In a nausea-inducing post, the US Patent and Trademark Office is trumpeting on its website the millions of patents it has issued. As the short version states: “The USPTO has issued millions of patents over the years. Number 1,000,000 was issued 100 years ago this month. Number 2,000,000 was issued in 1935. Take a closer look at these “million milestones” from patent history.” This disgusting puff-piece, of course, ignores the horrible cost of the patent system, and naturally, conflates innovation and invention, with patenting.
Incidentally, the PTO issues new patents every Tuesday–5,120 little state grants of anti-competitive monopoly privilege were issued this week, two days ago, with the latest being 7,996,916 for Process verification, claim 1 of which grants some Reno, NV company, IGT, a monopoly on this process:
1. A method of verifying the authenticity of gaming software stored in RAM of a gaming device, said gaming device having a gaming controller for executing gaming software programs at the gaming device, the method comprising: identifying a first gaming software program currently stored in the gaming device RAM, wherein the first gaming software includes a first portion of executable code stored in the gaming device RAM; determining a first identifier associated with the first portion of executable code; identifying, using the first identifier, a second gaming software program stored on a file storage device, wherein the second gaming software program has associated therewith an identifier which matches the first identifier, and wherein the second gaming software program includes a second portion of executable code; verifying an authenticity of the first gaming software program, wherein verification of the authenticity of the first gaming software program includes comparing bits of the first portion of executable code to bits of the second portion of executable code, and determining whether any portion of the second portion of executable code matches the first portion of executable code; and generating an error event if it is determined that no compared portion of the second portion of executable code matches the first portion of executable code.
With the PTO granting about 5000 patents a week, and given that we are only 3,084 patents away from 8,000,000, expect that number to be hit next Tuesday, Aug. 15, 2011.
Incidentally, in case you are wondering, here are the other million-patent milestones since the first two the PTO highlights:
- U.S. Pat. No. 3,000,000, issued 1961 for an “Automatic Reading System“
- U.S. Pat. No. 4,000,000, issued 1976 for an “Process for recycling asphalt-aggregate compositions“
- U.S. Pat. No. 5,000,000, issued 1991 for an “Ethanol production by Escherichia coli strains co-expressing Zymomonas PDC and ADH genes“
- U.S. Pat. No. 6,000,000, issued 1999 for an “Extendible method and apparatus for synchronizing multiple files on two different computer systems“
- U.S. Pat. No. 7,000,000, issued 2006 for an “Polysaccharide fibers“
Notice the time to issue another million patents is decreasing: about 110 years for the first million, 24 years for the second million, then 26, 15, 8, 7, and 5. So you can see that, just the flood of legislation and regulations (including a mountain of IP law and treaties), we can expect to be increasingly inundated with a flood of patents (especially with economically confused patent shills arguing for a “Patent Stimulus Plan” to get the economy roaring–calling for President Obama to “issue an Executive Order directing the Patent Office to start allowing patents”. Who knows. Maybe we are headed for an IP singularity instead of the technological one.
Anyway, here is the full puff piece–if you can stand it:
Millions of Patents
The United States issues patents by the millions. Our patent system was created to support intellectual property, which is recognized in our Constitution: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
Under the current numbering system for patents, number 1 was issued in 1836. A million patents later, number 1,000,000 was issued by the United States in 1911. The U.S. Patent and Trademark office will issue patent number 8,000,000 in 2011. In the coming weeks we’ll take a look at some of these “milestone millions” from over the years.
Patent no. 1,000,000 – August 8, 1911
Patent number 1,000,000 was issued to Francis H. Holton of Akron, Ohio for his improvement in vehicle tires to make them more durable and puncture resistant. Click on the patent drawing below to see a larger version. Or to read the complete patent, click on the description to open a pdf file.
On August 20, 1911, the New York Times noted the arrival of patent 1,000,000 and printed this fascinating story about Holton’s “up-to-the-minute contraption” that was “one of the crying necessities of this modern world.”
Patent no. 2,000,000 – April 30, 1935
Like patent number 1,000,000, patent number 2,000,000 was related to tires and it was granted to Joseph Ledwinka of Philadelphia for the Edward G. Budd Manufacturing Company. The focus for Ledwinka’s patent was for rail cars and consisted of a pneumatic tire, used in combination with a rail wheel provided with a retaining flange. Light in weight, Ledwinka claimed that a rail car provided with wheels and tires of this type could attain exceptional high rates of speed, be braked as severely as desired, and do so safely. Click on the patent drawing to see a larger version. Or to read the complete patent, click on the description to open a pdf file.
What did the media have to say about the milestone? The Ellensburgh (WA) Capital Newspaper published a photo of Patents Commissioner Conway P. Coe presenting Ledwinka with his patent. Meanwhile, the Tuscaloosa (AL) News also looked at patent number 1,999,999. What a difference a digit makes!
Update: United States Patent and Trademark Office Issues 8 Millionth Patent, for a “visual prosthesis.” Without the Constitution this would never have been invented! Thanks be to the gods Founders!
[c4sif]
{ 85 comments }
Judging from the code description in the first example, it seems that any program that verifies another code segment or accessed sub-program, is in violation of this patent. At least for gaming machines (a BIG market).
That’s like patenting a square knot!
Sheesh. Obviously, the inspectors don’t know bugger-all about software. I guess if they did, they’d get themselves a REAL job, huh.
When you have a division of the US Federal government that is _profitable_ then you know you have problems.
The patent office makes money on the patents it approves. More applications, more patents awarded, the more money they get.
I didn’t know it was a profit center. Worser and worser….
They make a profit but the fedgov siphons the surplus from them every year. The PTO complains about it and asks allatime for the fedgov to let them keep their profit. whiners.
Relevant, and stated from the programming sphere:
http://www.marco.org/2011/08/11/patents-cant-be-fixed
It seems programmers are also running into these same issues, and blogging about them too, in increased frequency.
The problem is that the author still thinks that patents are a good idea.
[Pointless whining about patents elided] … “Patents are a good idea. The rules of the patent system were well-designed and have been refined for hundreds of years, mostly for the better.”
He’s like Winston, fully brainwashed, loving Big Brother and waiting for the bullet that will catch him in the back of his head one day when the party is done playing with him.
I just heard a talking head on a local news-talk radio station who was absolutely raving mad about the fact that the Chinese “stole” the idea of making an iPad. And now they sell iPad copies for only around $25 in a fake Apple store in China. Isn’t it strange that someone would be foaming with anger that the Chinese “stole” ideas from someone whom he has never met and probably doesn’t give a damn about, but it never occurs to him that Apple might be stealing from *him* by using their patents to force him to pay about 10 times more for a tiny, hand-held computer than the actual fair price would be, if a free market existed.
If you think that there’s anything new under the sun, try writing software. Somebody been dere, dun dat every time. Cut, paste and a tip o’ de hat and on my way.
But if I’m in a bind, who I gonna call??? Yep, de guy I just *stole* from. Victim? or just a good advertiser?
Seems as if the US-of-A is trying to patent “everything”. The patent on a substance like O2, cannot be far away.
On the other side, and that is perhaps where the article is aiming at, the patent system may be killing itself by the sheer vastness of it.
Actually, as you can see in this post, patent proponents ADMIT exactly this–that O2 itself could be patented:
Why can’t you see the bright side? When these millions of patents expire all the knowledge and information become public and non-patentable. Isn’t that the nirvana you are longing for?
First: there is no proof that this information is all that useful in the form it is disclosed in. Details are left out, etc. Believe it or not, the main reason most companies look through patents is to make sure they are free to innovate or sell in a given area–not to learn things.
Second, there is no proof that the information disclosed would not have already been known due to the sale of the covered products in the market. I.e., companies still keep some things secret, so here the patent system does not result in disclosure; but the things they cannot keep secret–aspects of products they sell that become known as soon as they start selling them–they might as well get the patent monopoly but it does not induce any disclosure that would not have been made anyway.
Third: there is no proof that any additional innovation at all, much less on net, results from the patent system, to be disclosed in the first place. There is good reason to believe innovation is on net reduced due to patents–meaning there are innovations we do not have, that cannot be disclosed at all.
Fourth: there is no reason to believe that the value of any additional disclosure offsets the enormous costs of the patent system–this is similar to the idea of spinoffs from state funding of research: e.g., the billions spent on NASA might have resulted in Tang. So what?
@Stephan,
1) One of the criteria to grant a patent is non-obviousness. That takes care of your first point.
2) It is almost impossible to prove the negative. I guess you know that but isn’t it too arrogant to assume that others don’t? So don’t hide behind it. Things first has to be invented to be produced.
3) Following on 2), Wildberry has eloquently proven that you are wrong. When will you pull your head from the sand?
4) I agree the title system can be streamlined. But it is not only in IP. There is a huge mess in the legislation of physical properties, too. Does this mean that we should abolish ownership of those? Far from it. I can imagine an absolutely private title system for IP as well, especially for those that worthy of it. It takes time to evolve though like all rules directing ownership. First the damage done has to be corrected, however even when they are mature they will still be changing constantly as conditions, knowledge and people change. It will as long as we are not like bees and ants.
You love negatives! You should embrace the positive similarly to inventors who are expected to express themselves in positive terms. You can not build an ideology on hate.
My first point was: “there is no proof that this information is all that useful in the form it is disclosed in. Details are left out, etc. Believe it or not, the main reason most companies look through patents is to make sure they are free to innovate or sell in a given area–not to learn things.”
This has to do with the enablement, written description, and best mode requirement. I am pointing out that you can satisfy these three and still leave a lot of details out. This has nothing to do with the non-obviousness requirement. That simply requires the Examiner to make a determination that the claimed invention is not only novel, but has what Europe calls an “inventive step”. Even if the invention is “inventive” in this sense does not mean that the disclosure gives much useful information to the world, since a lot of details can be left out–and also because in most cases competitors independently come up with the same or similar idea on their own and just happen to infringe the patent–not because they got the idea from the patent. You do realize that in most patent infringement cases there is never even an allegation made that the defendant copied from the patentee, right?
So, you don’t know what you are talking about here. Your point 1) makes no sense whatsoever.
It is IP monopoly advocates who claim that it is justified because it produces net wealth. The burden of proof is on them to demonstrate this. They have not. In fact they do not even try. And they cannot ever succeed at this. That is not my problem or fault. If they really don’t have knowledge that the patent system genrates net wealth, becuase it’s impossible to acquire this knowledge, how can they make this claim to justify patent law??
I never argued that patents should be abolished because of a title system mess. I have no idea what you are jabbering about. Property precedes the state. IP comes from the state. Get rid of the state, we get rid of IP; and property rights become more secure.
This is not an argument about substance, though. In any case, I love liberty and property rights, and naturally hate violations thereof–and IP is such a violation. It is evil and socialistic and statist and hideous. It destroys wealth, rights, and life. As Rothbard says, hatred is my muse.
1) I can only talk for myself: for me, patents are an enormous resorce for information though you have to learn how to read them. I agree, their primary objective is not teaching. However, that comes later after a position is established. Why would anyone publish any useful information otherwise. Corporate research would guard its secrets even more. Only reverse engineering would work to a certain point. Try to calculate the cost of these also when you are considering the costs of the alternatives.
2) Wildberry demonstrated it, read him again if you could not understand.
4) Why are you keep publishing the horrors of IP? You never put a disclaimer on them like “I’m just kidding these are not the main reasons I am against IP”. You whip up emotions to have an audience which can be manipulated easier.
Rothbard is a wonderful example, with his huge potential he remained almost totally obscure outside of a small circle. Was he a success? Did his ideas run their full potential?
what are you talking about? a position?
lots of reasons, but in any case it need not be published: the sale of products invariably teaches others things about your innovations. They are embodied in the product.
You don’t konw this; but so waht, if so? THere is always a division between knowlege that is disclosed, and that which is kept secret. The state does not know the “right” line to draw.
No. You do it. If you support IP. You carry your burden of proof.
The “main” reason? I have been veyr clear about why I am agianst IP. The examples are illustritive and supportive and attention-getting and help to sow doubt on your incessant sophistic use of utilitarian bromides.
@Stephan Kinsella August 13, 2011 at 2:27 pm
Yes, these are the usual purposes to which straw man arguments are normally put. I guess you agree that my criticism was on target, at least as to your style and purpose.
As is this type of unfounded, inflammatory rhetoric used in ad hominem.
You think that pointing out your incessant use of fallacious “parade of horrors” arguments are unjustified, yet you claim that those who hold a different view than you are merely making what appear to be by your own admission, truthful arguments derived from utilitarian economic arguments based on commonplace notions? Yet they are, according to you, false. Why?
If you think the arguments are sophistic, then it seems the burden is on you to show why they appear correct, but in fact are not. Economic theory is the height of utilitarianism, so I don’t even understand how calling them “utilitarian” is a criticism. If common sense is not relevant, then what kind of sense is?
The situation is, in case you have not noticed, essentially you against the rest of the world. As Andras points out, Rothbard, while respectable in some ways, has failed to make any real impact, while Mises, on the other hand, is leading the revolution. Is that simply because Rothbard hasn’t come into his own as yet? We need to give it more time?
To quote a line from a great anti-war film, “What is your major malfunction?”
Here is what an honest commentator might have said:
“Well Caroline, there are still distinctions that Patents make with regard to what is and is not protected by patent law. O2, like genes, are not within the subject matter of Patents. If they were, this dummy would have won his argument in the courts.”
Wildberry,
(emphasis added) The rhetoric is very well founded. Your demagogic behaviour is well documented, by your own posts. Stephan’s posts are not ad hominem. Ad hominem is when a personal attack is used in an attempt to invalidate the target’s arguments. This is not what is happening here. The attacks merely refer to your behaviour. They do not address the contents of your claims, only the form you present them. Your claims are erroneous because they are logically invalid, confused and vague. They are devoid of a coherent meaning. This is not what earned you the reputation. There are plenty of others that cannot coherently argue.
Your strategy, however, is just smoke and mirrors, repetition of refuted arguments, avoiding confrontation, distraction, and if all else fails, you proclaim yourself morally superiour and the clear winner. This is why you’re having a tough time being taken seriously. You’re a joke. A bad one even.
Strange, 3) is conspicuously missing.
As to whether it is an issue of “net wealth”, this is irrelevant, since it is impossible to prove something that doesn’t exist (a non-IP market place).
So we look to praxeology, and the operation of markets in relation to external economies. Fundamentally, without IP, producers would be producing for external economies, and as Mises shows, this is a big no-no.
Therefore, the burden shifts to the opponents to explain how this problem is solved in a way that doesn’t result in, for the most part, in non-production, socialism, or ultimately, slavery. All of these outcomes would be consistent with a Misesian analysis in the absence of IP rights. Despite many challenges to do so, Kinsella has never attempted to take this argument on. I am not surprised.
Instead he creates an impossible argument, in your own words, and then claim that proponents must successfully make it before you have any “burden”. This patently (pun intended) false. Each party in an argument has a burden to support his case.
Instead, “hatred” is his muse. A rare statement of honesty.
Wildberry,
You have failed to either provide a theoretical definition, nor an example, of this “non-IP market place”.
Producing for external economies is unavoidable, IP or no IP. Memory loss again?
On the contrary, he said exactly the opposite, that the existence of external economies is not a valid reason to conclude that this is a “no-no”.
Boring.
(My knee-jerk reaction to mentions of socialism)
But would they? Assuming that consumer demand is still there, would producers retail their articles in the old way, or would they choose a more competitive model (e.g. subscription)?
Unless one treats Human Action as a holy scripture, trying to find interpretations consistent both with Mises’ words and their own agenda, it is expedient to do away with the “most part” (how much is “most” anyway?) and consider only the part that is internalized. From a theoretical standpoint, if it is possible to turn a profit by selling enough articles before the consumer demand switches to cheap third-party copies, then the dreaded “external economies”, and the problem of quantifying them, become quite a non-issue.
It can be objected that this way the market underappreciates the true scope of innovator’s contribution toward general welfare. But it still does what the market should do – reward actors that satisfy consumer demand. No excuse for innovator’s marketing department if it fails to persuade the consumer early.
Wildberry is as evil and dishonest an interlocutor as I have ever encountered.
Nice way to dodge the burden of proof.
prove your claim. you cannot do so. some of us will not let you evade this.
@Andrew from Russia August 15, 2011 at 12:27 pm
You might want to check your reflexes. This might be a twitch.
How old? The old way to “retail” books was to hand-letter them and keep them as prizes of the closed societies of the elite.
Consumer demand, especially say, for budding artists and authors, takes awhile to develop. This is one reason, perhaps, that modern authors often make their work available on-line. Such promotion is a means to an end, which hopefully delivers them to a place where they can actually be “popular”. In such a position, the existence of copyrights becomes a critical factor in internalizing the benefits of being a popular author or artist.
That is called the capitalist system; all the work done before general popularity might be thought of as “loss-leader capital investment”, while post-popularity might be called the profitable phase. The Socialist approach would be to centrally plan what books are needed and what they should contain, and then “hire” a suitable writer to produce such a book.
This very idea has been expressed here (see Sweatervest) by opponents of IP; i.e. that in a post-IP world, the makers of CD players would “hire” artists to produce CDs to play on their machines. Does that seem workable to you in a capitalist system? It certainly would work in a socialist system, wouldn’t it?
I’m sure you mean something here, but I’m not sure I grasp it. A careful reading of the relevant section of HA addresses both of your “issues”. He uses “for the most part” because he appears to recognize that all externalities can never be eliminated, nor should they be. Read his section on external costs, which he contrasts with external economies.
His position appears to be that the internal benefit must outweigh the external costs in light of the actor’s own subjective valuation of means and ends. Therefore, it is not necessary to evaluate the relative value of internal v. external; it is merely necessary to determine if the internal benefit is sufficient for him to take the subject action. If they are not, he will not so act. It is a proxeological approach the allocation of scarce means of production privately owned by the producer; i.e. the author owns himself.
Secondly, he concedes that without IP, the author finds himself in the position of the entrepreneur, and quickly finds himself left with “only his glory”, since the serviceability of his products can be reproduced indefinitely. The question is, if he is producing, for the most part, for external economies, how will his economic calculations lead him to act? I think the answer is obvious; humans do not voluntarily act to enslave themselves.
You are making a nonsensical statement here, which reduces to “It is the innovators problem to become popular before he becomes popular”. How is that not absurd? It is certainly not a business plan that has much chance of success.
The “market” may well recognize the contribution of the author, it simply does not have a way of rewarding him for it by consuming his product. That “income” goes to an external producer of products, which can only exist because of the capital investment of scarce means made by the individual author.
How is this outcome consistent with the operation of a free market in any other context?
Kinsella,
For someone who by now must have written a million words on this subject, you certainly have little of substance to say.
What assuming I have a burden here (which I share) what is the standard of proof?
I have claimed praxeology and Mises as supporters of my view; producers will not voluntarily produce for external economies.
You propose that this is of no consequence; i.e. let the entrepreneurial chips fall where they may. You have even defined the playing field: 1) secrecy or 2) free goods.
To the extent that you accept either praxeology or Mises, I have presented my case.
I have restated it to you countless times. Can you show me a single instance of where you have addressed Mises’ dilemma of external economies? I think I wouldn’t have missed it.
All you have is your “muse”. You hate the State. We have IP because we have the State. Therefore you hate IP, and anyone who can see a justification for the economic principles of property rights in the “Intellectual Creations” is “evil”.
You and Clarence Darrow might be soul mates.
Wildberry,
you’re boring. I wanna see new tricks. Booooo!
WildB:
Your ilk says “we” “need” IP law. Prove it.
Darrow was a Rothbardian anarchist? Hmm, news to me.
@Stephan Kinsella August 15, 2011 at 4:32 pm
I have offered my argument in this context. It is the external economies argument raised by Mises. No need to cite it again, right?
I was referring to his rhetorical style. I think he gave a 12 hour closing argument in his first famous murder trial, and “won” by getting his clients life plus 99 years. He defended some murders by arguing it was an “honor killing”.
So I don’t know how your ideologies line up, but you share a talent for hyperbole and inflamitory accusations while avoiding the obvious facts.
Kettle.
Pot.
Black.
@Andras August 12, 2011 at 11:17 am
Just thought I’d say hello so you don’t feel so alone here, what with the chorus and all!
Almost all laws which are misused and abused have a legitimate fundamental principle behind them. If this were not the case, mercantilism could not exist. So, in my view there is always room to argue at the margins of any law without reaching the fundamental principle.
Not here though. Look no further than Kinsella’s post on O2 to see how an obviously specious argument is stood up and then attacked to “prove” that the principle of IP is illegitimate. Not only is the “isolations” argument nonsense, but the courts seemed to agree, and the patent system ended up doing exactly what Kinsella argues for. The court found that the genes themselves could not be patented. This decision did not touch the issue, as far as I know of whether the process used to isolate the genes or an application of those genes in some secondary product, like a vaccine, for example, was patentable.
So what does Kinsella do? I points to a fallacious argument being made by a “mercantilist” and uses it to “prove” that patents, in principle and in general, are equally fallacious. This is an ideology, not a principled position. I offer as evidence that I am supportive of the principle and general legitimacy of patents, but agree with the court and Kinsella, that neither genes nor O2 are proper subject matters for patents.
This is very similar to the approach in copyrights, where the argument against ideas being the subject matter of copyrights is presented as a case against copyrights, while at the same time failing to acknowledge that the Copyright Act reaches this same result, for the same reasons Kinsella argues.
It is illogical and/or dishonest to oppose something based on a claim that it is doing what it specifically seeks to avoid. Patents do not apply to O2, and copyrights do not apply to ideas. Those are easily verifiable facts.
Wildberry
when writing about “illogical and/or dishonest”, you’re projecting yourself onto your opponents again, right?
Stephen’s comments about attempts to patent O2 we’re not presented as a “proof that the prinicple of IP is illegitimate.” He was just responding to someone else’s comment that they foresaw an attempt to patent oxygen, pointing them to information showing that it in fact has already happened.
It’s seriously dishonest to suggest that Stephen’s argument against the principle of IP has only ever been the that the idea of patenting “isolations” is ridiculous, or that any other aspects of patent and copyright law that you happen to consider poorly applied are ridiculous. But I think that most people that are not seeing an article from Stephen Kinsella for the first time would realize that, so maybe it’s pointless to point this out :/.
Suur:
This is what Kinsella said:
I hardly think that this was offered as a defense of the principle of IP or patents.
Caroline said this: “Seems as if the US-of-A is trying to patent “everything”.
Kinsella obviously agrees and shares a story in which this very argument about patenting O2 was made.
What may not be apparent is that he is telling a story of an attorney making a losing argument on behalf of his client. That is hardly representative of what “patent proponents” belive to be legitimate about patents. To imply so is dishonest. But to do so does support his premise, which is that no form of IP is legitimate, even in principle.
It is possible to be for something in principle and be against a particular application of that principle, or have differing views about where the boundaries of legitimacy might be drawn. Ironically in this case, most patent proponents and opponents agree, as do the courts.
If he had happened to type “some patent proponents,” would you not have had issue with his comment, since it would acknowledge that patent proponents have differing views on the application of the laws?
And even as that one sentence stands, it is still wrong to paint all his arguments against IP as being of the stripe that balks at particular applications of the current set of laws. Many other of his arguments against IP attack the very principle that you are for, so it is irrelevant that you do not agree in every detail of application in the overall argument of the legitimacy of IP. Him bringing up a ridiculous aspect of the current system, even if you agree that it is ridiculous, does not make those other arguments disappear. Pointing out ways in which the particular system doesn’t achieve the ends desired may be useful in convincing people that cling to the system solely for the ends they believe it achieves, and such a comment might be an effective argument against their own opinions. It’s fine that that is not the case for you, but there’ve been plenty of arguments against the principle of IP, as well, and just because a single article did not address your personal concerns doesn’t mean the other articles aren’t out there, and does not discredit his position as a whole.
I’m sorry if I’m just misunderstanding your point in your first comment, though. I took it as an argument that his anti-IP stance is based entirely on attacking the current state of patent law and making an incorrect logical jump to attacking IP in general. I agree that would not be an effective argument, but it’s false to say that’s what Stephen’s entire argument against IP consists of, across all the things he’s ever written. But I get that the subject of this article and his response to the above comment are not relevant to a person that finds the situations he is attacking to be ridiculous as well, which is the case with you.
Surr,
That’s OK. It’s a good trick, and the use of such techniques are so common that it has a name; straw man fallacy. You state your premise, put up a fallacious argument to attack, and then “win” the argument by showing it is fallacious. It is just not noticed as such by those who are predisposed to the same conclusion as Kinsella; i.e. any argument that reaches the “right” conclusion is a “good” argument.
I am well aware of Kinsella’s various arguments against IP. He can always say that any particular argument he makes is not “THE” argument. Here I am merely pointing out the dishonesty of making this particular argument in support of his position.
You are dishonest. No one knows what “the” argument you guys have for IP is.
You might want to wipe your mouth, there is spittle in the corners.
You’re a liar and a moron, Wildberry. I don’t base my case on these little examples, as you well know. You are worthless.
Kinsella,
You are certainly not afraid of being rude, though. As you might suspect, however, I consider myself neither. Notice that you didn’t address my fundamental point, that your argumentation is dishonest?
Whether you base your case on these “little examples” or not, it is a trend in your approach to argumentation, and this is just a new example of it. For example, you argue that “ideas are free” and then insist that “ideas, information, and IP” are all equivalent, and then argue that the principle of IP is illegitimate because “ideas are free”, while refusing to acknowledge that the positive law here agrees with you. Ideas are free, but original works are not. There is a distinction that you equivocate on, to rhetorical effect.
Similarly, you use a ridiculous argument that O2 should be patentable to demonstrate just how ludicrous the patent laws and its supporters are. It is rhetorical flim-flam because it is designed to lead people emotionally to the conclusion that “If you support the principles of patents, you must want to patent O2.”
Since patents do not allow patenting of O2, the fact that a lawyer tried to make the case in defense of his client is hardly an argument, of any kind, against the principle of patents, especially when the courts agree with your position in this case, as do I; O2 is not and should not be patentable. You have your wish, yet try to enlist your “little story” in support of your overall argument.
I object.
Liar and idiot Wildberry:
No. I point out that you idiots’ argument lead to this conclusion. Ever heard of a “reductio”?
Who say this? I think they would. In the Priestley case noted.
There was no lawyer defending his client, you worthless twit. There was a modern defenderof patents admitting that an O2 patent should be granted, in the right circumstances.
I think proponents should go beyond Kinsella. (though we can use his posts for communication)
There is an issue caught my attention: water rights in the western US. I see lots of similarities with IP. Conflict with seniority, upstream vs. downstream, agriculture vs. cities vs. power generation, waste management. And still there is co-operation, to a certain level that is.
Different jurisdictions have different solutions and by now consequences. Just compare Colorado, Nevada and California. This is a wonderful experiment. Are you happen to know more and direct me to literature?
Best,
Andras
So, Mr Kinsella,
From your arguments and teachings, the best way to protect your invention is to be the first to sell it, to bring it in the marketplace in an efficient and cost effective manner, to give outstanding customer service, to dedicate many hours and efforts to your customers so that larger competitors will not be able to outcompete you in service and to be the most vocal and loud about your invention, to make it go viral on youtube and to constantly remind your customers and the world that you exist and your invention exists and you invented it.
Is that it ? Would that be a suitable business model that could bypass and circumvent the entire patent system.
Once an idea has been publicly disclosed, it is no longer patentable and others cannot patent it to prevent you from selling it.
And if you want to be recognized as the originator and inventor, you have to be vocal about it and find creative ways to constantly market your invention, so that you will be associated with it as the inventor.
Am I right ?
Anyways, the entire patent system is so complicated and expensive that it is no longer worth it to try and patent your stuff and this is especially true with small inventors. You are better off to simply sell it right away the best way you can and make a profit off your invention than try to patent it and never make any profit.
Some inventions stem from economic sectors that are evolving so rapidly that by the time your patent is granted, your invention is already obsolete.
In the end, it’s all about how well you serve your customers and how much value you bring them and there’s nothing new about that.
I am not sure about the latter. I think it’s fairly irrelevant THAT you invented something, except insofar as it increases your reputation as being smart, innovative, etc. I don’t think customers will go to you out of gratitude for having invented it. Does Coca-Cola try to guilt people into not buying Pepsi–by saying look, we came up with cola first, so you have a duty to buy from us… ? I am not sure the goal is to protect an invention, but to profit from it. If you can keep it secret while profiting, e.g., if you have a secret process for making widgets, then you keep your invention secret and sell the widgets. But for most inventions, the design will be apparent from the product sold (e.g., a new mousetrap having inventive, new features), or others can reverse-engineer it.
People who sell products always face competition. If the product is successful because you propertly spotted a market opportunity, then the profit you make will attract competition; the competitors will thus eat away at your profit and you will have to continue innovating to survive and prosper. This is the nature of the market. If you sell well-made (but old style) mousetraps for $15 when the normal price is $10, other people see that you have found a way to sell at a higher price by selling high-quality mousetraps, so they might make high-quality mousetraps to compete with you–lowering the price they and you can charge down to $14, $13, whatever. They eat away at your profit, by competing. You invite competition by showing to the world a possibility of profit by doing what you are doing–you invite emulation, by doing something that you show is worth emulating.
It is no different in kind for business models in which a great deal of the value of the product or service sold is some knowledge-based aspect, e.g. music, inventions, etc., where it is relatively easier for competitors to compete since part of competing would just be emulating or duplicating some of the knowlege/patterns invovled in your business. I.e., if I am selling a new mousetrap for $30 when the typical price is $10, because it has novel, inventive, new features, then as in the case above, someone else may add those features to their mousetrap and compete with you, so that soon the price may fall to $20, $15, whatever. Maybe they find it easier to compete with you here, than with hte old-mousetrap case above, since in the former case they have ot build a high-quality manufacturing plant etc, whereas here the extra value comes from the new features which you have taught them by selling your improved mousetrap publicly. But the ability of others to compete varies from industry to industry and product to product. It’s harder in some and easier in others.
So here, you might have to think of yet a new feature to stay eahd of your competition–and when they emulate that, you have to think of more; and of course they may think of innovations and improvements you didn’t, and if that helps them win business, you might add or improve on that too — this is nothing more than the standard case of market competition, benefiting consumers, always eating away profits (remember: profits are zero in equilbrium).
What IP advocates say is: they are willing to tolerate people competing with you in the old-mousetrap case above. They apparently grumble about it nad don’t like it, but they think it’s difficult enough for others to compete with you that you have enough time to have a sort of breathing spell and earn your well-deserved profits for some time. it’s like ther’s a natural monopoly by being first. But at least, naturaly, it lasts a while. So, the IP advocates tolerate it there. But for the novel-improved mousetrap case, it’s “too easy” for others to compete, so your first-mover advantage doesn’t last “long enough” to give you “enough” of a natural-monopoly profit window. So they draw the line at this: they say no sir! we are against unbridled competition! We need to rein it in, to tame cut-throat competition! So they pass an atlas shrugged style “anti-dog-eat-dog” rule, called patent law, designed to stop this cut-throat, dog-eat-dog, unbridled competition. Patent law is simply a way of protecting people from competition that its advocates believe is too “fierce” or “unbridled”. They want to bridle it, to limit competition. They are anti-market.
So the bottom line is anyone having an entrepreneurial idea has to find ways to make a profit and innovate and compete with others. This can involve all sorts of maneuvers, from reputation, to leveraging, to means of exclusion. That’s the entrepreneur’s function and job.
Well, I thoght you were asking about a patent-free world. In a world with patents, you can have your cake and eat it too: you can disclose the idea and still keep people from using the information you have disclosed to them.
I guess, though in a patent free world, who really cares? I guess it can help your reptuation but look, throughout history, and in the world of science, there is a tendency to identify people who came up with things–whether or not there are patents. We identify Shakespeare as the author of Romeo and Juliet even though he had no copyright; we credit Newton and Leibniz for “inventing” calculus, even though they had no IP right in it. You are mixing up different things: there is general attribution and credit, which is just a matter of factual accuracy, and has nothing to do with IP; and there is the matter of advertising and reputation: you might want people to know, “buy Dyson products: we always innovate and have the best stuff”–even if there was no IP. But it’s not to guilt people into buying your stuff on the grounds that they should pay tribute to your innovation and reward it, it’s rather they buy from you b/c they think your company is really good at this and makes good stuff.
Hard to say. YOu might want to block others from patenting it. You might need it to get venture capital. You might want some patents for defensive purposes–to make other competitors afraid to sue you with their patents. etc.
Dear Mr. Kinsella,
My point was that if you publicly disclose something before you patent it, then it is no longer patentable either by yourself or anybody else. At least I think that this is how the patent laws are made, but you must know better than me on that subject so please enlighten me.
I believe in the power of my own genius and I enjoy intellectual and engineering challenges, I have a natural compulsion to look for ways to increase productivity and to do things faster, cheaper and better, to produce better quantity and quality. I am a natural “inventor” even though most of what I come up with already existed and is not patentable nor marketable and I do them for myself to augment my productivity because I hate unnecessary hard work.
