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Why Libertarians Should Stop Worrying and Learn to Love Intellectual Property

December 5, 2009

This guest post comes from Michael F. Martin, a Thousand Nations regular, and a blogger at Broken Symmetry.–editor

Toward a Libertarian Theory of Intellectual Property

We libertarians, being libertarians, are seldom to be found in agreement on first principles when it comes to anything, especially legitimate roles of government.  But if there were one principle to which all libertarians might agree, it would be this: that government, in carrying out its legitimate roles, should minimize costs.  The costs of government include not only the more obvious direct costs in the form of taxes and redistributions of property, but more importantly the much larger and more pernicious indirect costs of distortions to private institutions and organizations. (I follow the convention of some economists in distinguishing between the rules that define activity among a group of people (“the institutions”) and the group of people itself (“the organization”).) When government intervenes to benefit a particular group in society, even for noble of reasons, it can also undermine private institutions that have evolved to bring order, private institutions that may reflect a broader and more stable consensus than can be achieved even by a representative democracy.  At the margins of government reach, communities can and do by consensus ignore legal norms, thereby avoiding the distortions caused by the undermining of locally stable cultural norms.  We Americans should be as proud of the ranchers in Shasta County, California who ignore California trespass law as we are of the Founding Fathers who disobeyed the laws of a more ancient and powerful sovereign.

But true to libertarian form, I mean to challenge this most basic of libertarian principles.  For through my study and practice of intellectual property and antitrust law, I have come to the view that a broader proposition should be embraced: That all institutions in society, in carrying out their legitimate roles, should minimize costs.

Why the need for this broader proposition?  In short, because great benefits may be gained by keeping the same skeptical and minimalist eye, which libertarians naturally keep on government, on all institutions in society, whether public and private.  By focusing on government costs alone, libertarians have been blind to the costs of private institutions.  In the end, what difference does it make whether an oppressive institution is called public or private?  What libertarians are in favor of is more freedom, not less government.

Some readers might object: How can a private institution be costly like government?  The cost of government — so these readers might say — is coercion.  And by definition, no private institution can be guilty of coercion.

My answer is that this objection begs the question.  Both public and private institutions interfere with individual liberties.  The constraints that parents place upon the liberties of their children — mental, emotional, and physical — are not different in kind from the constraints that governments place upon their citizens.  Parents’ rules are not just because parental; governments’ rules not unjust because governmental.

A stubborn reader might nonetheless persist: If not different in kind, then in degree.  Government coercion is at a scale (of millions of people) and to a degree (of taking life) beyond private coercion.  A glance at twentieth century history confirms it.

There can be no doubt that twentieth century history put a stink on government.  But did it leave private institutions smelling like a rose?  More importantly, the stubborn reader has already conceded my point by acknowledging that the scale and degree of coercion — rather than public or private status per se — is what makes government costly.  By this reasoning we can dismiss libertarians who argue against intellectual property simply because it is a government institution.

Having cleared away distractions, the more difficult question can be addressed:  Does intellectual property play a legitimate role at minimal cost relative to alternative institutions?  The question has both moral and economic dimensions.  Whether the role played by a given institution is legitimate is moral.  Whether there is not a better institutional form for accomplishing a given legitimate role is economic.  Intellectual property law should be favored by libertarians both for its moral and economic merit.

The Moral Case

The best argument ever made for the moral and economic merits of intellectual property was made very close to 150 years ago in Jacksonville, Illinois, where Abraham Lincoln gave a lecture (one in a series; multiple versions of which are available online).  Lincoln’s lecture “On Discoveries and Inventions” concludes with famous words: “Before [the patent system], any man might instantly use what another had invented; so that the inventor had no special advantage from his own invention. The patent system changed this [by securing] to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.”

What did Lincoln consider the moral case for patents?  To punish theft.  Without a property right in an invention, anybody who devoted the time and effort at inventing would be at the mercy of any dishonest character who managed to learn enough about the invention to copy.  To Lincoln, that seemed unamerican.  To Lincoln, the great difference between the United States and the nations of Europe was the result of “Discoveries, Inventions, and Improvements,” which in turn “are the result of observation, reflection, and experiment.”  In the United States, inventors earn rewards.

Some are skeptical of Lincoln’s premise.  Wouldn’t people spend time in “observation, reflection, and experiment” even without the rewards of intellectual property?

