Mossoff: Why Should Business Leaders Care About Intellectual Property (Objectivism)

by Stephan Kinsella on April 19, 2011

As I’ve noted before, with the rise of IP abolitionism among libertarians, with IP defenders on the ropes, the Objectivists are trying to strike back. Rand’s defense of IP was incoherent, confused, and never complete (her brief argument assumed the US patent system is first to file, which is incorrect; and she had an incoherent admixture of utilitarianism and intuitionism in her tortured attempt to defend a finite, arbitrary term for patent and copyright).

Modern defenders such as Greg Perkins and law professor Mossoff are attempting to put her IP views on a sound footing.¹

One thing ironic about this is Rand put so much stock into the importance of IP–she said ““patents are the heart and core of property rights,”² she told a patent attorney that “Intellectual property is the most important field of law,”³ and Mossoff claims that “All Property is Intellectual Property”. Well if IP is that important, if it’s the base of her whole system, but if she only devoted one brief and confused essay to it, and if her followers are still struggling to rehabililate and flesh her views out on IP (in the presentation I’ll discuss below, Ayn Rand Institute President Yaron Brook says he will participate in the Q&A even though “I don’t know anything about intellectual property”), how can Objectivism be a comprehensive, complete, and closed system? Surely its claims to completeness are suspect if its very foundations are IP and those foundations are still in need of shoring up?

In any case, GMU Objectivist law professor and Adam Mossoff is putting a lot of effort in trying to come up with a coherent defense of IP.⁴ In a lecture last November, “Why Should Business Leaders Care about Intellectual Property?—Ayn Rand’s Radical Argument,” Professor Mossoff (joined by ARI head Yaron Brook in the Q&A) attempts to defend IP based on Objectivist principles.

The attempt fails completely, because it is riddled with confused arguments and non-sequiturs, so many that it’s hard to know where to begin. I started keeping notes but could not keep up, so I will only make a few observations based on what I did jot down.

First, Mossoff says (or implies; I can’t recall) that Locke believed IP was a natural right. This is false, as shown by Ronan Deazley and Tom Bell.⁵ Nor did Jefferson or the Founders. It was the modern perpetuation of the ancient state grants of monopoly privilege and censorship, reworked democratically for administration by a state bureaucracy to advance a policy goal of encouraging innovation, disclosure, and artistic creation. It had nothing to do with natural rights or desert. They were just temporary, unlike normal property.

Mossoff repeats the crankish Objectivist argument that man “creates values”, as values are things, ownable things; he says the goals of action are the creation of values. But there is no property right to value, since value is relational: it has to do with how individuals regard the usefulness of real things–as demonstrated in action (this Misesian notion of demonstrated preference is similar to Rand’s definition of value as something one acts to gain and/or keep). We do not own values, and we do not create values. Rather, we value certain means and ends and demonstrate this valuing by acting to use the means to attain a given end. Often this action involves transforming an owned scarce resource to make it more valuable–that is to increase wealth. Man acts, and uses ideas, information, knowledge, intellect, creativity, action, labor, to transform given things from one state to another, presumably to a more valuable state. This is the only way we create value–by making an owned thing more valuable.

Rand recognized this:

The power to rearrange the combinations of natural elements is the only creative power man possesses. It is an enormous and glorious power—and it is the only meaning of the concept “creative.” “Creation” does not (and metaphysically cannot) mean the power to bring something into existence out of nothing. “Creation” means the power to bring into existence an arrangement (or combination or integration) of natural elements that had not existed before.

Mossoff says the source of rights is man’s need to “create material values.” He seems to miss the importance of the word “material” here, which complements Rand’s observation above regarding how production really involves rearranging existing material. As some Objectivists put it:

The right to property is the right to gain, keep, use, and dispose of material values without physical compulsion, coercion, or interference by other men (neither criminals nor governments). Because human beings are physical organisms, every life-sustaining action they take has a material dimension. Land, buildings, and material objects of all kinds are the means by which people live. Without property rights, no other rights are possible—including the rights to life and liberty.

This is actually good–it’s compatible with the Misesian idea of scarce resources being important to human action, and, thus, the importance of property rights in these material things. Still, it’s crankish to talk about “material values” as things. What is “a value” in their terminology? According to this usage, if you take “fallow land” and transform it into a farm, the farm “is” “a value” that you have … created? But this is confused. What you did was (a) homestead a scarce resource (the fallow land); (b) use your effort, labor, action, ingenuity, skill, knowledge, to transform the land into a farm; (c) you own the farm because you already owned the land which you rearranged into a farm; (d) the farm is “more valuable” to you (value is subjective) than was the unimproved land, so you now have more “wealth”–your action created wealth, but did not create property. Notice: there is an equivoction in “value” here–if it means wealth, then sure, your action created wealth but all this means is you transformed your own property into a more valuable arrangement, so this has no implications for property rights; but if it means an ownable thing, “a farm,” which is “a value,” then to say you own the value (the farm) because you “created” it, is simply false, a severe confusion.

At one point Mossoff says that leftist opponents of IP are labor theory of value types; and that the problem with this view is that it’s not physical labor but intellectual effort or labor that is the source of property. So it’s still a labor theory of value/property.⁶ Hume had it right when he wrote:

Some philosophers account for the right of occupation, by saying, that every one has a property in his own labour; and when he joins that labour to any thing, it gives him the property of the whole: But, 1. There are several kinds of occupation, where we cannot be said to join our labour to the object we acquire: As when we possess a meadow by grazing our cattle upon it. 2. This accounts for the matter by means of accession; which is taking a needless circuit. 3. We cannot be said to join our labour to any thing but in a figurative sense. Properly speaking, we only make an alteration on it by our labour. This forms a relation betwixt us and the object; and thence arises the property, according to the preceding principles.⁷

Locke, and Rand, are too metaphorical–figurative–in their emphasis on “labor” and (for Rand) “value.”

