The Ethics of “Intellectual Property”

Download: “Intellectual Property”: A Libertarian Critique

I. The Ethics of “Intellectual Property”
II. Privilege as Economic Irrationality
III. “Intellectual Property” and the Structure of the American Domestic Economy
IV. “Intellectual Property” and the Global Economy
V. “Intellectual Property,” Business Models and Product Design
VI. Is “Intellectual Property” a Necessary Incentive?

“Intellectual property” is a contentious issue among libertarians. Among the individualist anarchists alone, Lysander Spooner took an absolutist position in favor of patents and copyrights, defending them as binding in perpetuity, [1] whereas Benjamin Tucker classified them as one of his Four Monopolies.

Fourth, the patent monopoly, which consists in protecting inventors and authors against competition for a period long enough to enable them to extort from the people a reward enormously in excess of the labor measure of their services, — in other words, in giving certain people a right of property for a term of years in laws and facts of Nature, and the power to exact tribute from others for the use of this natural wealth, which should be open to all. The abolition of this monopoly would fill its beneficiaries with a wholesome fear of competition which would cause them to be satisfied with pay for their services equal to that which other laborers get for theirs, and to secure it by placing their products and works on the market at the outset at prices so low that their lines of business would be no more tempting to competitors than any other lines. [2]

Although Tucker relegated “intellectual property” to last place among the Four Monopolies, he considered them entirely in terms of their effect on individual exchange, rather than of their effect on industrial structure, or of the structural and institutional relationships between business and the state. This problem of emphasis was a general failing of Tucker’s. After 1900, for example, when he finally began to recognize the trusts as a problem, he assumed they had grown beyond the point at which eliminating the money, landlord, and other monopolies would do any good in reining them in; he ignored entirely the great extent of their dependence, as institutions, on direct subsidies and other structural ties to the state. But in fairness to Tucker, at the time he wrote the passage quoted above the corporate transformation of the economy was just getting well underway, and the effect of “intellectual property” still fell primarily at the level of individual exchange.

Ayn Rand regarded patents and copyrights as “the legal implementation of the base of all property rights: a man’s right to the product of his mind.”

What the patent and copyright laws acknowledge is the paramount role of mental effort in the production of material values; these laws protect the mind’s contribution in its purest form: the origination of an idea. The subject of patents and copyrights is intellectual property.

An idea as such cannot be protected until it has been given a material form. An invention has to be embodied in a physical model before it can be patented; a story has to be written or printed. But what the patent or copyright protects is not the physical object as such, but the idea which it embodies. By forbidding an unauthorized reproduction of the object, the law declares, in effect, that the physical labor of copying is not the source of the object’s value, that that value is created by the originator of the idea and may not be used without his consent; thus the law establishes the property right of a mind to that which it has brought into existence. [3]

Despite her defense of “intellectual property” as a property right rooted in natural law, interestingly, Rand did not pursue the principle consistently to the same logical conclusion as Spooner. Rather than treating it as a right in perpetuity comparable to tangible property rights, to devolve to one’s heirs and assigns without limits, she dismissed perpetual duration as an obvious impossibility. Instead, she considered the positive law’s provisions for copyright and patent duration as “the most rational solution….” [4]

Perhaps the most absurd development of “intellectual property” absolutism was that of Andrew Galambos. As Stephan Kinsella notes, “[i]t is difficult to find published discussions of Galambos’s idea, apparently because his own theories bizarrely restrict the ability of his supporters to disseminate them”; [5] students attending his classes were required to sign non-disclosure agreements promising not to circulate his ideas outside the circle of paying customers [6] (a rule which would seem to doom a movement to extinction about as effectively as the Shakers’ ban on sexual intercourse). Galambos reputedly dropped a nickel in a box for the heirs of Thomas Paine every time he used the word “liberty,” and juxtaposed his first and middle names to avoid infringing on his father’s “intellectual property” rights in his name. [7] If he paid royalties on the alphabet to the Tyre Chamber of Commerce, there is no record of it.