Some people, yes.  But for Lincoln the question was not whether inventing could go on without intellectual property.  Clearly it had in Europe, Greece, and Egypt.  (Although interestingly, the first patent system emerged from renaissance Venice.)  For Lincoln, the question was whether we ought to protect the livelihood of people who spend their time in “observation, reflection, and experiment.”  Lincoln never worried, as did Thomas Jefferson, that ideas wouldn’t spread fast enough if intellectual property punished copyists.

The Economic Case

The economic case for intellectual property is the most difficult.  The economic theory taught in law schools relies heavily on the principles of neoclassical economics, emphasizing equilibrium and the allocative efficiency of markets.  The recent paper by Bessen and Maskin provides an illustration.  A careful mathematical model is made of the net present value of patenting given a stream of innovations and the costs of licensing intellectual property.  But no theory or model is given for the source of the stream.  Many neoclassical economists seem to assume that inventions are an inevitable consequence of market competition.  No particular attention need be paid to inventors.  If the invention is efficient, an inventor will invent.  Even F.A. Hayek seems to have fallen into this circular reasoning.  More careful observation and reflection on inventing results in a calculus of costs and benefits in clear favor of intellectual property.

It is supremely ironic that Hayek opposed intellectual property because it was Hayek who founded the economic theory of institutions and organizations that reveals the economic case for intellectual property.  In particular, it was Hayek who first wrote about the problem of coordinating dispersed bits of information held by individuals in society.  It was Hayek who first explained why decentralized institutions should be favored over central planning.  What Hayek understood was that the costs of information gathering and processing increased with scale much faster than even the most well-run central planning could handle.  At best, the result of central planning at scale are institutions badly adapted or poorly timed to resolve disputes.  At worst, central planners are corrupted by incumbent authorities or vocal minorities into serving an elite group in society.

By contrast, decentralized institutions in the form of privately adaptable rules provide a scalable, accessible mechanism for resolving competing claims to scarce resources.  The archetypal Hayekian decentralized institution is market price.  By looking at market price signals, a dispersed group of individuals through society can coordinate a variety of activities associated with production and consumption without a single meeting, much less an election.  The story has been told of Nixon being introduced to a central planner in China who simply could not grasp how there was no need for his job in the United States.  Those days seem ancient!

But what is it exactly that makes decentralized institutions superior to central planning?  Is it the fact that central planning is done by government?  Consistent with the analysis given above, the answer is no.  First, whether public or private, central planning is less efficient than decentralized institutions.  Institutional religion, for example, is not exempt from the problems of central planning that plague governments.  Governments simply limit the damage that can be done by the central planning of institutional religion.  The Founding Fathers struck a unique balance through the First Amendment, permitting the United States a unique equilibrium between religious and government institutions.  (But maybe it’s better to say that the First Amendment was a consequence of the unique equilibrium that existed rather than its cause.)  Conversely, decentralized institutions are not perfectly private.  There can be little doubt, for example, that a threshold level of government is necessary to markets for insurance, much less complex derivatives.

What makes decentralized institutions superior is their structure and dynamics.  Decentralized institutions comprise a set of rules that underdetermine the outcome of competing claims to scarce resources.  In many cases, the rules are mutable — i.e., subject to renegotiation among parties and counter-parties.  As a group, the individuals subject to constraint by decentralized institutions get feedback earlier and more often than do the individuals subject to rule by central planners.  Moreover, the process of variation, selection, and retention of rules that seem to work well for subject individuals means that decentralized institutions actually learn and adapt to changing circumstances.

Intellectual Property as Complex Adaptive System

The most compelling economic case for intellectual property is that it provides a decentralized alternative to centrally planned alternatives, such as prizes, grants, or even tax credits.  Intellectual property does not determine economic outcomes.  Rather, like other systems of property and contract law, it constitutes a market whereby outcomes are determined through repeated private interactions.  Intellectual property law is a substrate on which a network of inventors, entrepreneurs, and established companies coalesces into an ad hoc organization formed with a particular social goal.  The cooperation of legally separate NFL teams to license the NFL brand on an exclusive basis to Reebok — now on appeal to the Supreme Court in the American Needle case — provides only a hint of what can be accomplished when dispersed organizations band together through intellectual property rights to accomplish specific goals.  The formation of patent pools for the licensing of drugs developed for treatement of HIV/AIDS are another.

