thousands of miles away. The point is that if a person knew they could trade their life for millions, or allow millions to die but they would live to see their family and friends, what would they choose? There are all kinds of variants, like being told if you do not renounce your faith in God, you will be killed (assuming you profess to have faith in the first place).

So I pragmatically ask, do we need a system where intellectual property is in the public domain, where someone who invents the cure to cancer is morally tested? If he passes the test and selflessly gives his or her discovery to humanity free, even if he invested his life savings in coming up with this discovery (where in the current system a patent might be the only way he can recover his investment), then all is well (although the fact keeps nagging me that he wasn’t compensated for decades of work and investing his life savings in the discovery, in this ideal world where his discovery is not patentable).

But what if he fails the test, which we’ll define as getting so wrapped up in the inequity of having spent his life (and life savings) on this cure, to have it unceremoniously taken and given free to everyone, that he decides to take it to the grave? Then so be it? We’ll just have to figure out another way to cure cancer even if it takes the next five hundred years? As amoral as some may interpret my conclusion, I can’t help but say “hell no!” I won’t let my dear family member who is dying of cancer denied a cure, just because I (gulp) have to pay the inventor for his or her efforts of the past decades to bring about that cure. Now that’s just me. Someone else may object on the principle of the matter, saying that if I had faith in God, then I would leave it in God’s hands… why pay someone for a cure that is, morally speaking, “a tangible good of potentially unlimited supply”?

I’m taking a break and quickly pounding out my replies on this keyboard, pardon the errors in grammar and spelling!

Anthony August 29, 2010 at 11:56 pm

If you were a pharmaceutical company you could pay him for the formula so you could be the first to market, taking advantage of a temporary monopoly before the drug is replicated… or even so you could brand the drug and use priority and advertising to make up for your added costs of production (on account of having to buy the formula).

Del Lindley August 25, 2010 at 4:14 pm

I would like to raise the following points:

1) I sense a certain intellectual sloppiness when non-scarce goods are defined to be “infinitely reproducible.” Either Mises’ definition involving “superfluous abundance” or Hoppe’s conflict-avoiding “superabundance” does not imply infinite reproducibility. Infinite reproducibility means to create an identical physical state an arbitrarily large number of times in an arbitrarily large number of places. Such a capability would require an arbitrarily great supply of organizing power (energy) to accomplish. So long as we live in a universe governed by the principle of energy conservation there can be no way to localize an arbitrarily great source of power. Hence the concept of “infinite reproducibility” can play no role in real world economic discussion.

2) If one is inclined to say that ideas have an independent existence in some Platonic realm where infinite reproduction is possible, then one needs to ask why this reproduction is necessary. Wouldn’t one copy in this realm be sufficient?

3) The separation of an idea (or valuable information) from its storage and transmission costs is artificial. What does idea reproduction mean if not transmitting an idea stored at point A at time T to point B for storage at time T+ΔT? The communication over space and time and the alteration of the physical state of the storage device at point B requires that energy be expended in the process. The use of energy and time for this purpose necessarily carries some opportunity cost. To see this point more clearly consider the problem of sharing ideas within a civilization that spans a galaxy. The cost of transmitting information could be prohibitive so long as we are limited to electromagnetic means. In this case the sharing of ideas may need to be economized.

4) It is not terribly meaningful to say, as Rothbard does, that ideas or technological recipes do not wear out in a physical sense. Leaving aside the fact that the idea’s interface to the real world (the storage device) will wear out, ideas get plowed over in their own realm through the recognition of new and better ideas. This is the rule within any dynamic economy. I have heard it said that any idea developed today will be seen, in one hundred years time, as either obvious, irrelevant, or wrong. It seems to me that Rothbard’s comment is relevant only with reference to an evenly rotating economy.

Abhilash Nambiar August 25, 2010 at 4:20 pm

Scarce goods can only be owned by one person at a time.

This statement struck me because I thought it to be true for a very long time. Scarce goods can be owned by many people provided they can come to an understanding on how its use will be managed. Think of a publicly held corporation, that assets and liabilities owned by the share holders are not individually marked, it belongs to all share holders and is managed by a professional management team on their behalf.

