The Libertarian Internet Geek Community, of which I consider myself a card-carrying member, has been embroiled in heated debate over the last few weeks on the subject of intellectual property. This debate was sparked by Robert Wenzel’s challenges on his blog at Economic Policy Journal to what many had presumed was the libertarian consensus on intellectual property. This “consensus” view – the one most associated libertarian patent attorney Stephan Kinsella – is that the very concept of “intellectual property” is fraudulent and a creation of the State, and serves only to stifle freedom and creativity in the marketplace.
This view is so prevalent that until very recently one would be hard pressed to find much opposition to it within the libertarian movement. In fact, we ourselves criticized Ron and Rand Paul’s “Technology Revolution Manifesto” for it’s support of IP. As cited in that article, here is Kinsella’s view on intellectual property:
.. intellectual property, which is nothing but a redistribution of rights. It is a redistribution of property rights from the original owner of a thing, to someone who applied at a state agency for some kind of monopoly certificate that gives them the right to go to government courts to ask the court to point their guns at the original owner and tell them “you have to share your property with this guy, or you can’t use it in this way without this guy’s permission.” It is a way of redistributing property rights. The idea that you can just add IP rights to the set of property rights in scarce resources is a pernicious one that leads to redistribution of control that owners have over their property, to other people.
Kinsella presents this view of intellectual property as a creation of the State; an artificial construct that would not exist in a free market system. I believe this is the main reason for libertarian opposition to the concept of intellectual property – because it is framed in the context of the State, and associated with all of the terrible things that the State and crony capitalist
firms have done in the name of IP. From the evil censorship laws proposed in CISPA and SOPA to major corporations like Apple using IP laws to shut down competition through “patent trolling”, the State and it’s crony partners in crime have used intellectual property as a cover for all sorts of nasty, anti-liberty maneuvers.
Wenzel however presents a different view of intellectual property. Wenzel holds the view held by Murray Rothbard as we discussed in this week’s edition of our weekly feature, Mondays with Murray. Rothbard essentially believed that intellectual property could have a legitimate function in the market place through the use of copyrights. Copyrights essentially allow the producer of an idea – a song, a book, a formula,etc. – to attach a condition on the sale of that idea that it will not be shared by the purchaser. This is essentially a contract between the seller and buyer about the use of the idea. However, Rothard was opposed to the idea of patents, which attempt to stymie competition by using force to prevent anyone who independently discovers or invents something from using or selling that idea or invention on the market place.
From Chapter 10 of Man, Economy, and State:
Copyrights, in other words, have their basis in prosecution of implicit theft. The plaintiff must prove that the defendant stole the former’s creation by reproducing it and selling it himself in violation of his or someone else’s contract with the original seller. But if the defendant independently arrives at the same creation, the plaintiff has no copyright privilege that could prevent the defendant from using and selling his product…
…Patent, then, has nothing to do with implicit theft. It confers an exclusive privilege on the first inventor, and if anyone else should, quite independently, invent the same or similar machine or product, the latter would be debarred by violence from using it in production.
So as we see, not all IP is equal. We have to differentiate between State-run IP and privately-enforced IP, between the copyright and patents. We also must determine whether the concept of “intellectual property” – to hold something non-physical, some sort of knowledge as property – has any validity to it whatsoever. This is the basis for the “debate” that was recently held between Wenzel and Kinsella on a recent special edition of “The Robert Wenzel Show”.
Warning: Listen at your own risk. This isn’t so much a debate as it is a long, drawn-out shouting match between Wenzel and Kinsella. Wenzel makes it personal fairly early on by bringing up some smarmy remarks made by Kinsella in the last month or so leading up to the interview. What follows is a series of ad hominem attacks, sarcastic remarks and a little cursing thrown in for good measure (don’t listen with the kids around). At times I would describe it as “cringe-worthy.” Of course, it’s also pretty darn entertaining, and if you can weed through all the nonsense you will get a good sense of some of the key issues that need to be addressed in order for libertarians to better understand the intellectual property debate. And fret not, for those that understandably can’t make it through the two and a half hour ordeal, I will provide my insights below.
Anybody still with me? If you made it this far I can only assume you’re at least mildly interested in the intellectual property debate. It’s clear the issue isn’t a simple one, and if you’re like me you still haven’t made up your mind on this one. So I will attempt to cut through the clutter and break down what I see as the most important questions that must be sorted out in order for libertarians to form a strong opinion on intellectual property.
