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Hayek’s Views on Intellectual Property

Some of Hayek’s views on patent and copyright have already been collected in previous blogposts (see below). Steve Horwitz just called to Jeff Tucker’s attention another provocative comment of Hayek’s on this topic, in his Constitution of Liberty. This is from chapter 3 (which is reprinted here) (emphasis added):

3. The rapid economic advance that we have come to expect seems in large measure to be the result of this inequality and to be impossible without it. Progress at such a fast rate cannot proceed on a uniform front but must take place in echelon fashion, with some far ahead of the rest. The reason for this is concealed by our habit of regarding economic progress chiefly as an accumulation of ever greater quantities of goods and equipment. But the rise of our standard of life is due at least as much to an increase in knowledge which enables us not merely to consume more of the same things but to use different things, and often things we did not even know before. And though the growth of income depends in part on the accumulation of capital, more probably depends on our learning to use our resources more effectively and for new purposes.

The growth of knowledge is of such special importance because, while the material resources will always remain scarce and will have to be reserved for limited purposes, the users of new knowledge (where we do not make them artificially scarce by patents of monopoly) are unrestricted. Knowledge, once achieved, becomes gratuitously available for the benefit of all. It is through this free gift of the knowledge acquired by the experiments of some members of society that general progress is made possible, that the achievements of those who have gone before facilitate the advance of those who follow.

Here Hayek correctly identifies a key aspect of human progress and production: the reproduction and spread of knowledge which, unlike material resources, is nonscarce and can be duplicated and copied without limit or exhaustion.

See also further quotes from that chapter (emphasis added):

Although the fact that the peo­ple of the West are today so far ahead of the others in wealth is in part the consequence of a greater accumulation of capital, it is mainly the result of their more effective utilization of knowledge. There can be little doubt that the prospect of the poorer, “undevel­oped” countries reaching the pres­ent level of the West is very much better than it would have been, had the West not pulled so far ahead. Furthermore, it is better than it would have been, had some world authority, in the course of the rise of modern civilization, seen to it that no part pulled too far ahead of the rest and made sure at each step that the material benefits were distributed evenly throughout the world. If today some nations can in a few decades acquire a level of material comfort that took the West hundreds or thousands of years to achieve, is it not evident that their path has been made easier by the fact that the West was not forced to share its material achievements with the rest—that it was not held back but was able to move far in advance of the others?

Not only are the countries of the West richer because they have more advanced technological knowledge but they have more advanced technological knowledge because they are richer. And the free gift of the knowledge that has cost those in the lead much to achieve enables those who fol­low to reach the same level at a much smaller cost. Indeed, so long as some countries lead, all the others can follow, although the conditions for spontaneous prog­ress may be absent in them. That even countries or groups which do not possess freedom can profit from many of its fruits is one of the reasons why the importance of freedom is not better understood.

Civilization Can Be Copied [n.b.: this header was not present in the original chapter; it was inserted in the Freeman reprint. —SK]

For many parts of the world the advance of civilization has long been a derived affair, and, with modern communications, such countries need not lag very far be­hind, though most of the innova­tions may originate elsewhere.

How long has Soviet Russia or Japan been living on an attempt to imitate American technology! So long as somebody else provides most of the new knowledge and does most of the experimenting, it may even be possible to apply all this knowledge deliberately in such a manner as to benefit most of the members of a given group at about the same time and to the same de­gree. But, though an egalitarian society could advance in this sense, its progress would be essentially parasitical, borrowed from those who have paid the cost.

Jeff Tucker wrote on this today too:

Hayek: Spread of Non-Scarce Knowledge is the Key to Progress

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For years I’ve looked for a passage from the Austrian tradition that clearly explains the nature of knowledge as a non-scarce good and its high value in pushing social and economic progress. Stephan Kinsella and I have found enough material to provide hints and suggestions, small examples and first thoughts, but never anything that really made the point super clear.

In all my speaking and writing for the past three years, I’ve gone to great lengths to spell out the difference between the physical world of scarcity and the world of ideas in which non-scarcity prevails, and suggested that this is a major reason for the great migration to the digital world. I’ve longed for a passage from some Austrian thinker who seemed fully to grasp the idea — not just in hints and suggestions but worked out and precise.

Well, last night, Steven Horwitz came across a passage from F.A. Hayek that is just gold. It is from the Constitution of Liberty (Chicago, 1960, 1978, p. 43). He puts it as plainly as one can possibly hope given that he was writing before the digital age.

The growth of knowledge is of such special importance because, while the material resources will always remain scarce and will have to be reserved for limited purposes, the uses of new knowledge (where we do not make them artificially scarce by patents of monopoly) are unrestricted. Knowledge, once achieved, becomes gratuitously available for the benefit of all. It is through this free gift of the knowledge acquired by the experiments of some members of society that general progress is made possible, that the achievements of those who have gone before facilitate the advance of those who follow.

Hayek goes on. He uses the fantastic phrase “fund of experience” — an analogy to capital theory in the physical world — as a way of explaining how the whole world and the whole of history can benefit from the success of one single firm or one innovator. “The free gift of the knowledge that has cost those in the lead much to achieve enables those who follow to reach the same level at a much smaller cost.”

This free gift is what I’ve called the socialistic side of capitalism. Every private producer, in order to market its wares, must necessarily give away that most precious thing, the evidence of its own success. That evidence, that knowledge, becomes part of the commons. That thereby inspires competitors to emulate the success. The profitable producer must, in turn, stay on the path of change and progress and never rest, generate ever newer and better knowledge.

So we see here how Hayek anticipated the great trend of our time, the steady and inexorable move of more and more of life from the realm of scarce to non-scarce: words, images, movies, physical objects with 3d printing, and now even money. This is all about the scalability, malleability, indestructibility, and immortality of ideas as non-scarce good. It is gratuitously available for the benefit of all — and this of course is what the markets “desires” in effect: the inclusion of the whole of the world’s population and resources in the great process of improving our lives in this world in which scarcity will always and forever be a feature — a feature to deal with realistically (and humanely) and also to overcome insofar as we are able.

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To the extent possible under law, Stephan Kinsella has waived all copyright and related or neighboring rights to C4SIF. This work is published from: United States. In the event the CC0 license is unenforceable a  Creative Commons License Creative Commons Attribution 3.0 License is hereby granted.