Monday, March 10, 2014

Grammy Foundation Essay Submission

(Note: This essay was originally directed to members of the Grammy Foundation, i.e. music business people, under the title "Intellectual Space"). 




Angry over our successful lawsuits curtailing access to “free” music, and now aging into positions of influence, the Napster Generation embraces a philosophical argument against copyright, based on the notion that intangible goods are not scarce. 

Intellectual Space establishes a new paradigm allowing intellectual works to be understood and analyzed in the same manner as physical objects; showing them to be scarce, rivalrous, and rightful property; while exposing the fallacy in the anti-copyright argument. 


A Brief History of Digital Piracy (Our Public Relations Nightmare)

Copyright has been the law of the land for over 300 years. Whether ignorant or defiant of the law, by the turn of the 21st century millions of mostly young people were using peer-to-peer sites like Napster to illegally copy and distribute song files. While copying a recording had always been a technical possibility, ever since Edison’s wax cylinder, the advent of digital media and the internet made copies perfect, easy, and extremely cheap.

Successful copyright-infringement lawsuits were brought by the music industry against Napster, other file sharing sites, and against individuals. Now deprived of access to free music, disappointment among music fans was predictable. The visibility of the court actions highlighted our enforcement power under copyright law, consequently allowing the Recording Industry Association of America (RIAA), record companies, and successful artists to be portrayed as bullies. Music had a public relations problem on its hands.

To address the public relations issues, the RIAA created public service ads promoting the concept that “copying is theft”. This memorable slogan seems morally self-evident to us in the music business. If I have created a piece of music, why should someone else be allowed to exploit it without my permission? Aren’t property rights in intellectual works a settled matter? Unfortunately, in the minds of the Napster Generation, the answer is no.

War for the Mind of Napster Generation

While legal battles have been won, the philosophical war is not over. Books such as Stephan Kinsella’s “Against Intellectual Property” offer ammunition to a Napster Generation eager to defend their iPods full of pirated songs. Kinsella, a patent attorney, denounces all of intellectual property - copyright, patent, and trademark – as allegedly being unnecessary and morally unjustifiable.

Kinsella first does an admirable job of explaining the rationale for property rights in general.  Physical goods like land, food, and manufactured items are scarce and rivalrous. That is, goods are limited in abundance. The use of something by one person interferes with use by another. Both of us cannot farm the same one plot of land, nor eat the same one apple.

Because physical objects are scarce and rivalrous, human conflict over their use is inevitable. To avoid conflict, we need a system of property rights. “Property” is a legal construct allowing us to decide who may use a given resource, while excluding others.

But according to Kinsella, intellectual works are not scarce:

[I]f you copy a book I have written, I still have the original (tangible) book, and I also still “have” the pattern of words that constitute the book. Thus, authored works are not scarce in the same sense that a piece of land or a car are scarce. If you take my car, I no longer have it. But if you “take” a book-pattern and use it to make your own physical book, I still have my own copy.

Such intangible goods are allegedly “free goods”, and  “super-abundant ”, like a “magically-reproducing lawnmower”, so disputes cannot arise over their use. Therefore, Kinsella concludes, there is simply no justification for intellectual property.

Our legal actions forced music consumers to begin paying for music they had become accustomed to getting for free. Many were also led to consider the moral and philosophical basis for copyright law, an uncomfortable task for those with devices full of downloaded content. Meritorious or not, it is hardly surprising that Kinsella’s anti-copyright argument finds support in the general public. More troubling is that Kinsella’s thesis has apparently been persuasive to creative types as well.

Copying is Theft! Or . . . is it?

Nina Paley is the writer-director of the animated feature “Sita Sings the Blues”. After being made to pay a significant license fee for songs used in her film, Paley became an anti-copyright activist and “artist in residence” at She has penned the song “Copying is Not Theft”. Her lyric expresses the anti-copyright argument succinctly:

    Copying is not theft
    Stealing a thing leaves one less left
    Copying it makes one thing more
    That's what copying's for

Copying is not theft
    If I copy yours you have it too

    One for me and one for you

    That's what copies can do

If I steal your bicycle you have to take the bus
    But if I just copy it there's one for each of us!

Paley is right. “Theft”, synonymous with the common law crime of larceny, means taking and carrying away something rightly owned by another, with the intent to permanently deprive. Copying a song file neither carries away the original, nor deprives the owner of listening.

Our Problem Persists

We can see there is a problem here. Copying does not appear to be theft. Intellectual works can be duplicated without limit. The anti-copyright “non-scarcity” argument seems to have merit, at least superficially. Meanwhile the RIAA is characterized as a greedy leviathan tyrant. The Napster Generation, many of whom now reject intellectual property per se, are a decade older, and gradually aging into positions of influence.

Are we right or wrong? Is there a philosophical justification for the copyright law we enforce? If so, what is it?  And if intellectual property is justified, then what is the fallacy in our opponent’s position? And most importantly, how to we communicate this to the Napster Generation?

Artists Will Starve! Or Will They? And So What If They Do?

Our recent efforts at addressing the copyright debate have focused largely on what could be called a “utilitarian” argument: How could the creators of books, music, films, and video games possibly earn a living if others were allowed to copy the work? Nobody is going to finance any large entertainment project absent copyright protection. Without the profit motive, entertainment would be reduced to amateurs and perhaps a handful of philanthropic ventures. Counter-arguments regarding “alternative business models” notwithstanding, the utilitarian reasoning is powerful and persuasive. We should continue to bang the utilitarian drum.

However, the utilitarian argument does not appeal to everyone. Many in the Napster Generation lean somewhat libertarian in their political thinking. Do the manufacturers of buggy whips or slide rules have a right to make a living? Is copyright merely a coercive tool of the state, used to prop up a dinosaur entertainment industry that should be allowed to fail, or remake itself and adapt to a changing world? That is how many see it. For them, copyright must be argued and justified in philosophical terms.

Moving Forward

What is needed is a philosophical paradigm that allows intellectual property to be understood and justified on the same terms as physical property, and which exposes the logical fallacies of the anti-copyright argument advanced by Kinsella, et. al. This theory must be logically sound, and able to withstand rigorous academic challenge. At the same time, it must yield simple analogies and examples, making it accessible to the lay person. I believe Intellectual Space is that paradigm.

The Doctrine of Intellectual Space allows an intellectual object, such as a song, movie, book, or software to be visualized in the same manner as a physical object. This greatly facilitates the otherwise confusing task of comprehending property rights over intangible goods.


The Paradigm

Intellectual Space is an array of unique locations, like physical space. Vast quantities of raw intellectual matter are scattered around intellectual space, just as vast quantities of physical matter are scattered around physical space. Words and symbols of human language constitute the basic building blocks of intellectual matter, just as atoms and molecules are the basic building blocks of physical matter.

Random words and symbols are useless to people, like aluminum-bearing bauxite ore lying dormant in a hillside. But through human ingenuity and effort, raw material can be discovered, brought forward, re-arranged, and transformed into a more useful pattern. Aluminum can be fashioned into a beautiful new bicycle. Words and musical notes can be fashioned into a beautiful new song.

Just as with physical matter, patterns of intellectual matter can have identifiable boundaries and be stable across time, allowing them to be understood as discrete objects.

For Example, a Song

A new song exists at a unique location in intellectual space, because it is different than that which has come before. A new song has a boundary, because we can tell the difference between what is inside from what is outside. A new song is temporally stable, because it is the same today as it was yesterday. A song is an intellectual object.

Musicians have the ability to bring a new song into existence and deliver it to others. This satisfies the human desire to be entertained. It is useful. A song has all the necessary characteristics of economic goods.

The act of creating a new song is homesteading intellectual property, because it represents the discovery and transformation of raw matter into a useful object, just as bringing aluminum out of the hillside is homesteading physical property. The homesteader is the rightful owner of the new object, and is entitled to 100% of its use.

Consumer Goods vs. Producer Goods

Objects that are directly useful to consumers are called consumer goods. Consumer goods may be replicated and mass-produced, so as to satisfy a large demand. To make replication practical and efficient, a productive capacity, i.e. a factory, must first be homesteaded into existence. The factory is also a good, called a producer good. Producer goods are used to make consumer goods.

The difference between producer goods and consumer goods is quite obvious in physical space: a factory is different than the things that come rolling off its assembly line. But in intellectual space, there is this fascinating feature: an intellectual object can function as either a producer good or a consumer good, depending on how it is being used at the time.

For example, a digital song file is a consumer good when being used for listening enjoyment, but is a producer good when being used for making copies. The failure to distinguish between consumer and producer usage is at the very root of the anti-copyright fallacy. As the following analogy illustrates, copying actually does interfere with the owner’s use, the producer use, but not the consumer use.

Unraveling the Anti-Copyright Fallacy

How are things like bicycles and song files actually able to be copied? And what are the ownership rights involved? To unravel the anti-copyright fallacy, and arrive at a philosophically sound theory supporting intellectual property, we will compare bicycles in physical space with song copies in intellectual space. To begin, let us first consider the homestead principle.

The Homestead Principle

“Homesteading” is the process by which un-owned things come to be owned in the first place. In homesteading land during the frontier days, it was not enough to simply discover unowned land. Rather, it was necessary to bring land under “dominion and control”, which means transforming it into usefulness, for example by planting crops.

Homesteading is discovering and transforming things in a way that can fulfill human wants and needs. Homesteading is an act of creation, and the object created is rightly owned by the homesteader. Modernly, any kind of production can be considered homesteading.

A Song is a Like a Bicycle . . . and a Bicycle Factory

Bicycles are mass-produced in a bicycle factory. A song is mass-produced by making digital copies on a computer.  A bicycle factory does not simply exist, nor does a master song file. Like any other economic good, both factories and master song files must first be created, only then can they be used for mass production.

Making a bike factory or a new song is an act of creation by an entrepreneur, and the person who brings this productive capacity into existence is its rightful owner, according the to the homestead principle. Ownership is not diluted. The homesteader owns 100% of the output from their factory, regardless of how much he or she chooses to utilize.

Bicycles in Physical Space

Suppose John is a bicycle maker. John discovers unowned land, and builds a bicycle factory there. By doing so, John has homesteaded in physical space, because he discovered and transformed unowned raw material into something useful. The factory exists at a unique location in physical space, because other things are at a different longitude and latitude.  We can see the boundary. By titling the factory and attaching his name, John has staked his claim.

For simplicity, imagine John’s factory as a building with an assembly line and a pile of raw aluminum tubing. With electricity to run the machine, and John’s labor, he can make 48 bicycles in an 8-hour day.

John owns all 48 bicycles produced each day. If he sells a bicycle to Betty, then Betty owns that one bicycle. Betty is now free to ride her new bicycle whenever she pleases. But in no way does Betty own any part of the productive capacity in John’s factory. When it comes to bicycles, the difference between the producer good (the factory) and the consumer good (the bicycle) is obvious, because they are physically distinct.

Suppose Betty noticed that John was only operating his factory 8 hours per day. Late one night, Betty sneaks into the factory. Using her own raw materials and her own labor, Betty runs the assembly line and produces some new bicycles, which she carts away before John returns the next morning.

Has Betty stolen anything from John? Has Betty done anything wrong? Betty may argue that she did nothing wrong. After all, John was using his factory only during the daytime, so Betty’s use did not interfere with John’s use. John is still free to use his factory just as before.

I hope that the flaw in Betty’s argument is apparent.  Betty may not have stolen anything from John, but she trespassed. The reason trespassing is wrong is that the owner of property is entitled to exclude others from using it, even when not using it himself. The owner is entitled to 100% of the use. Betty may assert that she did not interfere with John’s use, but properly understood, she most certainly did interfere. Before Betty’s trespass, John enjoyed 100% of his factory’s productive capacity. Afterwards, it was something less.

Note that expressing the factory’s total productive capacity as a percentage is crucial. If we were to express the capacity as a quantity, say “48 bicycles per day”, we would arrive at the mistaken conclusion that Betty is allowed to use John’s factory at night.

Songs in Intellectual Space

Now suppose John is a recording artist. John writes and records a new song called “Think This Through”. In doing so, John has homesteaded in intellectual space. He discovered and transformed raw material into a useful object. The song exists at a unique location in intellectual space because it has a beginning, an end, and unique contents within. We can see the boundary because it is different than other songs. By titling and attaching his name, John has and staked his claim.

