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Libertarian and Lockean Creationism: Creation As a Source of Wealth, not Property Rights; Hayek’s “Fund of Experience”; the Distinction Between Scarce Means and Knowledge as Guides to Action

by on May 6, 2025

[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.

Related:

Update [excerpted in Bylund’s Typology of Knowledge: Physical vs. Catallactic; General vs. Applied]: See Per Bylund’s taxonomy of types of information in Per L. Bylund, “Austrian Economics and Knowledge,” Q. J. Austrian Econ. 29, no. 2 (June 08, 2026): 1–24. Abstract:

This article develops a typology of knowledge in economics, drawing on the works of Carl Menger and F. A. Hayek, to clarify how different types of knowledge affect production, coordination, and entrepreneurial profit. It organizes economically relevant knowledge along two axes—the physical world versus the catallactic world, on the one hand, and general versus applied, on the other—and adds a temporal dimension to distinguish knowledge problems from uncertainty. The framework reveals that while physical-world knowledge sets the boundaries of what can be produced, catallactic-world knowledge guides what should be produced and how. The article applies this typology to Austrian theories of the market process, showing that uncertainty arises when value knowledge is unavailable at the time of action and that entrepreneurial profit stems from bearing this uncertainty rather than from superior knowledge. This conceptual separation advances the understanding of economic causality and the distinct functions of knowledge in market processes.

See also other tweets here:

Now my point in this post and in my writing about IP is more general: that action is necessarily guided by ideas, knowledge and information—knowledge of causal laws, and other knowledge such as contingent or factual knowledge about the world, and so on. The general point about the nature of action and the distinction between the roles of causally efficacious scarce means and their employment, on the one hand, and that of the knowledge that guides action, on the other, does not require a further breakdown of various types of knowledge that the actor considers relevant or useful in guiding his action.

So Bylund’s breakdown does not matter for the general point I am making—that causal and other knowledge is essential to and guides action—but it is interesting nonetheless. However, though it is depicted in a neat and apparently comprehensive 4-quadrant chart with sharp horizontal and vertical lines dividing the boxes, I am not sure it is 100% rigorous or exhaustive. This does not mean it is not conceptually useful for analysis nor that such distinctions are not useful to some actors. For example we find it useful to distinguish innovation from invention, or invention from discovery, even if these terms are not rigorously defined and the distinctions and divisions therebetween not sharp or clear. (( See Masnick on Innovation vs. Invention; on Irrelevant and Nonrigorous Distinctions: Innovation, Invention, Ideas, Knowledge, Data, Discovery… ))

As for exhaustiveness: when someone says here are the X categories of something, my hackles are raised: I always wonder if they can prove their breakdown is exhaustive and complete. You can do this in some cases, of course. For example, you can show that all action is jogging or non-jogging (or would that be jogging and “not-jogging”?), but you can’t say some liquid is either coffee or water, since there are other types of liquid.

For example “things” (what most people might call “property”)1 may be classified as either movable or immovable by definition, since “movable” is defined as the residual category: “All things, corporeal or incorporeal, that the law does not consider as immovables, are movables.”2

But what about types of goods? Are all goods either present or future goods; or either producer (capital) or consumer goods? Or does the capital/consumer division just refer to two obvious or main types, with others being possible—just as contracts may be nominate or innominate, with the former being “those given a special designation such as sale, lease, loan, or insurance” and the latter being those3 Or are there other types of goods, e.g. “sui generis” goods that are neither capital nor consumer goods, e.g. money?4

And what about, similar to the goods categories of consumer and producer goods, the parallel concepts leisure and labor? Are they exhaustive? Is all action either labor or leisure, or might there be other types of action? Labor and leisure are subcategories of action based on how we classify the type of end of the action: it the thing pursued and end in itself (leisure, consumption) or some intermediate end (labor, production)? Or maybe not all action is 100% either one and is a mixture: if I enjoy my job is it labor or leisure? (Likewise, the public-private goods dichotomy is also not sharp.)5

So: is all “knowledge” either general or applied; or appertain the physical or “catallactic” world? And what about other distinctions as between concepts like knowledge, ideas, recipes, information, data, and so on, which all play a role in the guiding part of human action and which are all sometimes used more or less synonymously and sometimes not? I don’t know.

