The ability to distinguish between one thing and another is a monumentally important aspect of having and keeping liberty.

So stop confusing, stop using vague language and stop running away from debates.

I read Friedman on Coase and I think it is good work. It is not until he ‘plays out’ some of the scenarios under the different ways of handling externalities that it becomes pretty clear and sensible that having well defined property rights does lead to more optimal solutions.

Good. I look forward to reading about how this perspective affects your arguments. It will be refreshing for me, I think.

I’m not entirely sold on his point about cases where there are high transaction costs that regulation may prove the better solution because I think the “free-rider” problem can be over emphasised (I acknowledge of course that the problem exists – it’s the just the extent of it that I question). In fairness, having not read Coase himself, I wouldn’t stress this objection too strongly.

If you read Freidman , you probably don’t need to read Coase to get the idea. The free-rider problem is dependent on the facts of the controversy. It can be huge, or only a small factor, depending.

I can see why you’ve referred to Coase within our IP discussion but it doesn’t really solve our disagreement on a fundamental level. To decide to classify something as property in order to optimise a solution in dealing with its externalities does not necessarily make it a just classification. For example we could classify ideas as property in order to optimise solutions for their originator’s externalities and it would be hard to disagree with simply by referring to Coase (although the high transaction cost issue may be a bit of an out).

What is our disagreement on a fundamental level? On this other thread, which I hope you are following, ( http://blog.mises.org/16570/cordato-and-kirzner-on-intellectual-property/comment-page-1/#comment-774492 ) about all the opponents have agreed that an author who has never shared his manuscript, could recreate copyright statutes by contract, making the unauthorized disclosure to a third party a condition for payment of a performance bond.

Of course, the cost of that bond would have to be added to each transaction, in addition to the cost of reading and negotiating and executing what amounts to a “publisher’s contract” for every customer buying a book. Then there are the costs of enforcement under contract theory, where the problems would be large because of the incentives for fraud (the party to the contract “leaks” the contents in an indictable way, and there is no cause of action against the third party.) This cost also has to be figured into the price.

The net result is that there is no efficient solution available under contract law exclusively. The book cannot be transferred to the party who values it most (the public) in the absence of a property rights to the work. That is the lesson of Coase.

Interestingly, you could arrive at the same result by placing the right in either party (author or public) as long as the one with the right paid the other for their costs. So if you said that the public had a right to access, and the author had a right to disclosure on a consumer by consumer basis, then traders will arrive at the efficient solution (a price that both are willing to accept).

But also true, as you look at Friedman’s work, is that there are more than one way to approach the problem. The best solution is elegant and intelligent. (Have you seen the TED piece on restoring dry waterways posted by Tucker recently?)

Anyway, you’ll be happy to note that I’ve changed my position somewhat. I think on a fundamental level it is perhaps reasonable to have some limited form of copyright but I would stress the word limited and then highlight it and perhaps then underline it for good measure. Yes it is a system that some would argue already is limited but I think it is ridiculously out of whack with its purpose.

It is not necessary for me to argue that copyright is perfect, any more than it is necessary to argue that the US Federal Government is perfect in order to support a concept of a libertarian right to self-government; far from it.

But the fundamental question remains; is there a legitimate right of the author to what he produces? From that answer, as a first principle, you can debate endlessly what approach and the limits of those rights should take, as we should.

I think that copyright is perhaps the best justification for IP and that other types of IP like patents are far more sinister. The industry I work in uses a vast array of patenting techniques to prolong protections and keep competitors out of highly profitable markets well past the point of R&D recovery costs and future incentivisation. In so many cases its like the goose that lays the golden egg. One such way is to patent a new product, then patent it’s use pattern and then pattern it’s manufacturing method and we end up with a maze of partially overlapping but seemingly ever extending patents.

First, I agree with you about copyrights. That is why I have focused on that as the case to test the fundamental issues. Second, while I know much less about patents, I agree with you. We are not producing an efficient outcome. We can do better. What we are doing is wasteful. But mercantilism in general is wasteful. It is always wrong to intervene in the operation of the free market. However, it is a different matter to throw out the baby with the bathwater (even if you do so because you believe it is Rosemary’s baby), because we know that not EVERY baby is so cursed.

The ability to distinguish between one thing and another is a monumentally important aspect of having and keeping liberty.

In fairness to the IP opponents, I think many of their arguments are strong and well thought out and particularly around the issue of arbitrariness. I also don’t think having IP is a justification for the state (as in AJ Nock’s distinction between government and state). I am more a minarchist than anarchist but not because the arguments for ancap are weak (I like a lot of Rothbard’s and Hoppe’s work) but because I find them hard to reconcile with human nature in the way someone like Mencken so well describes (the warm reassuring smell of the herd…).

Arbitrariness is the main issue, and why this subject (as is all laws at the margins of those “fuzzy lines” that Friedman refers to) is so contentious. IP opponents have selected some strong arguments, but strong is not right. I have learned that what seems strong can become pretty weak when you dig deeper. That is what I have been doing here. I did not start out trying to prove my case one way or the other. I simply took the adversarial position in order to foster debate, and have reached a point where I have a pretty strong sense of where I stand and why.