Old Mexican August 25, 2010 at 4:30 pm

Re: Abhilash Nambiar,

Scarce goods can be owned by many people provided they can come to an understanding on how its use will be managed. Think of a publicly held corporation, that assets and liabilities owned by the share holders are not individually marked, it belongs to all share holders and is managed by a professional management team on their behalf.

Shareholders are holding a share, which is what they own: a WRITTEN PROMISE, but not the good (the asset) itself. A share and the asset are different goods, just as the money you have in your purse and the bread you are going to buy at the store are different goods.

Abhilash Nambiar August 25, 2010 at 10:30 pm

No the asset of a firm and the share which represents a fractional ownership in the firm are not like the money you have in your purse and the bread at the store. The bread at the store belongs only to the store owner. The money in the purse belongs only to you. The share makes you a fractional owner of the firm. The assets in that firm are there to serve your interest. Yet you have no direct control over how it is used. Because the terms you agreed on allows only indirect control.

Jesse Forgione August 25, 2010 at 5:16 pm

I think the root of the IP fallacy is the Platonist idea that abstractions are “things” with their own existence apart from the aspects of physical reality that they represent. Physical reality is what exists, and we form abstractions about it.

I also think it’s strange that Ayn Rand of all people believed so strongly in the ownership of ideas, when in just about every other way she was an Aristotelian. But in Atlas Shrugged she wrote:

“Material products can’t be shared, they belong to some ultimate consumer; it is only the value of an idea that can be shared with unlimited numbers of men, making all sharers richer at no one’s sacrifice or loss, raising the productive capacity of whatever labor they perform. It is the value of his own time that the strong of the intellect transfer to the weak, letting them work on the jobs he discovered, while devoting his time to further discoveries. This is mutual trade to mutual advantage; the interests of the mind are one, no matter what the degree of intelligence, among men who desire to work and don’t seek or expect the unearned.”

I think Rand couldn’t violate the integrity of the fictional world she was creating (the community of strikers also had no coercive government, though she always said she didn’t believe in anarchy), but still hadn’t reached every implication of Objectivism, especially in regard to two issues: the fallaciousness of intellectual property, and the complete illegitimacy of the state.

Joseph Keckeissen August 25, 2010 at 5:26 pm

Hello All: I wish someone would complement his argumentation with the answer to this question:
What does the Seventh Commandmente: “Thou shalt not steal or the “Tenth: “Thou shalt not covet thy neighbor’s goods”" have to do with IP. I hope that the commandments do not refer to IP. Hopefully, someone has thought out a good moral answer, Respectfully, Joe Keckeissen

Eugene August 25, 2010 at 10:53 pm

I know that morally these commandments may very well apply, in principle, to modern day situations like bosses “stealing” employee ideas as their own. Their careers may benefit in intangible ways by appearing to present ideas as their own that others arrived at. It also denies the originator of the idea not just the acolades and respect for having thought of the idea in the first place, but perhaps a promotion that has very real economic consequences.

I wonder how Stephan views that kind of situation from a moral and perhaps legalistic perspective?

Stephan Kinsella August 26, 2010 at 10:50 pm

I don’t know if I see the problem. One’s role in an organization is often to make your boss look good. And most ideas are collaborative, and in a firm, at least, they benefit from the institutional structure and tools, projects, opportunities provided by the employer to the innovative employee. I just don’t see a problem here.

SeanH August 29, 2010 at 9:02 pm

A boss who represent’s an employee’s idea as his own violates neither the 7th nor 10th commandments. He has neither stolen anything nor desired to steal anything. Instead, the boss in that context is guilty of lying.

gene August 25, 2010 at 6:00 pm

Joseph, IP can’t be stolen [or coveted] unless it is made available. the originator of the idea always has the option of not making it available. once it is available, then it requires outside force of the state to “restrict” the use of property in order to insure IP monopoly. so, what is actually “stolen” is the use of one’s own rightfully acquired property [ie., purchased cd and computer to copy}.

Great article, to be honest, I think the fear of IP proponets is that their [or someone they sympathise with] livlihood will dissappear or at least dissapate]. There is some truth to this as a lack of IP monopoly would create a little micro free market that would have to survive within the greater controlled market. so the price of say authoring a book would then be subject to free market prices while the price of grocery shopping would still be under monopoly prices. so, the author [w/o IP monopoly] would be at a disadvantage when buying groceries or basically purchasing anything. doesn’t justify IP, but probably accounts for a bit of its support to otherwise free marketeers.