For example Bylund’s chart shows “value knowledge” from the “catallactic world” “guiding” the actor when when he “applies” it to productivity knowledge; and that scientific and technological knowledge (general and applied knowledge from the physical world) also limits and informs the actor too. I suppose this makes a sort of intuitive sense. But how does all this relate to Rothbard’s “recipes”–I don’t see that term in Bylund’s paper. When an actor acts, he uses a variety of types of knowledge or information: causal or scientific knowledge (I suppose this is quadrant i), technological knowledge in quadrant ii (recipes?), and value knowledge… Fine. But what about other knowledge that informs the actor’s decisions and forecasts for the future? For example just contingent, factual knowledge about, say, demographics or statistics; historical knowledge; knowledge of existing institutions and the nature of states; economic knowledge; philosophy; political philosophy; intuition; even the mythical, unteachable “verstehen” of the judgment of the actor or entrepreneur.6 If I know that there 5 billion chicken eggs produced and consumed daily planet-wide, this is useful knowledge for some actions and projects, but it’s not scientific or technological–it’s just a fact, like the speed of light and so on. As is the knowledge of how existing states are operated. Then there is knowledge of others’ character and preferences. The entrepreneur—and every actor is an entrepreneur because the future is uncertain and knowledge is limited, actors are fallible and loss or failure and mistakes are possible—takes all these various types of knowledge into account in deciding what ends to pursue and what means to employ and what recipes and designs to use, what scientific causal laws to regard as true and applicable and relevant… it seems to me like a judgment of the entrepreneur and I am not sure they can all be neatly captured by a 2×2 chart.

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Update: Penner on Intellectual Property, Monopolies, and Property: “If property is a right to things, we must provide some characterization of the things that can be property. … Most persons familiar with philosophical treatises on property are never faced with the task of thinking about why some things are objects of property and others are not.”

Update: Ronald Merrill, The Patent Question Ownership and innovation (January 1972):

It is well-known that the ultimate source of all property is creation[6]; so far, so good. Now, say both schools, the innovator creates an idea; therefore he owns it. The basic source of disagreement now appears. The problem arises because ideas are not the same as material goods.

See:

Mises, Human Action, IX.1:

It is always the individual who thinks. Society does not think any more than it eats or drinks. The evolution of human reasoning from the naive thinking of primitive man to the more subtle thinking of modern science took place within society. However, thinking itself is always an achievement of individuals. There is joint action, but no joint thinking. There is only tradition which preserves thoughts and communicates them to others as a stimulus to their thinking. However, man has no means of appropriating the thoughts of his precursors other than to think them over again. Then, of course, he is in a position to proceed farther on the basis of his forerunners’ thoughts. The foremost vehicle of tradition is the word. Thinking is linked up with language and vice versa. Concepts are embodied in terms. Language is a tool of thinking as it is a tool of social action. [p. 178]

Non-errata: on action being guided by ideas and information: see Mises, Human Action, IX.1:

Action is preceded by thinking. Thinking is to deliberate beforehand over future action and to reflect afterwards upon past action. Thinking and acting are inseparable. Every action is always based on a definite idea about causal relations. He who thinks a causal relation thinks a theorem. Action without thinking, practice without theory are unimaginable. The reasoning may be faulty and the theory incorrect; but thinking and theorizing are not lacking in any action. On the other hand thinking is always thinking of a potential action. Even he who thinks of a pure theory assumes that the theory is correct, i.e., that action complying with its content would result in an effect to be expected from its teachings. It is of no relevance for logic whether such action is feasible or not.