As to the distinction between State and (self-) government, I agree completely. Cooperating humans will develop institutions of self-government. These institutions are subject to mercantilist attack. Lack of vigilance and a lack of clarity between one things and another is a tool of mercantilism. I am opposed to it in every instance. Political power should not be ceded to special interests of any kind. Being able to distinguish between a libertarian right to self government and mercantilism in any form, is a critical distinction, and making it (and explaining it) is not easy. I am trying to improve in this endeavor.

The eternal problem with limited government is the same as limited copyright or IP – who is responsible for the job of creating and policing the limits. Just have a look at how well the US is going at keeping within it’s constitution limits.

The answer is inconvenient and inescapable; we are. If we are pursuing an ideal of self-government, we can’t ignore the “self” part. Unjust laws should be opposed. We have the power to do so, but we are not well organized to wage the battle. That is the problem. It is a big one, and quite frankly, when I first started coming to this site, I had expectations of greater common ground that I’ve discovered. These debates about IP are simply a vehicle for exploring that situation.

I hope to see you more often on these pages.

Best regards,

I’m not entirely sold on his point about cases where there are high transaction costs that regulation may prove the better solution because I think the “free-rider” problem can be over emphasised (I acknowledge of course that the problem exists – it’s the just the extent of it that I question). In fairness, having not read Coase himself, I wouldn’t stress this objection too strongly.

I can see why you’ve referred to Coase within our IP discussion but it doesn’t really solve our disagreement on a fundamental level. To decide to classify something as property in order to optimise a solution in dealing with its externalities does not necessarily make it a just classification. For example we could classify ideas as property in order to optimise solutions for their originator’s externalities and it would be hard to disagree with simply by referring to Coase (although the high transaction cost issue may be a bit of an out).

Anyway, you’ll be happy to note that I’ve changed my position somewhat. I think on a fundamental level it is perhaps reasonable to have some limited form of copyright but I would stress the word limited and then highlight it and perhaps then underline it for good measure. Yes it is a system that some would argue already is limited but I think it is ridiculously out of whack with its purpose.

I think that copyright is perhaps the best justification for IP and that other types of IP like patents are far more sinister. The industry I work in uses a vast array of patenting techniques to prolong protections and keep competitors out of highly profitable markets well past the point of R&D recovery costs and future incentivisation. In so many cases its like the goose that lays the golden egg. One such way is to patent a new product, then patent it’s use pattern and then pattern it’s manufacturing method and we end up with a maze of partially overlapping but seemingly ever extending patents.

In fairness to the IP opponents, I think many of their arguments are strong and well thought out and particularly around the issue of arbitrariness. I also don’t think having IP is a justification for the state (as in AJ Nock’s distinction between government and state). I am more a minarchist than anarchist but not because the arguments for ancap are weak (I like a lot of Rothbard’s and Hoppe’s work) but because I find them hard to reconcile with human nature in the way someone like Mencken so well describes (the warm reassuring smell of the herd…).

The eternal problem with limited government is the same as limited copyright or IP – who is responsible for the job of creating and policing the limits. Just have a look at how well the US is going at keeping within it’s constitution limits.

Regards.

Anyway, good luck.

Regards, Matt.

I accept what you say above and agree that there are problems with externalities in not allowing property rights in IP. I will need to read some of Coase (or Friedman’s take on it) in order to go any further in this debate – which I’ll hopefully undertake in the coming few days off (Easter).

Regards.

We’re good. This is a difficult format, so some benefit of the doubt is appropriate.

Yes, this is the standard Ancap position (without meaning to imply what you may believe).Since we cannot design social experiments, we have to speculate and rely on reason and analysis.

Coase provides a breakthrough in the analysis of externalities, and for this he won the Nobel prize. David Friedman wrote more recently on this and other related subjects. In order for the market to “come up with something” it must operate on the given rules, otherwise no calculation is possible.

No property rights in IP is such an assumption, so you would have to formulate a thought experiment and look at the issues. Mises starts us out by pointing out the existence of the externality problem. Most economists looked at the problem of simply imposing some regulation that internalizes the externality.

Coase showed that the issue of externalities was a function of transaction costs. If the transaction costs were low, (i.e. a contract between two parties with clear and compelling interests on both sides) then there is no need, or it doesn’t really matter how you assign rights as long as they are reciprocal. The Coase model is a train that throws sparks causing fires, and farmers adjoining the tracks who have their crops burned. We need trains and we need crops. If the transaction costs are high (not one farmer but 100′s of farmers), you run into other problems, like the public choice/holdout and free-rider problems.

In this case, the use of property rights produces the more efficient outcome. Fundamentally, this is the basis for the statement that property is a human device, and that in the case of a work or authorship, property rights is the preferred solution to the problem of public choice.

FYI, the pubic choice problem is that 2a) produces externalities for the author, and 2b) produces a limitation on the protection of the public domain and access to works.

This is a problem concerning the economics of law, and is the area of study that Coase was involved in. He was an economist that studied case law and made observations about what the common law had done and why. From this work he developed the Coase Theorem. It is an academic specialization, like economics or law by themselves, but attempts to look at the economic impacts of laws and tries to answer the question, “What is a good law?”.

Regards,

My apologies for the offense, perhaps I too quickly presumed your intentions were an appeal to authority as you say.

If you are not asking about how a distinction can be made between “ideas” and “original works” but rather the requirement for fixation, then I think this is so obvious that I may have assumed this is not what you were really asking.

