Hi I have a question for you guys and galls. Where do patents fit in in a free market ? Patents are legal property, they are similar to investments in that you take your money or labor time and put it into developing a new product, process or in the case of an investment a corporation, then you are entitled to a retern on your investment. The purpos of a patent is to recope losses incerd during R&D as well as a way for inovaters to profit from what is durring the duraration of the patent there intelectual property. In an unregulated or state absent market it would be difficult for many patent holders to secure there rights ( the exclusion of others from using there patent ) , have a remidy to seek restitution from infringment, or to have the market even acnowlge the patent as bieng ligitamite. This would discorage the inovater as there would be no reward for encorring the cost of thiere inovation since the new or more efficent product or process is open to all the market to exploit. Awnsers from differnet points of view are welcomed and encouraged. Espesialy if you wold void or alter the consept of the patent.
A great book to read about all Intellectual Property is called Against Intellectual Monopoly. It can be found for free online from the authors website here:
There are many arguments given in the book, but one quick answer is that a patent is a monopoly granted by the government which allows you to control what everyone else can do with their own property. Intellectual Property Rights cannot be legitimate Property Rights because it infringes on everyone elses.
Also there are many cases of simultaneous invention (which is the rule, not the exception as most believe), in which two or more people come up with the same idea around the same time. The one who is lucky enough to get it approved by the state first, can then use the force of the government to shut down competitors, or make them pay royalties to you even though they have created the idea on their own.
The book covers many more examples and ideas, and is a highly recommended read to anyone and everyone… It completely changes your view on Intellectual Property.
The reward is the inventor/entrepreneur gets the product to market first, what people do with that product once it is purchased is not dictated or ought not be dictated by the inventor/entrepreneur.
Trade secrets are fine, as they don’t infringe upon property rights, patents are time limited trade secrets, this violates property. Other posters have already given the resources that back this up. They are good resources.
Patents are perfectly legitimate in free market, and free market never meant the absence of state. The existence of a state which protects individual and proprietal rights is what allows human exchange to be protected. The state’s legitimate authority is only in protecting those rights, and once it exceeds its jurisdiction, it will end up violating those rights and hence will be illegal against its own laws - thus replacing law and order with the whim of the oligarchy. Opposition to government intervention in economy only happens because it involves taking the power away from law and order and into the hands of people who arbitrarily decide to compromise human liberty. It’s a little misleading to assume that non-interventionism in the market means government doing nothing; the government always is doing something, by maintaing the system of laws that protecting rights of people. Classical liberals like Mills, Spencer, and Smith more or less clarified these ideas.
In an ideal minimal state with exhaustive functions, patenting ideas means that allocation of scarce resources in society by independently functioning people is allowed to happen - in this case, it means allocation of information and ideas goes into the most rewarding ventures, and the creation of wealth is allowed to flow down to people who get the best ideas. If purchase of rights over intellectual property isn’t a protection of people’s rights and freedoms, what is?
I think you are still trapped with the idea that simultaneous invention is the exception, not the rule. Most of the time people think of the same ideas around the same time period, and those who are lucky enough to get the monopoly privilege from the state can shut down all competitors.
This is why Intellectual Property is illegitimate, it is a government granted monopoly over what everyone else can do with their own property.
That is from Nielsio’s (community member) Youtube channel. He has a lot more great videos worth checking out. He turned me on to Marc Stevens.
I first posted that video maybe a couple months ago for Giles and Lam, and I think both ignored it (inconvenient truths perhaps). Then I posted it again, and now people are referring to it all the time. It is pretty cool because I think most of the regulars here will be able to watch it, and appreciate a fascinating non-Austrian in origin, but very austro-compatible view on education, science and IP as public private goods.
Your making an economic argument that it is more economical and that we produce more wealth by preventing copying of production of various goods and services. When in fact it is the opposite. Keeping copy cats out of the market means there is less selection, less quantity, and less overall wealth. We produce less things and that means less for everyone. Allowing copy cats in the market increases selection, competition, quality, and lowers price. This is econ 101, supply/demand.
If a new idea generates a high demand in the market more entrepreneur’s are not only attracted to that market but they actually need to come and fill that consumer need gap. Preventing entrapaneurs from doing this is economically backwards as it prevents further economic growth. Economic growth means more wealth for all.
Minimal state is financed by taxes; which, yes, is a cost on society, and yet helps bear or reduce other possible costs that people would have had to bear, like having crime in society. If there were no law enforcement, there could still be a mafia-like organized crime for people’s protection and rooting out independent criminals, but then the costs of extortion for protection would still be present and would just as well replace taxes. Obviously, those costs would be far less for everyone, if you simply placed police officers following an independent code of laws equal for everyone, because then nobody would have to face people who smash your windows for not paying protection money. Because laws apply to even law enforcement, and hence it is not as arbitrary as the protection by organized criminals.
