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Home | Library | Understanding IP: An Interview with Stephan Kinsella

Understanding IP: An Interview with Stephan Kinsella

October 21, 2010

Tags EducationThe EntrepreneurFree MarketsLegal System

[Jeffrey Tucker interviews Stephan Kinsella, instructor of the Mises Academy's forthcoming course, "Rethinking Intellectual Property: History, Theory, and Economics." Audio of the original interview, recorded October 9, 2010, is available in Mises Media.]

Jeffrey Tucker:

Stephan Kinsella, it's a pleasure to have you here today. Welcome.

Stephan Kinsella:

Thank you. It's good to be here.

Tucker:

We're going to talk about your class for the Mises Academy, on intellectual property.

Kinsella:

Yes, I'm looking forward to it. We've been planning it for quite a while, as you know. I think the first course will be on November 1st for six weeks and then we'll take a week off. We'll have time to go in depth into many of the issues about intellectual property and its relationship to libertarianism, economic theory, and various other areas.

Tucker:

Why is this an important issue?

Kinsella:

Well, it's becoming a more and more important issue as we've seen in our circles and as seen on the internet. Daily, we see horror stories and crazy examples of abuses of IP. People are starting to wonder if these are really abuses of IP or if there's something wrong with IP itself.

In the past, free-market economists and libertarians have sort of given this issue a pass. They took it for granted. It's been in a corner all by itself. Now people are wondering, and as we start looking more closely at it, we can see that a lot of the assumptions about IP have been wrong.

Tucker:

It's striking you mention the history of thought here and why this issue is sort of crystallizing in our time, especially with your pioneering monograph on that subject, Against Intellectual Property.

It's generally true, isn't it, that that theoretical element of economics or law or whatever catches up when the practical need for that new theory comes along. For example, the theory of money and credit was made necessary by the advent of central banking.

So, 50 years ago, IP wasn't that big a deal.

Kinsella:

I think that's completely true. Mises said something I've always loved. (Everyone focuses on a few of his statements that other people don't see, because he has so many great aphorisms and things.) He pointed out that in his view economics is purely deductive reasoning from a priori categories. Plus, then you explicitly introduce certain assumptions to make it interesting. [See my post Mises: Keep It Interesting.] "Interesting" was something I always focused on. So, in other words, we could talk hypothetically about a barter society forever, but it won't get us that far. So let's introduce the assumption that there is money in society. It's not a priori that there is money, but there could be money and, if there is, then certain things follow from it.

I think that likewise in libertarian theory certain things become interesting at a certain point. In the past, as you mentioned in your talk yesterday here at the Supporters' Summit, it was not as easy as it is now to replicate information. There was sort of a tie in previous times between a good that was produced, like a book, and the information in it. The information in the book was in the physical copy of the book, so you could easily find a way to sell that. Now, with information being so easy to copy —

And, of course, as Cory Doctorow mentions in one of his articles and speeches, do we think we are going to get to a point where it is going to get harder to copy and to spread information? No, it's only going to get easier.

These things have made people confront the issue of the morality and the politics of sharing information.

Tucker:

It's not only technological advances, it's also dramatic changes in policy that have occurred over the last 15–20 years.

Kinsella:

Yes. Copyright and patent keep getting worse. The Western countries are twisting the arms of emerging economies like China to adopt a draconian Western-style intellectual property. This ACTA treaty that is coming up is terrible. It probably will be passed and it will impose protections around the world similar to what we have in the United States in the DMCA (Digital Millennium Copyright Act).

Tucker:

Is this enforced by the so-called World Intellectual Property Organization?

Kinsella:

The WTO will have a role in it, yes. The WTO is the World Trade Organization and the WIPO is the World Intellectual Property Organization. I'm not sure of their relationship to this.

Tucker:

But it's a UN organization, so you've got really international teeth growing here.

Kinsella:

Correct. Right.

Tucker:

And the prospect for unbelievable abuse. And you know what's striking about this to me? Here you have a sector of vast state expansion and imposition on individual liberty, and it's occurring in the name of property rights.

Kinsella:

Right. This is what is striking. When you start looking at this, you'll see that even libertarians, for a long time, have regarded patent and copyright as types of property rights. So they sort of assumed this is part of the property-rights panoply we should respect. It's in the American Constitution

Tucker:

I should tell you I've always assumed that too. Unquestioned, really.

Kinsella:

But, when you look at the history of it, the origins of copyright lie in censorship, literal censorship. Basically, they were afraid of the "menace of printing," because now the church and the government couldn't control so easily the distribution of what thoughts were, officially, to be promulgated to people. So the roots of copyright are in censorship, literally.