Yes it was a question that I thought had an obvious answer but I wanted to get your take on it. I was not asking for reasons of distinguishing ideas from original work because I accept what you’ve previously argued on this; notwithstanding my opinion that difficulties will often arise in deciding where exactly to draw the line between the two. I’m not even sure exactly where I was going with that question in the first place but I guess I was more interested in whether from a legal point of view the tangible fixation is only relevant for evidentiary value. Let’s move on…

Mises understands this and presents the problem as an externality in a very few paragraphs. His first principles are these:

1)Property is a human device

2) Works of authorship (for convenience, as currently defined as the subject of copyrights) function in the same way as ideas (although there is clearly a meaningful distinction between the two), in the sense that once you possess them, you possess the “factory” to copy them at low cost. Their serviceability is inexhaustible.

3) Either of the two pathways you take from this point creates its own set of problems:

a) if you permit no property rights in the author and permit unlimited replication, then the author, for the most part, is producing for an external economy.

b) If you permit absolute property rights in the author, then the public domain eventually disappears, and the public exchange of knowledge is curtailed, for the most part.

My preference is for “a” and then see what solutions the market offers. Authors are free to engage in lawful activities that make duplication difficult and it is easy to see this potentially being far easier in a digital ebook age (but equally the possibility of it becoming accessible in an unauthorised manner and then replicated rapidly are also real). For some strange reason this fits well with my principles and feels more libertarian to me. I accept the result may not achieve a pareto improvement but then I don’t really rate such a thing. I haven’t had a chance to read Coase yet but I will have a look.

Your response smacks of elitism again. One does not need to be a lawyer to have an opinion on what constitutes just law. I’m not offended as it is simply an irrelevant critism that adds no value to our debate. It is a tactic that you use prolifically when you’re unable to clearly state your position (or clearly refute the position of others) on a fundamental principles level. Any law not based on underlying principles that are able to be discussed in plain language is clearly unjust and not worthy of discussion.

I am offended a bit by your accusation of elitism. You feel I’m talking down to you? I didn’t say you needed to be a lawyer, but I think it is unreasonable of you to insist that I not make reference to something that exists to try to further your understanding of my meaning. Why do you feel entitled to dismiss something I say simply because I am referring to a particular way of defining things that is consistent with existing law?

My objective is not to appeal to authority, but to explain my position, and for you to offer your acceptance or objection to what I am intending to convey. That is the basis for communication.

However, this is not a perfect communication channel, and I suppose I am capable of misunderstanding what you are getting at. Feeling that what one is saying is not understood by those reading and responding to it here is a common experience.

This is what you asked:

…does the current law not seek to protect these things because of the inherent difficulty in determining the veracity of a claim of originality or authorship without them or could there be another reason?

…

If you want to not be misunderstood, try asking more clearly. It is unreasonable for you to assume your question was so clear that the only explanation for misunderstanding is my arrogance. If the shoe fits…

I am responding to the “another reason” part of your question.

If you are not asking about how a distinction can be made between “ideas” and “original works” but rather the requirement for fixation, then I think this is so obvious that I may have assumed this is not what you were really asking.

Anyway, my answer to that question is that we cannot deal with things we can’t know. By definition, a work without fixation is unknowable; i.e. intangible. The law uses the concept of rights in the “intangible work” in order to deal with different forms of fixation. As I understand Neil, he says that the fixation creates a tangible object with “identity”, and that once fixed, it is always fixed somewhere. Therefore he deals with it as a “material object”. In my view this is simply two ways of saying the same thing; that the work is protectable as property because at the point at which it is fixed, it clearly is a property object that is owned by the author. I arrive at the same conclusion using the principles of “self-ownership” and “private ownership of the means of production” principles. All roads lead to the same destination.

From that point on, we are no longer talking about the natural rights of property, since they have already arisen, and all sides acknowledge that the work is property, and can be dealt with through the mechanism of contract, but only to the extent that only the parties to the contract are bound. In my way of thinking, only things that are “owned” can be the subjects of a contract, and something that is owned is in fact property, in that it is an object for which the party has exclusive rights to use and/or possession.

One “property” of property, is that ownership of an object means ownership of all the bundles of rights that are contained in the ownership of that object. This is why in a contract we can release title to some part of the property (mineral rights) without also transferring other parts (the right to live on the land and exclude trespassers). This is a fundamental principle of property rights.

You and other opponents to IP insist that the device of property rights are unavailable to the author, and any transfer amounts to a complete transfer of the rights in the work. This is a decree by fiat. You simply define your theory of property in a way that says that IF an object is subject to low-cost replication and its service is inexhaustible, in the way that an idea ins inexhaustible in the service it renders, then ALL information must follow this principle and be exempt from economic and legal treatment as property.

I disagree.

By your logic, a book would remain property as long as it was never copied.
If we grant absolute rights of disclosure to the author, then likely, private libraries (i.e. the “church” or “information priesthoods”) would be the only way knowledge could be accessed. You solve the problem of disclosure by simply denying the right to public access. OK, that’s one way to go. OR…

You can grant unlimited property rights in the author, and over the centuries, all information and knowledge eventually becomes private property; there is no concept of the public domain. OR…

You can assign the right of disclosure to everyone, so disclosure is mandatory and information products always becomes part of the public domain. In this case the author would be producing, for the most part, for external economies. He may, of course, simply choose not to produce.

