The Ethics of Piracy

I’ve been reading Intellectual Property is Common Property by Andreas Van Gunten over the last couple of weeks and it has seriously challenged many of my intuitions on the topic of piracy and intellectual property. Specifically, its been making me think about the ethics of piracy from my utilitarian and consequentialist perspective and where it fits exactly in my moral framework. I’ll be sharing those thoughts here. First, what is piracy? Let’s look at some modern definitions:

the unauthorized use of anothers production, invention, or conception especially in infringement of a copyright – Merriam Webster

the unauthorized reproduction or use of a copyrighted book, recording, television program, patented invention, trademarked product, etc. – Dictionary.com

I think a good place to begin is to question whether or not piracy is identical to theft. Theft is universally perceived as morally wrong for reasons we will soon explore. By comparing the two, we can gather insight into why we may or may not think piracy is morally equivalent. However, even if it is true that piracy is not equivalent to theft in every respect, logically it does not follow that piracy is morally unproblematic. This is important to keep in mind.

Why is it that humans universally perceive theft as morally wrong? From a utilitarian and consequentialist perspective this is because of the harm it causes through an immediate loss of value. If I were to steal a shovel from a shed, the owner of that shovel could no longer use it. The shovel can only be owned and used by one person at a time. Therefore by depriving the owner of their possession and their ability to use the shovel- I’ve clearly harmed them.

In economics, goods that can be used by only one consumer at a time are called rivalrous goods. Rivalrous goods are almost always tangible and will have either durable or non durable characteristics. The shovel in my previous example would be an example of a durable rivalrous good. Likewise an apple would be an example of a non durable rivalrous good because once an apple is eaten it is “used up” and can no longer be eaten by others.  There are also some examples of non-tangible goods that are rivalrous- notably domain names and radio bands. When people refer to theft they almost always mean the theft of rivalrous goods.

However, there are also non-rivalrous goods that exist where the cost of providing the good to an additional individual is zero. For example, Broadcast television is a non rival good because when a consumer turns on a TV set, this does not prevent the TV in another consumer’s house from working. Other examples of non-rival goods include scenic views, cinemas, national defense, clean air, street lights, and most notably intellectual property. When asking whether piracy is identical to theft, there’s another underlying question: Can non-rival goods be stolen?

https://sites.google.com/site/microeconomicsreview/_/rsrc/1296342336865/public-and-private/Chart.jpgImage via wikipedia

As Andreas Van Gunten explains in Chapter 2:

“A text in a book or a painting on a canvas are only rival-goods in the sense that the physical manifestation of the expression cannot be consumed more than once at any given time. The expression itself is non-rival. It can be consumed by many people at the same time as long as sufficient copies of the expression exist. The proponents of the current copyright system argue that the justification of intellectual property shares the same moral grounds as the justification of physical property.13 But only the physical medium has a rivalry character comparable to the physical goods by which control rights may be justified. As soon as the copying of the expression, which is what copyright law protects, does not need a physical medium anymore, which means that it can be done at zero or near zero cost, it loses its rivalry character. In other words, copying is not stealing, as the proponents of intellectual property rights try to convince us.

A printed book for example can only be read by one person at a time.14 If someone takes the book away from its owner, he can now read it and the original owner cannot. What we have here are the typical characteristics of a rival-good where the postulation of control rights may make some sense. But this changes completely as soon as a digital representation of the expression is available. In this case this would be an E-Book file or a website with the same text on it. If I possess an E-Book or have access to text on the World Wide Web, I am not limited in my enjoyment of the expression when someone else makes a copy and reads the text as well. As soon as the expression is no longer bound to a physical medium, and its manifestation is realised in a digital representation, the marginal costs for the second and subsequent copies are nearly zero and therefore it loses its rivalry character and its scarcity.”

So to answer the question: Can non-rival goods be stolen? The answer is no. However, non-rival transactions still seem to have the possibility of being unjust and morally problematic. Interestingly enough, this seems to be particularly true if the systems in place are unable to efficiently regulate and organize non-rival good distribution. In the same way, piracy is not identical to theft, but it can still cause harm to the producers of non-rival information goods because of the free rider problem.

If we were to accept these conclusions, it would seem to me that there would be multiple levels to piracy with different ethical implications. Consider the following four scenarios:

  1. Consume copyrighted movie without permission for private use
  2. Consume copyrighted movie without permission and edit the content for private use
  3. Consume copyrighted movie without permission, edit the content and share for public use
  4. Consume copyrighted movie without permission and share for public use

In each of these scenarios we are consuming copyrighted content without permission. The variables at play here are private vs public and edited vs original. Interesting to note is that scenarios 2 and 3 are actually legal in many cases under fair use in the United States, while the others are not. The mere act of editing copyrighted content makes it “fair.” Nevertheless, from an ethical standpoint scenarios 2 and 3 are ethically equivalent to scenario 1. Scenario 4 in contrast could be argued to be ethically worse for encouraging more piracy because it is sharing the original content with the public. Thus leading to a greater free rider problem.

At a deeper level, what we are really talking about when discussing the ethics of piracy is whether or not “intellectual property” is legitimate. If it is not legitimate- as Andreas Van Gunten asserts in his book- then it can be argued that piracy is simply a way of spreading creative works and increasing human innovation. Indeed, piracy could very well be a a neutral or ethical act.

My aim is not to try to solve these fundamental problems but to show that a society where intellectual property is common property has a better chance to prosper, independently of the question whether its basic values are more libertarian or more egalitarian. The premise is that the more cultural artefacts and the more scientific ideas are developed and produced, and the more freely human communication can happen, the more sustainable a society grows. This is the classical liberal argument for freedom of speech.Intellectual Property is Common Property, Andreas Van Gunten

If one accepts Guntens premise that in a society where intellectual property is common property and “more cultural artefacts and the more scientific ideas are developed and produced, and the more freely human communication can happen, the more sustainable a society grows,” then this is a society we ought to strive for from a utilitarian perspective.