 “Think This Through” exists as a digital file on John’s computer. The master song file, the computer, and a stack of blank CDs are like a factory assembly line. With electricity to run the machine, and John’s labor, he can make 48 copies in an 8-hour day.

John owns all 48 CDs produced each day. If he sells a CD to Betty, then Betty owns that one CD. Betty is now free to play her CD whenever she pleases. But in no way does Betty own any part of the productive capacity in John’s factory. When it comes to music, the difference between the producer good (the original song) and the consumer good (a copy of the song) is not obvious, because the copy can also be used as an original.  But the difference is real, and crucially important:

No matter how many copies of the song are made, there is still only one song.

No matter how many consumer goods come rolling off the assembly line, there is still only one factory.
Suppose Betty noticed that John was using only his own computer to make copies of “Think This Through”. Betty buys 1 CD and extracts the digital file from it.  Using her own computer, her own raw materials and her own labor, Betty burns new CDs.  Has Betty stolen anything from John? Has Betty done anything wrong?

Betty may argue that she did nothing wrong. After all, John was making CDs with his own computer, so Betty’s use did not interfere with John’s use. John is still free to use his computer just as before.

I hope that the flaw in Betty’s argument is apparent.  Betty may not have stolen anything from John, but she trespassed in intellectual space.  She could not have made the copies of “Think This Through” without first venturing on to John’s intellectual property without permission.

The reason trespassing is wrong is that the owner of a property is entitled to exclude others from using it, even when not using it himself. The owner is entitled to 100% of the use. Betty may assert that by making copies she did not interfere with John’s use. But properly understood, she most certainly did interfere. She interfered with the producer use, not the consumer use. 

Before Betty’s trespass, John enjoyed 100% of his song’s productive capacity.

Afterwards, it was something less.


Copyright infringement is trespass, not theft. Recognizing the distinction between producer use and consumer use of intellectual objects is crucial to correct analysis. The music industry should continue making the strong utilitarian argument, pointing out that creators will not be compensated without copyright. However, the music industry should also address the philosophical debate over intellectual property by implementing the paradigm of Intellectual Space.


Intellectual space – a theoretical array of unique locations

Intellectual matter – that which can be understood through language

Intellectual object - an ascertainable, temporally stable and bounded pattern of intellectual matter which can condition the outcome of human events

Intellectual property – a non-trivial, homesteaded rivalrous intellectual object that substantially functions as productive capacity

 See Wikipedia Statute of Anne Wikipedia (October 20, 2013 11:35 AM)

 See Wikipedia Napster Wikipedia (December 9, 2013 9:02 AM)

 See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001)

 See for example Sean W., How the RIAA is a Bully Picking on the Little Guys Lazy Tech Guys (2011)

 Kinsella, Stephan Against Intellectual Property Ludwig von Mises Institute (2008)

 Id., p. 32

 Id., p. 31

 Paley, Nina Copying is Not Theft (September 20, 2013)

Saturday, October 5, 2013

Can There Be a Property Right in Value?


There must be a property right in the market value of things, because otherwise a legal system is impossible.

All legal rights are property rights, all legal wrongs are property violations. Legal remedies aim to restore property ("make the victim whole"). Restoring the physical integrity of damaged property is often impossible, thus the need for awarding money damages. The reduction in market value to the damaged property is the only rational measurement for money damages.  Since damages awarded must be based on a property right, there must therefore be a property right in the market value of things. Absent a property right in value, a legal system can impose only barter damages, not money damages. A legal system with only barter damages will fail for the same reason that a barter economy fails.


Can a person assert a valid property right over the value of something? Or is a property claim limited to the thing's "physical integrity"? This question ends up being crucial to the issue of intellectual property, for two reasons:

First, if sound economic theory finds that a property right can only pertain to physical things, then obviously intellectual works, like songs, movies, novels and computer games cannot be property.

Second, showing that intellectual goods are rightful property depends on showing that they are, by their very nature, scarce and rivalrous goods. The rivalrous nature of an intellectual work comes from the creator's desire to exploit the work commercially, by selling copies of it on the market. A competitor who makes and sells unauthorized copies interferes with the creator's use, which is measurable by the reduction in market value of the creator's original work. If there can be no property right in value, then the unauthorized copier's actions cannot be construed as trespass.

Hans-Hermann Hoppe's "The Idea of Law in a Private Society"

In  "The Idea of a Private Law Society" (quoted below), Austrian economist Hans-Hermann Hoppe has explained why, in his view, there cannot be a property right in value. I will show that Hoppe's finding must be incorrect, and that it must be possible to hold a property interest in the value of something.

To understand why there must be a property right in value, we must assume that a correct theory of economics will allow for a viable legal system. Conversely, we must also assume that any conclusion reached by economic reasoning which makes a legal system impossible must be erroneous. If you are not willing to assume the necessity of a viable legal system in society, then read no further.

The Rationale for Property

Begin by imagining a state of nature. Humans are much like wild animals, with no sense of right and wrong, and no concept of property. We could call this a state of total freedom.  A man takes what he wants, with nary a thought of who it might "belong" to. Because there are many people, who all want things, conflict ensues.

In such a world, one of the things that people come to want is the elimination of conflict. And thus is born the concept of property. Property is the idea that we can decide who has the right to use a given thing, and the concurrent right to exclude everyone else from using it.

Property represents a step away from total freedom, because it naturally imposes restrictions on allowed behavior. The reasonable person is willing to impose such restrictions on himself because he understands, through reason, that a society with property rights will be one of peace and prosperity, while a society without property rights will be one of conflict and poverty. Hoppe has given a beautiful exposition of the rationale in his "The Ethics and Economics of Private Property".

It is important to scrutinize this chain of reasoning. We start with a theory of "total freedom". Working forwards, we deduce that total freedom leads to an undesirable outcome, and conclude that there must be an error in that theory, because it does not produce our intended result (a peaceful, prosperous society). We then work backwards, modify "total freedom" to include property, work forward again and get a much better result. I wish to underscore that in social theory "working backwards" from a desired conclusion is, to a certain extent, inevitable.

We first assume that avoiding conflict is a desired outcome, then invent property rights to solve the problem. Similarly, we must assume that a viable legal system is a desired outcome. Let us now discover what problems arise in the implementation of law in a libertarian world, and what we must invent as a solution.

The Rationale for Money Damages

The purpose of law is to provide a set of rules governing the conduct of people, and a mechanism by which people who have been harmed by the wrongdoing of others may be compensated. Correctly understood, all rights are property rights, beginning first and foremost with the right of each person to own his or her own physical body. All laws flow from the protection of property rights. All legal wrongs should be understood as a violation of the property rights of another.

The most fundamental concept in compensating victims is "damages". It is not enough to merely note that a victim has been harmed by the wrongdoing of another. We must be able to measure the magnitude of harm. Then, we must have a viable method of transferring the compensation from the wrongdoer to the victim.

In most cases, the simplest and best method to "make the victim whole" is to determine the reduction in market value caused by the offense, then make the wrongdoer pay that amount of money to the victim. There are many different types of legal situations that requires remedy, and the Common Law has devised others sorts of remedies besides money damages (e.g. "replevin", which is forcing a thief to give back the stolen goods). But money damages is, by far, the type of remedy that applies to the greatest number of cases.

Clearly, a viable legal system must have the ability to award money damages. I hope it is plain to the reader that a legal system attempting to impose compensation by barter is not viable for the same reasons that an overall barter economy is not viable.

What Does Hoppe's Conclusion Imply About Damages?

Suppose then that we accept Hoppe's conclusion that there is no property right in the value of a thing. Rather, a property right exists only in its "physical integrity". Suppose you own a car, and a trespasser comes along and smashes the car up with a baseball bat, because he is angry that his former girlfriend fell in love with you. In Hoppe's world, you have a property right only in the physical integrity of the car. The legal system could catch the wrongdoer, and find him liable to you. But what are the damages?

In Hoppe's world, the damages in the car smashing example are a broken windshield, dented hood, slashed tires, etc. We can order the wrongdoer to restore the physical integrity of your car. Technically, this is impossible, under the physical laws of entropy. We cannot reverse time, and magically put your car back in the state it was before.

Lacking magic, repairing your car is the next best thing, but what does that really mean? It doesn't mean restoring the physical integrity of your car, rather it means restoring the value of your car, as best as possible. Let's temporarily ignore the fact that, here in Hoppe's world, you don't have a property right in the value of your car. Unless the wrongdoer is himself a skilled mechanic, he will need to purchase materials and the labor services of a mechanic, to fix the car. This is kind of possible, but we'll run into all sorts of problems regarding which substitute materials are acceptable. 

But suppose the car is smashed up so badly that it is literally impossible to repair. What then? Do we order the wrongdoer to buy you a new car? What if your car was not new at the time of the smashing? Must we obtain a new car, and then attempt to inflict whatever wear-and-tear had occurred to your car? Are you beginning to see the problem?

Students of Austrian economics will recognize these clumsy transactions to be quite similar to the types of problems experienced in socialist economies, which lack meaningful prices. The lack of market prices makes rational economic calculation impossible, as proven theoretically by Mises, and empirically confirmed by history.

A Viable Legal System is Impossible Without Money Damages

A viable legal system is impossible without market prices on damages for the same reason that a viable economic system is impossible without market prices in general - rational economic calculation positively requires it. Without accepting the idea that one may have a rightful property interest in the value of a thing, then there is simply no basis whatsoever to consider market value in assessing damages.

Therefore, there must be a valid property right in value, and there must be some error in Hoppe's logic, which I will explore below. If you wish to dispute this finding, it is incumbent upon you to demonstrate why a legal system is unnecessary, or how a barter system of damages might work, or how money damages might otherwise be measured.

I've shown that that there can be valid property rights in the market value of things, because otherwise a legal system is not viable. Of course, this does not mean that one automatically obtains a valid property right in something simply because it has value. The difference between those two propositions lies in the distinction between individual valuation vs. market valuation.

Individual Value is Subjective

One of the more important and insightful findings of Austrian economics is that value is subjective. Two people encounter the exact same object, and come to completely different opinions about what it is worth. As the old saying goes, "one man's trash is another man's treasure."

Not only might it be the case that two people value the same thing differently, it is almost always so. Far from troubling, this is one of the most amazingly beautiful facts about humans, because this subjective valuation is what makes trade possible. When two people make a voluntarily exchange, they demonstrate that they value the things being traded in reverse order. I value what I get from you more than what I give up, while you value what you get from me more than what you give up.

Market Value is Objective

Individual valuation is indeed wholly subjective. It cannot be measured, except in order of preference. I might say that I like apples more than grapefruit, but it makes no sense to say I like it 3 more, or 7 more. However, market valuation is different than individual valuation. In a monetary economy, through the interaction of many people, each with subjective preferences, objective market prices emerge. While it makes no sense to contemplate how much an individual values something, it makes perfect sense to contemplate how the market values something.

Analyzing Hoppe on Property Rights in Value

With this in mind, let me turn now to Hoppe's piece on property rights in value. Note that Hoppe assumes in his definitions here that property must be physical, an assumption obviously I do not share. However, for the purpose of discovering the error in Hoppe's reasoning, I shall allow the assumption that property must be physical, and show that even with that assumption, Hoppe does not disprove the validity of a property right in value.
Hoppe:  [P]roperty ownership means the exclusive control of a particular person over specific physical objects and spaces. Conversely, property rights invasion means the uninvited physical damage or diminution of things and territories owned by other persons. In contrast, a widely held view holds that the damage or diminution of the value (or price) of someone’s property also constitutes a punishable offense.
Hoppe is quite correct that it is a "widely held view" that there is a property right in value. The majority can be wrong, of course, but Hoppe would do well to confront the possibility that at least some in that majority have hit upon the idea that a legal system is theoretically impossible without a property right in value, as I've explained above.
Hoppe: As far as the (in)compatibility of both positions is concerned, it is easy to recognize that nearly every action of an individual can alter the value (price) of someone else’s property. For example, when person A enters the labor or the marriage market, this may change the value of B in these markets. 
Stop. Did you see what Hoppe did right there? First, he frames the debate as asking whether damage to the value of property can be a punishable offense. But then, he uses entry into a labor market as his example. Did Hoppe establish that some person rightly held a property interest in the labor market? No he did not. Of course it is wrong to think that entering the labor market is a punishable offense, even though it lowers somebody else's value on that market. But the reason it is wrong is because nobody owns a property interest in the "labor market", not because it is categorically impossible to hold a property right in the value of something.
Hoppe: And when A changes his relative valuations of beer and bread, or if A himself decides to become a brewer or baker, this changes the value of the property of other brewers and bakers. According to the view that value damage constitutes a rights violation, A would be committing a punishable offense vis–vis brewers or bakers.
In the above hypothetical, A is asserting a bogus claim to property, because A has done nothing to constitute an act of homesteading that would confer a property right allowing his control over that market.  But just because Hoppe cites one example in which there is no property right in value, does not mean there can never be a property right in value. One could just as easily construct a hypothetical in which A asserts a bogus claim to physical property.