Each approach creates other problems. This is the public choice problem we must face.

That is where we are. To understand my argument, you must leave the discussion of natural rights, and switch to an economic analysis that involves economic rights, externalities, transaction costs and efficient outcomes.

It seems you want to play games with this one.

I think we can have a good discussion, but it is arrogant of you to assume something other than the difficulties of communication on such a difficult topic. How about you assume the best motives instead of the worst?

It would be far easier and more logical just to accept that the requirement for fixation is in the statute to verify the voracity of the originality and the true creator of the work.

I don’t really know what you are trying to say, especially the way you seem to be using the work “originality, but I suppose, if I properly assume your meaning, this is part of the purpose; tracing the origination of a work to an original author using principles of causation.

But it is also helpful in the enforcement of property rights in the work, because by dealing only with the fixations, you can rely on standard property theories in assigning ownership and liability rights. Laws can only deal with what it knows. The more it has to know and the more difficult it is to know it, the less effectively a law can do its intended job.

Separating rights to mineral wealth from the land itself is quite different from separating “economic rights” in IP. The glaring difference is in the rivalrous nature of the material goods “land itself” and “mineral wealth”

I get this, so it is not necessary to keep returning to an explanation. You are holding that the impossibility of simultaneous use is the single criteria that determines whether property rights are available to deal with economic issues. I view this as simply assuming a particular conclusion. I believe if you review the comments of Kid Salami, you will see that he understands the anti-IP position in the same way.

Mises understands this and presents the problem as an externality in a very few paragraphs. His first principles are these:

1)Property is a human device

2) Works of authorship (for convenience, as currently defined as the subject of copyrights) function in the same way as ideas (although there is clearly a meaningful distinction between the two), in the sense that once you possess them, you possess the “factory” to copy them at low cost. Their serviceability is inexhaustible.

3) Either of the two pathways you take from this point creates its own set of problems:

a) if you permit no property rights in the author and permit unlimited replication, then the author, for the most part, is producing for an external economy.

b) If you permit absolute property rights in the author, then the public domain eventually disappears, and the public exchange of knowledge is curtailed, for the most part.

Deciding what path to take are the economic policy problems of public choice, the Coase problem of externalities, and the principle of efficient outcomes. Friedman deals with this topic in contemporary terms that is very understandable and useful.

Unless you are willing to examine that type of analysis, then you are stuck at the point where you merely insist that works, because they can be copied as easily as ideas, are nothing more than ideas that belong in the public domain, and therefore any author that produces a work, and releases it, has by your definition released it into the public domain.

I believe that we have a right to choose how we want to handle our affairs, and have the right to self government, and the right to establish rules that protect property interests as a way to make public choice decisions.

You have a much more restricted view; that there a few rules that everyone must follow all the time in order to be “free”. From a philosophical vantage point, I see your world-view a being much more restricted in overall liberty than mine. I think you hold the opposite view, that you are serving the purpose of greater liberty.

If you really want to resolve that difference, we will have to face the actual problems of public choice, and deal with the facts as they are, and not has one might imagine them to be. I think this is particularly difficult for someone who holds the strong belief in advance that any solution that requires laws is excluded, because laws imply the state, and the state is the antithesis of liberty. To quote Kinsella, “We have IP because we have the state”.

If you simply insist that you have defined property in a way that ALWAYS excludes information products, then I agree, there is little left to discuss. You have excluded the principle of property from the realm of possible answers to the problem Mises defines. You have selected an ideology which you simply require the world to conform to.

Your response smacks of elitism again. One does not need to be a lawyer to have an opinion on what constitutes just law. I’m not offended as it is simply an irrelevant critism that adds no value to our debate. It is a tactic that you use prolifically when you’re unable to clearly state your position (or clearly refute the position of others) on a fundamental principles level. Any law not based on underlying principles that are able to be discussed in plain language is clearly unjust and not worthy of discussion.

Your first paragraphs either knowingly or involuntarily completely ignores the point of my question. The crux of my question is to do with the need for fixation onto a tangible medium in order to be recognised as property under copyright law. According to Wildberry…

The exclusion of ideas, short phrases, slogans, etc. is because they are in the public domain, and do not rise to the level of “original work requiring a creative endeavor” to warrant exclusion from the public domain.

This explaination is incongruous with the requirment for fixation. Poems and song lyrics (as my original example pointed out and yet you ignored) are subject to copyright if fixed on a tangible medium but then not able to be copyrighted if they haven’t been fixed on a tangible medium (eg. transferred verbally). Yet your response infers that song lyrics become an “original work requiring a creative endeavor” by the process of fixation itself.

It seems you want to play games with this one. It would be far easier and more logical just to accept that the requirement for fixation is in the statute to verify the voracity of the originality and the true creator of the work.

Separating rights to mineral wealth from the land itself is quite different from separating “economic rights” in IP. The glaring difference is in the rivalrous nature of the material goods “land itself” and “mineral wealth” – we cannot both grow crops on the same piece of land or both mine the same mineral from the ground in the same location. With the intellectual work fixed on a book we can both use it at the same time (admittedly not with the original manuscript but once the good has been distributed beyond this). I can transfer the intellectual content from an original work I have access to into my possession (and at my cost) without having any effect on that original work (save any loss of special monopoly priveleges had they been granted). This sticking point has not changed for either of us in quite some time and seems unlikely to.