I do have a kit I will want to market soon on the internet and there is already a patent on a more sophisticated variant of my embodiment. I do believe that I came up with the idea first however that is debatable as there could be hundreads or thousands of people who thought of it way before me but never did anything concrete about it.
I think I will run into trouble selling my kit and will eventually receive threatening letters about cease and desist. So I am already in a mine field because of this patent thing.
Yet, I already am working on a solid state improvement version of the kit I am about to sell and even the patent holders could not comprehend the new concepts I am introducing so I am already way ahead of them.
And I am very strong on commercialization, I want to build and sell, I want to make some money and have fun making an enterprise out of it. And given that this is the first time I launch a business, it will probably fail anyways and I don’t mind, I’m having too much fun making my dreams come true. I will learn from my mistakes and get better everytime.
I learned that you grow in adversity and nowhere else.
For example, right now I am broke and I don’t have the money to buy a new press-drill. The neighbor just threw his old rusty press-drill to the garbage and I recuperated it, spend three days derusting it with a steel brush and drill and WD-40 and all of that, I fixed and tuned-up the induction motor and now I have a fully functionning press-drill that I will use to produce my kits in order to sell them. I feel that I am in a better position having refurbished this rusty press-drill than if I would have bought a brand-new one. I acquired knowledge and skills doing so and I had a good time thinking about all I will do with it.
I know that the market I am about to enter is a small and fringe one and that I will probably not become rich, but a small income is better than none and the best part is that I will be my own boss.
I have so many ideas in my head that I feel I can build myself a reputation and do without IP laws and if I do finally get competitions that imitate me, I will feel honored because imitation is the sincerest form of flattery, it will mean that I am doing something right, that I am being recognized and it will motivate me to work even harder and come up with better ideas.
But if they eventually come up with something better, then I will simply buy from them, happy to get a better value for my bucks.
That is not strictly true. Suppose A invents X on day 1. B invents it too, in private, at some time—maybe a month earlier, maybe a month later. Then on day 100 B publicly discloses X by selling a product embodying X. Within 1 year of day 100, A can still file a patent application on X, since he an inventor of it and he has a one year statutory bar. And there are other weird complications I could bring up, if necessary. For example, suppose it’s 3 years later, and B files a patent on X. Maybe he thoguht of it independently; maybe he learned of it from A’s product. He can file it. The patent office may be unaware of the previous sale by A of X, so allow B’s patent. Maybe at trial A could prove B’s patent should not have been granted. Maybe. BUt then B’s patent has a presumption of validity. And maybe B sues C, not A. So how does C know about A’s product, or the date it was made public. How does the US Patent office know?
But in general, you are right: A’s making X public in general makes it harder for others to file a patent on X. I’m not sure why you think this is a “point”; it’s just a rather crude statement of the way current patent law works. So?
Yes, I just tried to. BUt I fail to see the relevance.
That is one example of the horror that is patent law.
“I’m not sure why you think this is a “point”; it’s just a rather crude statement of the way current patent law works. So?”
The idea is to publicly disclose it instead of patenting it. The idea is to prevent others from patenting it and then stop you from making and sell it because they have a patent. That instead of going into defensive patenting, you to into defensive disclosure.
But you pointed out that this method is highly complicated in today’s world.
What I was saying is that maybe public disclosure is a way to stop others from stopping you without having to file for a patent.
Plus with patents exposing your product and how it works will increase your liability.
We this a lot with software that was run by closed source software companies that later wanted to go open source.
These are corporations that realized that indulging in copyright protections is not as profitable or useful as they first imagined. Either that or they have internal-use-only software (95%+ programmers are paid to work on software that never is sold, but is used for specific business purposes) that they want to be able to share with other people in order to gain improvements to that software by outside companies.
Basically; The problem is that when you hide how your product functions it prevents patent trolls from knowing you violate their patents. The way the patent system works, especially with software, it’s impossibly expensive to know if your product violates patents. It all depends on a Judge interprets the patents and such as to whether or not you violate them and even the threat of the lawsuit is going to be huge financial penalties. So for a mature, complex code base it’s impossible to avoid violating patents. It is just a matter of luck. These potential costs involve both scaring away potential investors and your own legal costs. *
So companies who want to strip away their copyright protections and release their product’s functionality into the wild often get bared from doing so by their lawyers. Quite often they will be forced to abandon potentially decades worth of development on software and start over of they want to go public with it. Basically re-write it under the observation of lawyers and external observers so you have the best chances of avoid messy IP lawsuits.
* (on a side note: This is also leads to a tactic used by large patent-holding companies to attack and limit the competitiveness of smaller companies. They release a similar functional product to a popular product a competitor has. Then they advertise that the next version will have a huge amount of fancy and desirable features that their competitor (and their own product) does not have (and likely will never have) and then drop hints to potential investors that IP lawsuits may follow. It can be completely unfounded, but even with patents documents being public domain the huge system is such a mess that it’s impossible to know if the rumors are true or not. This will devastate a start-up company even if they have a obviously better product.)
I feel that in life, in my own personal case, I feel richer and happier when I successfully do something myself, when I learn something, when I accomplish something.
That somehow, although I would like to profit from my inventions, that as per Stephan Kinsella’s teachings, that in order to profit from my inventions I will need to treat them as a purely business venture and that the fact of inventing something or that I am the inventor is irrelevant.
I like to design and build things that work. I would be unhappy with just having money and just being a consumer. I want to innovate, invent, design, try stuff. I have built things that it took me years of failures before I finally made it come true.
Knowledge and relationships are much more valuable than money, I learned this the hard way. And if I can’t make money off an invention per se, I should then invent a way to do just that. Surely that if I can come up with an invention, I can also invent a way to sell it, market it, and make some sort of benefit from it. If it’s not money then it will be experience, knowledge, relationships, reputation etc. A small victory is better than none.
@Andrew from Russia August 15, 2011 at 2:41 pm
Well, if you are serious about your assertion, assuming you are actually making one, then you would have to show why, even in the case of current practices of using the internet say, as a low-cost distribution channel, that from the point of view of the actor who produces the product, this is beneficial and does not require any form of IP. I think you will find that there is no real scenario where high-quality copies being produced by external economies pays the creator sufficiently to justify the original allocation of resources needed for creation. But in any case, it is a praxeological issue and a case can be made using that methodology.
For example, you would have to address the problem of external economies while not depending on any “later state” operation of IP. I can imagine that an author who writes his first short story, is mostly concerned with exposure and developing a level of popularity. But it is also reasonable to assume that the “pay off” for this, if he is successful, is an ability to control copying such that he can internalize the benefits of production after popularity is established. You would have to show that popularity is not a factor and that without IP and after popularity, there is a viable business plan available.
For example, the often quoted example of the Grateful Dead encouraging bootlegging did occur, but they also sold quite a bit of vinyl, and they were a “performing” band, not a studio band. Having an artifact of a given concert attended in person, in the form of a bootleg tape, was part of the phenomena. You would have to go into that level of detail to make your case.
But see, you are not willing to do that. You want to “assume” it. It does not take a book to describe one example. If you think it all the way through, as Mises did, you will see the problem. If you are producing for external economies and you know it, you will stop because it doesn’t pay. You can’t just assume a contrary position and think that you have done anything to advance your position.
Again with the assumptions. Why are you so sure it is a “distraction”? I have found Mises to be quite deliberate and selective with this words. He rarely puts something down on paper that is not relevant or consequential. Why would you assume less of him in this particular case? That is taking quite a liberty, in my opinion.
I think the only “proof” is praxeology. If you buy the subjective value and the rational basis for economic calculation premises, you can reason your way to the same conclusion as Mises.
Just as “for the most part” implies a balance between conclusions about subjective value, IP itself implies a balance between “ideas are free goods” on the one hand, and the consequences of production for external economies, on the other. IP law is based on a policy of striking a balance between those two possible approaches, an attempt to balance economic consequences of a unique application of the private ownership of the means of production to the subject of “intellectual creations”.
I think you need to read more carefully. Entrepreneurship is about anticipating the future. Successful entrepreneurs do it better than unsuccessful ones. You are imposing a condition on the future that says to the entrepreneur dealing with intellectual products, “You have one shot, and after that, you are left with only your glory.” That is what I said, but that is not what you address.
Consumers will always try to fill their desires at the lowest cost. They act in a certain way because they have calculated that by acting they will receive some benefit. They “consume” a book because that benefit is fulfilled. If the consumption of books does not benefit the creators and producers of books, entrepreneurs will not act to create and produce them.
What is the “pre-existing” need of consumers in the case, say, of a novel? How does the consumer select the novel that meets this need? How does this act benefit the novelist? What is odd about your position, is that there is no way, in the absence of IP, to connect the benefit to the consumer with the benefit to the novelist, even if the novelist has successfully identified himself to the consumer that he is most likely the source of satisfaction for the subjective consumer’s desire. Marketing is about creating the connection between the consumer and the producer of a good. Catallactics is about the monetary exchange based on these preferences. In your “system” you do not show how the producer’s satisfaction of the consumer’s desires translates in monetary exchange from consumer to novelist. This chain of output/income is broken or severed, or redirected to the mass producer of copies. The exchange is between the copier and the consumer, not producer and consumer. For the producer, this exchange is an external economy. You see this as a problem that “marketing” is supposed to solve, yet do not explain how this connection between consumer and producer is preserved as an internal economy. This is the problem that must be addressed in the anti-IP position.
You in fact assert this very thing; a “producer” who competes with products created by means belonging to another, by merely reproducing and distributing to economies internal to him, but external to the author violates the basic principle of private property, and the private ownership of the means of production. Anything other than this is not capitalism nor a free market, yet this seems to present no ethical, legal or economic issue for you.
Let me ask you something. How do you compete on the market with something you do not own? You cannot open a hotdog stand in someone else’s hotel, yet you are merely competing for the appetites of the hotel guests, right? All of the producers you refer to own their own means of production. Those means must be privately owned, meaning inputs to the production process cannot include input resources owned by others, correct?
Yet you make a “special property rule” for producers of IP such that they may privately own the means, but not the products. By definition, a copy of a book is a perfect copy. So on what basis can a consumer insure that if he is going to pay $5 for a book, he wants to make sure that money goes to the author? Likewise, if I want to buy a $30 baseball cap to support my baseball team, how can I be assured that money goes to my team? If I want to support a band by buying their music, how can I insure that money goes to them?
If there is no prohibition on reproduction, then that is impossible. But according to you, that is the “team’s problem” because it is up to them to come up with a magic marketing plan that gets around this problem.
Do I have your position correctly?
Doesn’t that create a problem for you?
Dumbberry,
Since IP is a redistributive mechanism and you argue that it’s beneficial for the author, it is up to you to show that the benefits outweigh the costs. You have provided neither theoretical reasoning (indeed you ignore it altogether), nor empirical analysis of the problem.
You completely made this up. There are plenty of examples all around you, but you are blind to them. Furthermore, you provide no logical reason neither empirical evidence that IP has a positive effect on this at all.
Quite the opposite, it’s an empirical issue.
The same can be said about any other business plan, especially one that has high fixed and low variable costs.
You are making a praxeologically invalid argument, one which Mises rejected.
Popularity is a factor in all fields of business. Furthermore, as long as there is some level of “internalisation” in the absence of IP (which there evidently is), it is logically possible to have a profitable business plan. Last but not least, you neglect the cost element of IP and avoid the problem that IP might just as well cause unprofitability instead of profitability and there is no apriori way of determining which will occur, because it’s an empirical question.
And if you are on the receiving side of a potential external economy, but see that it does not materialise because the producer is not expecting to recoup his costs, you might decide to pay him anyway even knowing that others might get it for free. I read this in one of the books about externalities, I think it was in Cordato’s one but I’m not sure. Unlike in your “models”, people make decisions based on their own cost/benefit estimates.
Your argument is anything but praxeological. Praxeology invalidates your argument.
There is nothing IP-specific about this. Any business model has this risk.
A debate with you is pointless. You’re a lying fraudster, and also a moron. Your points have been refuted several times, yet you resurrect them after a while, assuming that people forgot. A typical demagoguery, expecting a lie repeated thousand times to become the truth. As I said, instead it becomes boring. Your boring me, Wildberry. Show some new tricks.
@Wildberry:
Subscription models, for one, do not require IP. We have them in the free software industry (I pay $49/year out of my wallet to obtain binary updates of OpenOffice and CUPS for an exotic operating system). Again, the “external economies” are a red herring, for they do not necessarily correlate with direct proceeds obtained. It’s either profitable or not.
Add “popularity” to the list of red herrings. What is relevant is whether enough of further revenue comes from an IP-based model (e.g. sales of copyright-protected media) or a non-IP model (e.g. subscriptions with synchronous distribution, or public performance).
I stop because something doesn’t pay, not because of external economies haunting me. One doen’t always lose their sales to externalities: demand may simply fail to pick up.
Whatever words Mises uses, it’s still easy to come to a misleading conclusion: that external economies (even assuming they are quantifiable) always preclude internal economies – e.g. if business model A entails “less” in external economies and business model “B” entails “more” in external economies, then model B should bring less in terms of direct revenue – I’ve shown with my concert-filming example that this is false.
Yes, but what’s wrong with that? Should entrepreneurs be given… more shots?
The need for some “new reading”.
An advertisement (e.g. plot outline) might help.
Not before some consumers obtain their copies from the original author/manufacturer. Note that without IP we can even have a multilevel marketing model whereby these “first-tier” consumers would become capitalists, paying much higher prices on their copies to produce new copies themselves and resell them to the next tier of consumers/distributors.
By merely reproducing the product, he is producing a product created by his own means. End of story.
If the consumer wants to ensure something, he should make sure it’s in the contract.
One way the customer can ensure money goes to the creator is for the creator to employ a scheme like the Creator Endorsed Mark. http://blog.mises.org/13286/the-creator-endorsed-mark-as-an-alternative-to-copyright/ If a vendor uses the CE mark deceptively, then he is committing fraud on the consumer. This means that no large, reputable company can use the CE mark since they would be subject ot fraud suits. So you might have some fly by night pirate types using the CE mark deceptively, but the whole CE model assumes there are already pirate copies available free/cheap and the customer WANTS to buy one from someone authorized by the author, so the customer will WANT to buy from someone who has the CE mark *and where it’s easy to verify this*–a fly by night company obviously will look shady and will be unable to easily verify it. So customers would not buy from the fake-CE guys assuming they want proceeds to go to the author.
BTW I used the CE mark on the authorized Italian translation of my Against Intellectual Property book.
@Andrew from Russia August 16, 2011 at 3:59 am
I think you are talking past me on this point. Obviously, not every business model depends upon IP, in fact most don’t, including the one you describe, perhaps, although it is not clear to me what the underlying IP assumptions might be affecting this particular business model.
But I am not talking about profitability; IP does not guarantee profit. For example, as Mises points out, the property monopoly an author secures in his work, say a book, may never be read or missed if not produced. That is not the point. This is a private property issue, and has nothing to do with contracts. A product produced with private means of production remains private property, enforceable by whatever institutional means of coercion you may choose. Any other model is not capitalism, but something more akin to socialism, where means of production, and the products from those means, are not privately owned. This is the mechanism that is put in play in a non-IP “market”.
OK, you have posed a question about relative revenue; how do you propose answering it? Also, you neglect to address the fact that even within the context of IP, private parties may decide to waive certain rights under IP in pursuit of a business plan that is considered advantageous. In a free market, the owner of goods has exclusive control of the use of his products. If that were not the case, in general, the principle of private property could not exist.
This is precisely the point. Internalizing the economy does not guarantee demand or profit, or even returns. That is a consumer decision. If you want to consume soup, you have a choice between brand A and B, etc. Yet if you prefer brand A, you cannot get it from brand B’s factory. Yet in the context of authorship, you are asserting the equivalent concept, that B may appropriate the means of A to sell you the soup you want. What property theory supports this approach? You must support the premise that A does not really own the means of making brand A, so to prevent B from using A’s means is aggression. That is the equivalent concept you are promoting for IP.
I think you are missing the point. There is nothing misleading about the Mises analysis; it stands up to a pretty careful reading. First, it is not necessary to “quantify” different business models, since they are simply datum to the subjective calculation of the actors. The first act of an author is intellectual creation. Proceeding that act is a subjective calculation by the actor based on market data. You must start your analysis there. You are looking at “profititability” on the basis of assuming that externalities are “quantifiable.” I am making no such claim. I am asking about the acts of the author.
It is not a question of “more” or “less” externalities. You need to re-read the section that distinguishes “external costs and benefits” from “external economies”.
