Owning Values
The libertarian civil war over intellectual property — Rand says you own what you create, Hoppe says you may own only physical integrity, and both are half-right; what neither will say is where ...
Keywords: intellectual property, property rights, value, scarcity, rivalry, creation, labour theory, Ayn Rand, Objectivism, Mossoff, Hans-Hermann Hoppe, anarcho-capitalism, Stephan Kinsella, Rothbard, idea–expression dichotomy, homesteading, first use, bounded form, Harper & Row, Feist, argumentation ethics, institutional facts.
Abstract
The fight over intellectual property is usually staged as creators against pirates, but the sharper and more revealing fight is internal to the libertarian right, between two camps that agree on almost everything except this. On one side stands the Randian, Objectivist tradition, which holds that creation is a source of rights: you made the value, the value is a thing, therefore you own it, and intellectual property is simply the recognition of that ownership. On the other stands Hans-Hermann Hoppe — an anarcho-capitalist, not merely an Austrian economist, and it is his anarchism that does the work — together with Stephan Kinsella, who hold that the only legitimate object of ownership is the physical integrity of a scarce resource, that “value” is conferred by the shifting valuations of others and so cannot be owned, and that intellectual property is therefore a fiction. This essay argues that both camps are half-right and both are incomplete, and that the truth lies in a third position neither will occupy. Hoppe is correct that value is not the object of a right and that labour is not, by itself, a source of title — production is the transformation of things one already owns, not the conjuring of property out of effort, and the Randian “creation grounds ownership” move is a genuine non-sequitur. But Hoppe’s own conclusion does not follow from his premises, and the argument he uses to reach it is built out of the very intangibles it forbids: title, contract, consent, and — at the deepest level — the norms of argumentation on which his argumentation ethics rests. His decisive test, that a right must be ascertainable in advance without consulting anyone’s subjective valuation, does not kill intellectual property; it licenses the narrow version of it, because a would-be copier can determine in advance, and in complete ignorance of anyone’s valuation, whether he is reproducing another’s work. And his “no third possibility” dilemma — either all value-effects are aggression or none are — is exhaustive only if all effects on another’s economic position are one undifferentiated category, which they are not: competition by substitution and appropriation by reproduction are different acts with different objects, and only the second is what intellectual property addresses. The defensible account keeps Hoppe’s two concessions — value is not the object, effort is not the title — without his conclusion. Title to a made thing flows from prior ownership of the underlying resource plus first use; the right is in the bounded form and its exclusivity, not in its value and not in the labour that produced it; and that is exactly the interest the law has long protected (the right of first publication in Harper & Row) while withholding protection from effort as such (Feist‘s rejection of “sweat of the brow”). Rand reaches the right destination — that authorship can ground exclusivity — by the wrong route. Hoppe takes the right route — that ownership is not conjured from value or labour — to the wrong destination. The bounded-form view takes the route to the destination, and it is the position both halves of the libertarian world have talked themselves out of seeing.
I. A family quarrel, not a border war
Most writing on intellectual property pits creators against copyists, the industry against the pirates, the maximalist against the abolitionist. That is the public quarrel. The more illuminating one is private — a quarrel inside the libertarian family, between people who agree about almost everything else and discover, on this single question, that they cannot stand in the same room.
On one side is the Randian and Objectivist tradition. It holds that the mind is the root of production, that a created thing is the objectification of a creator’s thought and effort, and that to deny a creator the ownership of what he created is to deny him the product of his mind. On this account intellectual property is not an anomaly requiring special justification; it is the paradigm case of property, because it is the case where the link between the producer and the produced is least mediated by anything he did not make. Adam Mossoff, the most careful modern legal exponent of this line, argues that the creation of value through productive labour is the historical and moral foundation of property rights, and that copyright and patent are not monopolies but ordinary property in the fruits of that labour.
On the other side is Hans-Hermann Hoppe, and here a label matters, because the usual one is wrong. Hoppe is routinely filed under “Austrian economics,” and he is an Austrian economist, but his position on intellectual property is not driven by Austrian economics; it is driven by his anarcho-capitalism — his commitment to a stateless order of pure physical-property rights in which the only wrongs are physical invasions of body and owned scarce resources. It is the anarchism, not the economics, that generates the conclusion. Hoppe holds that what can be owned is the physical integrity of a scarce resource and nothing else; that the “value” of a thing is not a feature of the thing but a function of what other people will give for it; that one cannot own other people’s valuations; and that intellectual property, being a claim to control something other than the physical integrity of a scarce resource, is therefore illegitimate. Kinsella, his most prolific follower on this subject, has built an entire body of work elaborating the consequence.