Among the Austrians, Ludwig von Mises, no market anarchist, took a largely agnostic attitude toward the legitimacy of patents. As a purely utilitarian assessment of their effect, he argued that they enabled sellers to charge a monopoly price for goods that might not have been offered at all without the use of patents to recoup the cost of development. [8]

Murray Rothbard, on the other hand, was not shy in his denunciation of patents as a fundamental violation of free market principles:

Patents prevent a man from using his invention even though all the property is his and he has not stolen the invention, either explicitly or implicitly, from the first inventor. Patents, therefore, are grants of exclusive monopoly privilege by the State and are invasive of property rights on the market. [9]

Rothbard dismissed utilitarian arguments for patents, based on claims that they are socially necessary to promote innovation, with the contempt they deserved:

The most popular argument for patents among economists is the utilitarian one that a patent for a certain number of years is necessary to encourage a sufficient amount of research expenditure for inventions and innovations in processes and products.

This is a curious argument, because the question immediately arises: By what standard do you judge that research expenditures are “too much,” “too little,” or just about enough? This is a problem faced by every governmental intervention in the market’s production. Resources — the better lands, laborers, capital goods, time — in society are limited, and they may be used for countless alternative ends. By what standard does someone assert that certain uses are “excessive,” that certain uses are “insufficient,” etc.?…

Many advocates of patents believe that the ordinary competitive conditions of the market do not sufficiently encourage the adoption of new processes and that therefore innovations must be coercively promoted by the government. But the market decides on the rate of introduction of new processes just as it decides on the rate of industrialization of a new geographic area. In fact, this argument for patents is very similar to the infant-industry argument for tariffs — that market processes are not sufficient to permit the introduction of worthwhile new processes. And the answer to both these arguments is the same: that people must balance the superior productivity of the new processes against the cost of installing them, i.e., against the advantage possessed by the old process in being already built and in existence. Coercively privileging innovation would needlessly scrap valuable plants already in existence and impose an excessive burden upon consumers. For consumers’ desires would not be satisfied in the most economic manner. [10]

This is, incidentally, the same sort of argument used for eminent domain, when property is seized for the use of a business that will be “more valuable” to the local economy.

If Rothbard rejected patents in principle, he considered copyright to be perfectly tenable and legitimate, on the assumption that it could be achieved through voluntary contract alone.

A man writes a book or composes music. When he publishes the book or sheet of music, he imprints on the first page the word “copyright.” This indicates that any man who agrees to purchase this product also agrees as part of the exchange not to recopy or reproduce this work for sale. In other words, the author does not sell his property outright to the buyer; he sells it on condition that the buyer not reproduce it for sale. Since the buyer does not buy the property outright, but only on this condition, any infringement of the contract by him or a subsequent buyer is implicit theft and would be treated accordingly on the free market. The copyright is therefore a logical device of property right on the free market. [11]

But the sort of contractual copyright regime Rothbard envisioned would, in fact, be practically untenable.

First, as Kinsella points out, contracts are only binding against the actual parties, so contractual copyright would be unenforceable against third parties who came into possession of copyrighted material. [12]

Second, there are serious practical questions about the legal enforceability of contractual copyright — so-called “shrink wrap” contracts — even against the accepting party. Pseudonymous blogger “quasibill,” of The Bell Tower, writes of the serious problems the common law “meeting of the minds” requirement entails for contract enforcement in general.

As an initial matter, it is important to clarify that a contract is not a written document. For reasons that should become more apparent as you read on, the written document is nothing more than very good evidence regarding the terms of the contract. It is the agreement of the parties, or to use Anglo-American common law terminology, the “meeting of the minds” that is the actual contract. As such, the contract is a subjective creature by nature, as it requires reading the minds of at least two people.

….The words written on a document do not constitute the agreement – they are merely evidence of what the parties intended the agreement to be….

In particular, he mentions that courts generally recur to external evidence like standard market practices (“course of industry”) to ascertain subjective understanding or intent, in determining whether a “meeting of minds” took place and an enforceable contractual obligation therefore exists. [13]

By this line of reasoning, both the seller’s and the buyer’s reasonable expectations in regard to enforceability will play a large role in determining whether the buyer did, indeed, assume contractual copyright obligations by the mere act of purchase. In an environment where verifying compliance is costly and the risks of detection and sanction are low, it is unlikely that either a buyer, or a court after the fact, will take any such contract seriously.

By way of analogy, some employers may demand, as a condition of employment, that their employees not smoke even in their own homes, that they refrain from barroom discussions prejudicial to the employer’s reputation, or that they not park on company premises with a weapon concealed in the trunk. In most such cases, the employee is likely to sign an acknowledgement form and accept the job with his fingers crossed, and with the mental reservation that it’s “none of their damned business.” If a job application asks questions that the prospective employee considers inappropriately nosy or intrusive (i.e. about political sympathies, social affiliations, and the like), he is likely to take the attitude that it’s the prospective employer’s problem to find out such things at his own effort and expense if he wants to know them badly enough; he is under no obligation to incriminate himself.