…does the current law not seek to protect these things because of the inherent difficulty in determining the veracity of a claim of originality or authorship without them or could there be another reason? This question may seem a little obscure but I think it is still both interesting and relevant to the debate because we’re both trying to work back to the fundamental principles of IP.

I would say no, that is not the objective of the law. It is a two-part objective: 1) to internalize the benefits of authorship to the author (i.e. incentive) and 2) to protect the public domain of ideas, etc. and facilitate public disclosure.

The exclusion of ideas, short phrases, slogans, etc. is because they are in the public domain, and do not rise to the level of “original work requiring a creative endeavor” to warrant exclusion from the public domain. Being to generous with the public domain would lead to all of the horrors that IP proponents claim in the “ideas are free” line of reasoning. The law recognizes and acknowledges this problem, and is designed to achieve some reasonable balance between protecting too much (ideas) and too little (no protection for original works).

To understand how the law operates to achieve this balance, you would have to learn something about the law. Short of that, let’s say that the principle of balancing competing interests has some utility for both sides.

It then comes down alienability of the bucket from what it carries. The anti IP folks say that these things cannot simultaneously have two seperate property titles (a title for the bucket and one for what it contains) because the new property title in the intellectual good will have redistributive effects on other existent property titles.

But this is not really true, is it? Let’s say property ownership of land is absolute. What does that actually mean? One thing it means is that any and all economic rights of that land belong to the owner. These economic rights can be alienated and traded as separate things. For example, I can sell the land itself, while retaining mineral rights. The mineral rights are one of the economic rights bundled together in the concept of “property ownership”. This is a universal rule of property. I could sell you a watch on the condition that you would only read the time during business hours, while retaining the right to the rest of the day. That is not meaningful in the case of a watch, but there is no principle of property rights that would prevent us from making such an agreement.

The issue is, why should IP operate in a completely different way than other property? There is no justification for that, as far as I can see, unless you just “made the rule” in order to arrive at the conclusion you want to reach; i.e. IP is “special property” that doesn’t involve a bundling of economic rights.

But this in not true. JNS recently described a list of economic rights associated with copyrights: rights to print, to movies, to translations, to paper back, hardcover, ePub, etc. Each economic right is negotiated as a part of the deal, and the owner can transfer those rights individually, or retain them while transferring others. This is precisely how all property rights operate in the open market. However, in order to do this, you must own the property in the first place. Once that is settled, then the “bundle” ownership is also settled, and can be the subject of a voluntary trade agreement.

We accept that the value offering of the combined good perhaps (and really in all likelihood) is predominantly a function of what is in the bucket and not the bucket but this fact in itself does not make it proper to alienate it into two separate and distinct property titles. It is for this reason that we are ok with contracts that recognise the value of the contents of the bucket separate from the bucket but not giving them a universal and far reaching property title.

I think you are getting lost in your analogy. No one is suggesting (I don’t think) that the owner of a manuscript would negotiate to sell off the paper it is written on while retaining the work that is printed upon it. To sell the work without the paper (carrier) would amount to a sale of copyright. It is sufficient to recognize that the work is what is being traded as it appears on the paper, which paper has a nominal value on its own. It object that is generating the subjective value held by the traders is the work.

However, if you think in terms of economic rights, you can see that in a contract situation between two parties, the owner could bundle the work and the paper (carrier in JNS’s terminology) as a unit, while retaining certain economic rights in the work. I think both sides even agree to the legitimacy of that, as long as it is accomplished within the context of a party-to-party contract.

In the case that is cited on the anti-IP side, someone who is not a party to the contract doing something that was prohibited to the parties to the contract (i.e. copying and distributing, or publically performing, etc.) is not bound. That is the real point of divergence between the two views.

In attempting to make a rule about how that situation is handled, you would have to refer back to the transaction, and make a determination of whether the authors rights were going to be recognized as property, thus binding all parties even those outside the contract, or as a strict contract issue, in which case you would have to rely on another theory. Although convoluted and high cost, trade secret, or interference with contract could be utilized and arrive at the same outcome.

For example, if one of the parties released the contents of the work in violation of the contract, liability would be assessed against the person who improperly released it. The problem then becomes whether the injured party can actually be compensated adequately for the loss. If not, then likely an injunction would issue, in which case the “innocent” third party would be enjoined from further use. It is a very costly way to arrive at the same outcome. This why, ultimately, it is a problem of externalities, and why the Coase Theorem applies.

At any rate, the consumer will pay a price for the bucket that closely resembles how they value what it holds not simply a price for the bucket regardless of its contents. This is why I think it is unfair for some IP proponents to suggest that IP opponents either:
a) don’t recognize the difference in value between an empty bucket and a bucket carrying an original work (I suggest this difference is similar to me selling my house in a decrepid state or painted with a beautifully manicured garden… property title is the same but value offering is different and accounted for in sale price)

I think this is an analogy distinguishing a good story from a badly written one, and so makes a different point; all house for sale compete with all other houses for sale, and by analogy, all books compete with other books.

b) think authors should be entitled to nothing and that anybody is welcome to steal from them (although clearly we have disagreements around this “steal” definition depending on how property rights are defined).

