Tuesday, October 29, 2002

IP Freely

Julian takes issue with libertarians (and others) who place intellectual property rights on the same plane as other forms of property. He contends that copyrights and patents "are not genuine property," and he worries that "we diminish the concept of property when we attempt to extend it beyond its rightful sphere."

Now, I'm with Julian and Larry Lessig in thinking that IP rights shouldn't be extended indefinitely and retroactively. But I don't take that position because IP rights are not really property at all. On the contrary, the only reason I support IP at all is that it's quite similar to regular property in the most relevant respects. I would not claim that IP rights are identical to the run-of-the-mill property rights, as there are significant differences -- but then again, there are significant differences even within traditional property rights. Property rights in land are different from property rights in water. Property rights in movable items are different from property rights in real estate. Fee simple ownership is different from ownership of the mineral estate. Self-ownership is different from world-ownership. Different rules apply for the definition and enforcement of all these different sorts of property.

Julian must have in mind some definition of property that includes all of these types of right, but excludes IP. I'm curious to know what that definition is. Property is not, after all, a Platonic form. Property is a catch-all term that refers to a variety of rules and institutions that serve the function of aligning economic incentives. And in this sense, IP and traditional property rights have much in common. Why, for instance, is it generally desirable for land to be owned privately? One huge reason is that without rights of exclusion, most any productive use of land would create positive externalities. If I cultivated apple trees, passersby could grab as many as they wanted, thus reducing the return to my investment of time, effort, fertilizer, etc. The "passerby tax" would induce me to plant fewer apple trees and spend less effort tending them. Similarly, the absence of copyrights would reduce my incentive to create new and interesting creative works. When the benefits of my effort (of whatever variety) are reduced by the free consumption of others, I lack an efficient incentive to expend that effort in the first place. Property is a means of internalizing the positive externalities.

Julian asserts that "the core of property -- which is in the first instance property in labor -- is the right to enjoy the direct benefits of that labor. It is emphatically not the right to prevent anyone else from enjoying the positive externalities of that labor, or indeed, to socialize the costs of internalizing those benefits." But why should we identify this one aspect of property, enjoyment of "direct" benefits, as its "core"? I'm not even sure what a "direct" benefit of labor is. Arguably, it might be the pure joy of using your hands (or brain) to create something, in which case we have an argument against virtually any form of property except self-ownership. All benefits of labor are in some sense indirect, so the question is how far we wish to extend ownership over the benefits.

Moreover, ownership of direct benefits of one's labor is an incredibly weak justification for property rights, which (if treated as a necessary condition for existence of property) would invalidate ownership of any asset that wasn't homesteaded through the "mixing of labor." This position would rule out the possibility of owning undeveloped assets such as forests. Say goodbye to the Nature Conservancy and other organizations that try to protect environmental amenities through private ownership.

J. then argues that another person's use of an idea I've created does not constitute "interference" with my well-being, because "I am made no worse off if some third party hears a song I've written, and plays it for her own enjoyment." Again, a very similar point could be made with respect to many traditional property interests. For example, if I drain a swamp on a piece of land, thus turning it into a great picnicking spot, I am not harmed by the picnickers' activities, at least if there are few enough of them. But denying my rights to the former swamp would substantially reduce incentives for people like me to drain swamps -- or make other land improvements -- in the first place.

I'll skip the discussion of the constitutional basis of IP, because it's obviously true that the origin of IP is not the same as the origin of other property rights, and move on to the question of whether IP is different because it creates a (temporary) monopoly. This, again, is not fundamentally different from other kinds of property. If I homestead a piece of land and put a fence around it, I claim a monopoly on that land. This monopoly may allow me to reap economic profit, particularly if the land is unique in some way. Yes, it's possible for other people with other pieces of land to compete some of my profits away, but that's also true for IP: other creative works can reduce the profitability of one's copyright. The question is how unique the asset is, and that question applies equally to both IP and traditional property.

Admittedly, IP does differ from traditional property in important ways. From an economic standpoint, the most salient difference is that ideas are non-rivalrous: their use by one person does not diminish the use by others. This is the "interference" point mentioned earlier, and it is the main reason that IP rights must be limited in duration. But as significant as that difference may be, I see no reason why it should be chosen as the essential distinction between "property" and "not property." There are, after all, some instances of traditional property that exhibit non-rivalry as well, such as bridges and roads in areas with relatively low population, or movie theaters on weekday afternoons. Should these be denied property status as well? I suggest we should instead recognize that property rights serve a variety of incentive-related purposes, only one of which is the rationing of resources subject to rivalrous consumption.

[As an aside, I should not be misinterpreted as agreeing with the arguments in Sonia Arrison's article that motivated Julian's reply. I think her bottom line is correct, but her reasons are less than sufficient.]

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