Against Intellectual Monopoly

might ask, Is it true that legal grants of monopoly serve to promote the
progress of science and the useful arts?
    Certainly common sense suggests that they should. How are musicians
to make a living if the moment they perform their music, everyone else can
copy and give it away for free? Why would the large corporations pay small
inventors when they can simply take their ideas? It is hard to imagine life
without the Internet, and today we are all jet-setters. Is not the explosion of
creativity and invention unleashed since the writing of the U.S. Constitution
a testimony to the powerful benefit of "intellectual property"? Would not
the world without patent and copyright be a sad, cold world, empty of new
music and of marvelous new inventions?
    So, the first question we will pose is, What might the world be like
without intellectual monopoly? Patents and copyrights have not secured
monopolies on all ideas at all times. It is natural, then, to examine times and industries in which legal protection for ideas has not been available to
see whether innovation and creativity were thriving or were stifled. It is the
case, for example, that neither the Internet nor the jet engine was invented in
hopes of securing exclusive rights. In fact, we ordinarily think of innovative
monopoly as an oxymoron. We shall see that when monopoly over ideas is
absent, competition is fierce - and that, as a result, innovation and creativity
thrive. Whatever a world without patents and copyrights would be like, it
would not be a world devoid of great new music and beneficial new drugs.

    You will gather by now that we are skeptical of monopoly - as are
economists in general. Our second topic will be an examination of the
many social costs created by copyrights and patents. Adam Smith - a friend
and teacher of James Watt - was one of the first economists to explain how
monopolies make less available at a higher price. In some cases, such as
the production of music, this may not be a great social evil; in other cases,
such as the availability of AIDS drugs, it may be a very great evil indeed.
However, as we shall see, low availability and high price is only one of the
many costs of monopoly. The example of James Watt is a case in point: by
making use of the legal system, he inhibited competition and prevented his
competitors from introducing useful new advances. We shall also see that
because there are no countervailing market forces, government-enforced
monopolies such as intellectual monopoly are particularly problematic.
    Although monopoly may be evil, and although innovation may thrive in
the absence of traditional legal protections such as patents and copyrights,
it may be that patents and copyrights serve to increase innovation. The
presumption in the U.S. Constitution is that they do, and that the benefits
of more entertainment and more innovation outweigh the costs of these
monopolies. Certainly the monopolies created by patents and copyright
may be troublesome - but if that is the cost of having blockbuster movies,
automobiles, and flu vaccine, most of us are prepared to put up with it. That
is the position traditionally taken by economists, most of whom support
patents and copyright, at least in principle. Some of them take the view that
intellectual monopoly is an unavoidable evil if we are to have any innovation
at all; other simply argue that at least some modest amount of intellectual
monopoly is desirable to provide adequate incentive for innovation and
creation. Our third topic will be an examination of the theoretical arguments
supporting intellectual monopoly, as well as counterarguments about why
intellectual monopoly may hurt rather than foster creative activity.
    It is crucial to recognize that intellectual monopoly is a double-edged
sword. The rewards to innovative effort are certainly greater if success is
awarded a government monopoly. But the existence of monopolies also increases the cost of creation. In one extreme case, a movie that cost $218 to
make had to pay $400,000 for the music rights.19 As we will argue at length,
theoretical arguments alone cannot tell us whether intellectual monopoly
increases or decreases creative activity.

    In the final analysis, the only justification for "intellectual property" is
that it increases - de facto and substantially - innovation and creation.
What have the last 219 years taught us? Our final topic is an examination
of the