Although Lincoln would not have chosen these terms, we can be sure that he nevertheless had this decentralized network of intellectual property rights in mind when he argued in favor of the patent system 150 years ago.  In his extended argument, he identifies the patent system as the fourth major stage in the progress of civilization.  Lincoln identified speech, writing, and printing as the first, second, and third stages.  What all four stages have in common is their status as decentralized institutions.  All are subject to renegotiation over time through an evolutionary process.  As I have noted elsewhere, had he anticipated their invention, Lincoln almost certaintly would have added internet protocols as a fifth stage.  Perhaps intellectual property should be called the fifth and internet protocols the fourth.

Elsewhere I have made the argument that the patent system should be understood as an evolving complex system, and that important problems with current system could be solved by understanding patents in those terms.  In the terms presented here, my argument is that decentralized institutions constitute a complex adapative system, although to avoid the somewhat unfortunate terminology I often abbreviate this to “systems theory,” a moniker embraced by a diverse group of venerable authorities including Mihalyi Csikszentmihalyi, Douglas McGregor, and W. Edwards Deming.

In this post I cannot provide an appropriate introduction to systems theory.  I must instead assert that a comparative institutional analysis conducted within the framework of systems theory strongly suggests that a decentralized institution like intellectual property is constitutive of innovation in ways that alternatives such as prizes or grants could never be.  Whereas prizes or grants are made (in a best case scenario) when the prospective value of an invention comes in view for the central planners, intellectual property permits a dispersed group of private individuals and organizations to invest in new technology.  Whereas the internal rate of return to investment in new technology would be negative (for easily copied technology) or too small to incur opportunity costs (for almost any technology), the security of intellectual property rights promises the possibility of outsize rewards for a limited time.  We are all gamblers in view of the uncertain future.  Intellectual property simply encourages a gamble on investments that promise even larger social benefits over the longer term.  In this limited regard, anaologies to secured credit, derivatives, and insurance markets are not inapt. All of these institutions facilitate the creation of wealth — in a literal sense — by facilitating divisions of labor and voluntary exchange that would otherwise be impracticable.

Given the scope of its impact, even ten years is too short a time to evaluate the relative costs and benefits of a intellectual property. But historical evidence for the net benefits of intellectual property is not hard to find looking across the longer span of history.  As noted above, the patent system was born in renaissance Venice, and carried out across the European continent by artisans who sought a reasonable reward for time spent perfecting a particular skill.  Although the English and American patent systems got off to a bad start by failing to honor the basic quid pro quo of public disclosures of knowledge in exchange for limited exclusive rights, by the mid-nineteenth century (the Patent Act of 1836 to be precise), the patent system had taken on what is substantially its modern form.  Interestingly, the concept of trade secrets as intellectual property rights emerged around the same time.  The industrialization that took place in the United States subsequent to 1836 is at least comparable in scope to the fifteenth century renaissance in Italy.

In the past, libertarians have simply misunderstood intellectual property to be merely government-granted privilege. Libertarians should be in favor of intellectual property because it promotes freedom through private enterprise at a scale and to a degree anticipated only by speech, writing, printing, and the Internet.

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24 Comments
  1. Thomas permalink
    December 5, 2009 9:45 pm

    What a beautiful, crystalline post.

    I’ve been attempting to make some of these arguments, in various awkward and evolving forms, for many years now — from heated dinner-table debates with friends to backwater web forum tussles in the Napster days. This column neatly sums up my thinking, and tidies up a few loose ends I could never quite properly wrangle.

    There’s another moral case that is occasionally presented as libertarian in form: an individual’s right to the fruits of his mind. This is a tricky one for me. It seems that its proponents must necessarily insist that patents/copyrights thus be granted in perpetuity — there is, after all, no expiration date on a natural right. (And since most don’t, they water down their own argument.) Still, I’m open to convincing.

  2. December 5, 2009 10:31 pm

    I don’t admire the founding fathers for rebelling against England. I think it was a mistake. Bryan Caplan, Mencius Moldbug and Dennis Mangan agree with me on that.

    I have endorsed parents having unlimited authority over their children, up-to-and-including ritually sacrificing them to Satan and then eating them.

    Violating intellectual property is no more theft than competing with a chartered monopolist is. The owner still owns all the physical property they previously owned, it has not been in any way altered by the violator.

    Greg Clark writes in “A Farewell to Alms” that returns to inventors don’t seem to have had anything to do with the industrial revolution. Innovations were swiftly copied and so many inventors died poor, but innovation exploded anyway.

