[From my Webnote series]
See my article The Problem with Intellectual Property (Papinian Press Working Paper #2), Part III.A; also Stephan Kinsella, Legal Foundations of a Free Society (Houston, Texas: Papinian Press, 2023), ch. 14, Law and Intellectual Property in a Stateless Society,Part III.B and ch. 15, Against Intellectual Property After Twenty Years: Looking Back and Looking Forward, Part IV.C; Libertarian Creationism; Succinct Criticism of Utilitarianism and Libertarian Creationism.
See:
From: “Intellectual Property and the Structure of Human Action”:
“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.”
“… The range of what will be tried and later developed, the fund of experience that will become available to all, is greatly extended by the unequal distribution of present benefits; and the rate of advance will be greatly increased if the first steps are taken long before the majority can profit from them. Many of the improvements would indeed never become a possibility for all if they had not long before been available to some. If all had to wait for better things until they could be provided for all, that day would in many instances never come. Even the poorest today owe their relative material well-being to the results of past inequality.” Update: Re the “fund of experience” notion: see also Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948), discussing scientific discoveries which add to the “storehouse of knowledge of all men”; also discussed in Elizabeth I. Winston, “The Technological Edge.” See also “Against Intellectual Property After Twenty Years: Looking Back and Looking Forward“: “For elaboration, see Kinsella, “Hayek’s Views on Intellectual Property,” C4SIF Blog (Aug. 2, 2013) and “Intellectual Property and the Structure of Human Action,” discussing Hayek’s comments about how the accumulation of a “fund of experience” helps aid human progress and the creation of wealth. See also Kinsella, “Tucker, ‘Knowledge Is as Valuable as Physical Capital,’” C4SIF Blog (March 27, 2017).”1
Hayek’s Views on Intellectual Property:
From Jeffrey Tucker:
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.”2
***
From ch. 15, Against Intellectual Property After Twenty Years: Looking Back and Looking Forward, Part IV.E:
IV.E: The Separate Roles of Knowledge and Means in Action
Property rights apply only to the scarce means or conflictable resources that humans employ, but not to the knowledge or information people possess, which guides their behavior, since anyone can use the same or similar knowledge to guide their own actions without conflict. In fact, it is the accumulation of this technological knowledge over time that enables increasing material prosperity. Property rights are needed to permit conflict-free use of scarce resources, but imposing restrictions on the emulation, learning, and use of knowledge, which is what IP attempts to do, impoverishes the human race.[59] This is why I concluded one article with these words:
It is obscene to undermine the glorious operation of the market in producing wealth and abundance by imposing artificial scarcity on human knowledge and learning…. Learning, emulation, and information are good. It is good that information can be reproduced, retained, spread, and taught and learned and communicated so easily. Granted, we cannot say that it is bad that the world of physical resources is one of scarcity—this is the way reality is, after all—but it is certainly a challenge, and it makes life a struggle. It is suicidal and foolish to try to hamper one of our most important tools—learning, emulation, knowledge—by imposing scarcity on it. Intellectual property is theft. Intellectual property is statism. Intellectual property is death. Give us intellectual freedom instead![60]
[59] For elaboration, see Kinsella, “Hayek’s Views on Intellectual Property,” C4SIF Blog (Aug. 2, 2013) and “Intellectual Property and the Structure of Human Action,” [Mises Economics Blog (Jan. 6, 2010)] discussing Hayek’s comments about how the accumulation of a “fund of experience” helps aid human progress and the creation of wealth. See also Kinsella, “Tucker, ‘Knowledge Is as Valuable as Physical Capital,’” C4SIF Blog (March 27, 2017) and George Reisman, “Progress In a Free Economy,” The Freeman (July 1, 1980; https://perma.cc/2HW6-JJ8J). See also Julio H. Cole, “Patents and Copyrights: Do the Benefits Exceed the Costs?”, J. Libertarian Stud. 15, no. 4 (Fall 2001; https://mises.org/library/patents-and-copyrights-do-benefits-exceed-costs-0): 79–105, p. 84 et seq., discussing the importance of technical progress (not to be confused with patents) to economic growth. Cole cites several studies in n.12.
[60] Kinsella, “The Death Throes of Pro-IP Libertarianism.”
