The economic principles of intellectual property and the fallacies of intellectual communism

Posted on November 14, 2010

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Now that Stephan Kinsella has admitted that intellectual property is a negative servitude and has a legitimate precedent in property rights, the libertarian debate on intellectual property is all but closed. However, many libertarians continue to desperately cling to their fallacies, and so this document remains to guide them back to reason.

Intellectual property rights are the foundation of any advanced knowledge economy. They make possible the capitalistic production of knowledge and information under a division of labor. A dangerous faction of intellectual communism is spreading amongst libertarians that wants to eliminate the ownership of information and communalize all information. To achieve this, they rely on a large set of fallacies that they invoke in sequence to confuse the issue.

In previous posts I argued that confusion over the production of roads came from a misunderstanding of the economics of land production, and then argued that the confusion over the ownership of land came from a confusion over the economics of knowledge and security. From this I provided the ultimate justification for the private ownership of information, land and natural resources from their economic scarcity. What I will now do is systematically refute all the fallacies invoked to defend communism in knowledge and information and show that they are only ruses to systematically destroy the capitalistic information producers in favor of their sub-optimal competitors.

First of all, as I pointed out in the topic of roads, not all goods have an exchange value in the marketplace. It is not the case that roads can be commoditized and sold as unit goods. However, they can be packaged together as larger-scale goods and economized upon based on the rents on this larger-scale good.

Intellectual property suffers from a similar economic confusion. Ludwig von Mises describes the problem as follows in his treatise, Human Action:

Yet there is an exception to this general rule that monopoly prices benefit the seller and harm the buyer and infringe the supremacy of the consumers’ interests. If on a competitive market one of the complementary factors, namely f, needed for the production of the consumers’ good g, does not attain any price at all, although the production of f requires various expenditures and consumers are ready to pay for the consumers’ good g a price which makes its production profitable on a competitive market, the monopoly price for f becomes a necessary requirement for the production of g. It is this idea that people advance in favor of patent and copyright legislation. If inventors and authors were not is a position to make money by inventing and writing, they would be prevented from devoting their time to these activities and from defraying the costs involved. The public would not derive any advantage from the absence of monopoly prices for f. It would, on the contrary, miss the satisfaction it could derive from the acquisition of g.

XVI. PRICES: Consumption as Affected by Monopoly Prices

While under roads and land ownership the good f, roads, cannot be separated economically from good g, land, its production results in, under intellectual property the problem is that good f, the stream of information that is valued by consumers, is distributed to them on good, g, media. While streams of information cannot be exchanged and commoditized, media can be. However, media can also be quickly and cheaply reproduced (which is part of the reason why they are so suitable to distributing information), giving the media holder the possibility of rapidly and costlessly circumventing the production of f in order to obtain good g.

Faced with the problem of producing for a public demanding intellectual goods, the producers invented the concept of copyright limitation. They would give you the full information stream that could be used as a source to make copies, but by your contract with this producer you would be disallowed from making copies and inflating the supply of media. That way the producer could supply the whole demand for the intellectual good and, by making an entrepreneurial decision on the marginal cost versus the marginal profit of production, choose whether or not to risk his capital on the production of f. This arrangement was understood as mutually beneficial by both producers and consumers, and as the market for intellectual goods developed, enormous industries deploying billions of dollars of capital on single projects have organized, reaping the profits of their entrepreneurial risks.

It has been a recent fashion by some libertarians to denounce the legitimacy of intellectual property rights on the free market. They believe and promote the idea that all information should be owned in common by all men, and that no man should exclusively profit from any information. This makes them, by any honest definition of the term, intellectual communists.

Most anti-IP arguments stem from confusion over the nature of information and its physical manifestation, which is why property in information gets bundled with property in ideas. Some libertarians, whose opposition to IP comes from a communistic sensibility to the production of information, when not actively promoting communistic models of information production, make liberal use of the confusion between information and ideas to promote the abolition of IP entirely and thus destroy their competition. This is particularly obscene due to the fact that the industrial wealth of the United States in the late 20th century has been grown precisely thanks to the capitalist industries that produce information, most notably the publishing, media, film and software industries, which have produced some of America’s most illustrious corporate champions and continue to be one of America’s most cherished exports all over the world, spreading goodwill for Americans where the export of bombs and wars have spread hatred.