Second, you are missing a key foundation of Mises: praxeology. You don’t look to aggregate data like “business models”. You look to the acts of humans, and the calculation to act relative to specific means and ends.
For example, would you act to grow vegetables if your neighbors could freely enter your garden and carry them away? Obviously not. What have we designed to secure the right of the grower to exclusively control the use of his production? Private property. Without it, you must use violence or threat of violence, or secrecy, etc. to secure your goods. This is common sense. Yet you abandon this analysis in the realm of IP, as if humans would just “figure it out” by developing a different “business model” for growing vegetables. I think no matter what you come up with, the simple and elegant solution is to secure private property to the owner of the means of production. That is fundamental to capitalism and free markets, yet you seem to be just willing to assume this away.
Well, what do you think? I don’t think it is a matter of one shot or more. I think it is a matter of private property and ownership. If ownership means right to exclusive possession and use of the benefits of the private means of production, then you either have to take issue with that principle, or you have to extend that principle to IP. There is no controversy that the author is the privately owned means of producing a work of authorship, i.e. a book. From the act of production, you are asserting that he must either withhold it from the open and free market, or be willing to offer it as a free good. Yet you make no such assertion in any other domain of private property. Why?
Correct. And an entrepreneur succeeds by satisfying this need. He uses his own private means to produce an economic good. He offers it to the consumer and the consumer calculates to act or not. If the consumer acts, he enters a monetary transaction with the author, according to the theory of pricing. That is the simple operation of an internal market economy. You argue that the producer should be denied the benefit of his production, based on an investment of capital in the means of production (he must sustain himself during the development and application of the means with savings and differed consumption) to write the book that the consumer desires to read. You argue that he should not secure exclusive control of these benefits, but that the consumer should be free to simply “copy” with impunity and enjoy the benefits of consumption without compensation to the rightful owner of private property. This is a socialist model, not a capitalist one.
Yes. I say, “I have a book for sale. Here is the plot. I’m really good.” I approach my first customer, and we agree to exchange for $5. The consumer buys the consumer good and the means of production for $5. This consumer can reproduce the book for a cost of $.10 and sell it for $2. The consumer has created an external economy relative to the original author. The author is left with only his glory. This is your model for free markets?
In answer to this obvious distortion of the free-market model, you suggest the author should come up with a business model to introduce products to the market in a way that does not require the principle of private property. How do you allow this conclusion in the face of the obvious contradiction to free-market principles?
OK, use this model and place yourself in the position of the author/actor. How would it work? You sell to “publishers” something that you do not own; you just have the one and only copy. How do you negotiate a price? How does the publisher calculate the price? Once it is introduced to the market at any level, it becomes a free good. Consumer’s will almost always choose a free good to an economic good. Where does this leave the producer and/or publisher? Certainly not in a free market with private property. You seem to believe your “business model” argument can overcome this problem?
This would be convenient to your argument, but it is simply and plainly wrong. You have to ask, what is the means for making the copy? You say the copier has the means in his own property, right? Let’s see. He has paper, ink, maybe a copying machine; all his own private means of making copies. What shall he copy? “Copy” implies something to copy from; an original. Where does he obtain the original? Obviously he does not already have it, or he would be the author. He must acquire it, but from whom? From the producer of it, the author (or someone else who acquired it from the author). The author, not the copier, is the means of production of that original. That original is a required input to the process of making a copy. If you require an input to your means of production that is not your private property and owned by another party, you cannot say your means are privately owned.
The only way you can solve this fundamental problem is to declare that the author sold you the means of reproduction, or that he didn’t really own it in the first place.
In the first case, you have to argue that the author cannot make his property available on condition of limitations of use. For this, you have to deny the operation of easements and servitudes. (see http://blog.mises.org/17398/intellectual-property-rights-as-negative-servitudes/comment-page-1/)
In the second case, you have to argue that “ideas are free” and that ideas are information are IP, and therefore the author only owns the paper and ink in a book, not the “information” that is contained within it, and so when he sells the paper, he sells it free and clear, with rights to make copies included. This brings you back to the external economy problem we have been discussing.
I imagine you meant to say “the author”. Yes, this is the contract theory of property; property rights only exist as they are negotiated in each transaction between buyer and seller. This is a form of secrecy in the false dichotomy that Kinsella offers; secrecy/contract v. free good. Those are the choices that he asserts are the only legitimate choices an author has. He puts it a little more crudely; either keep it a secret or make it available and don’t whine about what people do with it. Something like that.
If contracts where always adequate to secure the rights of individuals, why do we have property rights at all? Why not just handle everything through contracts? That way, you would have to negotiate with every person who could ever trespass on your land, for example. Anyone not bound by a contract with you would be free to trespass at will. This is your model for how best to deal with intellectual creations.
@Wildberry:
And because it is profit, not some relation of external-to-internal benefits, that counts on the bottom line, one may just wonder what the entire IP boondoggle is for.
The question is not about relative revenue at all. It’s whether enough can be made in revenues without IP to justify information-intensive projects. The answer in general is “yes, one can estimate the demand and calculate risk/reward even absent IP”. The answer for a particular project is one of trial and error – nobody is suggesting that IP-free business models come for free. They take investment and research – something that was likely underfunded during the 300-year era of planned/legislated IP. I’ll even go as far as to admit that, if the IP law were to die suddenly, IP-dependent industries could very likely take a nosedive similar to one experienced by ex-Soviet industry in the 1990s: “mayday, mayday, our government no longer steers us!”
Does the fact that slaves can be freed by their masters and re-hired as wage laborers rehabilitate slavery?
So the bugaboo of “producing mostly for external economies” has been replaced with that of “appropration”. The answer is, of course, that in IP-free world, A still has all its means. Somehow B learns to make a soup similar to A’s, that’s all an outside observer can say. Absent explicit agreement to the contrary with B, the consumers of B can try to reverse-engineer the recipe just as B supposedly did.
Note that I was arguing against an interpretation that you seem to hold on to. I was trying to point out that the actual problem of producing too little in terms of internal economies is not the same as producing “for the most part” for external economies.
Selling is not growing. If the goods are still there but market prices have tanked after my selling a few kilos, I’d have to suppress that little dictator inside me calling for full ownership and exclusive control over the market.
I think one shot is enough and believe that weighing risk/reward should provide guidance in any particular case. On the issue of ownership, see later on.
As the one born in the Soviet Union, I appreciate those lectures on the socialist model! Still, what I propose is a cut-throat competition model – serve your customers ASAP or sink. (The socialist model would ban copying equipment and then require every consumer to purchase the book from a state monopoly by Friday in order to be eligible for next week’s issue of food ration coupons).
Precisely! Perhaps that would educate the next author about the state of the market, and the next author would approach the same “first consumer” treating him as a capitalist-distributor, raising the price tag to $5000, or maybe he would ask for 1000 consumers to sign up before sending out the copies.
There’s no information without media, and all media is still private property in someone’s possession. If 100000 owner-consumers refuse to disclose the content of their books/CDs for free, then the 100001st consumer will have to pay one of them for his 100001st copy. So there’s a pricing mechanism that can be applied recursively back up the distribution chain. Oh, and there are the usual risks of miscalculating the price.
Free market (voluntary exchange, unrestricted pricing) – check. Private property (all participants own their copies) – check.
Generally, he can copy whatever he is able to observe. Notwithstanding any contractual restrictions that may forbid copying without IP, the general answer is still “whatever”.
Dumbberry,
Again, I see no other explanation that you’re either a fraud or stupid if you ask this question. I have explained the problem many times since the very beginning of your posting, which is over half a year. Suddenly, you bring it up and ask why?
Why Whineberry? Why do you behave the way you behave? Are you stupid or a fraud?
@ Stephan Kinsella August 16, 2011 at 11:26 am
Yes, this is similar to what major league baseball does with gear that is authentic. Of course, if a pirate puts the “MLB” on the product fraudulently, there is a cause of action by the consumer.
But as you know and advocate, this scheme, if it existed exclusive of existing trademark statutes, would deny a cause of action to MLB. We have discussed this difference of opinion before.
You seem to be advocating the use of trademarks here, yet deny the right to a cause of action by the injured party with the most to loose; i.e. MLB.
Also, you assume away the consequences of this by your “easily verifiable” assumption. What you are really suggesting is just another layer of trademarks; in fact a trademark arms race.
MLB puts a sticker on their hats. Pirates make a perfect copy. MLB puts a “chip” in the band. Pirates copy the chip. MLB puts a chip and a laser incribed label. Pirates copy that. etc. Pretty soon, it’s not so easy to verify. For evidence of what I’m talking about, look at a new $100 bill. Do you think this is the last attempt that will ever be needed to try to foil counterfeiters?
If viewed from an economic standpoint, a legal schem that gives the originator no cause of action does not serve the purpose of trademarks; to insure that a mark authentically identifies the source of origin. That is what consumer’s rely upon. A law always has a policy component. How is this policy of “authenticty” advanced by denying a cause of action to the authentic originator?
If you agree that consumer’s are harmed when their intentions are frustrated by piracy, they why deny a cause of action in all parties who are harmed, including the authentic producers of the product? Certainly an individual consumer is not going to incur the full cost of legal action to redress piracy of a $30 baseball cap. The pirates know this, and so achieve practical immunity.
However, MLB would take on such action and expense, offset by the aggregate lost sales to pirates. This would insure enforcement. If enforcement is not possible or likely, then it is useless to claim that a cause of action exists.
The victims are the defrauded customers, so they have the cause of action. Not MLB.
This prevents any widescale “piracy” of this type, by any mainstream, reputable, large competitor to MLB. So the consumer who *wants* to buy from MLB_endorsed vendors, will be able to find this with a modicum of effort. It’s in the interest of endrosed vendors to find a way to stand out from the half-assed two-bit pirates.
You protectinoists are so quick to jump to state solutions to things you perceive as “problems”because you have little imagination. In today’s world if you go to a store labeled Kroger, and buy Crest toothpaste, how do you know it’s not fake Crest? Because Kroger would start losing business if customers could not trust it to find reputable suppliers. How do you know it’s a real Kroger? Because if it’s big and nice and shiny adn took a lot of money to build it, the monye would not have been invested if it could easily be shut down by a few trademark-fraud suits by defrauded customers.
Likewise if you want the MLB-authorized hat you get it from a website with easy verification, or the MLB-authorized store in the mall, etc. Those will not be fly by night because those lowlifes cannot afford it, since htey are living day to day in fear of lawsuits.
What does it mean to “view” a “legal scheme” from the “economic standpoint”? seems like lotta assumptions going on here.
Ensure. not Insure.
Reputation can be a market not a legal thing. For example you have established a reputation here for being a dishonest gadfly.
Consumers. Plural. Not possessive.
So what? Some “policies’ are good, some not. This is just eristic, equivocating, circular reasoning.
haha, you turn it into a denial of a negative. Oh, I don’t know, how about because you have not justified the state nor your stupid “policy”?
Consumer’s what’s?
And libertarianism is not against harm but against violation of property rights. I harm you when I expose your illogic, or when I open up a competing drug store across the street, or when I “steal” “your” girl. So what?
Eristic attempt to switch the burdern of proof: instead of showing why there ought to be a cause of action, you ask me to justify “denying” a cause of action. ha!
Ensure. Not insure. And this has nothing to do with justice. It is just incoherent, disconnected musings.
@Stephan Kinsella August 16, 2011 at 3:24 pm
Yes, we’ve discussed this before. The customers have an action for fraud, but the sponsor has no cause of action for fraud, or anything else. You dismiss misappropriation and the common law “passing off” as non-existent and illegitimate. I remember.
And if the “pirate” is the “mainstream, reputable, large competitor”, then what? It seems in your vision, the large are immune and the small are screwed. Very libertarian!
I agree it is in their “interest” to stand out, but you offer no justice if they fail or are out-maneuvered because of superior resources, etc. The small player may develop the market, just to see the large players swoop in when the pickings are ripe? Clearly in such a case the small producer is entitled to redress! But you would leave it up to individual consumers to protect only indirectly the small producer’s interests.
Yet the same result could be achieved through a convoluted class action suit. Why not just allow direct action AND class action, if appropriate? There is only one reason; it interferes with your “hat trick” on abolishing IP: patents, copyrights and trademarks.
Who said anything about the state? Kroger has a right to control its own supply chain. Crest has a right to control its own distribution channels. Consumers have a right to assume this to be the case. Anyone who fraudulently interferes with this alignment injures all the others. In principle, each injured party should have a cause of action, not just the consumers.
Likewise if you want the MLB-authorized hat you get it from a website with easy verification, or the MLB-authorized store in the mall, etc. Those will not be fly by night because those lowlifes cannot afford it, since htey are living day to day in fear of lawsuits.
Yes, this might be true. It might also be true that someone sets up a “fake” MLB store in the mall and sells Chinese knock-offs. Or it may be that a factory worker in the legitimate MLB factory is skimming authentic articles and setting up a “fake” store, as recently happened in China at the “Apple Store”. The issue is wrongdoing. Those who are the victims of wrongdoing are entitled to a cause of action.
Thanks for the instruction. Why can’t or shouldn’t reputation be both a market and a legal thing?
Really? Well I guess I’m saying that enforcement of trademarks is a generally good policy, because it addresses wrongdoing and gives legal recourse to those who are wronged. You know, harmed to some legal threshold, like the distinction between “stealing my girl” and kidnapping, or an expression of my opinion of you, and liable. Or say opening a drugstore across the street, and muscling my way into your drugstore. Like the difference between “socially wrong”, and “legally wrong”. You agree there is a distinction?
It is a fair question. You have the burden of justifying your position with an argument. I once saw a political cartoon in which Kennedy and Krushchev were both pointing a pistol at each other and each was saying, “You put yours down first!”
Somebody has to go first, but we both have to go. Me first.
You have said that the only legitimate cause of action is fraud on the consumer. I have said that there is also a cause of action by the mark holder.
The policy question is accuracy in informing consumers as to origin of goods, and securing producers their property rights to their products, including the market reputation that is developed around the brand. That is a form of investment of private capital, and any diversion of the benefits of that capital investment to a third party is misappropriation. If the market cannot secure rights to private property, it is not a free market. The misappropriation creates an external economy, which is counter to the operation of a free market. I support free market principles.
Bastiat says this: “Law is justice. And it is under the law of justice — under the reign of right; under the influence of liberty, safety, stability, and responsibility — that every person will attain his real worth and the true dignity of his being.”
Is justice served if the law forbids the injured to seek redress? By denying a cause of action for trademark violation, you enable the appropriation of capital investment to external economies. That is not a policy that is under the influence of liberty, safety, stability or responsibility. It facilitates and enables third parties to appropriate the benefits of another’s property and labor.
That is why it is bad policy and bad law to deny trademark vioation cause of action, and why securing a cause of action to the victims of misappropriation, consumers AND producers AND distributors, is good policy and good law.
Then they will have assets to pay the customers suing them for fraud, and will never get off the ground or survival. Helooo
Sometimes injustice happens. quite often in fact your statist world of today.
Maybe the intermediate supplier would sue instead–imagine Kroger having a bunch of customers upset at buying fake Colgate toothpaste. Kroger goes after its supplier, or changes to a more reputable one. Etc. This is no problem.
Just allow it? It’s not appropriate, that’s why. The trademark “owner”‘s rights are not violated. Theya are not defrauded.
I don’t know. Why shouldn’t using force to shut you up be a “legal thing”? I mean why “shouldn’t it”?
I agree that you are confused and making this up on the fly. Let us know when you have your views figured out.
This is all nonsense. You are hardly worth conversing with. Jesus, is this the best IP advocates have to offer? Pathetic!
Stephan,
This is not a conversation. This is you ignoring what I have said and responding with a feeble attempt to bully and intimidate. When I was in grade school, I wasn’t very tolerant of bullies. One of us usually ended up with a bloody nose. Did that happen to you much?
I learned that there were two kinds of bullies; those who could back it up and those who couldn’t. Only one way to find out, really. Then there were those who wanted be bullies, but couldn’t pull it off. It was funny. I suspect they hated not being taken seriously.
Eventually some of us grew up. Others didn’t.
@Andrew from Russia August 16, 2011 at 3:59 am
I see from SK’s comment that I misunderstood you. You are placing the burden on the consumer to make a “contract” with an impersonator of another’s products to verify that the product is “authentic”.
That sounds on its face to be a strange suggestion. Even it it was authentic to the best of the seller’s knowledge, do you think he is likely to review and sign a contract taking on personal liability of unknown proportions in order to sell you a simple consumer product?
Do you imagine that you would enter a contract with your grocer before you bought his goods? Do you imagine your grocer would agree to such an arrangement with every customer who enters his store?
