Against the Copyist’s Socialism (I): The Costume
Series, part one of three. The argument that intellectual property is illegitimate is sold as Austrian economics.
Series, part one of three. The argument that intellectual property is illegitimate is sold as Austrian economics. It is not. It is an anti-institutional anarchism wearing the costume — and the first thing to establish, before any economics, is that Mises and Hayek were not anarchists, and that “intangible, therefore not property” is a doctrine foreign to the school it claims
Keywords: intellectual property, Austrian economics, anarcho-capitalism, Ludwig von Mises, Friedrich Hayek, Stephan Kinsella, subjective value, human action, methodological subjectivism, limited government, rule of law, institutions, calculation, money, non-aggression principle, intangible property.
Abstract
The case against intellectual property advanced by Stephan Kinsella and allied anarchist writers presents itself as a continuation of Austrian economics — as though Mises and Hayek, had they only been consistent, would have reached the same abolitionist conclusion. This series argues that the presentation is false at the root, and this first essay establishes the ground for the two that follow. Austrian economics is not anarchism. Mises was not an anarchist; he held that the state is the indispensable social apparatus of coercion, and wrote in plain words that the anarchist overlooks the existence of people too narrow-minded or too weak to fit themselves to social life without it. Hayek was not an anarchist; his life’s work is a theory of the rule of law, evolved institutions, and the general rules of just conduct on which a free order depends. What the two opposed was socialism — the abolition of private ownership of the means of production, which destroys the price signals on which rational calculation depends — and interventionism, the substitution of command for market coordination. They did not hold, and their economics does not entail, that every right a state recognises is therefore an illegitimate privilege. The anti-IP argument takes that separate and distinctly anarchist premise — that state recognition taints — and grafts it onto the Austrian critique of socialism, then markets the hybrid as “Austrian.” It is a political graft attached after the fact. The graft is held together by four confusions: it mistakes tangibility for property (as though only kickable things can be owned, when land title, shares, debts, and money are all intangible and all owned); it mistakes state recognition for illegitimacy (as though law-backed means stolen, when all developed property requires law to exist at all); it mistakes copying for competition (as though reproducing a finished form were the same act as producing a rival one); and, the engine of the whole manoeuvre, it mistakes the Austrian opposition to socialism for an opposition to the state and to institutions as such. The deepest of these errors is the first, and it betrays an ignorance of what the Austrian school actually is. Austrian economics begins not with matter but with human action and subjective value: a thing becomes an economic means only through the operation of an acting mind, and, as Mises put it without qualification, economics is not about tangible material objects but about men, their meanings, and their actions. The entities the Austrian tradition treats as central to economic life — money as a social institution, the price as an information signal, credit, the company share, the contract, goodwill, the entrepreneur’s plan — are intangible to a one. The anti-IP argument accepts every one of them without protest and singles out only patents and copyright for the charge of unreality. That is not subjectivism applied with rigour. It is a preference, dressed as a principle, deciding in advance which intangibles are permitted to be property. The remaining essays develop the positive economics — Mises on external economies and the delimitation of property rights, and Hayek on the institutional order that makes markets possible — but the costume must come off first.
I. The fraud of calling anarchism “Austrian”
Begin with a distinction that the anti-IP literature works very hard to blur, because once it is drawn, the whole rhetorical edifice loses its foundation.
Austrian economics is not anarchism. It is a tradition of economic theory — the theory of human action, subjective value, marginal utility, economic calculation, capital structure, entrepreneurship, the business cycle, and the institutional preconditions of a market order. Its two towering twentieth-century figures, Ludwig von Mises and Friedrich Hayek, were not anti-state theorists. They were classical liberals who defended private property, sound money, freedom of contract, the rule of law, and a government limited in its powers but real in its existence. They opposed socialism with unmatched rigour — Mises’s demonstration that the abolition of private ownership of the means of production destroys the price signals on which rational calculation depends is the central achievement of the school — and they opposed the interventionist state that substitutes command for market coordination. What they did not do, and what their economics gives no warrant for doing, is to declare that every right protected by a state is, for that reason, an illegitimate privilege.
The modern anti-IP writer performs a sleight of hand at precisely this point. He takes the Austrian critique of socialism and interventionism — a critique of what the state does when it plans and commands — and he silently swaps it for an entirely separate doctrine: an anarchism that rejects the state as such, that treats every state-recognised legal institution as suspect, and that recognises no legitimate property beyond the physical integrity of a scarce resource. Then he presents the hybrid as the consistent terminus of Austrian thought, as though the economists had merely lacked the courage to follow their premises to the anarchist conclusion. This is not a development of Austrian economics. It is a graft — an anti-state political ideology spliced onto an economic tradition that never contained it, and then sold under the older name.
