Chapter 11 of Law's Order

Francois-Rene Rideau
Thu, 6 Apr 2000 20:37:54 +0200

Dear David D. Friedman, dear cybernethics readers,
   as a complement to my previous e-mail,
here is some criticism for chapter 11 of
"Law's Order: An Economic Account" by David D. Friedman, 1999
(Forthcoming, Princeton University Press 2000),)
The chapter's title is
	"Chapter 11: Clouds and Barbed Wire:
	The Economics of Intellectual Property"

I'm sorry that this criticism is quite long.
I'll have to insert it all in my essay on the catallactics of free software.

Let me just insert a remark about Chapter 10,
that speaks of property in general, and is quite clear:
to apply its reasoning about the making of property to intellectual property,
it would require it that my right to copy a book be in the commons
for the government or someone else to claim it.
And I contend that this right is naturally mine,
and thus cannot be taken away from me but by plunder.
Even the US constitution acknowledges that this is plunder,
since it admits that IP, whether as copyrights or as patents,
is a government-granted _priviledge_, not a natural right.
There remains to wonder whether this kind of priviledge is useful.
I contend that it is not, for the very same reasons
by which classical liberalism rejects plunder in general.
But since chapter 11 goes into specifics of property applied to information,
let me respond in detail.

As for the description of current law and its official rationalization,
I won't argue about.
I will express my sadness at the fact that it is never stated
or even understated that IP is a priviledge, not a natural right.
F.A. Hayek warned about the fact that "natural right"
is used to mean two completely different and sometimes opposed meanings;
anyway, IP is as artificial
[i.e. enforced by arbitrary governmental decision
instead of grown out of popular practice]
as it is unnatural
[i.e. against "nature", against universal principles of law].
Now, perhaps that's a deliberate choice of the book,
to never state principles,
so as to try to induce them from utilitarian arguments;
after all, if these principles are indeed valid,
their conclusions will be coherent with that of the utilitarian approach.
So I'll argue with the same utilitarian approach as choosen in the book.

First, about the ease to define copyright. That's plain false.
Certainly, it's relatively cheap to define a just notion of a copy.
But I contend that it is impossible to define a just notion of an author.
First, there are collaborative works explicitly made by several people;
who gets how many parts of the copyrights is not such an easy question.
On a picture or a book, why would the technical people,
or even sometimes the actual writers get NO copyright at all,
while the stars and official signatories get ALL of it?
Of _course_, it might be normal that they get less, if they are worth less.
But _no right at all_ is a definite abuse; if copyright were truly
a remotely just "right", then they should at least get proper
compensation for abandoning theirs; but that is not the case _at all_.
Giving arbitrary power to a publishing monopoly,
as is done in practice today, is certainly not a fair solution.
And the way these publishing monopolies drain gigantic profits
out of pressuring both authors and the public is obviously dreadful.
Then, even when a "main author" can be clearly defined,
there remains to determine how much even
that "main author" did that is original.
I am positive that in all arts that I know of,
artistic or technical creation is NEVER, EVER, out of the blank;
it is based on a large body of existing culture,
and on extensive interaction with other people and with the world at large.
The ability to copy previous information and the discussion with
proof-readers and collaborators play a non-neglible role in creation.
So in as much as copyright is easily defineable, it is hardly assignable.
This is particularly visible in computer software,
but specialists will tell you how this is true in any technical field,
and then how even arts are very technical in nature.

Intellectual creation consists in taking existing information,
and modifying it, albeit in as unsuspected ways as possible.
Limiting the original copy of information,
preventing the publication of modifications before they resulted
in different enough expressions,
is thus a definite brake to intellectual creation.
The whole copyright affair rests on a romantic mythification of the author
as a divine creator who creates out of the blue a work that stands on itself,
independently of both past and future works.
But that myth is completely false.
If intellectual creations were so independent from past and future works,
then they would be completely useless, and certainly require no protection
or encouragement.
Intellectual creations are useful exactly in as much as they will
be later used in identical or modified versions, and any brake to
the dissemination of modified versions thereof are definite reduction
of the overall utility of intellectual creations.

You forget to say that in your chapter,
but it's THE essential characteristic of information:
the value of information is in spreading it.
The more you limit the use, copy, modification, distribution of software,
the more you destroy value.
Thus, the _first_ and _immediate_ effect of IP is to _destroy_ value.
You may argue that IP has positive _incentive_ effects (I will counterargue),
but you just can't pretend that it has positive _direct_ effects.
Just like protectionism and other monopolies,
it consists purely in negative restriction to other people;
unlike physical property, it doesn't correspond to control
over any positive resource that would otherwise be unavailable to anyone.

