Scarcity – Does it Prove Intellectual Property is Unjustified?
A number of scholars have suggested that the logical basis for tangible property rights is scarcity. Property rights efficiently allocate these resources and avoid conflicts between competing rights of individuals. These scholars argue that ideas and invention are not subject to scarcity and therefore intellectual property rights should not exist. These arguments seem to be particularly prevalent among Libertarians, including the Cato Institute and Von Mises Institute, and the open source community.
Tangible property rights include real property rights in land and buildings and personal property rights in things like cars and furniture. Tangible or physical property is scarce since it can only be owned by one person at a time and it takes resources to create. Intangible or intellectual property such as patents and copyrights, and software in the case of the open source community, is not scarce according to this theory. Intangible property can be owned by multiple people without excluding others from the same property. According to Tom G. Palmer a proponent of the scarcity theory of property:
It is this scarcity that gives rise to property rights. Intellectual property rights, however, do not rest on a natural scarcity of goods, but on an “artificial, self created scarcity.”
Scarcity is not the historical or logical basis of private property rights. The historical justification of property rights are based on the right that a person owns himself. If you do not own yourself, you are a slave. If you own yourself then you own the fruits of your labor, physical and mental. This is commonly referred to the “natural rights labor theory of property.”
In the pre-capitalist eras, private property existed de facto, but not de jure, i.e., by custom and sufferance, not by right or by law. In law and in principle, all property belonged to the head of the tribe, the king, and was held only by his permission, which could be revoked at any time, at his pleasure. (The king could and did expropriate the estates of recalcitrant noblemen throughout the course of Europe’s history.)
The labor theory of property provided the foundation of property rights as opposed to property as a custom. As a result, the scholars who suggest that property rights are based on scarcity are incorrect historically.
Despite this historical inaccuracy, perhaps “scarcity” is a better theoretical framework for the justification of property rights. The natural rights labor theory of property explains why slavery is immoral. If you own yourself, then no one else has the right to own you. It also explains why murder and manslaughter are immoral, why stealing is immoral, why assault and battery are immoral and why we have laws against all these actions. The natural rights labor theory defines how property should be allocated and how people come into possession of property morally and legally. The labor theory explains all of our basic criminal law and all of our basic property laws. What does scarcity explain? It offers no justification for why slavery, murder, manslaughter, assault and batter and theft are immoral, except that they are inefficient at allocating resources. Thus, all of these crimes would be allowed if they were efficient at allocating resources. Scarcity does not explain who has ownership in property or why they should have ownership in property. It merely explains that private property ownership is an efficient manner in allocating scarce resources.
In science, the theory that has the greatest ability to explain the widest number of facts is considered to be the correct or better theory. Here the “scarcity” theory of private property requires the additional assumption that it is preferable to have efficient allocation of resources. However, it fails to explain how the resource should be initially distributed, it does not explain how property law determines ownership and has no power to explain criminal law. Trading scarcity for the labor theory of property is like trading the theory that “what goes up must come down” for Newton’s Law of gravity. The fact of the matter is that the proponents of scarcity have confused cause with effect. A system of private property results in efficient allocation of resource, but it is not the reason for private property – it is the effect of private property.
 Kinsella, Stephen, Against Intellectual Property and Palmer, Tom G., “Are Patents and Copyright Morally Justified? The Philosophy of Property Rights and Ideal Objects”, Harvard Journal of Law & Public Policy, Vol. 13, No. 3, Summer 1990, pp. 817- 865.
 Palmer, Tom G., “Are Patents and Copyright Morally Justified? The Philosophy of Property Rights and Ideal Objects”, Harvard Journal of Law & Public Policy, Vol. 13, No. 3, Summer 1990, p. 865.
 Rand, Ayn, Capitalism the Unknown Ideal, The New American Library, 1962, p. 13.
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