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Source link: http://archive.mises.org/9248/hayek-ip-and-knowledge/

Hayek, IP, and Knowledge

January 16, 2009 by

I am hesitant to compliment Tucker’s A Book that Changes Everything, given that he generously over-praises me in it, but I can’t help it–it’s really a great piece–just perfect. And he has a tantalizing suggestion in it: “As I’ve thought more about their book, it seems that it might suggest a revision in classical-liberal theory. We have traditionally thought that cooperation and competition were the two pillars of social order; a third could be added: emulation. In addition, there is surely work to do here that integrates Hayek’s theory of knowledge with the problem of IP”

Now, I’ve long been critical of aspects of the Hayekian focus on “knowledge problems” (see my post Knowledge vs. Calculation). But Tucker has a good point. Property rights are rights in scarce resources. All actions employ means, including scarce resources in our bodies, and in appropriated scarce resources (property). All action employs these means to attain certain ends. But all action is based on information or knowledge: beliefs by the actor about what causal laws are operative, what ends are possible, and so on. People acquire knowledge as they develop and grow; some by introspection and experience, but so much more is acquired dissemination from others, by those in one’s community, and by the inherited body of knowledge passed down, and added to, over the centuries. Emulation and the acquisition of knowledge play a key role–are essential to–society, and economy.

So Tucker has hit the nail on the head: one problem with IP is that by monopolizing information, knowledge–patterns–it restricts and locks up the flow of knowledge. It thus impedes the operations of the free market and productivity, by reducting the scope of human action, impairing its efficiency by hampering the means at one’s disposal.Update: See also my Against Intellectual Property, p. 53, noting that “All action, including action which employs owned scarce means (property), involves the use of technical knowledge. Some of this knowledge may be gained from things we see, including the property of others.”

Also, see my Knowledge, Calculation, Conflict, and Law, pp. 58-59, arguing that it should be realized that “knowledge” is merely a “technical problem that confronts any individual when choosing means to achieve certain ends, and when deciding which ends to pursue. … The need to acquire knowledge faces even Crusoe alone on his island, who has no need for private-property rules because there are no other people and thus no possibility of interpersonal conflict.”

And see Guido Hülsmann’s Knowledge, Judgment, and the Use of Property:

However, there is still a more fundamental condition of action. This is the fact that knowledge as such is never scarce. Knowledge problems thus do have a place in economics only insofar as knowledge has to be selected for application. Yet the selection of knowledge depends entirely on the property of the acting person.

At each moment we dispose of a myriad of information, and we often know of many ways to achieve any given end. For example, if my apartment is cold, I could keep my body warm through gymnastics or additional sweaters. I could also burn parts of my furniture or simply turn on the heating and pay higher bills. I could also sit down in my armchair and invent a new technology permitting one to heat my apartment at half of the present cost. To be sure, the latter alternative is the most elegant one. In any case, as conditions do not cease to change, we constantly have to acquire new knowledge if only to conserve our present standard of living. However, economic science does not have to deal with the factors conditioning the acquisition of knowledge.

… For the moment we are entirely unconcerned with the creation of knowledge, that is, of judgments that prove to be successful in action. We do not bother about the way we reduce our sheer ignorance. Rather we have to consider the principles that govern the selection of the judgments that we actually apply in our actions.

…In choosing the most important action we implicitly select some parts of our technological knowledge for application. In other terms, our choices imply a judgment upon the importance of our technological knowledge under the expected conditions of our action. This economic judgment is our only concern. Technological knowledge as such is immaterial for economics.

Notice how Hülsmann here distinguishes between action, and the means one employes, and the “technological knowledge” ones uses to guide one’s actions, to employ various causal means in the world to achieve certain ends–but that it is distinct from action and means.

{ 60 comments }

ktibuk January 19, 2009 at 11:23 am

Don’t be so sure RWW.

RWW January 19, 2009 at 11:40 am

Well, there’s a word for a hypothetical position that’s easy to argue against. On the other hand, your actual position, if I’m not mistaken, is that no voluntary contract is required in order to restrict a person’s use of his property in emulation of another person’s.

My position is that each extreme is incorrect. Voluntary contracts and tangible property, along with the enforcement of both, are legitimate, but anything more or less is not.

Tommy Rogers January 19, 2009 at 1:07 pm

I agree with John Boyle’s rejection of arbitrariness and utility in ethical decisions, so IP is a tough one for me. This is a great discussion. I read from an IP supporter that “a thief acts to destroy the source of that which he desires”.
I’ll run with that argument here and appreciate replies to this question:
What becomes of the overall profit motive for creators in the absence of intellectual property rights?

