“Patents do not give protection to inventive small businesses because they are impossible to enforce, an organisation claiming to represent small technology companies has said. In an open letter (http://www.smeia.org/smeia-org/_img/sme/SMEIA_HMG_Growth_policies.pdf) to Government ministers, the group said that small and medium-sized enterprises (SMEs) are not able to take advantage of the protection offered by patents. ”

But you know what comes next…

“For high-tech SMEs … a patent is almost impossible to enforce,” it said. “It does not require another review of IP [intellectual property] to establish this particular unfair fact yet again; it requires immediate change.” SMEIA chair John Mitchell told the Daily Telegraph that smaller companies could not afford to defend themselves in court and that a “patent defence fund” should be made available to them so that they could afford to take part in major patent suits with large corporations.

“It would be a serious blunder to deduce from the antithesis between monopoly prices and competitive price that the monopoly price is the outgrowth of the absence of competition.

Mises, HA, p. 277-278

Mises, Human Action Scholars Ed. p. 277

No, it is monopoly, as in a property owner’s right to exclude all others.

That’s not how Austrians define monopoly.

I think it may be true that property must be scarce to be owned. Ownership of non-scarce goods makes no sense.

Great, we have progress. Without scarcity, there are no mutually exclusive options, there are no decisions, there are no means and no ends and there is no human action.

there is no such thing as a private monopoly in the Austrian framework because it defines monopoly to depend on the initiation of force. It does not define monopoly through scarcity. Scarcity means that there are mutually exclusive options. Exercising more than one of them simultaneously is impossible. Exercising more than one option when you have a monopoly is possible, it is merely undesired by the monopoly holder and he’ll employ force to prevent them.

It is impossible, for example, to simultaneously steal an apple and for the victim to have the apple. Laws do not change that. But it is possible for someone to copy a book and the original book to remain with the owner, it is merely (sometimes) undesired by the copyright holder.

Also, a person has a monopoly on his own body. It is also scarce. But all others are excluded from the possession or use of one’s body. Isn’t that a monopoly, of the personal kind?

I think it may be true that property must be scarce to be owned. Ownership of non-scarce goods makes no sense.

OK, but you do believe in individual monopoly, right? I mean, it’s not monopoly you object to, right?

There is no such thing. What you are describing is scarcity, not a monopoly.

I can only repeat what I already said:
- the same fundamental question exists with any endeavour whatsoever because all actions have some effects which are not covered by property rights
- the question will remain no matter how you define property rights, because causality extends to infinity
- given a specific definition of property rights, some business models are profitable and some are not. This indicates how well they are able to make the use of scarce goods to satisfy the needs of consumers.

The question of the definition of property rights is outside of the scope of economics. Please recall that Austrian economics is value free. An Austrian economist cannot judge a definition of property rights based on what products are produced by whom at what time and what products are not. That violates the principle of interpersonal comparisons being impermissible.

So, to interpret your example with copying, the algorithm from a value-free economic point of view: if the costs of you designing and writing it exceeded the gains that your employer was able to achieve, it means it was an inefficient use of a scarce resource (your time). Your argument proceeds backwards: from an inefficient business endeavour you draw conclusion that the product should not have been produced. But then you conclude that this would be bad thing. However, from a praxeological point of view, that would mean wastage was prevented.

So X admits to us “Sorry, I forgot about the contract – I copied the binaries and then left my memory stick on the bus. You’d better get your lawyer to tell me how much I owe you.” Meanwhile, the competitor now has “accidentally” stumbled upon this information and, having made no contract with us, is free to do as he pleases with it.

I have a problem with this. I think people have a natural sense that this is “not fair” and so think that in a free market some mechanism would evolve to prevent it.

OK, but you do believe in individual monopoly, right? I mean, it’s not monopoly you object to, right?

“I’m quite free to take the devices apart, learn their workings and manufacture copies…”
Are you sure about this? If you were copying someone else’s property, theoretically, then that is ethically and morally OK with you?

“My property is mine and I can do as I want with it.”

Yes, but my property is mine and you can’t do what you want with it. In fact, you can’t even do what you want with your own property, right? What about that pesky non-aggression principle?

I’m favourably inclined to anarchism. It would appear that there is no justification for monoply government, as there is no justficiation for granting some individuals the divine right to impose force over others.

As far as buying labour-saving devices is concerned, I’ll buy whatever I like and can afford. Of course, once I have done that I’m quite free to take the devices apart, learn their workings and manufacture copies (or have my colleagues in Vietnam or China do it on my behalf). My property is mine and I can do as I want with it.

A Rolls Royce? Which model do you like? Right now some of the older ones are cheap. A slightly rough one takes a little work to put right, but it is worth it (and a fun project). Get an old one with the 6.7 litre (417cid) V-8 and you’ll find it responds very well to turbo-charging. Rolls Royce of Crewe found this and in various forms that engine has continued in production to the present.

Sione

Personally I am unsure on the issue…

Well, maybe. But it appears you have to be a “consistent libertarian” to reach the conclusion that ALL forms of IP are ABSOLUTELY nonsense.

The conclusion is strained in both cases, (IP and Ancap ideology) and is not necessary to establish your main assertion concerning IP, which is that there is quite a bit of nonsense all around. That seems sufficient, doesn’t it?

Not if you are an anarchist. To be consistent, you must eat everything on the menu.

Not that there is anything wrong with that, I’m just saying.

He explains it pretty clearly on page 104-105 of Our Enemy. I don’t have it with me, but it is the value that is created when two or more people want to own the same property. In the context in which he was speaking, it related to land speculation.