    First, whether public or private, central planning is less efficient than decentralized institutions.
    The theory of the firm says otherwise, at least when stated so absolutely. There are economies and diseconomies of scale when it comes to central planning.

    Conversely, decentralized institutions are not perfectly private. There can be little doubt, for example, that a threshold level of government is necessary to markets for insurance, much less complex derivatives.
    I think a debunking of anarcho-capitalism will require a bit more argument than that, particular at a site you would expect to find anarchists at.

  3. Thomas permalink
    December 5, 2009 10:44 pm

    “Violating intellectual property is no more theft than competing with a chartered monopolist is. The owner still owns all the physical property they previously owned, it has not been in any way altered by the violator.”

    You’ve begged the question.

  4. December 6, 2009 1:25 am

    Have you ever read Rothbard about copyrights? He makes the definitive libertarian case in defense of copyright as a natural part of property rights and freedom to make contracts:

    “Violation of (common law) copyright is an equivalent violation of contract and theft of property. For suppose that Brown builds a better mousetrap and sells it widely, but stamps each mousetrap “copyright Mr. Brown.” What he is then doing is selling not the entire property right in each mousetrap, but the right to do anything with the mousetrap except to sell it or an identical copy to someone else. The right to sell the Brown mousetrap is retained in perpetuity by Brown. Hence, for a mousetrap buyer, Green, to go ahead and sell identical mousetraps is a violation of his contract and of the property right of Brown, and therefore prosecutable as theft. Hence, our theory of property rights includes the inviolability of contractual copyright.. (source: http://mises.org/rothbard/ethics/sixteen.asp )”

    It surprises me that so many libertarians are against copyright, when it is so clearly an extension of contract rights. If you break make a copy of my book, you are breaking the contract you implicitly agreed to when you acquired my book with the label “Copyright” on it.

    Patents, though, are not defensible from a theoretical, libertarian framework.

    • December 6, 2009 8:21 pm

      Libertarianism would indeed encompass contracts such as the ones Rothbard discussed, but existing copyright law is not like that. Copyrights restrict people who never entered into any contract and give ownership over ideas. The makers of Star Wars sued the makers of Battlestar Galactica for certain similarities that are really archetypes going back to Homer.

      Thomas, intellectual property is a subset of monopoly privileges. What is so special about IP that what is normally considered illegitimate by libertarians now acceptable?

    • December 7, 2009 5:11 am

      Thanks for the pointer. I haven’t read Rothbard on copyright. I’m curious to know why he distinguishes copyright from patent.

  5. Dr. Q permalink
    December 6, 2009 8:00 pm

    “What did Lincoln consider the moral case for patents? To punish theft. Without a property right in an invention, anybody who devoted the time and effort at inventing would be at the mercy of any dishonest character who managed to learn enough about the invention to copy.”

    What’s dishonest about making use of a discovery or invention?

    “The most compelling economic case for intellectual property is that it provides a decentralized alternative to centrally planned alternatives, such as prizes, grants, or even tax credits.”

    This has to be one of the most inane things I’ve ever heard. How can you possibly describe giving someone a monopoly as “a decentralized alternative”? Compare private file-sharing websites to record labels or open-source software to Microsoft and you might learn what the word “decentralized” actually means.

    “The cooperation of legally separate NFL teams to license the NFL brand on an exclusive basis to Reebok – now on appeal to the Supreme Court in the American Needle case — provides only a hint of what can be accomplished when dispersed organizations band together through intellectual property rights to accomplish specific goals.”

    Why can’t “disperse organizations band together” without intellectual property? ownership of a trademark hasn’t added anything to the equation here. A factory that manufactures hats doesn’t need permission from a trademark holder before it becomes physically possible for them to make me a high-quality Patriots baseball cap, does it?

    “… the security of intellectual property rights promises the possibility of outsize rewards for a limited time. We are all gamblers in view of the uncertain future. Intellectual property simply encourages a gamble on investments that promise even larger social benefits over the longer term.”

    So you’re basically saying that the government should grant privileges to businesses engaging in risky R&D ventures? How is that even remotely libertarian? Why do inventions and creations specifically merit this sort of protection?

    • December 7, 2009 5:10 am

      Dr. Q,

      It’s dishonest to take something that somebody worked hard to create without giving something back in return. Just because it can be taken without diminishing what is available to others doesn’t make it less the fruit of the labor of the creator. Why do you think it’s fine to take what took time and money to create without paying for it simply because it costs much less to copy it?

