Property Rights and Equilibria of Force

Francois-Rene Rideau Francois-Rene Rideau <>
Sat, 2 Jun 2001 02:46:55 +0200

Here is a summary of the arguments that were advanced during that dinner
I had with libertarian friends after the most interesting conference
(in french) by J.D. Lafay last tuesday.
The summary is done from my point of view, with my biases,
and it includes with developments I added later, etc.,
I don't try to reflect the way other participants lived the evening.
Now, the discussion was lively and entertaining, and without any kind
of verbal violence, even in the most pronounced divergences of views.
So yes, there is the possibility of a rational discussion
on intellectual property between people with diverging views.

The initial disagreement was about the Microsoft case:
one of our dining philosophers (let's call him X) was arguing
that in a free world, a company ought to be free to bundle or not bundle
products, and to decide of its pricing policies, and that you shouldn't
punish a company for being successful. Another of us philosophers
(let's call him Y) replied that Microsoft had abused a de jure monopoly,
and thus could be punished. A third diner (let's call me I), argued that
both sides were right, since indeed, in a free world, a company should
have these claimed freedoms, but that intellectual property was a
protectionist monopoly that was allowed companies to earn money to the
detriment of the public, and hence that by being efficient, Microsoft
was being efficiently detrimental to the public, so that punishment or not,
the most important thing was to abolish the monopoly.

X argued that copyrights were a natural right, that could be born in
exclusive contracts, non-disclosure agreements, etc.
I argued that indeed, there were ways through which SOME kind of
intellectual property equivalent could be born in contracts, but
that the results would be very different from what currently is,
and much to the benefit of the public, considering that contracts
can't bind third parties, and that enforcement costs should be born
by the beneficiaries rather than the public.

We then explored what kind of information hoarding could happen
if copyright laws were abolished and that any intellectual property claim
had to be defended by such self-enforced contracts.
Certainly, publishers could insert clauses in their contracts
to punish the source of an information leak; the responsible of the leak
could be identified by some systems of watermarking and registration.
Customers, fearing the leaks, would make proportional efforts to avoid leaks
(TEMPEST protection, guards around systems, A1 level secure OSes, etc.).
Companies could also deliver software in the form of self-destructing devices
containing cryptographically-obfuscated hardware chips,
that could take months to reverse-engineer and de-watermark,
assuming anyone would take the risk to leak a copy.
Thus, argued X, a high level of information protection could be achieved,
although at a high cost that would be a waste for everyone.
However, though everyone agreed on the possibility of such tight
information protection, Y and I disagreed on the economic conclusion.

First, this system has the advantage that any property protection costs
are borne by the one who is claiming property, rather than by the people
he tries to exclude from the claimed property. This is but justice.
Indeed, even in presence of copyright laws, enforcement has a cost:
you must find, sue, punish people who breach copyrights;
copyright protection law makes these costs borne firstly by the public who
funds the police and justice system, and secondly by the third parties who
are either excluded from information access or made subject to prosecution.
So that it is those who have least interest in copyright who are forced
to pay to protect the interest of those who benefit from it;
this is clearly theft.

Moreover, when a company actually uses such costly methods, it will lose
market shares, since interning the price of protection in its product
offerings will deter customers. So that companies will compete with
people providing late copies of their work, or with companies living
with lesser protection costs, or with no protection costs at all, when
free software is involved. So it is obvious that there won't be an
infinite waste of money sunk in such protection techniques, but rather,
a delicate balance, that will be find some optimum in presence of liberty,
for everyone's benefit. Markets optimize production based on price
equilibria; making prices really reflect more of the reality, by interning
the protection costs, allows markets to optimize more parameters.

All in all, any penny won thanks to copyright law protection is but
a penny that was lost to the public, plus the associated enforcement costs,
plus all the utility not created by activities that were forbidden.
Copyright privilegees deprive the public, actual and potential customers,
from money they wouldn't get without protection laws: that's the plunder.
They destroy utility because the protection laws forbid much more
than even billions and billions of dollars worth of protection
could legitimately achieve; this is the waste. Finally,
they are an attempt to people's freedom; that's the injustice.
Of course, as I remarked, the three aspects are deeply linked,
as we know from classical literature (like the Harmonies of Bastiat):
the world follows harmonic laws, and any utilitarian good or bad
isomorphically corresponds to a ethical good or bad.

Then, we tackled the problem of justifying the rule according to which
people had to bear the cost of defending their property, and what
makes property, to begin with, getting back to how property is born, and
how you can can justify it by either utilitarian analysis or ethical rules.