Fortunately for us and the world of trade, we handle those problems with property rights and implied warranty principles. Imagine the transaction costs you would incurr with your suggestion?
@Wildberry:
Bad luck if they don’t. The reluctance of seller to enter such contracts hardly makes a case for government-enforced IP laws any more than for government-enforced food quality standards. Also, the liability needs not be “unknown”.
Imagine what economies of scale can do with transaction costs when the volume of transactions is high enough!
@Andrew from Russia August 16, 2011 at 2:48 pm
Sorry Andrew, you miss the entire point. What is the difference of profits or no profits to the author, if they accrue to a third party? In such a case, it matters not whether they exist or not.
What is “enough” revenue, and who makes that call? Yet you confidently answer “Yes. There is “enough” without IP?” You mention that “one can calculate” but fail to show how this calculation is made. You offer a business case that does not depend on IP and then use this to “prove” that IP is not required to make a profit. Who said that IP is the only mechanism for making a profit?
I have given you a simple case; an author who writes a book that he does not own, in our world. I challenge you to show me how such a person makes a living from his craft? The only answer you can offer is to become a paid laborer for “capitalists”, which really means, if you look merely one layer deeper, central planners who “buy” labor and “produce” goods for “consumption”. This looks and smells like a socialist model.
Yes the Soviet is a good model for what we are discussing. The history is, briefly, Czarism, Communism and “Gangsterism”. When the Soviet fell, the same party elites and criminal enforcers swooped in to gain control the means of production by criminal coercion, and appropriated the resources of the nation for their own purposes. Some of the richest people in the world are Russian, yet I doubt you would agree that these “profits” were gained solely by participating in a “free market”.
This is similar to the vision you have for a post IP world. The weak will fend for themselves in the face of the strong, well-connected and well financed. Individual rights give way to cronyism, elitism, and violence. In such a world, we will read what the “planners” offer us to read. If you are Russian, you have learned nothing. You are an institutional man.
No, it eliminates slavery. That is all that capitalism offers. If the means of production are not ultimately subject to the will of consumers, it is not capitalism, it is socialism. You advocate socialism and slavery. How ironic for a Russian, but not unexpected.
You did not read carefully. I said B may “appropriate” the means of A, not that B may make competing soup. The later is the free market, the former is not. This is not about reverse engineering, it is about appropriation.
When an author A creates a book, and sells it to B, what has occurred? In your world B has bought the soup and the factory from A. In my world, B has bought a can of soup.
In a world where IP exists, B is free to reverse engineer the soup, and produce soup with his own private means. B is not free to enter A’s factory and appropriate A’s soup for his own profit and/or use. Yet this is precisely what you advocate.
I do not take your meaning. There is no “problem” of producing too little” or too much. In a free market, supply and demand operates to allocate resources to those who satisfy consumer demands through internal economies. In external economies, it does not. This is why external economies are contrary to the principle of a free market. So yes, they are not the same thing, but I am confused why you are saying so.
I am losing confidence in your grasp of economics. No one, especially me, is calling for “full ownership and exclusive control over the market”. That is a good definition of socialism.
It is true that selling is not growing, and it is also true that planting is not harvesting. But what is true is that production of economic goods takes time and must follow a certain sequence. If not, farmers would skip the planting and growing and skip right to the selling. If this were possible, it would be done.
An author cannot start by selling a book. He must first write it. Unless he does so, it will not exist, and there will be no economic good for him to sell. Recall that “economic good” means goods produced with scarce means of production. In this case the author is the scarce means of production. Therefore what he produces is an economic good. The benefits of an economic good must be privately owned by the producer, for a free market to work. You are arguing against that principle.
Yes, I know. You have an unrealistic vision of how products are brought to market and how demand develops over time. You think it is a matter of saturating the market in one shot, and taking your profit or loss for that one action. It is a naïve and misinformed model of business.
As one born in the Soviet Union, you should learn more about your own history and how it compares with the analysis of Mises. You will find that he was pretty prescient about how the Soviet experiment would end. You reveal yourself when you refer to competition as “cut throat”. That is the current Russian model for free enterprise. Shall we agree it is not driven by the principles of ethics and individual freedom?
Like many former prisoners, you seem to long for the security of the communist institutions. It is common. It is similar, I think to the Stockholm Syndrome. You seem to think that the “answer” to the Soviet State of Stalin and Khrushchev is “cutthroat competition” whatever that really means. Yet, not surprisingly, you miss the subtle lessons of Mises, who gives us the principles needed to distinguish the various forms and flavors of socialism from a truly free market. Ironically, American is rushing towards the Soviet model in significant ways, and unchecked will suffer the same demise. It is an open issue whether we will likewise bequest the country outright to criminals and thieves, like Russia and Ukraine, to mention just two.
Again, you miss the obvious. Why would a publisher or “first consumer” want o pay $5000 for an asset they cannot own or control? Why would a new author attract 1000 new customers who have no idea whether they will like him or not? As you may know, word of mouth plays an important role in product acceptance and growing demand. This takes time. What you deny an author is the time needed to develop a market for his products.
Yes, I am familiar with this business model. It is essentially a pyramid scheme based on controlling the distribution channels. It requires a consortium, which is difficult or impossible to create or sustain. In theory, I suppose it can be done. It carries a very high transaction cost. When comparing IP to no-IP, don’t forget about his factor.
Check your assumptions. The author would not voluntarily exchange all rights to his book to a consumer at any realistic price. I publisher will not pay an author large amounts for an asset they he cannot own or control. There is nothing voluntary about your “free market”. Certainly your concept of private property is defective. You account for everything but the private property rights of the author. Ooops!
At some point this becomes ridiculous and absurd. First you pull this property rule out of the air. “Observing” means what? Second you imagine that two parties can contractually agree that the right of possession can be limited. Yet for reasons I can only understand as a necessary assumption of your conclusion, you cannot grant that IP works exactly like any other property, in that if it starts out as being privately owned by the producer/author, then it can be transferred with a limitation of use, that can be established by contract, as well as property rules. Property rules have a distinction from contracts in that they do not required privity. You do not enter a contract with potential trespassers. It is not necessary precisely for the reason that IP does not require a contract to be enforceable against those who violate the terms of use imposed by the rightful owner.
Then again, we here in the West have been at this for a few hundred years. Russians have a much different historical experience. It is not fair to expect that you “get it” in a mere 20 years.
Reading Mises and Russian history is a powerful teacher.
Can you say that the destruction that IP brings to the economy and society as a whole is compensated by the economic benefits that it brings to specific groups?
Lots of authors do that. They write all sorts of stories and documents for things they will never hold copyrights to. One example is ghost writing were you are writing a book to fulfill somebody else’s vanity.
You are very confused.
IP, at it’s core, is the result of central planners trying to control society for their own purposes.
@nate-m August 16, 2011 at 5:57 pm
No, Nate, I cannot say that. I am not trying to argue a comparative advantage. I am simply saying that in a free market the principles of private property have to apply to all production by private means, which includes IP. You seem to advocate two systems of private property, one for IP and another for everything else. That is the inconsistency I am trying to point out.
Yes, this is true. But this is not germane to a debate of the principles of IP. Such an arrangement is work for hire. If the real author was not ghostwriting, he would have copyrights as the author. Studio musicians don’t get a piece of the writing credit. Same deal. But an author of an original work of authorship is deploying his own private means to produce a product, and therefore he is entitled to secure his property rights in the economic goods he produced. This is just a restatement of private property rights, and is not specific to IP. You seem to want two systems of private property.
One of us is confused.
If IP is a mechanism of central planners, where is their influence evident in dictating what books is get written, which books you read, which movies you watch, what music you listen to, etc. etc. You have no evidence that IP is operating as a vehicle for central planning. Some books don’t get read at all. Some are fabulously successful. Who is deciding which is which? Central planners?
Fraudberry,
Then you do not have an argument. You say that if you consider the benefits of IP but ignore then costs, then it’s good.
IP is a redistributive policy. The claim that without IP, private property does not apply to all production by private means is erroneous. You have been told this so many times, that besides you being stupid and/or a fraud, I see no other explanation for your behaviour, pardon my lack of imagination.
On the contrary, you advocate two mutually exclusive systems of private property: one that interprets goods by their location and integrity, and one that interprets them by function and meaning. One that interprets them based on what they cause, and one that interprets them based on what affects them. You are entirely oblivious to elementary logic. A debate with someone who denies logic is a waste of time. You should go back to elementary school (as a pupil, not as a teacher).
Boring.
No. I advocate one system of private property. IP is a violation of private property; which is why it’s deplorable.
Patents and copyright are property in the same way that a token for being a taxi driver in NY is “private property”.
IP is just another ‘write of monopoly’ created by the government. In one sense IP is ‘property’. In the same sense that somebody ‘owns’ a food stamp or has a ‘right’ to social security. That ‘right’ to free healthcare is something that somebody owns. IP is a government institution which is charged specifically “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries”.
Just like I reject the morality behind ‘Economic rights’ of Union members to ‘own’ their jobs I reject IP. It’s all just the same type of thing.
No amount of feigning ignorance or repeating ‘IP is really just another form of private property’ falacies, lies, and deceptions, over and over and over again is going to change the true nature of IP.
Do you live in a hole in a ground or something? Do you not understand how the ‘rights’ your advocating actually affects people or influences the market?
Here is just a example:
http://www.theregister.co.uk/2000/12/21/warner_brothers_bullying_ruins_field/
http://www.timesonline.co.uk/tol/news/uk/article543318.ece
http://www.chartattack.com/news/41504/winnipegs-wyrd-sisters-still-fighting-harry-potter
http://www.dailymail.co.uk/tvshowbiz/article-1193283/JK-Rowling-sued-500m-plagiarism-lawsuit-family-late-Willy-The-Wizard-author.html
That’s just one ‘work’. One ‘IP Right’. Harry Potter and the lawsuits that go on and on and on in every country in the world is just one example out of millions.
I mean, seriously. Do you not understand what ‘derived work’ is in copyright and how it influences the design of software? How can you be so clueless not to see how copyright and patents influence the world the around you?
What? The ‘copyright clause’ in the constitution is not good enough for you?
The fact that modern copyright law is derived from censorship laws designed to counter act the liberating nature of the printing press by granting exclusive rights to specific publishers. That patents are derived from mercantilistic practices were companies were granted government monopolies over specific business ventures or regions.
Are you going to argue now that when the British Empire handed over the right to do business in south central Asia to the ‘East India Company’ that this was a ‘private property right’ owned by the East India group?
Your statements on IP are increasingly mind boggling as time goes on.
They are the ones that decide what type of books are legal to publish in the first place. They decide what software is legal to be sold or distributed in the first place. They decide what type of services a person is allowed to provide on the internet or transmit over the air.
FFS, man. What do you do for a living? Do you not do anything that interacts with copyright or other IP rights in the business world and never had experienced the legal headaches and ever escalating costs that IP is inflicting on the American public?
How you could be so ignorant as to be completely clueless about the effects of the laws and restrictions that you are advocating?
@nate-m August 17, 2011 at 2:34 am
I see your point, that IP is a “granted privilege by the State”, but he question is whether that is true or false, or whether that is all it is.
One way to sort this out is to explore whether in a “pre/post-State” world, IP would be re-created in some form. My view is that it would, to the extent that the society values free markets, and private property. That is why I argue for the principle of IP rights, regardless of the source of coercion used to enforce those rights. It is not necessary to have a state to conceive of the principle of trespass, for example.
I think you either mean “writ of monopoly” or “right”, and I guess either conveys your meaning. A guarantee of free speech is also in that same Constitution. Is that wrong too? Trespass is a law enforced by the state. Does that mean it is illegitimate? Are you saying that “We have IP because we have the State”? No state, no IP. No state, no trespass. Is that your position?
Let’s assume, just for the moment, that you and I are both reasonably intelligent people. Yet you see these as the same, and I don’t. I agree with you about “economic rights” but disagree with your analysis of IP. Is there any possible explanation for this other than I must be stupid and you must be smart? If so, what is it?
If I recall, you and I discussed this once before, where you got all huffy about my use of the term “economic right” because of your interpretation of those words as referring to unions and welfare. Wasn’t that you?
To try to be clear, I do not believe that unions and welfare are economic rights. I think your analysis of them as illegitimate state creations is correct. We agree. We disagree that IP is equivalent to this. It is, ultimately, a utilitarian, i.e. economic question.
Again, we agree. We disagree about the “true nature” of IP.
Harry Potter is a good example to discuss, because the economic stakes are high enough that everyone is willing to take it to the mat. But the economics stakes of individual case does not touch the principle issue; is it right or wrong, good or bad? This is a utilitarian question that requires a system of analysis. That system is an economic framework, in nature. My preferred framework is AET.
I agree that the software applications of IP are a mess. Part of this is the result of granting both patents and copyrights. It is not completely incomprehensible that the state of the art in technology and law is not aligned. The state of the art in economics (AET) is not aligned with current practices either. Getting them aligned is the work of liberty and vigilance.
Look, I could point out all the court cases that are currently underway to prosecute murder. Those court cases represent a huge aggregate cost. Is your position that murder laws should be abolished because enforcement costs too much?
No, I will not argue this, though it is true. You seem to want to deny a fundamental principle of property rights; namely that they arise when they are asserted and defended. This is what makes it possible to treat India and slaves as property. But this does not tough the issue of whether they SHOULD be regarded as property. To determine that, you have to apply ethics, and economic analysis. Laws, good laws, should merely reflect those conclusions and provide for a means of enforcement.
If you think the problems you raise can be resolved by looking only to the history surrounding the first experiments with State granted privilege, well, no wonder you are confused.
I agree, there is such a thing as State granted monopoly. I will even grant that the first patent laws were granted by the State in Venice in 1474, but it is not clear that it began as a way to grant a monopoly to a favored person or group in advance. It was designed to encourage by reward technical innovation. Look it up. Subsequently, whether you believe it as a consequence or not, Venice became the center of technical innovation for the times. These are historical, verifiable facts.
So to just dismiss the entire subject because you heard Kinsella say that patents started as a state sponsored privilege to loyal pirates, or that copyrights started as a monopoly on propaganda for the State, misses the entire point.
The point is whether a principle of IP, here and now, is legitimate and justifiable in the face of a comprehensive economic theory of freedom and liberty. That question encompasses quite a bit more scope, depth and breadth than a simple dismissal of the entire question because of some rhetoric you heard from Kinsella. If you are interested, the history is there to examine.
Where to do you live, somewhere still in the Dark Ages? Who are “they” that are deciding what type of books are legal? Rights that are not enforceable are not rights at all. Therefore pointing to the enforcement function has no bearing on the legitimacy question of the rights themselves.
Nate, you could fill in the nouns in this sentence with any contemporary socio/political issue; Banking, healthcare, welfare, criminal law, drug wars, military actions, etc. etc. Just because IP has problems doesn’t make that a rebuttal all arguments for and against the basic legitimacy principle.
Some form of banking is legitimate. The principle of healthcare is legitimate, and so forth. This is just another form of Kinsella’s “Parade of Horrors” style of argumentation. You just can’t point to bad things in something and conclude that everything is bad about them. There are bad people, but not all people are bad. Bad people are not all bad. Things can be good and bad at the same time. See?
With all due respect, Nate, you don’t seem to have much of a clue about what I’m advocating. Oddly, at some levels I’m sure we agree about more than our disagreements. I’m for liberty, free markets, private property, capitalism, babies and flowers in the springtime.
You need to cool down your ideology (you are not alone in this) and take a minute to look at the consequences of what you are saying and advocating. Although “Hate the State” is a catchy slogan and all, it is not a comprehensive theory of economics, law, ethics or cooperation in a division of labor society. That requires a little more that a slogan.
@Andrew from Russia August 17, 2011 at 2:45 am
Well, that is one way at looking at the situation. The question is whether it is correct.
I think you are not familiar with Mises. In your scheme, how is the serviceability of “the initial master copy…owned and controlled by the author/publisher”? That is fundamental. Since it is serviceability and scarce means which compose an economic good. Next, you must look to the actors and speculate on what data they might use to calculate subjective value.
Consumer demand is there because of the serviceability of the book. A copy and the original have the same serviceability. The producer of an economic good is not interested in retaining a master copy, he is interested in trading the serviceability of his economic good for monetary value; i.e. a price. You fail to acknowledge the consequences of severing this relationship between output and income. It is a fundamental violation of the principles of the market economy.
I thought you were born in Russia? This is your sense of history, that some Leninist literature will have to be liquidated? The issue is precisely governance and economics. Mises made his career from looking at the relationship between capitalism and socialism, in all its various forms. And you think the consequences of Russia’s approach are some wasted books? You must have been very young when you left Russia.
Sorry, you don’t seem to understand the relationship between slavery and external economies. What happens when slaves are hired for a wage is that the external economy of slavery is exchanged for the internal economy of wage labor. The consequences of that change are monumental.
You are confused over the distinction between externalities (costs/benefits) as a specific case, and external economies (output/income) as a general case. If you understood the difference, you wouldn’t make this statement.
Yes, I’m quite familiar with your argument. To see if the soup/book analogy is correct, you have to look at serviceability, and the scarce means required to produce that serviceability. If the serviceability is different, they are different goods. If not, they are the same good. Let’s analyze:
The serviceability of a can of soup is the nutrition and taste experienced by its consumption. The scarce means of production is the factory and the capital goods (vegetables, meat, etc.).
When the can is consumed, the consumer DOES NOT have the means to reproduce the serviceability of the can of soup. If he wants to continue to consume soup, he must acquire ADDITIONAL cans of soup, or open a soup factory and manufacture his own soup. He calculates that it is more efficient for him, given the efficiency of the division of labor, to buy soup rather than capitalize his own soup factory. A soup producer satisfies this need of the consumers, and thereby internalizes the benefit of production output; i.e. money income. He is producing for an internal economy.
The serviceability of a book is the comprehension of the expression experienced by its consumption (reading). The scarce means of production is the author and the capital goods (research, writing, editing, and publication, etc.).
When the book is “consumed”, the consumer DOES have the means to reproduce the serviceability of the book. If he wants to continue to consume this book (I guess we have to assume a need to consume additional copies; i.e. make them available to a distant community or a large community who will read them during the same period, so they can’t just pass the same copy around until everyone has read it) he must acquire ADDITIONAL copies of the book, or he can open a “book factory” and make his own books. He calculates that it is more efficient for him, given the efficiency of the division of labor, to buy THIS book rather than capitalize his own “book factory”. An author satisfies this need of the consumers, and thereby internalizes the benefit of production output; i.e. money income. He is producing for an internal economy.
But because the consumer has the means to reproduce the serviceability of the book, he can merely copy the expression by using his copying machine, and service his community at a fraction of the capital cost it would require to produce the “original master copy”. If he chooses this option, he creates an external economy to the author. Yet the consumers gain the serviceability of the author’s production. The consumers are satisfied, but the author receives no income from his output.
This is the economic dilemma with IP. When introducing an economic good to the market, the means of production are generally not conveyed with the serviceability of the good. But with a book, the means of production ARE conveyed along with the serviceability of the good. This is a unique situation for what Mises calls “Intellectual Creations” and what he calls an extreme example of external economies.
Because economics is ultimately utilitarian, you must analyze the policy question: On the one hand, because the serviceability of the book is inexhaustible, i.e. NON-SCARCE, it is a free good. On the other hand, since the MEANS OF PRODUCTION (author) IS SCARCE, it is an economic good. There is an important distinction between “intellectual” economic goods, and “physical” economic goods like soup. This distinction creates unique policy questions for economics and law.
To treat production from scarce means as “free goods” the producer is producing for external economies. To treat production from scarce means as “economic goods” the producer is producing for internal economies.
The principle of private property and private ownership of the means of production is consistent with capitalism and free markets. The principle of public property and public ownership of the means of production is consistent with socialism and planned markets.
Which economic policy do you prefer?
Given the policy dilemma above, you have a point. To treat IP as an economic good “forever”, it tends to have a cumulative impact on free speech and association. If you treat it as a free good “forever”, then you are creating external economies. So the answer should be somewhere between “never” and “forever”. Originally it was 14 years with a chance to renew for additional 14 years. In my view, that is plenty of time. It is now life+70 years. That is way too long and reflects the growing influence of mercantilism.
Good. But I’m still not sure you acknowledge the consequences of external economies on the actor’s calculations about how to allocate is own scarce resources. Perhaps you can give me a way to understand what you think about this.
Words matter. “cut throat competition” implies a zero sum game. Free markets are not zero sum. That is an important distinction.
IP “protectionism” and minimum wage are completely different issues, and if you consider them the same, as Nate considers IP and taxi medallions the same thing, it explains your confusion.
My point to you here is that creating external economies has implications for producers. These implications are consistent with the balance of Mises analysis of economics and governance.
Don’t you think that is a rather important point? If “own” does not include “control” what is the economic purpose of owning?
This whole blog is a thought experiment. That is the point. You seem to reach a different conclusion than I on the same facts. That is why I look to Mises for a hand, since he apparently thought this through.
Yes, I have no problem with this. But let’s not forget that we have been “grinding away” at this for some time. I am a big fan of evolution and the natural process of selection. Therefore, I tend to begin with wondering why certain things have evolved the way they have. Generally, there is a purpose that may additionally be hidden. I have found that when you start with a blank piece of paper, you end up re-creating much of what already exits. To come up with something completely new is rare.
By illustration, when seeing a camel for the first time, you may conclude that the humps serve no important purpose. The more you understand about camels and their environment, and the purpose the humps serve for the camel, the more you appreciate the fact that they exist.
The attitude here often seems to be that the only legitimate approach to a given question or thought experiment, is to start with a blank piece of paper. If we were going to “invent” a camel from scratch, do you think we would get it right the first time, just by “thinking” about it? Knowledge and wisdom accumulates over time. That is worth remembering.
Funny. You are saying that “the medium is the message”? Someone already said that once. You own your feet, but you can’t use them to trespass on my land. Your reasoning is faulty here.
Obviously, none, including Intellectual Property rules. But even in this example, there are “legal” boundaries. Can you “look around” under a woman’s dress? See, no rights are absolute unless you are Crusoe, and even then your “rights” are limited by natural laws. I think that is a rather important point.
This is just rhetoric. As Hayek observed, questions about what the law should do is as much a question for economists as lawyers. This refers to the study of the economics of law. See David Friedman for a great summary of the field. They are not separate things.
@Wildberry:
First, there is no serviceability of “the book” but serviceability of “a book”, of a particular physical copy. And it may either serve as a consumer good to be read and enjoyed, or as a peculiar capital good that, with some ancillary factors (blank paper and copying equipment) can reproduce itself – not unlike seed corn. So the speculator’s task is to foresee both consumer demand from ultimate readers and capitalist demand from intermediary copiers who would vie for the same consumer base. An unusual kind of speculation as this may be, it’s still grounded on the final consumer demand and prices. As I noted earlier, speculators may rely on past facts on who the readers and copiers were and thus maintain a multilevel reproduction/distribution chain.
My point was that in systems deeply spoiled by intervention, liquidation becomes necessary. This applies to the transition away from socialism and may apply as well to the first days of future post-IP world. That is, no free market Superman could save copyright-dependent industries if copyright protection were to end tomorrow, and the anti-IP position cannot be invalidated simply by claming that no known “alternatives” exist that could save today’s IP-dependent industries.
The initial question was not about external economies, it was about freedom of choice providing a justification for IP.
So, how does this generalization lead one to the conclusion that external economies necessarily eat into income? I tend to see logic in the opposite view that there is no general relation between the two. Also, as I re-read the relevant piece from Human Action, I can’t help but notice that the “problem of external economies” was likely not meant to be a problem in the sense of “trouble” but in a sense of a “question to be discussed”. Maybe it’s just non-native speaker in me and/or in Mises, but perhaps Mises wasn’t that determined to renounce external economies per se as an absolute evil. Producing “entirely for external economies” does sound trouble for the producer, while producing “for the most part” leaves the door open.
As pointed above, there are two serviceabilities: that of a book as a consumer good and that of it as a capital good. So the “consumer” who buys a book with the intent to reproduce it and sell copies is not a consumer to begin with, he’s a capitalist in disguise! Now I turn the tables and ask you: should we prevent him from using his book as a means of production by decree (socialists would salivate over that prospect), or should we simply allow the author’s sales dept. ferret out such wannabe capitalists and pursue them with distribution deals?
I was too lazy to type “does not own downstream copies and control downstream copying because the owners of these copies own and control them“.
Evolution is known to leave vestigial features. Besides, wasn’t socialism hailed as an inevitable “evolutionary” stage?
If you encounter an instance of information without media, be sure to call 1-800-GHOST-BUSTERS.
@Wildberry:
I agree. I just don’t see the need to deprive third parties of their profits and redistribute the profits to the author.
I don’t see a calculation problem given that the consumer demand is there and the initial master copy – scarce physical media – is still owned and controlled by the author/publisher. The journey from a master copy toward a million consumer copies is a matter of market research, advertisement, efficient distribution and luck.
The issue at hand is not gangsterism, it’s that the readjustment brought about by the advent of market economy may require liquidation of certain unprofitable/uncompetitive lines of production: unsold inventories of Leninist literature will have to be recycled, researchers on Marxism be laid off. Similar fate may await the IP sector once its cozy protection is lifted.
It doesn’t unless all masters emancipate their slaves and abstain from further use of slave labor, and they might not act that way voluntarily. And anyone who does still faces the costs of slavery system (e.g. compliance with fugitive slave laws) without enjoying the “benefits” of controlling laborers outright – the parallel with IP being that Wikipedia or FSF/GNU, renouncing the bounties of IP protection, still have to expend resources on monitoring the copyright cleanliness of articles/code contributed. Maybe it’s because of these costs that non-IP patches inside the present IP system are so limited in scope.
In my world B owns a book / a can of soup, and if he owns a printing press he also owns a factory.
I said that externalities as such are irrelevant, as it’s only what is internalized that counts. To repeat, one doesn’t always lose their profit to externalities.
I’m arguing that copies made by other producers are different goods, thus drawing a clear line: benefits stop here – as soon as the author sells the goods produced by him. In contrast, the pro-IP camp embraces causal relationships to attribute copies to the author and draws its line (and a vague line at that!) many copies and life+70 years down the road.
It’s not even about saturating the market. It’s about selling as much as one can, as fast as one can. No one is entitled to the “whole” demand (which indeed develops over time – should we then have perpetual IP, or should we ban competition elsewhere?)
First, I’m all with Mises on his verdict for socialism (in contrast to the popular neoliberal argument claiming lack of “incentives”, it really makes sense). Second, the phrase “cut-throat competition” was a classic device of anti-capitalist propaganda – I though that native speakers should know better. Third, ethics are relevant, but no doze of ethics will rescue economically unsound doctrines, be that IP, protectionism or minimum wage.
He does own and control it at the moment of purchase. That he does not control downstream copying is a different story.
So does advertisement. And I’m not claiming this to be “the” alternative to copyright, it’s a thought experiment on “yet another” alternative that may well find its niche.
No problem, let the market mix and match various IP-free alternatives: the one with very high transaction costs, another one with very high risks, the third one with very low market coverage etc., and grind away their rough spots over time.
The physical media (without which no information exists) is always owned and controlled. What is not owned and controlled is other people’s media, their voluntary actions and the resulting market prices. What a horror!
Which property rule forbids looking around?
IP may work just like private property on slaves used to work but I smell bait-and-switch from economics to legal theory here.
I used to post a ban alert on my blog. I can’t imagine posting 2 million bans.
@Andrew from Russia August 18, 2011 at 8:36 am
I am not an economist, but even I can see that your economics is rather strange here.
First, books are not fungible goods, like corn. If you want to read a particular book, which is what we are analyzing, you need that particular book. That book has inexhaustible serviceability, but it is also unique. The expression in a given book is unique to that particular book’s content. The link of causality between initial capital investment
To quote Mises: http://mises.org/humanaction/chap23sec6.asp
Second, a book does not “reproduce itself” like bacteria or wild plants. Book reproduction (specifically the act of copying) requires human action. The limitations of those acts are circumscribed by the rights of others. That is your standard NAP.
It is true that any “book” is comprised of the tangible medium, and what is fixed upon that medium. Between the two, what do you think is the primary source of its serviceability? Hint, it is not the paper, and it is not the fact that it can be cheaply copied.
If you insist on an agricultural analogy, imagine a plant that can only be reproduced by cloning. The owner knows that if he sells you the plant and you carry it away, you can reproduce the plant and he no longer can control its use. But if you can only ingest the plan while on his property, you can’t carry it off. Does the farmer have a right to withhold the plant from the market, and insist that only those who come to him in person will be able to be saved? Is there any other arrangement you can think of that will allow for a “better” outcome, while maintaining the private property rights of the farmer? Apparently, it is not possible to have it both ways.
OK, I can agree with this.
But then you go off the rails. If we find we are transitioning from “one” thing to “another”, what will we take with us as fundamental principles? We have to return to what level of civilization to make such a transition? Assuming that copyright “ended tomorrow”, what other assumptions must be necessary? Complete collapse of the existing social institutions? No courts? No laws? No history?
I am quite familiar with the “irrelevance of impossibility” argument. It is a total cop-out. It is like deficit spending; it defers responsibility to the unknown future. It claims “you can’t prove that I am wrong just because I cannot prove I am right”. That is not a very helpful principle. Sorry, this excuse is not a universal “get out of jail free” card. (Sorry, do you know the game “Monopoly”?)
The initial question you raised has consequences. Don’t try to escape responsibility by claiming you didn’t ask about consequences. Every decision has consequences.
Yes, and I said that you are wrong about this, and referred you to someone’s writing that presumably we both respect. I agree with Mises; externalities are not irrelevant, especially when the externalities are the extreme case of external economies.
While it is true to say that not everyone produces for external economies, that does not mean that no-one can. Salves were producing for external economies, but plantation owners were not. The author, in the absence of some form of IP, produces for external economies, but commercial copiers do not. Can you see the distinction?
Really? Output always equals income. If output does not result in income, why would the output be produced? Under what theory of human action would the actor act? Mises answers that the “creative genius” does not create for commercial purposes. OK, that is one possibility. But that also means that “non-commercial purposes” are not affected by the externality issue. The actor is not participating in market activities.
However, those who are creating for commercial purposes are affected. Those are the cases that Mises focuses on. He eliminates the “creative genius” motivation from the discussion and refers to “technical manuals” etc. Clearly in that case, externalities matter, if in fact they exist. You cannot show that they do not exist, and I am showing that they do exist, based on Mises’ analysis.
Here is the basic math: I make bread for $1 and sell it for $2. When you buy bread from me, my output (bread) equals my income ($2). This is an internal economy.
Say I deliver my bread using a delivery boy, and he gets the $2 and uses it to go to the movies. In this case my output (bread) does not equal my income ($0). The $2 benefited a third party. I have produced bread for an external economy, because the benefit of my output has benefited a third party, not me.
Notice in both cases, the consumer gets his bread. The key difference is the impact on the producer. Imagine that it was the Sheriff that was taking the money from the boy, and that the boy and the baker are powerless to stop him. The Sheriff gets greedy and takes all the bread the baker tires to deliver. Now the baker is producing, for the most part, for an external economy. If there is nothing he can do about it, including not being able to stop making bread, then the baker is a bread slave to the Sheriff and the Sheriff’s customers for bread. For the baker, output does not equal income.
OK, we are discussing the question. No, your understanding is just fine and Mises is very solid on his use of language, so let’s take it literally.
What is the distinction between “entirely” and “for the most part”? Here is my analysis.
Before humans act, they rationalize and calculate. Before they act, they conclude that acting is of greater benefit than not acting, and that a particular means are superior to other means to achieve the subject goal of his actions. The calculation is based upon market data; whatever is available to the actor at the time. It is not an objective standard of analysis, but subjective. The actor may in fact be wrong about his data and his conclusion, but what we know is that he does not act unless he concludes that acting through some specific means will satisfy his desired results.
The word “entirely” means something absolute and objective; i.e. 100% true. “For the most part” means that on balance, it is subjectively viewed, from the perspective of the actor, to be true. It is not necessary that it be 100% true, only that it exceeds the subjective threshold in the mind of the actor.
To go back the bread example; it is not necessary that the Sheriff take 100% of the bread. If it was only one loaf out of 1,000, the baker may calculate that it is an acceptable cost of doing business. If it was half of his output, only the baker would know if that was too much to tolerate. If it was 100% of what the baker produced, the baker would starve and eventually produce nothing. The meaning of “for the most part” is consistent with Mises theory of subjective value.
Yes, this is a fundamental source of disagreement. Are they different goods? A good is characterized by its serviceability (or utility, if you prefer) and the means of production.
If it has no serviceability it is not a good. It is an economic good if the means of production are scarce. It is a free good if the means are non-scarce.
In the production of the first master copy (manuscript, if you prefer), there is no controversy that the means of production, the author, are scarce. Also, there is not controversy concerning whether a book produced by the scarce means of the author are a “good”. Therefore the author’s manuscript is an economic good.