Again, to further this point of view and open it for rebuttal:
An inventor may invent, an author or musician may write, and a pharmaceutical company may develop- as a farmer may grow food- just for the love of bettering society. If not all primarily for the benefit of making money, though, certainly most people labor under the gamble that they may recoup their sometimes enormous expenses.
Profit is certainly the gamble entrepreneurs make when investing in creations.
Watt wanted fortune and fame. So did his competitors. Waiting was one of the costs of meeting their demands. Perhaps better to have their inventions later than never?
If “society” wants their fruits, “society” needs to offer them an agreeable benefit (such as money, or fame, or acknowledgement of ” their IP”).
Thanks in advance for your responses!

Peter Cohen January 19, 2009 at 3:10 pm

Tommy Rogers asked: “What becomes of the overall profit motive for creators in the absence of intellectual property rights?”

I can tell you from person experience. For most of the last twelve years I have supported myself and several other people creating videos which were sold on the web. Piracy has reached such rampant proportions in the field I serve as to effectively render Intellectual Property rights moot.

Absent IP rights, the profit motive disappears, ‘entirely’! I am out of business. Everything I have created for the last twelve years is for all intents, worthless, as it is available all over the place for free to anyone unscrupulous enough to not care that they are pirating. Absent IP rights, and the enforcement of those rights, there will soon be NO profit motive for any creative work that can be easily copied in an electronic medium.

This is the end of Hollywood, the end of HBO, the end of anything other than the most mediocre ‘reality’ tv. We are entering an age where all creative work will either be old, or amateur. And I am not exaggerating in the slightest.

Of course people will demand that the government do something about the deplorable state of art, and so the government will dutifully step in and levy taxes with which to ‘publicly finance’ government approved art.

Tommy Rogers January 19, 2009 at 4:27 pm

Thanks Mr. Cohen. Your experience certainly supports the position that “a thief acts to destroy the source of that which he desires”. I’d like to hear explanations for any conflicting views on that.

To put the burden of proof on you for a bit, Mr. Cohen, can you also demonstrate that there is such thing as IP.
By that, I mean objectively identify a logical, concrete boundary (as opposed to establishing an arbitrary or utilitarian boundary) between the circumstance of IP existence and nonexistence. Criteria for a patent’s expiration certainly is arbitrary. So, if IP exists, how to go about discovering what is a logical, observable, objectively reasonable limit to the nature of IP rights as opposed to the natural limits of physical property?

And to anyone who concludes that there is no IP, please demonstrate why there isn’t.
It isn’t because logical, observable, objectively reasonable limits to it’s nature haven’t been found (ad ignorantium).
It isn’t because the implications lead to a slippery slope of ridiculous obstacles as the undeveloped notion of IP rights snowballs into a freeze of technological progress (utility).

I’m not giving anyone a hard time here. This is very interesting to me and in many years of the topic coming up, I’ve not thought about it before as much as I would like.

Tommy Rogers January 20, 2009 at 1:45 pm

No takers?
It seems to me that Peter Cohen has the firmest grasp of this issue here.
There are simple observations that hold true hear regardless of the complications that arise from acknowledging them.
IP is as natural and real as physical property. It’s natural limits seem to be what is really in dispute.
The problems with IP seem to stem from it’s limits so far being established and dictated, rather than observed.

newson January 20, 2009 at 9:33 pm

so the last word goes to peter cohen…hollywood is dying. needs bailouts.

even true ip believers might want to ask themselves how they can persist in supporting the current regime, if they believe it’s failing so badly?

like so many other government initiatives, failure merely invites calls to redouble efforts, not to evaluate the actual viability of the scheme.

newson January 20, 2009 at 9:44 pm

jimmy rogers says:
“IP is as natural and real as physical property.”

except you can’t touch it, see it, smell it, taste it..

not to worry, some god at the patents office can divine its true nature and origin. that’s reassuring.

Tommy Rogers January 21, 2009 at 10:57 am

Newson said “except you can’t touch it, see it, smell it, taste it.”
I, “jimmy” rogers, repeat: “It’s natural limits seem to be what is really in dispute. The problems with IP seem to stem from it’s limits so far being established and dictated [as perhaps by "some god at the patents office"], rather than observed.”
I asked for anyone to demonstrate that there is such thing as IP by objectively identify a logical, concrete boundary (as opposed to establishing an arbitrary or utilitarian boundary) between the circumstance of IP existence and nonexistence.
Fair enough?

Frank H. January 31, 2009 at 7:57 pm

Well, given the value of IP is it’s enabling the production of a marketable good. If someone sells such a good, it seems only fair they should pay license fees. I see the problem of IP laws mainly in the obstruction of scientific and non-profit efforts. That could be avoided by limiting IP license fees to for-profit use.
What do you think?

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