indessed roscivs

(Continuing yesterday’s post.)

Another important difference between physical and intellectual property from the utilitarian standpoint is what I call the “public domain trade-off”. If every patentable or copyrightable idea or work from the beginning of time was patented or copyrighted, with no time limits or expirations, it would be nearly impossible to create new non-infringing works. Nearly everything we see today, from Disney’s Little Mermaid to The Toys’ “Lover’s Concerto” would be derivative works of at least one, if not more, previous creations. And it’s not just a simple matter of finding the copyright owner (perhaps Bach’s great-great-grandnephew) and licensing their content, which would already be prohibitive for most authors and creators. If your work derives from multiple different works, this requires the agreement, cooperation, and licensing of all of them in order for your work to be legal.

Physical property has no such trade-off. When I create a new piece of physical property, I know exactly what other physical property I need to purchase in order to create the new piece, the purchase is a one-time transaction that requires no further records or maintainance, and I can’t accidentally fail to realize that I need something additional to complete my work legally but obtain the physical item anyway. (At least, I have never heard of “accidental theft” being used as an excuse for physical property violations.) It’s simply not a difficult matter to create new, non-infringing physical items, even if every physical item on the planet is privately owned.

But the most vital and most important difference between physical property and intellectual property is the marginal cost of production. According to economic theory, the market price of a good is exactly equal to the marginal cost of production, given a perfectly competitive market. This means that very elastic^[2] goods, such as wheat or beans or generic widgets, are sold for nearly exactly what it costs to make another one, package it up, and get it to you.

The marginal cost of production for copyrighted works, especially in the digital age, is very, very close to zero. Once you have created the work, it costs nearly nothing to make another copy of it. Whereas physical goods require work, labor, and resources to make more of them (they are intrinsically scarce) intellectual works are trivially duplicatable, intrinsically plentiful. Because it’s so easy to make copies (and therefore difficult to exclude people from enjoying the creative work) economists call this a “non-excludable” good. Furthermore, while physical goods are “rival” (to use another economic term)—meaning that if I’m currently using a shovel or a truck or a house, you can’t be simultaneously using that object—creative works are almost always “non-rival”. My having a copy of a song, or a book, or a poem, doesn’t affect your ability to enjoy it.

Economists call things like this—both non-rival and non-excludable—”public goods”. The problem from a utilitarian perspective isn’t trying to produce enough for everyone to have, as it is with physical goods. That’s trivially easy for creative works. The problem is in encouraging people to create new works. Why would I spend my time writing a novel or composing a symphony if I can only sell it for the marginal cost (i.e. nothing)? I’d rather spend my time and effort on physical labor that will reap real monetary rewards.

There are a lot of solutions to the general problem of public goods (also called “the free-rider problem”), and a good list can be found at Wikipedia: http://en.wikipedia.org/wiki/Public_good#Possible_solutions. Note that “Legislated exclusion,” or the system we have today with copyrights, is only one possible solution. Many others are possible, and in my opinion should be more thoroughly explored.

But whatever the solution, the important thing is to realize that creative works are fundamentally different from physical goods, and thus should have (and have had, in every society in history, including this one) a significantly different set of laws governing their creation and duplication.

This entry was posted on Wednesday, October 3rd, 2007 at 8:26 pm and is filed under politics, philosophy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.