Hoppe proceeds to discuss remedies, and finally drops the bombshell:
Hoppe: If A is guilty, then B and the brewers and bakers must have the right to defend themselves against A’s actions, and their defensive actions can only consist of physical invasions of A and his property. (emphasis added)
And there you have it. In Hoppe's world, money damages are impossible. And he admits it, right there. I strongly encourage Hans-Hermann Hoppe to continue forward from this point, exploring the praxeological implications of a legal system that forbids the assessment of damages based on market value. I believe he will collide headlong with the calculation problem, and quickly determine that such a system is completely non-viable.


Hoppe's fundamental error ought to be clear by now. His reasoning is that because some  property claims in value are bogus, that all property claims in value are bogus. That's a fallacy. And it is a fallacy even assuming that property rights must only apply to physical things. Even in a world without IP, a theory finding no property right in value is fatally flawed.

That said, the argument that property must be physical is also wrong. The doctrine of Intellectual Space provides the framework to understand and apply strict libertarian principles to intangible objects. Doing so demonstrates that, like all forms of intellectual property, a property right in value is valid when it is created by an act of homesteading.

Sunday, September 29, 2013

Kinsella's Kool-Aid - The Real Reason Libertarians Oppose IP

UPDATE:  Readers have pointed out some factual errors in this article, and I wish to correct them. I have indeed read Kinsella's book "Against Intellectual Property", but I have also read many of his other published articles, and had a podcast conversation with him, in addition to various email and discussion thread interactions.

My confusion arises over the use / non-use of the words "scarce" (which appears in the book) and "rivalrous" (which does not). In many subsequent writings, Kinsella uses "rivalrous" to mean what "scarce" means in the book.

As always I appreciate substantive criticism, and I do apologize for sloppy research here. However,  I don't believe this is likely to change my opinion on the issues.  For posterity I will leave the article and comments below as they are, now relabeled "first draft", and work on a revised version of "Kinsella's Kool-Aid".

-Alexander Baker  October 4, 2013


Kisella's Kool-Aid - First Draft

The Austro-Libertarians have given what I consider to be the correct theory of economics. In the process, they earned my respect, and they accomplished both of those things the same way: by steadfastly adhering to a consistent set of core principles, then diligently exploring all of the implications, regardless of whether the conclusions reached might be popular or not.

Sadly, on the issue of intellectual property, many libertarians, led by Stephan Kinsella, have abandoned academic rigor and principle. Instead, they repeat the basic tenets of Kinsella's attack on IP, without ever stopping to consider if Kinsella has given a defensible thesis. He hasn't.

Kinsella Doesn't Define Key Terms

Kinsella's anti-IP position is crucially founded on showing that IP is not scarce, and not rivalrous. Scarcity of physical goods gives rise to possible conflict, thus necessitating the allocation of property rights in physical things. Since IP is not scarce and not rivalrous, Kinsella argues, there is no need and no justification for IP.

However, a careful reading of Kinsella's central work "Against Intellectual Property" reveals a very troubling shortcoming: he does not define "scarce" and does not define "rivalrous". To fail to define the very terms upon which a thesis stands is inexcusable. The reason for Kinsella's subterfuge becomes clear upon studying the book. He pulls the clever, but intellectually dishonest trick of smuggling his conclusion into his premise.

Kinsella Smuggles his Conclusion Into his Premise

Consider: "Rivalrous" means that "use by one interferes with use by another". Clearly we also need to understand what "use" means. I would define use as "experiencing the value or benefit of". With these definitions in mind, we can test whether or not something is rivalrous, and thus whether it is rightful property.

But Kinsella never defines those terms explicitly, and that's where it gets sneaky. Throughout the book, Kinsella mentions that one can "use" an intellectual work without interfering with someone else's use. But what he means is that they do not interfere physically. Do you see how this works? Kinsella is implicitly including "physical" into the definition of "use", and therefore into the defintion of "rivalrous".

In context, we can conclude that Kinsella is defining "rivalrous" as "physical use by one interferes with the physical use by another". Obviously, if property requires rivalry, and rivalry must be physical, then property must be physical. Thus Kinsella assumes his conclusion. Had Kinsella defined his key terms explicitly, he could have written a very, very short book!

Why Have the Mises Scholars Endorsed Kinsella?

It's clear Kinsella wanted to attack IP, by all means possible, and he's been very successful at doing so. But the question reamins: why? After all, Kinsella himself is a patent attorney and a successful author, having earned over $1,000,000 in royalties, according to him. Why would Kinsella take such a position, and even more importantly, why would the Mises scholars embrace a theory so obviously lacking in academic rigor?

The answer, I'm afraid, is all too plain to see. The Mises scholars have long ago realized that their own intellectual property simply isn't worth very much. That is not to say it is bad. Indeed, I feel that the Austro-libertarian literature comprise the finest books ever written. But the simple fact is that books and videos on economics and philosophy are never going to sell as well as those about Harry Potter or NFL football or the Kardashians, or whatever.

The Napster Generation

The early 2000's saw the great advent of Napster and other file sharing sites, where millions of mostly young people were happily sharing songs and movies, without a care in the world for copyright violations. Then they got caught. The fight was on, as media giants began suing file-sharing sites, and even individual users.  The libertarians, led by Kinsella, sensed a golden opportunity.

Since their own intellectual property is not worth very much anyway, they schemed, why not create a theory denouncing the very concept of intellectual property? This is an immensely attractive idea to the Napster generation, desperate for guilt relief about their iPod's full of pirated content. Join the libertarian movement, drink Kinsella's Kool-Aid, and you never have to feel bad about downloading ever again! Those big, bad media companies just want to use the coercive power of the state to enforce their monopoly, and destroy your freedom.

And the strategy may work out for them, I'm sad to say. Libertarianism appears to be more popular than ever, and that's a good thing, as far as it goes. But to me, libertarianism is nothing without a strict adherence to principle. If we must sacrifice principle for membership, count me out. I just don't see eye to eye with intellectual communists.

Hans-Hermann Hoppe's Cursory Statement on Intellectual Property

Dr. Hans-Hermann Hoppe has offered here what appear to be his rather cursory conclusions about IP, quoted below.  It is my sincere hope that my interspersed comments will inspire Dr. Hoppe to consider the issue more deeply.   

Intellectual goods are not free
Hoppe: I agree with my friend Kinsella, that the idea of intellectual property rights is not just wrong and confused but dangerous. And I have already touched upon why this is so. Ideas – recipes, formulas, statements, arguments, algorithms, theorems, melodies, patterns, rhythms, images, etc. – are certainly goods (insofar as they are good, not bad, recipes, etc.), but they are not scarce goods. Once thought and expressed, they are free, inexhaustible goods.
Intellectual objects are neither free, nor inexhaustible. Free goods, such as atmospheric air, exist naturally and arrive to humans in useful form, without needing any kind of production process. Intellectual goods, such as songs, do not exist naturally, and must first be produced by human effort, and thus are not free goods.

Hoppe says "once thought and expressed, [intellectual goods] are free  . . ."  This is like saying "Once a car has been manufactured, it is free . . ." One can easily pretend that something is free, if one ignores the cost of producing it. This is quite reminiscent of the socialist mindset, which loves to assume the existence of wealth, and debate how it should be distributed. It is a plain fallacy.

Intellectual goods are not inexhaustible

Intellectual goods are not "inexhaustible" in the economically relevant sense. It is true that, given sufficient expenditure of resources and labor, any number of copies of a song can be made, to meet consumer demand that may exist to listen that particular song. But the exact same thing is true of physical goods. Given sufficient expenditure of resources and labor, any amount of aluminum foil can be manufactured, because the quantity of raw aluminum in the earth's crust is, for practical purposes, infinite. Does this make aluminum foil "inexhaustible"? No.

Aluminum foil is scarce because it requires human effort and resources to produce it,  not because of how much raw aluminum exists. The exact same is true of intellectual goods. Both the original creation and duplication of intangible consumer items require an expenditure of time, labor, energy and other resources. Both necessarily entail an opportunity cost, just as with physical goods. These facts render intangible goods scarce, and arise from the very nature of things, not the imposition of law by the state.

Intellectual Goods Are Rivalrous

Hoppe: I whistle a melody or write down a poem, you hear the melody or read the poem and reproduce or copy it. In doing so you have not taken anything away from me. I can whistle and write as before. In fact, the entire world can copy me and yet nothing is taken from me.

Here, Hoppe is reprising Nina Paley's claim that "copying is not theft". In Kinsella's terms, Hoppe is saying that IP is not rivalrous. But neither Paley nor Hoppe nor Kinsella have bothered to define "rivalrous" and prove what they assert. In fact, IP is rivalrous, and if I compose a melody, and you copy and distribute it, you have indeed taken something from me. To show how, let us begin with the definition of "rivalrous":

Rivalrous - having the quality such that use by one interferes with use by another

We must also consider what "use" means, and we must be very careful. If our definition of "use" contains or implies physical use, we would automatically be limiting the concept of "rivalrous" to the physical realm, which is, of course, the entire issue up for debate.

Use - to experience the value and benefit of

When I compose and record a song, my intent is to mass produce copies of the song, and sell them on the market. The original song is a producer good, like a factory, allowing for song copies to come rolling off the assembly line. My use, therefore, is not listening to the song. For me to use my song,  i.e. for me to experience its value and benefit, I must sell as many copies as the market will bear. If you copy and distribute my song, you are interfering with my use. You have trespassed, and damaged me by the reduced market value of my song.

Reduction in Market Value as a Measure of Damages

Kinsella and others have responded to the above argument about market value damages. For me to hold you liable for the reduction in the market value of my song, they say, is tantamount to me having a legal claim on the money in the pockets of all those potential customers. In fact, I have no rightful claim on another person's money, nor do you, and both of us have an equal right to exploit the market by selling copies of the song, so Kinsella's argument goes.

In other words, Kinsella holds that if a reduction in market value is the measure of damages for a trespass, then the underlying property claim is invalid. This position is untenable, because a reduction in market value is precisely the measure of damages resulting from trespass to physical property, accroding to long-standing principles of Common Law.

For example, suppose you own a car that would sell for $20,000 on the market. A trespasser comes along and smashes up your car so badly that it is not worth repairing. The best you can do is sell the car as scrap metal for $500. The trespasser is liable to you for damages, and the correct measure of damages is $19,500, i.e the reduction in market value of the car.

Since market value reduction is the only available measure of the damage caused by the trespasser in this case, does this mean that the car is not valid property? Of course not. Does it mean that you, as owner of the damaged car, are asserting a bogus claim on the money in the pocket of the person you wish to sell the car to? Of course not.

Once again, Kinsella, Hoppe and the rest of the anti-IP crowd refuse to apply the logic of their argument against IP to the phsycial property we all agree is valid. I, however, insist on just such a consistent application of logic, and this is the driving force behind Intellectual Space.

A Meaningless Distraction
Hoppe: If I didn’t want anyone to copy my ideas I only have to keep them to myself and never express them.
Of course I have a right to not produce works of music, in the same way Ford has the right not to manufacture cars. This says nothing whatsoever about the property rights enjoyed by me and Ford with regard to the music and cars we do manufacture. Hoppe's statement here is simply not an argument.

Copyright is Valid, Patent is Not
Hoppe: Now imagine I had been granted a property right in my melody or poem such that I could prohibit you from copying it or demanding a royalty from you if you do. Doesn’t that imply, absurdly, that I, in turn, must pay royalties to the person (or his heirs) who invented whistling and writing, and further on to those, who invented sound-making and language, and so on? 
Well, no. Hoppe here is conflating copyright and patent, as if they were the same thing. They are not. Copyright applies to finished works, while a patent applies to inventions and methods. For reasons I discuss in detail elsewhere, copyright is legitimate property, while patent is not. Thus Hoppe could claim a copyright in his melody or poem, without owing royalties to the inventor of whistling. Murray Rothbard was Hoppe's mentor, and Rothbard drew the same distinction between copyright and patent. Hoppe would do well to carefully consider Rothbard on this subject, as he has clearly done in every other area. 