      The answer to your other questions is found in experience, not theory. In principle, perhaps, organizations could contract their way to respecting the work of creators without government-sponsored exclusive rights to reduce those transactions costs. In practice, we don’t see it happen, at least at scale.

      But it is a mistake to assume that intellectual property is a monopoly. Intellectual property, like any property, is a monopoly only when the exclusive rights held by its owner cover a work or invention that has no close substitutes and for which there is demand.

      • Dr. Q permalink
        December 7, 2009 5:31 pm

        “Just because it can be taken without diminishing what is available to others doesn’t make it less the fruit of the labor of the creator.”

        What’s your point? We don’t have property rights because people are entitled to the “fruits of their labor,” we have property rights because tangible goods are scarce and we need a way to allow people to use them without conflict. No such conflict is possible over ideas because they are not scarce. They are infinitely replicable.

      • Dr. Q permalink
        December 7, 2009 5:35 pm

        You admit yourself that people can use the same ideas “without diminishing what is available to others.” How can you possibly consider that a form of theft?

      • December 7, 2009 5:38 pm

        Why do you say ideas are not scarce? Ideas about how to build airplanes, for example, were pretty scarce until about 100 years ago.

        Why do you say ideas are infinitely replicable? The costs of replication are not zero, and might be very high indeed in a scenario in which a separate negotiation with each and every person who might be interested in using the idea were necessary to ensure fair compensation to the creator.

      • Dr. Q permalink
        December 7, 2009 9:46 pm

        “Why do you say ideas are not scarce?”

        Because ideas can be used by more than one person at the same time. It’s not possible for one person to have a farm on a particular plot of land and for another person to have a parking lot on that same plot of land so we need a system of property in order to decide which one of these two people can use the land.

        In the case of an idea, these sorts of conflicts can’t arise. Two songwriters can both use a melody without depriving the other of the ability to use it.

        “Why do you say ideas are infinitely replicable?”

        Because there is no limit to the number of people who can use an idea at the same time. As I said, two people can use the same idea without depriving each other of the ability to use it.

        “The costs of replication are not zero, and might be very high indeed in a scenario in which a separate negotiation with each and every person who might be interested in using the idea were necessary to ensure fair compensation to the creator.”

        I think you’re missing my point. What I’m trying to get at is that if I don’t sign a contract agreeing not to duplicate a CD, then the creator of that CD does not have the right to sue me in the event that I “pirate” the CD or start sharing it with others.

  6. Nicolas1776 permalink
    December 7, 2009 5:09 am

    The moral case for IP made in this post ignores part of the equation. The main point seems to be that IP is morally justified because it rewards (for a necessarily arbitrary period of time) the inventor with a monopoly over all possible embodiments of an idea everywhere it can be enforced.

    It ignores the following consequences:

    1. the IP holder can now prevent others from making use of their knowledge and physical property in some ways without having ever had an agreement with them, either directly or even indirectly in many cases.

    2. some people WILL come up with the same or very similar ideas on their own, only to find out the idea was already being marketed, or simply patented. Some may even have thought of it prior to the current patent holder applying for anything. Yet only the eventual patent holder will reap the rewards, and will also exclude all others from competing. Coming up with smart ideas on one’s own with no copying involved is very common.

    3. because all inventions rely in part on the powers of observation of the inventor, there is no telling what portion of the new invention is attributable to the observation or understanding of the workings of already patented ideas (one idea leading to another which combined with something else may produce a unique method, process or invention).

    Any enforcing of IP rules is only moral insofar as the various actors have agreed to it beforehand. For instance, it cannot be said that IP rules are immoral on a seastead where people have agreed to it being one the founding principles. But even in this context, invoking the morality of it to justify its inclusion in the founding principles would be circular. If morality is to be considered (which is not a pre-requisite), it has to be so PRIOR to it being made necessarily moral as a result of agreement. And clearly in light of #1, #2 and #3 it is not naturally the case. Utilitarianism may be invoked as a reason to include IP in the founding of a society but morality cannot.

    It does seem to me that IP has many other flaws (extremely arbitrary by nature being one of them) and that the negative consequences outlined above far outweigh the intuitive argument that one class of inventors (those with patents) should gain exclusivity at the expense of all others (those who happened to think of it independently but could not get a patent, and those who managed to make something of it). Not only is IP not moral until made so but it is quite possibly not a useful tool in maximizing progress either.