Art August 25, 2010 at 6:02 pm

Joseph – It’s very simple. If IP is property, then the 7th and 10th commandments apply. If IP is not property, they don’t. That is the issue: whether IP is property or not…

Greta August 25, 2010 at 7:56 pm

IP is too broad a category. Signatures, quality labels, trademarks, copyrights, patents: simply proving that that there is a conceptual scheme according to which they are all of the same genus does not prove that they are all birds of a feather where a person’s rights are concerned.

Proving the inanity of “positive IP law” is not the same as proving that there is no such thing as intellectual property. (What does the inanity of “positive property law”, e.g., with respect to taxation, eminent domain, etc., prove about property rights?) Similarly for proving the inanity of the idea that corporations (be they political, commercial, industrial, scientific, or whatever) own intellectual “things”.

Since this discussion is almost as much about libertarianism as it it is about IP, consider the following: Suppose we are in a libertarian world, at least in the sense that there is a “[free] market for justice.” As it happens, providers of judicial services that take a principled stance against IP (along the lines of Kinsella & Tucker) invariably go broke.
Would this mean that there should not be a free market for justice? Or would it mean that the discussion is really about what would happen if Kinsella & Tucker came to head the Justice Department?
Just asking.

Mark D Hughes August 25, 2010 at 11:24 pm

Greta, you write: “As it happens, providers of judicial services that take a principled stance against IP (along the lines of Kinsella & Tucker) invariably go broke.”

Have I missed something? Please explain why you think they would “invariably go broke.”

Eric August 25, 2010 at 8:00 pm

For a great story on FASHION, which, for some strange reason is NOT copyrightable, see this talk:

http://www.ted.com/talks/johanna_blakley_lessons_from_fashion_s_free_culture.html

RTB August 25, 2010 at 9:52 pm

Here’s my 2 cents, or is it 200 cents with inflation?

1. How can intellectual creations be called non-scarce? There is nothing more scarce than an individual. When that individual creates something original from their own mind there is only one of it. How much scarcer can you get? Just because modern technology allows you to copy it ad infinitum (or ad nauseum in the case of most modern “art”) doesn’t mean that the individual does not own his/her own idea. If the person has a right to go to the grave with it then they own it, right? The idea or creation would not exist in this world if it were not for that one person. It boggles the mind how one could think that a person’s mind is community property.

Which leads me to

2. What’s the big fuss? Is it the government agencies that are set up to regulate IP? We don’t need all the bureaucracies. The best way to protect IP is through private means, by prior contract or agreement which government (or private security agencies, or individuals) can enforce. If you want that software and you click that check box then you agree to the terms. If the record company states that the buyer cannot redistribute their record then the buyer can’t redistribute it. If a person creates a widget and sells it only on the condition that it not be copied or on any other condition then that condition must be honored.

And in the end people are free to provide the world with their ideas free of charge if that’s what they want to do.

Eugene August 25, 2010 at 11:00 pm

You have a point. Suppose a person didn’t have the right to go to the grave with their idea or intellectual creation, because future technology allowed the State to hook that individual — against their will — to a machine that translates and records thoughts?

The State, in this futuristic scenario were IP laws have been abolished, downloads citizens’ ideas and intellectual creations — for the public domain and betterment of society of course — into massive quantum storage which is then mined by government scientists and inventors for viable (read profitable) ideas and intellectual creations. Let’s assume the abduction under circumstances where a citizen is withholding valuable information is legalized to add the s**! frosting to this cake.

Given all said, based on your original thought, I too believe that IP is “scarce” now that you brought it up! What saith Stephan?

Eugene August 25, 2010 at 11:06 pm

By the way, RTB, I like your proposal for a middle of the ground solution to the IP dilemma. You’re not throwing the baby out with its bath water or rationalizing the baby deserves its fate in this regard; and neither are you proposing we keep the dirty bathwater to avoid making the baby cry. You hit the issue on the head: Government should enforce private contracts, not keep adding bureaucracies on top of one another like some ungodly layer cake.

Eric August 26, 2010 at 2:28 am

Wow, that’s some melodramatic stuff.