The roots of patents — this is something I will mention in the speech at the Supporter's Summit. I was mentioning it to you the other day. Ironically, the origins of patents are in piracy, literally in piracy. Nowadays you hear the defenders of IP attack so-called pirates. Of course, as you and I have discussed, they are not pirates at all, because real pirates kill people and break things and take things from you and make you worse off. IP pirates don't do that.

One of the original uses of what is called letters patent was a grant to Francis Drake. Drake became a privateer, which is nothing but a legalized pirate. He went around the world using these letters patent, granted to him by the Queen of England, to plunder and to steal and to bring the treasures back home. He was literally a pirate authorized by a patent. So patents and piracy do go hand in hand actually. [See The Real IP Pirates.]

Tucker:

Now a lot of this history is being unearthed, again, only recently because of the change in technology and the intensification of the law have caused people to now look more carefully at the foundations of something that was previously largely unquestioned. Although, Hayek has some passages in his work that were explicitly against copyright and patent. Of course Rothbard was against patent; he had a clear statement about his views on copyright. He was in favor of so-called common-law copyright, which is more or less a free-market position. And Mises provides enough good reason to question the whole idea that you could have ownership of ideas. I think it is pretty clear that he did not believe you could own ideas. So you have these strains in the Austrian tradition and, of course, it's not only the Austrian tradition that matters here. It's just that the Austrians have been the ones who have done the most serious thought about it, right?

Kinsella:

In thinking hard about this issue myself, I have noticed that having an Austrian background, as usual, helps to see these issues more clearly. It has helped me in legal theory and other areas, but here especially.

You can see why Mises, even though he didn't devote a lot of attention to this issue, didn't go off track too far because his focus on the structure of human action kept him from doing that. He saw the role of ideas as a guide to human action. It was not the means of action. The means of action are scarce resources, which have to be economized, but Mises saw that human action is guided by ideas. So he glimpsed, although he didn't unfold it too much, he glimpsed that ideas — as you mentioned in your speech — that ideas cannot be destroyed. They can last forever. They're infinitely reusable. They're malleable, which also, I guess, Hayek would see as well with his emphasis on tacit knowledge.

Tucker:

Isn't it great, too, when Mises says ideas are not phantoms; they're real things?

Kinsella:

They are things. And I think the mistake made by sort of crude philosophizing by a lot of libertarians, is they'll say well, if it is a thing, then it can be owned. "Thingness" is not the criteria for ownability. There is something else, which is scarcity or something like that. It's not to denigrate their importance.

And a lot of utilitarian-minded people just assume that if you're skeptical about intellectual property then you are anti-intellectual or you are hostile to the role of ideas. Of course, it is the other way around. Intellectual property hampers innovation. Intellectual property literally imposes censorship on people. It literally prevents you from using knowledge that you have. So, basically, getting rid of IP, one of the goals there is to enhance innovation and to enhance intellectual freedom.

Tucker:

Make every industry work the way the fashion industry has managed to live and thrive without IP.

Kinsella:

Absolutely. We're used to that now, although there is always agitation to impose IP even on those areas.

Tucker:

Sure. And if I were Calvin Klein, I would probably favor it.

Kinsella:

Absolutely. That's why we have to get the word out there and inform people. But there has been a great interest in this. As you notice, whenever we post on this on the Mises blog, it gets some of the most comments. People are just repeatedly fascinated and interested in this issue. We thought it was time to explore this issue in depth, to go into the history of how it emerged and also just to explain exactly what IP is in the modern law.

Most laymen get this confused all the time. I'm a practicing patent lawyer so I'm always explaining to people, no, that's not a copyright, that's a trademark. No, that's not a trade secret, that's a patent. They get these things confused. It is, of course, especially bad when you're advocating IP and you don't even really know what you're talking about. If you want to think about it critically and understand it and even be critical of it, you do need to understand exactly what the legal system is.

Tucker:

What is so wonderful about this topic is not just that it is a topic we need urgently to understand, but to take on the topic of IP helps us think more seriously about the foundations of social thought and economic thought — issues like property, ideas, how society emerges, economic development. It seems like it's a bridge to understanding in a more vivid way almost every other area of local economy.

Kinsella:

It forces you to focus on the foundations of economics, and Austrian economics, so the structure of human action, means and ends, what scarcity means, the role of ideas, emulation, even some of Hayek's knowledge-based arguments. Also, in terms of libertarianism, it forces you to clarify your thinking on various other areas such as causationDownload PDF and, especially, contract theory.Download PDF

Between the three thinkers that you mentioned, Hayek, Rothbard, and Mises, I think Rothbard was, of course, overall the best on IP. Unfortunately, he only gave it a little bit of attention. If he had only devoted more attention to it. I think he thought it was a fairly obvious issue. He dealt with it; he put it aside.

