Saturday, October 3, 2009

Patents: tools of state socialism

the following reasoning is met with deafening silence at IP Watchdog, where clueless patent attorneys accuse me of socialism, communism, etc...

How are patents a free market device? Shouldn’t capitalism embrace free markets? My love for free markets is what drives me to hate patents, since they skew markets, are a state-granted privilege accorded for no better reason than beating someone else to filing something with bureaucrats, and inhibit free, unfettered competition, which is what capitalism ought to encourage rather than hinder.

Patents are more socialist than capitalist. They get the state into the business of marketplaces, of determining what technologies ought to succeed or fail, of boosting patented tech over non-patented tech, rather than encouraging the market to select for the best products and drive pricing. It’s a lot closer to five-year plans than what I envision, which is a market without any state involvement at all.

6 comments:

Lex said...

David, you need to work on the proper boundaries between and among corporate entities and human entities. Libertarians conflate the two and so they see no issue with granting patents to corporations as though they were individual entrepreneurs with conscience. Scale enables modern corporate structures to overwhelm all competitors, rather like the monsters of our science fictions. I think the socialism/capitalism issue is only a cause for shouting now from true believer to true believer, and needs to be replaced with a more thoughtful discussion about scale. Any sane person is a capitalist up to a certain scale. Any sane person also fears corporate power when it is unchecked. Two more cents for the marketplace.

drkoepsell said...

Well, some libertarians I know do not conflate the two, but I don't. I actually consider laws that allow corporations to exist aspersons to be just as harmful as laws that enable anyone to monopolize expressions of various sorts (IP laws). I actually consider myself an anarchist, not a libertarian, since I find Libertarians do often contradict themselves in granting too much to "corporate" entities. I will grant you the point about scale, and would suggest that without the cover of the corporate/oligarchic state, business would be conducted at a much more human scale, and thus more fairly. Natural monopolies, when they arise, are much more vulnerable than are state-suported monopolies.

Lex said...

Now you're talkin'! That helps to explain why civil libertarians can be so wrong sometimes, too (the "free speech protections for corporate entities"). The trouble with government is that it too has become more "corporate" in a vicious feedback loop. Sorry, I'll quiet down now.

drkoepsell said...

No, please, I always benefit from you contributions, they always help me clarify. Don't quiet down, ever!

nonsequitur said...

Patent law fills a gap in the market. Let's say you spend millions of dollars in research and development to create a product, but that product is easily reproducible. Someone else sees the product and thinks it's a good business idea, so they create the same product, thus putting it in direct competition with the original. The problem is the free-rider did not suffer the costs of R&D, so they can offer it much cheaper than the inventor, thus pricing the inventor out of the market. So where is the incentive to create if free-riders will jack your invention before you can recoup your costs of innovation? Patent law grants a LIMITED monopoly. When the patent expires, competition is spurred in a market that likely would not have existed but for the patent. In the short term is it anticompetitive, but in the long term it is competitive. Monopolies exist in a free market. Your flaw is that you believe a free-market will always be competitive, but it isn't. The key is competition. I am also a libertarian and think we should be as hands off as possible, but it doesn't mean abandoning common sense.

Some of you are arguing that Libertarians are wrong as exemplified by corporatism. However, that is not a symptom of free markets, that is a symptom of large government. The more power government has, the more corporate entities will be attracted to that power for anticompetitive purposes. One thing that is interesting about antitrust law is that corporations aren't allowed to engage in certain behavior because it is anticompetitive, but it is perfectly legal to engage the government to perform such anticompetitive behavior on your behalf. If there is no power source in the government, crony capitalism would not exist.

drkoepsell said...

no one is obliged to "suffer" the costs of R&D. In a free market, people take risks because they hope to recoup their investments and profit. In a free market, no government ensures against such a risk, nor should it. Market forces should govern the success or failure of risky behaviors. It is not the state's role to "incentivise" innovation, unless you believe in five-year plans, etc. I have no problem with natural monopolies, gained through success in a free market. I have trouble with state-sponsored monopolies granted through bureaucracy rather than market success.