Kinsella has expressed skepticism, on similar grounds, regarding the enforceability of shrink-wrap and click-wrap contracts:

….[T]here is often no meeting of the minds on the fine print. If the customers routinely just click the “I have read and agree to these terms” box but never do read it, and the vendor knows this, then it’s a sort of fiction to assume both sides have actually agreed on these terms…. [14]

….I believe two consenting parties have the right to enter into whatever terms they want, even if they are stricter and more draconian than those set by modern IP law. …[But] I do not believe that something is part of the agreement merely because it is written down in the fine print of a click-wrap or similar type agreement; there needs to be true meeting of the minds (for example, suppose I sneak into the last clause of a long click-wrap agreement, “And the purchaser hereby agrees to give me half his income for the rest of his life.” Well, I know that you are just gonna click “yes” without reading, so I am aware that you are NOT consenting to this term, so there is no meeting of the minds; that should not be enforceable, and arguably neither should boilerplate, “unreasonable” terms in fine print that the publisher knows the customer is not even really aware of). [15]

Third, the enforcement of contractual copyright, even if enforceable in law, would present enormous problems for verification of compliance. The enormous and draconian body of copyright legislation over the past twenty years should indicate that enforcement of copyright requires an intrusive regulatory and surveillance state, and that copyright is virtually unenforceable without such a mechanism.

The new digital copyright regime has done away with many traditional limitations on copyright from the days when it affected mainly the print medium, like the “first sale” and “fair use” doctrines. We can thank the traditional exceptions to copyright, for example, for the public library and for free access to photocopiers.

Charles Johnson gives, as an example of the fair use exception, the common university practice of making course reserves available for photocopying, rather than expecting every student to buy a scholarly book at the academic publishing houses’ steep rates. (I myself have numerous photocopies of books ordered through Interlibrary Loan, which would otherwise have cost me $70 or more, often for slim volumes of under two hundred pages.) But, he says,

as soon as the University eliminates the paper medium, and facilitates exactly the same thing through an non-commercial, internal University course pack website — which does nothing at all more than what the xerox packets did, except that it delivers the information to pixels on a monitor instead of toner on a page — the publishers’ racket can run to court, throw up its arms, and start hollering Computers! Internet!, send their lawyers to try to shake down have a discussion with the University administration for new tribute to their monopoly business model, and then, failing that, utterly uncontroversial decades-old practices of sharing knowledge among colleagues and students suddenly become a legal case raising core issues like the future of the business model for academic publishers, while even the most absurd protectionist arguments are dutifully repeated by legal flacks on behalf of sustaining the racket…. [16]

In the case of digital content, especially, copyright would be virtually unenforceable without not only DRM, but the criminalization of technical means for circumventing it. Imagine buying a car on the contractual understanding that you wouldn’t drive it to certain places that the dealership disapproved. In the real world, such a contract would be a dead letter because of the high cost of verifying compliance. But if the contract were governed by the legal regime prevailing in the digital content industries, the car would be designed with built-in blocks against driving the car to forbidden places. And not only that, such blocks would be mandated by law, and developing and selling means to circumvent them would be criminal acts. Doesn’t sound very libertarian, does it?

In “The Right to Read,” Richard Stallman depicted the inevitable logic of such principles, as depicted in a late 21st century society under total copyright lockdown.

if he lent her his computer, she might read his books. Aside from the fact that you could go to prison for many years for letting someone else read your books, the very idea shocked him at first. Like everyone, he had been taught since elementary school that sharing books was nasty and wrong — something that only pirates would do.

And there wasn’t much chance that the SPA — the Software Protection Authority — would fail to catch him. In his software class, Dan had learned that each book had a copyright monitor that reported when and where it was read, and by whom, to Central Licensing. (They used this information to catch reading pirates, but also to sell personal interest profiles to retailers.)…

Of course, Lissa did not necessarily intend to read his books. She might want the computer only to write her midterm. But Dan knew she came from a middle-class family and could hardly afford the tuition, let alone her reading fees. Reading his books might be the only way she could graduate. He understood this situation; he himself had had to borrow to pay for all the research papers he read….

