Richard Epstein’s Takings Political Theory versus Epstein’s Intellectual Property Views

by Stephan Kinsella on November 4, 2011

I’ve long been a fan of and admired the brilliant libertarian legal theorist Richard Epstein. I devoured his book Takings: Private Property and the Power of Eminent Domain in 1991, at the tail end of my minarchist phase and as I was becoming even more an adherent of the Austrian school of economics. The book is Epstein’s own theory of the state, a response of sorts to John Rawls and Robert Nozick. He argues that because of free rider and holdout problems, a state is necessary. But that it and its laws and policies are justified only insofar as they do overcome these holdout problems and make everyone better off. Then, there is enough social surplus generated so that some of it can be used to compensate those who are disproportionately impacted by particular state polices.

For example if the state needs to take someone’s property for some public use and in a way that makes the overall “pie bigger,” then some of that extra wealth generated by this state measure can be used to compensate the victim of expropriation. So he has no complaint, since he receives compensation for the taking; and the rest of society benefits overall because of the bigger pie that they all partake in. Now I disagree with this argument for a number of reasons. For example, this utilitarian view falsely equates value with money; but as the Austrians have shown, value is subjective, ordinal, not cardinal, and not interpersonally comparable. Second, it is unethical to redistribute property from A to B even if B gains more than A loses. Third, there is no reason whatsoever to think the state could ever engage in this utilitarian redistributionism efficiently, competently, honestly, or without corruption. That is, the state would be making the pie smaller. (For more discussion, see my The Case Against IP: A Concise Guide; also the “Utlitarianism” section in In Defense of Napster and Against the Second Homesteading Rule.) In fact, in a review essay in the Texas Law Review in 1987–one of the best book reviews I have ever read, by the way; another favorite is Justin Raimondo’s great, withering review of Horowitz’s memoir Radical Son, David Horowitz and the Ex-Communist Confessional–Jeffrey Rogers Hummel observes: “The same public-goods problem that is such a vital prop to Epstein’s legal framework also fatally undermines that framework” (p. 1239). (Hummel’s amazing review is here, reprinted with his permission.)

Professor Epstein’s entire case relies on the fallacious notion of public goods, and flies in the face of Austrian insights into the nature of value and utility. (See Murray N. Rothbard, “Toward a Reconstruction of Utility and Welfare Economics“; Hans-Hermann Hoppe, “Fallacies of the Public Goods Theory & the Production of Security,” in The Economics and Ethics of Private Property: Studies in Political Economy and Philosophy.)

In any case, in Takings, Epstein argues that a given state law or policy is justified only if we have good reason to think that it does make the pie bigger, i.e. that it increases social welfare. If it does not, there is no surplus left over to compensate the expropriated victim, and society is made worse overall. In other words, there is a presumption against state laws unless it is shown that it generates social surplus. The burden of proof is on someone who supports a given law or policy to demonstrate this. In the book Epstein then analyzes a number of laws and shows that a small number of them appear to increase the size of the pie, and should be permitted (e.g. national defense), but that most modern policies of the federal government clearly do not make the pie bigger, and so have to be rejected as illegitimate. So even though his utilitarian and positivist argument is flawed from the point of view of Austrians and anarchists, at least he applies a very strict filter to scrutinize state law, and most of it fails Epstein’s razor.

What I find interesting is that in his arguments for intellectual property, namely patent and copyright, Professor Epstein appears not to abide by his own normative theory in Takings. So far as I can tell, when he argues in favor of IP, he argues that IP is justified because it creates social surplus (say, by inducing valuable net innovation or artistic creation that would not exist without such laws). (See Richard Epstein on “The Structural Unity of Real and Intellectual Property”.) But he presents (so far as I can tell) no evidence for this assumption. In fact, the vast bulk of empirical studies seem to conclude that we simply cannot determine this, or that it appears that innovation is harmed by IP (see the references in The Economist on the American Patent System). In other words, the available evidence and studies indicate that IP makes the pie smaller. Epstein, it seems to me, should use an “if” instead of a “because”: IP is justified, according to his Takings theory, if it makes the pie bigger; but since we have no good reason to think that it does, and in fact good reason to think it makes the pie bigger, IP law is in fact not justified, by Epstein’s Takings test.

