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Source link: http://archive.mises.org/9391/the-mercantilism-of-our-time/

The Mercantilism of Our Time

February 6, 2009 by

[Last in a series]

Someone handed me a book the other day–a cult classic among music geeks–and urged me to read it, and, when I had finished, sign my name in the front cover. That way I could be added to the already long list of readers in the front cover, each of whom add added his or her scrawl to the book after having read it.

How charming!

Except for one thing: this is complete violation of the spirit of intellectual property law. All these readers were sharing the same book instead of buying a new copy. Think of the revenue lost to the publisher and the royalties lost to the author! Why, if this gets out of hand, no one will ever write or publish again! These readers are all pirates and thieves, and they should probably be subject to prosecution.

So goes the rationale behind intellectual property law. It’s what economists call a “producers’ policy,” design to create maximum revenue for one side of the economic exchange, consumers be damned. In that sense, it is exactly like trade protection, a short-sighted policy that stymies growth, robs consumers, and subsidies inefficiency.It’s Bastiat’s “petition of the candlemakers against the sun” all over again.

Apply the IP principle consistently and it’s a wonder we tolerate public libraries, where people are encouraged to share the same copy of a book rather than buy a new copy. Isn’t this also an institutionalized form of piracy?

The defenders of IP would have to admit that it is. They are often driven to crazy extremes in sticking the claim that copying is a form of theft.

I asked one emphatic correspondent about the ethics of the following case. I see a guy in a blue shirt and like it, so I respond by wearing one too. Is this immoral?

No, he said, because the color blue occurs in nature.

What if a person draws a yellow happy face on the blue shirt? Can I copy that? No, he said, this would be immoral. I must ask his permission and gain his consent. Actually, it’s even worse than the this case suggests. If even one person had previously worn a blue shirt with a happy face, no one else on the planet would be able to do that without seeking consent.

It should be obvious that if everyone were required to ask seek the permission for the use of every infinitely reproducible thing that “belongs” to someone else–every word, phrase, look, vocal inflection, chord progression, arrangement of letters, hair style, technique, or whatever–or if we were really to suppose that only person may possess the unique instant of any of these things, civilization would come to a grinding halt.

Sadly, this is where our laws are tending. Right now, there are laws being considered that would step up IP enforcement to the point of clear absurdity. Just last week, Youtube removed the background music of countless videos for copyright reasons, even though such videos help popularize the music. Even home performances of songs written in the 1930s–young kids playing piano and singing–were taken down at the behest of producers.

People are talking about extending patents to sports moves, extending copyright to story lines, imposing a central plan on computer design to comply with patents, forcing everyone on the planet to obey U.S.-style IP laws by means of military force. Kids are going to jail, institutions are hiring internal police forces to watch for IP violations, and an entire generation is growing up with a deeply cynical attitude toward the entire business of law.

We are at a prohibition-style moment with regard to IP, just as with liquor in the 1920s. The war on the banned thing isn’t working. Those in power face the choice of stepping it up even further and thereby imposing a militarized state in place of anything resembling freedom, or they can admit that the current configuration of law has no future and bring some rationality to the question. Other societies have indeed crushed innovation with this very impulse.

Do you know why we celebrate Columbus Day instead of Cheng Ho Day? Cheng Ho was a great Chinese explorer who, in the early 15th century, took his fleets to Africa and the Middle East, but he was forced to stop when the elites in the home country began to feel threatened by his discoveries. The Chinese government won the war on exploration, and became static and inward. You can win a war on progress but the gains over the long term are few.

In addition to relaying the above story, the authors of Against Intellectual Monopoly, in the last chapter of their fantastic book, make a case for the complete dismantling of the law. “Intellectual property is a cancer,” they write. “The goal must be not merely to make the cancer more benign but ultimately to get rid of it entirely.”

The authors do not leave at that. They are intellectuals of the real world. They first make a case against any more expansions of bad laws, and lay out some reform proposals: shortening patent and copyright terms, changing burden of proof for originality, eliminate ridiculous redundancy trials for drugs, and the like. The authors even volunteer their time to help craft legislation. But the really hard work here is intellectual, since the pro-IP bias is so entrenched. The authors take the pure abolitionist position as a way of shocking us out of our stupor.

Is change possible? Of course. It was thought in the middle ages that most all products required monopoly production. The salt producer would enter into an agreement with the ruler. The ruler would promises a monopoly in exchange for a share of the revenue. It was thought that this would guarantee access to a valuable commodity. How can anyone make a buck without a guarantee that his hard work would be compensated?

Well, it took time but eventually people realized that competition and markets actually do provide, as implausible as it may seem. As the centuries moved on, markets became ever freer, and we no longer believe that the king must confer a special status on any producer. They still do it, of course, but mostly for open reasons of political patronage.

