Intellectual Property, Monopoly and an Anarcho-Capitalist society

Economics Economics Questions
1

Suppose I have this exotic technology which nobody else possesses. I set out to make money, so I want to make sure nobody who buys my product or otherwise gets to use my technology and increase the supply of my products, drive down prices and eat away my profits.

So what I do is go to one of the largest Private Defense Agencies in the region, tell them I’ll pay x dollars to make sure they recognize my ‘Intellectual Property’ over my technology under the rules of an influential private court. Now nobody gets to use my technology and increase the supply of goods made out of the technology. I decide not to give permission to anyone to use my technology. I control supply as a monopolist, and get rich.

Now my question is, what factors acting in an Anarcho-Capitalist society would make sure that my plans would be spoiled, thus benefiting consumers.

One thing I can think of is, my competitors entering into deals with competing PDAs and courts to have my IP over my technological innovation derecognized. But then I feel this is unlikely, considering the fact that these competitors themselves may not be able to pile in enough profits once the field becomes extremely competitive. So it really wouldn’t make sense for them (as rational profit-seeking agents) to outbid me. Remember, I will be ready to pay a bigger sum to PDAs that recognize my monopoly right over my technology compared to my competitors who want the technology to be freely available, because as a monopolist I would be able to earn much hugher profits than my competitors would in a freely competitive market where profits would be much lower.

Please let me know the validity of my argument. Thanks!

2

“Pirating”, assassination, lawsuits, espionage, adaptation, one-upmanship. Same things that happen now.

3

If it takes one PDA to control an entire population and other PDAs, then that sounds like a state to me. Also, don’t forget that war is expensive. The costs of actually paying one PDA or all PDAs to suppress a population is a lot. A state taxes a population to fund itself. In an anarchist society, you would have to foot the bill yourself.

Bill Gates has 67 billion dollars. That’s peanuts in terms of what the USA spends on wars abroad and to arm police forces/swat throughout the country. He would be broke in no time if he tried to pay to suppress the population by himself.

You might find Libertarian Anarchism: Responses to Ten Objections by Roderick Long to be helpful in general and also with this question.

4

gotlucky, I am not even assuming there is just one PDA and a single court system. I am giving all the room for other competing PDAs and competing courts to do business. Only that I think the competing courts themselves would bargain and still come up with laws that favor the monopolist who wants them to recognize his IP rights. The reason is simple: the monetary gains of the monopolist are much higher than that of a number of competitors in a market where his intellectual creation is freely available to all, hence he would still be able to get the laws he wants.

All that would change in a situation where there are competing PDAs would be PDAs bargaining and reaching a deal in favor of the potential monopolist inventor–basically, the monopolist (through his PDA) pays a particular amount to competing PDAs and their clients to have laws in his favor. This amount they pay is very likely to be higher than the potential monetary income competitors are likely to earn in a market where there is full competition, and thus lower revenues and profits.

5

@Prashanth

If you could somehow pay one PDA to suppress all other PDAs, or to pay all PDAs to suppress an entire population, this would cost an extraordinary amount of resources. The reason a state can do this is because the state funds it’s suppression by taxing the population it is suppressing. In your scenario, you are paying the PDAs to do the suppressing without taxing the population. You would not be able to afford this.

Bill gates has a net worth of $67 billion, and Microsoft has total assets of $121.2 billion and a net income of $16.97 billion. The FBI alone costs about $8 billion to operate per year. Bill Gates would go broke if he tried to pay off the FBI in a free market, as the FBI would require him to pay for the actual costs of going to war against all the police forces throughout the nation. He would be broke in about 6 years. If he got Microsoft involved, then maybe it could be done. But then the FBI would have to go to war against a lot of police forces throughout the nation as well as the actual USA military and it’s doubtful the FBI would win.