    See http://mises.org/books/against.pdf for a much more comprehensive and eloquent argumentation.

    • December 7, 2009 5:29 am

      Nicloas1776,

      On the moral point, you start with an implied premise that for any rule to be moral, it must apply by voluntary consent. This premise is a starting point for most serious political philosophy, and there are arguments for how the concept of voluntary consent can be extended even to the scale of representative democracy like we have in the United States, but I don’t think it is needed to comprehend the moral argument I make above. The moral argument is that taking and using an idea or work of art or writing that somebody else created without any compensation is morally wrong. I don’t think we need the voluntary consent of everybody in society before we can say that.

      2 and 3 raise an interesting technical point, which is addressed only indirectly above. If you click through the links to the Bessen and Maskin article, you will find them making much the same argument. In economic terms, this is often called the “tragedy of the anticommons” after an article by Heller and Eisenberg. Heller recently published a book called “Gridlock,” revisiting the argument and its applicability to the patent system now.

      The answer to this objection is that it oversimplifies the process of innovation. It assumes, as I say above, that inventions will be invented by somebody when society needs them. It’s a kind of efficient market hypothesis in that regard. What it glosses is over is the fact that most inventions are failures for either technical or economic reasons, and that most investors and engineers or scientists could not justify putting their time and money into solving technical problems whose solution could be easily copied thereafter without the protection of government-backed exclusive rights. In other words, we only have the luxury of assuming that inventors will be there when inventions are needed because we have intellectual property. Although you may be skeptical of this claim when it comes to software or even hardware, you will have a hard time finding anybody who works or invests in the biotech field who would disagree.

      “Complex adaptive system” and “systems theory” are fancy ways of analyzing the structure and function of intellectual property among the diverse groups of people who have an interest therein. To put the argument in more simplistic terms, intellectual property creates a market for creative works, including inventions. Despite flaws, markets are the least costly way of coordinating the behavior of people that we know of, taking administrative costs and information costs into account. If we want our society to have more creative works, including inventions, then we should want intellectual property.

  7. December 7, 2009 5:04 pm

    For all of the commenters who wondered what was wrong with copying somebody else’s ideas, would you be morally okay with what happened in this story:

    http://steveblank.com/2009/12/07/someone-stole-my-startup-idea-%E2%80%93-part-2-they-raised-money-with-my-slides/

    If not, how is what happened to Steve Blank different from any other copying of ideas?

    • Nicolas1776 permalink
      December 8, 2009 5:18 am

      Non disclosure agreements can handle this scenario partly. An inventor could first have the other party sign an NDA which would prevent him from disclosing the idea to third parties (or making use of it) but also make him responsible for any negligence resulting in others profiting from the idea.
      Since they purposefully avoided NDAs because they were expecting mutual gains, they cannot ethically blame others for gaining more in the process than they did. Of course in this specific case, it seems one party acted unethically (calculated risk that backfired) but a patent system is by nature immoral and in a systemic way. This story is about a miscalculated risk that backfired with unscrupulous individuals that were still unable to attain their goals in the end. If anything it goes to show that ideas are cheap and easy to come by (something many people experience on a regular basis)… and execution matters.

      Contract law is no replacement for a government enforced patent system however. Third parties can difficultly be bound by such contracts (in some cases not at all) and enforcement is much more difficult and costly (but then again, so is a patent system). Because I hold IP to be an invalid and immoral concept in the first place, necessarily resulting in arbitrary enforcement, does not mean I will fool myself believing the same results could be achieved with contract law even if desirable.

      The IP debate can easily be settled on the moral side (hint: it isn’t, a priori, moral in the libertarian sense) but the utilitarian side is certainly more ambiguous. As Michael alluded to, IP seems to work differently for different industries or class of ideas.

      This is why we need a thousand nations to see if and which versions of an IP system foster innovation and progress.

  8. December 7, 2009 9:35 pm

    This delightful post brings up an interesting argument, yet it leaves me unconvinced. Having my entire career depend on making “stuff,” I’ve yet to ever patent anything except for clients who’ve requested them. Granting monopolies does not seem like the most efficient method for expanding knowledge and economies. Steve Blank’s story epitomizes how I and my partners have worked for decades, search the patents just to make sure we aren’t going to get torpedoed by a submarine patent, then work like heck to become the most expert in the market. Competition breeds efficiency, it may make it harder to stumble into windfalls at the venture capitalist’s office, but society is better served by the more efficient division of labor.

