The Evils of Intellectual Property – State Created Monopolies

I have found that while most people believe in private property, they don’t have a clear rational and logical basis for their beliefs.  This lack of a rationale can lead people to believe in some downright awful stuff.  For example, many people believe that State sanctioned coercive theft can result in a more peaceful and prosperous society.  Obviously such beliefs are ridiculous.

One of the areas that I find people have some real trouble wrapping their heads around is the logical basis for intellectual property laws (copyrights and patents).  Many people consider these to be legitimate forms of property protection, when in fact they are not.

I have created this post to summarize the arguments against intellectual “property” from the perspective of a free society.

Professor Jeffery Tucker and Patent Attorney Stephan Kinsella tag team the evils of copyright and patent laws in this series of videos on intellectual property laws.

Summarizing the arguments:

Libertarian property rights are defined through homesteading and the mixing of labor with scarce resources. If a person picks up a stick in the forest and whittles that stick into a spear, that person now owns that spear because he has mixed his labor with a homesteaded resource.   Self-ownership should also be self-evident.  Because one owns one’s self, one owns the product of his own labor.

Wiki defines homesteading as:

Together with the principle of self-ownership, the homestead principle forms the basis of libertarian philosophy. The homestead principle is seen by libertarians as consistent with their opposition to initiatory coercion, since only land that is unowned can be taken. If something is unowned, there is no one the original appropriator is initiating coercion against. And, they do not think mere claim creates ownership.

Murray Rothbard says (in Justice and Property Rights): “All existing property titles may be considered just under the homestead principle, provided
(a) that there may never be any property in people;
(b) that the existing property owner did not himself steal the property; and particularly
(c) that any identifiable owner (the original victim of theft or his heir) must be accorded his property”.

Understanding the rational basis for property rights is necessary before one can understand why intellectual property laws are morally bankrupt.  Property can only be expressed against tangible things.  It is impossible to have ownership over ideas since there is no physical “thing” that property rights can be applied to.

Copying is not stealing. In order to have theft, the original property must be removed from the original owner’s possession against his consent. In the case of copying a digital music file, the original property is never harmed or stolen, it is duplicated on to the private property of the person who is copying it.

It is immoral to assume control of another persons private property against their consent, which is what all copyright laws seek to impose. If a product such as a music file can be replicated without any violation of property rights against the original owners version, then there is no crime. The original owner’s property is not harmed in any way. A person copying a file does not have to initiate any violence or take any property in order to copy the file, while a person seeking a copyright suit is ultimately seeking the use of State sanctioned coercion against a person who has not used any coercion against them.

Further, a person who owns a music file should be free to do with that property as they wish.  Copyright laws destroy the notion of private property, since they prevent people from using their private property as they see fit. Since when does magnetically arranging bits of metal on a private hard drive in a particular pattern suddenly make that hard drive the property of someone other than the person who bought it?

If a person wishes to allow another to replicate or take their property, they have every right to do so. Once a music file is sold to a consumer, that consumer owns that property and should be free to do with it as they wish. Including copying it and distributing it to friends.

The imposition of copyright also greatly hinders the free flow of ideas. Ideas are not tangible goods that are subject to the laws of scarcity. It is immoral to impose property laws on intangible things. Since ideas are not tangible, they can not rightly be claimed to be private property.  They can be replicated infinitely without anyone incurring a loss of property. The reason why it is immoral comes down to the fact that the original idea holder is never physically harmed by someone replicating their idea.  There is no loss of tangible property that a person can point to as being stolen or damaged.

Taking a notebook and copying a piece of text verbatim takes measurable effort mixed with the private property of the person copying the text. That person owns the text he copied because he owns the notebook and it took his effort to produce the copy, while at the same time the original writer’s property was not damaged or stolen in anyway.

Market competition depends upon the replication of ideas. If copyright laws were taken to their extreme, then no ideas could ever be replicated without the express consent of the original idea holder. Ultimately market competition would cease to exist if all ideas were forbidden from being replicated without the express consent of the original idea creator.

Copyright laws artificially inflate the pockets of corporate interests who then use their power to tell the public what to believe rather than allowing the public to think for themselves. The music and movie industries have undo influence on the social beliefs of the public only because copyright laws allow them to acquire massive wealth, which is then used to create systems of corporate propaganda.