The two camps are not arguing about a detail. They are arguing about the source of ownership itself — about what, at bottom, makes a thing yours. Rand says: you made its value. Hoppe says: you control its physical integrity, and nothing about value can enter into it. This essay’s claim is that each has hold of one true thing and one false thing, and that the true things, separated from the false ones, point to a position neither side defends.
Figure 1. Three accounts of where ownership of a made thing comes from. Rand and Hoppe are each half-right; the defensible view keeps Hoppe’s concessions without his conclusion.
II. Where Hoppe is right, and Rand is wrong
Concede the strong half of Hoppe’s case first, cleanly, because a refutation that will not grant what is true is worthless — and because what is true here is genuinely fatal to the Randian formulation.
Hoppe is right that value is not the object of a right. The value of a thing is what others will give for it, and what others will give is a fact about them — their wants, their alternatives, their valuations — not a fact about the thing or its owner. You do not, and cannot, own the contents of other people’s heads. If your restaurant loses custom because a better one opens across the street, the fall in your restaurant’s value is real and it is no wrong, because the value was never yours to begin with; it was always a standing bet on what strangers would choose to do. Rothbard put the same point in Man, Economy, and State: a man owns the physical existence of his property, not its monetary value, because monetary value is a function of what others will pay, and he has no vested right in the choices of others.
Hoppe is right, too, that labour is not, by itself, a source of title. This is the deeper and less obvious point, and it is where the Randian formulation breaks. “Creation” feels like it ought to ground ownership — you made it, so it is yours — but the feeling does not survive analysis. Production is not the creation of matter from nothing; it is the transformation of things from one configuration to another, and the things were already owned before the labour was applied. When you carve a statue from your block of marble, you do not come to own the statue because your labour “created” it; you own the statue because you already owned the marble, and the statue is simply the marble in a new shape that is worth more to you. The labour changed the configuration and raised the value; it did not generate a fresh title, because the title was already there, attached to the stuff. Mix your labour with a thing you do not own — carve a statue from someone else’s marble, or from marble owned by no one but lawfully closed to you — and your labour earns you no title at all; at most it earns you a mess. Labour is how you raise the value of what you own. It is not an independent source of owning.
This is precisely the move the Randian tradition makes and cannot justify. From the true premises that you laboured, that the result is valuable, and that the value would not exist but for your effort, it leaps to the conclusion that you therefore own anything you create that has value — and the leap is a non-sequitur. That you made something more valuable does not establish that you own a new thing; it establishes that you made the thing you already owned more valuable. To get from “I created this value” to “I own this value” you need a premise that value is an ownable object, and that premise is exactly what Hoppe correctly denies. Kinsella’s sharpest single observation, in his commentary on Mossoff, is just this: it is a non-sequitur to move from “your labour made your property more valuable” to “you own whatever you create that has value,” because the first is about the value of a thing you already own and the second smuggles in a new and ungrounded kind of property. On that narrow point he is right, and the Randian is wrong.
Figure 2. The creation–ownership inference. The valid chain grounds title in prior ownership; the Randian leap to “you own whatever you create that has value” is a non-sequitur — but so is the opposite leap, that nothing about the produced form can be owned.
So the Randian formula, taken literally, fails. “Creation grounds rights” is false as stated; creation raises value, and value is not a thing you own. If that were the end of the matter, Hoppe would win, and intellectual property would fall. It is not the end of the matter, because Hoppe’s conclusion does not follow from the concessions, and the argument he uses to bridge the gap collapses on inspection.
III. What “you cannot own value” does not prove
Here is the move on which the entire anti-IP case turns, and it is a conflation.
From the true proposition that you cannot own value, Hoppe and Kinsella slide to the conclusion that you cannot own the work whose value you are trying to protect. But those are different propositions, and the gap between them is the whole argument. “You cannot own value” refutes a claim to own the market’s response to your work — its demand, its price, the public’s taste, your expected profit. It says nothing whatever about a claim to control the reproduction of the specific bounded artifact you produced. The first is a claim against the choices of strangers; the second is a claim about a definite object — the form you made — and its exclusivity. To own the second is not to own anyone’s valuations; it is to own the thing, in the only sense in which an authored form can be a thing.
