IP a disincentive to R&D

[thelion]

Mises value analysis against central planning is utilitarian because it’s goal is everyone is better off.

I agree with I. Ryan. There is nothing bad about such analysis; in fact, it is the cornerstone of economic theory; NOT TO BE CONFUSED WITH BENTHAM’s “SOCIAL UTILITY FUNCTION”, which is as Rothbard has pointed out a socialist idea coming from Betham’s idealized prison system scheme.

The articleon utilitarianism posted was a rubbishy review of utlitarian theory, basically equating with Bentham and his nonsense with all means-ends-preference anaysis.

Menger’s demonstration of how “morals” are rather spontaneous rules arising from concerns to promote property rights is yet to be disproven (and has been followed up on by Hayek very nicely). Mises and Hayek do not differ on this point. If we start reasoning from moral principles, then we get trash.

Same with literature; if we say “this is wrong; and that’s that”; we produce trashy literature. If we show why it is wrong and does not accomplish anythign good, we get powerful drama.

[back on topic]

Once again, thought experiment: IP would arise in a stateless society via PMCs. Try it.

[I_Ryan]

@E. R. Olovetto

Erm, typically I thought “utilitarianism” involved a faulty reification of society and assignment of ends to it. Sure there is the utility in individual action, but the “problem” here is that R&D, generally for the whole free society, would fall.

Right now, I am using the word “utilitarianism” like how Mises and Hazlitt used it:

@Ludwig von Mises

All nonutilitarian systems of ethics look upon the moral law as something outside the nexus of means and ends. The moral code has no reference to human well-being and happiness, to expediency, and to the mundane striving after ends. It is heteronomous, i.e., enjoined upon man by an agency that does not depend on human ideas and does not bother about human concerns. Some believe that this agency is God, others that it is the wisdom of the forefathers, some that it is a mystical inner voice alive in every decent man’s conscience. He who violates the precepts of this code commits a sin, and his guilt makes him liable to punishment. Punishment does not serve human ends. In punishing offenders, the secular or theocratic authorities acquit themselves of a duty entrusted to them by the moral code and its author. They are bound to punish sin and guilt whatever the consequences of their action may be.

@Ludwig von Mises

The essential teachings of utilitarian philosophy as applied to the problems of society can be restated as follows:

Human effort exerted under the principle of the division of labor in social cooperation achieves, other things remaining equal, a greater output per unit of input than the isolated efforts of solitary individuals. Man1s reason is capable of recognizing this fact and of adapting his conduct accordingly. Thus social cooperation becomes for almost every man the great means for the attainment of all ends. An eminently human common interest, the preservation and intensification of social bonds, is substituted for pitiless biological competition, the significant mark of animal and plant life. Man becomes a social being. He is no longer forced by the inevitable laws of nature to look upon all other specimens of his animal species as deadly foes. Other people become his fellows. For animals the generation of every new member of the species means the appearance of a new rival in the struggle for life. For man, until the optimum size of population is reached, it means rather an improvement than a deterioration in his quest for material well-being.

[…]

As social cooperation is for acting man a means and not an end, no unanimity with regard to value judgments is required to make it work. It is a fact that almost all men agree in aiming at certain ends, at those pleasures which ivory-tower moralists disdain as base and shabby. But it is no less a fact that even the most sublime ends cannot be sought by people who have not first satisfied the wants of their animal body. The loftiest exploits of philosophy, art, and literature would never have been performed by men living outside of society.

This is an introduction to how Hazlitt saw ethics, which he called “utilitism” or “utilitarianism”:

@Henry Hazlitt

Now the connection between what is and what ought to be is always a desire of some kind. We recognize this in our daily decisions. When we are trying to decide on a course of action, and are asking advice, we are told, for example: “If you desire to become a doctor, you must go to medical school. If you desire to get ahead, you must be diligent in your business. If you don’t want to get fat, you must watch your diet. If you want to avoid lung cancer, you must cut down on cigarettes,” etc. The generalized form of such advice may be reduced to this: you desire to attain a certain end, you ought to use a certain means, because this is the means most likely to achieve it. The is is the desire; the ought is the means of gratifying it.

