The Fallacy of Non-Scarcity: Natural Law, Time-Bound Rights, and the Economic Illiteracy of Anti-Property Rhetoric
The case against intellectual property presents itself as rigorous natural law. It is neither.
The case against intellectual property presents itself as rigorous natural law. It is neither. It smuggles in a narrow physicalist theory of property — only tangible rivalry counts, only permanent physical possession is real ownership, only the parties to a contract can be bound — and then declares everything outside that picture artificial. But the property law we already have is built almost entirely out of the excluded remainder: leaseholds, easements, covenants that run to strangers, options, debts, choses in action. The physicalist test, applied honestly, does not refute intellectual property. It voids most of property law. This essay shows where the argument fails, technically, and concedes everything it gets right.
1. The slogan and the move
There is a slogan that does a great deal of work in the argument against intellectual property: you cannot own an idea. It is repeated as though it ended a discussion, and it sounds profound because it asks you to picture property as a physical thing — a fence around a field, a lock on a door, a hand closed around an object. Once property is reduced to that picture, intellectual property looks absurd. No one loses an idea when another person copies it. No one is physically dispossessed when a pattern is repeated. No molecule is removed when a design is imitated. The conclusion seems to follow by itself: there is nothing there to own.
This is not economic analysis. It is a child’s ontology of property dressed in the language of natural law. Mature legal systems have never recognised property only where a person can clutch the thing in his fist. They recognise timed rights, divided rights, future rights, contingent rights, security interests, leaseholds, equitable interests, contractual expectancies, debts, and choses in action — rights that exist precisely because value has to be ordered across time and against other people. The anti-property argument begins by treating those institutions as curiosities at the edge of property law. They are not the edge. They are the bulk of it.
The move I want to expose is a substitution. Confronted with a question that is at bottom institutional — which costly, conflict-prone interests should the law give structured, enforceable, time-bounded form, and on what terms — the abolitionist reframes it as a question of metaphysics: is an idea the kind of thing that can be owned? The reframing feels rigorous. It is the opposite. It replaces an economic inquiry that has answers with a definitional stipulation that forecloses them. The argument is not too rigorous to permit intellectual property. It is insufficiently rigorous to reach the question that intellectual property actually raises.
A word on what this essay is and is not. It is not a defence of intellectual property as a natural right radiating from the act of creation. That theory — that one owns one’s ideas because one made them, as one owns the crops one plants — is weak, and its weaknesses are real. It is not a defence of perpetual copyright, of evergreened patents, of patent thickets, or of the proposition that every existing right is wise; those are miscalibrations, and several are indefensible. This essay attacks one specific thing: the claim that there is a clean, principled, natural-law demonstration that intangible, time-bound, value-bearing interests cannot be property. There is no such demonstration. There is a slogan, and underneath the slogan there is a physicalist reduction that cannot survive contact with a lease.
2. What the argument actually says
The most rigorous version of the anti-property case is Stephan Kinsella’s, and it deserves to be stated exactly, not caricatured, because the caricature is easy to beat and the real argument is not.
Kinsella does not, in the main, defend intellectual property as natural law and then get caught out. He does the reverse: he attacks both the creation-based natural-rights defence of IP (Rand, Spooner, Galambos) and the utilitarian defence, and he offers a positive theory of his own. That theory begins with a question worth taking seriously: why is anything property at all? His answer is scarcity. Property rights exist, he argues, because physical resources are rivalrous — my use of a thing excludes yours — so conflict over them is possible, and a system of exclusive control is needed to avoid that conflict peacefully. In his words, a property right is “simply the exclusive right to control a scarce resource”, and the function of such rights is “to prevent interpersonal conflict over scarce resources.” Allocation, on this view, runs by the Lockean first-use or homesteading rule, which gives property visible, objective borders that strangers can see and avoid.
From this premise the conclusion is meant to be inexorable. Ideas, Kinsella argues, are not scarce. Using my technique does not take it from me: “your use does not exclude my use; we could both use my technique.” From the absence of rivalry he infers that there is no economic scarcity, no possibility of conflict, and therefore no need for exclusivity. Copy my book and I still hold the original and the pattern of words alike. He invokes Jefferson’s image of lighting one taper at another without darkening the first, and he quotes Arnold Plant approvingly: property rights in patents and copyrights, Plant wrote, do not arise from the scarcity of objects but are the deliberate creation of statute that manufactures a scarcity which would not otherwise exist (Plant, 1934). Patents and copyrights, on Kinsella’s account, therefore do something sinister: by granting rights in non-scarce ideal objects, they hand the holder a measure of control over everyone else’s tangible property. If I own the pattern of a book, then you may not arrange your own paper and ink into that pattern; Kinsella calls this a “negative servitude” in the property of others, a transfer of partial ownership of material things from their natural owners to authors and inventors.