The decisive way to see that these come apart is to disaggregate the cases the anti-IP argument keeps fused. There is competition by substitution: a rival writes a better book, invents a superior machine, sells a cheaper substitute, and your work’s value falls. No wrong — and copyright and patent do not touch it, which is the point. And there is appropriation by reproduction: someone takes the specific expressive or inventive form you produced and runs off copies of it. These are not two intensities of one act called “harming value.” They are different acts with different objects. The first competes against your product; the second reproduces your product. The difference does not turn on value at all, and so “you cannot own value” — true of the first — is simply silent about the second.
This also disposes of Hoppe’s flourish that “a third possibility does not exist”: either every effect on another’s economic position is an actionable wrong (which would make all competition aggression, an absurdity) or none is (in which case copying is permitted). The dilemma is exhaustive only if all economic effects are one undifferentiated category. They are not. Once substitution and reproduction are pulled apart, the third possibility is exactly the one every intellectual-property system has always occupied: there is no right against substitutive value-reduction and there is a right against the reproduction of one’s bounded form, on grounds that never mention subjective valuation. The “no third possibility” rhetoric works by deleting the answer and then observing that nothing is left.
Figure 3. What “you cannot own value” proves and what it does not. The anti-IP case relies on fusing substitution and reproduction; disaggregate them and Hoppe’s dilemma dissolves.
IV. The test that backfires
Hoppe does not merely assert that value cannot be owned; he offers a criterion, and it is worth taking seriously because it is the strongest thing in his argument — and because, applied honestly, it cuts the other way.
The criterion is ascertainability in advance. A right, Hoppe argues, must have a boundary that any person can recognise on his own, before he acts, without first consulting anyone else’s subjective valuation; otherwise no one could know in advance whether a planned action was permitted, and one would have to interrogate the entire population before doing anything at all. Property in physical integrity has this feature — you can see where the fence runs, you can tell whether you are about to strike another’s body or take his marble — and property in “value” lacks it, because whether your act lowers another’s value depends on facts about other people’s heads that you cannot inspect. So far this is a real argument, and it is the part of Hoppe worth defending.
But run copyright through the criterion and it passes — cleanly. Can a would-be copier determine, in advance, and in complete ignorance of anyone’s subjective valuation, whether the thing he is about to reproduce is another’s authored work? Yes. He does not poll the public; he does not estimate anyone’s valuations; he checks a single, objective, in-principle-knowable fact: am I copying someone else’s work, or producing my own? The boundary of a copyright is at least as ascertainable in advance as the boundary of a parcel of land — and arguably more so, because the edge of a parcel is itself a contested normative construction (the law of nuisance, of trespass, of where one estate ends and a neighbour’s air begins, is a thicket of judgment), whereas “did I reproduce this expression or independently make my own” is a comparatively crisp question of fact. The criterion Hoppe deploys to abolish intellectual property, taken at face value, vindicates its narrow form. It rules out a right in value — correctly — and it admits a right in the bounded form, because the bounded form has exactly the advance-ascertainability that value lacks.
There is a deeper irony, which belongs to the anarchism rather than the economics. Hoppe’s ultimate ground for the physical-integrity-only view is his argumentation ethics: the claim that anyone who argues at all must presuppose self-ownership and objective property borders, so that to deny them in argument is to contradict oneself in the act of arguing. Set aside whether the argument succeeds. Notice what it is made of. “The presuppositions of rational argumentation” are not a scarce physical resource; they are an intangible, non-rivalrous, socially-instituted normative order — the very kind of entity Hoppe says cannot ground a right. The deepest foundation of the anti-IP position is built from the material the position outlaws. A theory whose floor is made of intangible norms cannot consistently treat “it is an intangible norm” as a knock-down objection to a right. And the same is true all the way up: title, contract, consent, transfer, the homestead boundary itself — the working vocabulary of Hoppe’s and Kinsella’s own system — are intangible juridical relations, not physical objects. They are accepted without protest when they protect marble and land, and forbidden only when the protected interest is an authored form. That is not a principle doing work. It is a preference deciding which intangibles are allowed.
V. The third position: the bounded form
We can now state the account both camps talk past.