Logical Trickery: The Shifting Definition
Hoppe: In preventing you from or making you pay for whistling my melody or reciting my poem, I am actually made a (partial) owner of you: of your physical body, your vocal chords, your paper, your pencil, etc. because you did not use anything but your own property when you copied me.
Stop. Underlined above is the exact moment when Hoppe smuggled "physicality" into the definition of "use", just as I warned against. Hoppe says that the copier did not use anything but his own body in the act of copying, but that is begging the question. Only by assuming that the intellectual good is not property can Hoppe make that claim, and this is, of course, the very issue up for discussion. In fact, the copier did use something besides his own physical body - he used the intellectual property belonging to someone else.

As shown above, unauthorized copying is a trespass, because it reduces the market value of the good, the same way that breaking all the windows will reduce the market value of a house. Thus the copying represents the initiation of force, validating the usurpation of the copier's rights, according to libertarian principles.

Begging the Question
Hoppe: If you can no longer copy me, then, this means that I, the intellectual property owner, have expropriated you and your "real" property.
Begging the question again. If copying is not a property violation, then yes, demanding a royalty is expropriation. But if copying is a violation of legitimate property rights, then demanding a royalty is simply rent seeking, perfectly consistent with libertarianism.

All Property Rights Impose Limitations on Others
Hoppe: Which shows: intellectual property rights and real property rights are incompatible, and the promotion of intellectual property must be seen as a most dangerous attack on the idea of "real" property (in scarce goods).
All property rights impose limitations on the behavior of others. You can fire your gun, but not at me. You can chop down trees, but not my trees. You can distribute recorded music, but not my recorded music. Unless I say so. The notion that IP differs from physical property in this way is absurd. Once again, the intellectual communists want a double standard, applying a rule to IP that they are unwilling to apply to physical property.

The Mises Test of External Reality

And again, Hoppe repeats the unsupported assertion that only "real" property is scarce. I've shown  above that IP is scarce, because it entails an opportunity cost to produce, to copy, and to distribute. And according to the Ludwig von Mises test of reality, intellectual objects are just as real as physical objects, because they have just as much potential for affecting the outcome of human affairs.

YouTube is Glorious

Intellectual property is not dangerous. Like all property rights, IP is necessary for society to flourish. As just one shining example of how IP enforcement leads to a brilliant and beautiful result, consider YouTube. One can visit YouTube today and choose from hundreds of millions of hours of original entertainment and education, of almost any style and substance imaginable. The explosion of human creativity and diversity on display is mind-boggling. We are all so much richer for YouTube, and I would like to express my sincere gratitude and amazement that such a thing is here.

By the way, YouTube enforces copyright.

Sunday, April 21, 2013

The Mises Test of External Reality

Do intellectual objects exist in the external world?


The nature of existence has plagued philosophers for eons. Physical matter, external to our minds, appears self-evident. We see and feel things, hear them, taste and smell them. We rely on our senses to understand the nature of reality. It is no coincidence that the word “sense” means both “a faculty by which the human body perceives an external stimulus” and also “a judgment derived by reason”, as in “that makes sense to me”. Claims that defy the senses do not make sense.


But is it enough to say that matter is self-evident? Or, as existentialists challenge, could not our sensory perception of external reality be merely that – a perception? Is it “all in our minds?” Can we prove the existence of matter? If so, how? And crucially here, what happens if we then attempt the same proof for the existence of intellectual objects? Do intellectual object really exist outside the perception of each individual human mind?


Ludwig von Mises met and conquered the existentialist challenge with praxeology – the logic of human action.


The starting point of praxeology is a self-evident truth, the cognition of action, that is, the cognition of the fact that there is such a thing as consciously aiming at ends. [1]


The Mises Test of External Reality


A thing is real if it can condition the outcome of human events.


Humans act purposefully. To deny this would be a performative contradiction, since the act of denial is purposeful. Only humans can deny, so a denial of human action would actually represent a denial of one’s own humanity, an impossibility. It is literally undeniable that humans act purposefully.  Mises then applies that fact to the question of material existence, in “Human Action”, and  a section titled “The Reality of the External World”:


From the praxeological point of view it is not possible to question the real existence of matter, of physical objects and of the external world. Their reality is revealed by the fact that man is not omnipotent. There is in the world something that offers resistance to the realization of his wishes and desires. Any attempt to remove by a mere fiat what annoys him and to substitute a state of affairs that suits him better for a state of affairs that suits him less is vain. If he wants to succeed, he must proceed according to methods that are adjusted to the structure of something about which perception provides him with some information. We may define the external world as the totality of all those things and events that determine the feasibility or unfeasibility, the success or failure, of human action.[2]


Clearly, intellectual objects can meet Mises’ conception of “things” in the “external world”, because they can affect the success or failure of people’s goals. For example, consider a book about automobile repairs. The know-how contained in the book may have a major impact on whether someone can successfully replace their carburetor, or just makes a bigger mess of things. Mises continues making the case for external reality:


The much discussed question whether physical objects can or cannot be conceived as existing independently of the mind is vain. For thousands of years the minds of physicians did not perceive germs and did not divine their existence. But the success or failure of their endeavors to preserve their patients' health and lives depended on the way germs influenced or did not influence the functioning of the patients' bodily organs. The germs were real because they conditioned the outcome of events either by interfering or by not interfering, either by being present in or by being absent from the field.[3]


From this we can derive “The Mises Test of External Reality”. A thing is real if it can condition the outcome of human events. We ask whether the thing may interfere or not interfere with some human endeavor, depending on whether it is present in the situation or not. Note that “present” does not necessarily mean physically present. Indeed, Mises’ approach was to deliberately ignore physicality in proving the existence of the world external to the human mind.


To run the test, let’s insert the Beatles song “Hey Jude” into Mises’ example:


The much discussed question whether intellectual objects can or cannot be conceived as existing independently of the mind is vain. For thousands of years the minds of musicians did not perceive the combination of words and melody the defines the song  “Hey Jude”. But the success or failure of their endeavors to entertain audiences depended on the way the music did or did not influence the emotional functioning of the listeners. “Hey Jude” is real because it conditioned the outcome of events either by interfering or by not interfering, either by being present in or by being absent from the field.


Does “Hey Jude” condition the outcome of human events? I don’t refer to any specific physical instance of Hey Jude, rather I refer to the underlying pattern of language that defines the song itself. Suppose Paul McCartney had written the song differently, with a different melody, and different words. Would the outcome have been different? Yes, the outcome would have been different.


The Beatles recorded hundreds of songs, including “Old Brown Shoe” which immediately succeeded “Hey Jude” on the original album release. “Old Brown Shoe” was not nearly successful at entertaining listeners as was “Hey Jude”. Had “Hey Jude” been more poorly written, fewer people would have recommended it to their friends, fewer radio stations would have played it, and its overall influence would have been less.


“Old Brown Shoe” had the same physical manifestation as did “Hey Jude”, because they were both embodied in the same original album. Yet something about the pattern of information in “Hey Jude” conditioned human events in a way that “Old Brown Shoe” did not. An intellectual creation has the ability to condition the outcome of human events, passes the Mises test, and therefore is a real thing. 


By contracting, humans act as though IP exists


We know that intellectual objects exist because people act as though they exist. In particular, people voluntarily contract to buy and sell intellectual objects, such as movies, songs, games, and software. One may only contract with that which is one’s own property. If intellectual objects cannot be property, then we simply cannot make any sort of contract about them at all.


People voluntarily agree to buy and sell things like movies, songs, games and software. By contracting, people demonstrate their belief and understanding that the pattern of information that defines the intellectual object is rightful property. And overwhelmingly, people are satisfied with the intellectual content that they purchase.


Imagine a world in which sellers are allowed to defraud buyers about the intellectual content of their goods. This would seem to be a decidedly non-libertarian situation. When customers buy intellectual objects, we must ask what exactly it is they value. Obviously, it is the pattern of information, not the physical container.


Suppose I go online and order a DVD of the movie “Thor”. I pay the agreed price, and a few days later a DVD arrives at my house. But instead of “Thor”, it features reruns of “Gilligan’s Island”. Do I have a legitimate complaint against the company that sold me the DVD? After all, I ordered a DVD, and I got a DVD. The only difference between what I contracted for and what I received is the pattern of 1’s and 0’s encoded into the disc. In other words, the only distinction is the IP. The physical property is identical, except for the pattern. In some technical sense, the two discs could be said to be physically different, but such would be completely irrelevant to human action. The only humanly meaningful distinction between the two discs is the pattern of information encoded. My satisfaction as a customer depends entirely on the pattern of information I received, and nothing else.


In the above example, obviously, I have a legitimate complaint against the seller of the DVD. The only theoretical basis for such complaints is to assert a property right in the pattern of information stored on a disc. Only property can be the subject of contract, one cannot make contracts regarding that which one does not own.


Doesn’t IP require a physical container?


It is true but irrelevant that intellectual objects require physical containers to be delivered. A movie arrives on a DVD or Blu-Ray disc, computer software lives on your hard drive. But this does not mean that only the physical object can be owned, as the IP opponents would have it.


To demonstrate the physical differences between the two discs are completely irrelevant, let’s consider a different hypothetical.  Suppose I go online and purchase a vacuum cleaner. Inside the vacuum cleaner is a motor, and on the motor is a sticker that contains information about the date of manufacture and so forth. Suppose I learn that the motor was installed on a Tuesday, but I hate Tuesdays because it reminds me of September 11.


Assuming the vacuum cleaner sucks up dirt correctly, do I have a legitimate complaint against the company that sold me the vacuum? After all, the pattern of information within the device is different than I would prefer. In some technical sense, there is a physical difference between a vacuum cleaner with “Tuesday” versus “Wednesday” on the motor label. But such is irrelevant to human action. I have contracted to buy a vacuum cleaner, and its use is to suck dirt up off my floor. I did not contract regarding the pattern of information.


Concluding remarks on the Mises test


The fundamental point of the Mises test is to consider human relevance. The same one pattern of information can be embodied on many different types of physical media. And it is the pattern, not the physical media, that matters. In this light, patterns of information must be considered real, and ownable.


[1] Mises, L.V. “The Ultimate Foundation of Economic Science”, sect. 4.

[2] Mises, L.V. “The Ultimate Foundation of Economic Science”, sect. 5

[3] Mises, L.V. “The Ultimate Foundation of Economic Science”, sect. 5

Saturday, April 13, 2013

Intro to Intellectual Space

Property is the foundation of any free and just human society. “Property” is the name we give to things that can be owned. The owner of a thing is the person who has the sole right to use it, to exchange it, and to exclude others from using it. Without an understanding of property, we have no basis for ethics.  We simply have no other way to decide who is and is not allowed to do anything.


Am I allowed to pick an apple from that tree? It depends whose property this is. Am I allowed to drive that car? It depends who owns it. Even basic human rights are best understood as property rights. Each person owns herself. Am I allowed to touch you? Only if you say so, because you belong to you.


Do you see how fundamental and far reaching the concept of property is? The moral concepts of “right” and “wrong” disappear without property. Conceived this way, all rights are property rights, and all wrongs are property violations.


Like most everyone, I believe it is wrong to initiate the use of force against the person or property of another. Like anyone with the courage and clarity to apply this non-aggression principle consistently, I am a libertarian. I favor a stateless, voluntary, free society. ­This conclusion is controversial, but it is the only conclusion that can be reached after accepting the validity of property.


The findings of Austrian economics


The philosophical and economic framework for libertarianism is found in a large literature over the past two centuries, most importantly in that of the Austrian school of economics.[1] Owing to preeminent thinkers such as Ludwig von Mises, Murray Rothbard, and Hans-Hermann Hoppe, using the irrefutable logic of human action called praxeology, the Austrians have shown that a society free of government intervention is superior to any other system, both morally and economically.


Economics is understood through a priori, deductive logic, not empiricist positivism. Scarcity of economic resources creates the possibility of conflict. Self-ownership, non-aggression and respect for private property rights are the requirements for peace and prosperity. A state, by definition, is a monopolist of the legal use of violence, and so is incompatible with a free society.  Government intervention into the economy distorts the price signaling system, causing irrational economic calculation. Fractional reserve credit expansion artificially lowers interest rates, stimulates bad investments, and ultimately causes the boom-bust business cycle. Money in a free society must be based on a valuable commodity, like gold.  These are some of the conclusions reached by Austrian school, and I concur.