An economic good is not a free good. The distinction is that economic goods are the subject of private property; if you hold that the means of production are also privately owned. If not, you are assuming a socialist system of production.
The author is the means of production of the manuscript, and those means and the good he produces are both privately owned. Ownership means exclusive control of possession and use.
Therefore, again, the right to control the use and possession of the manuscript is his and his alone.
What about a copy of his manuscript? What are the means of producing that? Since the manuscript is owned by the author, and it is a required input to the production of a copy, then the copy cannot be owned by anyone but him. To argue otherwise, you must insist that he did not own the original. That is not your argument.
You argue that, while it is true that the author owns a copy that he makes, something happens to that ownership when he discloses the book (i.e. sells or gives someone a copy) to the “public”. You are saying that the author must sell the “copyright” with the medium upon which his book is printed. You are arguing that, while the book and the first copy are clearly the property of the author, when he sells a book, the buyer now has the same title to the book that the original author has. This is your error. I will illustrate this by using a familiar land problem.
I own land which has mineral on it. Can I sell you the land, but retain ownership of the minerals? Of course. How does that transaction operate in a free market? You want the land to build a house and raise cattle. You are not interested in mining. I offer to sell you the land for those uses, but not for mining the minerals. You, as a buyer, have the choice to accept or reject that offer. We settle on a price, which includes the condition that I own the minerals and you own the rest. Does this violate any principle you hold to be true?
When I offer to sell you my book, can I offer it on condition that I retain the “copyright” and you get the rest? Of course. How and why does your theory of liberty and private property insist that this is not legitimate? It does not.
If you believe that property is a human device, as I do, then you can argue that while it is possible, it is wrong to withhold any rights when selling something. This is true. But if you are going to adopt this rule as a general matter of property rights, then you also have to forbid the landowner from retaining mineral rights. You can say that if he wants to keep the minerals, he needs to keep the land to himself.
Likewise, you can say, as Kinsella has, if the author wants to keep the “copyrights”, then he needs to keep the book and any copies to himself.
Since I am asking what we “should” do, I am posing a utilitarian question. Because economics is ultimately utilitarian, I am asking an economic question.
Is it “good” or “bad” to allow the alienation of land and rights of use to land, i.e. mineral use from other uses?
I would argue it is good, because if it is done, it places the decisions about how to allocate resources in the hands of individual action and subjective values of individual market participants. Such rules of alienation of private property facilitate the cooperation of humans who are specialized in one type of business or another. This is the foundation for a division of labor society, and division of labor is the most fundamental feature of advanced civilization.
The milk farmer specializes in raising cows. The miner specials in mineral extraction. By allowing the alienation of uses of private property, this cooperation is facilitated. It is “good” policy for all of the reasons that Mises argues that capitalism is superior to socialism.
The author specializes in writing books. The publisher specializes in copying books. The consumer specializes in reading books. This is what makes the civilized world go around.
It is a feature of natural markets to develop property rules which facilitates cooperation. It is not nice to fool with mother nature.
Yes, I’m quite familiar with your argument. To see if the soup/book analogy is correct, you have to look at serviceability, and the scarce means required to produce that serviceability. If the serviceability is different, they are different goods. If not, they are the same good. Let’s analyze:
You have not turned the tables at all. In the use of “his” you assume that his ownership is absolute. By analogy, you are assuming that the cow farmer can go ahead and extract minerals too, because no matter what he accepted, he now “owns” the land and no one can stop him from using it however he chooses.
The question is what does he own and control? You cannot assume that the author, if he can, would not sell the book on condition of retaining certain rights of use, including copying. You are simply assuming that he didn’t or couldn’t. That is what is under debate here.
OK. You see my point now? Whether the author can own and therefore control the use of copying is in fact the question at hand. To say yes is to agree with Mises, copyright law, and all other property rules outside of IP (i.e. land and chattel). To say no is to agree with Kinsella, Rothbard (although he has also argued for copyrights) and other Ancaps here.
You need to explain why there is a need to intervene in the current operation of property laws, and/or show why IP is a “special case” of property such that external economies do not matter to the producers of those particular goods.
Yes, by its proponents, but not by everyone. Mises was a rather outspoken critic of this view. None the less, we haven’t won completely either. In fact we are currently headed for greater socialism in American than ever before.
@ Wildberry:
Reproducing cultivars all the way toward next year’s crop is purposeful human action. But you are actually making too much of the corn analogy, again digressing into the legal field. I used it only to point out that there’s already a class of capital goods that (1) can alternatively serve as consumer goods and (2) with the aid of other factors can be multiplied – and the market is OK with that (or it was before plant variety patents arrived on the scene to… er-r-r… incentivize innovation).
None. No need to overelaborate beyond the general case that government intervention begets liquidation. The point is that anti-IP Austrians, facing pro-IP retorts like “with copyright protection gone, Hollywood will likely be gone in a short time”, can strategically agree and then press ahead with their case that IP is intervention and that the more government intervenes to prop up IP-dependent industries and shield them against “piracy”, the more it distorts the market, prompting severe liquidation/readjustment should this intervention stop.
I’ve already pointed out that externalities or not, the costs of compliance with fugitive slave laws or IP statutes still weigh upon those willing to free their slaves or waive their IPRs. Now, even admitting that an economic case against slavery can be based on allowing for internalization, there’s no similarly strong case to be made against copying (i.e. for IP), for here a degree of internalization is always possible due to the voluntary exchange of scarce physical goods, privately-owned media, without which no information exists.
The author has the opportunity to minimize his externalities by negotiating sale of a few initial copies to capitalist-copiers at a speculative price inferred from projected consumer demand. By postulating media as a capital good in addition to consumer good, my example of multilevel distribution scheme, no matter how outlandish, stops the “the author loses his shirt to copiers after selling three books at consumer prices” line of argument in its tracks.
Right, output results in income (that notion of equality looks so mainstreamish!)
And for this to be an Austrian internal economy, the equality sign has to be shown the door and we’ll rather say that you value an addition of $2 to your cash balance more than your expenditure of a loaf of bread.
But note that your primary economic concern is parting with bread for nothing, not some distant third party now possessing $2. The case of reproducible information elucidates this distinction. Suppose that, of two authors selling their books at $10 a copy, A sells 50 copies under a draconian copyright regime, pocketing $500 yet not losing a single sale to piracy, while B resorts to a subscription scheme, slaps GFDL on his text and calls it a day after obtaining $1000 from 100 subscribers. B’s careless abandoment of copyright restrictions results in subscribers making 100,000 more copies and retailing them at $1 apiece for a total of $100,000 of which the author gets nothing. Ceteris paribus, B nets more in income than A ($1000 vs. $500) despite inviting external economies ($100,000 vs. $0). So, to reiterate my point, from the mere fact that external economies are huge it does not follow that income is tiny or nonexistent.
Now that I’ve explained my position, ask yourself what the author should be concerned with: his income in absolute terms or this unquantifiable relation between income and external economies?
@Andrew from Russia August 19, 2011 at 2:32 am
Let’s back up a moment and see if this conversation can be advanced.
In general, I am trying to stay within a limited scope of inquiry; namely is the PRINCIPLE of IP legitimate, and is there an economic policy justification for that legitimacy?
What I am NOT engaged in is a general defense of all that is IP. Mercantilism, corruption, government intervention in the markets, etc., all may (and do) coexist with the principle that IP may and should operate in the market as legitimate private property.
You may believe, as I understand Kinsella does, that this is an attempt to have it both ways. It is not. It is not necessary to resolve our views on the State in order to attempt to resolve a difference of opinion about the fundamental principle of legitimacy and utility of IP rights.
It is possible to support the principle of the right to form associations in the form of corporations, yet not support the collusion between corporations and government, i.e. mercantilism, for example. Please keep this in mind and you interpret what I’m saying here.
I said: “Second, a book does not “reproduce itself” like bacteria or wild plants. Book reproduction (specifically the act of copying) requires human action. The limitations of those acts are circumscribed by the rights of others. That is your standard NAP.”
I am merely pointing out what I presume to be a shared principle of non-aggression. This principle is dependent upon an analysis of rights, since aggression can only be understood in terms of the rights of the affected parties. It is hard to believe that you have a fundamental disagreement with this principle. The act in question is copying a book that certainly originally was the property of the author. The issue is, who’s rights are being violated here; the copier’s or the copied? Let’s try to stay on that point.
All human action is purposeful, which is a fundamental assumption of praxeology, so pointing that out is not helpful nor does it advance the discussion.
Second, yes, corn is an example of a non-IP good that can serve both as a first order and second order economic good. IP is a subset of all economic goods which share this characteristic.
Second order goods require additional inputs before being transformed into first order consumer goods. You are restating fundamental economic principles. An certainly “markets” have no problem with that, UNLESS the production process violates some other fundamental principle, such as the principle of the private ownership of the means of production.
This is where our analysis diverges. You hold that no private property principles are violated, and I hold they are. We both agree that a violation of these rights would be bad. As to WHY that is good or bad, there may be some legitimate difference of opinion, especially as to degree. You assume your conclusion that it is “not bad” because it is “not” a violation of private property. This is what I am trying to focus on.
So when I ask, “Assuming that copyright “ended tomorrow”, what other assumptions must be necessary?”
You say “none”. I would not have asked the question if I thought the answer was
“none”, so let’s examine the issues.
You are leaping way ahead of the current argument, to how government intervention affects macro-economic and industrial/governmental relations. I am not arguing for a particular industry. In fact the industry you mention is one of the guiltiest of the charge of mercantilism. The Act that extended the copyright term to life+70 is called by some the “Mickey Mouse Extension Act” for good reason. But that does not help us look at the fundamental principles of IP. Obviously, if the principle of IP is wrong, then mercantilism that depends upon the existence of IP is wrong. However, I hope you can acknowledge that if the principle of IP is right, it is still possible for a good principle to be hijacked for bad purposes. This is in fact the case. This should return us to the issue of the fundamental principle of IP.
Let’s be objective here. Compliance with slave laws is a burden on everyone involved, and the burden increases in proportion to non-compliance. Compliance is the primary way that enforcement costs decrease. The same can be said about IP.
This returns us to the legitimacy question. In the case of slavery, we now hold almost universally that the principles of individual liberty cannot co-exist with slavery. We made a monumental choice, the right one at least in this regard, in 1863 or so. It cost us dearly (although one could persuasively argue Lincoln’s motivations were not wholly humanitarian). In the conflict between the property rights of the individual slave and the individual slave owner, we determined that the principle of individual freedom was a higher principle. Nonetheless, this can be viewed objectively as a property rights issue. The conflicting claims were resolved by a rule of law; individual humans cannot be the property of other humans, by force of arms or force of law.
Similarly, IP is a property rights issues at one level. Whose property claims should prevail? The copier’s right to his paper and ink, or the authors right to what is being copied?
I said: “Salves were producing for external economies, but plantation owners were not. The author, in the absence of some form of IP, produces for external economies, but commercial copiers do not. Can you see the distinction?”
And you responded:
First, you did not indicate whether you see the distinction I was drawing, or not. Do you? In your response, it does not appear that you do.
Perhaps your lack of familiarity with legal principles is one factor. If you are raising “negotiating”, you are describing a contracts theory. We are discussing a property theory.
Second, you are speculating about the subjective value of economic goods, but you do not assume private property rights. I know of no coherent economic theory that can separate these two assumptions.
You confuse and conflate these concepts, so that your speculation is impossible to interpret. First, what is the point of negotiating a contract over a subject matter that cannot be privately owned? You and I could negotiate over the lunar real estate, but that has no practical meaning.
As a result, your assertion that your speculation about an imagined negotiation between two parties making an agreement over something neither can own is nonsensical. Therefore this argument is dead on arrival.
Before parties can negotiation over the transfer of property, ownership of that property must be settled. You cannot skip the plowing and planting and cultivation, and jump right to the harvest.
You: “So, how does this generalization lead one to the conclusion that external economies necessarily eat into income? I tend to see logic in the opposite view that there is no general relation between the two.”
Me: “Really? Output always equals income. If output does not result in income, why would the output be produced?”
Do we agree? If output (production), for the most part results in income (for the producer), then it equates to an internal economy. If not, we are describing an external economy. Correct? I don’t know what you mean about “mainstreamish”. It is simply a logical relationship between output and income.
If you read “logically equivalent to” rather than “numerically equal value”, does that change your interpretation? What you repeated is exactly what I think I said.
Yes, my primary concern is to explain how it happens that a baker’s output of bread does not equate to $2. What language and concepts can we use to describe and understand that situation? The concept is “External Economies”.
Second, you are making my point yet declare yourself victorious against me.
In both cases you choose, the sellers are securing their private property rights; i.e. in both examples, the sellers “secure exclusive control” (i.e. OWN) their books. It is possible to imagine more than one way of accomplishing this, and many ways used in combination.
But in both cases, the underlying assumption is that the author secures exclusive controls of the serviceability of what he has to sell. That is the critical issue. If this is not assumed, then no one in their right mind is going to pay $1000 or $100,000 for something that is valued at $20, the subjective value (I am assuming) that people usually associate with the benefit of possessing a book.
If private property rights are secured, then externalities can be minimized. If not, then they are maximized. Minimizing externalities is the way free markets optimize efficiency in the allocation of resources, based on the time preferences of consumers.
I think we can agree that it is his absolute income. Only economist care to analyze WHY, in a particular case, output does not equal income, and theorizing WHAT the consequences of that situation might be. That is what I have been doing, by referring to Mises’ thoughts on this issue.
Fair enough.
Media (paper, let’s say) is a capital good. Its relevant serviceability is its utility as a medium for the printed word. If you are going to make a copy of a book on paper, you need paper as an input to that production process. Paper is a scarce good produced by scarce means. Its serviceability is limited, because the same piece of paper cannot be used to carry two different fixations of two different books.
A book may be viewed as both a consumer good and a capital good. Let’s focus on the capital good aspect. It may be decomposed into the medium that carries it (paper) and that which is copied. (This is essentially Schulman’s argument). Positive copyright law makes the same distinction as the tangible “fixation in tangible media” and the intangible “work”.
No matter how you conceptualize what IP is, it is always fixed upon a tangible medium, paper in this case. We begin with an original manuscript. The subjective value of a book is not the paper; untransformed paper can be acquired for pennies. The subjective value of a book comes from the transformation of blank paper by the fixation of an expression upon it. If one wishes to produce a copy of a book on paper you need at least two things: an original book and some paper.
The original book is a capital good. It requires third order capital goods to produce. It is the transformation of these third order goods that results in the existence of the first instance of the book. This original fixation of the book on paper is a second order capital good. It is a required input for any first order consumer goods, copies of books which will be “consumed” by end users.
Privately owned means of production indicates that the process, equipment and inputs (second order capital goods) are owned by the individual producer (for simplification) in order to transform these goods into a first order consumer good. In the baker/bread example, the baker needs a recipe, oven and ingredients to make bread. If he owns the means of production, then he owns the products he transforms.
In the case of authorship, the author needs his cognitive abilities and expressive talent (owned as part of owning the self), a means of putting letters on paper (typewriter for simplicity) and paper. The author transforms these inputs into the capital good, which we can call manuscript; the first fixation of the book. There is little controversy that under these conditions, the author owns the manuscript.
In order to mass produce the book for mass consumption, the author must reproduce the manuscript. Characteristically, (as we discussed above with seed corn), each copy is both a consumer good and a capital good.
The capital cost of the manuscript is high. Let’s say the least costly input is the paper that it is printed on. High cost inputs were the time and energy it took to produce the manuscript in every other way, including the need to have enough accumulated capital to sustain himself during the production of the manuscript.
At the point in time where only a single manuscript exists, the author has some options in regard to how to deliver the consumer goods into the hands of consumers, recognizing that once the first copy is distributed, the consumer now also has the means of production of additional copies. Remember that no copy can ever be made without an original copy to copy from. An original copy is a required capital input for any subsequent production.
If the author cannot retain exclusive right of use (i.e. own the copy right), then he only can utilize a time advantage: As Mises says:
http://mises.org/humanaction/chap23sec6.asp
By “free goods” I think he means they are not economic goods in an internal economy; that is “the remained outside the sphere of private property”. Once they are disclosed they become free goods and cannot be privately owned.
This is the outcome you are advocating. You are claiming that once the author discloses his work, it becomes a free good. If it is a free good, he no longer benefits from private ownership, and any third party is free to copy and distribute it. Since any such copy can be made available for a very low cost, no consumer is going to pay more for a good than something close to the marginal cost of production of a copy. By close I mean $10, not $1,000. Therefore, the production of the book has become production for an external economy.
