Copyright as a Penalty System
Rusty Russell has this brilliant piece on how copyright is a penalty system, not a reward system:
The first poorly understood point is that copyright on my work does not give me the right to copy it. It prevents everyone else from copying: a so-called “negative right”. As an example, if you own the last copy of my autobiography, I don’t have the right to make a copy: it’s your property. You don’t either: it’s my copyright. If you destroy that last copy, my copyright still exists, but is useless. This illuminates something noone ever spelt out for me: that copyright is a weakening of property law. Normally when you buy something, you get all the rights the previous owner had: if you buy apples off me and sell apple juice in competition with me, I have no legal recourse. Copyright weakens property law by not transferring the “right to copy” with sale: that sliver of rights is removed from every copy and remains in the hands of the copyright holder.
Even if copyright disappears, property rights don’t:
The traditional focus on copyright, without considering the property which is its source, skews the copyright debate quite badly. Works which are no longer copyrighted are often said to “fall into the public domain”. This is a terrible phrase, which implies that property rights are being destroyed. We don’t say that apples, which were never copyrighted, are “in the public domain”. Or consider UK singer Cliff Richard’s accusation that, as copyright expires, “every three months from the beginning of 2008, I will lose a song”, as if the songs will no longer exist.
While I think copyright laws are far too strong at the moment, mr Russell is completely missing the point.
Let’s go back to basics. First, why do we protect intellectual property?
1. Advocates of Labour theory start from Locke’s principle that a natural property right arises when one person’s labour produces something from either unowned resources or those held in common, subject to the proviso that he leaves enough (of the same quality) in common for others. This applies particularly to Intellectual Property because facts and knowledge are held in common and their synthesis and reshaping through labour contributes almost entirely to the final product. Nozick has addressed the issue of Locke’s proviso and how it might be transposed into Intellectual Property law, stating that it places an obligation not to cause net harm to other people by acquiring rights. Accordingly, the fact that a patent might prevent others from accessing the invention is offset by the fact that the invention would not have existed at all without the inventor’s labour.
2. From Kant and Hegel we derive Personality theory, which asserts that private property rights are vital for the fulfilment of some human needs. From which it follows that Intellectual Property is justified in the protection it affords to personal effort, embodying the will of the creator, from reproduction and alteration. It can also be argued that the socio-economic environment produced by a framework of Intellectual Property rights should be a catalyst for further creativity and therefore human development. Justin Hughes came up with three fundamental principles on which Intellectual Property law should be based. First, those works which are the product of highly expressive activity should receive stronger protection than those which are not. Second, the law should protect a person’s public image, as it is a vessel through his personality, even though it may not be the product of labour. Finally, moral rights that protect against mutilation and misattribution should be utterly inalienable, allowing the creation to remain as true to its creator’s personality as possible. (This theory has its merits but many of the rights it supports are generally contracted out to the personality-deficient companies that ultimately publish and fund works.)
3. Perhaps the most prominent theory in Intellectual Property is that of Utilitarianism, which aims to maximise net social welfare by balancing the need for monopoly rights against their potential abuse, which can deprive society of inventions and cultural works as much as they can help to spread them. In the context of copyright this will involve weighting the negligible costs of production with the artist’s cost of expression, in order to ensure that artists continue to create intellectual products and that society will continue to benefit from them. While it is this theory that underlies and explains many of the developments of Intellectual Property law, it has been moderately adapted by some academics to become Social Planning theory, which takes a wider and perhaps more preferable view of net social welfare. For instance, copyright is justified in terms of the discursive platform it fosters, both productively in the breadth of writings and structurally in the freedom of these works from potentially bias-inducing patronage. Such a platform, it is argued, provides a strong basis for democracy and the building of communities, which themselves raise the standard of life for all people.
4. Utilitarianism largely mirrors an economic approach to the subject. The economic justifications for the existence of monopoly powers fall broadly under two heads. We might note that microeconomic considerations force those holding monopoly powers to innovate and keep their prices at reasonable levels so as to maintain their monopoly in the face of Schumpeterian creative destruction, the theory which states that monopolies encourage other companies to innovate to the extent where the monopoly market is rendered obsolete (see Microsoft’s u-turn on IE6 development in the face of Firefox). However, the most powerful justification for these rights falls under the second head concerned with macro-economics. First, there is a finite amount of resources that the free market seeks to distribute in order to satisfy demand. This can result in an inefficient allocation of resources as a result of which certain goods will not be produced because no one company will undertake research and development without being sure of recouping (and exceeding) its investment. Such situations require some form of government intervention, which in this case is the system of Intellectual Property rights available to those who create things. Second, a strong system of Intellectual Property rights will attract investment, which is essential if sustainable long term growth is to be achieved by expanding aggregate supply and so allowing aggregate demand to grow without the threat of inflation.