So in this regard, yes, it is the value a good has in the market, which can be measured in a single transaction as “price”, but it is really a reflection of the fact that there are others in the market that would like to own it, too. This creates the trading opportunity for the original owner. This straightforward situation becomes complicated when the cost of replication (i.e. copying) is very low. That creates an impact on scarcity, and subsequently drives price deflation. But the deflation is not the central issue.

Regardless of the price, who has the right to a monopoly on the enjoyment of these property rights? Who has better title? If you know the answer to that by some form of establishing good title, then the next question is, how do you enforce that right?

I think that is the point that the concept of IP rights arises. It is a legal convention for providing protection to one’s property rights, when the goods in question are easily copied. The fact that it is an “arbitrary” construct is not sufficient to defeat its legitimacy.

You write, “I do have some control over governments, limited though it is.”

I’d contend that you have none- nothing real. What you control think you have is illusory. Anyway, that is irrelevant to what we were discussing. The topic to hand is “public property” and whether you have an owership right over it. It remains correct that it isn’t your property. You don’t own it. You are not even able to arrange for the disposal of your “share” of it or even borrow against it.

Whether some government or other altered its arbitrary processes and random rules for the granting of special priviledge is not of fundamental importance. The point remains that the patent system of the US was not the primary causal agent in the population in-flows that occurred (which included the bright, the clever, the intelligent and the abitious). I previously listed a few that you might like to consider (capital, economics, costs of living, style and standard of living, liberty, taxation, class and social structure, opportunity, wars, famine, slavery, trade, etc. etc. etc.). Surely these more than eclipsed the alleged attractions of the US patent system.

As far as the USSR is concerned, them Russians, they may just have had a few other problems with their political and economic structures that more than dwarfed any issues with their patent system. Just a few…

Cheers

Sione

“If the ideas I use are in the public domain, how can it be unjust that I use them? At the same time, I am saying that a mere “idea” is not sufficient in itself to describe the attributes of either the means of production, or the goods thereby produce. They are merely a component of the means of production, although a necessary component. However, if no one owns it, I own it as much as anyone else, so my use is not unjust.

It order to “produce” something which I own, I must own the means employed to produce it. If I own everything but the idea, including the idea in the means does not change my position.”

Sorry I misunderstood you initially; I’m pretty much in complete agreement with this; it makes me wonder, what exactly are we disputing re. IP? Perhaps it relates to this:

“According to Nock, property has value in two domains: use-value and economic rent value. ”

“Using Nock’s terminology, I would argue that to not attribute property rights deprives the author of the economic rent value of his production. ”

Not sure exactly what Nock had in mind, but to me, terms like “economic rent value” can only mean the *market price* the owner can get in exchange for his property. And I would say, not attributing property rights deprives the author of the right to TRY to exchange his property for other goods. THIS is the only right he has: to try to exchange his justly acquired goods. He has no right to a particular price. So, eg, opening up shop next to yours doesn’t violate your rights, assuming that I do not prevent you from continuing to (try to) make sales.

If this is the context for some hypothetical support of IP, then I still disagree. Let me stress that there are definitely ways in which an author’s work can be unjustly copied, eg, breaking and entering, violating an agreement to not copy, etc. But copying as such (or whatever specific facet of IP is under consideration), or more appropriately, duplication as such, does not violate any rights. It certainly does not preclude the author from continuing to TRY to fetch money for his work, a right he had before the copying and a right he continues to have after copying.

“…you seem to be saying that someone can unjustly use an “public” idea in the course of production.”

I am saying the opposite. If the ideas I use are in the public domain, how can it be unjust that I use them? At the same time, I am saying that a mere “idea” is not sufficient in itself to describe the attributes of either the means of production, or the goods thereby produce. They are merely a component of the means of production, although a necessary component. However, if no one owns it, I own it as much as anyone else, so my use is not unjust.

It order to “produce” something which I own, I must own the means employed to produce it. If I own everything but the idea, including the idea in the means does not change my position.

“Value is not owned, cannot be owned.”

According to Nock, property has value in two domains: use-value and economic rent value. (Our Enemy, etc. p. 104-105) Goods produced are property, and I own them if I own the means of production. So far it would be hard to deny the ownership of such goods. If you own the goods, you also own the value of those goods, which you are free to employ in a process of trade. If these goods had no value, they would not be useful for trade. So obviously, you own the value of goods which you own.

“Would you say that a businessman whose profits shrink because of competition has been wronged or robbed? I don’t think you would.”

You are right, under the implied general assumptions, I would not. But profits would shrink because the price for goods with less scarcity is lower than those more scarce. Competition implies less scarcity. Provided the businessman and the competitors all own the means of their production, not a problem. Competing bakers don’t argue over the IP nature of a loaf of bread.

So, the central issue in the debate comes down to whether it is ever legitimate to acknowledge something like property rights in a unique means of production, and if so, how might those rights be attributed to the author?

Using Nock’s terminology, I would argue that to not attribute property rights deprives the author of the economic rent value of his production. That value is attributable to the producer, or “author”. That value is created by taking something that didn’t exist (totally scarce) and producing one instance of a good which has economic rent value, because there is a perceived (and real) desire by more than one person to possess it. It is precisely the low cost of replication, (replication would reduce scarcity) that creates the ethical breach; i.e. the economic rent value of a scarce good is attributed to someone other than its owner.

The only way to preserve the scarcity of that good is to do one of a limited number of things: Withhold it from trade and maintain the scarcity, make a unilateral transfer to all comers, or develop a legal convention that attributes the economic rent value to the original owner of ultra-scare goods such that these goods can be dispersed into the market by the process of economic trade. This third option makes for equitable public policy, i.e. it avoids the unjust enrichment of misappropriators.

I think it is also possible to arrive at this same conclusion taking the path of homesteading of ultra-scarce resources, but I’m not sure it is necessary.