Monday, May 12, 2014

Title-Transfer Theory of Contracts (and other notes to Steve)

A reader named Steve has stated what he believes are central claims of my thesis. He then asserts that he has shown them to be false. These occurred in the the comments section of my post titled "3 Questions . . ."

Following are his statements, with my responses.


1) Because people value so-called "IP," property rights are necessary in so-called "IP."

Intangible goods are scarce and rivalrous

 

People value intangible goods, just as they value physical goods. Just as with physical goods, property rights to intangible goods are necessary because they are scarce and rivalrous.

Briefly, an intellectual work, like a song, is like a factory. At first the song does not exist. Once homesteaded into existence, the producer of the song owns its productive capacity, just as one can build and own a factory. Making copies of a song is like making copies of a widget on the assembly line. The song owner is entitled to 100% of the productive capacity of the song, just as the factory owner is entitled to 100% of the productive capacity of the assembly line.

A person will use their property in a way that brings value. Valuation is subjective. Thus, "use" is subjective.  The producer's use of a song is to exploit it commercially, thus unauthorized copying interferes with the producer's use. Only by presuming that valuation is objective can one decide that copying does not interfere.

Much of Intellectual Space is devoted to an explanation of this concept. In particular, see "Grammy Essay", and "The Alleged Case Against Intellectual Property".


2) Contracts involving so-called "IP" are impossible without assigning property rights in so-called "IP."

No property, no contract 

 

That is exactly correct, contracts involving IP are impossible without assigning property rights in IP.  Please see Rothbard (and indeed Kinsella) on the title-transfer theory of contract. One may only contract with that which is one's own property. If there is no property right in a pattern of ideas, then one cannot buy, sell or license that pattern of ideas.

3) People would only be ostracized if they violated someone's property right.

No property, no wrong

 

We do not ostracize randomly. We ostracize those who have done something wrong.  If there is no property right violation in, say plagiarism, then it is not wrong. Thus, without IP, there is no basis to ostracize.


All legal rights are property rights. Period. All legal wrongs are property violations. Period.


4) People necessarily have property rights in the products of their labor.

Service contracts are title-transfers

 

A person rightly owns the product of his labor, assuming he did not violate the property rights of others in the process. Keeping this in mind helps clarify why a service contract is a contract for the exchange of property titles, just as with any contract.

Suppose you hire me to paint your house. I am renting my physical body to you for some period of time, which I may do because I own my body. You agree to allow me in while I work, which you may do because you own the house. I agree to let you keep the layer of paint on your wall, which is the product of my labor.





12 comments:

  1. Alexander,

    For the purposes of this discussion, I would like to ask you to acknowledge three things:

    1) An intangible good is defined as a good that is unable to be touched or grasped; a good that has no physical presence.

    2) A scarce good is the same thing as a rivalrous good, with a rivalrous good defined as a good whose use by any one person for any one purpose would not in any way exclude, or interfere with, or restrict its use by any other person or for any other purpose.

    3) The burden of proof is on you to demonstrate that property rights in intangible things are necessary.

    Do you acknowledge these three things?

    Best regards,
    Steve

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    Replies
    1. 1) I've given my operational definitions:

      http://homesteadip.blogspot.com/2013/04/intellectual-space-definitions-of-key.html

      My definition of intellectual space, matter, objects, and property are more precise. But we can go with this to see where it leads.

      2) Your syntax has a typo, reversing your meaning. What I think you mean is this.

      Rivalrous - use by any one person for any one purpose interferes with or restricts its use by any other person of for any other purpose.

      Yes, I'll go with that.

      3) It could be argued that the burden of proof would fall an those seeking to abolish the status quo. But for purposes of this discussion, and because I appreciate a difficult challenge, OK.

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  2. Alexander,

    1) Your other operational definitions are irrelevant to the definition of an intangible good. For the purposes of this discussion, I'm using the standard definition of intangible: something that can't be touched or grasped and that has no physical presence. So intangible goods are non-physical: they are information, ideas, patterns, etc.

    2) Yes, you are correct. I meant to say that a rivalrous good is a good whose use by any one person for any one purpose would in some way exclude, or interfere with, or restrict its use by any other person or for any other purpose.

    3) The status quo is irrelevant. Anyone can come up with ways to assign property rights in anything. You are trying to show that it is *necessary* to assign property rights in intangible goods.

    Are we on the same page?

    Best regards,
    Steve

    ReplyDelete
    Replies
    1. I assume we can use Carl Menger's definition of "goods".

      My other definitions are relevant, because each preceding term appears in a subsequent definition: matter --> object ---> property.

      Your definition of intangible goods is vague. It leaves out some key elements - namely "ascertainable", "bounded" , "temporally stable", and "able to condition the outcome of human events". Not all intangibles could be rightful property. Some can, some cannot.

      Lets go with this, substituting "intangible" for "intellectual" if you like:

      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






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    2. Alexander,

      My definition of intangible goods will work for purposes of this discussion, because I intend to show that it's not necessary to assign property rights in any non-physical goods at all.

      So, to recap:

      1) An intangible good is a non-physical good: information, ideas, patterns, etc.

      2) A scarce good is a rivalrous good, i.e., a good whose use by any one person for any one purpose would in some way exclude, or interfere with, or restrict its use by any other person or for any other purpose.

      3) You must show that it's necessary to assign property rights in intangible goods.

      Agreed?

      Best regards,
      Steve

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    3. By "necessary" we mean something like "conflict will result if not obeyed" ?

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    4. Anyway, OK. For purposes of this conversation, we can go with your definitions.

      I AGREE!!

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    5. We both agree that it's necessary to assign property rights in rivalrous goods, correct? That, because of their nature, there is always the possibility of conflict, so rules that assign rights of exclusive control are necessary?

      We both agree that goods that are not rivalrous, i.e., goods whose use by any one person for any one purpose would not in any way exclude, or interfere with, or restrict its use by any other person or for any other purpose, do not have to have property rights assigned in them, correct?

      This is where your claim comes in: that certain intangible things are rivalrous, and that those things therefore need to have property rights assigned in them. Right?

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    6. Ok, my argument is posted here:

      http://homesteadip.blogspot.com/2014/05/why-intangible-goods-are-scarce-and.html

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  3. "No property, no wrong."

    So fraud isn't wrong? If someone else digs a ditch, but you knock them out and claim credit, that's not wrong? Even if no money was involved, but you wanted to curry favor?

    ReplyDelete
    Replies
    1. I'm speaking here of legal rights, and legal wrongs. All legal wrongs are property violations.

      Of course fraud is wrong. Fraud has 3 elements - deception, reliance, and harm. I deceive you, you rely on the deception, and are harmed as a result. Harm must take the form of an injury to property.

      Of course it is wrong to "knock them out". A person has a property right in their own body. Therefore battering another person injures that person's property.

      If you falsely take credit for someone else's labor, that is wrong if in so doing you obtain property. This would be fraud. If the falsehood merely injures someone's reputation, then a finding of wrongdoing would need to be based on a property right in one's reputation. This is known as "defamation".

      I'm with Murray Rothbard, I don't find a property right in a reputation.





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