He adds two further arguments that the essay must answer rather than dodge. The first concerns contract. A defender might say: fine, forget natural rights — let the author sell each copy on the condition that the buyer not reproduce it, and reproduce intellectual property privately, by agreement. Kinsella’s reply is that contract binds only the parties to it. He runs a thought experiment: an author sells one copy without restriction and one copy “reserving” the right to reproduce; the two books are physically identical, yet on the reserved-rights theory one carries an invisible “right to copy” and the other does not. Worse, consider a stranger who never bought the book and never agreed to anything — who merely learns what is in it from gossip or a review. No contract reaches him. As Kinsella puts it, there is no warrant for the view that reserved rights can bind such third parties. A bare agreement cannot generate a right good against the world.
The second is his attack on value. The natural-rights defender, he notes, often slides into saying that something is property if it holds value. But, drawing on Hoppe, Kinsella argues that one cannot have a property right in the value of one’s property — only in its physical integrity. Others may compete with you, undersell you, and invent substitutes that destroy the market value of what you own, and none of that is aggression, because they have not touched your things. Value is a function of other people’s choices; to claim a right in it is to claim a right over their minds and actions.
This is a serious, internally disciplined argument, and three of its planks are simply correct. I concede them at the outset, because a fair argument states what its opponent gets right. Ideas, as mental contents, are non-rivalrous: your knowing what I know does not unknow it for me. You cannot own value in the abstract: competition that lowers the worth of your property is no wrong, and a right against being competed with would indeed be monstrous. A bare contract does not bind strangers: privity is real, and the reserved-rights manoeuvre cannot, by itself, reach a non-contracting third party. Grant all three. The argument still does not reach its conclusion, because the conclusion was never derived from these premises. It was derived from a fourth proposition, never defended, that does all the actual work: that the only interests capable of being property are rivalrous physical objects. That proposition is not a finding. It is the whole question, asserted as an answer.
3. Natural law is not physicalism
Begin with the philosophical sleight, because it sets up everything that follows. The argument advertises itself as natural law. Natural law, in any of its serious historical forms, is a theory about human action, reason, and justice — about promise-keeping, honest dealing, desert, reliance, exchange, restitution, the wrong of fraud, and the ordering of liberty among persons. It is emphatically not the doctrine that only objects one can physically hold can ground a right. A tradition that runs from the Roman law of obligations through the common law of contract and equity has always protected things you cannot touch: the enforceable promise, the debt, the expectancy, the relationship of confidence.
So when the abolitionist says “natural law” but means “only tangible rivalry counts,” he has not deepened natural law; he has hollowed it out and kept the name. A natural law that can recognise trespass on land but cannot recognise the betrayal of a confidence, the deliberate passing-off of one trader’s goods as another’s, the fraudulent misappropriation of what someone has built, or the calculated destruction of a contractual expectancy is not a more rigorous natural law. It is merely a thinner one. Thinness is being sold as rigour. The physicalist has not earned his austerity by argument; he has simply declared that the hard cases are not cases.
And the declaration is self-undermining in a way worth naming early. Kinsella’s own foundation is not a brute physical fact but a rule: the first-use homesteading principle, a chosen convention for converting unowned scarce things into owned ones, justified because it reduces conflict and gives visible borders. That is an institution — a human-made rule for assigning exclusive control to achieve a social end. Once you have conceded that property in land is constituted by a conflict-reducing rule rather than discovered in nature, you have conceded the only thing that matters. The question is no longer natural versus artificial; all property is rule-constituted, his homestead included. The question is which rule, for which interests, on what terms. That is an economic and institutional question, and it is exactly the question the scarcity slogan is designed to avoid reaching.
4. The physical-exclusion fallacy: scarcity is not the same as touch
Here is the economic heart of the matter, and the first and most important fallacy.
The argument treats physical exclusion as if it were the whole of scarcity. It is not. Scarcity, in economics, is not the question can two people touch the same object at once? It is the question are there valuable means that cannot simultaneously serve all the competing ends to which people would put them? On that definition — the real one — a great many things attached to an idea are scarce even though the idea itself, as information, is not. Time is scarce. Priority is scarce. Attention is scarce. A market window is scarce. The position of first mover is scarce. Reputation and provenance are scarce. The condition of secrecy, once broken, cannot be restored. The option to be the one who decides how a thing is first used has a present value and can be held by only one party at a time.