Libertarians on intellectual property


In 1855, anarchist philosopher, abolitionist and attorney Lysander Spooner[2] held that:


 . . . a man has a natural and absolute right—and if a natural and absolute, then necessarily a perpetual, right—of property, in the ideas, of which he is the discoverer or creator; that his right of property, in ideas, is intrinsically the same as, and stands on identically the same grounds with, his right of property in material things; that no distinction, of principle, exists between the two cases.[3]


Similarly, libertarian philosopher and novelist Ayn Rand invoked a homestead principle in supporting intellectual property:


Patents and copyrights are the legal implementation of the base of all property rights: a man’s right to the product of his mind.[4]


Murray Rothbard also supported the concept of intellectual property, but drew a distinction between copyright and patent.[5] He saw no justification for patent on the free market, but argued that copyright could exist as a contract in which a buyer agrees not to copy the intellectual work as a condition of purchase.[6]


In recent years, however, owing largely to the scholarship of libertarian author and patent attorney Stephan Kinsella[7], many Austrians appear to have adopted what I believe is an erroneous position on the issue of intellectual property (IP). Kinsella has evidently convinced many that intellectual property does not exist, except in the fanciful imaginations of those artists and inventors who would engage the coercive power of the state to force others to pay for the use of their ideas.  In Kinsella’s view, IP, like the state itself, is incompatible with a free society:


[A] system of property rights in “ideal objects” necessarily requires violation of other individual property rights, e.g., to use one’s own tangible property as one sees fit.[8]


About this project


Having studied and acquired such profound respect for the Austrian school, I initially accepted Kinsella’s central claim that intellectual goods are not rivalrous, and so cannot be property. As both a libertarian and a music composer, deriving a significant portion of my income exploiting my copyrights, I accepted the anti-IP argument somewhat grudgingly.


I did notice what I saw as a few shortcomings of Kinsella’s work, such as a lack of clear definitions of crucial terms, and a rather non-libertarian take on the homestead principle. For this reason I began to work on intellectual property myself, thinking I could bolster Kinsella’s case with praxeology.


To facilitate, I propose the doctrine of intellectual space. The doctrine is a conceptual framework theorizing the a priori existence of intellectual matter. My approach is to take the reasoning used by Mises, Rothbard and Hoppe in showing the existence of, and property rights in physical matter; and to apply that same reasoning to intellectual matter. I expected to see that these intangible patterns of ideas behaved so differently than physical objects that they could not function as property in a free society. But just the opposite occurred.


By the logic of human action, I will show that intellectual objects exist, that they are rivalrous, that they have all the characteristics of goods, and may be homesteaded. I will therefore conclude that a legal system in a free society should enforce property rights in intellectual creations such as songs, books, and motion pictures. For reasons that will become clear, I draw a sharp distinction between copyright and patent, finding that the former should be enforced, while the latter must not.


Overview of topics


How do we assign property rights in the first place? Is there a philosophically valid way to establish original ownership? And what of intellectual property? Is there such a thing? Is it morally permissible, or economically viable to recognize a property right in a pattern of ideas? Or should property be restricted to the realm of physical, tangible objects? What are the tenets of  the current anti-IP case, and is it valid or flawed? Of what value are empiricist or utilitarian analyses? What thought experiments will illuminate the problem most brightly?  These are the questions will drive this work.


In Part I, “The Philosophical Case for Physical Property”, I will offer a brief summary of the well-established libertarian philosophy on property rights, including Hoppe’s Argumentation Ethic. I consider this position to be proven, and after my restatement, I will assume it as fact. If you do not accept the fundamental propositions of self-ownership, the non-aggression principle and homesteading, I refer you the many fine scholars at the Mises Institute[9] , and any disagreements you have can be taken up with them.


Next, in Part II, I postulate “The Doctrine of Intellectual space”. I will define “intellectual space”, “intellectual matter”, “intellectual object”, and “intellectual property”, along with other key terms. With these in play, I’ll do a side-by-side analysis of physical vs. intellectual objects, and show that we arrive at property rights in intellectual objects exactly as we arrive at property rights in physical objects. The two behave identically.


Part III is “The Alleged Case Against Intellectual Property”. Restated are the arguments against intellectual property, particularly those presented in “Against Intellectual Property” (Stephan Kinsella), and “Against Intellectual Monopoly” (Boldrin and Levine). I will refute each and every element of the supposedly “libertarian” anti-IP position, showing that argument to rest upon logical fallacies such as faulty analogy, baseless assertions, non-sequitors, and begging the question.


Finally, Part IV is called “Exploring Intellectual Space”. Here I offer various examples, parables and thought experiments. I apply the theory to various species of intellectual property enforced under the current statist model (i.e. copyright, patent, trademark, and reputation), and discuss which of these are viable in a free society. 


I hope that you will join me on my journey through intellectual space.


[1] Austrian economics today has nothing to do with the country of Austria. The originators of the doctrine (Carl Menger, Eugen von Böhm-Bawerk, Ludwig von Mises, Frederich Hayek) were indeed in Austria, faculty at the University of Vienna, during the late 19th and early 20th centuries.

[2] See Spooner’s classic essay “No Treason: The Constitution of No Authority” (1867), a refutation of the U.S. Constitution under common law contract principles.

[3] Spooner, Lysander, “The Law of Intellectual Property”, Part 1, Chapter 1, Section 9.

[4] Rand, Ayn, “Capitalism: The Unknown Ideal” Signet, New York, 1967, p. 130.

[5] Rothbard, Murray N., “Man, Economy, and State: A Treatise on Economic Principles” Volume II, Chapter 10: Monopoly and Competition, Nash Publishing, Los Angeles 1970, pp 652-660)

[6] Under long-held common law principles, one can only contract regarding that which is one’s rightful property.

[7] See Kinsella’s website

[8] Kinsella, Stephan, “Against Intellectual Property” Ludwig von Mises Institute,  (2008) p. 59.

[9] The Ludwig von Mises Institute (http://www. freely provides a vast library of online books, articles, lectures and other educational materials related to the economics and philosophy of human liberty. 

Wednesday, March 20, 2013

On Roderick Long's "Libertarian Case Against IP"


In 1995, libertarian philosopher Roderick Long published “The Libertarian Case Against Intellectual Property”,[1] reprinted here in its entirety, with my comments interspersed. Long begins with a brief overview of the historical debate.


A Dispute Among Libertarians


The status of intellectual property rights (copyrights, patents, and the like) is an issue that has long divided libertarians. Such libertarian luminaries as Herbert Spencer, Lysander Spooner, and Ayn Rand have been strong supporters of intellectual property rights. Thomas Jefferson, on the other hand, was ambivalent on the issue, while radical libertarians like Benjamin Tucker in the last century and Tom Palmer in the present one have rejected intellectual property rights altogether.


When libertarians of the first sort come across a purported intellectual property right, they see one more instance of an individual's rightful claim to the product of his labor. When libertarians of the second sort come across a purported intellectual property right, they see one more instance of undeserved monopoly privilege granted by government.


I used to be in the first group. Now I am in the second. I'd like to explain why I think intellectual property rights are unjustified, and how the legitimate ends currently sought through the expedient of intellectual property rights might be secured by other, voluntary means.[2]


As for me, I used to be in the second group, now I am in the first. Working through Long’s paper should go along way towards explaining why intellectual property rights are justified for the exact same reasons as physical property. 


Long’s “The Historical Argument”


Intellectual property rights have a tainted past.


Yes, as do physical property rights.


Originally, both patents and copyrights were grants of monopoly privilege pure and simple. [3]


That’s not true. Copyright protection arose in medieval Ireland and England, at common law. One Irish case dates from AD 567, before the invention of the printing press.[4] Like so many other social phenomena, law (including IP) arose on the market, only to be co-opted by the state, for the state’s purposes.


A printing house might be assigned a "copyright" by royal mandate, meaning that only it was allowed to print books or newspapers in a certain district; there was no presumption that copyright originated with the author. Likewise, those with political pull might be assigned a "patent," i.e., an exclusive monopoly, over some commodity, regardless of whether they had had anything to do with inventing it. Intellectual property rights had their origin in governmental privilege and governmental protectionism, not in any zeal to protect the rights of creators to the fruits of their efforts. And the abolition of patents was one of the rallying cries of the 17th-century Levellers (arguably the first libertarians).[5]


Of course the state has placed itself in charge of intellectual property, and abuses its discretion in its own interest. The exact same can be said of physical property.


Now this by itself does not prove that there is anything wrong with intellectual property rights as we know them today. An unsavory past is not a decisive argument against any phenomenon; many worthwhile and valuable things arose from suspect beginnings. (Nietzsche once remarked that there is nothing so marvelous that its past will bear much looking into.) But the fact that intellectual property rights originated in state oppression should at least make us pause and be very cautious before embracing them.[6]


As Hoppe has often pointed out, history without theory is useless.[7] Long moves on to ethics:


Long’s “The Ethical Argument”



Ethically, property rights of any kind have to be justified as extensions of the right of individuals to control their own lives. [8]


Nonsense. In correct libertarian theory, property rights are justified as a necessary assignment of exclusive control over scarce and rivalrous goods, so as to avoid  conflict. Two people could both desire to use the same resource, and may each consider use of the resource to be what is necessary to “control their own life”. An “extension” of the right to control one’s own life could mean absolutely anything. Such a concept tells us nothing about what is and is not valid property, nor how it comes to be owned, and so cannot be any kind of a test.


Thus any alleged property rights that conflict with this moral basis — like the "right" to own slaves — are invalidated. [9]


Is Long is using “right to control one’s life” to mean what libertarians typically refer to as “self-ownership”? Maybe, but if so I wonder what an “extension” of that right would be. Correctly framed, all rights are property rights, including a property right in one’s own physical body. Slavery is wrong because it is a violation of the slaves’ unalienable self-ownership. Long continues:


In my judgment, intellectual property rights also fail to pass this test. [10]


What test? The “right to extended control over one’s own life” test? Long has not attempted to explain what he might mean, nor how we might examine anything with his “test”.


To enforce copyright laws and the like is to prevent people from making peaceful use of the information they possess. [11]


Characterizing IP rights violation as “peaceful” is begging the question. The issue is whether or not a legitimate property right exists in the copyrighted work. If it does, then copyright infringement is not peaceful, it is an aggression.


If you have acquired the information legitimately (say, by buying a book), then on what grounds can you be prevented from using it, reproducing it, trading it? [12]


There is a difference between a consumer use and a producer use. When you buy a book, you are buying the consumer good. It is yours to use, which means reading, enjoying and understanding the information. You are then perfectly free to use that information in any way you see fit, so long as such use does not constitute using the productive capacity to mass-produce the consumer good. The ability to copy a book is a productive capacity, like a factory assembly line. That productive capacity is rightly owned by its creator, because it was the creator who brought it into existence through capital expenditure.


Is this not a violation of the freedom of speech and press?[13]


As Murray Rothbard and others have pointed out, “freedom of speech” and “freedom of the press” are simply property rights.[14] You can say whatever you want to say, so long as you do not violate my property rights in the process. If I have a  property right in my intellectual work, then your freedom of speech does not allow you to commercially exploit it, any more than freedom of speech would allow you access to my printing press.


It may be objected that the person who originated the information deserves ownership rights over it. But information is not a concrete thing an individual can control; it is a universal, existing in other people's minds and other people's property, and over these the originator has no legitimate sovereignty. You cannot own information without owning other people.[15]


This is either begging the question again, or just plain false, depending on what his ambiguity means. Long is correct that an object must be controllable to be property. Long is also correct that information is not a concrete thing. But when he says that “information is not a concrete thing an individual can control”, we don’t know whether he means “information cannot be controlled” or “information is not a concrete thing”, or both.


In fact, information can be controlled, so if Long is trying to say it can’t, that’s just false. We need only to contemplate the extraordinary capabilities of today’s computer systems to visualize man’s control of information.


It’s true that information is not “concrete”, but whether intangible objects may or may not rightly be property is the issue, so it appears Long is once again smuggling his conclusion right up into his premise. Naughty, naughty Roderick.


Suppose I write a poem, and you read it and memorize it. By memorizing it, you have in effect created a "software" duplicate of the poem to be stored in your brain. [16]


Remember, “the poem” is actually two distinct goods – a consumer good used for entertainment, and a producer good used for duplication of the consumer good.