At another point in his talk, Mossoff conflates knowledge, technology, knowhow, and innovation with IP–he gives a laundry list of impressive human innovations and achievements, as if this is IP; as if this makes it obvious that IP is good–this is pure equivocation.

One of his arguments backfires completely. He tries to give an example which is supposed to show how great and necessary patents are in the case of Shockley (co-inventor of the transistor) and Noyce, who, Mossoff says, simultaneously and independently invented the integrated circuit. I am not sure if this story is correct–I think it was Noyce and Jack Kilby, not Noyce and Shockley, but whatever (forgive me, I’m a EE and these guys are giants in my mind). In any case, according to Mossoff, these two independent co-inventors got into a two-year “interference” litigation at the patent office to determine who got the patent–and after two years of wasted litigation they both dropped and went on with their lives. I blinked when I hears this example. Is this supposed to show that patents are good? Here we have two people independently inventing the same thing–meaning the invention’s “time was ripe” and was going to come regardless; neither should have gottten a patent! And in this case, they wasted tons of time and resources obtaining and fighting over patents… that they dropped because the litigation was consuming their time. So…. this supports the notion of IP exactly how? I can see why the patent bar likes it, but… libertarians?

As I noted above, it’s amusing that when Yaron Brook, the President of ARI, introduces Mossoff, he says he will participate in the Q&A even though “I don’t know anything about intellectual property”! Even though IP is the heart and core of all property rights! Even though he does participate in the Q&A at the end!

Mossoff says all rights are intellectual property rights, but he only means, I think, that there is (of course) an important element of intellectual creativity and the mind involved in homesteading resources, and then transforming them. Of course; who denies this. But this is yet another equivocation: the IP proponent first uses “intellectual” in this sense, to show that rights are “intellectual” (in that the intellect is involved in acts of homesteading), and then they do the equivocation switcheroo and say “well then you are in favor of intellectual property” “and that includes patent and copyright”. Argument by equivocation.

Mossoff also trots out the old argument that the reason for American success since its founding is that it had patent and copyright. He gives an example of how the Supreme Court (in Diamond v. Chakrabarty, IIRC) opened the door for certain gene patents in the 1980s, leading to our dominance in biotech, unlike the Europeans whose courts or IP standards were “behind” ours at the time. Correlation v. causation, anyone? We’ve also had significant taxation, racism, and regular wars since our founding. Maybe that’s why we are so great!

Mossoff says that libertarians who oppose IP (he mentions Misesisans like me and Catoites like Tom Palmer by name) are “Benthamite” utilitarians, because we understand scarcity is an important aspect of property. This is completely confused. This is a commonplace observation: It was recognized by Hume (1751),⁸ Benjamin Tucker (1890s),⁹ Arnold Plant (1934),¹⁰ Rothbard,¹¹ and Hoppe.¹² In fact, the arguments given by Randians for having an arbitrary, finite term for IP (say, approx. 17 years for patent, about 100 years for copyright) is what is completely ad hoc, unprincipled, reverse engineered, and utilitarian.

IP libertarians rarely seem to understand the horrible, unlibertarian implications of their views. Case in point, Mossoff recently appeared on an IP panel at the recent APEE annual meeting, along with several anti-IP libertarians, including Sheldon Richman (I believe Roderick Long was present too but I am not sure if he was on that panel). The panel also had Ed Lopez who offered efficiency arguments against IP but was not much part of the debate. Richman related to me that at one point, Roy Cordato asked Mossoff if IP would protect a Kirznerian entrepreneur who has a novel insight about the gap between the cost of inputs and the price of an output. At first Mossoff said he didn’t know what a Kirznerian entrepreneur was (Cordato explained), then he didn’t get the point (thinking Cordato meant the actual product rather than the idea about the gap between costs and price), then ended up saying that the idea would be patentable–which means the law would stop market equilibration, since others could not jump in and imitate the entrepreneur.

This is not surprising, given that the very purpose of IP is to reduce what Rand mockingly referred to in Atlas Shrugged as “cut-throat” competition. Consider these quotes, by advocates of IP:

The “patent bargain” is an easily understood concept. Awarding an inventor twenty years exclusivity naturally entails considerable social cost — a cost that rises in direct proportion to the value of the covered invention. In certain instances — those where the patented technology is so useful that no substitutes exist — the award of a patent creates a complete economic monopoly. [Alan Devlin]

Governments adopt intellectual property laws in the belief that a privileged, monopolistic domain operating on the margins of the free-market economy promotes long-term cultural and technological progress better than a regime of unbridled competition. [Jerome H. Reichman]

A patent is a pretty significant monopoly, so we want to make sure we are giving it to the right people. [Beth Noveck]

This is what some libertarians are for. This is what Objectivists are in favor of. Can you believe it?

Of course, if you take IP seriously (like Tom Paine “Liberty” nickle-dropper, name-changing, scientistic quasi-cultist Galambos did), other absurdities are possible (see An Objectivist IP Argument for Taxation; Sheldon Richman, Question for Randian IP Advocates). If we really enforced IP, all human life would die out.

It’s mind-boggling that some libertarians have been led down this rabbit-trail–but it’s time for it to end. Fess up, jettison your errors, and move on.

Down with IP!

[Mises]