Run the distinction through cases. Two firms can use the same chemical formula; they cannot both be the first to bring it to market, and the first-mover position is worth money precisely because it is exclusive. Two authors can possess the identical text; they cannot both be the authenticated origin of it, and authorship and provenance command a premium for exactly that reason. Two manufacturers can run the same process; they cannot both hold the single exclusive supply position in a given market at a given time. The information is non-rivalrous and can be copied without limit. The commercial position attached to it is rivalrous, depletable, and conflict-prone. The slogan proves the first and then behaves as though it had proved the second. It has not. It has performed a category substitution: it establishes that information is not consumed by use and then helps itself to the very different proposition that no economically scarce interest exists around information. That is not a proof. It is a switch of subjects in the middle of the sentence.
Notice that this defeats the argument on its own chosen test. Kinsella’s criterion is not, in the end, physical depletion; it is the possibility of conflict — he says it is the possibility of conflict over a resource that renders it scarce and calls property into being. Very well. Is conflict possible over the first-mover position, the exclusive licence, the undisclosed formula, the market window? Not merely possible — routine. Firms litigate, spy, race, and bargain over exactly these positions, because two parties genuinely cannot both occupy them. By Kinsella’s own definition of scarcity as the possibility of conflict, these economic positions are scarce, and therefore are candidates — on his terms, not mine — for the kind of conflict-avoiding rule he says property is. The scarcity test, taken seriously and applied consistently, does not exclude the interests around information. It includes them. The only way to keep them out is to redefine scarcity, at the last moment, as physical rivalry — which is the thing that was supposed to be shown, not assumed.
There is a further category the slogan never registers, and it is the one that matters most in a networked economy: coordination scarcity. A standard, a protocol, a ledger, a trademark, a reference implementation — these are valuable not because the underlying information is scarce but because they coordinate the expectations of strangers, and a coordinating position is intensely rivalrous. Only one arrangement can be the standard that everyone builds to; two incompatible specifications cannot both occupy that slot, which is why standard-setting is fought over so bitterly. A trademark is the cleanest legal case: its entire function is to let a buyer rely on the source of goods, and two producers cannot both authentically signal the same origin — if they could, the signal would carry no information and the coordination would collapse. The law that protects the mark is not protecting a scarce symbol, since symbols are infinitely copyable; it is protecting a scarce coordinating position, the reliable link between a name and a source. Authentication is the same phenomenon from the buyer’s side: provenance, attribution, and a verified chain of custody are rivalrous because there can be only one true origin of a given thing, and the worth of knowing it depends on others being unable to counterfeit the claim. None of this is scarce in the sense of a depletable object. All of it is scarce in the sense that decides whether conflict is possible — and all of it is conflict-prone, which is the only sense Kinsella’s own theory says matters.
This is why Plant, whom the abolitionist quotes, is a treacherous ally for the abolitionist. Plant was a copyright sceptic; he did argue that the law manufactures a scarcity in patents and copyrights that the objects do not have (Plant, 1934). But Plant also documented, carefully, how authors were paid in the era before international copyright protected them: nineteenth-century American publishers, free to reprint any English book without paying anyone, nonetheless paid English authors handsomely for early “advance sheets,” because being first to the American market was worth paying for (Plant, 1934). That is the point in miniature. The information was free to copy; the priority was not, because priority is scarce. Plant’s own evidence is a demonstration that a commercial position can be valuable and appropriable even when the underlying information is not — which is precisely what the non-scarcity slogan denies. Arrow made the structural version of the same observation in the founding paper of the economics of invention: information can be reproduced at little or no cost, which is exactly why a competitive market tends to underinvest in producing it (Arrow, 1962). Non-rivalry is not the abolitionist’s discovery that ends the inquiry. It is the orthodox premise that opens it.
5. The permanence fallacy: leaseholds, easements, and the death of the tangibility test
The second fallacy is the assumption that real property must look like fee-simple ownership of a physical object: tangible, perpetual, and physically possessed. Strip that assumption out and the argument loses its metaphysical simplicity, because actual property law has never honoured it.