Later on, Dan would learn there was a time when anyone could go to the library and read journal articles, and even books, without having to pay. There were independent scholars who read thousands of pages without government library grants. But in the 1990s, both commercial and nonprofit journal publishers had begun charging fees for access. By 2047, libraries offering free public access to scholarly literature were a dim memory.

There were ways, of course, to get around the SPA and Central Licensing. They were themselves illegal. Dan had had a classmate in software, Frank Martucci, who had obtained an illicit debugging tool, and used it to skip over the copyright monitor code when reading books. But he had told too many friends about it, and one of them turned him in to the SPA for a reward (students deep in debt were easily tempted into betrayal). In 2047, Frank was in prison, not for pirate reading, but for possessing a debugger.

Dan would later learn that there was a time when anyone could have debugging tools. There were even free debugging tools available on CD or downloadable over the net. But ordinary users started using them to bypass copyright monitors, and eventually a judge ruled that this had become their principal use in actual practice. This meant they were illegal; the debuggers’ developers were sent to prison.

Programmers still needed debugging tools, of course, but debugger vendors in 2047 distributed numbered copies only, and only to officially licensed and bonded programmers. The debugger Dan used in software class was kept behind a special firewall so that it could be used only for class exercises.

It was also possible to bypass the copyright monitors by installing a modified system kernel. Dan would eventually find out about the free kernels, even entire free operating systems, that had existed around the turn of the century. But not only were they illegal, like debuggers — you could not install one if you had one, without knowing your computer’s root password. And neither the FBI nor Microsoft Support would tell you that. [17]

There’s a reason for such draconian controls. As described by Michel Bauwens of the Foundation for Peer-to-Peer Alternatives, the corporate economy faces a growing crisis of realization, in monetizing and capturing profits from use-value created in the immaterial realm. It is becoming increasingly impossible to capture value from the ownership of ideas, designs, and technique — all the “ephemera” and “intellect” that Tom Peters writes about as a component of commodity price — leading to a crisis of sustainability for capitalism.

Recall the following: the thesis of cognitive capitalism says that we have entered a new phase of capitalism based on the accumulation of knowledge assets, rather than physical production tools. [McKenzie Wark’s] vectoralist thesis says that a new class has arisen which controls the vectors of information, i.e. the means through which information and creative products have to pass, for them to realize their exchange value. They both describe the processes of the last 40 years, say the post-1968 period, which saw a furious competition through knowledge-based competition and for the acquisition of knowledge assets, which led to the extraordinary weakening of the scientific and technical commons. And they do this rather well.

But in my opinion, both theses fail to account for the newest of the new, i.e. to take into account the emergence of peer to peer as social format. What is happening?

In terms of knowledge creation, a vast new information commons is being created, which is increasingly out of the control of cognitive capitalism. [18]

In a later blog post for the P2P Foundation, Bauwens elaborated on the nature of cognitive capitalism as a response to the limits on accumulation in the finite physical realm, attempting a new form of accumulation based on ownership of the cognitive realm. But this attempt is doomed to fail because of the increasing untenability of property rights in the information realm. Various resource and input crises like Peak Oil, he wrote, are creating new limits to growth based on extensive expansion in the physical realm. He compares the imperative for capitalism to switch from extensive to intensive development to the parallel crisis of the chattel slave economy.

This is no trivial affair, as the failure of extensive development is what brought down earlier civilizations and modes of production. For example, slavery was not only marked by low productivity, but could not extend this productivity as that would require making the slaves more autonomous, so slave-based empires had to grow in space, but at a certain point in that growth, the cost of expansion exceeded the benefits. This is why feudalism finally emerged, a system which refocused on the local, and allowed productivity growth as serfs had a self-interest in growing and ameliorating the tools of production.

The alternative to extensive development is intensive development, as happened in the transition from slavery to feudalism. But notice that to do this, the system had to change, the core logic was no longer the same. The dream of our current economy is therefore one of intensive development, to grow in the immaterial field, and this is basically what the experience economy means. The hope that it expresses is that business can simply continue to grow in the immaterial field of experience.

However, Bauwens writes, this is not feasible. The emergence of the peer model of production, based on the non-rivalrous nature and virtually non-existent marginal cost of reproduction of digital information, and coupled with the increasing unenforceability of “intellectual property” laws, means that capital is incapable of realizing returns on ownership in the cognitive realm.