There are two possibilities for dealing with this situation as economic policy. First, treat all intellectual works as free goods. In that case there are benefits in terms of access to knowledge, but shortcomings in relation to the consequences of producing for external economies.
Second, treat the as private property. Given that knowledge is cumulative, and inexhaustible, this policy would mean that all knowledge would be, eventually, privately owned, much like land is today. This has consequences for the access to knowledge, but makes intellectual creation a matter of internal economies.
That is a dilemma. Again in the words of Mises:
So the economic question is what should be done? The current economic policy, and in my view the correct one, is a compromise between free goods and external economies, between unlimited access to written works, and unlimited security of private property. It is a bargain, not unlike the one I believe would be reached between negotiating parties; open access in exchange for limited private property rights. This appears to be the only policy that aligns with the economic principles and the ethics of knowledge and private property that is necessary for a complex technical society based on the division of labor. In short, limited use rights in exchange for limited property rights. Ultimately, justification for this approach is a utilitarian, i.e. economic argument.
With his in mind, perhaps I can reiterate what I said at the beginning; I am talking about principles and policies consistent and supportive of those principles. I do not mean to say that what has happened to copyright laws in the last few decades is good, right, or supportable. It is an issue of distinguishing between sound policy on economic grounds, and mercantilism. Because special interests have colluded with government politicians to distort and intervene in what would otherwise be a free market does not mean the underlying principles upon which these laws rest is also wrong. The ability to distinguish between one and the other is precisely the challenge that modern advocates of liberty and freedom face in our current times.
And why I said:
“In fact we are currently headed for greater socialism in American than ever before.”
You should not now be surprised that I agree with you. In a socialist system, it is not what you do, but what preferential treatment has been arranged with those wielding the power of government. In the Soviet Communist context, this is the privilege of the Party. In a non-Communist context, this same phenomenon can be described as mercantilism. Certainly on this 20 year anniversary of the Soviet coupe, we can recognize that for what it is.
The Sony Bono Act is a prime example in the domain of IP. Extending the term for existing copyrights by an additional 20 years is the equivalent of making the term for new creations perpetual. This is not consistent with bargain I described above. This extension of the term did nothing to further the purpose of incentives for new creations. Its purpose was clearly to benefit those whose copyrights were about to expire, i.e. Mickey Mouse, by giving them an additional 20 years of private property security. This was a mistake.
The bargain of copyrights should remain in place for something like the original term of 14 years. But whether 10 or 25 is not the real issue; it need not be a term that is precisely fixed, since in the end it is an arbitrary standard based on an approximation of what is “better”. It is more meaningful to say that it should be as short as possible in order to meet its purposes of being limited at all.
Oh, no, I think it’s possible to defend the principle of IP without making a general defense of IP.
NOT!
If you think the principle of IP is justified you surely can find *some* aspect of IP that is justified. But every time you dudes trot out something we can show how horribly unjust it is. Then you say, no no no, i don’t support *that*. But you will never tell us what you do support. Now you are musing about the “principle” and no doubt, when anyone tries to translate that into any concrete policy you will say no no no, I don’t mean that…
Try me.
Boringberry,
There is no “principle of IP”. IP is incoherent bullshit. To debate whether it is legitimate or not is moot. That its proponents typically can’t (or don’t want to) coherently argue and substitute their zeal for logic does not help much either.
IP is not even close to a principle, it’s an (arguably unsound) compromise not unlike “mixed economy”. Austrians welcome principled approaches but AAMOF none have been put forward so far – witness Mises doffing his catallactics hat when touching the issue.
If there’s a principle at all. Beware of the route of mixed-economy/welfare-state apologists.
When I say “negotiating sale”, I refer to contractual transfers of titles to property.
Obviously that’s not the case, as every copy is privately owned.
Private ownership of media ensures exclusive control, unless by serviceability you mean “the ability to sell certain goods at a certain market price” which is about controlling third-party interactions and which even IP doesn’t guarantee. As to why pay $1000 or $100,000 for something that a consumer values at $20, this question is answered by making distinction between books-as-capital-goods and books-as-consumer-goods.
Similarly, one may “decompose” a steel pin into steel and the form “cylindrical”, nevertheless a steel pin remains a single economic good.
Perhaps Mises put quotes around “free goods” for a reason. As hinted above, information is at all times a feature of scarce physical media. Therefore, for purposes of analyzing human action, this alleged “free good” cannot be divorced from an economic good, that is, privately-owned media.
As much as I hate the social engineering of “incentives”, if I were to play Devil’s advocate I would argue that withholding older works from the public domain prompts new authors to compete for the field with copyright proprietors – otherwise some of would-be-buyers would likely find delight in earlier works going public domain, costing industry the sacred jobs and “slowing” innovation. Quite a lot of calls for IP policy are actually of “broken windows create jobs” and “spin the squirrel cage for more GDP” variety. The central-planning apparatus of IP, ostensibly seeking to “maximize” innovation, never bothers to question the demand side.
@Andrew from Russia August 20, 2011 at 9:34 am
This is nonsense. Unless you believe that no form or coercion is necessary by an ymeans at all to enforce property rights because “men are angles” in your world, then the existence of government or private enforcement is irrelevant to the fundamental issue; is IP property or not? That answer does not depend upon having a mixed economy, and can operate perfectly normally within a free-market assumption.
As to Mises, he dealt with the issue, which by no means is central to his treatise on economics, in a few short paragraphs. I would like to see you “doff your hat” so efficiently.
Your ancap ideology is showing, and interfering with your ability to have a conversation about fundamentals. There is no central planning component here. You are projecting that from thin air.
If you think a title theory of contracts and property rules are equivalent, you are misinformed. These are separate but overlapping legal doctrines.
This statement is conclusory and loaded with packed assumptions, which I have already carefully unpacked and detailed for you.
I do not need you to “ensure exclusive control”, exclusive control must flow from the rightful owner. You abandon this requirement by claiming that the medium is the only consideration, and by denying the operation of fundamental rules of property, as they operate in other contexts, even under the tortured theory of libertarian property rules as Kinsella has acknowledged.
If you think an important attribute of a book is its shape, I’m afraid I cannot rescue you.
You completely ignore the definition of economic good as requiring scarce means of production. I laid this out for you. You now revert to “the paper is scarce, therefore whoever owns the paper own everything encoded in upon it absolutely”.
Yet in the context of land, you cannot look at a parcel and tell by looking if it is burdened by an easement. So this means that easements in your theory are also forbidden, and that the only way to own all land is absolutely, without limitation? This is nonsense. If you own land, can you sell the mineral rights and keep the land?
Did you infer social engineering? I don’t think you can show that I did. Works are not “withheld”, that is the point. If works are in the public domain, they are free goods, and they are not owned. If they are owned, they cannot also be in the public domain.
All authors compete with other authors in the market for books, just as all hotels compete with other hotels. There is no central-planning apparatus for IP, and I challenge you to demonstrate that this is wrong. There is no need to “maximize innovation”, any more than there is a need to “maximize hotels”. What is required is the ability of a hotel owner to secure exclusive control of his particular hotel. An author must secure the right to control his own private property, and condition its sale however he finds appropriate, while interfering with no other persons ability to do the same. Isn’t this the foundation of NAP?
Like most IP opponents I have encountered here, you have not thought this through. Therefore when you are led by the nose to the fundamental issues, your ideological commitments take over and you fudge the principles to meet your conclusions.
By now, I have seen it here all before. You seem to think you have escaped socialism, but it is obvious you are just dressing it up in new clothes. This is ironic, given your personal history. Although the Soviet is no longer the threat to liberty it once was, fuzzy headed thinking like yours is a clear and present danger.
@Wildberry:
Once again you take a simple comparison too far. If there’s no coherent economic principle behind IP, then any IP policy will be an arbitrary boondoggle and will invite regime uncertainty. Similarly, when a proponent of mixed economy comes to an arbitrary conclusion about how or how much public sector should “contribute” to GDP, they always think that “some” involvement is necessary but, when pressed to explain, they can only fire back with “laissez-faire is long discredited, don’t you know?”
There’s no ancap agenda here (quite a few layers of government intervention have to be peeled off before “smashing the State”). And IP may not be planned at all stages like a command economy, yet it’s a government doctrine influencing the market – the classic case of private-sector actors “playing market” while the government lays course.
Whatever. The sale is contractual.
Again, the issue is pricing of factors, not property law. There’s no way that every factor-owner “exclusively controls” all the chain of production, yet capitalism works.
The point is, you can “decompose” but you can’t separate.
No need to venture into law. The paper may or may not be burdened – I only maintain it does not have to. Try to deal with the challenge of copies-as-capital-goods on economic grounds.
I was only explaining how the copyright term extensions are supposed to “stimulate” the industry. If you support shorter copyright terms, you may have to deal with this objection.
There was no need for the First Five-Year Plan of 1928-1933 either. The propaganda simply claimed that the relatively free NEP economy of mid-1920s was “under-industrialized” and, unless drastic measures were taken, “they would crush us”. Similarly, there’s no need for IP unless one proclaims that the economy is “underproducing creative works” or “underinnovating” and then comes up with a legal framework to “fix” it. How is the latter different from the former?
Thanks for a good laugh! It’s exactly the fuzzy nature of IP (you need not look further than your exponentially-ballooning replies to my posts) that rings suspicious with survivors of Soviet central-planning experiment.
Actually I used to be pro-IP throughout 1990s, and it has taken some time to think the issue through and make a U-turn – it seems as if the ranks of today’s staunchest opponents of IP are made of its former supporters. No wonder why this crowd cannot be stopped by orthodox defense of IP.
Wildberry’s justification of IP is:
1. IP is property right
2. Property rights are sacred
3. Therefore IP is sacred.
That means we should completely ignore any practical limitations to IP and ignore the reality of what it means to have IP and what is required to maintain IP and just agree with him on all points.
As far as socialism goes:
1. Socialism is bad
2. People that don’t like IP are socialists
3. Therefore you are bad.
If you cut through all the layers of bullshit and misdirection this is all it all really amounts to.
@nate-m August 21, 2011 at 4:18 am
Apparently this is the argument you want me to be making. There is no relationship between this drivel and what I’ve said. It merely demonstrates that you are not serious about this subject, and merely want to pick sides based on what conclusions make you feel more cozy.
I welcome you serious response to any point I’ve made. But that means you actually have to use my words, not words you make up and attribute to me. You are not interested in that kind of discussion. Instead, you just wish to marginalize the issue as a forgone conclusion. How simple for you.
Back at you.
@Andrew from Russia August 21, 2011 at 4:03 am
When you say “if” you admit it is a question, or you merely state your conclusion? According to Mises, and as I have elaborated, there is the economic principle of private means of production and external economies. Like Kinsella, you refuse to take this obvious issue on directly.
As for the rest, you merely make the argument you wish I made, but did not. I have said nothing about interventionism beyond the coercion required, from whatever source or institution, to secure private property rights.
Are trespassing and capital murder laws “government doctrine”? There is no government laying of a course. Have you been restricted lately from writing and publishing the book you wish to write, as was the case in the USSR? This is complete fabrication.
However, I have acknowledged the presence of mercantilism, in IP and elsewhere.
Perhaps you don’t understand the issues here, or perhaps, like many, you dismiss the issue because it leads away from your preferred conclusion. If the sale is contractual, then the owner of the good has the right to offer it upon condition of use, correct? Why couldn’t two parties agree to something like copyright, and why wouldn’t they?
If you acknowledge this, then it is simply one more step of analysis to understand how such agreements can be manifest as property rights. You need look no further than land sales to see non-controversial examples. You must deny simple reality to support your anti-IP position.
Sorry, I don’t think you know what you are saying here. Pricing implies property rights, since in the absence of ownership, there is no basis for a trade at any price. Capitilism works because it operates on the principle of private property and private ownership of the means of production. This part of my argument you completely ignore or don’t understand, I’m not sure which.
There is no relevant point. Your analogy is meaningless unless you can explain how “cylinder” equates to something about books. I am not saying that any object cannot be decomposed into integral parts, I am saying you analogy misunderstands the relevant parts.
I provided a statement from Hayek concerning the inseparable relationship between laws and economics, and referred you to David Friedman as a source of further discussion of this field.
Nonetheless, I provided in my “ballooning response” an analysis of book as capital good. You have not provided a rebuttal. You have merely claimed that the copy is “already owned by the purchaser”, and ignore the concept of the right to unbundle property rights to restrict use as a condition of sale.
CTEA was legislated on the basis of mercantilism, Sonny Bono being a willing participant. SCOTUS only ruled on the constitutionality of such legislation, and found that it could not be overturned on constitutional grounds. It is still bad law for the reasons I indicated. There is a detailed analysis in one of the amicus briefs which demonstrates that life+70 years is equivalent to a perpetual term, which is clearly contrary to the original constitutional intent. Second, it had little impact on incentives for future works, and benefited exclusively those who hold copyrights of works which already exist. Not unlike the Federal Reserve Act of 1913, it is a sham. But that fact does not prove that the very concept and principle of banking is wrong, and the existence of CTEA does not prove that the principle of IP is wrong. It proves that mercantilism is a factor in the dysfunction of government, as it has always been.
If you are referring to FDR, then you are only making my point, as he advanced the socialist agenda in America by such interventions and expansion of government as was contained in the “plan”. So we agree on this, I think.
The thing about propaganda is that it takes a fundamental truth, and rationalizes a contradictory conclusion to that truth. The ability to sort that out requires the ability to distinguish between one thing and another. You seem to lack that ability.
You are welcome. “Fuzzy” refers to the difficulty in distinguishing one thing from another. Such distinctions are not often simple bright lines. Be suspicious all you want, but that is likewise no excuse for failure to understand crucial distinctions.
There is no greater advocate of smoking bans than ex-smokers. There are none less capable of difficult distinctions than religious zealots and ideologues.
I am not here to “stop this crowd”. This crowd is insignificant in the overall scheme of things. It is that in addressing your specious arguments, I clarify my own thinking and positions to myself, and I do it in a public place to invite discourse. There is no purpose beyond that. If I had a greater purpose, I would not write under a pseudonym.
@Wildberry:
I’ve dealt with it directly by illustrating that external economies per se are irrelevant. This issue is really obvious and I’m not going to waste more of my time on it. If it was the “principle” of IP, I feel sorry.
These don’t aim at influencing the market. IP does.
The goal of restricting copying is to “incentivize” production in certain sectors. That’s quite overtly declared by governments.
Whether they can agree on is irrelevant insofar as I claim that outright sale of originals as capital goods to copiers is a sufficient condition for a non-IP market to operate. This claim still stands.
This rights-unbundling sideshow fails to demonstrate why one has to unbundle rights in order to have markets in books or software.
I was referring to JVS (Joseph V. Stalin) not FDR, and I may lack the ability to tell socialist propaganda from pro-IP “truth” but you have not shown what the difference is.
@Wildberry:
Or is it simply a viable business model that is the critical factor? Even assuming that copyrights outdo any conceivable IP-free business model in terms of “internalization”, the problem is still one of profitability, not internalization. A business plan may turn out a loss despite being “well-internalized” (say, record sales suddenly flop – no piracy, just lack of demand), while another one may produce a whiff of externalities yet bring profits (say, the revenues of a successful concert tour are by no means harmed if amateur filmings made by fans flood the Internet).
No need to plan centrally when the consumers can arrange all the planning and hiring for themselves. Whatever business models evolve in absence of IP is well worth a separate book the size of Human Action, let’s just assume that the gap will be filled in multiple ways.
I have read it before and I’m quite sure that the “most part” is a kind of distraction. Actually you seem to agree that the question is not one of relative proportions between external and internal benefits but one of the absolute extent of internal benefits received. So the correct critisism would be “not reaping enough in terms of internal economies”. Still, no way to prove it.
The question is, did he apply his entrepreneural talent toward finding the most profitable scheme of marketing. No excuse if he didn’t. The consumer demand was there to be discovered and satisified as quickly as possible – that’s what entrepreneurship is about.
Products succeed not because their producers become popular but because they serve the (pre-existing) needs of consumers. So there’s no cyclical argument here, just a marketing challenge.
A product sold by a some other, competing producer is no longer “his”, nor should be the income from its sales. Cause-and-effect demonstrates nothing. Actually, it only harms your argument, for a lot of producers crop up in response to new products on the market, some to compete directly, others to offer repairs/upgrades etc. And it’s actually every consumer to decide for himself if this Chinese copy is, or isn’t, a perfect substitute for the original product (that leaves no chance for the original manufacturer even to assert definitely that he has lost X customers or $Y in sales to those pesky imitators).
Comments on this entry are closed.