I'm not ready to give my definitive answer on whether or not intellectual property should exist, but I've noticed a tendency towards fuzzy thinking on the part of the IP opponents over at the Mises Institute.
Specifically, they often discuss property as if it were a prior category, rather than a contingent socially-created fact. Stephan Kinsella, in his Against Intellectual Property (available for free; those Mises folks always put their money where their mouths are), holds forth at length on the supposed origin and meaning of property, and then points out all the ways that intellectual property fails to meet this standard. Specifically, ideas are a non-rival good- basically, if I download an MP3 it doesn't make that song less available to anyone else; my consumption inhibits no one else's consumption- and are likewise a non-scarce good.
All of that is true, and none of it means anything. 'Property' is a social creation- if there is only one man, there is no property. Only when two men must decide what belongs to whom is there property. Hence, property is a socially-constructed concept, and therefore it can be modified at will to attain whatever ends at which we aim. If creating rights in ideas leads to better outcomes, then we can do that. If removing rights in cars led to better outcomes, we could do the same.
"But what about rights!?," I hear them shouting. Friends, let's be grown ups- 'natural rights' are pretend. No one has any natural rights to anything at all, ever. Assertions of such rights are just that- unwarranted assertions. In days of yore these assertions had a theological basis, but if you want to assert rights on those grounds you'll have to prove the existence of God. Have fun! Others- most famously Robert Nozick- simply assert the existence of these rights, and while I agree that they have an intuitive appeal, ultimately if your argument rests on 'because I said so' you have a pretty weak argument, unless you are arguing with your children.
So how can I possibly be a libertarian and not believe in natural rights? Simply put, I do agree with the Hayekian argument about the decentralization of information. Each individual has the best available information about his situation, his means, and his ends at his fingertips, and thus each individual is best suited to make his own decisions about how to maximize his utility. On the broader questions of how to write laws and structure society, I adopt a utilitarian approach, strongly informed by Hayek's information argument. My presumption is against interfering in individual choices unless it can be convincingly demonstrated that such interference promotes the general good. Laws against murder are an obvious example.
On IP, I am undecided, but I will admit a prejudice. If A writes a book that B publishes and sells to C, I think B should give A a cut. I don't have a rigorous argument to back this up, but I feel it in my water, as they say.
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