1) The creation of non-monetary value is exponential.
2) The monetization of such value is linear

In other words, we have a growing discrepancy between the direct creation of use value through social relationships and collective intelligence…, but only a fraction of that value can actually be captured by business and money. Innovation is becoming… an emergent property of the networks rather than an internal R & D affair within corporations; capital is becoming an a posteriori intervention in the realization of innovation, rather than a condition for its occurrence….

What this announces is a crisis of value…, but also essentially a crisis of accumulation of capital. Furthermore, we lack a mechanism for the existing institutional world to re-fund what it receives from the social world. So on top of all of that, we have a crisis of social reproduction…. [19]

Corporations rely on increasingly authoritarian government legislation to capture value from proprietary information. Johann Soderberg compares the way photocopiers were monitored in the old USSR, to protect the power of elites in that country, to the way the means of digital reproduction are monitored in this country to protect corporate power. [20]

The good news in all this is that, even with the upward ratcheting of “intellectual property” law and of the mandated electronic surveillance technologies for enforcing it, it is still becoming unenforceable. In an age of bittorrent, strong encryption, and proxy servers hosted in international anti-copyright havens, the DMCA is a dead letter for anyone who cares enough to take even minimal trouble to circumvent it.

A good example is the so-called “DeCSS uprising,” which followed from an attempt to suppress public discussion of means for circumventing DVD encryption.

Journalist Eric Corley — better known as Emmanuel Goldstein, a nom de plume borrowed from Orwell’s 1984 — posted the code for DeCSS (so called because it decrypts the Content Scrambling System that encrypts DVDs) as a part of a story he wrote in November for the well-known hacker journal 2600. The Motion Picture Association of America (MPAA) claims that Corley defied anticircumvention provisions of the Digital Millennium Copyright Act (DMCA) by posting the offending code….

The whole affair began when teenager Jon Johansen wrote DeCSS in order to view DVDs on a Linux machine. The MPAA has since brought suit against him in his native Norway as well. Johansen testified on Thursday that he announced the successful reverse engineering of a DVD on the mailing list of the Linux Video and DVD Project (LiViD), a user resource center for video- and DVD- related work for Linux….

The judge in the case, the honorable Lewis Kaplan of the US District Court in southern New York, issued a preliminary injunction against posting DeCSS. Corley duly took down the code, but did not help his defense by defiantly linking to myriad sites which post DeCSS….

True to their hacker beliefs, Corley supporters came to the trial wearing the DeCSS code on t-shirts. There are also over 300 Websites that still link to the decryption code, many beyond the reach of the MPAA. [21]

This incident, and the humiliating failure of so many other corporate attempts — starting with the “McLibel” case in the UK — to suppress the free circulation of proprietary information or supposedly libelous statements, [22] should demonstrate this beyond the shadow of a doubt.

Every such attempt, inevitably, results in the rapid transfer of files of prohibited information around the Worldwide Web, and the proliferation of mirror sites, orders of magnitude faster than content owners can suppress any particular violator. The would-be corporate proprietors of information find themselves playing whack-a-mole.

And in the offensive-defensive arms race between the statist surveillance technologies required to enforce proprietary content, and the circumvention technologies needed to trade such content freely, the defensive side will always be a step ahead. Ultimately, the legal suppression of “piracy” by the surveillance state depends on the same sort of people who are responsible for delivering your mail to the correct address — which means things don’t look very hopeful for the enemies of freedom.

If the DMCA is unenforceable even with state-mandated DRM and criminalization of technical means of circumvention, and even with taxpayer subsidy to the legal cost of enforcement, what would become of such extensive copyright claims in a free market regime? In a free market regime, where enforcement of such claims is a private good provided at cost, the payment of contractual copyright enforcement would be endogenous — i.e., the cost would be borne by the beneficiary of enforcement.

“Intellectual property” is a form of privilege, just one example of a broader category of artificial property rights.

Like all forms of coercion, artificial property rights create a zero-sum situation in which one party benefits at the other’s expense. There is a symmetrical relationship between one party’s benefit and the other’s loss. While natural property rights benefit everyone by securing the individual’s claim to the product of his own effort, artificial property rights enable the holder to collect tribute from the efforts of others. Natural property rights are a way of dealing with scarcity; artificial property rights create scarcity.