The reason that any argument for intellectual communism can be made is that a particular form of information production, one which poses the opposite problem as that described by Mises, has emerged within the software industry (but not the entertainment media industry), where a good f has value in the market only if it is improved by good g, but good g itself is of no value. This is so-called “free and open source software”. Under this model, a producer needs good g (for example, a software database) with the use of his goods f (for example, a photo-sharing website), which he will usually sell as commodities or services. As such, he can share good g with other producers selling goods f or similar to f, and together they can cooperatively expand the value of their products against the broader market. While it has been a viable business model for such capitalist enterprises as Apple Computers and IBM, the model quickly runs into a severe limitation: by its nature it results in producer goods suitable to the needs of producers, while consumers have little to no influence on its design. It cannot be considered to be a division of labor model of production as it is traditionally understood, it is at most a collective autarky made possible by cheap media. This is the reason why Apple chose a BSD licensed core with a privately designed, proprietary desktop interface for its Mac OS X series of operating systems, as opposed to many other more popular open source operating system packages with more restrictive licenses. It could not justify the enormous capital investment in consumer software if it did not own the rights to this software.

Nevertheless, open source advocates are oblivious to the existence of a consumer software market, and believe that all software can and should be produced under the open source model, and that this model can then be expanded to all forms of intellectual goods, such as movies, music, and literature, despite there being no example of the model ever taking root in these markets. In order to de-legitimize intellectual property, they therefore hunt for any possible loophole in the copyright system that they could exploit in order to make mass piracy possible. The pirates themselves, however, have their own code of intellectual property – they are angered when their “product” is distributed without their authorization – much like the old-time sea pirates needed a property system within their own ranks to divide up the loot they had stolen. This makes software pirates much less menacing than intellectual communists, as the pirates must realize that their activities are merely parasitic and could not take place without real property in the goods they are counterfeiting. The pirates, like rational parasites, have an incentive to protect and grow the industries that supports them. Intellectual communists, on the other hand, want only the destruction of these industries.

The trend towards de-industrialization and the expansion of the service industries goes through the expansion of the information-producing industries, both by making production more automated and by offering valuable consumer intellectual goods, and the future wealth of civilization is therefore inextricably bound to the protection of intellectual property rights. Already, the invention of sophisticated volumetric printers is showing the irrelevance of large-scale manufacturing, and we are rapidly approaching the civilization depicted by Neal Stephenson in The Diamond Age, where intellectual property production is the only form of capitalist industry there exists.

It is my intent now to go through each one of the fallacies of intellectual communists, from the most common to the most bizarre, to show that intellectual property is fully rooted in the physical nature of the universe and derives from property rights in materially scarce goods produced in the free market, as well as making the case for the nefarious intentions of the opponents of intellectual property rights.

Fallacy 1: Intellectual property is bad due to patents

This is by far the most common fallacy, as espoused by such legal professionals as Stephan Kinsella. This argument goes as follows: because patents are monopolies, all forms of intellectual property must be abolished.

One does not need to reflect for long to realize the fallacy in this argument. We have known since Rothbard’s Man, Economy and State the difference between patents and copyrights. Simply put, copyrights originate with a producer, while patents originate with the state. One must “apply for” patent protection in order to be granted it, but one does not need to apply for copyright protection to receive it, one only needs to seek protection with the state when a copyright is violated, much as is the case when any other form of market-created property is violated. This makes a copyrighted intellectual property a product of the free market, as it is created by a producer of information for the benefit of consumers.

In the case of patents, the patent is created by the state (you may even say for the state), and may be granted or refused at the will of the state. Additionally, if one were to independently arrive at an idea and apply for a patent for this idea, it may be the case that an existing patent on this idea already exists. Not only does this mean that this act of independent production will be refused protection, it will also be banned, and of course the whole process of searching and checking patents against each other will require the state to consume substantial resources to enforce its patents. This means that the creator must also suffer the burden of the costs of applying for patents in order to be protected (while in the case of copyrights he faces no cost to declare such a right), and may abstain from producing an invention due to the risk of it already being patented. Obviously such a system makes no economic sense.

It is for this reason that Rothbard argued that patents are illegitimate precisely to the extent that they go beyond the copyright. He saw the technological boundary between information and ideas. All forms of intellectual property must thus be judged on their origin, whether they are created by a private producer or whether they are created by a state. Except for patents, all are created by producers and are therefore legitimate on the free market.