Just look at that TED talks video on fashion. It is already AN EXISTING world without IP law. No need to theorize. An amazing world that is free of lawyers, bureaucrats, and best of all, EVERYONE gets to use everyone else’s ideas. And they like it that way.

I’ve seen what IP laws has done to software development. The first 30 years of computers didn’t have software patents. And that was the big bang time for computer software. It’s a mine field of patents now. I’d hate to be a new programmer now. Anything you think of might be someone else’s IP. The industry has discovered the trap of IP laws and is fighting back somewhat with open source. Others have found that they need war chests of patents to fight off other patent holders. It’s expensive though.

Oh, jokes can’t be copyrighted either. Comedy hasn’t gone away.

Mike Vine February 4, 2011 at 12:09 am

But the point RTB is making is that the fashion world does this by choice and that there is a contractarian method of constructing IP that doesn’t violate any libertarian principles.

Seems to me many anti-IP folks are more concerned with ends than means. Like guilt free song downloading and an open source society. Isn’t that a bit like the right to housing or a poverty free society?

New American Farmer (at heart) August 26, 2010 at 12:53 am

Here’s an article I’ve written concerning scarcity and abundance and what the characteristics of a life based on scarcity and a life based on abundance would be like. I find it compliments some of the things mentioned in this article.
http://newamericanfarming.blogspot.com/2010/08/abundance-and-scarcity-two-opposing.html

It seems to me that non-scarce goods are those found in abundance, and I would argue, are even replenish-able. Most things which are not man-made would fit into this category. These would be God-given goods like: water, air, earth, sunlight, the will to live, intellect (in its varying degrees), freedom to choose, an inventive mind, and so on. These are things that are all around us that we use and share freely (at least for now, i’m sure there’s devilish plans to figure how to charge people for use of sunlight).

However, there is a conflicting mindset that challenges the idea of abundance, which is scarcity. Presumed scarce goods are those things that are man-made, where someone has used their skills to make something from a raw material. But is that newly made good, really a scarce good? Only if someone determines it to be. The original sources, the skills and the raw material, of this newly made good were both abundant and non-scarce. So why consider the newly made good, scarce? Time constraints? Location of certain abundant goods? Rate of replenishment?

John B August 26, 2010 at 4:58 am

The person who is left in the rather unfortunate position of not necessarily obtaining reward, then, is the person who provides non-physical contributions, such as ideas and music. Is there any motivation for that person to give that which he can, as something that might be of extreme value to other people, if he only obtains a minor or no return?
By the way, the paper clip does not quite hold up as a single entity possessed by billions. It is unitary as a concept, but billions of paper clips are just that, billions of individual paper clips and each one can have a separate owner. Not “the paper clip” as in Save “The Whale” – a collectivist concept.
And if I may say, these words sound somewhat alarmingly collectivist and feel as though they set a dangerous precedent:
“We are not truly human without being part of human civilization; and there can be no civilization and progress without the spread, dissemination, and accumulation of knowledge. To be human is to be part of a learning society, a communicating society, an information-sharing society. Society is emulation-based.”
Besides that, your article is a most refreshing look at the concept of ownership! Thank you, indeed.

Eugene August 26, 2010 at 3:05 pm

John, it’s been suggested in these replies that something is morally wrong with someone “if he only obtains a minor or no return.”

My specific point earlier was basically ignored — that reward through monetary means, which simply translated is having the modern equivalent of pooka shells (sp) to buy resources to live (a home, energy to air-condition it, a fridge stocked with nutritious foods, a vehicle for transport, …), is an intrinsic affirmation to some people (like myself) that I’m valued.

Imagine laboring one’s whole life, discovering scientific breakthroughs that save lives, only to discover people are saying about you in your old age things like “I wish that old coot would drop dead so we don’t have to keep paying him corporate royalties on his inventions” (assuming that one’s death ends any royalties). Instead of coming to your defense, you learn others you thought were close friends for many years are going along with these mean-spirited sentiments because they are in your will.

