By Michele Boldrin & David K. Levine
The Mises Review
[Against Intellectual Monopoly. By Michele Boldrin and David K. Levine. Cambridge University Press, 2008. Viii + 298 pages.]
One of the most important recent advances in libertarian theory has come in the field of intellectual property. Several writers, Stephan Kinsella most notably among them, have argued that patents and copyrights should not form part of a proper libertarian law code. These writers modify and extend the work of Murray Rothbard, who allowed copyrights but not patents.
These writers must confront an important objection. However convincing one may find their analysis of the implications of libertarian theory, what if the policy that they recommend leads to economic disaster? Without patents, would not inventions drastically decrease, crippling economic progress? Could writers earn a decent return without being able to copyright their work? If one sets aside these questions, insisting that libertarian theory requires that patents and copyrights be ended and that is that, critics stand ready to pounce. They will say that libertarians dogmatically disregard consequences, insisting on principles at whatever cost.
Against Intellectual Monopoly enables us to meet this challenge on its own ground. Boldrin and Levine, though quite sympathetic to the free market, are neither Austrians nor libertarians, much less natural-rights libertarians of Rothbardian views. They are mainstream neoclassical economists and their ethical views seem, broadly speaking, to be utilitarian. Arguing strictly on consequentialist grounds, they oppose intellectual property. Patents and copyrights do not promote economic progress but impede it.
Their argument for this view consists of two parts. First, even if patents and copyrights encourage innovation, they produce so many bad effects that, on balance, these measures have negative consequences. Second, though benefits from promoting new ideas of patents and copyright cannot on a priori grounds be ruled out, there is strong reason to believe that these effects have been greatly exaggerated.
I can discuss only a small sample of the profusion of arguments the authors deploy in support of these contentions. They begin by posing a sharp challenge to those who think patents essential for innovation. Innovative industries have often flourished without them:
Even if this is true, though, this shows only that patents are unneeded; why are they bad? Boldrin and Levine answer that the struggle to secure patents often involves costly and unproductive activities:
But the most obvious cost of patents lies not in the side effects of the struggle to obtain them but in their direct purpose:
The "submarine patent" is an especially insidious means of impeding competition. Here, someone files for a patent on a general idea without completing the application process:
The risk of being undermined by a submarine patent surely tends to discourage innovation.
As this example shows, the authors display a thorough familiarity with the ins and outs of intellectual property law. But even more important is a less technical point that they emphasize. People learn through imitating others, and to the extent that patents and copyrights impede this process, they block progress:
Even if the authors are so far correct, they must confront a formidable objection. Suppose, as they wish, that patents and copyrights were abolished. According to their neoclassical model of competition, is there not a strong argument that innovators could derive little profit? Once the innovation is on the market, copiers can quickly expand production until marginal revenue equals marginal cost, driving profits down to nothing.
Boldrin and Levine prove fully equal to the challenge. Within their neoclassical framework, they find ample room for profit for both innovators and imitators:
The authors acknowledge, though, that their argument does not cover all possible cases:
But these cases of indivisibility do not amount to much in practice.
For one thing, the "first-mover advantage" of the innovator generally offers ample opportunities for profit.
What if the objector persists? Even if innovators can gain profits without recourse to intellectual monopoly, can they not in at least some cases gain higher profits with legal protection of their discoveries? If so, perhaps the gains from such innovations would outweigh all the considerations the authors have amassed on the other side.
Little evidence supports this conjecture:
The book is packed with arguments; I shall conclude with one I found especially telling:
In addition to the sources our authors cite to back up this claim, Murray Rothbard also notes the importance of simultaneous discovery in Man, Economy, and State. The point was also a favorite of my old friend S. Colum Gilfillan, and his books from the 1930s, The Sociology of Invention and Inventing the Ship, lend strong support to the authors' case. All future work on intellectual property will have to take account of Against Intellectual Monopoly.
 For an example of this sort of criticism, though not applied to intellectual property, see Leland Yeager, Ethics as Social Science. I discuss his criticism in The Mises Review Summer 2001.
 I am grateful to Jeff Tucker for calling my attention to this book.
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