THE LIBERTARIAN ENTERPRISE
585, August 29, 2010
"I have a fundamental human right not to be
stolen from. Or enslaved. And so do you."
Misapplication of the notion of "public goods" and the author's extinction paradigm
Attribute to The Libertarian Enterprise
I've noticed, amidst the extreme assertiveness of the Neo-Austrians, a reluctance to call non-rivalrous, non-excludable goods by their actual economic name"public goods". I find this reluctance amusing, but not surprising. You see, the Austrian school rejects the whole notion of "public goods". The Neo-Austrians apparently reject it only in so far as it pleases them, but demonstrate no reluctance to use the classical definition of public goods to define away the property rights of those who are responsible for their creation.
This model of the author's output as "public goods" results in several (perhaps) unintended consequences.
The author, having invested his (scarce) time and resources to produce a work (in this case, let's say a work of fiction, roughly 50,000 words in length), with the hope (or perhaps expectation) that others will be entertained or enlightened by his unique perspective on some issue of mutual importance or interest. The author takes the work, now committed to a physical form and no longer residing exclusively in his mind, and seeks to make it available to an anticipated audience through a market process that involves a division of labor. It is important to note that, by the Neo-Austrian definition, as soon as the author allows another to view his workagent, publisher, reviewer, friendthe author has lost the right and ability to further determine the fate of his product, and that the agent, publisher, reviewer, and soon-to-be former friend would be perfectly within their rights to appropriate the work in question, remove (or not remove) the author's name and share, with or without cost, the complete work with entire world.
Let's say, for the sake a few hundred more words on the subject, that the agent, publisher, reviewer, or friend possesses somewhat more regard for the productive output of the author in question. The author, or perhaps the author's contractually-bound agent, manages to reach an agreement with a publisher to bring the work into the world as a paperback book. A contract is signed, and the author traditionally receives a payment from the publisher, often divided into several small payments depending on the condition of the work at the time of the sale, known as an advance against royalties. (The typical mid-list advance in genre publishing ranges from $1500 to $5000. Obviously a positive track record can push that figure upwardbut more about that later.) What that means, in practice, is that until enough copies of the book are sold to the reading public to pay back the advance (at the author's paperback royalty rate of somewhere between 5-10% of the cover price, or in some cases the wholesale price), the author will receive no additional remuneration for the work he has produced. Most published works (with notable and highly publicized exceptions) never manage to repay their advances.
So now the work has made it into the publishing house where it will pass through the hands of one or more copy editors, typesetters, and proofreadersany one of whom would be completely justified and perfectly within their rights (by Neo-Austrian definition) to appropriate the work in question, remove the author's name (or not) and share, with or without cost, the complete work with entire world. Unless, of course, their employment contract prohibits them from doing so. But what about the casual visitor to the copy editor's home who just happens to see and memorize the entire 50,000 word book during a social visit (no, I'm not kiddinga correspondent recently asked me such a question)? He's in no way contractually bound to keep the book bottled up inside, and he would be completely justified and perfectly within his rights to appropriate the work in question, remove the author's name (or not) and share, with or without cost, the complete work with entire world.
However let's assume, once again, that there is some modicum of respect for the intellectual processes the author employed and that the work actually makes it to the marketplace where it is purchased by, oh, let's say, Theodore. Now Teddywho finds the work tedious and of no valueis annoyed that he had to spend $8 to read this tripe. He hates the book, and he's not afraid to say so, loudly and publicly. Others are interested in the fuss, but since Teddy hates the book he's unwilling to share it with others so they end up buying copies of their own. The publisher sees that the book is selling, and paying back the advance against royalties so when the author approaches the publisher with another book the author's track record of sales convinces the publisher that the work is a good investment and another book is "born".
But what if Teddy actually liked the book? He could engage in the analogous behavior of reviewing the book, or recommending it to a book club, or buying copies to give to his friends. But instead, out of the goodness of his heart (or more likely because he knows he can exchange it for other works he likes without doing himself any economic harm) he uploads the book to the information superhighway. Suddenly, the author is receiving email from admirers of the work. Teddy pats himself on the back and congratulates himself for providing the author with "free publicity". But the royalty statements do not reflect this increased popularity. The publisherconcerned with the repayment of the advanceis seeing no increase in sales, no repayment of the advance, and no reason to consider the next book the author feels encouraged to write based on the nonmonetary feedback he receives. The publisher has no incentive (because the information normally provided by the marketplace has been denied to those who engaged in the activity) to continue to produce works by this particular author. If the publisher is marginally astute, he may even come to the conclusion that works about a particular subject, or point of view, are nonviable.
I maintain that the assertion that there is "no cost" associated with free riders in the case of literature is incorrect and potentially damaging to the notion of original works of literatureparticularly fiction. By transferring "ownership" of a work to the possessor of the physical manifestation as opposed to the source of the work, free riders are distorting the market and denying feedback that leads to the efficient allocation of resources. Under this allocatory scheme, the author becomes a mere "reproductive stump" (thank you, Frank Herbert, Hellstrom's Hive).
It is undeniably true that the landscape is changing and that certain aspects of our culture lag behind others in adapting to changes. But I'm compelled to point out that the changing landscape does not demand that we fail to treat one another with respector to respect one another's property rights. The prevailing argument in the anti-IPR realm largely consists of "because I can acquire things without paying for them, I must", or that, at the very least, there should be no negative consequences for doing so.
One final note. I referred earlier in this piece to the perhaps unintended consequences of Neo-Austrian property theory, but there is a question here that begs to be asked and answered. I shall ask the question and leave it to those who defend this practice to provide adequate justification. Libertarians (and their fellow-travelers) are still a small part of the political landscape, and Neo-Austrian and Austrian economists, despite their ubiquitous presence on the Internet, are still far from the dominant school of economic thought. That being the case, I must wonder aloud what purpose is served by those who wish to deprive the thinkers and inventors on their own side of their intellectual property while leaving the field, at-large, to those who have no concern at all for the fact that such property is currently defended by the state.
The truth is that all property, in our current scheme of social organization, is defended by the state. I question the motives of those who wish to reduce the intellectual element of the libertarian society to the status of slaves. Or do they merely want us to shut up?