How Not to Argue for IP
Posted by Kevin Carson on Mar 12, 2010 in Commentary • 9 commentsAt TechCrunch, Paul Carr argues for why the UK needs, if not exactly the draconian new digital copyright currently under consideration, at least something very much like it (but with stronger procedural guarantees for accused file-sharers).
Never mind all the arguments from principle against the legitimacy of copyright law. I’ve done that to death here.
But what really caught my eye was his utilitarian arguments.
Aside from the whole issue of IP’s legitimacy, arguments like these make me want to pull my hair out.
Guess what? If there’s a head-on train collision, every penny spent on replacing or repairing the trains, paying the insurance claim on the cargo, hospitalizing or embalming and burying the human victims, and paying damages for any tort that happened along the way, will count as a net increase in GDP.
By definition, anything that anyone can charge for adds to the GDP by the amount people pay for it. So the more stuff is enclosed with charges for admission, the higher the GDP will be.
In Theories of Value and Distribution, the Marxist Maurice Dobb used a classic example of artificial property rights: the state granting to a class of people the right to erect toll gates across highways and pockiet the proceeds (not to fund highway maintenance, mind you–just to take the money for themselves).
Under marginalist economics, any production input with a price has “marginal productivity” equal to what it adds to the final price of the good. So under that orthodox paradigm, the toll-gate owners would have “marginal productivity” equal to whatever cost the toll added to total production costs and prices, and economists would be stroking their beards and intoning learnedly about the “service” the toll collectors perform in not impeding traffic on the roads. And of course, GDP would increase by the amount of the tolls.
In other words, anything anyone can do to make it more costly to produce anything, to increase the amount of money you have to pay to receive a given good or service, or in general to increase the cost of living our daily lives, will show up as an increase in the GDP. It’s what Thorstein Veblen called “capitalized disserviceability.”
If highway subsidies cause the neighborhood grocer to shut down so that you have to take the freeway to go to the chain supermarket on the exit, and as a result you’re unable to live without a car, you’ve experienced a net reduction in quality of life to the exact amount of the time you have to spend working to make payments on the car and pay the insurance premiums, plus the extra time you have to spend driving — not to mention the increased insecurity that comes from having yet another non-discretionary subsistence good in your life that depends on the whim of an employer. But the GDP has gone up by the additional amount you had to pay for all that stuff you didn’t have to pay for before, despite having a higher quality of life. You’ve done your part to increase the GDP, you old altruist you!
If someone could figure out a way to bottle air, sell it to you, and criminalize directly breathing from the atmosphere as “airlifting,” or if they could contrive some new mechanism for collecting a toll every time you tried to move a spoon from your bowl to your mouth, GDP would probably rise a hundredfold.
If your main concern is the size of GDP, it’s easy: just find some way to use government to muscle in and force people to pay you for something they were getting free.
Kevin Carson is a senior fellow of the Center for a Stateless Society (c4ss.org) and holds the Center's Karl Hess Chair in Social Theory. He is a mutualist and individualist anarchist whose written work includes Studies in Mutualist Political Economy, Organization Theory: A Libertarian Perspective, and The Homebrew Industrial Revolution: A Low-Overhead Manifesto, all of which are freely available online. Carson has also written for such print publications as The Freeman: Ideas on Liberty and a variety of internet-based journals and blogs, including Just Things, The Art of the Possible, the P2P Foundation, and his own Mutualist Blog.
In “Karl Hess: Toward Liberty”, there’s a section where Hess makes fun of the GDP, it’s nice to see because the GDP is sometimes used as an example of the flaws inherent in the market economy’s way of measuring things.
And there actually is an early-20th century science fiction novel, “The Air Trust” by George Allan England, in which a new technology enables the capitalists to monopolize the air supply:
http://www.gutenberg.org/etext/12826
You don’t even need to look at science fiction: Bolivian (and US) GDP benefited from Bechtel charging people for rainwater.
Are we talking all marginalists? Or just the idiots who I and most others have gotten their BA from?
Good article, Kevin. But, prompted by a friend’s reaction, I must ask re Dobb’s example: if we started paying road tolls, we’d have to reduce spending on other things. So the GDP effect would be a wash, no? It’s Bastiat’s broken window. The creation of artificial property is objectionable, but not on GDP grounds.
Sheldon
Chris: If I understand it correctly, I think that view of marginal productivity is true by definition under the paradigm. Marginal productivity applies to anything with a monetizable value to it (or any *one*, like slaves). The more critical academic marginalists would probably admit that that’s simply a descriptive fact, with no prescriptive implications, and that they’re just describing the empirical rules by which markets function *given* whatever tradeable property rights were created. They might be the first to admit that the definition of property rights is a political or social question, not self-evident and not to be decided by the rules of economics. (For instance Walras, probably the founder of marginalism as a grand mathematical system, was a Georgist who thought the rules for land should be changed.) But the dumber ones probably pump their fists up and down and chant “GDP! GDP! GDP!”
Sheldon: Well, if the retail prices we paid for the necessities of life were riddled with embedded rents to the toll collectors, the elimination of toll gates might not be compensated by enough increased demand for material goods to keep the monetized GDP constant. Some of the freed-up purchasing power would probably be taken in the form of more leisure. That was the topic of this post:
http://blog.p2pfoundation.net/abundance-creates-utility-but-destroys-exchange-value/2010/02/02
Kevin, point taken, as long as we don’t spend the money on leisure activities. I guess we can’t say for sure how it would play out.
“if we started paying road tolls, we’d have to reduce spending on other things.”
While we all understand that a consumer economy wants people to spend as much as possible, it does not want everyone to spend equally. While WE would reduce spending, someone else, the rent collector, would spend more since his/her income has been increased. He or she is the more rational consumer who will make better decisions with his/her money for the overall market, since, rationality and/or competence as an economic agent are positively correlated with income and property ownership.
The last thing that so called advocates of free markets (conservatives and “libertarians”) want are free markets where the decisions of MORE agents come into play.
"The last thing that so called advocates of free markets (conservatives and “libertarians”) want are free markets where the decisions of MORE agents come into play."
SPBS: that's a pretty broad brush, isn't it? Are you saying all libertarians are only "so-called advocates of free markets"? Where's your evidence for that?
Sheldon – I mean the libertarians of the sort found in the Libertarian Party. The belief being that the "business class," or capitalists, or whatever moniker one chooses is the best determinant of what the market needs. The same group that will look at someone from a lower class and say, "well if they had more money they would just spend it on beer" or make a comment about seeing a satellite dish on a trailer and how that person needs to save money – without any realization that given that person's income and lot, it may be the best entertainment purchase.