The Necessity of Intellectual Property Rights within a Libertarian Economy
Intellectual Property rights (IP) have been the subject of debate amongst Austrian Economists for a long time. Those are the rights of the creator of an idea to that idea, usually expressed as patents or copyrights. IP rights had much support among the early tenants of the theory such as Mises and Ayn Rand, however, late views tend to vary. There are two main ways in which it is argued that IP rights are necessary, the first of which is the idea that intellectual rights are also property rights, and the second is the idea that IP rights have a benefit to society. I will be rejecting both of those arguments, asserting that IP rights are not rights, nor are they necessary for a successful Libertarian society.
The argument for IP rights as a necessary good comes from Ayn Rand. Rand argues that IP rights function in the same way as property rights since ideas are, according to her, a product of the mind. Rand specifies that ideas need to be materialized before they can be protected as property. It is not merely enough to come up with an invention, but the invention must be made for the idea to be patented. Rand concedes that IP rights and property rights have a fundamental difference. There is no practical way for ideas to be passed on the future, unless the owner chooses to contractually allow a different entity to use the idea or chooses to waive their rights over the idea all together. This is problematic for Rand as it prohibits the further development of the idea by future generations. Huebert critiques Rand’s defense of IP rights precisely for this point. Huebert argues that this difference between IP rights and property rights is fundamental and cannot be ignored. If IP was exactly the same as real property, then there would be no time limits. If Rand sees a necessity for the time limit, then it is a clear concession that IP is not real property and therefor should not have the same protection. Huebert’s argument, however, ignores that Rand considers time limits as a necessary evil. While they are infringement on property, they should exist to allow for further development. Rand’s argument for time limits is utilitarian and does not entail that IP and real property and fundamentally different.
In order to examine Rand’s claim, we should look at the origin of property rights in a Libertarian framework. The main purpose of property rights is to prevent conflict. Since land is a scarce resource, competition leads to conflict unless rights are established over real property. The same line of reasoning applies to personal property; however, it does not apply to IP. Since ideas are not a scarce resource, conflict would not arise over them so property rights should not apply. Moreover, ideas are not well defined like property is. Ideas can be improved or built upon. They do not take a final shape and can have different variations for different people, we cannot pin an idea to an exact ‘thing’ and hence we cannot apply property rights to it. As such, Rand’s argument would at best serve to only protect exact replicas of an invention or work, and at worst fail completely to defend IP as property rights.
Moreover, IP rights violate people’s freedom to exercise their own rights. Generally speaking, Libertarians define freedom in its negative sense; that is, the freedom from something or the absence of coercion. As such IP rights would prevent people from their own rights over property. Someone’s purchase of a book means that it is now their property however copyrights would prevent them from their rights over their property. IP rights are ingringements on the freedoms of others using the coercive powers of the state and therefore cannot be defended in a Libertarian framework. The only portion of Rand’s argument that we might still consider in that if fairness. People deserve compensation for their work to create something. Even then, IP rights are not justifiable. Compensation for the idea is present regardless since the creator can still idea in production. IP rights merely create an unnecessary monopoly for the owner over that idea that prevents others from it.
The main other argument for IP rights within Libertarianism sees them as a necessary evil. The argument which originates from Mises is a utilitarian one. IP rights are necessary since guaranteeing benefits for the creator of the idea and that translates as utility for society as a whole. Before assessing the truth behind this claim by applying the utilitarian calculus, we should establish that it remains unclear that utility is enough to justify coercive rights. Moreover, this view is only consistent with a rule-utilitarian view since an act-utilitarian application would mean assessing the utility of each specific patent and copyright on society as a whole on a case by case basis and as such would not motivate innovation due to the lack of guarantee. However, for a rule-utilitarian ethical application to mandate IP rights, the benefits have to far exceed the utility derived from the absence of coercion, which does not seem to be the case.
Boldrin and Levine extensively assess the benefits of IP rights on innovation in empirical economic terms, their findings find no clear between IP rights and increased innovation. Moreover, historical evidence shows it is not the case, as writers have produced valuable works and ideas long before copyright and patent law existed. The utilitarian argument wrongly assumes that incentives for innovation could only be granted through a monopoly, however creators can still gain benefits from their work by exchanging the product itself thereby having an incentive without the interference of the state. Additionally, there is a reverse utilitarian argument to be made here, since patents and copyrights prevent others from improving on an idea and since such improvement could have a greater utility than the initial idea, surely, IP rights have a negative impact in those cases. It is clear that even if there is a slight utility gained by establishing IP rights, it is not enough to justify the use of coercive power.
The only remaining case to examine with copyrights and patents is that of contractual obligations. Murray Rothbard argues that creators can contractually oblige those who buy the product to not reproduce the work or its ideas as a condition for the transaction. For Rothbard’s idea to apply one should adopt the will theory of rights; specifically that rights can be waived for some property rights over the object of transaction are being waived by the buyer, however, since there is a general agreement among Libertarians regarding that idea we will accept it to be true. Even then, Rothbard’s argument faces difficulties. While it is acceptable that the seller can oblige the buyer waive their rights over the ideas expressed through the invention or the work, there is no obligation for any third party to not reproduce the idea or build on it if that idea was to enter public domain. What Rothbard’s idea of copyrights gives, is merely a framework wherein the creator can sue any direct buyer’s for infringement on a contract; nevertheless, it does not allow for the existence of copyrights as that would infringe on the rights of non-consenting third parties to practice their rights over their own future ideas with no legal basis in the form of a contract.
In conclusion, IP rights are not necessary for successful Libertarian society ethically nor economically. IP rights are radically different from both real property rights and personal property rights as they are not rights over scarce resources and therefore their application would not serve to prevent conflict. Moreover, the impossibility of defining an idea in on specific unique variation makes it impractical to have such rights over abstract objects. The utilitarian support for IP rights, which renders them as a necessary evil to motivate innovation has no empirical or logical basis. Empirical analysis of history and current times shows no correlation between IP rights and innovation, and logical reasoning leaves the case ambiguous as motivation is still available in the form of potential profit for any given idea and patent laws can obstruct improvements of current ideas. Rothbard’s contractual case for copyrights merely highlights the potential for creators to have some unguaranteed control over the distributive usage of the idea; it does not however, demonstrate a basis for a universal establishment of IP rights. It is clear that there is no necessity for IP laws in a Libertarian society, they would only lead to more needless coercion and undesirable monopolies, and as such, they must be abolished.
Bibliography
- Boldrin, Michele and David K. Levine. “Does Intellectual Property Help Innovation?” Review of Law and Economics. Vol 5:3 (2009). 991-1042.
- Huebert, Jacob H. “The Fight Against Intellectual Property.” In Libertarianism Today. 203-219. Santa Barbara, CA: Praeger, 2010.
- Kinsella, Stephan. “Law and Intellectual Property in a Stateless Society.” Libertarian Papers. 5:1. (2013). 1-45.
- Rand, Ayn. “Patents and Copyrights.” In Capitalism: The Unknown Idea. Ayn Rand Org, 1966-67.
- Rothbard, Murray N. Man, Economy, and State. Ed. 2. Ludwig von Mises Institute, 2004.