So far, so good. But how far does this get us toward a theory of ethics? For if a man does not desire an end, there seems no way of convincing him that he ought to pursue the means to that end. If a man prefers the certainty of getting fat, or the risk of a heart attack, to curbing his appetite or giving up his favorite delicacies; if he prefers the risks of lung cancer to giving up smoking, any ought based on the assumption of a contrary preference loses its force.

A story so old that it is told as an old one even by Bentham[2] is that of the oculist and the sot: A countryman who had hurt his eyes by drinking went to a celebrated oculist for advice. He found him at table, with a glass of wine before him. “You must leave off drinking,” said the oculist. “How so?” says the countryman. “You don’t, and yet methinks your own eyes are none of the best.” “That’s very true, friend,” replied the oculist: “but you are to know, I love my bottle better than my eyes.”

How, then, do we move from any basis of desire to any theory of ethics?

We find the solution when we take a longer and broader view. All our desires may be generalized as desires to substitute a more satisfactory state of affairs for a less satisfactory state. It is true that an individual, under the immediate influence of impulse or passion, of a moment of anger or rage, malice, vindictiveness, or the desire for revenge, or gluttony, or an overwhelming craving for a release of sexual tension, or for a smoke or a drink or a drug, may in the long run only reduce a more satisfactory state to a less satisfactory state, may make himself less happy rather than more happy. But this less satisfactory state was not his real conscious intention even at the moment of acting. He realizes, in retrospect, that his action was folly; he did not improve his condition, but made it worse; he did not act in accordance with his long-run interests, but against them. He is always willing to recognize, in his calmer moments, that he should choose the action that best promotes his own interests and maximizes his own happiness (or minimizes his own unhappiness) in the long run. Wise and disciplined men refuse to indulge in immediate pleasures when the indulgence seems only too likely to lead in the long run to an overbalance of misery or pain.

To repeat and to sum up: It is not true that “no amount of is can make an ought.” The ought rests, in fact, and must rest, either upon an is or upon a will be. The sequence is simple: Every man, in his cool and rational moments, seeks his own long-run happiness. This is a fact; this is an is. Mankind has found, over the centuries, that certain rules of action best tend to promote the long-run happiness of both the individual and society. These rules of action have come to be called moral rules. Therefore, assuming that one sees one’s long-run happiness, these are the rules one ought to follow.

This might be relevant:

@Henry Hazlitt

There is no irreconcilable conflict between the interests of the individual and those of society. If there were, society could not exist. Society is the great means through which individuals pursue and fulfill their ends. For society is but another name for the combination of individuals for cooperation. It is the means through which each of us furthers the purposes of others as an indirect means of furthering his own. And this cooperation is in the overwhelming main voluntary. It is only collectivists who assume that the interests of the individual and of society (or the State) are fundamentally opposed, and that the individual can only be led to cooperate in society by Draconian compulsions.

The real distinction we need to make for ethical clarity is not that between the individual and society, or even between “egoism” and “altruism,” but between interests in the short run and those in the long run.

[…]

The distinction between the consideration of short-run and long-run consequences is so basic, and applies so widely, that one might be excused for trying to make it, by itself, the whole foundation for a system of ethics, and to say, quite simply, that morality is essentially, not the subordination of the “individual” to “society” but the subordination of immediate objectives to long-term ones. Certainly the Long-Run Principle is a necessary if not a sufficient foundation for morality.

[…]

To sum up: The distinction between the short-run and the long-run effects of conduct is more valid than the traditional contrasts between the interests of the individual and the interests of society. When the individual acts in his own long-run interests he tends to act also in the long-run interest of the whole society. The longer the run we consider, the more likely are the interests of the individual and of society to become identical. Moral conduct is in the long-run interest of the individual.

[…]

It is only from a short-sighted view that the interests of the individual appear to be in conflict with those of “society,” and vice versa.

Actions or rules of action are not “right” or “wrong” in the sense in which a proposition in physics or mathematics is right or wrong, but expedient or inexpedient, advisable or inadvisable, helpful or harmful.

