Human Action and Intellectual Property Rights

This is an extract from a transcript of a speech given by Stephan Kinsella’s at the 2010 Annual Meeting of the Property and Freedom Society, June 6, 2010.  It is produced in full over at Mises.org.

Let’s think about property rights in the context of the nature of human action.

There are various ways to explain what is wrong with IP. You can explain that IP requires a state and legislation, which are both necessarily illegitimate. You can point out that there is no proof that IP generates net wealth. You can explain that IP grants rights in nonscarce things, which are necessarily enforced with physical force against tangible property, thus supplanting already-existing rights and scarce resources.

Another way, I believe, to seeing the error in treating information, ideas, and patterns as ownable property is to consider IP in the context of a structure of human action. Mises explains in The Ultimate Foundation of Economic Science that to act means to strive after gains, to chose a goal and resort to means in order to attain the goal sought. Obviously, the means have to be causally efficacious to obtain the desired end. So as Mises has observed, if there was not causality, men “could not contrive any means for the attainment of any ends.” Knowledge and information, of course, play a key role in action as well. They guide action. The actor is guided by his knowledge and information. Bad information results in unsuccessful action or loss. As Mises puts it, “Action is purposive conduct. It is not simply behavior, but behavior begot by judgments of value, aiming at a definite end and guided by ideas concerning the suitability or unsuitability of definite means” (emphasis added).

So all action employs means and all action is guided by knowledge and information. As Mises says, means are necessarily scarce resources. He said, “Means are necessarily always limited, i.e. scarce, with regard to the services for which man wants to use them.”

So, in other words, to have successful action, you have to have knowledge about causal laws to know which means to employ. You have to have the ability to employ these means suitable for the goal that you are seeking. So the scarce resources that you need to use as means need to be owned by you. This is why there are property rights in these things. The nature of a scarce resource is that use by one person excludes use by another; but you don’t need to own the information that guides your action in order to have successful action. For example, two people can make a cake at the same time. They each have to have their own ingredients, but they can use the same recipe at the same time.

Material progress is made over time in human society because information is not scarce. It can be infinitely multiplied, learned, taught, and built on. The more patterns, recipes, causal laws that are known add to the stock of knowledge available to all actors and act as a greater and greater wealth multiplier by allowing actors to engage in ever-more efficient and productive actions. It is a good thing that ideas are infinitely reproducible, not a bad thing. There is no need to impose artificial scarcity on these things to make them more like scarce resources, which, unfortunately, are scarce. As Bastiat said,

All innovation goes through three stages. One possesses unique knowledge and profits from it. Others imitate and share profits. Finally, the knowledge is widely shared and no longer profitable on its own which thereby inspires new knowledge.

What patents do is artificially prolong the first stage at the expense of the others. For example, a recent news story reports that Acer is the latest PC maker to jump into the tablet PC market, which has been gaining increasing attention since Apple launched its iPad in January. With more than one million units sold so far, the iPad’s success has sent other PC makers scrambling to come up with similar devices. This competition to make similar devices is not a bad thing, but IP advocates have to have mixed feelings about this imitation.

Granting copyrights to scarce resources, but not to ideas, is precisely what is needed to promote successful action as well as societal progress and prosperity. So we can see that an essential defect of IP is that it seeks to impede learning and the spread of ideas and knowledge. Honest (or naive) IP advocates even admit this. Recall that above I quoted the comment from William Shughart. He says, “To paraphrase the late economist John Robinson, patents and copyrights slow down the diffusion of new ideas for a reason, to assure there will be more new ideas to diffuse.”

So they admit this. By the way, Professor Hoppe realized this as far back as 1988. At a panel discussion on ethics with Hoppe, Rothbard, David Gordon, and Leland Yeager, there was the following exchange, and I’ll conclude with it:

AUDIENCE QUESTION: I have a question for Professor Hoppe. Does the idea of personal sovereignty extend to knowledge? Am I sovereign over my thoughts, ideas, and theories? …

HOPPE: … in order to have a thought you must have property rights over your body. That doesn’t imply that you own your thoughts. The thoughts can be used by anybody who is capable of understanding them.

by Stephan Kinsella