Or to put it in more neutral terms, the author releases his work with the understanding that once he does, he is transferring the work into the public domain, and he no longer has any title to the economic rights from having once owned the manuscript.

c) there would be virtually no noticeable effects on how creators could be rewarded for their external economies

If b) were true, the possession of economic right of the private ownership of the manuscript would have to be recalculated, so that the author would need to make his economic calculations and develop his business plan based on this “new” reality. This is a matter of some considerable speculation.

It is not a difficult thought experiment, though, to place yourself in the shoes of such an author, and realize that if you are going to achieve anything close to the outcome you would have had under copyrights, it was going to come at a very high transaction cost. The higher the transaction cost and the lower the return form output, the less attractive the business plan becomes; economics 101.

However no later replication is possible without the initial production of the original work. Its production and existence at that moment, before it has ever been copied is ultimately scarce, (there is only one in the universe). Because it is a tangible, material object, it could be transferred as with any other scarce good at that moment in time.

I agree with this, even the first sentence of it. This also explains why an author does have the ability to at least make some income from their work, albeit perhaps (even quite likely) significantly less than in an IP protected environment.

I think there is little doubt about this, but like I said, it is a matter for speculation, since we can’t run a sociological experiment.

I’ve run myself out of time for now but wrapping-up quickly I would say that I agree that without IP legislation there is a predicament with production for external economies but I don’t like the property title in intellectual creations solution. I do not see why that is the only possible solution to this issue.

After thinking about what you have said here, I think you have a limited concept (no offense intended) of what property rights are and how they operate.

While much time and attention has been paid to the justification for recognizing property rights (or not), very little has been paid to the issues of the economic of law introduced by Coase. If you look at that issue, I think you will see that there is more than one way to get from point A to point B. You can accomplish much of the things with contracts that you can with property rights, and so you have to understand why one would be more efficient over the other in a particular set of circumstances.

Friedman’s book takes off exactly at this point.

Regards,

Fair comments. I also agree with yourself and Kinsella that the original manuscript is scarce and this is where it gets interesting for both sides of this debate yet doens’t really help us move on. Let me try and explain why I say this..

If you don’t mind, I’ll return to JNS’s (assuming it was his) “bucket” analogy where the material manuscript is the bucket, the work fixed on it is the immaterial contents of the bucket.

We all seem to agree without an initial “bucket” there is nothing that is protectable or could be considered property. I raised a query before though for things like short poems or songs that are easily remembered and then are perhaps only ever shared verbally (i.e. without a fixation) – does the current law not seek to protect these things because of the inherent difficulty in determining the veracity of a claim of originality or authorship without them or could there be another reason? This question may seem a little obscure but I think it is still both interesting and relevant to the debate because we’re both trying to work back to the fundamental principles of IP.

It then comes down alienability of the bucket from what it carries. The anti IP folks say that these things cannot simultaneously have two seperate property titles (a title for the bucket and one for what it contains) because the new property title in the intellectual good will have redistributive effects on other existent property titles. We accept that the value offering of the combined good perhaps (and really in all likelihood) is predominantly a function of what is in the bucket and not the bucket but this fact in itself does not make it proper to alienate it into two separate and distinct property titles. It is for this reason that we are ok with contracts that recognise the value of the contents of the bucket separate from the bucket but not giving them a universal and far reaching property title.

At any rate, the consumer will pay a price for the bucket that closely resembles how they value what it holds not simply a price for the bucket regardless of its contents. This is why I think it is unfair for some IP proponents to suggest that IP opponents either:

a) don’t recognise the difference in value between an empty bucket and a bucket carrying an original work (I suggest this difference is similar to me selling my house in a decrepid state or painted with a beautifully manicured garden… property title is the same but value offering is different and accounted for in sale price)
b) think authors should be entitled to nothing and that anybody is welcome to steal from them (although clearly we have disagreements around this “steal” definition depending on how property rights are defined).
c) there would be virtually no noticeable effects on how creators could be rewarded for their external economies

However no later replication is possible without the initial production of the original work. Its production and existence at that moment, before it has ever been copied is ultimately scarce, (there is only one in the universe). Because it is a tangible, material object, it could be transferred as with any other scarce good at that moment in time.

I agree with this, even the first sentence of it. This also explains why an author does have the ability to at least make some income from their work, albeit perhaps (even quite likely) significantly less than in an IP protected environment.

I’ve run myself out of time for now but wrapping-up quickly I would say that I agree that without IP legislation there is a predicament with production for external economies but I don’t like the property title in intellectual creations solution. I do not see why that is the only possible solution to this issue.

Thanks for you suggestion of David Friedman’s book – I’ll endeavour to have a look at it.
Regards.

Why does Mises state with absolute clarity that technical manuals and formulas (both protectable under current IP laws) are NOT scarce yet you claim original works are? Where are the differences in production costs between Mises’ tech manuals and formulas and your original works that make the prior goods not scarce and the latter good scarce?