Figure 1. Two doctrines, one costume. The anti-IP anarchism shares with Austrian economics exactly one commitment — opposition to socialism — and is then dressed in its name.
The evidence that the two are distinct is not interpretive; it is on the page, in the economists’ own words, and the next section produces it. But state the indictment plainly first. The Austrian School did not teach that civilisation can run on slogans, private vengeance, and men shouting “non-aggression” over the ruins of title law. It taught that markets require property, calculation, contract, money, law, and institutions. The anarchist has every right to argue for a stateless order; what he has no right to do is to conscript Mises and Hayek into it, because they declined the conscription themselves, in print, repeatedly.
II. What Mises and Hayek actually held
Take Mises first, because the anti-IP writer most often invokes him, and because Mises addressed anarchism directly and rejected it.
Mises held that the state is the social apparatus of compulsion and coercion, that it holds the monopoly of violent action, and that it is indispensable — not a necessary evil to be abolished as soon as men are enlightened, but a permanent requirement of social cooperation. His refutation of the anarchist hope is characteristically blunt: the anarchist, he wrote, overlooks the undeniable fact that some people are either too narrow-minded or too weak to adjust themselves spontaneously to the conditions of social life, and that even granting every sane adult the capacity to grasp the benefits of cooperation, there remain the infants, the aged, and the insane. A society that wishes to preserve peace, on this view, must be prepared to crush those who break it, and the institution that does so is the state. This is not a grudging concession wrung from Mises by his critics. It is his settled position, stated in Human Action and elsewhere, and it is flatly incompatible with the claim that Misesian economics culminates in the rejection of the state and of state-recognised rights.
Hayek is, if anything, still more fatal to the anarchist misreading, because his entire mature project is a theory of the institutional order that anarchism dispenses with. Hayek’s themes are spontaneous order, the rule of law, the evolution of institutions, the general and abstract rules of just conduct, and the dispersed character of the knowledge that markets coordinate. His enemy was never order; it was planned command substituted for evolved order — the discretionary direction of resources by a central authority in place of the impersonal coordination achieved by general rules and market prices. Hayek’s account of coercion makes the point exactly: coercion occurs, he held, when one person’s actions are made to serve another’s will, for the other’s purposes rather than his own, and the function of a law-bound order is to minimise such coercion by subjecting everyone, the state included, to general rules known in advance. None of this is the abolition of law or of the state. It is the disciplining of the state by law. To read Hayek as an anarchist is to read the theorist of the rule of law as an opponent of rules.
So the foundational claim of the anti-IP literature — that it is carrying Austrian economics to its honest conclusion — is false in the most direct way a claim can be false: the authors it claims to follow held the opposite, and said so. Mises defended the state as indispensable. Hayek defended the rule of law as the precondition of freedom. Neither held that a right is illegitimate merely because a legal order recognises it; both held that legal order is what makes property and exchange possible at all. The anti-IP position does not extend their economics. It contradicts their politics and then borrows their prestige.
III. The claim, stated fairly
Before dismantling the argument across this series, set it out at its strongest, because a refutation that caricatures its target proves nothing.
The anti-IP argument runs as follows. Patents and copyright are artificial monopolies granted by the state. They invade tangible property, because they restrict what others may do with their own machines, their own paper, their own computers, their own servers and presses and laboratories: a patent tells me I may not arrange my metal into a certain shape; a copyright tells me I may not run my printing press to make certain marks on my paper. Information, moreover, is non-rival — your use of a formula does not deplete my use of it — and what is non-rival, the argument says, cannot sensibly be owned, because ownership is a device for allocating things that cannot be used by everyone at once. And copying does not dispossess: when I reproduce your book, you still have your book, every word of it, so nothing has been taken from you. From these premises the argument concludes that copyright and patent are not property at all but anti-property — privileges that invade the genuine, tangible property of others under colour of law.
The anarchist extension goes one step further, and it is this step that turns a debate about intellectual property into a debate about the foundations of all property. Because these rights depend on the state for their recognition and enforcement, the extension says, they are illegitimate; they are creatures of political power rather than of natural right. This is the move that should set off the alarm, because it is not really an argument about patents and copyright at all. It is a general principle about the relationship between legal recognition and legitimacy — and a principle with that shape, as the companion essays in this series will show, does not stay confined to intellectual property. It travels.
The argument depends, this series will argue, on four errors, and it is worth naming all four at the outset so the reader can watch each one operate.
Figure 2. The four confusions. Each is a category mistake; the fourth is the one that licenses the rest, by letting an anarchist politics ride under the name of an economic school.