What Kinsella was employing was what Hazlitt called “ad hoc utilitism”:

@Henry Hazlitt

The principle of acting in accordance with general rules has had a most curious history in ethics. It is implicit in religious ethics (the Ten Commandments); it is implicit in “intuitive” ethics and in “common-sense” ethics–in the concept of the “man of principle” and the “man of honor”; it is explicitly stated by the first utilitist, Hume; then it is almost completely overlooked by the classical Utilitarian, Bentham, and only fitfully glimpsed by Mill; and now, practically within the last decade, it has been rediscovered by a group of writers.[18] They have given it the name rule-utilitarianism as contrasted with the older act-utilitarianism of Bentham and Mill. The former designation is excellent (though I would prefer rule-utilitism as a little less cumbersome), but the aptness of the latter is more questionable. In both cases it is the probable consequences of an act that are being judged, but in the first it is the probable consequences of the act as an instance of following a rule, and in the second it is the probable consequences of an act considered in isolation and apart from any general rule. Perhaps a better name for this would be ad hoc utilitism.

[z1235]

Great post/quotes, I. Ryan. Very elucidating.

Z.

[E_R_Olovetto]

Once again, thought experiment: IP would arise in a stateless society via PMCs. Try it.

Via a what? Is this something like the “dynamic signalling argument” jargon you created which google had zero results besides your babbling?

I really don’t have time to repeat the same arguments which you fail to meet the challenge of. If you want to actually try, instead of running off-topic to irrelevant matters, respond in the above thread to my points you never addressed.

Property rights develop as a way to resolve conflict between scarce goods. Ideas, concepts and patterns are not scarce things. Assigning pseudo-rights to ideas creates conflicts.

What this thread is about is IP proponents proving that R&D would fall without IP law.

[nirgrahamUK]

I am trying to get the best understanding I can of Kinsella’s paragraph and also of your criticism of it.

So lets say that I want to argue that redistributing Bill Gates’s wealth will lead to a superior welfare distribution, or argue pro that horrid rape example, what would be the correct time horizon?

[I_Ryan]

@nirgrahamUK

So lets say that I want to argue that redistributing Bill Gates’s wealth will lead to a superior welfare distribution[…] what would be the correct time horizon?

Well, my first question would be this, what makes that distribution “superior”?

[hayekianxyz]

So if there are five bakeries in a town, then none of them would try to sell something better than the others?

See, this is the problem with you argue with slogans. You end up making ridiculous comparisons, like between bakeries for whom the marginal cost of innovation is negligible to other firms whose investments require fixed costs of multiple millions.

[I_Ryan]

@hayekian

See, this is the problem with you argue with slogans. You end up making ridiculous comparisons, like between bakeries for whom the marginal cost of innovation is negligible to other firms whose investments require fixed costs of multiple millions.

So does that mean that you accepted my argument that it is a different of degree, not one of kind?

[nirgrahamUK]

Well, my first question would be this, what makes that distribution “superior”?

the sum total of the welfare gains to the thousands of recipients be greater than Gates’s reduced utility

[hayekianxyz]

So does that mean that you accepted my argument that it is a different of degree, not one of kind?

Quite possibly, I’ll go over and give your post another read sometime soon. But in the meantime, I’m not sure it makes the slightest bit of difference. The fact of the matter is that the degree is so large between the two markets. R&D for a bakery is limited and bakeries are far more personal and can engage in greater product differentiation. On the other hand, R&D for pharmaceutical companies involves millions and millions dollars, which they may see minimal return on if they’re not granted a monopoly over it.

[I_Ryan]

@nirgrahamUK

the sum total of the welfare gains to the thousands of recipients be greater than Gates’s reduced utility

Which is the justification of much of what democracies do. But there are two problems: (a) I am not aware of how to compare “utility” between people. And (b) if you do that, in the long run, people will not try to acquire such wealth, because they may fear that, once they acquire it, people will just take it away. That is, it will mess up the incentives to acquire wealth. Whenever you make keeping wealth less secure, you make creating wealth less attractive. (And we know that, when you create wealth, in a “free market”, you are serving other people, not just yourself; that is, we know that, in creating wealth, you are creating wealth not only for yourself but also for other people.) So redistribution seems not to be in the long term interests of people; that is, redistribution of wealth does not seem to be in the interests of people who have a long “time horizon” and understand what I am saying, that redistribution destroys the incentives to build wealth for yourself and others, in the long term.