    My brother even takes advantage of this by voicing ideas of things he’d like to have and broadcasting them as widely as possible. Eventually, if the meme is good enough, a market opportunity can be observed by an expert who then can exploit it. My brother’s idea may not have been directly compensated, but he can now obtain said idea for the fraction of the effort required of him should he have tried to make it himself.

    Benjamin Franklin, I recall, believed that the patent system should be a repository for the attribution of who thought of an idea first, then disseminating the ideas so that the most efficient producer could make them. I find it hard to believe that any monopoly granted by authority would be more efficient than a “natural” monopoly gained by serving markets more efficiently than competitors.

  9. December 8, 2009 8:21 pm

    This post is very confused. I explain the problems with IP in various papers at my site http://www.stephankinsella.com

    • December 8, 2009 8:43 pm

      Could you say more? Your essay in the December issue of Liberty was part of what inspired me to write this.

      Your analysis of priority disputes over property seems to turn entirely on priority in time. Could you explain why being first is so important in determining how scarce resources should be allocated? Far from being incoherent, I see more sophisticated mechanisms for allocating and reallocating scarce resources (such as markets) as being more just as well as more efficient than crude priority in time. Priority in time was the default rule at common law. It is a natural place to start, but doesn’t the evolution of common law to more sophisticated priority rules reflect a better fit between individual liberty with fewer costs of administrating that allocation? But I see from a post at your that you are generally skeptical of such spontaneous order. So I don’t hold out much hope of convincing you that IP is a good way of fostering such order.

      I’m also curious to know why you practice patent law if you don’t believe in IP.

  10. December 8, 2009 8:57 pm

    Michael,

    If I read your post correctly, you are defending IP both morally and economically. If so I cannot for the life of me see how you were inspired by my writing which argues explicitly that IP is immoral and economically unjustified. Or did I misread you? You seem to be endorsing Abraham Lincoln, for goodness’ sake–that horrible tyrant.

    “Your analysis of priority disputes over property seems to turn entirely on priority in time. Could you explain why being first is so important in determining how scarce resources should be allocated?”

    Because there is no ownership without the presumption that the earlier user has a better claim than the later one. If prior possession did not trump a later claimant, there could be no ownership–the next guy just takes it from whoever has it now, and so on. See Intellectual Property and Libertarianism; The Case Against IP: A Concise Guide; What Libertarianism Is; How We Come To Own Ourselves.

    “I’m also curious to know why you practice patent law if you don’t believe in IP.”

    To earn a living, of course. Why do I need to “believe in IP” to make money off of it? There are tax attorneys who don’t “believe” in taxes. There are cancer doctors who are not in favor of cancer. Etc. See <a href="http://www.stephankinsella.com/2009/07/12/an-anti-patent-patent-attorney/&quot; rel="bookmark" title="Permanent link to An Anti-Patent Patent Attorney? Oh my Gawd!”>An Anti-Patent Patent Attorney? Oh my Gawd!.

    • December 8, 2009 8:59 pm

      repeat, w/ fixed link:

      Michael,

      If I read your post correctly, you are defending IP both morally and economically. If so I cannot for the life of me see how you were inspired by my writing which argues explicitly that IP is immoral and economically unjustified. Or did I misread you? You seem to be endorsing Abraham Lincoln, for goodness’ sake–that horrible tyrant.

      “Your analysis of priority disputes over property seems to turn entirely on priority in time. Could you explain why being first is so important in determining how scarce resources should be allocated?”

      Because there is no ownership without the presumption that the earlier user has a better claim than the later one. If prior possession did not trump a later claimant, there could be no ownership–the next guy just takes it from whoever has it now, and so on. See Intellectual Property and Libertarianism; The Case Against IP: A Concise Guide; What Libertarianism Is; How We Come To Own Ourselves.

      “I’m also curious to know why you practice patent law if you don’t believe in IP.”

      To earn a living, of course. Why do I need to “believe in IP” to make money off of it? There are tax attorneys who don’t “believe” in taxes. There are cancer doctors who are not in favor of cancer. Etc. See An Anti-Patent Patent Attorney? Oh my Gawd!.

  11. December 28, 2009 4:42 pm

    This post is very confused. I explain the problems with IP in various papers at my site http://www.stephankinsella.com

  12. February 16, 2010 12:20 am

    You admit yourself that people can use the same ideas “without diminishing what is available to others.” How can you possibly consider that a form of theft?

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