As a lecturer of ECN101 at USFQ, Ecuador, I regularly take my students through all the basic tenets of Economic Science. Of course, I have a primordially Austrian approach, but I make sure to give them an overview of the current debates among schools of thought and even within them (did someone say Bizantine arguments ad infinitum?)

Using Googlegroups, I use the email list format to discuss any and all subjects, and last night it was IP’s turn (i.e. so-called “intellectual property”).

After watching this one minute video, the immediate reaction was rejection, followed by two questions I find of interest to TLS readers.

1.- Does copying mean I can plagiarize or make fakes of arts and crafts?

2.- How about the effort the creator puts into his/her work? Doesn’t a copy make the original loose value?

To which I answer through some thoughts on IP in an attempt to answer both questions and discuss some additional angles of the “IP problem”.

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The commonly used example of “wrong” copying is movies. But the very same person will have replicas of Rembrandt at home without even noticing the irony of the situation. As a matter of fact people can clearly distinguish between original/legit watches and fakes, and the same goes for anything else. The reason we prefer originals brands is because it ensures quality meaning a sense of authenticity and/or flawlessness that comes from a direct relationship to the brand. And we all know how to buy originals: find a vendor you trust. Preferably, one authorized (perhaps exclusively for a geographical zone) by the producer itself.

When we imitate other people’s behavior (what pyschologists call “modelling”) we know it’s not real (from within) yet it may be a necessary step in personal growth. We grow up imitating. Then, we can modify and create.

So to begin with, we’re all cultural imitators. The amount of work that goes into creating a dance step, recipe or social rite has never in the past precluded people from imitating it faster. Learning implies by necessity a time-saving process where the student uses less time and trial&error (what we call the “learning curve”) to achieve the same. But the teacher does not charge for the content. He charges for his performance. The libraries have always been there for centuries gathering dust, yet we prefer to learn from someone in a structured, stimulating way.

So, to set an arbitrary line and say “now” or “from this point on” what are cultural patterns (copyright over dance steps), painting techniques or styles (aprentices of Manet or Kingman were paid to copy the style to perfection so he sold them under his name), writing styles (ghost writers, fan fiction, fan movies) is a further step down the path of foolishness.

But ok, what about commercial products. They are produced, after all, with the intention of profiting from their sale. But see, we have three components here: production, intention and sales. Some ideas never go into production or are underproduced to benefit producers with high(er) prices at the “expense” of consumers. Some goods are produced without an intention to sell them or with characteristics that render them commercially worthless. And finally, sales are not a certain result of attempts to sell. But in the market as much as in sports, it is neither conception, intention or trying that which wins over the public and serves it better. A long run of score-less matches will scare away most sports fans, in the same way that attempts to sell us things waste our time and patience if they don’t turn into real sales.

So, as we see, it’s not effort but results that which counts in generating welfare for our chosen public. In other words, it’s not effort but sales that which generates income in the division-of-labor. Sales. So it’s quite evident to me that if an inventor doesn’t find a way to hit the market first (remember, the market is a metaphor incarnated in a network of property title exchanges) it’s not only fair but good for mankind that others do serve the public with attractive products derived from his invention, design or recipe.

This of course has nothing to do with fraud and plagiarism. Claiming a Picasso is original when it isn’t or claiming you wrote “A Hundred Years of Solitude” is clearly deceiving. It has to be punished by the legal system but even if it isn’t, the market itself has exclusion, bad reputation and boycott mechanisms used all the time. And they would be even more intensively used if the State didn’t provide us with a fake sensation of security in that (and dozens of others) field. But a replica, a cd copy, an mp3 handed over to you is a very different thing. It takes nothing from the producer, and the only one who gets less value (if that is the case at all) than when buying original is yourself.

Last but not least: the fakes do not decrease the sales of the original good. They don’t in the absolute sense whenever both were available to be chosen instead of the other, but they don’t in the relative sense either: a bad pricing policy for lower income segments or regions of the world should always be blamed on the seller, not the unwilling customer. If Microsoft sold Windows 7 in low monthly installments in Latin America, the trend would start to change towards having the company’s support and other original product advantages. The same goes for $18 usd music albums from Virgin when besides a pretty box, there’s no profit (like memorabilia or a poster or anything of the sort) in not having just the mp3 version.

To those companies I say: Give us enough value for the price you ask, and we will prefer you over pirates. Meanwhile, piracy is your best ally or you would never know how badly you’re handling it all.