But clearly I can claim no rights over that copy so long as you remain a free and autonomous individual. That copy in your head is yours and no one else's.[17]


Long here is failing to distinguish between consumer and producer goods. The poem in someone’s head (or the digital song file on their hard drive) can be both a consumer good when it is used for entertainment, and a producer good when it is used for duplication of the consumer good.


But now suppose you proceed to transcribe my poem, to make a "hard copy" of the information stored in your brain. The materials you use — pen and ink — are your own property. The information template which you used — that is, the stored memory of the poem — is also your own property. So how can the hard copy you produce from these materials be anything but yours to publish, sell, adapt, or otherwise treat as you please?[18]


It is true that a copier uses his own physical body and his own material property to make the copy. The copyright owner does indeed seek to disallow the copier from commercially exploiting the copies. This is simply an example of how property rights place restrictions on all other people in the world.


This is not at all unique to intellectual property. You may walk where you like, but you can’t come in my house. You may own a gun and bullets, but you may not point it at me and shoot. Property (intellectual or physical) is all about the right to exclude others. Without the right to exclude, property is completely meaningless. 


An item of intellectual property is a universal. Unless we are to believe in Platonic Forms, universals as such do not exist, except insofar as they are realized in their many particular instances.[19]


The existence of physical matter is also questioned, for example by existentialist or metaphysical nihilist philosophers. Ludwig von Mises found this challenge so important as to address it right in the beginning of Human Action, and again in The Ultimate Foundation of Economic Science.[20] According to Mises, something is real if it can condition the outcome of human events. By the same test, intellectual objects are real.[21]


Accordingly, I do not see how anyone can claim to own, say, the text of Atlas Shrugged unless that amounts to a claim to own every single physical copy of Atlas Shrugged. [22]


This is just the old “argument from personal incredulity”, a logical fallacy.


But the copy of Atlas Shrugged on my bookshelf does not belong to Ayn Rand or to her estate. It belongs to me. I bought it. I paid for it. (Rand presumably got royalties from the sale, and I'm sure it wasn't sold without her permission!)


The many instances of the physical books are something different than the one unique instance of the intellectual object.  Each individual purchaser of the consumer good called a “book” owns that physical object, free and clear.


Ownership of the producer good, i.e. the productive capacity which makes mass-production possible, remains with the creator. It is like the difference between owning a bicycle vs. owning a bicycle factory. It is my sincere hope that the doctrine of intellectual space will makes this long-neglected and crucial point easier for Professor Long and others to conceptualize.


The moral case against patents is even clearer. A patent is, in effect, a claim of ownership over a law of nature.[23]


Well, no. A patent is claim of ownership over a method of producing a useful good.


What if Newton had claimed to own calculus, or the law of gravity? Would we have to pay a fee to his estate every time we used one of the principles he discovered?[24]


This is a strawman argument, like asking “what if Lewis and Clarke claimed to own the Rocky Mountains?” Dancing merrily with his strawman, Long quotes Benjamin Tucker:


"... the patent monopoly ... consists in protecting inventors ... against competition for a period long enough to extort from the people a reward enormously in excess of the labor measure of their services, — in other words, in giving certain people a right of property for a term of years in laws and facts of Nature, and the power to exact tribute from others for the use of this natural wealth, which should be open to all."[25]


- Benjamin Tucker


I agree that patents are likely not valid property, but not because of anything that Long or Benjamin Tucker have argued regarding “laws of nature”. As generally understood, a patent is a claim of ownership in a method of producing something, not something that has actually been produced. Thus a patent does not represent an act of homesteading, and cannot be property. Copyright, however, applies to the creation of a finished work, and a functioning productive capacity.  Thus, copyright represents an act of homesteading, and is rightful property.


Defenders of patents claim that patent laws protect ownership only of inventions, not of discoveries. (Likewise, defenders of copyright claim that copyright laws protect only implementations of ideas, not the ideas themselves.) But this distinction is an artificial one. Laws of nature come in varying degrees of generality and specificity; if it is a law of nature that copper conducts electricity, it is no less a law of nature that this much copper, arranged in this configuration, with these other materials arranged so, makes a workable battery. And so on.[26]


Is Roderick Long really unable to understand the difference between a law of nature and the human creation of useful things? Long proceeds with a far-fetched hypothetical, but let’s go with it, to see if it sheds any light:


Suppose you are trapped at the bottom of a ravine. Sabre-tooth tigers are approaching hungrily. Your only hope is to quickly construct a levitation device I've recently invented. You know how it works, because you attended a public lecture I gave on the topic. And it's easy to construct, quite rapidly, out of materials you see lying around in the ravine.


But there's a problem. I've patented my levitation device. I own it — not just the individual model I built, but the universal. Thus, you can't construct your means of escape without using my property. And I, mean old skinflint that I am, refuse to give my permission. And so the tigers dine well.


This highlights the moral problem with the notion of intellectual property. By claiming a patent on my levitation device, I'm saying that you are not permitted to use your own knowledge to further your ends. By what right?[27]


The sabre-tooth tiger story is an emotional “lifeboat scenario”.  The exact same kind of argument can be brought to show that physical property is illegitimate. Suppose you are in a bad neighborhood, and a gang of thugs are intent on robbing and killing you. Your only chance to escape is to steal a nearby car, which is unlocked with the key in it. The owner of the car would say you are not allowed to take it, so the thugs succeed in their heinous crime.


Does this “highlight the moral problem with the notion of physical property”? No, it simply means that vicious thugs did not respect your rights, just like the vicious sabre-tooth tiger did not respect my rights in Long’s story.


Does a free society offer a solution? Yes. What could happen is that you go ahead and steal the car, make your escape, then return the car to its owner, and pay for whatever damages the owner suffers as a result of your theft. Same with the sabre-tooth tiger. The victim would build Long’s hypothetical levitation machine, escape the predators, then negotiate a license fee with the IP owner. [28]


Another problem with patents is that, when it comes to laws of nature, even fairly specific ones, the odds are quite good that two people, working independently but drawing on the same background of research, may come up with the same invention (discovery) independently. Yet patent law will arbitrarily grant exclusive rights to the inventor who reaches the patent office first; the second inventor, despite having developed the idea on his own, will be forbidden to market his invention.[29]


The problem with patents is that they do not represent homesteading. The fact that two inventors can independently discover the same invention is irrelevant to a principled argument. Two explorers can independently discover the same patch of un-owned land, and the rightful owner will be the one to first occupy and transform the land into usefulness. Does this mean that there is no legitimate property right in land? No, so why would this argument in any way invalidate intellectual property?


Long cites Ayn Rand’s response to the alleged  problem of “first come, first serve”:


"As an objection to the patent laws, some people cite the fact that two inventors may work independently for years on the same invention, but one will beat the other to the patent office by an hour or a day and will acquire an exclusive monopoly, while the loser's work will then be totally wasted. This type of objection is based on the error of equating the potential with the actual. The fact that a man might have been first, does not alter the fact that he wasn't. Since the issue is one of commercial rights, the loser in a case of that kind has to accept the fact that in seeking to trade with others he must face the possibility of a competitor winning the race, which is true of all types of competition."[30]


- Ayn Rand


Rand is pointing out the same contradiction I do. If “first come, first serve” does not invalidate physical property, why should it invalidate IP? Long responds to Rand:


But this reply will not do. Rand is suggesting that the competition to get to the patent office first is like any other kind of commercial competition. For example, suppose you and I are competing for the same job, and you happen to get hired simply because you got to the employer before I did. In that case, the fact that I might have gotten there first does not give me any rightful claim to the job. But that is because I have no right to the job in the first place. And once you get the job, your rightful claim to that job depends solely on the fact that your employer chose to hire you.


In the case of patents, however, the story is supposed to be different. The basis of an inventor's claim to a patent on X is supposedly the fact that he has invented X. (Otherwise, why not offer patent rights over X to anyone who stumbles into the patent office, regardless of whether they've ever even heard of X?) Registering one's invention with the patent office is supposed to record one's right, not to create it. Hence it follows that the person who arrives at the patent office second has just as much right as the one who arrives first — and this is surely a reductio ad absurdum of the whole notion of patents.[31]


Long is ignoring a consideration of what property even means, ignoring first principles, and quibbling about the whether a patent should go to the first to invent, or the first to the patent office. In a free society, if an invention represented the homesteading of a new productive capacity (which I don’t believe it does), then the property right would likely vest in the first person to file a claim.


Long’s “The Economic Argument”



The economic case for ordinary property rights depends on scarcity. [32]


Correct, the need for property rights arises over the possibility of conflict over scarce resources. Long is on the right track here, evidently abandoning his pervious claim that “property rights of any kind have to be justified as extensions of the right of individuals to control their own lives.”


But information is not, technically speaking, a scarce resource in the requisite sense. If A uses some material resource, that makes less of the resource for B, so we need some legal mechanism for determining who gets to use what when. But information is not like that; when A acquires information, that does not decrease B's share, so property rights are not needed.[33]


Long is using logic to test for scarcity and rivalry, and thus the validity of property rights. That’s the right  approach to take, but unfortunately he uses one rule when analyzing physical property, and a different one in analyzing IP. The result is that he is comparing the consumer use of physical property with the combined consumer-and-producer uses of intellectual property. This the same fallacious analogy repeated so often by so many, including Nina Paley in the lyric of her Anti-IP song “Copying is Not Theft”.[34]


Paley likes to talk about bicycles and songs, so let’s use those as our examples of physical and intellectual objects respectively. I will restate Long’s rules as logical syllogisms, then insert the objects and check the results. 


Long’s 1st rule


Rule: If person A uses a resource, and that use makes less of the resource available for person B, then the resource is rivalrous and thus rightful property.


Analysis: Resource = one bicycle. Use = riding the bike.


If person A rides the bicycle, then that same bicycle is not available for person B?


Conclusion: Yes, the test holds, and a bicycle is rightful property, according to Long’s 1st rule. Since we already know that physical objects can be rightful property, this result supports the idea that Long’s 1st rule is valid.


Next we apply Long’s 1st rule to an intellectual object.


Analysis: Resource = one copy of a song file. Use = listening to the song.


If person A listens to the song, then that same copy is not available for person B?


Conclusion: Yes, the test holds, and a song file is rightful property, according to Long’s 1st rule.


Long’s 2nd rule


Rule: If person A acquires one instance of a resource, and person B acquires a different instance of the same resource, and A’s use does not interfere with B’s use, then the resource cannot be property.


Analysis: Resource = bicycles. Use = riding.


Person A acquires a bicycle, person B acquires a different instance of the same model bicycle. A’s riding does not interfere with B’s riding, so a bicycle cannot be property?


Conclusion: No, this does not hold. Since we have already established that physical goods like a bicycle are valid property, Long’s 2nd rule fails as a test. We can apply Long’s 2nd rule to an intellectual object, to show that it will fail to hold in the same way.


Analysis: Resource = a song. Use = listening


Person A acquires a copy of the song file, person B acquires a different instance of the same song file. A’s listening does not interfere with B’s listening, so a song cannot be property?


Conclusion: It is true the A’s listening does not interfere with B’s listening, but we’ve already seen that the rule itself fails. Because Long’s 2nd rule fails, it says nothing of whether a song can be property.


All Long has done was test physical property with his 1st Rule, and intellectual property his 2nd rule.



Long’s “The Economic Argument”, cont.


Having truly avoided the underlying philosophy, Long proceeds to setup and then knock down his next strawman:


Some will say that such [IP] rights are needed in order to give artists and inventors the financial incentive to create. But most of the great innovators in history operated without benefit of copyright laws. [35]


This is a naked assertion. Long provides no reason or evidence to support the contention that “most of the great innovators in history operated without copyright laws”, nor why that might invalidate IP even if true. If Long wishes to show that IP somehow restricts innovation, it is not enough to show that innovation occurred pre-IP. Long would need to use praxeology to show that, other things equal, innovation would have been less with IP that what actually occurred in the pre-IP era. Long has not attempted, let alone succeeded in doing so.


Again, Long applies a standard to IP that he is unwilling to apply generally. Countless physical structures, tools, etc. were manufactured in ancient times, prior to the development of a universally accepted concept of property rights. In the 1950s the Soviet Union built a world-class space program, a magnificent achievement in physical engineering, despite having essentially abolished private property altogether.  Do these historical facts invalidate rights in physical property? Of course not.