Keeping a physical resource against the aggressions of man and nature has
costs, from preventing it from catching fire, to discouraging thieves to
rob it, repairing the damages of time or the wear and tear of normal and
abnormal use, etc. It is both (and isomorphically) phenomenologically
efficient and ethically just that whoever benefits from the resource be
the one required to bear these costs, and that whoever bears these costs
for an otherwise unclaimed resource be recognized owner of it. Indeed,
any responsibility between costs and benefits creates a positive feedback
loop toward efficient resource-handling, whereas displacement of this
responsibility creates feedback loops toward benefitters wasting resources
while they exist and/or forcing those that bear the preservation costs to
spend more than they want to (whereas these people will on the contrary
be enticed to refrain from spending the efforts necessary to keep the
resource in good shape). Of course, different individuals may voluntarily
pool efforts to cut costs or reduce risk; but once again, freedom to
decide to pool or not pool in what conditions is the only guarantee,
through responsibility, that resources will be efficiently spent.

Now, when it comes to conflicts between rival claims, rules that can
identify who's right help avoid needless fights. Someone may own the
output of his work, but must first own the input, or replace and repair
them afterwards (plus incidental damages and interests) for whoever
owned them. When a previously unclaimed natural resource is at stake,
homestead laws attributing resources to first inhabitant provide a good
rule. However, just how far should the first inhabitant's claim go?
If I'm the first to land in a new continent, can I claim the whole
continent mine? Or only part of it? Which part? A good rule is that I
own whichever part I can effectively defend: I must actually put barbed
wire around it, or return to it regularly to chase intruders, or pay
guards with dogs, or negociate mutual protection with my neighbours, etc.
An undefended claim is an invalid claim. So it's not enough to claim
the moon; it will be yours the day you build and exploit a moon base; and
then, only the base and exploited parts will be yours. If you wish to own
it without exploiting it, you must build some anti-spacecraft protection
on it, and will only own whichever part the protection covers.
If your cease to defend some territory you own, and some squatters come
to exploit it without your claiming it back, then your property claim
may become obsolete. When you sell a territory, the new owner must keep
paying the protection costs, or lose his claim, too.
An undefensible claim is even more invalid (see below .signature):
if you claim rights on something that you didn't create,
claim to limit the use of other people's resources, and require
from other people that they enforce this claim, even though no amount of
personal spending by you could ever enforce this claim,
then you're plain wrong and your claim is laughable.

X complained that such a theory was ultimately basing property rights
on the use of force, whereas he contended that the moral principles
behind classical liberalism were precisely against the use of force.
I replied that firstly that classical liberalism was against aggression,
but agreed to use of force for self-defence. And secondly, that you
mustn't confuse the ethical and the phenomenological points of view.
Use or threat of force, and the resulting equilibria of forces,
are unavoidable parts of any phenomenological theory, and the relationship
between these equilibria and the emergence of property rights is
a phenomenological law of sociology much like the relationship between
electromagnetic fields and particle behavior is a law of physics.
Laws that you cannot change are neither good nor bad; they are.
And you better learn and know them rather than blank out their existence,
if you want to succeed in anything where they are of any relevance.

X then told that if we were considering such phenomenological laws,
then the existing world was already optimizing force potentials,
that existing societies, governments, etc., were already optimal solutions,
and then that I could justify any existing behaviour that way.
Not quite so, I replied, for knowing how things are is not the same as
telling how they should be, according to any goal whatsoever;
this again is confusing phenomenology with ethics.
Just because every single atom or molecule follows the natural laws
of physics or chemistry doesn't mean that we can't assemble them
into useful artefacts. While science is interested in understanding
phenomena, engineering is interested in developing rules that when
followed, lead to useful results. Similarly, the phenomenology of
human action will lead to describe the universe in terms of general laws,
whereas ethics dictates rules of conduct to follow to achieve various goals.
Silicium chips may follow the laws of nature no less than
the constitutive sand and metal bits they were originally made of,
yet are more useful in a way sufficient to entice us to make them.
Similarly, rules of ethics explain how to behave between human beings
in order to build relationships that are useful to
various generic or specific goals. Just like the physical tools we build,
these human relationships are devices we can use to better our lives,
though they can make our lives worse if we don't master them.

As for what these goals are, they needn't be dictated from anywhere.
They are internal to us; they are these subjective axioms of ours
that require no discussion, of for which all discussion is vain.
They are not beyond ethics, they are on this side of ethics. [FR: en-deçà]
Each one has his desires written in his genes and memes,
and is responsible for their own fulfillment.
What's beautiful about ethical rules is that they can nonetheless apply;
in other words, despite their many variations,
there is enough similarity in the goals and means of human beings
that can be a relevant rational discourse about patterns
to achieve various kinds of goals with various kinds of means;
there is more to life than just ad-hoc utterances or silence.
Of course, the more generic a law, the more imprecise
its conclusion for any particular setting; and
the more precise the conclusions of a law,
the more restricted the settings in which it applies.
The same goes with any kind of information,
so this isn't quite specific to ethical laws.

That's all folks.

As for ethics in general, I haven't finished reading this promising book
by Henry Hazlitt: "The Foundations of Morality"
For more on intellectual property, see the articles down my page
Concerning the origins of property, I don't know what to refer to;
pointers welcome.

Yours freely,

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