So paying to the state for protection is, in my view, no different from paying premium to an insurance company, so that you can get somebody else to bear a certain cost and risk that you yourself can’t bear, in return for paying a small cost on your part. Having a small and honest government, but a government nonetheless, is good, because you could even be a foreigner trying to enforce a trading contract that you made, and this little government with its judicial system would still give you the same treatment and protection, and hence reduce everybody’s cost of doing their activities. As was the case in 19th century Britain, and hence was exactly what encouraged Lombards and French people to do business there.
This is false. Rights and property rights have been protected without states. Rights and property exist before states, not after them.
The state has no legitimate authority. Authority can only come with consent. I never gave my consent.
No, it is just rationally coherent and intellectually honest.
The government cannot protect rights of everyone by establishing a monopoly.
What?
You don’t require patents for that.
What does this mean?
Patents are simply a monopoly privilege granted by the state. It allows the patent holder to control what other people can and cannot do with their property. Patents are immoral.
However, value is subjective. That is, perhaps you would rather have the state, while I would not. That is, perhaps the cost of the state outweighs the cost of not having the state to me, but not to you.
What happens when it is the police that start smashing your windows?
The major difference between the state and the insurance company is that paying the insurance company is voluntary, while the state initiates coercion to get you to pay it.
OK, at this point, I’ll stop arguing from the liberty angle and just concede defeat there. While compromise on liberty itself is something out of question, I stil must consider something on this issue based on the ultimate ends, irrespective of the means.
Pharmaceutical companies can end up spending 10 years on researching and developing drugs, many of which will be discarded, and among all, only a few will enter the later stages of development. Once they come up with these few drugs, they can even have to spend 10 more years on giving trials to these drugs. If they have to recover the costs of developing all other failed and discarded drugs from the few drugs that were successful, they’ll have to ensure to charge high prices to recover all their sunk costs.
Of course, many companies these days have extremely acute financial analysis teams calculating the net present values of their projects before even thinking of undertaking them. (Just for those few who might not know, net present value is the value of a venture based on all future cash inflows and outflows) Since years of consuming cash for development bring down the net present value greatly, the financial calculators of the company will not allow the venture to be undertaken if it has negative net present value. And if they know that imitators will bring down the prices they can charge, they will clearly be able to see that the project has negative net present value, and they will simply not undertake it in the first place. Drug companies will refuse to develop drugs to address common ailments, period.
I know some smart person is leaping at the chance to say it, but no, I know that what is good for a competitor is not the same as what is good for competition. I do, however, know that if all pharmaceutical development projects have a negative net present value, none of them will ever be undertaken, and none of them will ever be there to address people’s ailments. There will be no drug companies. And if there are no drug companies, who will undertake the massive expenditure to develop them? The state?
Well libertarianism is built upon the NAP, meaning that the means justify the ends… the ends do not justify the means. Therefore, it is not ok to use force to steal from everyone (or threaten them with jail), in order to pay for what you think is best for society.
I would highly recommend reading Against Intellectual Monopoly, it covers everything you are bringing up and more.
Most of the problems you brought up are problems with the FDA and the government’s regulations… Those are a huge burden on pharmaceutical companies, raising the prices, and lowering the quality and quantity of drugs.
This is exactly where money will be spent, because you can make large profits, especially if you get the advantage of being first to market.
This is just living in a fantasy land. Getting rid of patents means all drug companies will disappear? If we get rid of the government subsidies on food, no one will make food!!! If the government didn’t grant monopolies to water/electric companies, no one would get water and electricity!!!
Come on. Give these things a little more thought. Entrepreneurs will still invest and create businesses in these areas, especially when the government gets rid of so many barriers to entry.
There would be entrepreneurs who see a profit in making drugs. There would also be charities, and fundraisers in order to raise money to help fund cures or help those with certain diseases.
So you’re going to pretend liberty doesn’t exist, so you can argue around it?
So now you’re arguing against the market by arguing for monopoly?
You’re asserting market failure. Do you actually believe free markets fail?
This latter argument basically amounts to the “too big to fail” bank argument. If we don’t allow the drug companies monopoly profits, then we will have to turn it over to the monopoly state. In other words, we are hostages to drug developers.
Please, try to present something resembling a free market, Austrian argument.
If Bastiat was reading this, he would be rolling in his grave.
It’s getting late in the evening and I am getting a little exhausted, but all the same, I am just curious - based on all available empirical evidence, what has been the level of investment in drug development in countries where patents exist and in countries where patents don’t exist, and whose consumers have benefitted from availability of more drugs and at better prices?
I don’t believe in any such thing as market failure. Markets merely allocate resources to their best available uses under any given circumstances, nothing more, nothing less. I am not arguing against market; how can anybody argue against human exchange?
There ARE gangs and mafia-like organizations WITH state run law-enforcement so whats your point again? Also state run law enforcement tend to get caught up in scandals due to their position of power.
There is one other major difference between the state’s production of security and private production of security aside from the fact that private insurance companies are morally sound. Private firms have price calculation. The state does not. the state has no way of measuring whether it’s security efforts are effective.