Fallacy 2: Information is not scarce

Ideas can be communicated orally following their formulation in the mind, but useful information can only be produced while working with media, can only be inscribed and communicated through media, and can only be enjoyed and consumed through a media. Often they must be recorded from the physical world using sophisticated instruments to transform physical patterns from one aspect to another, recordable one. This physicality makes information essentially indistinguishable from media. Information can only exist if media takes a specific physical shape. For example, if one wants a recording of actors riding along a mountain range, one must send physical actors to this mountain range and record their physical presence with cameras writing on film or on digital memory, a process that requires a substantial capital investment. The uniqueness of such an event is self-evident, and even if another producer of information were to hire the same actors to ride along the same mountain range and film them with the same equipment, the resulting stream of information would still be completely different in physical structure. This makes information a good that is inevitably bound to physical structures, which are scarce, therefore a tangible good. Any existence of an identical copy of this information stream is physically connected to this original recording through acts of communication with the producer’s property, and it is impossible for it to be a result of an independent act of creation.

In fact, one can determine whether or not an intellectual property is legitimate based on the nature of the information; when the information is unique and will never re-occur in the lifetime of the universe, then it is scarce and comes only from one original source. If the information is not unique and can re-occur again and again, then it is not scarce and can be considered super-abundant, as it would be in the Garden of Eden. For super-abundant information, no conflict can possibly arise, as no labor, time or capital is ever spent in its production. For information that is unique and specific, the scarcity of this information will grant the one who possesses it a productive advantage, and many others will attempt to obtain this information. Because it is unique, the only way to obtain it is by either contracting with the original producer, or by violating this producer’s physical property. This is why there is a market for information in the first place, and this is why counterfeiters seek to obtain this information in order to produce copies. Were the information not scarce, there would be no need at all to engage in copying! (In comparison with patents for ideas, one never sees internet pirates redistributing patented ideas, as these have no scarcity and no value.)

Fallacy 3: Information is more efficiently produced in common

This is one argument that intellectual communists advance that may not be fallacious as it explicitly states their intention. Unfortunately it is gravely mistaken. It is usually expressed by a special class of information producers, computer geeks adept of the “open source” software movement. Open source software is a collection of software platforms licensed under agreements that require those who utilize it to share their changes (in this sense, also benefitting from copyrights that limit some forms of use). Its weakness is that the only producers who create this software are those who produce software for themselves. It is the same as an autarkic economic production process, only the low cost of copying information makes it possible for every autarkic producer to leverage the efforts of previous such autarkic producer. What it means, in essence, is that all open source software is produced to suit the needs of the producers, not the consumers. Those who do not have the skill of software production do not enjoy the benefits of this software. To preach this as the only model for the production of information is an explicit rejection of the division of labor and capitalism.

There does not exist mass-market open source software products which have overtaken their superior counterpart produced by capitalist software industries in market share. In fact, when Apple decided to rebuild their Operating System software on an open-source foundation, it had to reject the most popular platform Linux in favor of the less commonplace BSD due to the BSD license explicitly allowing for the privatisation of the investment Apple made in the mass-market viability of its platform. For this reason, the Apple OS is a testament to the limits of the open-source software model, not to its triumph.

Some intellectual communists recognize the non-viability of the open-source business model, but claim that the negative aspects can be mitigated by employing alternative business models, such as consumer support. This ignores the fact that capitalist producers have already made the choice not to employ such models despite being free to do so, which must mean that they recognize them as not being in the interests of their consumers and their own. In the case of consumer support, the relationship between consumer and producer remains fundamentally altered – the software producer is no longer rewarded for producing reliable, easy-to-use software, but for guiding the consumer through the complications of the software. It is therefore in the industry’s interest to make complicated software, which turns out to be the case for all open source software platforms.

In non-software information industry, intellectual communism is even less viable, and often amounts to little more than sophisticated beggaring. In all cases, it means a capitalist production of information (a large enterprise taking on all the risks of an investment in information and paying its collaborators in advance of the product being taken to market) being impossible and thus reducing the welfare of all producers of information in the structure of production. Because the communist alternative is already available on the free market, and because the producers of information overwhelmingly opt not to make use of it, it can only mean that communist production of information is less productive and less efficient. This is also true of all other general communist models of production, hence it is no surprise to an economist.