The distinction between natural and artificial property rights is analogous to that of Albert Jay Nock between “labor-made” and “law-made” property. [23] Were it not for the legal appropriation of the land, Nock argued — i.e., the engrossment of vacant and unimproved land to a favored class which did not appropriate it by its own labor, but was enabled to collect tribute from those who did — economic exploitation would be impossible. Historically, so long as wage employers have to compete with easy access to self-employment, there is a floor under the wages people are willing to work for and a ceiling on the rate of profit. As Kropotkin asked:

If every peasant-farmer had a piece of land, free from rent and taxes, if he had in addition the tools and the stock necessary for farm labour — Who would plough the lands of the baron? Everyone would look after his own….

If all the men and women in the countryside had their daily bread assured, and their daily needs already satisfied, who would work for our capitalist at a wage of half a crown a day, while the commodities one produces in a day sell in the market for a crown or more? [24]

Defenders of “intellectual property” argue that the innovator deserves the scarcity rents, as a reward for the net contribution to consumers’ utility. If the consumer does not consider the innovation a benefit even at the patented price, he is free not to buy it. Reason magazine’s Ronald Bailey, an enthusiastic supporter of the drug and biotech industries, is a good exemplar of this line of argument. Citing a study that compared the overall economic value to consumers from increased life expectancy to the cost paid for drugs, he argued (in the words of his title) that “drug companies don’t get enough money… for the life-saving benefits they give us….” [25]

There’s a word for someone who’s able to price a good according to the consumer’s benefit from it: a monopolist. The normal effect of market competition is for the productivity benefits of new technology to translate directly into lower consumer prices. It is only through artificial property rights that privileged sellers can charge the consumer in proportion to his increased utility, regardless of the cost of supplying the good. Patents impede the normal process of market competition by which technological innovation translates directly into lower consumer cost. They enable the privileged to appropriate productivity gains for themselves, rather than allowing their benefits to be socialized through market competition.

But they do more than that: they make it possible to collect tribute for the “service” of not obstructing production. As John R. Commons observed, the alleged “service” performed by the holder of artificial property rights, in “contributing” some “factor” to production, is defined entirely by his ability to obstruct access to it. As I wrote in Studies in Mutualist Political Economy, marginalist economics

treated the existing structure of property rights over “factors” as a given, and proceeded to show how the product would be distributed among these “factors” according to their marginal contribution. By this method, if slavery were still extant, a marginalist might with a straight face write of the marginal contribution of the slave to the product (imputed, of course, to the slave­ owner), and of the “opportunity cost” involved in committing the slave to one or another use. [26]

Such privileges, Maurice Dobb argued, were analogous to a state grant of authority to collect tolls, (much like the medieval robber barons who obstructed commerce between their petty principalities):

Suppose that toll­gates were a general institution, rooted in custom or ancient legal right. Could it reasonably be denied that there would be an important sense in which the income of the toll­owning class represented “an appropriation of goods produced by others” and not payment for an “activity directed to the production or transformation of economic goods?” Yet toll­charges would be fixed in competition with alternative roadways, and hence would, presumably, represent prices fixed “in an open market….” Would not the opening and shutting of toll­gates become an essential factor of production, according to most current definitions of a factor of production, with as much reason at any rate as many of the functions of the capitalist entrepreneur are so classed to­day? This factor, like others, could then be said to have a “marginal productivity” and its price be regarded as the measure and equivalent of the service it rendered. At any rate, where is a logical line to be drawn between toll­gates and property­rights over scarce resources in general? [27]

Thorstein Veblen made a similar distinction between property as capitalized serviceability, versus capitalized disserviceability. The latter consisted of power advantages over rivals and the public which enabled owners to obstruct production. [28]

It is sometimes argued, in response to attacks on patents as monopolies, that “all property is a monopoly.” True, as far as it goes; but tangible property is a monopoly by the nature of the case. A parcel of land can only be occupied and used by one owner at a time, because it is finite. By nature, two people cannot occupy the same physical space at the same time. “Intellectual property,” in contrast, is an artificial monopoly where scarcity would not otherwise exist. And unlike property in tangible goods and land, the defense of which is a necessary outgrowth of the attempt to maintain possession, enforcement of “property rights” in ideas requires the invasion of someone else’s space. “Patents… invade rather than defend property rights.” [29]

Kinsella describes the way that so­called “intellectual property” rights give the holder a right in other people’s real — tangible — property. An “intellectual property” right implies that

“A person who comes up with some useful or creative idea which can guide or direct an actor in the use of his own tangible property thereby instantly gains a right to control all other tangible property in the world, with respect to that property’s similar use.” This new-fangled homesteading technique is so powerful that it gives the creator rights in third parties’ already owned tangible property.