Nevertheless, I can sympathize with those that are skeptical of Guntens views. They appear counter intuitive to many given the ingrained cultural status quo on copyright, patents, and other property laws. Furthermore, it may very well be the case that “possessing” intellectual property individually leads to a more prosperous society than one unable to do this. I remain agnostic.

Whatever your beliefs, I highly recommend checking out Guntens work. Piracy will continue to remain an interesting ethical question- one that is volatile to a technological environment and the laws we set in motion. Let’s see where it goes.

Advertisements

The Paradox of Free Markets

No individual has had a greater influence on economic policy than Adam Smith. Smith laid the foundations of classical free market theory and most notably conceptualized the idea that profit maximizing firms interacting with rational consumers in competitive markets lead to prosperous societies. [1] For this reason, Smith is frequently celebrated by free market fundamentalists as a champion of Laissez-faire capitalism.

However, despite what his contemporary followers claim, Smith recognized the limitations of the market and the necessity of government:

“According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings: first, the duty of protecting the society from violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain public works and certain public institutions which it can never be for the interest of any individual, or small number of individuals, to erect and maintain; because the profit could never repay the expense to any individual or small number of individuals, though it may frequently do much more than repay it to a great society.”- Adam Smith IV.9.51

Smith believed that it was essential for government to provide certain goods like infrastructure, banking and education because they provided the foundation in which markets could flourish. Nevertheless, Smith recognized the danger of government when their authority was used only to benefit a small number of individuals. Indeed, Smith warned again and again of the collusive nature of business interests, the formation of cabals or monopolies, and the political power this gives to the richest members of society:

“It is in the age of shepherds, in the second period of society, that the inequality of fortune first begins to take place, and introduces among men a degree of authority and subordination which could not possibly exist before. It thereby introduces some degree of that civil government which is indispensably necessary for its own preservation: and it seems to do this naturally, and even independent of the consideration of that necessity. The consideration of that necessity comes no doubt afterwards to contribute very much to maintain and secure that authority and subordination. The rich, in particular, are necessarily interested to support that order of things which can alone secure them in the possession of their own advantages. Men of inferior wealth combine to defend those of superior wealth in the possession of their property, in order that men of superior wealth may combine to defend them in the possession of theirs. All the inferior shepherds and herdsmen feel that the security of their own herds and flocks depends upon the security of those of the great shepherd or herdsman; that the maintenance of their lesser authority depends upon that of his greater authority, and that upon their subordination to him depends his power of keeping their inferiors in subordination to them. They constitute a sort of little nobility, who feel themselves interested to defend the property and to support the authority of their own little sovereign in order that he may be able to defend their property and to support their authority. Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”Adam Smith V.1.55

What Smith is describing here is the foundation of corporatism. Simply put, corporatism is the control of the state by the richest interest groups. In practice, corporations will lobby the government for things like subsidies and profit reducing regulations. Free market fundamentalists will often call this level of conspiracy “crony capitalism.” They argue that by simply reducing government size that the “free market” will naturally resolve this issue. This, however, is a misguided fantasy with no factual basis in history.

Before we go any further we must identify what a “free market” actually is, or at the very least, try to understand what it implies. Let’s look at some modern dictionary definitions:

“An economic market or system in which prices are based on competition among private businesses and not controlled by a government.” – Merriam Webster

“Business governed by the laws of supply and demand, not restrained by government interference, regulation or subsidy.” – Investor Words

“An economic system in which prices and wages are determined by unrestricted competition between businesses, without government regulation or fear of monopolies.” Dictionary.com

Today, the term “free market” is often defined as a market without government regulation. Implicit in this definition is that buyers and sellers would have “prices based on competition”, markets would follow the “laws of supply and demand”, and economic activity would be “unrestricted.” Immediately we can see contradictions in this concept.

The following excerpt from Understanding Capitalism demonstrates this quite concisely:

“Without government interference there is nothing to prevent interference, restriction, and subsidy by the mafia, an activity for which we have real world examples. Without government interference there is nothing to prevent the erection of barriers to free transaction, used either to extract rents, to marginalize competition, or to punish groups of people based on any number of criteria such as race, religion, gender, etc. Furthermore, there are any number of ways in which non-governmental entities can implement rules and regulations which distort the laws of supply and demand, a classic example being the National Football League’s imposition of salary caps and profit sharing across organizations.” R.G. Price, Understanding Capitalism

So here we have a paradox. Without the government imposing rules on the market, there is nothing to stop the “free market” from restricting itself from the next powerful authority. There are countless examples of the “free market” distorting itself. To name a few:

Coca Cola paying retailers to eliminate competition

Ticketmaster obtaining exclusive contracts with venues

F.W. Woolworth discriminating against black customers

Japanese citizens erecting barriers to trade and charging tolls for the transport of goods

In each of these cases we see private actors take action to subvert the “laws of supply and demand,” distort “prices based on competition” or prevent people from transacting freely in an “unrestricted” market without any coercion from government forces. Indeed, it was the implementation of government regulation that ultimately led to a freer market in these cases.

To conclude, Smiths analysis of free markets provides a solid foundation for creating a prosperous society. However, free markets ≠ no government regulation. A freed market must have limited, but smart regulations towards the highest concentrations of capital. It must also account for externalities. And ideally, the freed market would be one that redistributes its capital to all its citizens, but I’ll save those thoughts for another time.