And yet in this one area of “intellectual property,” all the old mercantilist myths survive. People still believe that a state grant of monopoly privilege is necessary for the market to work. The myth has now been crushed with this book. So now the laws can be beaten back and they are being beaten back in the age of digital media.

Realize that for young people today, the initials RIAA and MPAA are the most hated on the planet–the equivalent of the IRS of a past generation. The heck of it is that these are private entities. Think what this means.

Capitalists of the world, please pay attention: you have a serious problem when an entire generation is being raised to HATE private, capitalistic institutions. Now, you and I know that these institutions are doing something illegitimate, namely enforcing “intellectual property,” which is really nothing but state coercion. Still, this besmirches the reputation of free markets. So too is a generation of socialists being raised to hate U.S. foreign policy on the belief that its export of IP is a form of capitalist imperialism.

For these reasons, no one has a stronger interest in abolishing intellectual property than supporters of capitalism.

I said at the beginning of this series that it has taken me fully six years to think through these issues. The book by Boldrine and Levine broke through the reservations I had that remained. In the meantime, I’ve received hundreds of messages to the effect that other readers have made the jump too. Whatever is holding you back, I beg to you read this account. I personally consider it to be one of the most mind-blowing books I’ve ever encountered, and so now I join the armies of people who are demanding an end to a system that threatens our way of life in the most fundamental way.

For this reason, this book is seminal, not only for our times for the entire history of liberty. It has clarified a point that has been a source of confusion for many years, and put it front and center in the current debate.

It might need correcting in places and I have my own nits to pick over their neoclassical framework and talk of social costs and the like, but these are petty concerns as compared with the overall framework. What they have done is marvelous and extremely important.

{ 16 comments }

JEff February 6, 2009 at 10:20 pm

I don’t think you can make this argumetn. I have my doubts. I read an article a few days ago on http://www.recessioninfocenter.com that pointed out this

heuristic February 7, 2009 at 3:28 am

“It should be obvious that if everyone were required to ask seek the permission for the use of every infinitely reproducible thing that “belongs” to someone else–every word, phrase, look, vocal inflection, chord progression, arrangement of letters, hair style, technique, or whatever–or if we were really to suppose that only person may possess the unique instant of any of these things, civilization would come to a grinding halt.”

In this thread we have had a series of fallacious arguments (fallacious because they avoid the ethics of violation of contract):

First we had an argument from utility and then an argument ad hominem, and now, argument ad absurdum! Tucker is now straining to find ridiculous, supposed “examples” of IP in order to prove that there is no such thing as IP.

Yes, there is IP: that which is created by contracts between consenting parties.

newson February 7, 2009 at 3:50 am

to JEff:
do you get paid for making inane blog posts? what’s the going rate?

to jeff:
i owe a debt of gratitude to b & l in curing me of my agnosticism re:ip

newson February 7, 2009 at 3:58 am

heuristic says:
“Yes, there is IP: that which is created by contracts between consenting parties.”

…therefore there is no need for ip legislation, standard contract law suffices.

kg February 7, 2009 at 6:10 am

Mr Tucker,
Not to be getting “nit-picky” but as one who has done my share of actual nit picking AND knitting, they are not the same…;-)….but then maybe you are referring to picking fuzzballs off your knits, a new spin on the phrase (maybe you can copyright that!). I agree with you on IP. The monopolizers are ALWAYS using someone elses IP (the alphabet, unprotected stories and ideas, etc., in the creation of their own). It’s just a matter of who gets government favor first and money enough to go to court for extensions of protection. It’s a racket, just another example of regulation and control of people excused as protection. Maybe if we are going to have IP, we should be able to charge IP creators for using our brains to store their IP which we do not specifically contract to store for them.

Deefburger February 7, 2009 at 10:36 am

kg: LOL! I think the rent on my aging brain will fall as time goes by!

The funny thing is that in days of old, bards were paid to do just that! Before printing, and general literacy.

Keeping a thought only in one’s mind is the only sure form of protection of an idea. So non-disclosure agreements are a way of contractually sharing thought exclusively.

IP seems perfectly suited to ego. But to the intelligent being, the higher rational self, it becomes a gilded cage. I think Ayn Rand missed this point in her observations. Who is John Gault? A man with a secret. A man with a protected ego and a tortured soul.

heuristic February 7, 2009 at 10:46 am

newson writes:

“heuristic says:
“Yes, there is IP: that which is created by contracts between consenting parties.”

…therefore there is no need for ip legislation, standard contract law suffices.”

I don’t believe in legislation of anything, since I’m an anarchist.

I’m saying that in a free world everything economic would be done by contract and reputation; the industries of dispute arbitration and reputation management would be far greater than they are now.

Contracts between publisher and artist, and between publisher and buyer, would create most of the IP that is called “copyright.” People might still dishonestly flout a contract by copying the work but if detected they would be subject to loss of reputation and in such a world that would be a serious penalty. Bottom line: IP is a real and natural product of contract between consenting parties.

