At the recent Austrian Scholars Conference 2008, held March 13-15 (scroll down at the Preliminary Schedule in pdf), Stephan Kinsella chaired a session on the monopoly formerly known as intellectual property. (Okay, this wasn't the actual title.) Paul F. Cwik gave a paper "Is There Room for Intellectual Property Rights in Austrian Economics?" (pdf--scroll down on the left; I couldn't get the other link to work, so I linked to this), in which he argued that there is, and against the position staked out by Kinsella in his paper "Against Intellectual Property". Here is a blog post on it.

The crux of Prof. Cwik's paper is that IP is a public good, based on a natural right to property, and can be fenced off, just as Austrians argue that other public goods can be. His defense of a natural right to IP (he uses copyright as the paradigmatic example, and follows Murray N. Rothbard in claiming that anything created, including an invention, can be copyrighted) essentially consists of the assertion that the created thing, say the word order of a book, is the product of one's labor and should therefore be protected against anyone else's copying it.

Without getting into the public goods debate, which is secondary to the natural rights argument anyway, why does Jones' application of labor to newly homesteaded or otherwise justly owned property give him the right to block Smith or anyone else from making and/or selling or otherwise commercially using their justly acquired copies of his creation? Merely asserting that he has this right, as Prof. Cwik does, doesn't make it a sound argument. After all, neither Smith nor anyone else claims the right to prevent Jones from using his copies of his new creation. Everyone agrees that Jones has the right of first disposal of his property, including the right to sell copies of it. Contrary to what Prof. Cwik thinks, Jones' first mover advantage and the ability to sell complementary and derivative services based on his creation gives him a powerful edge over potential competitors (which of course he is free to squander, hello WebVan and Pets.com--meet Fresh Direct and Petsmart), and enables him at least to have a shot, if not a guarantee, at earning back his cost of capital in a competitive market.

Also, I have a beef with John Locke, Murray Rothbard, and Prof. Cwik. Locke held that a laborer owns his labor; Rothbard et al. have followed him over this cliff. No one owns labor per se, which is an action. How do you own an action? What laborers sell is their labor services; an actor sells his acting services, an assembly line worker sells laborer services, say building a car or at least some action along the assembly line.

So much, then, for the doctrine that he necessarily owns the fruits of his labor, if this is meant literally. If an auto worker tried to walk out at the end of the week with a car that just rolled off the assembly line, I'm guessing he wouldn't get far. His compensation is a wage and contractually attached benefits.

This is also true for Crusoe, laboring on a deserted island. He isn't selling his labor services in a labor market, but he is applying them to whatever he is making, perhaps a fishing net.

I've noted many times that one fallacious line of reasoning in support of intellectual property is the idea that creation is an independent source of rights. In libertarian circles, I have begun to refer to this as "libertarian creationism." I critique this notion, inherent in a recent paper by libertarian philosopher Tibor Machan, in the comments here.

Tyler Cowen has some links at Marginal Revolution.com to an article by Felix Oberholzer-Gee and Koleman Strumpf and a reply by Stan Liebowitz, who is critical of their research.

Here is Liebowitz's homepage, which has the reply. He has a link to copyright issues.

He also has a spreadsheet allowing you to play God with copyright. What are the underlying assumptions he uses? Are they sound (in the sense that logicians use the term--i.e., empirically true and logically valid)?

The Center for the Analysis of Property Rights and Innovation, which is located in the School of Management, at the University of Texas at Dallas, where he teaches, is pro-copyright. But that means anti-property rights, as I understand the term.

Tim Lee at Techdirt raises a question about the purpose of increased encryption of BitTorrent traffic link here, teeing off from a Brit story in the Register link here. He suggests that it is not designed to make it difficult to determine who is using BitTorrent that can't be done. But it would make it impossible to determine whether the material transferred is copyrighted. Given the prospect of filters being used to screen web traffic, it seems to me that encryption does exactly what a lot of users would want- make it impossible for the proposed filters to identify BitTorrents of copyrighted material because the filter won't work if it can't "read" the material. That in turn may increase the pressure to ban BitTorrents completely (already tried a bit by Comcast), but that will be much harder to pull off. An alternative already in use at some colleges and universities, pushed by the industry, would be to charge students higher web access fees and pay the proceeds to the music and video industry.

The New York Times has a really crazy op-ed article today on the high cost of textbooks link here. The author, Michael Granof, a professor of accounting at the McCombs School of Business at the University of Texas, a textbook author, and the chairman of the university's Co-op Bookstore, claims that it is the second hand book market which keeps prices on new books high that is the only way publishers can recoup their costs. He also claims that the second hand text market is highly organized, competitive, and cheap. If that were true and the old and new texts were even just roughly equivalent, publishers couldn't sell many new texts. Granof acknowledges that text prices are very high and has some ideas for improving matters, as he notes publishers "try to discourage students from buying used books by bundling the text with extra materials like workbooks and CDs that are not reusable and therefore cannot be passed from one student to another." He would have publishers sell site licenses to the university planning to use the text and charge students appropriate fees. The real solution is that proposed by David Levine put the text on line and ignore the question of what publishers charge for hard copies. If anyone wanted a hard copy, he could pay to print it himself. That way, the author can alter the text as often as he wants, as intellectual honesty requires, as pedagogical effectiveness suggests, and as current developments in the discipline would seem to require. Granof has some justified criticisms of the Advisory Committee on Student Financial Assistance which was asked by Congress to suggest a cure for the problem of high text prices. His bottom line: "Unfortunately though, the committee has proposed a remedy that would only worsen the problem by doing nothing about the second hand book market."