Obviously the FBI and the USA military would not exist as they do now in a free market. But the point is that there could exist a PDA as large as the FBI as well as many smaller PDAs throughout the country. It would be nearly impossible to actually suppress a population in order to make the people do what you want in a free market. You would have to take the population’s wealth in order to fund your control, and that would make you, or whatever organization that actually does it, a state.

6

gotlucky, I am not implying that the huge PDA will suppress other PDAs in the business. I am merely saying that it is in the self-interest of the smaller PDAs themselves to enter into a bargain with the PDA which bargains for a law that favors the monopolist. It’s all part of the market process with no conflict involved between competing PDAs or courts. The reason is that the monopolist is set to gain much more through holding monopoly rights over his idea, than a number of competitors using the idea and making much lesser revenues than the monopolist. The “equilibrium” that would result in such a case won’t exactly be maximizing consumer welfare, although it would be economically-efficient (since resources are allocated to the highest bidders, in this case the monopolist).

I am not sure why you are trying to bring in the example of Bill Gates waging war in the world. My example doesn’t assume the monopolist to stretch beyond a certain market where he can easily earn more revenues than competitors by holding a monopoly right over his idea. If my monopolist were to go around bombing people and causing damage worth billions, then competing PDAs would find it economical to outlaw such action (since property owners who would be suffering losses would be easily able to outbid Bill Gates). But in my example the competitors are by design unable to bid more than the monopolist. Our examples are very different.

7

So the question is what would people do when they have no legal recourse? Something illegal, obviously. They aren’t just going to kneel before Zod and starve because they don’t have a government to run to. This isn’t a legitimate question. It’s an attempt to find a chink in the armor. But that’s just sadly not the case. The premise is flawed, it exists in a vacuum, and leaves practicality, if not all semblance of reality, at the door.

Why would anyone continue to use the PDA if they enforce monopolies? And why wouldn’t competition for said PDAs emerge? If as you say it’s but a small portion of the market monopolized, why would they risk ALL clientele to cater to one rich prick? What industry and amazing single technology could ever exist that it would lay waste to all other aspects of every market in terms of value? And if it did, why is this guy even worrying about competition or courts or defense agencies? He’s clearly got something that enslaves the entire planet.

Without any real details it’s just more of this pie-in-the-sky BS that gets thrown around here every day. Guy tries to inject something workable into the debate. You say no, fantastical poppycock only for this discussion.

OK, what would happen is the competitors would form Voltron and seize all his assets and form an intergalactic super PDA and hire the Superfriends who don’t rely on profit.

8

^

What he said.

9

HabbaBabba, the very premise of competing PDAs and law-providing agencies is that it would bring about laws that are economically-efficient. Now, yes, if some guy is going to pay big to get a law that allows him to destroy people’s property, such situations are very unlikely because the groups that are bound to lose their property due to such a law would be able to pay their own PDAs good enough money to .block such laws.

But the case of monopoly I cite is very much plausible. You really don’t have to possess a very exotic technology to allow that to happen. Such monopolies can be enforced in the market for almost any product where the benefits of the monopolist are higher than the benefits that competitors would receive in an extremely competitive market where revenues would be lower due to increased production. Want examples? Governments today all over the world do that to a number of markets.

It’s quite pissing off when snobs like you want to spoil serious questions with snobbish insults rather than rational arguments. I am very much ready to accept arguments when they are backed with proper reasoning rather than useless insults (which only make me think you don’t have a friggin point).

10

gotlucky, I’m honestly not convinced.

11

I don’t see how part 2 necessarily or even realistically follows from part 1.

12

Long time since I don’t post something…anyways.

Is it really true that the monopolist would earn enough revenue to bribe all the PDAs?

The picture:

Joe is the monopolist, he tries to bribe every PDA to try and keep his monopoly.

Firstly, is it reasonable that people keep buying Joe’s products? See, we are assuming here that everyone would unequivocally buy Joe’s product, despite his actions. Since the PDAs would supposedly try to “create” a law that prohibits everyone to create a similar product, everyone would know what Joe did, namely, bribe all the PDAs. I don’t think people would like that.

