Pozeram, “The Great Intellectual Property Bubble and the Coming Reckoning for Western Economies”

by Stephan Kinsella on July 31, 2026

Interesting piece by Len D. Pozeram, “The Great Intellectual Property Bubble and the Coming Reckoning for Western Economies,” Libertarian Alliance (UK) (31 July, 2026):

Since the early 1990s, Western economies have undergone a complete and perilous transformation. They have shifted from systems centered on the production of tangible goods to ones dominated by the extraction of rents through finance and intellectual property. Factories and machine tools gave way to platforms and algorithms, both resting on legal monopolies. Wealth came to be measured less by what nations manufactured than by the soaring market capitalizations of technology companies whose primary assets consisted of patents, copyrights, trademarks, and proprietary data. This was presented as the inevitable triumph of the “knowledge economy.” In reality, it represented a dangerous wager: that legal privileges and financial engineering could indefinitely substitute for genuine productive capacity.

That wager is now visibly unraveling. The recent weakness in technology stocks, the mounting difficulties of streaming giants like Netflix, and the sharp sell-offs triggered by Chinese open-source AI breakthroughs are not isolated corrections. They are the first cracks in a thirty-year experiment that substituted paper claims and monopoly rents for the hard work of making things. The intellectual property bubble—sustained by intrusive laws, currency debasement, and speculative capital—is beginning to deflate. Its collapse will force a painful reckoning.

Pozeram makes some good points but I am not sure all of the reasoning can be endorsed. For example:

Rewarding invention may be essential to progress. The problem arises when legal protections cease to incentivize discovery and instead become instruments for extracting perpetual monopoly rents. Western capitalism has tilted decisively in this direction. The result is an economy that increasingly rewards ownership of legal claims rather than the creation of tangible wealth.

This seems to be a variant of the fallacious notion that IP used to work okay but now is “broken.” Of course the stated purpose is IP, at least in the US Constitution, is to “promote the progress” of science and the arts, by granting monopoly privileges to protect “creators” from competition so that they can charge monopoly prices¹ so that they find it easier to make more profits so that they will invest in intellectual innovation and creation in the first place—even though the purpose of law is to do justice not run around looking for market failure to tweak² and even though there is no evidence that IP law ever did or could do what its alleged purpose is³ or that the cost would worth it even if it did⁴ and even though this is not what motivates innovation in the first place⁵ and even though the today’s patent and copyright laws are just modern outgrowths of European state-church censorship and thought control and anti-competition protectionism and mercantalism⁶ — but come on. If IP was justified at one point, it still is. It is not broken now, if it ever made sense. If it is broken now, it was always broken.

Pozeram also lumps together a type of preference for material goods and physical “manufacturing” in which is critique of IP subsidies or dependencies and related distortions, e.g.:

Wealth came to be measured less by what nations manufactured than by the soaring market capitalizations of technology companies whose primary assets consisted of patents, copyrights, trademarks, and proprietary data. T

It is true that many western industries, especially American ones—especially Hollywood (movies; copyright), music (copyright), and pharmaceutical (patent), but also aspects of technology-related copies like Apple, Microsoft (patent, trademark, copyright)—are significantly dependent on IP protection—⁷ Yet the opposition to IP does not rest on the almost Trumpian whine that America has “lost its manufacturing” or that this way of being productive in a free market is somehow superior to, say, services. Of course it true that various state policies in the west, say in the US, have artificially impeded and distorted manufacturing—by its regulations and taxes increasing the cost of production, manufacturing of material goods has migrated to lower-cost developing economies such as China, but this does not mean that natural shifts in such things or international trade and international divisions and specializations in labor in view of the law of comparative disadvantage are bad things or that there is anything wrong with one region or sector or country specializing in, say, information products, tourism, legal and financial and insurance services, R&D or higher education or design as opposed to physical manufacturing.

In reality wealth is just the ability to satisfy humans and in general all action is aimed at achieving a future state of affairs that is demonstrably and ex ante more valuable to the user than alternative future end states.⁸ It is why most human action—aimed in general at achieving psychic, not monetary, profit—is aimed at non-pecuniary ends, and even most catallactic or commercial transactions—only a subset of all actions—are not always aimed at purely monetary ends: the consumer or purchaser if often one half of an exchange. And even here the consumer is only sometimes interested in achieving ownership of a good as the end of his action. Quite often the consumer-purchaser pays money to receive a changed state of affairs or a service (having his house painted; getting a massage; seeing the Northern Lights; making a niece delighted at seeing The Nutcracker).

Opposing IP does mean that there cannot be property rights in knowledge.⁹ But this not mean that ideas are not valuable (they are essential guides to action)¹⁰ just as the inability to own a service does not mean that it cannot be “sold” (and selling something—an economic concept—does not mean that it is or can be “owned”—a legal concept.¹¹

We anti-IP libertarians do not have a knee-jerk preference for physical goods over other forms of satisfaction or utility nor a preference for physical manufacturing over other roles in a complex, modern, division of labor international economy.