William Stepp does an admirable job rebutting Helprin's deeply flawed reasoning in arguing for perpetual copyrights. You might also want to check out the response from Iiya Somin over at Volokh.

Somin reiterates a thought that always comes to my mind on this issue that cuts right to the heart of the matter: Imagine the consequences of giving Shakespeare's great-great-great-great-great grandchildren the power to end distribution and performances of his work for all time. It would also prevent the creation of any derivative works (i.e., no West Side Story, RAN, and thousands of other works based on Shakespeare. All wiped out since they would violate the "property rights" of someone who has been dead for hundreds of years.).

Helprin's idea is not merely wrong - it would be utterly destructive to any semblance of artistic culture.

[Update: Lessig has put together a useful wiki page for rebutting Helprin. Hat-tip James Grimmelmann over at PrawfsBlog.

To the Editor:

In asserting that since a great idea lives forever, so should its copyright, Mark Helprin confuses real and intellectual property ("A Great Idea Lives Forever. Shouldn't Its Copyright?," opinion, May 20.) Information, as embodied in intangible or "intellectual property," cannot be owned, but can only be possessed or experienced, unlike tangible property, as John Perry Barlow pointed out in a 1996 essay. An ideal object, such as a book, music, or other article of property in which information is instantiated, can be owned. The information or expression (e.g., words, musical notations, pictures) contained within them, which conveys the message from the writer or producer to the reader or consumer, cannot be owned.

A tangible object is real property because it possesses three properties: it has a physical instantiation and boundaries, it can be physically possessed and used, and it can be alienated. Intangible or "intellectual property" fails the first and third criteria. An author who sells a copy of a manuscript, which is real property, still retains the ideas and word order within it even if he doesn't own them. He owns his manuscript, including the paper, ink, and cover, but does not own the words he writes and their arrangement.

He has two rights to his property, the ownership of his manuscript and to its first disposal. In a free society, he would not have the downstream right to prevent others from making copies of their own property, including copies of his work. He has two ways to prevent others from copying his work, either not publishing it or publishing it in a form that can't be copied, such as by encrypting it.

"Intellectual property" is applied to tangible property by giving a creator (or legal possessor) a state-granted monopoly to do certain things with it, such as making copies. This is accomplished by enjoining others from using their legally owned tangible property to do these things. The economists Fritz Machlup and Edith T. Penrose pointed out in a 1950 paper on the nineteenth-century patent system that the French legislature invented the term "intellectual property" and applied it to ideas that were patented to obfuscate the monopolistic origin of patents. "Intellectual property" is therefore better termed intellectual monopoly. Mr. Helprin is correct when he states that without government intervention, copyright holders would have no right to monopolize the production of copies of their protected works.

Thomas Jefferson recognized that the lack of "intellectual property" in nature (i.e., in a free market) benefited society, contrary to Mr. Helprin's belief that copyright is consistent with the "public good." The authors of the progress clause of the Constitution failed to understand that patents and copyrights impede intellectual progress, act as barriers to innovation and as rent-seeking devices, and imperil the liberties of innocent people using their own property. A creator's first mover advantage, combined with the ability to sell complementary services, enables him to reap the competitive rents that ensure the continuation of intellectual progress without intellectual monopoly.

Elaborating on Crosbie's comment: I also saw the Helprin op-ed this morning, courtesy of Bill Zame who sent me the link. Helprin confuses a gift granted him by the government with that which he earned by the sweat of his brow. A house you build with the sweat of your brow. Helprin's great masterpieces such as Memoir From Antproof Case he also built with the sweat of his brow. Suppose for the sake of argument that I had purchased a copy (for obvious reasons I have not). Then what right does Helprin have to tell me how I can use my copy? If he built a house and sold it to me, would that give him the right to tell me how to use it? Make no mistake, intellectual property is not about property, it is about monopoly. What Helprin wants is not the right to own his work in perpetuity - that right he already has. What Helprin wants it the right to monopolize his work in perpetuity - and that is a gift given him by the government that is not given to builders of houses, flour mills, travel agencies or newspapers.

Mark: nobody is forcing you to sell your great masterpieces. But if you sell them, stop trying to tell us what to do with our copies of them.

He thinks copyright should last forever.

Mark Twain only wanted it for a million years.

A rebuttal is in order.

The Viacom lawsuit against Google has received a lot of publicity. The Washington Post has has an article by one of the lawyers - an article that implicitly raise the question: Why do the courts tolerate the twisting of the plain meaning of words?

The worst example of this is the SCO lawsuit againsts IBM on the grounds that somehow Linux infringes on source code to which SCO holds the copyright. This lawsuit has being going on for years - the judge has repeatedly held against SCO's claims; SCO has repeatedly refused to provide evidence for its claims; and it is clear that SCO executive and lawyers have repeatedly lied to stockholders about the strength of and evidence for their claims. Yet the legal system treats the claims and liars with dignity as if they were serious plantiffs. There are laws against making misrepresentations to stockholders. Perhaps if the SCO executives and lawyers went to jail - which is where they belong for harassing IBM with a meritless and expensive lawsuit - that would send the right message to Viacom. It doesn't seem enough that somewhere down the road years from now a court will rule that Viacom's claims have no merit. Or even that they repay Google for its legal costs. Certainly SCO won't ever repay IBM: they've bankrupted the company by giving all of its assets to the lawyers who agreed to pursue a meritless lawsuit to the bitter end.