For example, by inventing a new technique for digging a well, the inventor can prevent all others in the world from digging wells in this manner, even on their own property. To take another example, imagine the time when men lived in caves. One bright guy — let’s call him Galt­Magnon — decides to build a log cabin on an open field, near his crops. To be sure, this is a good idea, and others notice it. They naturally imitate Galt­Magnon, and they start building their own cabins. But the first man to invent a house, according to IP advocates, would have a right to prevent others from building houses on their own land, with their own logs, or to charge them a fee if they do build houses. It is plain that the innovator in these examples becomes a partial owner of the tangible property (e.g., land and logs) of others, due not to first occupation and use of that property (for it is already owned), but due to his coming up with an idea.

Dilbert creator Scott Adams, in a rather feeble attempt to defend copyright, used the analogy of underpants:

Let me give you an analogy. Let’s say your neighbor sneaks into your house while you are gone and borrows your underpants. After wearing your underpants all day, the neighbor launders them, folds them neatly, and returns them to your house in perfect condition, all while you are gone. He tells himself that he will say good things to people about your business — whatever business that is — so this arrangement is good publicity for you. The next time he sees you, he tells you about the underpants because he figures you’ll thank him for saying nice things about his business. He informs you that it’s a win-win scenario.

Given that you have full use of your property (the underpants), is it a victimless crime? I would say the owner of the underpants lost something even though his property is physically the same. [30]

This is a remarkably poor analogy. Underpants are a physical object that can only be in one place at a time. When the neighbor borrows my underpants, I no longer have that particular pair in my possession any more. His use of them logically precludes my being able to use them. Physical property is a zero-sum game, in which one person’s possession necessarily comes at the expense of everyone else’s possession. That is exactly why property rights are a logical conflict avoidance mechanism for physical property: given the fact that a physical object can only be possessed by one person at a time, property rules establish who the rightful owner is and prevent conflict between multiple claimants trying to possess the same thing at the same time. For underpants to be a good analogy, they would have to be reproducible at zero marginal cost so that the same identical pair of underpants could be in ten million dresser drawers at the same time, without the original owner ever losing physical possession of his pair of underpants.

A more accurate analogy would be to suppose that I could cause an exact duplicate of Adams’ underpants, created from atoms in my own house, to appear in my own underwear drawer entirely through publicly available knowledge of the configuration of atoms in the original pair, without ever trespassing in Adams’ home or disturbing his particular pair of underpants in any way.

Adams’ real objection, obviously, is not to the deprivation of the thing itself or its use in any sense, but to loss of the economic value of artistic creations that would result from his sole legal right to sell them. But as Kinsella argues, “one cannot have a right to the value of one’s property, but only in its physical integrity.” [31] One cannot argue otherwise without accepting the premises of local zoning laws and assorted aesthetic ordinances (against outbuildings, compost piles, clotheslines, solar panels, front yard gardens, cars parked on lawns, etc., etc.) designed to protect homeowners from a decline in their “property values.” One’s primary right in a property is to its unfettered use, not to cooperation by others in the maintenance of its resale value. A law that restrains one’s use and enjoyment of one’s own property, in order to maintain the market value of someone else’s property — and all in the name of “property rights,” no less — is fundamentally perverse.

Blogger Mark Poncelet, incidentally, came up with a hilarious parody of Adams’ underpants analogy:

Let’s not forget that you never actually own your underpants (unless you crochet them yourself. Just be very careful that you don’t make a pair that looks like someone else’s. You could be liable for damages). Most underpants makers only give you a license to wear them. When you “buy” these underpants, some of that money goes to the person who designed them. The rest goes to the company that mass­produced them and the company that shipped them. Some of that money finds its way to entities who are preparing to sue you for wearing your underpants improperly.

I pay a subscription fee to a company that sends me underpants on demand. I can wear them, but they get to choose how often I wear them, and I can’t wear similar underpants too many times in a row. When I’m done, I have to send the underpants back. This is a whole lot better than some other methods of getting underpants….

Buy your underpants from iTunes? At least you get to keep them! Yet be prepared to have someone from Apple watch you put them on and take them off….

Regardless of how you get your underpants, there are some brutal realities to consider before you put them on. Like I mentioned above, you don’t own these underpants. Someone else does. They’re just giving you permission to wear them. In return for this permission, they get to decide a lot. [32]


1 Lysander Spooner, The Law of Intellectual Property; or, An Essay on the Right of Authors and Inventors to a Perpetual Property in Their Ideas (Boston: Bela Marsh, 1855) <>.

