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Source link: http://archive.mises.org/5348/classic-rothbard/

Classic Rothbard

July 20, 2006 by

The Present State of Austrian Economics” by Murray N. Rothbard. Working Paper from the Ludwig von Mises Institute, November 1992. Reprinted in The Logic of Action One: Method, Money, and the Austrian School. Glos, UK: Edward Elgar Publishing Ltd., 1997, pp. 111-172. Reprinted in Journal des Economistes et des Etudes Humaines, Vol. 6 No. 1 (March 1995), pp. 43-89.

{ 1 comment }

David C July 20, 2006 at 11:50 pm

Since there is a big debate going on about IP, and since it is the issue
of the age, I thought it would be good to explain why his position is outright wrong.

When he publishes the book or the sheet of music, he imprints on the first
page the word “copyright.” This indicates that any man who agrees to
purchase this product also agrees as part of the exchange not to recopy or
reproduce this work for sale. In other words, the author does not sell his
property outright to the buyer; he sells it on condition that the buyer not
reproduce it for sale. Since the buyer does not buy the property outright,
but only on this condition, any infringement of the contract by him or a
subsequent buyer is implicit theft and would be treated accordingly on the
free market. The copyright is therefore a logical device of property right
on the free market.

First off, there is a property right side of the transaction and there is
a contract side of the transaction. When he says “Since the buyer does not
buy the property outright, but only on this condition …” he is making an
implicit assumption that the government should be treating this as a
property right to begin with. This is an essential distinction, because he
could have just said it was a contract transation that passes an obligation
from one party to the next that has no property aspect at all, but he didn’t
say that. Why? Because, one of the fundamental tenants of contract law is
that contracts are not binding to unrelated 3rd parties. Hence if a bum
broke the terms of the contract by copying and reselling the book, then anyone
else in the universe would be free as a bee to make coppies of that without
restriction. In addition, it is an unjust contract because there is no
negotiated agreement – only an agreement declared by law. It would be like
if the government passed a law that said “by going into any store where a
smiley sign is posted, you automatically agree that they will obtain all
the money in your wallet, and they will decide what you’re going to buy”.
Even if both parties know and accept the terms of the law, the government
still has no business making such laws – which are an abridgement of liberty
for people to negotiate terms on their own. So why don’t authors then
negotiate terms on their own? Well, because it’s too hard to implement and
too complicated to enforce, which really begs the question – if it’s too
hard and complicated for them, then why should the rest of us be obligated
to take up those costs? The answer is, of course, that we shouldn’t be
and more recently we can’t. The amount of resources to impose external
enforcement on the internet goes up exponentially in proportion to the amount
of content. So now many content creators are resorting to DRM, which I
really have no problem with, but I have a huge problem with the government
regulating hardware manufactures to impose it in every device. If DRM
was really market driven, this wouldn’t be needed.

So lets go back to the assumption that the government should be treating
this as a property right to begin with. Why? Well, it says so right in the
US consitiution – to incentivize sharing of creations. While this is a noble
sounding endeavor, typically incentives are a consequence of just property
rights, not an end in themselves. In fact, incentive is a terrible reason
for a right, maybe I got no incentive to work unless the government forces
someone to give me a job, maybe so, but that doesn’t mean they should.
In fact, the constitution implies that copyrights are not a right because
they have an expiration date.

So why copyrights really? Well, for physical property, this is an easy one –
differnet individuals looking to utilize the same resource will have
different opinions about how to use the resource. Hence, it’s a way of
resolving an intractable conflict without denying liberty. The funny thing is
that with copyrights there is no such intractable delimma. Me doing whatever
I want with my copy does not prevent anyone else in the universe from doing
weatever they want with their copy. In fact, copyrights create an
intractable delimma because there is no natural law limits on information
itself, only upon the time and resources to create and apply it.
So copyrights really distort the market by forcing it to center around
information controlls at the expense of information services. And hence
you can see the distortion to this day, where the information in the
alleymcbiel show is valued higher than the teaching of a calculus book,
even though the former has little or no real world value at all compaired
to the latter.

In sum, copyrights are not contract rights, they are not property rights,
they are not workable as society enters the information age, and they are not
true to free market princibles like supply and demand but rather distort
the market to promote hype over substance, which lead to the proping up cartels in the software
and music industries. So Rothbard is wrong.

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