Anyone who thinks that abolishing copyrigth laws means a free-for-all orgy of copying is either a bad person (that no-one should trust once the nature of the person becomes apparent) or a barely functiopnal moron who, in a free world, might be an object of charity and pity.

A Bad Person or a Functional Moron February 7, 2009 at 4:47 pm

newson wrote:

“heuristic says:
“Yes, there is IP: that which is created by contracts between consenting parties.”

…therefore there is no need for ip legislation, standard contract law suffices.”

I do not believe in legislation of anything, since I am an anarchist. I am saying that, in a free world, everything economic would be done by contract and reputation; the industries of dispute arbitration and reputation management would be far greater than they are now.

Contracts between publisher and artist (and between publisher and buyer) would create most of the IP that is called “copyright.” People might still dishonestly flout a contract by copying the work; but, if detected, they would be subject to loss of reputation and in such a world that would be a serious penalty. The bottom line is that IP is a real and natural product of contract between consenting parties.

Anyone who thinks that abolishing copyright laws means a free-for-all orgy of copying is either a bad person (that no one should trust once the nature of the person becomes apparent) or a barely functional moron, who, in a free world, might be an object of charity and pity.

heuristic February 8, 2009 at 4:13 am

Newson, so, let me get this straight: spell-checking is the only argument you have left?

Lowell Sherris February 8, 2009 at 6:58 am

Boldrin and Levine’s book is indeed fantastic. They give some very interesting utilitarian reasons for abolishing IP. We live in a world where the overriding philosophy of most people is utilitarian. The arguments in this book are very useful for countering the usual objections to eliminating IP laws, ie inadequate motivation for research and development.

Boldrin and Levine appear to be “good” economists in that they examine the unseen consequences of actions. It’s like a breath of fresh air. However, they are certainly not Austrians. It is nice to know that free markets maximize wealth, but that in itself is not a sufficient reason to promote free markets. That fact that free markets are most consistent with morality and liberty would be reason enough even if wealth were not maximized.

For example, they realize one could not eliminate pharmaceutical patents without changing the exorbitant cost of getting drugs approved by the FDA. Their suggestion is to have the NIH sponsor phase II and III studies on drugs after drug companies do the phase I testing. Eliminating both the FDA and NIH is apparently never considered.

Government + Science = Junk Science

See Molecules of Emotion by Candace Pert. This provides an interesting look at the politics inside the NIH by a former star research scientist.

Leo February 8, 2009 at 7:51 am

It seems to me that the anti-IP position amount to the claim that I should have no effective remedy through which to enforce contract violations.

Suppose that I write a book. And I don’t want anyone else to read my book. Except this one friend of mine. So I show him my book, on the condition that he not share it with anyone else. Then he breaks his promise, and sends copies of my book to all his friends. And they send it to their friends, and so forth.

Or suppose that I never intend for anyone to read my book, but a thief breaks into my house and steals my computer.

I assume that we would all agree that the government should punish the thief who steals my computer, or the friend who breaks his promise. But why should all the rest of the world be allowed to profit from their evil deeds?

Brian Macker February 8, 2009 at 9:21 am

“Except for one thing: this is complete violation of the spirit of intellectual property law. All these readers were sharing the same book instead of buying a new copy.”

No it isn’t. Don’t be silly. The copying right holder only owns the right to copy the book. None of the people sharing the book violated this right.

This isn’t anything new either. What do you think a library does?

Sherman February 8, 2009 at 12:55 pm

heuristic,

It was I, not newson, who took your post, improved it, and posted it as my own. I am actually awaiting one of your ethics sermons or your treatment of “my” post as you understand contract law.

For that matter, I’d be interested in many of the pro-IP arguments against my conduct from a market perspective, an ethical perspective, or even a penal perspective.

Sherman

Grace Innes February 8, 2009 at 1:07 pm

You may be interested in Dr. Lyons-Weiler’s proposal for an IP Share Market. Under this model, the public can own shares of IP, not just shares of companies. This has many advantages to the general public and to the companies.

Please see his article in the Feb 2009 is located here:

http://www.the-scientist.com/2009/02/1/28/1/

and his blog is

http://ipshareguy.vox.com

chris March 11, 2009 at 11:17 am

@leo:

why would you write a book that you don’t want anyone to read?

why would you entrust something you wanted so much control over to someone who could betray you?

having your work out there for all to see is the best protection for it. if you put your book up on the web, you are recruiting witnesses to the fact that the work belongs to you. being the original creator is a real competitive advantage.

establishing yourself as the creator then becomes a trademark issue rather than a copyright issue. there are few who would argue against trademark. levine and boldrine make this argument in the book.

Dainel March 11, 2009 at 12:06 pm

Leo, is it so bad that the whole world should profit?

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