As for your remark on fair use,
I find it paradoxal that commercial use be considered unfair:
if someone can make money out of copying a book without use of force,
then that's the mostest proof that one is doing a useful work.
Considering that a use is unfair when it is established that it is useful,
while it is considered fair when such utility is not established
(non-profit, "educational")
is the biggest hypocrisy of all times for market economists.
Only communists could honestly make such a stupid claim.
No, I don't mean that non-profit activity is useless;
sometimes it is, sometimes it is not;
most likely, it is not, when done out of a free decision,
voluntarily by well-informed people.
However, in the case of a book freely bought by a customer
we know for sure that the customer likes the book,
and thus has been provided a valuable service by the copyist.
On the contrary, in the case of a book copied and given away,
the recipient may not care about the book much or at all,
and thus not have been rendered as valuable a service if at all;
at best, the recipient may like the book enough so as to purchase it
if given the opportunity.

You also speak about the revenue of the copyright holder;
but the goal of public policy (to continue on the utilitarian trend)
is not and should not be to care about the revenue
of any particular individual, but about the general welfare.
F. Bastiat has very well demonstrated how this welfare matched
the interest of the consumer, not that of the producer.
Protectionism, that consists in "protecting" the revenues of producers
will only reduce general welfare in proportion to the protection.

You say that copyright is easy to enforce.
But it is not so when people modify a work so as to republish it.
Often, people are sued by copyright holders for being copycats,
and it takes lengthy and uncertain trials to find what's a copycat or not;
it requires _major_ modifications to escape copyrights.
On the other hand, publishers use _minor_ modifications
so as to extend their copyrights indefinitely:
they modify the punctuation and typesetting of previous editions,
they make new language translations, they add and modify footnotes,
they unearth unpublished chapters, etc,
so as to manage to lengthen the copyright on otherwise public domain works
whose authors are long dead (even done to Mark Twain's Huck*Finn!).
This is all a huge fraud to extort money from the public,
one way or another.
Another symptom of this fraud is the way
they successfully lobby the law factory at Washington
so as to _retroactively_ extend copyrights on previous works
(as if a longer copyright will retroactively incite past authors
to publish their past works).

Again, a utilitarian shouldn't forget that a work is useful only
in as much as it is copied, reused, corrected, enhanced, etc.,
rather than just read once and ignored
as is the case with the pile of protection-incented empty art.
The pseudo-argument that "no one else was going to write that book"
completely misses the point that rights
are not about the past, but about the future.
If a work becomes part of the culture,
no amount of making a better replacement is possible.
You could rewrite Shakespeare's plays better
than Shakespeare did write the original,
it wouldn't replace the former in the common culture.
Same goes with computer programs, etc:
works are not isolated pieces of random signs;
they are used to communicate meaning,
and they are useful in as much as they are shared as common knowledge.
Copyrights put a brake to this very process of cultural growth,
by forcing every contributor to go through the huge and incertain overhead
of re-expressing previous works from scratch
before to propose an original contribution.
This is very counterproductive, and an immense harm to general welfare.
This harms both the new authors who have to do a lot of redundant work,
and the public, who cannot as easily share a common culture.
It also prevents any kind of in-depth critical commentary,
promoting superficiality in criticism,
and giving an edge to crooks who feed their victims with
massive amounts of documents (such as the so-called Church of Scientology).

You argue that the space of copyrighted works is so large
that hoarding a piece of it is not a problematic restriction,
but this is but a hypocritical argument,
for the very value of the protection is in the restriction:
either the restriction is large,
and thus is a significant hindrance to the public,
or it isn't, and thus isn't useful to the holder either.
As Bastiat puts it in the above essay, talking of protectionism in general:
"Such laws are either injurious or ineffective. They cannot be useful."

You assert that copyright royalties are a conservative measure
of the value produced by the author, but that is plain false.
It's a conservative measure value produced by the copyists.
Value can only be born in work.
An author does provide some work, and authoring is a service as such.
As such, the author deserves to be paid, and that's what is done
by the people who patronized his works, be it before or after the fact.
But such work is bounded and doesn't increase once the work is finished.
Sales of a book do take place and continue after the work is finished.
If anyone creates value in publishing Mozart's music, it is the publishers,
the interprets, the distributors, etc.
Or are you arguing that the value of Mozart's works is increasing everyday,
and that long dead Wolfang keeps creating value from his grave?

Now, let's talk about patents.

Again, you suggest that patents are about converting commons into property.
But that is false.
What is made someone else's property is everyone's right
to use one's own mind, to waste one's own resources, to apply one's own work,
according to some patterns.
But these rights were not commons
before the patent was granted by government:
they were each the individual right of the one
who could one's faculties and properties and cannot anymore.
Patent protection is plunder.
It consists in being deprived by force from a right to do something,
and being offered the opportunity to purchase back a license to do it.
Certainly, the patent is granted on the claim on novelty,
meaning that people are meant to not have had
the opportunity to exercise their previous right.
Still, the effect is a loss of right;
the principle of patents is to transform
an alledged technical progress into a certain regress in liberty.

As with the analogy with mineral claims, it is plain false.
Indeed, ideas are no resource, and can be shared by indefinitely many people
without preventing anyone to exploit anyone of them.
Just because someone else has your recipe of apple pies
doesn't prevent you the least to make apple pies.
It only makes the whole world happier, and if your recipe is good,
it makes you famous (and thus potentially rich).
This supposes that authorship be acknowledged,
but this isn't a property right of the author,
only a right to the truth of the public.

