Public Goods and Intellectual Property

In his works, Hans-Hermann Hoppe eviscerates the conventional view that there is a clear distinction between public and private goods, and that the state is needed to produce public goods.

As he writes in A Theory of Socialism and Capitalism:

A clear-cut dichotomy between private and public goods does not exist, and this is essentially why there can be so many disagreements on how to classify given goods. All goods are more or less private or public and can—and constantly do—change with respect to their degree of privateness/publicness with people’s changing values and evaluations, and with changes in the composition of the population. They never fall, once and for all, into either one or the other category. In order to recognize this, one must only recall what makes something a good. For something to be a good it must be realized and treated as scarce by someone. Something is not a good-as-such, that is to say, but goods are goods only in the eyes of the beholder. Nothing is a good without at least one person subjectively evaluating it as such. But then, since goods are never goods—as-such—since no physico-chemical analysis can identify something as an economic good—there is clearly no fixed, objective criterion for classifying goods as either private or public. They can never be private or public goods as such. Their private or public character depends on how few or how many people consider them to be goods, with the degree to which they are private or public changing as these evaluations change, and ranging from one to infinity. … [I]f this is so, no decision whatsoever can be based on the classification of goods as private or public. ¹

…  to come to the conclusion that the state has to provide public goods that otherwise would not be produced, one must smuggle a norm into one’s chain of reasoning. Otherwise, from the statement that because of some special characteristics of theirs certain goods would not be produced, one could never reach the conclusion that these goods should be produced. …

The norm required to reach the above conclusion is this: whenever it can somehow be proven that the production of a particular good or service has a positive effect on someone but would not be produced at all, or would not be produced in a definite quantity or quality unless others participated in its financing, then the use of aggressive violence against these persons is allowed, either directly or indirectly with the help of the state, and these persons may be forced to share in the necessary financial burden.

Notice how similar this is to the reasoning behind patent and copyright (IP) law. That if you don’t have IP law, there will be an underproduction of creative and intellectual works, since people can free ride on it since it’s so easy to copy and emulate it. Thus, artistic works and inventions are public goods that must somehow be subsidized to overcome these problems, either with grants of monopoly privilege in the form of patent and copyright law, and/or with taxpayer-funded subsidies to artists and innovators.² No surprise, then, that Hoppe was so easily able to see that IP is unjust.³

1. See also “Fallacies of the Public Goods Theory and the Production of Security,” in Hoppe’s EEPP. This also would apply to other distinctions between types of goods, such as the distinction between consumer and production goods, which is also based on the subjective appraisal of individual market actors (food, vehicles, clothes, and so on could be viewed subjectively as consumption goods, or as production/intermediate goods, depending on the use put to them by the actor). It is also why Hoppe (and Mises) recognizes that not all goods are necessarily consumption or producer/capital goods, viz., money, which is sui generis since it is neither a capital nor consumer good. See citations to Mises’s, Rothbard’s, and Hoppe’s views on this in Block & Barnett, “Money: Capital Good, Consumers’ Good, or (Media of) Exchange Good?,” Review of Austrian Economics (2005): 179–94. [↩]
2. $30 Billion Taxfunded Innovation Contracts: The ‘Progressive-Libertarian’ Solution,” Against Monopoly (Nov. 23, 2008); Libertarian Favors $80 Billion Annual Tax-Funded “Medical Innovation Prize Fund”, Mises Blog (Aug. 12, 2008); The “Artistic Freedom Voucher” [sic]. [↩]
3. Hoppe on Intellectual Property [↩]