Take the entry point the abolitionist himself cannot avoid: the lease. A leasehold, in black-letter law, is a property interest. The Legal Information Institute states it plainly: a lease between landlord and tenant “creates both a contractual interest and a property interest” — the latter called a leasehold (Cornell LII, Leasehold). It is time-bound — a term of years, not forever. It is alienable and, in many systems, mortgageable. During its term it gives the tenant a present right to exclude even the owner; afterward it evaporates. A thirty-year lease is, on any honest accounting, property: valuable, transferable, defended by law. And it is not perpetual. So temporality is not fatal to property. That single, banal institution refutes the permanence requirement outright.
Press on through the catalogue, and the physicalist criteria fall one by one. An easement is a right to use another’s land without owning or possessing it — non-possessory by definition, and it runs to subsequent owners. So possession is not fatal either: the law recognises a property interest that gives no possession at all. A life estate lasts a lifetime and then ends — temporal again, and Kinsella himself, drawing on the standard bundle-of-rights conception, gives the example of a landowner carving out a life estate for his mother and an easement for a neighbour while selling the minerals to an oil company. He accepts, in his own text, that one tangible parcel can be sliced into divided, timed, non-possessory interests, each a legitimate piece of property. That concession is fatal to half his rhetoric, because it means the dispute was never really about permanence or possession. It was only ever about scarcity — which Section 4 has already met on its own terms.
Now go further than land, to the interest that does the most damage to the physicalist picture: the chose in action. A chose in action is a property right whose entire content is an enforceable claim — a debt, a contractual right, an insurance claim, a right to sue. It is intangible: there is no object. It is non-possessory: you cannot hold a debt in your hand. It is enforceable only through the legal system. And it is, unquestionably, property — bought, sold, assigned, securitised, inherited. The Uniform Commercial Code classifies a “general intangible” as “any personal property, including things in action” (U.C.C. § 9-102), and the Legal Information Institute defines intangible property — listing stocks, bonds, trademarks, copyrights, and trade secrets — as property that “cannot be physically held” and yet “is still a form of property” (Cornell LII, Intangible property). The law’s own definition of property is not “a tangible thing.” It is “anything (items or attributes / tangible or intangible) that can be owned”, and it expressly names “the goodwill of a company” as intangible property (Cornell LII, Property). A debt is a pure value-claim, owned and traded as property, with no physical integrity whatsoever — and no one calls it a metaphysical fraud or a monopoly.
The figure sets the whole landscape out at once.
Read down the rows. Fee simple in land — the physicalist’s archetype — is the only interest that is tangible, perpetual, possessory, and good against the world all at once. Every other interest the law recognises fails at least one of those tests, and most fail two or three. Leaseholds and life estates are not perpetual. Easements and covenants are not possessory and attach to no object. Options, licences, debts, and goodwill are intangible, time-bound, and non-possessory. And then patents and copyrights sit at the bottom, failing exactly the criteria that easements, covenants, options, and debts already fail — and binding third parties exactly as easements, covenants, and perfected security interests already do. Intellectual property is not an anomaly that a physicalist test cleanly excludes while leaving the rest of property law intact. It is unremarkable. The test that would void it would void the lease, the mortgage, the easement, the covenant, the option, the share, and the debt along with it. A theory of property that cannot survive contact with a thirty-year lease is not a theory of property. It is an aesthetic preference for objects, presented as ontology.
6. The privity trick: contract is not the whole of private law
Kinsella’s contract argument is his strongest, and it is half right, which is what makes it dangerous. He is correct that a bare contract binds only its parties, and that the “reserved rights” manoeuvre cannot, by itself, reach a stranger who never agreed — least of all the third party who merely overhears the information. If that were the entire toolkit of private law, the abolitionist would have a point. But it is not, and the inference from contract alone cannot bind the world to no non-possessory, intangible interest can bind the world is a leap across a canyon.
The law has, for centuries, known how to make certain obligations run beyond the original pair — not by magic, and not by pretending a contract reaches strangers, but through structured, notice-based property doctrines. The clearest is the covenant that runs with the land. A real covenant is a promise about the use of land that binds not only the promisor but future owners who were never parties to it. The Legal Information Institute is explicit that such covenants run with the land, so that “future owners of the property are bound by the covenant” (Cornell LII, Real covenant), and that they “differ from personal covenants, which bind only the original parties” and do not transfer to successors (Cornell LII, Covenant that runs with the land). This is not done casually. The burden runs only when a set of conditions is satisfied: the parties intended it to run, the covenant touches and concerns the land, the requisite privity exists, and — decisively — the successor took with notice of it (Cornell LII, Vertical privity). A later owner is bound because the restriction was intended to run, related to the land, and was knowable to him when he acquired it.