2 “State Socialism and Anarchism: How Far They Agree, and Wherein They Differ,” in Benjamin R. Tucker, Instead of a Book, By a Man Too Busy to Write One. Gordon Press facsimile (New York: 1973 [1897]), p. 13.

3 Ayn Rand, Capitalism: The Unknown Ideal (New York: The New American Library Inc., 1967), p. 130.

4 Ibid., p. 132.

5 N. Stephan Kinsella, Against Intellectual Property (Ludwig von Mises Institute, 2008), p. 16n. This monograph first appeared as an article the symposium Applications of Libertarian Legal Theory, published in the Journal of Libertarian Studies 15, no. 2 (Spring 2001).

6 Ibid., p. 27.

7 Ibid.

8 Ludwig von Mises, Human Action (Chicago: Regnery, 1949, 1963, 1966), pp. 385-386, 680-681.

9 Murray N. Rothbard, Man, Economy, and State: A Treatise on Economic Principles (Auburn, Ala.: The Ludwig von Mises Institute, 1962, 1970, 1993), p. 655.

10 Ibid., pp. 657-658.

11 Ibid., p. 654.

12 Kinsella, Against Intellectual Property, p. 46.

13 Quasibill, “Contract Enforcement Consolidation,” The Bell Tower, December 20, 2007 <>.

14 Stephan Kinsella comment under Aheram, “The Validity of End User Licesnse Agreements Redux,” Copyfascism Watch, December 2, 2008

15 Kinsella comment under David K. Levine, “Can You Contract Away Fair Use?” Against Monopoly, April 13, 2009

16 Charles Johnson, “How Intellectual Protectionism promotes the progress of science and the useful arts,” Rad Geek People’s Daily, May 28, 2008 <>.

17 Richard Stallman, “The Right to Read” (updated 2007). It originally appeared in the February 1997 issue of Communications of the ACM (Volume 40, Number 2) <>.

18 Michel Bauwens, P2P and Human Evolution. Draft 1.994 (Foundation for P2P Alternatives, June 15, 2005) <>.

19 Michel Bauwens, “Can the experience economy be capitalist?” P2P Foundation Blog, September 27, 2007 <>.

20 Johan Soderberg, Hacking Capitalism: The Free and Open Source Software Movement (New York and London: Routledge, 2008), , pp. 144-145.

21 Deborah Durham-Vichr, “Focus on the DeCSS trial,” CNN.Com, July 27, 2000 <>.

22 Numerous examples—the Diebold corporate emails and Sinclair Media boycott, the Alisher Usmanov libel case, the Wikileaks case, etc.—are provided in the appendices to Chapter Nine (“Special Agency Problems of Labor”) in Kevin Carson, Organization Theory: A Libertarian Perspective (Booksurge, 2008). An earlier online draft of the chapter can be found at <>.

23 Albert Jay Nock, Our Enemy, the State (Delavan, Wisc.: Hallberg Publishing Corp., 1983), p. 80

24 Peter Kropotkin, The Conquest of Bread (New York: Vanguard Press, 1926), pp. 36-37.

25 Ronald Bailey, “Drug Companies Don’t Get Enough Money …,” Reason Hit&Run blog, February 22, 2006 <>.

26 Kevin Carson, Studies in Mutualist Political Economy (Blitzprint, 2004), p. 79.

27 Maurice Dobb, Political Economy and Capitalism: Some Essays in Economic Tradition, 2nd rev. ed. (London: Routledge & Kegan Paul Ltd, 1940, 1960), p. 66.

28 Veblen, The Place of Science in Modern Civilization and other Essays, p. 352, quoted in John R. Commons, Institutional Economics (New York: MacMillan, 1934), p. 664.

29 Rothbard, Power and Market: Government and the Economy. (Kansas City: Sheed Andrews and Mcmeel, Inc., 1970, 1977) , p. 71.

30 Scott Adams, “Is Copyright Violation Stealing?” The Dilbert Blog, April 7, 2007 <>.

31 Kinsella, Against Intellectual Property, p. 47.

32 Mark A. Poncelet, “Leave my underpants alone,” poncelet, April 9, 2007 <>.

Anarchy and Democracy
Fighting Fascism
Markets Not Capitalism
The Anatomy of Escape
Organization Theory