Title to a made thing flows from prior ownership of the underlying resource, plus first use — not from creation, and not from labour. This keeps Hoppe’s two concessions intact. Value is not the object: conceded; the object is the form, and value is merely the reason the form is worth contesting. Labour is not the title: conceded; the labour raised the value of what was already owned, and the title runs to the owner, not to the effort. What Hoppe denies, and what does not follow, is the further claim that nothing about the produced form can be owned. That is the opposite non-sequitur to Rand’s. Rand leaps from “I created value” to “I own value”; Hoppe leaps from “value and labour are not sources of title” to “the produced form is not an object of property.” Both leaps skip the same middle term — the bounded form itself, which is neither value nor labour, but a definite, ascertainable, transferable thing.
What is the “bounded form”? It is the specific expressive or inventive configuration the producer made: this arrangement of words, this claimed mechanism, this particular confidential compilation, this source-identifying mark. It is bounded in the precise sense the law has always insisted on and the abolitionist always ignores — it excludes the idea, the method, the fact, the function, and the effort, and protects only the determinate form. Copyright protects this expression and not the idea behind it; patent protects this claimed and disclosed invention and not the principle it exploits; and both are limited in time, defeated by independent creation or prior art, and silent against anyone who learns from the work and goes on to make his own. The right is not a claim to value and not a reward for toil. It is ownership of a determinate object that the producer brought into a particular shape, on the same logic by which the sculptor owns the statue: he owned the marble, he gave it a form, and the form is now a thing he holds.
And the law has been operating on exactly this account for a very long time, against both camps’ descriptions of it. Against Rand: copyright does not reward creation-as-such or effort-as-such. In Feist the Supreme Court threw out a laboriously assembled telephone directory and held that originality, not sweat of the brow, is the constitutional touchstone, and that copyright’s purpose is to promote knowledge, not to compensate labour. The labour theory the Randian leans on is the very theory copyright disclaimed. Against Hoppe: the protected object is a bounded form whose appropriation is a recognised wrong even when nothing physical has been taken and no “value” has been seized. In Harper & Row, a magazine that obtained President Ford’s unpublished manuscript and printed his account of the Nixon pardon ahead of the authorised serialisation was held to have appropriated the right of first publication — a definite, marketable interest in the form and its exclusivity — and the fact that Ford still had every word of his manuscript was true and beside the point. The wrong was not the loss of a physical token and not the seizure of “value.” It was the taking of the bounded form’s exclusivity, which is exactly the object the third position names and both camps miss.
VI. Why each camp resists the third position
It is worth asking why neither side simply adopts the view that resolves their quarrel, because the resistance is instructive.
The Randian resists because the bounded-form view gives up the thing the Randian most wants to say: that the creative act itself is the moral source of the right, that the author deserves the work because he made it from his mind. The bounded-form view declines that. It says the author owns the work the way the sculptor owns the statue — through prior ownership and the giving of form — not through a special creative desert that the law is obliged to honour. For a tradition built on the heroism of the producing mind, this feels like a demotion, a reduction of authorship to mere configuration. But the demotion is the price of coherence: the moment “creation deserves ownership” is stated as a general principle, it either proves too much (every value you generate becomes yours, including the value competition strips from your rivals) or it collapses into the bounded-form account on inspection. Rand’s instinct — that authorship can ground exclusivity — is sound. Her theory of why is the part that does not survive.
Hoppe and Kinsella resist for the mirror-image reason. The bounded-form view concedes their two best points — value is not the object, labour is not the title — and then declines their conclusion, and the conclusion is the thing the system is built to reach. An anarcho-capitalist order of pure physical-property rights has no room for an intangible right in an authored form, because such a right binds strangers who are using their own presses and their own paper, and binding strangers who commit no physical invasion is precisely what the system exists to forbid. So the bounded form must be denied not because the denial follows from the concessions — it does not — but because admitting it would require admitting an intangible in rem right into a system whose whole architecture is the refusal of intangible in rem rights. The refusal is structural, not argued. And it is purchased, as Section IV showed, only by forgetting that the system’s own foundations — title, contract, the norms of argument — are themselves the intangibles it claims to do without.
VII. Conclusion: right route, wrong destination; right destination, wrong route
The libertarian civil war over intellectual property is not a clash between a party that is right and a party that is wrong. It is a clash between two parties that are each half-right and have each mistaken their half for the whole.
Rand reaches the right destination by the wrong route. She is correct that authorship can ground a right to exclude others from the work — that there is something there to own, and that the maker is the one who owns it. But her route, “creation is a source of rights” and “you own the value you create,” is a non-sequitur that proves too much and dissolves on contact with the fact that production is transformation and value is conferred by others. She is right about the conclusion and wrong about the argument.