It’s bad enough that if you are richly rewarded for your contribution to mankind, you might discover your “friends” really are jealous and resentful of you, perhaps backstabbing you. Although we hope that we personally never experience such hubris in our lives, I’m sure many of us emphathize with such a soul. We understand that even if everyone loves us for our contributions (honestly and truly) part of loving someone is putting your money where your mouth is (i.e., if a friend who is wealthy says, “I’m sorry that I can’t help pay $50,000 for your surgery and you may not survive as a result, but my wife and I are taking our third vacation to Hawaii this year and planned on spending that money,” then you know deep down they could care less about you).

The world is the same. You go out and help save it through some scientific breakthrough, due to your years of sacrifice in getting a Ph.D. and other degrees, then spending 12 or more hours a day working (seven days a week). If everyone in world throws in a few pennies each for your life saving breakthrough, you get wealthy on royalties to your invention. Now imagine if everyone in the world said, “Sorry, I can’t find those few pennies in my pocket” (this coming from millions maybe billions) “but thanks for saving my life. Have a nice life!”

I cannot imagine even those who pretend to be diehards against IP don’t recognize that when it comes to the world, your affirmation of years of blood and sweat toward a major contribution (your IP under current laws) is worth NOTHING (it’s not “scarce” and therefore anyone can copy it and get rich off it under the pretense they’re charging for tangible “distribution services”). In such a world, you might feel that if nobody cares about you but views you as an hard working intellectual to be used then discarded, why should you tell them about a breakthrough that could change the course of their lives for the better? If someone robbed your home and trashed it, would you tip them on the way out?

Eugene August 26, 2010 at 3:08 pm

Correction: I said, “‘John, it’s been suggested in these replies that something is morally wrong with someone “if he only obtains a minor or no return.’”

I meant to say, “‘John, it’s been suggested in these replies that something is morally wrong with someone “if he expects to obtain a minor or no return.’”

The rest of the message is based on what I actually meant to say.

Rafal Rudowski August 26, 2010 at 5:19 am

No goods are always, or intrinsically, nonscarce or free. It all depends on the context. For example, the air we breathe is usually nonscarce, but it is scarce for a diver. The same is with ideas. If I know an idea it is nonscarce to me. But if I don’t know it and I have to take actions to obtain it, it is a scarce good.
That is what, I believe, the masters of the Austrian School had in mind when they wrote about scarcity. The authors of the article created their own definition of (non)scarcity.

Jesse Forgione August 26, 2010 at 7:42 am

@Rafal Rudowski

So, when you say “the masters of the Austrian School” you don’t include Ludwig von Mises?

It’s you that just invented your own definition of scarcity on the spot.

Ideas are not things on their own that can be given and taken like physical objects. We represent aspects of physical things with abstractions. We can only pass along abstractions by taking some action in physical reality, and hoping that the intended observer is capable of recreating them.

For example, Stephan Kinsella has been trying to help people recreate an abstract line of reasoning that first happened in his brain, in their own. Many of them are failing to reproduce it.

Jkillz August 26, 2010 at 9:50 am

I’m not always the most skilled at this, but, if I may, I believe you just confused the means with the end. The means (time, access to the good, etc.) to obtain a nonscarce good are, indeed, limited. But the end, acquiring the nonscarce good, can be repeated over and over again.

Contrast this with a scarce good. The means, again, are limited. Choices must be made; opportunity costs are weighed. But, once acquired, the scarce good — say a car — cannot be gotten again.

Plus, given your statement “If I know an idea it is nonscarce to me”, one can easily infer that nonscarcity applies to any good which one owns. I own a computer; therefore, the computer is nonscarce. Does that make any sense?

The important distinction between a scarce good and a nonscarce good is that a nonscarce good can be appropriated by many people at the same time, without lessening the efficiency or experience of anyone else; whereas, if many people attempt to use my computer at the same time, each of us is thwarted.