Intellectual communism is nothing more than a crude death-wish for the entire capitalist information industries of the world, much like land communism is a death-wish for all food-consuming humans. Some intellectual communists, who have opted to make use of the communistic production models despite their drawbacks, would greatly benefit from the death of those industries, as they are their main competitor. Their arguments should therefore be considered highly suspect.

Fallacy 4: Nothing is taken away by copying

This is an inflationist argument similar to those who promote inflation as a source of unlimited wealth. The original inflationist argument concerning money is as follows: because the media on which money is inscribed, paper, costs almost nothing to reproduce, then society can print money until unlimited prosperity has been achieved. Today it is no longer debated whether counterfeiting is a criminal act, and counterfeiting has been a monopoly of the state only for the fact that people who use money are unable to outlaw it entirely. As Mises famously argued, money is valuable only to the extent that it is strictly limited in supply. Its scarcity is its tangible value, and producing money that fulfills this role is one of the most fundamentally beneficial economic acts that the capitalist banking system has achieved. It has been obvious to Austrian economics since Mises’ seminal treatise on money that counterfeiting money, both through fractional reserve lending or crude money-printing, is an economically destructive act that takes away from the producers of wealth, those who have created the original money and those who have entered into contractual relations with those creators to obtain a part of this money, and gives to the destroyers of wealth, the counterfeiters. By thus rewarding destruction and punishing production, de-civilization is promoted.

A counterfeit copy of intellectual property achieves exactly the same result. It gives the counterfeiter wealth by multiplying his instances of the scarce information, while reducing the wealth of the producer of the information and of those who have entered into contractual relations with him to obtain part of the scarce information. Inflation is promoted, production is punished.

Some in reply claim that money can only enjoy property protection to the extent that it is a claim on scarce metal specie. However, it is not the specie that money consumers demand, but the more efficient productivity of the money-substitute itself (which is why they choose to exchange specie for media). Producing money from a stock of specie is a legitimate form of production. Undermining this productivity is an attack on the producer’s property rights regardless of the state of the stock of specie.

A similar fallacy states that the counterfeiter is only guilty of fraud towards the purchaser of his product because he misrepresented himself, and the original owner of the counterfeit good is unaffected. This is a grave error, as much of the value of the good is the trust in the authenticity of any of the fungible copies in circulation. The existence and propagation of counterfeit products of lower quality directly destroy the confidence of consumers in the products of this enterprise, and make all accumulated goodwill worthless. In the case of money, it may get to the point where there is no longer trust in the authenticity of any media, and the money is simply rejected as a medium of exchange. The entire investment made into the good by the original producer is thus made worthless, in essence expropriated and consumed, by the counterfeiter.

Fallacy 5: Why admit limited copyrights of some tens of years instead of zero years, an arbitrary distinction?

The state corrupts property laws and taxes in many ways, for example requiring property owners to give up a large part of their estate upon death, or requiring them to register the ownership of real estate at a municipal office. This violation of the property right by the state does not make the underlying right invalid.

Under a pure free market, information producers could determine themselves what the extent of their copyright is, going as far as perpetuity. That is their right and what is necessary for them to engage in a capitalist risk of producing scarce information.

Fallacy 6: Copyright cannot stop piracy

This fallacy states that piracy is ubiquitous and therefore intellectual property rights are invalid.

A pirate is not a capitalist producer of information and therefore his ability to damage the property of the capitalist producer is strictly limited by scale. Because they operate in a black market, pirate copies of information are generally of lower quality and carry a higher risk than authentic copies. This means that in many cases the cost of pursuing justice from these pirates, due to their large number and underground distribution, is higher than the benefit from eliminating their piracy. However, this is subject to the law of marginal utility, and there is a point where an act of piracy is so large as to immediately deserve a response by the intellectual property owner.

Piracy is not significant enough to make capitalism in information impossible, however, were it to be protected by law, it would immediately unleash capitalists against each other. Because of their greater productivity and reputation, the capitalists would be able to engage in counterfeiting at an unimaginable scale. The sub-marginal acts of piracy would become unlimited, and the entire value of the capital stock of each capitalist information industry would be wiped out.

Much like one can tolerate the occasional trespass of children on one’s property, while employing the full force of the law against much larger and significant acts of trespass (such as parking one’s car on the neighbor’s lawn), tolerating some piracy is not a renunciation of property rights. In fact, that information producers must tolerate piracy is evidence of the state’s violation of their property right, as the state by its monopoly on property protection increases the costs of protection of their rights.