The first three errors are the subject of the later essays: the institutional character of all property (which answers the tangibility and state-recognition confusions) and the difference between reproduction and rivalry (which answers the copying confusion). The fourth error is the one this opening essay exists to correct, and it is the load-bearing one, because it is what permits the other three to be presented as Austrian rather than as what they are. Remove the fourth confusion — insist that Austrian economics is a theory of markets and institutions and not a brief for anarchism — and the remaining three must stand on their own merits, stripped of the borrowed authority of Mises and Hayek. They do not survive the exposure, but that is the work of the essays to come. The work of this one is to take away the costume.
IV. Austrian economics begins with subjective value, not matter
There is a deeper reason the first confusion — tangibility with property — is not a careless slip but a betrayal of the very tradition the anti-IP writer claims, and it is worth dwelling on, because it inverts the relationship between Austrian economics and materialism.
Austrian economics is the least materialist of all the schools. It does not begin with matter, with physical quantities, with stocks of tangible goods. It begins with human action: with acting persons, their ends, the means they select, their knowledge, their expectations, their judgments under uncertainty. Value, in this tradition, is not a property embedded in things, the way mass or volume is embedded in things. Value is imputed — conferred on a thing by an acting mind that judges it useful for an end. A lump of matter is, in itself, merely a fact of the physical universe and the subject of the natural sciences; it becomes an economic means only when a human being takes it up in the service of a purpose. Mises stated the point about as starkly as it can be stated: economics is not about things and tangible material objects, he wrote; it is about men, their meanings, and their actions, and goods and wealth and all the categories of conduct are not elements of nature but elements of human meaning and action.
Set that beside the anti-IP argument’s premise that only the tangible can be property, and the incompatibility is total. The argument smuggles in a crude physicalism — the view that real economic objects are the kickable ones and that the immaterial cannot be owned — and presents it as hard-headed Austrian realism. It is the opposite of Austrian. The school that holds value to be imputed by acting minds cannot consistently maintain that only physical objects are real enough to own, because on its own account the physicality of a thing is not what makes it economically significant at all; its serviceability to human purposes is, and serviceability is a relation in the mind of an actor, not a property of matter.
Figure 3. Value is imputed, not embedded. The intangibles at the centre of economic life are accepted without protest; only intellectual property is singled out for the charge of unreality.
And the proof that the anti-IP physicalism is selective rather than principled is the sheer quantity of intangible furniture the Austrian tradition treats as central and the argument accepts without a murmur. Money, in the Austrian account, is not a lump of metal or a slip of paper; it is a social institution, a generally accepted medium of exchange whose existence and value are matters of human convention and expectation, traced by Mises himself back through a chain of subjective valuations. A market price is not a physical object; it is an information signal, a summary of dispersed knowledge that no single mind possesses — the very thing Hayek identified as the genius of the price system. Credit is not a thing you can hold; it is a legally and institutionally structured claim on future performance. A company share is not a quantity of matter; it is a bundle of rights against an abstraction called a corporation. A contract is not the ink in which it is written; it is an enforceable obligation. Goodwill is not tangible; it is the capitalised value of a reputation and a set of expectations. The entrepreneur’s plan, the structure of capital, the expectations that coordinate or fail to coordinate an economy — none of these is kickable, and all of them are at the dead centre of what Austrian economics studies.
The anti-IP argument accepts every one of these without hesitation. It does not say that money is unreal because it is intangible, or that a share cannot be owned because it is a bundle of rights rather than a thing, or that a contract is a fiction because the obligation is immaterial. It reserves the charge of unreality — too intangible, too non-rival, too dependent on legal recognition to be genuine property — for patents and copyright alone. But the features it objects to in intellectual property are shared by the whole intangible apparatus it elsewhere takes for granted. Either intangibility and legal dependence disqualify an interest from being property, in which case money, shares, debts, and contracts go down with copyright; or they do not, in which case the objection to intellectual property collapses and the question becomes the genuine one — how a legal order should delimit rights over created intangible value — which is exactly where Mises located it, and exactly where the second essay in this series will take it up. What cannot be maintained is the selective version: that intangibility is fatal to intellectual property and harmless everywhere else. That is not a principle being applied. It is a preference being enforced, and dressed in the language of a school that would not recognise it.
V. What this series will and will not argue
A word, before the costume is fully off, about what is and is not being claimed, because the disciplined version of this argument is easy to mistake for a maximalist one.