What is Property?
We certainly can’t get very far in a debate about property without first coming to an agreement on what qualifies as property. The general Austrian economic view of property rights is a system for defining ownership over scarce resources. All resources are scarce, and individuals make decisions in using those resources based on their preferences. This is the foundation of Austrian economics. As Austrians, Wenzel and Kinsella agree on this.
The disagreement arises from Kinsella’s claim that ideas – and here we are really talking about the expression of ideas as formulas, patterns, etc – are not scarce resources and therefore cannot be considered property. Wenzel’s counter is that these things can indeed be scarce. In a follow up blog post, he quotes Ludwig von Mises from Human Action, where he states:
The available supply of every commodity is limited. If it were not scarce with regard to the demand of the public, the thing in question would not be considered an economic good, and no price would be paid for it.
This is a very important insight, and leads us to our next question…
Can Ideas Be Scarce?
The available supply of every commodity is limited. If it were not scarce with regard to the demand of the public, the thing in question would not be considered an economic good, and no price would be paid for it. If ideas are not scarce, why would anyone ever pay for them? The very fact that an idea can have any price at all seems to suggest that they can have value to individual actors, and therefore can be scarce.
Wenzel gives the example of his “Drudge Formula” – a formula he claims to have developed in order to get an article on the front page of The Drudge Report. Kinsella claims that this formula is an idea and is therefore not scarce, but of course when pressed cannot tell Bob the formula.
Does the “Drudge Formula,” if it works, have value? It would certainly have value to me if I knew a sure fire way to get one of our articles onto Drudge. I don’t know exactly what I would be willing to pay for this knowledge, but I certainly would pay some price. I don’t currently know how to get an article on the front page of Drudge, and I would find value in that knowledge.
Wenzel’s argument is that the formula itself must be scarce, because if it isn’t, why would anyone pay for it in the first place?
This reminds me of one of my father’s best friends when I was growing up. He worked for Pepsi, and I remember my father telling me on several occasions that he was one of the few people at the company that had access to the formula for Pepsi. Clearly if only a “few” people have access to it, the formula for Pepsi must be scarce. I imagine that he also had stipulations in his contract with Pepsi that he could not share that formula with anyone that Pepsi did not authorize him to share it with, and doing so would put him in breach of contract.
This is precisely the concept behind how intellectual property not only can, but in many cases does work in a free market.
How would IP be enforced?
One of the most frustrating parts about listening to this debate was that whenever he didn’t want to answer a specific question, Kinsella would continually resort to the Strawman argument of “But…the State!” and then proceed to list all of the bad things the State does in the name of IP – CISPA, SOPA, etc. But this contradicts what he says in his opening statement that, since he and Wenzel are both of the Austrian economic school of thought and are anarchist libertarians, that this debate
should take place in the framework of a free market, private property society. And yet Kinsella keeps going back to the State!
Clearly Wenzel does not advocate State enforcement of intellectual property rights. Rather he pictures a private property society that would design their own IP rights through contract, and enforcement would be at the discretion and at the expense of whatever party feels their copyright has been breached. They would have to take the case before a private court system and hash out the issues via arbitration or legal proceedings of some kind. I’ve described how this could work in my series on anarcho-capitalism, specifically my article on private law.
Was Kinsella “Crushed”?
Wenzel certainly pats himself on the back with the title of his posted interview. While I cannot say that Wenzel fully presented a positive case for intellectual property in a free market, I do believe he did “crush” Kinsella in one sense.
Kinsella claims that the IP debate has been over for some time and that there is a general consensus among libertarians that intellectual property is an illegitimate concept, regardless of whether it is enforced by the State or developed by the free market. If nothing else, the attention that Wenzel has brought to the issue of intellectual property and the dialogues that have since taken place among libertarians in the last few weeks does at least show that there is a debate to be had. That in itself is an important accomplishment, and certainly “crushes” Kinsella’s assertion that this is a dead and buried issue.
We will continue to delve into the finer points of the IP debate further in future articles, but for now we hope this has served as a sufficient introduction to the concepts and questions surrounding the intellectual property debate. As always, we welcome your feedback on the issue.
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