***
From ch. 14, Law and Intellectual Property in a Stateless Society,Part III.B, Part III.B:
III.B Libertarian Creationism[77]
Another reason why many libertarians favor IP is their confusion about the origin of property and property rights. They accept the careless observation that an individual can come to own things in three ways: through homesteading an unowned thing, by contractual exchange, and by creation. Therefore, they reason, if you own what you create, this is especially true for useful ideas. For example, libertarian philosopher Tibor Machan has stated: “[I]t would seem that so called intellectual stuff is an even better candidate for qualifying as private property than is, say, a tree or mountain.”[78] And Objectivist philosopher David Kelley writes:
[T]he essential basis of property rights lies in the phenomenon of creating value… [F]or things that one has created, such as a new product, one’s act of creation is the source of the right, regardless of scarcity.[79]
The mistake is the notion that creation is an independent source of ownership, independent from homesteading and contracting. Yet it is easy to see that “creation” is neither necessary nor sufficient as a source of ownership. If you carve a statue using your own hunk of marble, you own the resulting creation because you already owned the marble. You owned it before, and you own it now.[80] And if you homestead an unowned resource, such as a field, by using it and thereby establishing publicly visible borders, you own it because this first use and embordering gives you a better claim than latecomers.[81] Thus, creation is not necessary for ownership to arise.
But suppose you carve a statue in someone else’s marble, either without permission or with permission, such as when an employee works with his employer’s marble by contract. You do not own the resulting statue, even though you “created” it. If you are using marble stolen from another person, your vandalizing it does not take away the owner’s claims to it. And if you are working on your employer’s marble, he owns the resulting statue. Thus, creation is not sufficient for ownership rights to arise.
This is not to deny the importance of knowledge, or creation and innovation. Human action, which necessarily employs (ownable) scarce means, is also informed by technical knowledge of causal laws or other practical information. An actor’s knowledge, beliefs and values affect the ends he chooses to pursue and the causal means he selects to achieve the end sought (as discussed further in the next section).
It is true that creation is an important means of increasing wealth. As Hoppe has observed,
One can acquire and increase wealth either through homesteading, production and contractual exchange, or by expropriating and exploiting homesteaders, producers, or contractual exchangers. There are no other ways.[82]
While production or creation can certainly increase wealth, it is not an independent source of ownership or rights. Production is not the creation of new matter; it is the transformation of things from one form to another—the transformation of things someone already owns, either the producer or someone else. Using your labor and creativity to transform your property into more valuable finished products gives you greater wealth, but not additional property rights.[83] (If you transform someone else’s property, he owns the resulting transformed thing, even if it is now more valuable.)
In other words, creation is not the basis for property rights in scarce goods. Creating something does not make you its owner. A mother who creates a child does not own it. A vandal who creates a mural on someone else’s property does not own it. An employee who creates a consumer device using his employer’s facilities and materials does not own it. Creation is not sufficient to generate rights. And those who transform their own property to create a more valuable product own the resulting product because they already owned the original material, not because of creation. The creator of an idea does not thereby own the idea.[84]
Notes
[77] See also Part IV.C in “Against Intellectual Property After Twenty Years: Looking Back and Looking Forward” (ch. 15).
[78] Tibor Machan, “Intellectual Property and the Right to Private Property,” Mises.org working paper (2006; https://mises.org/wire/new-working-paper-machan-ip), discussed in Kinsella, “Owning Thoughts and Labor,” Mises Economics Blog (Dec. 11, 2006), and in idem, “Remembering Tibor Machan, Libertarian Mentor and Friend: Reflections on a Giant,” StephanKinsella.com (April 19, 2016). See also the similar “ontology” based argument of J. Neil Schulman, mentioned in “Conversation with Schulman about Logorights and Media-Carried Property” (ch. 17).
[79] Quoted in Kinsella, “Rand on IP, Owning ‘Values’, and ‘Rearrangement Rights,’” Mises Economics Blog (Nov. 16, 2009). The idea that you own what you “produce” or “create” is widespread. See, e.g., Kirzner on Mill:
“The institution of property,” John Stuart Mill remarked, “when limited to its essential elements, consists in the recognition, in each person, of a right to the exclusive disposal of what he or she have produced by their own exertions, or received either by gift or by fair agreement, without force or fraud, from those who produced it. The foundation of the whole is the right of producers to what they themselves have produced.” The purpose of this paper is to point out the ambiguity of the phrase “what a man has produced”, and to draw attention, in particular, to one significant, economically valid, meaning of the term,—a meaning involving the concept of entrepreneurship—which seems to have been overlooked almost entirely.… Precision in applying the term “what a man has produced” seems to be of considerable importance.
Israel M. Kirzner, “Producer, Entrepreneur, and the Right to Property,” Reason Papers No. 1 (Fall 1974; https://reasonpapers.com/archives/): 1–17, p.1, quoting J.S. Mill, Principles of Political Economy (Ashley Edition, Londen, 1923), p. 218. As another example, patent attorney Dale Halling writes: “A patent is a property right it is not a monopoly. Like all property the source of the property right is creation.” See comments in Kinsella, “Pro-IP Libertarians Upset about FTC Poaching Patent Turf,” Mises Economics Blog (Aug. 24, 2011).
[80] See, on this point, Sheldon Richman, “Intellectual ‘Property’ Versus Real Property: What Are Copyrights and What Do They Mean for Liberty?,” The Freeman (12 June 2009; https://fee.org/resources/intellectual-property-versus-real-property):
If someone writes or composes an original work or invents something new, the argument goes, he or she should own it because it would not have existed without the creator. I submit, however, that as important as creativity is to human flourishing, it is not the source of ownership of produced goods… So what is the source? Prior ownership of the inputs through purchase, gift, or original appropriation. This is sufficient to establish ownership of the output. Ideas contribute no necessary additional factor. If I build a model airplane out of wood and glue, I own it not because of any idea in my head, but because I owned the wood, the glue, and myself. If Howard Roark’s evil twin trespassed on your land and, using your materials, built the most creatively original house ever seen, would he own it? Of course not. You would—and you’d have every right to tear it down.
See also Dan Sanchez, “The Fruit of Your Labor… is a good, not its form,” Medium (Oct. 30, 2014; https://perma.cc/GD28-JS44).
[81] See “What Libertarianism Is” (ch. 2); Hoppe, A Theory of Socialism and Capitalism, chaps. 1, 2, and 7; David Hume, A Treatise of Human Nature, Selby-Bigge, ed. (Oxford, 1968), Book III, Part II, Section III n16:
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.
See also “Against Intellectual Property After Twenty Years: Looking Back and Looking Forward” (ch. 15), at notes 56–57.
[82] Hans-Hermann Hoppe, “Banking, Nation States, and International Politics: A Sociological Reconstruction of the Present Economic Order,” in The Economics and Ethics of Private Property, at 50 (emphasis added).
[83] See Kinsella, “Locke on IP; Mises, Rothbard, and Rand on Creation, Production, and ‘Rearranging,’” Mises Economics Blog (Sep. 29, 2010). See also Pierre-Joseph Proudhon, “Les Majorats littéraires,” Luis Sundkvist, trans. (1868), in Lionel Bently & Martin Kretschmer, eds., Primary Sources on Copyright (1450–1900; www.copyrighthistory.org/cam/index.php), at pp. 11 et seq.:
The masters of science instruct us all—and the supporters of literary property are the first to argue this—that man does not have the capability of creating a single atom of matter; that all his activity consists of appropriating the forces of nature, of channeling these and modifying their effects, of composing or decomposing substances, of changing their forms, and, by this steering of the natural forces, by this transformation of substances, by this separation of elements, of making nature [la création] more useful, more fertile, more beneficial, more brilliant, more profitable. So that all human production consists (1º) of an expression of ideas; (2º) a displacement of matter.
This is essentially Spooner’s mistake: he has a broad definition of “wealth,” which includes knowledge, ideas, inventions, etc., and then assumes that property is just wealth that can be possessed. Thus, ideas can “be property.” [See IP is Not “Not Property”.] See Spooner, “The Law of Intellectual Property or an Essay on the Right of Authors and Inventors to a Perpetual Property in Their Ideas,” §§ 2–3, et pass. This also highlights the importance of using the term property to refer to the property rights individuals have with respect to owned resources, as I note in “What Libertarianism Is” (ch. 2), Appendix I.
[84] In fact, as Proudhon notes:
[I]n the strict sense of the term, we do not produce our ideas any more than we produce physical substances. Man does not create his ideas—he receives them. He does not at all make truth—he discovers it. He invents neither beauty, nor justice—they reveal themselves to his soul spontaneously, like the conceptions of metaphysics, in the perception of the phenomena of the world, in the relations between things. The intelligible estate [fonds] of nature is, in the same way as its tangible estate, outside of our domain: neither reason, nor the substance of things are ours. Even that very ideal which we dream about, which we pursue, and which causes us to commit so many acts of folly—this mirage of our understanding and our heart—we are not its creators, we are simply those who are able to see it.
Proudhon, “Les Majorats littéraires,” at p. 12. Or as Isaac Newton put it, “If I have seen further it is only by standing on the shoulders of giants.” Letter to Robert Hooke (February 15, 1676).
***
From ch. 15, Against Intellectual Property After Twenty Years: Looking Back and Looking Forward, Part IV.C:
IV.C. Lockean Creationism[49]
In the “Creation vs. Scarcity” section of AIP, I pointed out that one mistake made by many proponents of IP is the notion that creation is a source of property rights. But it is not. I have elaborated on this topic in subsequent writing, pointing out that creation—i.e., production, transformation, or rearrangement[50] of existing resources—is a source of wealth but not a source of property rights. After all, transforming a set of input resources into a more valuable output product requires that the input factors already be owned. The resulting product is thus owned according to standard property rights and contract principles.[51]
Property rights in one’s body are based in one’s direct control over one’s body.[52] Property rights in external, previously unowned scarce resources come from original appropriation, or homesteading—first use and transformation or embordering—of an unowned scarce resource or by contractual transfer from a previous owner.[53] Production or transformation of existing, already-owned resources may increase or create wealth, but is not a source of rights. This is a common confusion among libertarians, especially Randians and those influenced by the confused labor theory of property and the related labor theory of value, as can be seen in nonsensical sayings like, “You have a right to the fruits of your labor.”[54]
Notes
[49] See also the discussion of “rearrangement” in Part IV.F, below, and also Part III.B, “Libertarian Creationism,” in “Law and Intellectual Property in a Stateless Society” (ch. 14).
[50] For more on this concept, see Kinsella, “Locke on IP; Mises, Rothbard, and Rand on Creation, Production, and ‘Rearranging,’” Mises Economics Blog (Sep. 29, 2010); also Kinsella, “KOL037 | Locke’s Big Mistake: How the Labor Theory of Property Ruined Political Theory,” Kinsella on Liberty Podcast (March 28, 2013).
[51] See also the section “Creation of Wealth versus Creation of Property” in Kinsella, “Intellectual Freedom and Learning Versus Patent and Copyright,” Economic Notes No. 113 (Libertarian Alliance, Jan. 18, 2011) (also published as “Intellectual Freedom and Learning Versus Patent and Copyright,” The Libertarian Standard (Jan. 19, 2011)); “Law and Intellectual Property in a Stateless Society” (ch. 14), Part III.B; and Kinsella, “KOL012 | ‘The Intellectual Property Quagmire, or, The Perils of Libertarian Creationism,’ Austrian Scholars Conference 2008,” Kinsella on Liberty Podcast (Feb. 6, 2013). And see Gary Chartier, Anarchy and Legal Order: Law and Politics for a Stateless Society (Cambridge University Press, 2013), at 78 (“the ability to control a possession means that one can transform it as needed in a way that may enhance its value either to the possessor, to others, or to both”; emphasis added); and Israel M. Kirzner, “Producer, Entrepreneur, and the Right to Property,” Reason Papers No. 1 (Fall 1974; https://reasonpapers.com/archives): 1–17, p. 1 (“Precision in applying the term ‘what a man has produced’ seems to be of considerable importance.”). See also Uszkai, “Are Copyrights Compatible with Human Rights?,” p. 13, discussing my argument in AIP that creation:
… is neither necessary nor sufficient to establish ownership. The focus on creation distracts from the crucial role of first occupation as a property rule for addressing the fundamental fact of scarcity. First occupation, not creation or labor, is both necessary and sufficient for the homesteading of unowned scarce resources.
[52] “How We Come to Own Ourselves” (ch. 4).
[53] See note 47, above.
[54] See references in Part IV.D, below. See also International News Service v. Associated Press, 248 U.S. 215 (1918; https://supreme.justia.com/cases/federal/us/248/215/), where the Supreme Court recognized a quasi-property right in the fruits of one’s labor, what is sometimes called the “sweat of the brow” doctrine (a doctrine later rejected in the copyright context in Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340 (1991; https://supreme.justia.com/cases/federal/us/499/340/)).
- See also Julio H. Cole, “Patents and Copyrights: Do the Benefits Exceed the Costs?”, J. Libertarian Stud. 15, no. 4 (Fall 2001): 79–105, p. 84 et seq., discussing the importance of technical progress (not to be confused with patents) to economic growth. In this regard, Cole cites in n.12: Robert M. Sherwood, Intellectual Property and Economic Development (Boulder, Colo.: Westview Press, 1990), pp. 82–83; Robert M. Solow, “Technical Change and the Aggregate Production Function,” Review of Economics and Statistics 39 (1957), pp. 312–20; and Edward F. Denison, Accounting for Slower Economic Growth (Washington, D.C.: Brookings Institution, 1979). [↩]
- Update: Re the “fund of experience” notion: see also the Supreme Court case Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948), discussing scientific discoveries which add to the “storehouse of knowledge of all men“; also discussed in Elizabeth I. Winston, “The Technological Edge.” See also “Against Intellectual Property After Twenty Years: Looking Back and Looking Forward“: “For elaboration, see Kinsella, “Hayek’s Views on Intellectual Property,” C4SIF Blog (Aug. 2, 2013) and “Intellectual Property and the Structure of Human Action,” discussing Hayek’s comments about how the accumulation of a “fund of experience” helps aid human progress and the creation of wealth. See also Kinsella, “Tucker, ‘Knowledge Is as Valuable as Physical Capital,’” C4SIF Blog (March 27, 2017).” [↩]
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