In the absence of copyright, books would still be written, music would still be produced and the market would find alternative sources of revenue for the artists and thinkers in question. For example, musicians would be forced to preform live and charge venue fees if they wished to make a living. They could also release their songs on CDs or other digital forms and charge a fee which people may pay simply because they know the distributor is free from viruses and is of a high quality. Today iTunes does tremendous business primarily because of this fact, since anyone can still download songs illegally with a very remote chance of ever being caught.

Authors could still publish books and charge market rates for the production of those books. A book is a tangible thing that takes real resources to produce. However, authors would now face stiffer competition in the publication of those books since any publisher could take the text and issue their own version. This is obviously of great benefit to consumers and greatly improves the flow of ideas in society. In the same way musicians would be forced to preform live for money, so too would authors, who would need to supplement their incomes by holding private readings or book signings.

Patent laws are immoral for many of the same reasons copyright laws are immoral. In the case of patent laws, they are clearly nothing more than State privileged monopolies. They intentionally destroy market competition to the benefit of corporate interests while directly harming consumers.

In the case of Apple creating a phone with a touch screen interface, which they hold a patent on, we can see that Apple was still able to generate huge amounts of wealth from being first to market with such a phone, even though all the other major phone manufacturers ignored Apple’s patent and produced touch screen phones of their own.  Apple spent $150 million over thirty months on R&D for the iPhone, while generating sales of 6.1 million original iPhone units over just the first five quarters of sales.  Apple makes a gross profit margin of 60% on a $400 phone.

Patent laws are not necessary for companies to recoup the costs of research and development. Being first to market with a new idea is benefit enough. State privileged monopolies are not necessary.

Patent laws also destroy trade secrets. In the case of Apple, the other phone manufacturers knew exactly what Apple was up to because patents are publicly accessible documents.

Further, patent laws generally harm the smallest producers in a given market. If a small startup phone producer had to defend themselves against Apple’s legal department in a lawsuit, they would almost certainly bankrupt themselves in the process of defending a patent case (which they would  lose).  The major players in any given manufacturing industry have large patent portfolios, which enables them to legally squeeze out competition through the use of patent suits.

Taken in contrast against a major phone producer like T-Mobile, who might lose the lawsuit, but would still remain in business without facing any real threat of bankruptcy. All the major players in any given industry understand this quite clearly and so seek to destroy the smaller players first, thus greatly harming consumers and startups in the process.  This results in a very high barrier to entry for new market participants.

State privileged monopolies always harm consumers more than they help in terms of increased research and development. Further, much of the patented corporate technology was first researched in public universities at tax payer expense. Thus a corporation is able to doubly benefit through patent protections and subsidized research costs, all to the detriment of consumers.

Since copying is not stealing, taking a product and replicating it exactly with my own raw materials and my own labor does not harm the original product creator in anyway. The use of coercion is not necessary to replicate a product, however the use of coercion is necessary to enforce patent laws against a person who replicates an object with their own property and labor – this is clearly immoral.

Patents are an outgrowth of mercantilism in England.  The King/Queen would grant patents (which were the ability to be the exclusive seller of a product within a geographical area) to mercantilists, who then provided a kick back to the monarchy.  Obviously this arrangement was mutually beneficial to the merchantilists and the crown, while providing consumers absolutely zero benefit.  This is where patent law has its origins, and it still plays the exact same role today.  The Wright brothers actually impeeded US aircraft innovation through their use of patent suits so badly that the US air force didn’t have any decent planes to fly during WWI.

There are no economic benefits to consumers that are derived from patents. Indeed, even the Columbia Law Review has issued papers demonstrating as much.

Initial data generated using The Patent Game suggest that a system combining patent and open source protection for inventions (that is, similar to modern patent systems) generates significantly lower rates of innovation (p<0.05), productivity (p<0.001), and societal utility (p<0.002) than does a commons system. These data also indicate that there is no statistical difference in innovation, productivity, or societal utility between a pure patent system and a system combining patent and open source protection.

Needless to say, the Austro-libertarian camp is loaded with journal articles and essays demonstrating the exact same thing.

Stop supporting State sanctioned monopolies and start supporting freedom.

Praise Mao, and may Bernanke reign supreme over your bank account forever.

© Michael Suede – All Rights Reserved.

(just kidding – you can copy this work freely or mail it to a copyright attorney of your choosing).