Rafal Rudowski August 26, 2010 at 11:09 am

You wrote:
“The important distinction between a scarce good and a nonscarce good is that a nonscarce good can be appropriated by many people at the same time, without lessening the efficiency or experience of anyone else;”
This is Kinsella’s definition of nonscarcity. I don’t mind it but I don’t think Mises or Rothbard had this is mind. By nonscarce they meant abundant enough to serve all possible ends. For example, Rothbard writes:
“In the first place, all means are scarce, i.e. limited with respect to the ends that they could possibly serve. If the means are in unlimited abundance, then they need not serve as the object of any human action. For example, air in most situation is in unlimited abundance. It is therefore not a means and is not employed as a means to the fulfillment of ends.”
(Man, Economy, and State; Scholar’s Edition 2004, p. 5).Ideas are not in unlimited abundance or in sufficient abundance for all needs of all individuals.You also wrote:”Plus, given your statement “If I know an idea it is nonscarce to me”, one can easily infer that nonscarcity applies to any good which one owns. I own a computer; therefore, the computer is nonscarce. Does that make any sense?”No it doesn’t. It is specific for ideas that they become nonscarce when they are learned (at least untill they are forgotten). Computers can hardly be nonscarce, though if you could use a computer for only one purpose and one computer would be enough, then computers would no longer be scarce for you if you have one.

Rafal Rudowski August 26, 2010 at 11:18 am

Sorry for the edition of the above. I made a correction at the last moment and the layout got somewhat untidy.

Mark D Hughes August 26, 2010 at 5:41 pm

Rafal, I don’t think its just the layout that is “untidy.” Even if we assume Mises and Rothbard would reject what you call “Kinsella’s definition of nonscarcity” (which they would NOT). Your argument is still falls apart. True, Mises and Rothbard argue (like all praxeologists including Kinsella) that for a good to be scarce it must be actionable, that is, one must be able to consciously apply it as a means to achieving a desired end. You, however, assert that an unknown idea is scarce. This is absurd. If an idea is unknown then, for all relevant purposes vis-a-vis acting man, it does not exist. Something which does not exist cannot be scarce since there is nothing upon which to act.

With your argument, penicillin was a scarce good before penicillin, or even the thought of penicillin, entered Fleming’s consciousness. Nonsense.

Rafal Rudowski August 27, 2010 at 6:48 am

If I know that an idea exists, and I want to know (learn) it, but there are obstacles to my accessing it, it is a scarce good for me. That follows from my understanding of the economic concept of scarcity. In simplest terms: if I don’t have it and I want it – it is a scarce good.
Your understanding of scarcity is different. That’s all right for me.

Peter Surda August 27, 2010 at 8:40 am

Rafal, you cannot learn an idea without using physical goods, for example, a book, and of course, your brain. It is impossible to transmit information without a medium. Book, brain and all media are scarce. That is what is causing confusion. Immaterial goods are attributes of physical goods, they do not have a separate existence. Let’s take a colour, e.g. “white”. The concept of “white” is immaterial, non-rival/non-scarce. But without physical objects, there cannot be “white”.

Jkillz August 26, 2010 at 10:28 pm

You wrote: “This is Kinsella’s definition of nonscarcity. I don’t mind it but I don’t think Mises or Rothbard had this is mind.”

Perhaps so. But you must remember that Kinsella’s work is a relatively new strain of thought in the school. Faulting Kinsella for not sticking stringently to the Misesian or Rothbardian definition is a bit like faulting authors for using computer word processors instead of typewriters.

The Rothbard quote is great. But I don’t think it quite contrasts with Kinsella’s conception of nonscarce goods. Again, I think you’re confusing ends with means.

You wrote: “Ideas are not in unlimited abundance or in sufficient abundance for all needs of all individuals.”

Yes, they are in unlimited abundance. Ideas might be hard to access — but access is a means. An idea is not a means. The idea is not scarce. This is perfectly in keeping with Rothbard.

Rafal Rudowski August 27, 2010 at 6:53 am

It doesn’t matter if an idea is a means or an end. Both means and ends are scarce.

RTB August 26, 2010 at 8:46 pm

I’m tired of working for someone else. I’m tired of the same old routine just to put food in my mouth and a roof over my head. I think I’ll write a book. I hope people will want to read it. If they do I hope to gain wealth by it in order to feed myself and put a roof over my head. After all, it is my idea, my time of life that I invest in it. I will forgo working extra hours at my present job. I will forgo working freelance. I will forgo watching TV to in order to do this. I hope that someone doesn’t copy it and sell it themselves. If they do then my sweat and my labor will have gone to their benefit without my consent. Sounds like stealing to me.

Anthony August 30, 2010 at 12:06 am

I want to make mud pies. I will quit my job and fun and everything to make my mud pies. I hope to gain wealth and a house by it.

Just because I work for something does not make my product worth anything.