Fallacy 7: A counterfeiter is not breaking a contract and is not bound by copyright limitations

One obviously does not need a contractual relation with a property owner in order to be a violator of his property. A thief is not bound by contract to respect the property of the owner of the automobile he is driving away in. He is bound by the law to do so, and will be punished for his violation. The role of the contract in intellectual property is precisely the reverse, it grants the right to the consumer to access the property of the producer, and thus makes their limited use of the information lawful.

Fallacy 8: Intellectual property derives from the labor theory of value and is refuted by marginal value theory

If an argument along these lines can be made, it is that intellectual property is derived from the labor theory of property, which argues that an act of production should be protected and rewarded by private ownership. This has nothing to say about the value of what has been produced, it may well turn out to be worthless, and this risk is the very thing that makes capitalist production of information absolutely necessary.

When a capitalist information industry undertakes to create specific information, it must do so with the expectation that it will be able to sell the information at a profit, and thus calculate the optimal supply of this information based on marginal revenue, from which it must subtract the costs that will be incurred during production. If it should fail, the capitalist will have to exit the information production industry. All of these prices are the result of marginal value, and thus marginal value theory is a foundation for intellectual property rights.

Supposing that it were impossible for the information producer to control the supply of information, then the value of any capitalist investment in information would be zero, and no such production would ever be risked, to the detriment of information consumers.

Fallacy 9: Copyright prevents the creation of new or derivative information

From the fact that copyright is a market-created property right, it is no different from any other property right. One may transform any un-owned natural material to create a scarce good, but one may not transform an owned natural material to create a scarce good that one must then appropriate. In fact, if one opts to transform someone else’s farm into an arboretum, then the legitimate owner of the farm would have the right to claim full ownership of the arboretum and expel the intruder since it was produced from his property.

In order to create and own derivatives of any form of property, one must have an agreement with the original appropriator to secure this ownership.

Fallacy 10: Information is property, but only if it is self-protected

A particularly bizarre form of fallacy, this states that producers of information have the right to deny access to information only as long as they do not release it from their private networks, and must ensure the secrecy by hiring sufficient security. Obviously this fallacy recognizes the legitimacy of owning information, and also recognizes the scarcity of this information. However, the proponents of this fallacy claim that the moment the information is shared on a media that is sold to the public, it becomes public property. This is like claiming that selling tickets to a concert is a permanent invitation to occupy the amphitheatre! What this amounts to is that creating limited property rights is unlawful, and we would also have to reject any contractual relation that limits what one may do with an acquired property, such as a contract that binds the title of a house to a membership in a neighborhood association. There is no valid reason to reject such contracts, as they originate from the free market and are recognized as beneficial by both producers and consumers.

Fallacy 11: Consumers of information are being ripped off repeatedly

This fallacy claims that consumers are unaware that the media they repeatedly purchase at specialty stores is limited in rights, despite the declaration of copyright being explicitly inscribed on the product they are purchasing, and that they have not entered into an agreement with the intellectual property owner that limits their copy rights. However this does not entitle the consumers to appropriate the information for themselves, if in fact they have not reached a contractual agreement with the intellectual property owner. The intellectual property owner has not conceded any of his rights because consumers are confused about their purchase. All it entitles them to do is to return the media and perhaps claim a refund, and of course we would expect those cheated consumers never to again make the mistake of purchasing limited-rights media.

Since consumers continue to purchase and consume limited-rights media in enormous quantities, then we can only assume that they do agree with the limitations of the goods they are purchasing and are aware that these limitations are to their benefit as consumers of information in the free market.

Fallacy 12: We cannot know that all instances of media have been protected by copyright, therefore counterfeiters are presumed innocent

As stated before, in order for someone to legitimately come into possession of scarce information, he must first have a contractual relation with the producer of this information. Therefore, if someone is accused of breaking a copyright, he must demonstrate and provide a witness to the fact that his contractual relation to the intellectual property owner was not limited by copyright. If he cannot demonstrate any contractual relation having been concluded, he is necessarily a violator of property.

Fallacy 13: We might miraculously be able to independently produce identical information, therefore counterfeiters are presumed innocent

This is an argument from miracle, and obviously does not enter a rational discourse on the legality of intellectual property, as a counterfeiter would have to provide evidence of a miracle in order to escape an accusation of counterfeiting unique information, just as a thief who uses the excuse of a miraculous possession of a car identical to the one coincidentally robbed from a property owner would have to prove the miracle to get away.