Indeed, sufficiently stringent copyright laws would have made [artists and inventors] achievements impossible: Great playwrights like Euripides and Shakespeare never wrote an original plot in their lives; their masterpieces are all adaptations and improvements of stories written by others. Many of our greatest composers, like Bach, Tchaikovsky, and Ives, incorporated into their work the compositions of others. Such appropriation has long been an integral part of legitimate artistic freedom.[36]


Long here is assuming that copyright holders do not want their works adapted and improved on. This is just a fallacious as assuming that land owners do not want their property improved. It might be true in some instances, where the land owner prefers keeping the land in its natural state rather than contracting with a developer to add roads, utilities and buildings. This is simply a reflection that value is subjective. Many land owners do consider adding structures to be an improvement, and many copyright holders approve of adaptations of their original works.


For example, in 1985 Norwegian pop band “Aha” wrote and recorded the hit song “Take On Me”.[37] In 2012, along with co-writers, recording artists Pitbull and Christina Aguilera released a hit single “Feel This Moment”. “Feel This Moment” features an adaptation of the distinctive synthesizer melody from “Take On Me”. The Aha members were happy for the creation of the derivative work, and received writing credit (thus royalties) on the new tune. [38]


In other examples, original creators are not willing to allow their music to be incorporated into derivative works, doubtless causing frustration among those seeking to create the new piece. But this is conceptually no different than disputes arising between parties with differing ideas on the best use of land, or any other resource. Once again, if this kind of problem does not invalidate physical property, it must not invalidate IP.


Having sidestepped the crucial economics, Long’s parade of non-sequirtors continues:


Is it credible that authors will not be motivated to write unless they are given copyright protection? Not very. Consider the hundreds of thousands of articles uploaded onto the Internet by their authors everyday, available to anyone in the world for free.[39]


In a world of 5 billion people, there are thousands or millions of people who author material which is not commercially viable, so therefore . . . what?


Is it credible that publishers will not bother to publish uncopyrighted works, for fear that a rival publisher will break in and ruin their monopoly? Not very. Nearly all works written before 1900 are in the public domain, yet pre-1900 works are still published, and still sell.[40]


Sure, classic material can still “sell”, but this is irrelevant. Of course it can sell. The question is who deserves the money from the sales. If I stole a load of flat-screen TVs from a warehouse, I could sell them, but would it be right?


Long’s increasing desperation is betrayed by ever more bizarre interpretations:


Is it credible that authors, in a world without copyrights, will be deprived of remuneration for their work? Again, not likely. In the 19th century, British authors had no copyright protection under American law, yet they received royalties from American publishers nonetheless.[41]


In the 19th century, both the United States and Great Britain had copyright laws, it’s just that U.S. law did not explicitly require payment to foreign authors. By paying the British authors, U.S. publishers demonstrated a good faith  understanding of a property right in the intellectual work, and were simply doing the right thing. Far from an argument against IP, this 19th century example illustrates that free people will respect intellectual property, even absent the coersion of the state. 


In his autobiography, Herbert Spencer tells a story that is supposed to illustrate the need for intellectual property rights. Spencer had invented a new kind of hospital bed. Out of philanthropic motives, he decided to make his invention a gift to mankind rather than claiming a patent on it. To his dismay, this generous plan backfired: no company was willing to manufacture the bed, because in the absence of a guaranteed monopoly they found it too risky to invest money in any product that might be undercut by competition. Doesn't this show the need for patent laws?


I don't think so. To begin with, Spencer's case seems overstated. After all, companies are constantly producing items (beds, chairs, etc.) to which no one holds any exclusive patent. But never mind; let's grant Spencer's story without quibbling. What does it prove?


Recall that the companies who rejected Spencer's bed in favor of other uses for their capital were choosing between producing a commodity in which they would have a monopoly and producing a commodity in which they would not have a monopoly. Faced with that choice, they went for the patented commodity as the less risky option (especially in light of the fact that they had to compete with other companies likewise holding monopolies). So the existence of patent laws, like any other form of protectionist legislation, gave the patented commodity an unfair competitive advantage against its unpatented rival. The situation Spencer describes, then, is simply an artifact of the patent laws themselves! In a society without patent laws, Spencer's philanthropic bed would have been at no disadvantage in comparison with other products.[42]


Tainting IP with the scary buzz-word “monopoly” is the same tactic taken to the extreme more recently by mainstream economists Boldrin & Levine.[43] All property is a “monopoly”, if you want to use that word. Property confers upon the owners the right to exclude all others from use, by definition. Property is not economically harmful, property is economically essential. The issue is whether a patent is a valid form of IP. For the reasons set out elsewhere in this book, I don’t believe that it is, but the “philanthropic bed” example is pointless.


The manufacturer in the “bed” example cannot be blamed for seeking patent protection, when such is legally available. It’s true that in a world without patent, the law would not prevent competitors from using the manufacturer’s invention. There would surely be much more “competition” in the use of the invention. Is that sort of “competition” necessarily economically good? 


The same anti-patent argument above could be applied to physical goods, like a factory, with equally absurd results. In a world without physical property rights, the law would not prevent competitors from storming the gates of the bed factory and taking over the machines. There would be a lot more “competition” over the use of the assembly line, rather than the “monopolistic” use that occurs under property laws.


Do you see? The fundamental economic question is not “competition” or “innovation”. The fundamental economic, philosophical and moral question is property. If there is a valid property right, it should be enforced. If there isn’t, it shouldn’t.


Long’s “The Information-Based Argument”


Though never justified, copyright laws have probably not done too much damage to society so far. But in the Computer Age, they are now becoming increasingly costly shackles on human progress.


Consider, for instance, Project Gutenberg, a marvelous non-profit volunteer effort to transfer as many books as possible to electronic format and make them available over the Internet for free. (For information about Project Gutenberg, contact the project director, Michael S. Hart, at Unfortunately, most of the works done to date have been pre-20th-century — to avoid the hassles of copyright law. Thus, copyright laws today are working to restrict the availability of information, not to promote it. (And Congress, at the behest of the publishing and recording industries, is currently acting to extend copyright protection to last nearly a century after the creator's death, thus ensuring that only a tiny fraction of the information in existence will be publicly available.)[44]


This is just silly. Long has long ago given up any attempt at discussing property rights, and is simply whining because some non-profit project isn’t allowed to make an e-book out of “Gone With The Wind”.


Yes, of course information is good. Yes, of course IP rights serve to limit access to information. So what? This is no more of an argument than saying that a Manhattan penthouse apartment is good, that the security guard is limiting my access, and therefore a building cannot be property.


More importantly, modern electronic communications are simply beginning to make copyright laws unenforceable; or at least, unenforceable by any means short of a government takeover of the Internet — and such a chilling threat to the future of humankind would clearly be a cure far worse than the disease. Copyright laws, in a world where any individual can instantaneously make thousands of copies of a document and send them out all over the planet, are as obsolete as laws against voyeurs and peeping toms would be in a world where everyone had x-ray vision.[45]


This is just baseless fearmongering. Sure, enforcing IP is a challenge, just like enforcing physical property rights are a challenge. But the free market is great at responding to challenges. The greatest barrier to IP enforcement over the long run is not technological, but philosophical.


Long’s “First Tolkien Story”


Here's a story that illustrates some of the needless irritation that intellectual property laws can cause.


Several years ago the avant-garde film animator Ralph Bakshi decided to make a movie of J. R. R. Tolkien's classic fantasy trilogy The Lord of the Rings. Or rather, he decided to split the trilogy into two movies, since the work is really too long to fit easily into a single film.


So Bakshi started off with Lord of the Rings (Part One). This movie covered the first volume of the trilogy, and part of the second volume. The second movie was to have covered the rest of the second volume, and then the whole of the third volume. To make the first movie, then, Bakshi needed to buy the rights to the first two volumes, and this is what he (or, presumably, his studio) did.


But Bakshi never got around to making the second movie (probably because the first movie turned out to be less successful financially than had been anticipated).


(Note: abandonment of un-profitable projects is the market working correctly.)


Enter Rankin-Bass, another studio. Rankin-Bass had made an animated TV-movie of Tolkien's earlier novel The Hobbit, and they were interested in doing the same for the second part of Lord of the Rings, left unfilmed by Bakshi.


But there was a problem. Bakshi's studio had the rights to the first two volumes of the trilogy. Only the rights to the third volume were available. So Rankin-Bass' sequel (released as The Return of the King) ended up, of necessity, covering only the third volume.[46]


(Note: Rankin-Bass could have purchased the rights to volume 2, and chose not to.)


Those events from the second volume that Bakshi had left unfilmed were simply lost. (Not even flashbacks to events in the first two volumes were permitted — although flashbacks to The Hobbit were okay, because Rankin-Bass had the rights to that.)


Video catalogues now sell The Hobbit, The Lord of the Rings, and The Return of the King as a unified package. But viewers unfamiliar with the books will be a bit puzzled. In the Bakshi film, the evil wizard Saruman is a looming force to be reckoned with; in the Rankin-Bass sequel, he is not even mentioned. Likewise, at the end of the Bakshi film, Frodo, Sam, and Gollum are traveling together; at the beginning of the Rankin-Bass sequel we find them split up, without explanation. The answers lie in the unfilmed portion of the second volume, which deals with Saruman's defeat, Gollum's betrayal of Frodo, Sam's battle with Shelob, and Frodo's capture by the Orcs. Not unimportant events, these. But thanks to intellectual property laws, the viewer is not allowed to know about them.[47]


No, thanks to intellectual property laws, investors are routinely willing to risk millions of dollars creating films for our entertainment, in the hopes that they can realize a profit by having the exclusive right to market it. The belief that major motion pictures, like The Hobbit or Lord of the Rings, would be produced without IP is like believing that an automobile factory would be produced without a property right in the assembly line.


[Are missing plot elements in a cartoon] a catastrophe? I suppose not. The æsthetic unity and continuity of a work of art was mangled, pursuant to the requirements of law. But it was just an animated TV-movie. So what?[48]


So what, indeed. I agree that the artistic integrity of the trilogy was compromised. But the culprit was not IP. The culprit was the box-office failure of the avant-garde filmmaker’s work. Libertarians all understand that failed economic ventures must be allowed to fail, so that scarce resources (including scarce intellectual resources), may be reallocated to their more highly valued use.


Yet again, it must be pointed out that the type of problem presented here is not unique to IP. One could easily find examples where real estate developments remained unfinished, or were only finished in a compromised fashion compared to original plans. Is this an argument against the validity of property? No, no, no.


So what, perhaps. But my [artistic mangling of Tolkien] story does serve to cast doubt on the idea that copyright is a bulwark of artistic expression. When a work of art involves reworking material created by others (as most art historically has), copyright laws can place it in a straitjacket.


This is so completely wrong I lack sufficient adjectives. Long is talking about people who willingly risked millions of dollars and years of time to produce an animated film based on a classic series of books. Other than the very rare case of a wealthy philanthropist funding a pet project, nobody, repeat nobody is going to invest millions of dollars producing entertainment unless there is a copyright. To do so would defy the logic of human action.


None of this is to suggest that the entertainment industry has any entitlement to profit, or to even exist. With the advent of automobiles, the once-profitable horse-and-buggy industry became extinct. But this was because cars offered a superior alternative in personal transportation, not because people decided that there was no valid property rights in horses and buggies, or the associated farms and factories.


Long’s “Alternatives To Intellectual Property Rights”


I may have given the impression, thus far, that intellectual property rights serve no useful function whatever. That is not my position. I think some of the ends to which copyrights and patents have been offered as the means are perfectly legitimate. I believe, however, that those ends would be better served by other means.[49]


Having ignored the philosophy and botched the economics, Long ventures into legal theory:


Suppose I pirate your work, put my name on it, and market it as mine. Or suppose I revise your work without your permission, and market it as yours. Have I done nothing wrong?


On the contrary, I have definitely committed a rights-violation. The rights I have violated, however, are not yours, but those of my customers. By selling one person's work as though it were the work of another, I am defrauding those who purchase the work, as surely as I would be if I sold soy steaks as beef steaks or vice versa. All you need to do is buy a copy (so you can claim to be a customer) and then bring a class-action suit against me.[50]


Long is trying to show that plagiarism without copyright constitutes fraud against the customers, while not harming the author. He obviously does not realize that property is the basis of any lawsuit.