But then the question is this, how do we judge whether a “time horizon” is correct or not? What if people know that they will be worse off in the future, but want to go ahead and do these things anyway, because their time preference is so high? How can we say that these people are “incorrect”? How do we choose whose time preference is “correct” and whose is not?

Well, the only people that are relevant to this discussion are the people who both (a) have high time preferences and (b) because of that, want to redistribute wealth to themselves through the processes of a democracy, through petty theft, or whatever. If the people with the high time preferences just smoke weed constantly or something because of it and do not commit any sorts of crimes, they are not relevant; for, because they are not commiting any sorts of crimes, they are only a part of society as far as they are producing things for other people and getting things in return, which, of course, is what society is. Who we are talking about are people who both (a) have high time preferences to the extent that they barely care about the future and (b) threaten the security of property rights. (Notice that most criminals are people that we would characterize as having high time preferences.)

So how can we feel justified in beating these people into submission because they possess a higher time preference than us? Well, I think that saying it that way is misleading. For we do not directly care about the fact that they have a high time preference. What we directly care about is how they threaten the security of property rights because of that. So the real line of questioning is this:

@I. Ryan

Don’t we need to bring in a sort of “objective” morality here to show that we are “correct” but the people trying to destroy society, like murderers, thieves, rapists, or whatever are “incorrect”? How else would be feel justified in killing these people? Why are our ends more important than theirs? Why is the end of a person A, that is, to raise a family, more important than the end of a person B, to kill people, including people like person A? We feel so passionate about our hatred toward people like B; so, surely, there is a reason why the ends of the person A are more important than those of the person B!

I explore those questions in the rest of the post that I just quoted above and those that I link to in it.

[I_Ryan]

@hayekianxyz; boldfaced added by I. Ryan

Quite possibly, I’ll go over and give your post another read sometime soon. But in the meantime, I’m not sure it makes the slightest bit of difference. The fact of the matter is that the degree is so large between the two markets. R&D for a bakery is limited and bakeries are far more personal and can engage in greater product differentiation. On the other hand, R&D for pharmaceutical companies involves millions and millions dollars, which they may see minimal return on if they’re not granted a monopoly over it.

Indeed.

[scineram]

So you concede?

[I_Ryan]

@scineram

So you concede?

Concede what?

[scineram]

The argument. You accepted his counterpoint.

[I_Ryan]

@scineram

The argument. You accepted his counterpoint.

I wrote this:

@I. Ryan

So does that mean that you accepted my argument that it is a different of degree[?]

To that, he said “quite possibly” but then elaborated that the difference of degree is huge.

[chrispy]

@Ash Lawson

Need a quick and easy answer, maybe an example to proove some friends wrong. They believe that firms would stop investing in R&D if copyrights, patents, industrial design rights and trade secrets, were to be abolished.

The long answer is to read Against Intellectual Monopoly and Against Intellectual Property.

My favorite short example is music. Look at all the development in music from the time primitive humans started banging two rocks together until IP started to take off in the late 1700s. And even today in genres like hip-hop, is more or less music created if we allow sampling? I think the answer is clearly more; IP only stifles creativity. And would a band like U2 suddenly stop touring if Joe Shmoe is allowed to publish a cover version of Zoo Station without paying a royalty? It seems unlikely, to say the least.

[scineram]

Here is a simple use of the estoppel approach, curtesy of Kinsella.

• If it weren’t for IP laws, a given piece of intellectual property would not exist.

• Therefore you are estopped from complaining, that you havo to pay for its use.

[I_Ryan]

@scineram

Here is a simple use of the estoppel approach, curtesy of Kinsella.

• If it weren’t for IP laws, a given piece of intellectual property would not exist.

• Therefore you are estopped from complaining, that you havo to pay for its use.

Huh?

[Snowflake]

Even if IP rights aren’t legitimate, you can still sell your product under the condition that the buyer not copy or distribute it… IP rights might not exist a priori but they are certainly valid if they are the result of voluntary exchange.