Fallacy 14: Third world countries do not enforce IP laws

Whatever this has to do with the legitimacy and economic benefit of IP is unclear. Third world countries are guilty of many violations of property, which is why they remain third world countries instead of becoming advanced industrial civilizations with capitalist enterprise. They would greatly benefit from adopting IP laws, as they could develop their own information producing industries for export, engaging in the global division of labor and benefiting greatly from their new wealth.

Fallacy 15: Property must be rivalrous

This fallacy is behind both intellectual communism and fractional reserve banking. If we admit rivalry as a necessary condition for property, privacy becomes impossible and, in fact, any exclusion or exclusivity becomes impossible. Based on this notion, fractional reserve bankers lend deposits that they do not own on the pretense that their depositors are not using them. Based on this notion, it is impossible to create a club with a limited membership.

It suffices to say that there is no history of the principle of rivalry to be found in the literature of classical liberalism on the subject of property. Property is an economic institution whose purpose is to secure goods for the individual.

But let’s suppose that rivalry is a valid pre-condition for property rights. Is information non-rivalrous? You can in fact create a copy without consuming someone else’s copy, hence it seems to be miraculously non-scarce. But consider what the creator intended to create when he invested in his information – it is not an unlimited supply of copies, but the potential of distribution of copies that rewards his investments. Each information good, whether a movie, a software package or a book, has a potential for distribution – once a copy has been distributed to someone and he has consumed the information in it, the potential for that distribution is exhausted. This is analogous to an oil field, where prospecting the oil field requires risky investment, while exploitation is quite cheap. If multiple exploiters are allowed to tap the oil field concurrently, there will of course be more immediate barrels of oil distributed on the surface, but the potential of the oil field will exhaust much more rapidly (each exploiter will employ technologies that increase the rate of extraction at the expense of the oil field’s potential in order to beat the others to the race), thus reducing the full long-term potential of the oil field. Focusing back to intellectual property, we see that when movie bootleggers record and distribute a theater release recorded on handheld cameras they are distributing a copy of lower value than what the creator intended, producing less enjoyment in the consumer while eliminating the distribution potential for the property that the owner won’t get back.

By reducing the potential of intellectual properties, pirates reduce investments in the prospecting of new intellectual properties and wreck economic growth and capital accumulation.

Thus we see that intellectual property is in fact rivalrous, although the intellectual communists do not understand the capital aspect of it and refuse to consider its existence.

Fallacy 16: Costless replication technology will create a world of unlimited non-scarcity

As volumetric printers become common and we approach the civilization depicted in The Diamond Age, this fallacy becomes more attractive. However, as Neal Stephenson depicts it, the division between owned information and open source information will continue much as it did today, using very simple techniques.

Free goods will always exist, but some providers will deliberately create closed systems which will allow the private ownership of software. This software will be higher quality due to better capitalization. For example, Apple’s iPhone software distribution system relies on a locked model of selling “apps” through the device’s strictly-controlled software marketplace. This has both made the iPhone as hardware a commercial success and created a large consumer software market where none existed before.

Stephenson’s nano-technological replicators have the same model underlying them. Large corporations provide you the technology and earn profits by creating a marketplace for software goods that can be replicated within it, with some goods being free but many being sold at a premium. (This makes Stephenson a visionary who predicted the modern app store.)

Fallacy 17: Intellectual property relies on state privilege and protection

Intellectual property owners are perfectly capable of seeking out and destroying counterfeit copies of their property, much as they can provide for the protection of any of their rights. It is the state that prevents them from doing so and protects pirates.

In fact, the economics of intellectual communism makes it impossible for it to exist in an anarcho-capitalist society as dreamed by these very same libertarian intellectual communists. For capitalist courts to provide protection to counterfeiters against intellectual property owners, the value the counterfeiters derive from counterfeiting must be great enough for them to justify purchasing protection in excess of the value intellectual property owners derive from purchasing protection on the exclusivity of their property. Because the acts of counterfeiters demonstrate how little they value the property they are counterfeiting, they would never actually purchase any protection against intellectual property owners. Intellectual property rights, from the fact that they create value, would become the law globally.

This implies that it is only under the state, and more likely an ideologically communist democratic state, that counterfeiters can obtain any protection at all! In any other, their operations must remain at the margins of obscurity.

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