Fraud occurs when a victim is damaged due to a reliance on an intentional deception. There are three essential elements to a fraud claim – deception, reliance, and damages.  The plagiarist is deceiving the customers by lying about authorship, and the customers are relying on the deception. But how are the customers damaged? After all, they got the book they paid for.


Long’s analogy fails.  Plagiarism is not like selling “soy steaks as beef steaks”. It’s like selling beef steaks grown on Jim’s farm claiming they were beef steaks grown on Bob’s farm. The content is identical.  The only thing the customers are being cheated out of is the satisfaction in knowing they are reading the work of a particular writer. In other words, to show fraud we would have to find a compensable value present in the reputation of the original author.


But wait a minute, a value in reputation is a form of intellectual property. Finding a property right in one’s reputation is the basis for laws against defamation (i.e. libel and slander). Property rights in reputation are arguably more tenuous than copyright, yet Long doesn’t seem to realize that his proposed fraud lawsuit hangs by that tiny thread.


With copyright, correctly understood, plagiarism is a form of theft from the author. The plagiarist expropriates the productive capacity of the author, then uses that productive capacity to mass-produce copies, then contracts to sell copies to the customers. It’s like manufacturing goods with stolen machinery.


Whether the customers are damaged will depend on whether they are made to return the goods. Without copyright, we really have no common law remedy against plagiarism, because damages are always related to the concept of property.


There are other legal options available to the creators of intellectual products. For example, many software manufacturers can and do place copy-protection safeguards on their programs, . . .[51]


Copy-protect exists to protect property, like locks on a door. Without IP, what would be the purpose of copy-protect? It would be protecting something that didn’t belong to you, like putting a lock on the door to an abandoned, un-owned building.


 . . . or require purchasers to sign contracts agreeing not to resell the software. [52]


Sorry, but one may only contract with that which is one’s own property. If there is no intellectual property right in software, there is no basis for any kind of contract regarding it. When Long and others have suggest contracts as an “alternative” to IP, they really are just demonstrating their deep down understanding that IP is valid property and may be the subject matter of a valid contract.


Likewise, pay-TV satellite broadcasters scramble their signal, and then sell descramblers.[53]


Pointing out copy-protect strategies like scrambling serve to illustrate that information is useful, controllable, scarce, contestable, and rivalrous.  Intellectual works thus have all the attributes of legitimate property. Again, copy-protect without IP is nonsense.


None of these techniques is foolproof, of course. A sufficiently ingenious pirater can usually figure out how to get around copy protections or descramble a signal. And conditional-sale contracts place no restriction on third-party users who come by the software in some other way. Still, by making it more difficult to pirate their intellectual products, such companies do manage to decrease the total amount of piracy, and they do stay in business and make profits.[54]


By waving the black flag of “pirates”, Roderick Long is waving the white flag of “surrender”. Pirates are thieves and trespassers. If there is no property, there are no pirates, only explorers and sightseers. If there are pirates, there must be property.


But what if I do go ahead and market your work without your permission, and without offering you any share of the profits? [55]


Long gives up the fight here, by referring to “your” work. “Your” means “owned by you”. No property means no ownership. Without IP, it’s just “the” work.


Is there nothing wrong with [IP pirating]? Can nothing be done about this?


In the case [of unauthorized software copying], I don't think what I've done is unjust. That is, it's not a violation of anyone's rights. But it's tacky. Violating someone's rights is not the only way one can do something wrong; justice is not the only virtue.[56]


Long is just philosophically muddled. All rights are property rights. All wrongs are property violations. In fact, violating someone’s rights is the only way to do something wrong. Without IP, there is absolutely nothing wrong with plagiarism or unauthorized copying. Long says copyright violation is “tacky”. Long is discussing one of the most important philosophical issues of our time, and his grand conclusion of how best to conceptualize the expropriation of intellectual work is an undefined term borrowed from Miss Manners? Tacky, indeed.


But justice is the only virtue that can be legitimately enforced. If I profit from pirating your work, you have a legitimate moral claim against me, but that claim is not a right. Thus, it cannot legitimately use coercion to secure compliance. But that doesn't mean it can't be enforced through other, voluntary methods.


A good deal of protection for the creators of intellectual products may be achieved through voluntary compliance alone. [57]


Wait, what? Protection? For creators of intellectual products? If there is no property, there’s nothing to protect. If they are protecting something, they are sure acting like it’s property. If others are trying to get at what they are protecting, humans are acting as though intellectual objects are scarce and rivalrous goods.


Consider the phenomenon of shareware, in which creators of software provide their products free to all comers, but with the request that those who find the program useful send along a nominal fee to the author. Presumably, only a small percentage of shareware users ever pay up; still, that percentage must be large enough to keep the shareware phenomenon going.[58]


The existence of copyright obviously does not prohibit shareware, so it’s difficult to see what Long’s point might be in bringing that up.


There are more organized and effective ways of securing voluntary compliance, however. I have in mind the strategy of boycotting those who fail to respect the legitimate claims of the producers. Research conducted by libertarian scholar Tom Palmer has turned up numerous successful instances of such organized boycotts. In the 1930's, for example, the Guild of Fashion Originators managed to protect dress styles and the like from piracy by other designers, without any help from the coercive power of government.[59]


The Fashion Guild boycott is a nice libertarian example of how a free market can enforce intellectual property rights. Boycotts can be successful by convincing the public that wrongdoers are to be avoided. Absent an understanding of a property right in the designs, there is simply no basis for a boycott, because “pirates” would have done nothing wrong.


A voluntary boycott is actually a much safer tool than government for protecting the claims of intellectual producers, because, in the course of trying to strike a pragmatic balance between the economic power of producers and the economic power of consumers, a private effort is more likely than a government monopoly freed from market incentives to strike an analogous balance between the legitimate moral claims of the two groups — the producers' moral claim to remuneration, and the consumers' moral claim to easily accessible information.[60]


Here Long is admitting that intellectual producers would have claims against pirates, as if that didn’t require property. Whether construed as a “legal” claim or a “moral” claim, no property means no claim.


Something more formal can easily be imagined. In the late Middle Ages a voluntary court system was created by merchants frustrated with the inadequacies of governmentally-provided commercial law. This system, known as the Law Merchant ("law" being the noun and "merchant" the adjective), enforced its decisions solely by means of boycott, and yet it was enormously effective. [61]


Yes, but their basis for identifying wrongs was property violations. 


Suppose producers of intellectual products — authors, artists, inventors, software designers, etc. — were to set up an analogous court system for protecting copyrights and patent rights — or rather, copyclaims and patent claims (since the moral claims in question, though often legitimate, are not rights in the libertarian sense). Individuals and organizations accused of piracy would have a chance to plead their case at a voluntary court, but if found guilty they would be required to cease and desist, and to compensate the victims of their piracy, on pain of boycott.[62]


The system Long envisions sounds lovely. But whether Long uses the word “rights” or “claims” makes no difference. Long is speaking of his belief that it is wrong to use something created by another without consent. That belief has a name. And its name is “property”.


What if this system went too far, and began restricting the free flow of information in the same undesirable ways that, I've argued, intellectual property laws do? [63]


Apparently Long realizes that he’s just renaming property.


This is certainly a possibility. But I think the danger is much greater with coercive enforcement than with voluntary enforcement. [64]


Yes, there is a problem with coercive enforcement. Of anything. This is an argument against the state, not property. 


As Rich Hammer likes to point out: ostracism gets its power from reality, and its power is limited by reality. As a boycotting effort increases in scope, the number and intensity of frustrated desires on the part of those who are being deprived by the boycott of something they want will become greater. As this happens, there will also be a corresponding increase in the number of people who judge that the benefits of meeting those desires (and charging a hefty fee to do so) outweigh the costs of violating the boycott. Too strenuous and restrictive a defense of copyclaims will founder on the rock of consumer preferences; too lax a defense will founder on the rock of producer preferences.[65]


Napster was a peer-to-peer file sharing site, with 100s of thousands of song titles available for free, and some 80 million registered users.[66] This occurred in a world with copyright. I ask you to first imagine a world without copyright, and without a concept of intellectual property. In that world, now imagine organizing a boycott of Napster at the height of its popularity.


Long’s “Second Tolkien Story”


Let me close with a second story about Tolkien and his famous trilogy. The first edition of The Lord of the Rings to be published in the United States was a pirated edition from Ace Books. For reasons which I now forget, Tolkien could not take legal action against Ace. But when Ballantine came out with its own official author-approved American edition of The Lord of the Rings, Tolkien started a campaign against the Ace edition. The Ballantine edition was released with a notice from Tolkien in a green box on the back cover stating that this was the only authorized edition, and urging any reader with respect for living authors to purchase no other. Moreover, every time he answered a fan letter from an American reader, Tolkien appended a footnote explaining the situation and requesting that the recipient spread the word among Tolkien fans that the Ace edition should be boycotted.


Although the Ace edition was cheaper than the Ballantine, it quickly lost readers and went out of print. The boycott was successful.


It might be objected that Tolkien devotees tend to be more fanatical than the average readers, and so such a strategy of boycott could not be expected to succeed in ensuring such loyalty generally. True enough. But on the other hand, Tolkien's boycott was entirely unorganized; it simply consisted of a then-obscure British professor of mediæval language and literature scribbling hand-written responses to fan letters. Think how effective an organized boycott might have been![67]


The boycott worked because Tolkien, his publisher, and the customers understood that Ace was violating intellectual property rights. Absent that property right, there is no basis for Tolkien to suggest a boycott, and no reason for the customers to participate.


Final thought on Roderick Long’s paper


Long began by noting that some libertarians view intellectual property as just that – property. Long would have done much better to actually confront that philosophical issue and apply praxeological reasoning. Instead, Long mostly avoids any consideration of what scarcity and rivalry mean, and how those concepts justify property rights.


Long eventually admits the failure of his own position on IP by conceding that violations are morally wrong. It would have saved us all some trouble if he would have simply acknowledged that this finding can only be based on property rights, and nothing else. Instead, Long chooses subterfuge by making a false distinction between “moral rights” and “legal rights”, and renaming “rights” as “claims”.


I cannot help but be puzzled by the extraordinary lack of rigor shown by the libertarian community in analyzing the issue of intellectual property. Troubling as the thought may be, I must consider the possibility that the “libertarian” anti-IP position is motivated by pure opportunism. Is it possible that normally diligent economists and philosophers have made a calculated assessment that their own intellectual property is of little economic value, while the potential audience of amoral anti-IP sympathizers is vast?


[1] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[2] Id.

[3] Id

[4] Bowker, R. “Copyright, Its History and Its Law” (1912); see also Birrell, A., “The Law and History of Copyright in Books  (1899).


[5] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[6] Id

[7] See Hoppe, Hans-Hermann Theory and History (2004).

[8] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[9] Id

[10] Id

[11] Id

[12] Id


[13] Id

[14] Rothbard, Murray N. “Human Rights as Property Rights”, Mises Daily (2007)

[15] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[16] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[17] Id

[18] Id

[19] Id

[20] Mises, L.V. “The Ultimate Foundation of Economic Science”, sect. 5

[21] See discussion of The Mises Test of External Reality under section II of this work

[22] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[23] Id

[24] Id

[25] Tucker, Benjamin “Instead of a Book, By a Man Too Busy to Write One: A Fragmentary Exposition of Philosophical Anarchism” (New York: Tucker, 1893), p. 13.

[26] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[27] Id

[28] Long’s “saber tooth tiger” hypothetical involved a patent for a levitation machine. As explained, I do not support IP rights on patents generally. I was assuming an IP right in the design of the machine for sake of Long’s hypothetical.

[29] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[30] Rand,  Ayn “Capitalism: The Unknown Ideal” (New York: New American Library, 1967), p. 133.

[31] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[32] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[33] Id

[34] See my blog post “Copying is not Theft by Nina Paley”.

[35] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[36] Id

[37] See “Take on Me” Wikipedia

[38] See “Feel This Moment” Wikipedia

[39] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[40] Id

[41] Id

[42] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[43] See Boldrin & Levine “Against Intellectual Monopoly” Cambridge University Press (2008)

[44] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[45] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[46] Long, Roderick “The Libertarian Case Against Intellectual Property”, Formulations (1995)

[47] Id.

[48] Id.

[49] Id.

[50] Id.

[51] Id.

[52] Id.

[53] Id.

[54] Id.

[55] Id.

[56] Id.

[57] Id.

[58] Id.

[59] Id.

[60] Id.

[61] Id.

[62] Id.

[63] Id.

[64] Id.

[65] Id.

[67] Id.