Then, on the same line, why would people keep continue to pay the PDAs? Joe, his wealth notwithstanding, wouldn’t be able to pay the same amount the whole or the majority of society would pay the PDAs.

Lastly, as gotlucky pointed out, for the PDAs to enforce the new law, they would have to, well, enforce it. It’s not reasonable, given what I already estabilished above, to think that the PDAs would have the resources to force everybody to obey, even if we dont assume that people would be reasonably well armed, and that’s a stretch in and of itself.

There’s something I’d like to point out about PDA theory. Aren’t they reactive? I mean, don’t they only act when the contract of one of their clients was breached? For the reasons above, I don’t think PDAs would (could) start creating arbitrary laws and enforcing them, i.e, being proactive, i.e, government.

What do you think?

13

The problem here is that you are mistaken as to how laws come to exist. Both laws and norms are meant to resolve disputes, and they naturally arise as the results of disputes. In the case of a state, the state is so powerful that people tend to agree with whatever the state’s verdict is. Few people resort to ignoring the state’s decision and personally using violence to achieve their own sense of justice. It’s just not worth it to most people.

There are two main types of laws in most statist systems today, statutory law and common law. In the case of statutory law, a bunch of central planners get together and decide what the law will be before there is a dispute. They can get away with this, as I said, because they wield overwhelming amounts of force. In the case of common law, judges rule by precedent, where judges make rulings based on previous rulings by other judges who make rulings by each case. This is closer to a decentralized free market type of law.

In the case of PDAs, they do not have such overwhelming force that they can just centrally plan whatever law they desire and expect the population or other PDAs to submit to such a law. In a decentralized society, law and norms are results of disputes. Contracts, in both centralized and decentralized societies, are attempts at working out problems before they happen. But even contracts can be disputed and taken to court.

  1. The case of monopoly you cite is possible, though not probable, in a decentralized society. It wouldn’t remain a decentralized society for very long if one person could manipulate the legal system to such an extent.

  2. Governments are terrible examples. As I already pointed out, state governments have the manpower to enforce their laws because they pay for their power by taxing their population. PDAs cannot do this by definition, or else they would be states or gangs at the very least.

14

So what I do is go to one of the largest Private Defense Agencies in the region, tell them I’ll pay x dollars to make sure they recognize my ‘Intellectual Property’

Why not spend $X to create propaganda showing sob stories of struggling IP creators and telling people they’re thieves? Hire experts in marketing and think tanks to craft elaborate fallacies and scientists to produce phony studies on IP. Research memetic engineering. Hire teenagers for peanuts as disinfo shills. Get people to roll over and willingly throw away their rights.

The average person is a moron, and half the people are even dumber. That’s why anarchocapitalism won’t be realized by humanity, but rather by our electronic progeny.

15

gotlucky, I thought about this issue for a while and I think I have the answer.

It has to do with the assumption that a monopolist knows somehow what the revenue-maximizing supply of goods is. That now looks like a naive assumption. So if company X is going to meet a private PDA or court and tries to strike a deal to provide it a monopoly privilege, there is every chance that its competitor Y too would approach a different PDA or court and strike a deal to make sure that no law protecting against grant of any special privilege to X. Why would Y compete against X? Note that since neither of the companies really knows what the revenue-maximizing supply would be, there is every possibility that X and Y have different rough estimates of the potential market returns. So if Y has an estimate of market returns that is higher than the estimate of X, there is every reason for it outbid X and prevent the grant of monopoly privilege for X.

Now, secondly, even if we assume that both X and Y have the same estimate of what the revenue-maximizing supply would be, there is everty reason for Y to eat up a share of that market rather than sit idle waiting for X to gain monopoly privilege. Now that’s true for all other companies in the market too, and all of them would persuade their respective PDAs/courts to prevent X from gaining monopoly privilege.

Basically, there is no problem here. Thanks everybody for your replies :slight_smile: