Intellectual Property is Theft

Ordinarily, individuals possess an intuitionally based conception of theft.  If an individual possesses a good, and it is taken, he comprehends theft by way of the lost utility that the good provided.  Society also loses utility (social utility) because the individual who lost the good no longer can use it to satisfy his demands, while an individual who valued it less — or did not have the means to acquire the good — will (in general) use it to satisfy less valuable ends.  When the government grants an individual or corporation monopolistic control over an idea the rest of the people that comprehend the idea lose utility because they do not have the legal privilege to exchange or materialize the idea.  Theft can be defined as an action that lowers social utility.  Social utility is defined as the overall level of satisfaction or lack of uneasiness in society; it is representative of the value and abundance of choice in a given society.  Since all voluntary transactions between rational people must increase satisfaction or alleviate uneasiness (increase utility) — as a rational individual would not take an action that does not increase his personal satisfaction or well-being — a society whereby people only made voluntary transactions would approach a Pareto efficient state in terms of individual utility.  A Pareto efficient distribution of individual utility would be a society with maximized social utility.  Alternately, if one could imagine a society whereby no actions are voluntary (or all actions are coercive) this society would have a minimized social utility; it would be in a state of absolute disorder.

Thefts can be divided into two classes, I; the direct theft of a good resulting in lost social utility, and II; a grant of monopoly resulting in lost social utility.  Monopolistic control over ideas restricts social utility but increases the individual utility of possessing the idea.  The opposite, (free exchange of ideas) increases social utility but decreases the individual utility of the idea because all individuals who possess the idea have the economic choice of exchanging or contributing to the idea.  Under a grant of intellectual property these individuals would not (usually) act on this economic choice because of threatened state intervention.

On these grounds a clarification may be needed related to the conception of individual utility, social utility and theft.  It is important to understand that not every action taken (by a rational actor) needs to create the most satisfaction of any given action the actor may choose; the rational actor must only choose the action that most benefits himself but does not decrease the satisfaction of someone else.  If a rational actor chooses an action with regard to only increasing his own satisfaction and not providing value to others then he may act to rob banks instead of learning a trade; this would certainly work to decrease social utility.  In instances like this a strategy of egoism (choosing an action with regard to only increasing personal satisfaction) would lead to a less prosperous society, as egoism would oftentimes lead to theft and hence disrupt a maximized social utility.

The relationship between the direct theft of a good and the monopoly over an idea  (intellectual property) is similar to the relationship between direct taxation and inflation.  While direct taxation is theft by way of a coercive and immediate loss of satisfaction – through theft of the good currency; inflation is a theft that decreases satisfaction from everyone holding the specific currency over a continuous period of time.  This similarity between government money production and intellectual monopoly is not a coincidence.  It is because the government grants the monopoly over currency to the Federal Reserve that they are able to decrease the social utility of society without direct theft.  As the Federal Reserve is able to print the good of currency without market competition, corporations that are granted intellectual property are allowed to produce their good without market competition.  This shows precisely that intellectual property is not actually property at all — instead it is a monopoly over a good; it is theft from the general public.

Given that intellectual property is monopoly (a government grant enabling sole production of a good) and monopoly is a class of theft (unnecessary loss of social utility), then it follows that intellectual property is a form of theft.  However, upon examination a contradiction of terms is apparent between 'property' and 'theft'.  Property defined as “a good augmented with the right of possession” and theft defined as “an action that would decrease social utility” are mutually exclusive terms for the following reason; property cannot exist if theft is accepted as a righteous act in society, as all property would no longer have a right of possession associated with the good.  Thus it should be proper, henceforth, to call intellectual property by a new name, intellectual monopoly.  An interesting practical application of this definition of theft works out such that if an individual removes from another individual’s land something that was previously unknown and hence valueless to the owner, the action should not be considered theft, because a person cannot lose satisfaction from something he does not know exists; while the person who takes the item has increased his satisfaction.  This demonstrates the subjective nature of property — if an actor does not subjectively recognize an item as belonging to him then the item does not belong to him.

Humans judge value based on the ability of means to attain ends.  Goods whether ideal or physical act as unitized means.  Ideal goods can be exchanged through a medium of information transfer including: written, verbal, gesture, emotion, and technological.  In the same way as humans can rank physical means (goods) by their end, we can also rank ideal means (ideas) by their end.  Ideal means may even be ranked against physical means given that we must choose among a limited number of ends.  It is just as much a human action to develop an idea through thought as it is to take a morning jog, and under some situations a human may have to choose between these two actions.  Among these actions the human will always choose to act on the ideal or physical good with the most important end.  However, ideal goods are not in all ways similar to their physical counterparts.  Physical goods can be counted because an individual can own multiple of the same good.  In contrast, it is inconceivable that an individual would have quantities of an idea.  Thus, when an ideal monopoly is granted to a certain individual the theft of the ideal good is a total loss from every other owner on the market.  For this reason the second class of theft is the most detrimental, as the theft of physical goods will only harm a (usually small) percentage of all of the physical good on the market.  As a direct result of being qualitative rather than quantitative ideal goods are limited to a single end. In contrast, physical goods can be applied to many different ends; thus the requirement of quantity for determining the marginal utility of a physical good.  For example, an individual conceptualizes an idea for a electronic circuit, the electronic circuit is defined by it's attributes or characteristics, and if these attributes or characteristics change it is no longer the same ideal good.  Accordingly, the ideal good only can be used toward one end; the production of the equivalent physical good.  Given that the ideal good only has a quantity of one and a ranked end of one the marginal utility of the ideal good is the only utility of the good. 

While the quantity of an ideal good only amounts to one on an individual level, quantities of an idea may be measured in terms of the amount of individuals who possess the ideal good.  Thus it may be stated that the price of the ideal good is measured in terms of marginal social utility; the person who gains the least utility from the ideal good is the marginal social unit.  Free exchange of ideas create an economic and social phenomena known as a 'negative network effect'.  In a negative network effect, early adopters of an ideal good can receive a higher price for the ideal good than later adopters.  As the ideal good spreads among individuals the supply of the ideal good also increases; the more people understand the ideal good the lower is the marginal social utility.  Thus the originator of an idea may justly charge whatever he pleases for the ideal good, or he could develop the ideal good into a physical good thereby allowing any buyer of the product the opportunity to reverse engineer the design and compete against his business.  Next, the second adopter of the ideal good will have the opportunity to compete against the originator by lowering the price of the ideal good, or improving on the ideal good -- creating a new ideal good.  Then, the third, fourth, or fifth adopter of the ideal good will have to charge progressively lower prices (create or fulfill unsatisfied demand) or improve the ideal good in order to make profit.  Notice that as more people learn the ideal good the opportunity for competition among the equivalent physical good increases.  This shows that the exchange of ideal goods increases the overall value of the economy, while also creating more competition.  Unfortunately however, this phenomena of increasing social utility is stifled when government and corporations intervene in the natural processes of the market.  When a government grants an individual or corporation a monopoly over a good the negative network effect is broken and the individuals who would have benefited from any future gains in utility are now without benefit, while the patent or copyright holder keeps a monopoly over the production of the ideal good.  The greatest number of individuals would never have access to the ideal good that increases their satisfaction.  By granting intellectual monopoly the government is committing theft (by way of monopoly) towards all who possess the ideal good.

While theft that stems from individual thuggery is most obvious (as the coercion is overt and visible) the theft that stems from a monopoly is more dangerous because the coercion is unseen — only the effects of the monopolistic grant are ever materialized and seen by the public.  However, the business owners who could not sell a product because of existing patents, copyright and other forms of intellectual property have (unfortunately) been prevented from acting in the way which they deemed best for themselves and their customers (who would pay lower prices or receive a better product).  According to the United States Patent and Trademark Office 5,413,817 foreign and national patents have been issued up until the year of 2015.  By way of placing monopolistic control over ideas, the government has prevented the free exchange of ideas by enforcing patents and copyright.  The culmination of these monopolistic grants by government have stifled market competition and innovation — hopefully this stifling of markets will someday be corrected by the abolition of patents and most copyright.

*Originally written in April of 2015


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