This series does not argue that every patent is wise, that copyright terms are well calibrated, that the existing intellectual-property statutes are beyond criticism, or that the abolitionist has nothing to teach. A genuinely Austrian treatment of intellectual property has ample room to criticise overbroad patent claims, examination failures, rent-seeking, abusive litigation, and terms so long they have lost any connection to the incentive they were meant to supply. Mises’s own framing — that this is a problem of the delimitation of property rights — invites exactly that scrutiny, because delimitation is a question of where to draw the boundary, not a licence to draw it anywhere. The argument of this series is narrower and harder than the maximalist’s, and it cuts in a different direction from the abolitionist’s: it is that the category of intellectual property is not refuted by the observation that it is intangible, non-rival, or legally constituted, because those features characterise property as such in any developed economy, and that the anarchist case which pretends otherwise is not Austrian economics but an anti-institutional politics borrowing its name.
What the series will argue, across the two essays that follow, is this. Mises did not reject intellectual creations from the domain of property because they were immaterial; he identified an economic problem — the inexhaustibility of the services a disclosed formula renders, and the external economies that flow from it — and treated the legal response as a question of delimitation, not a verdict of illegitimacy. That is the subject of the second essay, “Mises’s Problem.” And Hayek’s theory of the institutional order shows that the anarchist’s deepest premise — that legal recognition taints — would, if taken seriously, dissolve not merely intellectual property but the entire architecture of title, contract, and exchange on which civilisation runs, because all of it is legally constituted and none of it is found lying in nature. That is the subject of the third, “Hayek’s Courthouse.” Both essays develop the positive economics. This one has done the negative work that has to come first: it has shown that the doctrine calling itself Austrian is wearing a costume, that Mises and Hayek were not anarchists, and that the charge of unreality levelled at intellectual property is, by the lights of the very school invoked to support it, an error about what economics is even about.
The costume is off. The economics begins in the next essay.
References
Austrian primary sources-
Mises, Ludwig von. Human Action: A Treatise on Economics. 3rd rev. ed. Chicago: Henry Regnery, 1966. (Subjective value and human action: “economics is not about things and tangible material objects… it is about men, their meanings and actions.” The rejection of anarchism: the anarchist “overlooks the undeniable fact that some people are either too narrow-minded or too weak to adjust themselves spontaneously to the conditions of social life.” Patents and copyright as a matter of the “delimitation of property rights” and the external economies of authors and inventors; the inexhaustibility of the services of formulas, pp. 128, 364, 661.)
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Mises, Ludwig von. Liberalism: In the Classical Tradition. Trans. Ralph Raico. Irvington-on-Hudson, NY: Foundation for Economic Education, 1985 [1927]. (Liberalism distinguished from anarchism; the necessity of a state apparatus of coercion.)
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Mises, Ludwig von. The Theory of Money and Credit. Trans. H. E. Batson. Indianapolis: Liberty Fund, 1981 [1912]. (Money as a social institution; the regression of its value through subjective valuations.)
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Hayek, F. A. The Constitution of Liberty. Chicago: University of Chicago Press, 1960. (Coercion as one person’s actions made to serve another’s will; the rule of law as the discipline of the state; freedom and dispersed knowledge.)
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Hayek, F. A. Law, Legislation and Liberty. 3 vols. Chicago: University of Chicago Press, 1973–1979. (Spontaneous order; the general rules of just conduct; the distinction between law and command.)
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Hayek, F. A. “The Use of Knowledge in Society.” American Economic Review 35, no. 4 (1945): 519–530. (The price system as the coordinator of dispersed knowledge.)
The anti-IP position under examination-
Kinsella, N. Stephan. “Against Intellectual Property.” Journal of Libertarian Studies 15, no. 2 (2001): 1–53. (See n. 38: “Mises expressed no opinion on the issue, merely drawing the economic implications from the presence or absence of such laws” — the concession on which the second essay turns.)
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Hoppe, Hans-Hermann. A Theory of Socialism and Capitalism. Boston: Kluwer, 1989. (The physical-integrity-only conception of property; the anarcho-capitalist framework, distinct from Austrian economics.)
Note on method and scope. Every quotation attributed to Mises or Hayek above reflects the verified wording of the cited text and was checked at the page or passage level, not drawn from an abstract or a secondary gloss. One correction to a common framing is made deliberately: the claim, sometimes attributed to Mises, that intellectual creations stand outside property because they are “immaterial, intangible, and impalpable” is not Mises’s wording and is not used here; Mises’s actual distinction is economic — the inexhaustibility of the services a disclosed formula renders — and is treated as such. This essay is the first of three. It performs only the negative task of separating Austrian economics from the anarchist politics that borrows its name; the positive economic argument — Mises on external economies and delimitation, Hayek on the institutional foundation of all property — is developed in the second and third essays. The series criticises the abolitionist category-claim, not any particular statute, term, or scope, and it concedes the legitimacy of Austrian criticism of overbroad or abusive intellectual-property regimes, which is a question of delimitation rather than of existence.