Christopher Bradford August 28, 2010 at 6:52 pm

It seems like the book/novelist is the good example for the need for IP laws. Now if you look at other examples, IP doesn’t seem to be has necessary. For one, linux/ubuntu run off millions of programers building on previous software to contribute to the stability of the system. Another one is music. From what I understand, musicians make a lot off concerts and merchandise which can be excludable and non-rivalrous or scarce. And production companies make their money off the CD sales, but that isn’t to say that musician don’t make money off CDs, but that usually there is some sort of contract between the company and the musician.

So why I am having trouble with the novelist and not the other two? In a world without IP would there have to be a complete restructuring of how novelist or writers make money? Maybe they would work contractually for a publishing company? Probably there wouldn’t be as much of an incentive to write long novels, and perhaps writers would have to do shorter works or have longer works broken into a series of magazines that one would have to purchase month or week.

Clearly a world without IP may change the actual mediums of how artist produce work.

Anthony August 30, 2010 at 12:08 am

Believe it or not, there were books before there were intellectual property laws… authors were paid by companies up front, rather than through a portion of sales.

Jodie the Watch Movie Gal August 29, 2010 at 1:12 am

great article, very well said. However, I wouldn’t be able to imagine how a world could support artist without the protection of IP. This is the case in movie industries whereby people could watch movie at home via downloads and stuff.

Janis Klumel August 31, 2010 at 5:21 am

Thanks to both authors for a deliberative and intellectually stimulating article. It is nice to see some complements from other Austrians added to the topic: scarcity, economic good, intellectual property, monopoly. It is obvious that Mises.org contributors have perfected their knowledge about the topic.
Being aware that person has to be transcendental realist, instead of transcendental idealist (see I.Kant to find out the meaning of that distinction), to be a contemporary libertarian, I shall express short considerations:
- so that the article did not concern copyright and only limited analysis was directly provided with regard to other forms of intellectual property, I can add only that copyright legislation protects expression of ideas, not ideas themselves. Expression of original idea can be fixed in a tangible form, and the expression can therefore only be scarce;
- it would have been more comprehensive analysis, if the concept of price, value, utility was included in the analysis of scarcity, economic good. For example, drinking water for the people living near a river, brook would be of no value but still highly usable good. But for the people living far from the access to a drinking water such a water would be of a great value. The same economic reasoning applies to some type of intellectual property. An email containing object of copyright would be of no value to people having access to the internet where similar objects of copyright are easily available, and, consequently, such object of copyright would have no value for them (and they would possibly conclude: it is not scarce economic good).
- and finally, it can be added that object of intellectual property is an expression of one’s own personality. And libertarians’ main concept is self-ownership. It is very good to criticize misuse of libertarian concepts, but sometimes it is quite controversial to see how libertarians try to abandon their own conviction.

Tim Kern September 1, 2010 at 10:25 am

…and returning to the original idea, let me ask how can one realize incentive for creation of intellectual property?

True, he can use it himself — but (oversimplifying for the sake of clear argument) he can realize only little personal benefit, unless he can sell the idea — and if the idea cannot be sold (since it is universally free), only the most-trivial ideas will be explored. The incentive for invention, then, will limit invention’s effort to the personal benefit one can derive from such invention. “Big” (hard to do) inventions, then, will not be “worth” the trouble.

Breaking into someone’s factory and producing a physical good using that factory’s tooling and blueprints (assuming the trespassers damaged nothing and brought their own stock, paid for the electricity, etc.) would be analogous — the factory owner would “lose nothing.” It’s obvious to see that this action would be unacceptable — but it’s the same thing as duplicating someone’s song or book.

Look at the supply side of the equation: Why write a symphony or a novel? Why do research? Though I agree that “effort” is not a basis for compensation (only “results” are), when great effort is required to achieve an intellectual result, and when that result cannot be shared for profit, where does the inventor get motivation?

Rosemary Ley September 13, 2010 at 1:53 am

I find the argument about plenty vs. scarcity interesting because our whole economic system seems to be geared towards scarcity and hence the need for growth (e.g. GDP). In essence it may not be scarcity that mankind finds problems dealing with but not knowing when he has enough. Perhaps this explains the obesity epidemic and our propensity towards environmental destruction.
Rosemary

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