Here is the rest of that section:

The External Economies of Intellectual Creation

The extreme case of external economies is shown in the “production” of the intellectual groundwork of every kind of processing and constructing. The characteristic mark of formulas, i.e., the mental devices directing the technological procedures, is the inexhaustibility of the services they render. These services are consequently not scarce, and there is no need to economize their employment. Those considerations that resulted in the establishment of the institution of private ownership of economic goods did not refer to them. They remained outside the sphere of private property not because they are immaterial, intangible, and impalpable, but because their serviceableness cannot be exhausted.
People began to realize only later that this state of affairs has its drawbacks too. It places the producers of such formulas–especially the inventors of technological procedures and authors and composers–in a peculiar position. They are burdened with the cost of production, while the services of the product they have created can be gratuitously enjoyed by everybody. What they produce is for them entirely or almost entirely external economies.
If there are neither copyrights nor patents, the inventors and authors are in the position of an entrepreneur. They have a temporary advantage as against other people. As they start sooner in utilizing their invention or their manuscript themselves or in making it available for use to other people (manufacturers or publishers), they have the chance to earn profits in the time interval until everybody can likewise utilize it. As soon as the invention or the content of the book are publicly known, they become “free goods” and the inventor or author has only his glory.
The problem involved has nothing to do with the activities of the creative genius. These pioneers and originators of things unheard of do not produce and work in the sense in which these terms are employed in dealing with the affairs of other people. They do not let themselves be influenced by the response their work meets on the part of their contemporaries. They do not wait for encouragement.[13]
It is different with the broad class of professional intellectuals whose services society cannot do without. We may disregard the problem of second-rate authors of poems, fiction, and plays and second-rate composers and need not inquire whether it would be a serious disadvantage for mankind to lack the products of their efforts. But it is obvious that handing down knowledge to the rising generation and [p. 662] familiarizing the acting individuals with the amount of knowledge they need for the realization of their plans require textbooks, manuals, handbooks, and other nonfiction works. It is unlikely that people would undertake the laborious task of writing such publications if everyone were free to reproduce them. This is still more manifest in the field of technological invention and discovery. The extensive experimentation necessary for such achievements is often very expensive. It is very probable that technological progress would be seriously retarded if, for the inventor and for those who defray the expenses incurred by his experimentation, the results obtained were nothing but external economies.
Patents and copyrights are results of the legal evolution of the last centuries. Their place in the traditional body of property rights is still controversial. People look askance at them and deem them irregular. They are considered privileges, a vestige of the rudimentary period of their evolution when legal protection was accorded to authors and investors only by virtue of an exceptional privilege granted by the authorities. They are suspect, as they are lucrative only if they make it possible to sell at monopoly prices. [14]. Moreover, the fairness of patent laws is contested on the ground that they reward only those who put the finishing touch leading to practical utilization of achievements of many predecessors. these precursors go empty-handed although their main contribution to the final result was often much more weighty than that of the patentee.
It is beyond the scope of catallactics to enter into an examination of the arguments brought forward for and against the institution of copyrights and patents. It has merely to stress the point that this is a problem of delimitation of property rights and that with the abolition of patents and copyrights authors and inventors would for the most part be producers of external economies.

For me to go through this and address every point that I highlighted in this section is beyond what is practical here. However, there are two issues I will address: Scarcity and External Economies.

First, I do not dispute that both ideas and “works” inexhaustible in the service they render. However, I argue what is really a minor point; original works are scarce.

The “intellectual groundwork” Mises refers to is based upon the use of knowledge and ideas that exist in the public domain. In the case of a factory, this intellectual groundwork makes possible a product, whose property characteristics are not disputed, and which is clearly scarce by your thinking.

In the case of an author, the process of writing is this groundwork, the manuscript is the product. There is nothing scarce about the process of drawing ideas, facts, formulas, etc, from the non-scarce public domain. However no later replication is possible without the initial production of the original work. Its production and existence at that moment, before it has ever been copied is ultimately scarce, (there is only one in the universe). Because it is a tangible, material object, it could be transferred as with any other scarce good at that moment in time.

This explains why even Kinsella admits that the author owns the manuscript. I conclude therefore, that scarcity alone is not sufficient to determine whether property rights, a human device, are legitimate. If scarcity is your criteria, then the author is in possession of a scarce good, and as a property owner, has the right to transfer it under any conditions he wishes.

So, even using the concept of scarcity, it is reasonable to acknowledge that an original work is “property”. The more important question is, should we define it as property in the market? Do the rights in this property operate like all other property, that the rights of use are exclusive, and property represents a bundle of rights that can be alienated and limited under conditions of sale and/or license? How do we deal with the “economic rights” of this original product/property?

The rest of Mises’s writing here is about monopolies and external economies. Go to the section about monopolies footnoted here to understand what he says about equivocating the two connotations of “monopoly”.

He leaves the section, not by resolving the “drawbacks of this state of affairs”, but by pointing out that treating the work of authors and inventors as non-scarce “ideas” MEANS that producers of such goods will be producing for external economies. That is the drawback.

From here, I refer to the Coase Theorem, to understand what to do about the “public choice” problem of externalities. If you don’t want to read Coase, check out David Friedman’s book, Law’s Order, available online. He gives a great summary of the issues and how to look at the economics of law in relation to internalizing externalities.

The problem I have, when all is said and done, is that Kinsella advocates creating the externality, such that authors, by doing that very thing for this which the authors produced as the product of his privately owned means, namely offering it for sale and distribution, he merely finds that he is producing for “free-riders”.

By abolishing IP without acknowledging the consequences of the fact that humans will not act to produce for external economies, given a choice, he ignores the economic issues that result, namely that “that with the abolition of patents and copyrights authors and inventors would for the most part be producers of external economies.

Regards,

I think you conflate rivalrous goods with economic rivalry.