You say that patents cost a lot to register. This is true.
However, testimonies from former USPTO employees show that
only 8 to 12 hours are being alloted to a one reviewer for each patent,
whose response but be positive unless he has compelling evidence
that the patent should be rejected!
Also, patents grow more and more technical,
but reviewers are not experts in every subsubfield
of every branch of knowledge that is concerned with patents,
nor are they organized to base their acceptance
on a deep and consistent understanding of issues at hand.
This all means that cost of patent registration
is more and more shifted from the claimers to the public,
through legal litigation and threat thereof,
and with an advantage to patent claimers, abusive or not.
In a world where technology advances so fast,
this can but be more and more the case that
judging the interest of a patent is inherently costlier and costlier.
Your remark in the trade secrets section about
the harmfulness of a system of self-claimed patents
becomes really scary in this regard.

If inventors of practical inventions with very specific applications
are granted patent monopolies for their petty contributions to technology,
shouldn't scientists who discover great general theories
with uncountable applications in many a field of life
be granted even stronger patent monopolies?
Or is the principle that contributors are to be paid back
in _inverse_ proportion to the utility of their contribution???

As for incentives of intellectual property,
I would like to insist once again on two points.
Firstly, that the positive side of protectionism (which is seen)
must be balanced with its negative side (which is not seen);
any revenue generated for the privileged party through protectionism
is but revenue doubly lost to the public.
Secondly, that potential creations are incented in direct proportion
not to their utility, as was the case _without_ protection,
but to their hoarding value; protection is thus an incentive to decrease
general welfare, rather than to increase it.

Your argument for copyrighting computer programs just scares me:
"The next step is to ask whether computer programs
share the characteristics that make copyright appropriate for writings.
The answer, for protection against literal copying, is yes."
That's sacrificing the ends for the means!
The goal of law is not to protect, it is to advance creation.
Protection is the (alleged) means to this advance.
But just because you could protect doesn't mean you should.
You could also protect wine-makers against foreign competition,
as far as possible protection goes.
If you're going the protectionist way,
I propose that you also make a law that specifically protects me,
or rather, that spefically protects the trade
that I will be only one to perform, by whatever monopoly.

Your description of the relative advantages of various protections
for the intellectual hoarder is also scary in that it doesn't consider
the public, that is the alleged beneficiary of the law.
What you show is that one way or the other, the protectionist is
able to benefit; you forget that say that whatever this benefit is,
the public is paying; maximizing the information privilege is
also maximizing the direct cost to the public.
Every "option" open to hoarders is a liberty removed from the public.
Every "gap" filled by protection is a tighter oppressive regime
imposed on the public.

You explain how trade secret law has the advantage of balancing the
benefits of the protected party with the actual non-obviousness of
his contribution, and show how it allows things
to work where patents don't. Great!
But then why need a patent system at all?
Why need provide a non-negotiatable offer for the benefit of claimers,
when there is already this permanent negotiatable offer
whose judge is a free market?
An independent question is why have any authority decide
which measures are "reasonable" to keep a secret?
Why not just let the market decide
that whichever measures that did actually keep the "secret" secret
were reasonable,
and that whichever measures did not actually keep it secret,
were not reasonable?
I.e. why need protection as far as secrets are involved?

In a last part, you explain how technology allows authors
to profit from their works, if they use it judiciously.
Technology moves fast. Law does not.
Why not just let authors and the public adapt to technology,
and dynamically negotiate each other's profit maximization,
instead of issueing protectionist laws that can but
be unadapted to technology and be harmful to either or both parties,
but never useful?

My conclusion is that
intellectual property has all the defects and shortcomings of property,
without any of its advantage:
it costs more to enforce than physical property,
and yields less (actually, has negative global yield).
Unlike physical property, it's not a positive sum game,
but a negative sum game (sp? that's a literal translation from french
"jeu à somme positive", "jeu à somme négative").
Preventing sharing of a physical resource ensures
that it will be used consistently and without loss.
Preventing sharing of an intellectual idea ensures
that it will be less useful, because less people will be able
to use or criticize it.

As for a short return to the introduction,
if perchance it were the role of government to promote the arts
(which I know for sure it should not be, despite the US constitution),
instead of using the devious indirect means of intellectual property,
which costs doubly whatever it yields,
which stiffles cooperation within society,
and which deprives citizens from their natural rights,
it must (or rather the citizens who would promote arts must)
use the straightforward direct way of direct funding,
through before the fact grants and after the fact prizes;
these means do not have pervert effects, do not prevent cooperation,
and only deprive citizens of the liberty associated to the taxes involved,
i.e. tax-payers pay once, and control how much they pay for what result.

NB: my french-speaking page on free software
has got pointers (in the end) to several interesting articles about
intellectual property, including ones with definite classical liberal
positions, by Benjamin Tucker, Roderick T. Long, Eben Moglen,
and Jesse Walker.

Yours freely,

[ François-René ÐVB Rideau | Reflection&Cybernethics | ]
[  TUNES project for a Free Reflective Computing System  |  ]
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