Tucker:

Again, it was 40 years ago and the issue wasn't …

Kinsella:

I'm sure if the issue had been more important at the time, he could have devoted more time to it because his contract theory leads naturally to a correct view of IP as well. His contract theory is the title-transfer theory of contract,Download PDF which is based upon the work of Williamson Evers.Download PDF

So this idea of contract and Rothbard's really clear idea of what property rights are — Rothbard was one of the first to see that it's a little bit misleading to talk about these derivative rights as independent rights, like the right to free speech. There is a right to property. Rothbard is able, for example, to reject reputation rights because he saw that that means owning someone else's brain basically. Your reputation is what other people think about you. So Rothbard's clear focus on property rights as the foundational right led him to be clear on reputation rights, which I believe is a type of IP right as well. It's got the same arguments.

Tucker:

It's all linked.

Kinsella:

It's just a type of intellectual property. It's probably the third worst, I would say, next to patent and copyright. So Rothbard's contract theory is also crucial to having the proper view of intellectual property. Otherwise, you come up with these fuzzy, contract-based arguments in intellectual property. Unless you view contracts as transfers of title, which Rothbard did, you cannot respond properly to that type of argument.

Tucker:

Here again is an area of libertarian thought, or political economy in general, that people just don't often think about. It's something you read past. Okay, what does it really matter whether you accept this or that view of contract, really? So, well, it turns out that it does matter. One small mistake and suddenly you've got a calamity on your hands!

Kinsella:

Of course, almost every year, there's some political debate about reforming copyright and patent law, one way or the other. There's agitation to reform it to improve its efficiency, to maybe reduce the harshness of patent law, but then there's always the pressure to increase the protection, increase the term, impose the ACTA, make it more worldwide, increase its scope, add IP to fashion. These debates are always there in the public arena. We do need to be informed about the morality and the economics of these issues to weigh in.

Tucker:

I worry, too, about the huge thicket that is being created, not just nationally, but internationally, that is going to hamper economic development in the future. Even in the areas of software, we've seen how this kind of regulation is causing serious delays in development. That is what ends up happening — slowing down development. Of course, if you consistently enforced IP across the board, you could literally bring the whole world to a standstill, couldn't you?

Kinsella:

Absolutely. There is always pressure for the emerging economies, like China for example, to adopt American style IP.

Now, China is improving, more or less, as far as we can tell, in general. Their property rights are getting better. Their economy is improving. If they adopt this Western mentality that if they are going to become capitalists they need to adopt a strong IP system, this could actually impede their growth. It could trap capital, for example. It could hamper innovation.

Tucker:

By the way, I should tell you there is a guy here from China who told me that all this stuff about IP rights in China is designed for the consumption of American and English newspapers. In fact, one of the major reasons for China's growth right now is the almost complete absence of all intellectual property. I was intrigued to hear that.

Kinsella:

I had a discussion with him as well. He was interesting. He had some good comments. That is my sense as well. I work for a company that has a Chinese and a Taiwanese operation. My sense is that they're not really coming along as much as is being presented, but they are coming along to some degree. That does concern me.

As part of this course, I may do some more research to expose exactly the role of innovation, say in China, to see how the lack of IP there is helping them. So we can uncover lots of things in the course.

Tucker:

This is an exciting thing to have, a full course devoted to this subject. How many weeks?

Kinsella:

We're going to do six weeks.

Tucker:

It's an example of something that Mises Academy can offer that you can't find in a conventional learning environment at the local university. You are not going to be able to take a class from anybody who really knows it. You are one of the acknowledged experts in the whole world on the topic. Here you are offering a class for anybody in the world who is interested in learning about it.

What if somebody says, "Well, look, Stephan is a well-known radical advocate of eliminating intellectual property. I don't agree with him. Why should I take his class"?

Kinsella:

He can learn a lot of things about economics and about libertarian theory. He can learn why there is skepticism. Some people can hone their arguments. In the comments threads on the Mises blog, there is, repeatedly, the same types of questions raised over and over and over again. That's useful and that's helpful but it's in print. Sometimes, in a personal dialogue, these people can ask their questions and I can respond in person. Also, we can at least clarify our position, because, in the mainstream world, there is sort of this idea that people that are opposed to intellectual property are leftists. They are hostile to property in general. So we can at least clarify that no, there is at least a pro-property reason to be opposed to so-called IP for the reason that it undercuts property rights. It infringes property rights.

It will be educational. I will go into the history of it. The history is just fascinating. If you are in favor of IP, you can at least see all the different arguments offered and maybe find what some of the holes are in your arguments — see what work you need to do.

For example, most people, at least implicitly, have a utilitarian argument for intellectual property, even Ayn Rand. Basically, her argument was utilitarian, which is why she wanted a finite term for copyrights instead of an infinite term.

The utilitarians always say they are in favor of IP because it promotes general prosperity, it promotes innovation, but they never show that it does. If you're really serious with this argument, why don't you do some research, try to come up with an argument and evidence to establish your case? Tell me how much benefit the economy has from patents and copyrights. What are the costs? What are the benefits? What is the net? Show how you know this.

Tucker:

I feel sure you are going to have people in your class that are taking it and accepting a different conclusion about IP than you do, but I sense that they too could benefit and also make a contribution to the overall learning environment.

Kinsella:

Absolutely. Most reasonable people I speak with that I disagree with, when they think hard about these issues, they at least adopt a more reasonable position. They agree with you on most of the egregious examples.

They say, "No, I'm not in favor of that."

If you get them to agree on all of these egregious examples, then what they end up being in favor of is a type of IP system that wouldn't really bother us that much, any more than a 1 percent tax would really be something that would be the main issue of the day.

Tucker:

They would answer: themselves as the central planners constructing a certain kind of IP regime, actually.

Kinsella:

Yes, but people who take the course are free to disagree. This is an open forum. This is not an orthodoxy or anything like that. It is my opinion, but I'm going to give a lot of information that will allow people to make up their own minds.

Tucker:

The other thing about this, Stephan, is that it's not one of these subjects that is so easy to quickly come to a conclusion about. It's not like inheritance taxes or eminent domain or these other subjects that you can quickly think through and realize what is and isn't compatible. This is a tough subject.

Kinsella:

It's tough. It took me a long time to develop my views on it. I was a practicing patent and copyright lawyer at first. I struggled for maybe a decade to try and find a way to justify it because I assumed it would be justified somehow. I kept running into walls.

Finally, everything fell into place, primarily from Rothbard and Misesian theory. I found that this issue is difficult, but once you see it, it's one of these issues that sets peoples' minds on fire. It frees you to think about other things in different ways. It's like five or six other walls also fall in your mind on topics that you already had a view on. Now you can see them in a different light — about economic theory and libertarian theory.

Tucker:

I recall reading a book years ago by Michael Novak, in which he was discussing economic development. He said the reason why Britain and the United States advanced so rapidly was because we had intellectual property and other parts of the world did not. I read past that and I thought, you know, that's interesting. I don't recall reading that elsewhere. I wonder if that's true. This is maybe 10–15 years ago that I read this. I actually couldn't quite see where he had gone wrong or if he had gone wrong.

Kinsella:

That's a common argument that you hear all the time. Part of the empirical evidence for the success of patents is that America has been a successful country. That is just looking at correlation, not causation. We had slavery from the beginning. We've had free-trade tariffs and regulations …

Tucker:

Or maybe it's the Mississippi River that caused …

Kinsella:

Maybe we would have been more prosperous without this, for example. In fact, I think we would have been. I think it was a mistake.

The Founders put this clause in the Constitution. This is another thing we will uncover, too, which is fascinating. There is a common assumption that because is in the Constitution therefore it is a natural right — and that it was thought to be a natural right by the founders. Of course it wasn't. Even Locke and the Founders, none of them believed this was a natural right.

Tucker:

Jefferson was great on the topic.

Kinsella:

They were queasy about this thing. They had seen attempts at this in Britain and other things. They thought, well, we'll do it for prudential reasons, just to encourage innovation.

Tucker:

And also they believed they were establishing it as an individual right rather than a right of the king so they thought it was a liberalization of English law.

Kinsella:

A democratization of IP or something like that. Correct. Institutionalize it. Put it in the hands of a bureaucracy rather than at the political whim of a king. Maybe that was an improvement in some ways, but now you institutionalize it. You entrench the system.

The Founders, and maybe you can't blame them, they were doing a lot at the time, they had a lot on their hands, they made an assumption. They assumed this would be a net benefit for society.

Mises Academy: Stephan Kinsella teaches Rethinking Intellectual Property: History, Theory, and Economics
Tucker:

In any case, the laws were not egregious back then.

Kinsella:

They were not. The terms were short.

Tucker:

It's like the 1 percent tax you refer to; it wasn't that big a deal.

Your class went live a couple of days ago. We were already hit with lots of registrations so I know there is a great deal of interest in this. I look forward to the class very much.

Thank you for taking your time and being willing to teach the class and for being willing to sit down with me today.

Kinsella:

Thank you very much.


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