Well, this is a point of contention. If you wanted to provide an explaination, I would be happy to respond. I think one implies the other.

See Mises again under his heading “The External Economies of Intellectual Creation”:

The extreme case of external economies is shown in the “production” of the intellectual groundwork of every kind of processing and constructing. The characteristic mark of formulas, i.e., the mental devices directing the technological procedures, is the inexhaustibility of the services they render. These services are consequently not scarce, and there is no need to economize their employment. Those considerations that resulted in the establishment of the institution of private ownership of economic goods did not refer to them. They remained outside the sphere of private property not because they are immaterial, intangible, and impalpable, but because their serviceableness cannot be exhausted.

Mises says it is “because their serviceableness cannot be exhausted” which equates to their non-scarce and non-rivalrous nature (which he is saying is the critical attribute as opposed to the claim that it is due to their immaterial-ness). That is, my use of a certain intellectual good doesn’t prevent your use of it or any other party’s. This is clearly different from saying that my use of the intellectual good is rivalrous with it’s creator’s because the creator wants me to pay him a royalty and yet I don’t want to. The rivalry here IS NOT rivalry in the actual good but rivalry in the cash that he’s claiming he is owed by me (and I’m rejecting his claim). Hence why I made the distinction between rivalrous goods and economic rivalry. I also used a tariff example when I explained this so I did try to elaborate on what I meant by this distinction.

You say ideas are non scarce yet original works are scarce. So just how exactly is an original work’s serviceableness exhausted? Why does Mises state with absolute clarity that technical manuals and formulas (both protectable under current IP laws) are NOT scarce yet you claim original works are? Where are the differences in production costs between Mises’ tech manuals and formulas and your original works that make the prior goods not scarce and the latter good scarce?

I can’t imagine you’ll be able to adequately make this distinction but please, go ahead.

Are you familiar with the Coase Theorem?

Therein lies the solution to the “problem”.

The concept is “original work of authorship”. If you can’t understand that intuitively, I can think of a few ways to help you.

1) write a novel, a short one, say 150 pages. When you are finished, type it up and proofread it and rewrite it and correct all the errors, cut out what you don’t need, add what you left out, invent characters, convey a sense of beginning, middle and end, and when you are done, you will have a manuscript of your novel. That is “it”. Or…

2) Read about it in the law itself and understand the terms that are defined, and how they operate against real facts. Or…

3) keep asking people here to explain it to you, and remain puzzled when you get different interpretations of the subject matter, depending on who you read.

Beyond that, I don’ t know how I can help you.

Right: You agree it is an equivocation to equate “ideas” with “IP”, but not “information” and “IP”?

Because “it” is useful, you want to use “it”. Becasue you want to use “it” for free, you simply wave your hand and deny any rights to “it” by negating any recognition of how “it” came to be useful, and from whom “it” originally came?

I have never argued that a “work” is not easily copied. If you have a tool die, copies are pretty cheap marginally compared to the first prototype.

You argue that recieving a copy of a book made from the original entitles you to the “tool die” to make your own copies. The attribute of “property” in the original manuscript is not disputed by you, yet the normal operation of this property is denied by you simply because you believe you are entitled to it on account of the cost of copying being low.

Where in Rothbard’s work does he say that the ethical foundation property rights is derived by the low cost of duplication? Isn’t that what Tucker said; if it is easy to copy, it must not be scarce? I suspect he took his cue from you on this.

Oh I know, I just need to go read whatever statute you are talking about (don’t worry, it’s my responsibility to find that out too) and see how much sense IP really makes.

Or, you can just proudly cling to your ignorance about the very thing you are so opposed to. I am just saying that when you create a straw man by attributing things to IP laws that don’t exist, it is reasonable for me to object and point you to a way to verify whether what I’m saying is true. It is not reasonable to doubt the veracity of what I’m saying, and to refuse to verify it. Do you want to learn about Austrian economics by asking a blogger here to explain it to you?

Saying IP does not try to protect ideas admits that it is a state-run scheme to steal peoples’ physical property (i.e. recording devices, manufacturing goods, etc.) using frivolous claims to ownership that contradict the homestead principle.

I have said or admitted no such thing. Your one sentence here contains at least 4 assumptions which are all, at the very least, debatable. Stating them as conclusions is not an argument for or against anything.

I agree, it is not THE argument, it is ONE argument.

It is ironic that I spent weeks objecting to the equivocation and referring to the statute in my complaint that it is unreasonable to oppose a law for doing what it specifically seeks to avoid. Finally, Kinsella allows that OK, it is not ALL ideas, just some! Now you say it is beside the point?

If you cannot discriminate between a pick-up line and writing a book, I’m not sure where you are coming from.

I have never argued that “action” is property. Don’t attribute what someone else says to me. As for this:

When you mix ideas with property, now you have a property right, but you only have that property right, because property is now involved.

I don’t know what you are trying to say.

As to your debate, sorry I don’t know what you mean. The idea of a structured debate environment that is different than this blog forum is a good idea, although I don’t think is a matter just for you and I to settle. I have no idea what you intend, specifically, or how it would work. Why not write an article with your proposal, and that can start a new thread?

Ideas are not scarce (at least in principle) and “original works” are. Someone has to expend capital goods to produce them.

Sure. And they are free to keep them, sell them, lend them under restrictive contracts or do anything else they want with them. “Problem” solved.