(On this latter point, that “thinking is always thinking of a potential action,” see also Hans-Hermann Hoppe, Economic Science and the Austrian Method (Auburn, Ala.: Mises Institute, 1995), p. 20–21:

We must recognize that such necessary truths are not simply categories of our mind, but that our mind is one of acting persons. Our mental categories have to be understood as ultimately grounded in categories of action. And as soon as this is recognized, all idealistic suggestions immediately disappear. Instead, an epistemology claiming the existence of true synthetic a priori propositions becomes a realistic epistemology. Since it is understood as ultimately grounded in categories of action, the gulf between the mental and the real, outside, physical world is bridged. As categories of action, they must be mental things as much as they are characteristics of reality. For it is through actions that the mind and reality make contact.

… Kant had hinted at this solution. He thought mathematics, for instance, had to be grounded in our knowledge of the meaning of repetition, of repetitive operations. And he also realized, if only somewhat vaguely, that the principle of causality is implied in our understanding of what it is and means to act.16

Yet it is Mises who brings this insight to the foreground: Causality, he realizes, is a category of action. To act means to interfere at some earlier point in time in order to produce some later result, and thus every actor must presuppose the existence of constantly operating causes. Causality is a prerequisite of acting, as Mises puts it.

But Mises is not, as is Kant, interested in epistemology as such. With his recognition of action as the bridge between the mind and the outside reality, he has found a solution to the Kantian problem of how true synthetic a priori propositions can be possible.)

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).”7

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.”8

Jeffery Tucker, Interview with the Daily Bell (Jeffrey Tucker on Laissez Faire Books, Intellectual Property Rights and ‘Beautiful Anarchy’), in Liberty.me: Freedom Is a Do-It-Yourself Project (Liberty.me, 2013):

I’ve argued that every capitalist act includes a communist giveaway to go along with it: capitalists give up a substantial portion of their secret to success when they market and sell. They necessarily invite competitors. They have to. That’s because of the nature of information as a non-scarce good, a good of timeless and infinite value. Without information, capitalism cannot work and yet information is necessarily part of the commons once it is made public. Every capitalist is a massive contributor to the common stock of knowledge capital. I don’t think this point has really been reflected upon enough. In any case, once you understand this point, the rest of the theory of intellectual property makes sense.

See also Saifedean Ammous, “316. Principles of Economics Lecture 7: Technology,” The Bitcoin Standard Podcast (Youtube, March 10, 2026).

***

See also Karl Marx, Fragment on Machines:

Nature builds no machines, no locomotives, railways, electric telegraphs, self-acting mules etc. These are products of human industry; natural material transformed into organs of the human will over nature, or of human participation in nature. They are organs of the human brain, created by the human hand; the power of knowledge, objectified. The development of fixed capital indicates to what degree general social knowledge has become a direct force of production, and to what degree, hence, the conditions of the process of social life itself have come under the control of the general intellect and been transformed in accordance with it. To what degree the powers of social production have been produced, not only in the form of knowledge, but also as immediate organs of social practice, of the real life process.

Also:

And ChatGPT conversation about Marx and general intellect.
***

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, and Part III.D:

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).

III.D. Learning, Emulation, and Knowledge in Human Action

Another way to understand the error in treating information, ideas, recipes, and patterns as ownable property is to consider IP in the context of human action. Mises explains that “[t]o act means: to strive after ends, that is, to choose a goal and to resort to means in order to attain the goal sought.”[87] Knowledge and information of course play a key role in action as well. As Mises puts it, “Action … is not simply behavior, but behavior begot by judgments of value, aiming at a definite end and guided by ideas concerning the suitability or unsuitability of definite means.”[88]

Rothbard further elaborates on the importance of knowledge to guide actions:

There is another unique type of factor of production that is indispensable in every stage of every production process. This is the “technological idea” of how to proceed from one stage to another and finally to arrive at the desired consumers’ good. This is but an application of the analysis above, namely, that for any action, there must be some plan or idea of the actor about how to use things as means, as definite pathways, to desired ends. Without such plans or ideas, there would be no action. These plans may be called recipes; they are ideas of recipes that the actor uses to arrive at his goal. A recipe must be present at each stage of each production process from which the actor proceeds to a later stage. The actor must have a recipe for transforming iron into steel, wheat into flour, bread and ham into sandwiches, etc.[89]