(Professor Epstein also argues that IP “can” be treated by the law like a form of property, as I note in Classifying Patent and Copyright Law as “Property”: So What?, but I don’t see how this means it’s justified, or that it does grow the pie higher.)

Update:

STEPHAN KINSELLA: Okay, so Professor Epstein, you seem to believe with me that 130 years or so for a copyright is absolutely absurd and ridiculous. Now, apparently if you have a copyright system, that’s what happens. So would you prefer to have … a zero copyright term or 130…

— Stephan Kinsella (@NSKinsella) February 12, 2026

KOL364 | Soho Forum Debate vs. Richard Epstein: Patent and Copyright Law Should Be Abolished:

STEPHAN KINSELLA: Okay, so Professor Epstein, you seem to believe with me that 130 years or so for a copyright is absolutely absurd and ridiculous. Now, apparently if you have a copyright system, that’s what happens. So would you prefer to have … a zero copyright term or 130 years if that was your choice?

00:47:06

RICHARD EPSTEIN: I’d take the 130 years even though I hate it because it turns out…

RICHARD EPSTEIN: I would take the second of the miserable one of these alternatives because most of the value with respect to any literary work, most of it for most of them, are going to be concentrated in the first ten or 15 years. So essentially the distortions [indiscernible_00:47:27] from the years 20 to 120 may matter with respect to Mickey Mouse and a few other things like that, but with most things it turns out it doesn’t.

00:47:36

And remember, it’s not just books and literature that are subject to copyright. A software is subject to a complicated regime, but it’s often protected by copyright, and the useful life of a software copyrighted device is sort of five, ten years at most, usually less than that. And so essentially I think that the coverage is harmful, but I think the most important years are the in years, not the out years, and so I would keep the system, and I would do everything in my power to get rid of the silliness, all of which was introduced by international agreements because I think what I would answer is I’m talking about an ideal patent system, which doesn’t have the terrible risks that are associated with the public choice dimension that we have in the current law where the ability to take things out of the commons and to put them into these things are – is completely up to legislative discretion.

00:48:24

There was, in fact, as I tried to make in one of these cases that were brought early on that if something is already in the public domain, to put it back and to say it’s now going to receive copyright protection or patent protection is just crazy. And the culprit there is the constitutional system, which is so weak that when it says we use a rational basis test, which in my Takings book I attack and allow them to be re-protected.

00:48:48

And this was the case that Larry Lessig argued in 2003. Somehow the name seems to have escaped me, but I thought that it was exactly right to say that if you want to extend it for no quid pro quo whatsoever, which is what they did with the Term Extension Act, that should be unconstitutional. ¹ So again, I think the simplest way to put the point is I’m trying to defend an ideal system, not the current system, and the only way you can get to that system paradoxically is to do what I wanted to do in the Takings book, which is to create a strong and stable system of property rights, which would also mean that things that have been put into the public domain will be kept there.

See also Mark Lemley: The Very Basis Of Our Patent System… Is A Myth, arguing that the so-called patent bargain is false because no disclosure is given in return for the monopoly privilege grant. As Judge Erank H. Easterbrook writes, in “Intellectual Property Is Still Property,” Harv. J.L. & Pub. Pol’y 13, no. 1 (Winter 1990): 108–118, pp. 109–110: “The idea that a patent represents an exchange of protection for disclosure makes no sense, except perhaps with respect to process patents. The product itself, not the patent papers, usually discloses things. Inventors want and need patents only when disclosure is inevitable in the absence of protection.” [↩]