Hoppe takes the right route to the wrong destination. He is correct that ownership is not conjured out of value or out of labour, and his demand that a right be ascertainable in advance is a real and valuable test. But his route does not arrive where he thinks. The ascertainability test admits the bounded form rather than excluding it; the “no third possibility” dilemma is exhaustive only because it deletes the third possibility; and the deepest ground of the view, argumentation ethics, is built from the intangible norms the view forbids. He is right about the route — that value and labour are not sources of title — and wrong about where it leads.
The bounded-form view takes the right route to the right destination. Title flows from prior ownership of the underlying thing plus first use; the object of the right is the determinate form the producer made, not its value and not the effort that made it; the right is bounded, ascertainable in advance, limited in time, and defeated by independent creation — and it is exactly the interest the law has long protected, rewarding originality of form while refusing to reward effort as such. It keeps everything true that Hoppe says and discards only his conclusion. It keeps everything true that Rand says and discards only her argument.
What neither camp will say, and what the quarrel between them obscures, is the plain thing in the middle: a made form is a thing, the person who made it from what he owned is the person who owns it, and “you cannot own value” — true, and conceded — was never an argument against that, because the form is not its value, any more than the statue is the price it would fetch. Rand mistook the value for the object. Hoppe mistook the absence of a value-right for the absence of any right. The object was the form all along.
References
The Objectivist / creation-based tradition-
Mossoff, Adam. “Saving Locke from Marx: The Labor Theory of Value in Intellectual Property Theory.” Social Philosophy and Policy 29, no. 2 (2012): 283–317.
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Mossoff, Adam. “What Is Property? Putting the Pieces Back Together.” Arizona Law Review 45 (2003): 371–443.
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Rand, Ayn. “Patents and Copyrights.” In Capitalism: The Unknown Ideal. New York: New American Library, 1966.
The anarcho-capitalist anti-IP tradition-
Hoppe, Hans-Hermann. A Theory of Socialism and Capitalism. Boston: Kluwer, 1989, esp. 139–141 (physical integrity vs value).
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Hoppe, Hans-Hermann. The Economics and Ethics of Private Property. Auburn, AL: Ludwig von Mises Institute, 2006 [1993] (the value argument; argumentation ethics).
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Kinsella, N. Stephan. “Against Intellectual Property.” Journal of Libertarian Studies 15, no. 2 (2001): 1–53.
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Kinsella, N. Stephan. “Hoppe on Property Rights in Physical Integrity vs Value.” StephanKinsella.com, 12 June 2011; and “Objectivist Law Prof Mossoff on Copyright; or, the Misuse of Labor, Value, and Creation Metaphors.”
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Rothbard, Murray N. Man, Economy, and State, with Power and Market. Scholar’s ed. Auburn, AL: Ludwig von Mises Institute, 2009 [1962], ch. 2 §12 (no vested right in value); ch. 10 (defending copyright, opposing patents).
Philosophy of social institutions-
Searle, John R. The Construction of Social Reality. New York: Free Press, 1995 (institutional facts; status functions).
Doctrinal anchors-
Feist Publications, Inc. v. Rural Telephone Service Co., 499 U.S. 340 (1991) (originality, not “sweat of the brow”; copyright is not a labour-desert regime).
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Harper & Row, Publishers, Inc. v. Nation Enterprises, 471 U.S. 539 (1985) (right of first publication as a bounded, marketable interest).
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Baker v. Selden, 101 U.S. 99 (1879) (idea/expression; copyright protects the form, not the method).
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17 U.S.C. §102(b) (excludes ideas, procedures, processes, systems, methods, concepts, principles, discoveries).
Note on method and scope. Sources are cited as engaged, against their authors’ own statements; where this essay reports what a source argues — Mossoff’s labour theory, Hoppe’s value argument and argumentation ethics, Kinsella’s non-sequitur point, Rothbard’s value/physical-existence distinction, the case holdings — the report reflects the verified content of that source. Two labels are used precisely: Hoppe is identified as an anarcho-capitalist, because it is the anarchism and not Austrian economics that drives the physical-integrity-only conclusion; and the “bounded-form view” is offered as the position that survives both camps’ objections, not as either camp’s own doctrine. The essay defends the principle that an authored form can be owned; it does not defend any particular statute, term, or scope, and it concedes the genuine force of Hoppe’s two negative claims (value is not the object; labour is not the title) while denying the conclusion he draws from them.