Moreover, “[m]eans are necessarily always limited, i.e. scarce, with regard to the services for which man wants to use them.”[90] This is why property rights emerged. Use of a resource by one person excludes use by another. Property rights are assigned to scarce resources to permit them to be used productively and cooperatively, and to permit conflict to be avoided. In contrast, ownership of the information that guides action is not necessary. For example, two people who each own the ingredients (scarce goods) can simultaneously make a cake with the same recipe.

Material progress is made over time because information is not scarce. It can be infinitely multiplied, learned, taught, and built on. The more patterns, recipes, and causal laws that are known, the greater the wealth multiplier as individuals engage in ever-more efficient and productive actions. It is good that ideas are infinitely reproducible. There is no need to impose artificial scarcity on ideas to make them more like physical resources, which—unfortunately—are scarce.[91]

[87] Ludwig von Mises, The Ultimate Foundation of Economic Science: An Essay on Method (Princeton, N.J.: D. Van Nostrand Company, Inc., 1962; https://mises.org/library/ultimate-foundation-economic-science), p. 4.

[88] Mises, Human Action, 93. [MISTAKE; SHOULD BE ULTIMATE FOUNDATION OF ECONOMIC SCIENCE p.34]

[89] Murray N. Rothbard, Man, Economy, and State, with Power and Market, Scholars ed., second ed. (Auburn, Ala.: Mises Institute, 2009; https://mises.org/library/man-economy-and-state-power-and-market), p. 11. See also See also Guido Hülsmann, “Knowledge, Judgment, and the Use of Property,” Rev. Austrian Econ. 10, no. 1 (1997; https://perma.cc/DKQ8-JX45): 23–48, p. 44 (“The quantities of means we can dispose of—our property—are always limited. Thus, choice implies that some of our ends must remain unfulfilled. We steadily run the danger of pursuing ends that are less important than the ends that could have been pursued. We have to choose the supposedly most important action, though what we choose is how we use our property Action means to employ our property in the pursuit of what appears to be the most important ends.… In choosing the most important action we implicitly select some parts of our technological knowledge for application.”; emphasis added). See also the related discussion in “Goods, Scarce and Nonscarce” (ch. 18), text at n.32.

[90] Ibid.

[91] For elaboration on the ideas discussed in this section, see Kinsella, “Intellectual Freedom and Learning Versus Patent and Copyright” and “Against Intellectual Property After Twenty Years: Looking Back and Looking Forward” (ch. 15), the section “The Separate Roles of Knowledge and Means in Action.”

 

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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/)).

  1. Libertarian Answer Man: Self-ownership for slaves and Crusoe; and Yiannopoulos on Accurate Analysis and the term “Property”; Mises distinguishing between juristic and economic categories of “ownership”. [↩]
  2. La. Civil Code, Art. 475; Intellectual Property Rights as Negative Servitudes; Are Ideas Movable or Immovable?. See also Louisiana Civil Code, Art. 448. [↩]
  3. Louisiana Civil Code, Art. 1914. [↩]
  4.  Walter Block on Money as a Sui Generis Good. [↩]
  5. Public Goods and Intellectual Property. [↩]
  6. Verstehen and the Role of Economics in Forecasting, or: If You’re so Rich, Why Aren’t You Smart? [↩]
  7. 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). [↩]
  8. 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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The Center for the Study of Innovative Freedom (C4SIF) is dedicated to building public awareness of the manner in which so-called “intellectual property” (IP) laws and policies impede innovation, creativity, communication, learning, knowledge, emulation, and information sharing. We are for property rights, free markets, competition, commerce, cooperation, and the voluntary sharing of knowledge, and oppose IP laws, which systematically impede or hamper innovation. IP law should be completely and immediately abolished.

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