Anti-capitalists may shudder slightly at that, but I think a true economic approach is inherently liberal as it stresses the tension between competition, which ensures the highest numbers of consumers have their demand satisfied, and monopoly power with its dangerous potential for exploitation AND it should also account for the negative externalities of decisions (ie sweatshops may be cheap, but they are a bad thing).
To conclude: Intellectual Property as a concept is certainly justified, BUT it does not necessarily justify the current implementation of that concept. If the underlying motivation in having Intellectual Property rights is based in efficiency and the public benefit that this brings, then we must question both the expansion of the rights themselves, and the expansion of their enforcement to other countries.
Why do we need copyright?
Artistic works that we currently protect by copyright are non-rival, in that one person’s enjoyment of the work does not deprive another. They are also increasingly non-excludable in the sense that once one person has been provided with the product there is very little that can be done to stop others enjoying it. Indeed, where once this might have had a limited impact, the ubiquity of the internet means that now a copyright-protected work can be made available to the rest of the world at no cost, except that of the bandwidth used, which itself may now be distributed between users via bittorrent. These qualities - non-rival and non-excludable - are indicative of public good status, which carries with it the risk of market failure - this being where the free market will not supply something that it should supply because it is only concerned with making a profit.
Why will the market fail? Because an individual concerned only with costs and benefits affecting himself alone will realise that he cannot be excluded from enjoying the benefits of the work and therefore will not pay for it. Accordingly, without protection, the market will undersupply public goods because people won’t pay for them. An example: some films cost a lot of money, Lord of the Rings for instance. Without copyright anyone would be able to show them and that money would not be recouped, meaning that it would probably never have been invested in the first place, except if it were provided by a benevolent multimillionaire or a public body (see next para). Hate it as you might, but the freemarket doesn’t have many biases - if something is profitable (either directly, or sometimes in terms of prestige) it will be funded.
Attempts to solve the problem of freeloading have followed three possible alternatives. First, the government might provide public goods itself, using taxation to distribute costs equally. This works very well for individual public goods affecting the population as a whole such as national defence, transport systems and healthcare but not really for artistic works. Thus the second and related way in which the government might act is to commission works, but then a risk of bias, recognised by the advocates of the Social Planning theory, is introduced into the process. Equally, such a process would favour established authors, artists and other creators and would be inefficient at providing for the huge number of creations that take place outside of this relatively small group. Therefore it might try instead to reward artists financially after their creation through a system of rewards; again though this is better done by the free market, which exactly indicates public opinion as to whom remuneration should flow and to how much it should amount. Finally, the government can legislate to remove non-excludability by granting a qualified monopoly to the creator in the reproduction of his works. However, this too comes with risks, as copyright is not Pareto optimal, in that despite a marginal cost that is close to zero, a profit maximising price can and usually will be charged, depriving many consumers of enjoyment of that product.
What does this mean? Is copyright a weakening of property rights?
Personally, I think the most sustainable way for copyright to develop would be to allow for very strong protection but for a short period of time, after which the goods would enter the public domain (this should be the emphasis of copyright). To address Russell’s first point directly: Intellectual Property rights are an extension of traditional property rights that reflect the intangible property your ordinary property involves. It is absurd to say that when you buy a CD you should be able to assert all property rights that were involved in its creation - that would amount to denying the author of the work any property in that artistic work at all. Without enforceable rights artistic expression has no value to the free market and so is not provided. We all suffer if those rights are undermined. However, the mere fact that we can justify the existence of these rights is no justification whatsoever for the law as it is. The issue of real importance is to stress the public benefits of IP rights, and so to restrict rights wherever there sole use is to protect private parties (ie Copyright extension/process and software patents/trademark dilution).
PS - that’s an adapted extract from an essay I wrote a few months ago.