Loading More into the Shopping Cart

Jim DeLong has responded to comments on his shopping cart analogy – the idea that copying intellectual property is like taking a shopping cart – by pointing out that the marginal cost of producing a shopping cart is very low, just like the marginal cost of producing intellectual goods. His conclusion: the distinction between physical goods and intellectual goods is “one of degree, and often a slight one.”

Jim has not identified who has missed his point, and IPCentral doesn’t publish comments, so I’m going to assume that he’s responding to the posts and comments here on TLF.

The distinction I made between intellectual and physical goods in my long and windy post comes at a more basic level. I explored why property rights originate in the first place. In tangible goods, property rights exist to prevent conflict in the context of scarcity. In intellectual goods, property rights exist to prevent conflict in the context of abundance.

And we should be entirely clear that intellectual goods are abundant. Your computer has copied this post so that you could read it. Doing so has rendered no one less able to do so. Loading it from servers I theoretically pay for cost me a wee bit, but if you were to cut and paste this text, you could reproduce it at zero cost to its original producer/owner. Try doing that with a shopping cart! There is a difference between “tending toward zero” and “zero” – a difference of kind, not degree.

It could be that Jim D. is wedding intellectual and tangible property through a new theory: property rights arise as a natural consequence of things being produced from other things at marginal cost. This mixes the roots of property rights in natural justice with the economics of production, and I think it’s unworkable, but if that’s a theory he wants to defend . . . .

More likely, Jim is appealing to the unfairness of expensive pieces of intellectual property being stolen. I agree that violating copyrights is wrong, but I’m not sure that the marginal theory of value applies well in the intellectual property environment. Indeed, the copyright/patent clause in the constitution seems to call mostly for application of the labor theory of value. We should reward creators in amounts that promote the progress of science and useful arts.

Finding the level of reward that does this is difficult, but abandoning the task and adopting the marginal theory of value would probably reduce welfare compared to a regime that judiciously rewards creativity. It is my opinion that allowing the “Rambo” franchise to transfer more than a billion dollars from consumers to producers was wrong when consumers could have gotten the same value, and possibly much more, at half the price.

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