Sit with what that establishes. The law already possesses a mature, disciplined mechanism for making a non-possessory restriction binding on a person who never signed anything — and it treats this as ordinary property doctrine, not as a metaphysical fraud. The same is true across the field: a perfected security interest binds third-party creditors and purchasers, not because they agreed but because the interest was filed and made knowable; an easement binds successors who took with notice; an in-rem right is precisely a right held against the world subject to public notice. The recurring structure is notice plus a recognised form. The law makes a claim opposable to strangers when it is rendered visible and falls within an established category. This is exactly the “objective, visible borders” condition that Kinsella himself says good property rights must have — borders a stranger can see and avoid. Registration, publication, and the patent and copyright records are the intangible analogue of the fence: the mechanism by which a non-possessory claim is made legible to the world.
So the honest statement is narrow but devastating to the rhetoric. Kinsella is right that contract alone cannot bind strangers; he is wrong to convert that truism into a theory of property. Property law is the institutional technology by which some claims — not all — are made legible, transferable, and opposable beyond the contracting pair, under notice rules, for limited durations, with defences and exceptions. The real question is never the false binary the slogan offers — bare contract or universal metaphysical ownership. Real legal systems live in the enormous space between: they build forms, notice rules, priority rules, terms, limits, and remedies. To say “contract does not bind the world, therefore intellectual property is illegitimate” is to pretend that the entire law of property — which exists precisely to make selected claims run against the world — does not exist.
7. The no-value-in-property fallacy
The fourth plank is the Hoppean claim that one may own the physical integrity of one’s property but not its value. As I said at the outset, the core of this is correct and I concede it without reservation: there is no right against being competed with, no right against a rival’s better product or lower price, no right in the mere market worth of what you hold. A right of that kind would be a licence to suppress competition, and it would be indefensible.
But the concession does not reach the conclusion, and the chose in action shows why with unusual clarity. A debt is not a right against “value in the abstract.” It is a specific, defined, legally structured claim — this obligor owes this sum under this obligation — and its entire content is a claim to value, enforceable only through law, with no physical integrity at all. The law recognises it as property, lets you sell it, lets you use it as collateral, and protects it against third parties who knowingly interfere with it. If “you cannot own value, only physical integrity” were a true and general principle of property, the entire law of obligations-as-property would be impossible. It is not impossible; it is enormous, ancient, and uncontroversial. The principle, stated as a universal, is simply false as a description of the legal order it claims to describe.
What is true is narrower and more useful: you cannot own undifferentiated value, the kind that fluctuates with every rival’s choices. What you can own — what the law constructs and enforces every day — is a defined, bounded, structured interest whose value is the reason for defining it. That is what a lease, an option, a debt, a covenant, a security interest, and a patent all are: structured legal expectations about future use, exclusion, transfer, yield, priority, and remedy. Demsetz, Coase, and the whole property-rights tradition put the point bluntly — what is exchanged in any transaction is a bundle of rights, and it is the value of the rights that determines the value of the thing. Value is not an ornament hung on property after the fact. Value is why the right is specified at all. The physicalist treats value as a contaminant that disqualifies an interest from being property. The law treats value as the entire motivation for recognising the interest in the first place. One of these is a description of the legal world. The other is a stipulation about which the legal world has never been consulted.
8. “Artificial scarcity” is not the objection
The most rhetorically effective move remaining is the charge that intellectual property creates artificial scarcity — that it manufactures, by statute, an exclusivity the objects do not naturally have. This is true and it is supposed to sound damning. It is not damning, for a reason the abolitionist’s own framework concedes.
The law creates “artificial scarcity” constantly, and we do not flinch. A lease creates a temporary, exclusive, legally enforced scarcity of access to a building. A security interest creates a priority — an artificial ranking of one creditor’s claim above another’s. A restrictive covenant manufactures a legally enforced scarcity of permitted uses on a neighbour’s land. A corporate share is a bounded, artificial claim on a residual. A court’s injunction creates an enforceable restraint that did not exist in nature. Spectrum licences, water rights, and franchise territories are all deliberate, statutory creations of exclusive position. None of these arises from the physical scarcity of an object; all of them are institutional artifacts. If “artificial scarcity” were a sufficient objection, it would condemn the lease, the mortgage, the covenant, and the corporate share with the same stroke — and it would condemn Kinsella’s own homesteading rule, which is itself an artificial convention for converting non-owned resources into exclusively controlled ones.
So “artificial” cannot be the objection, because every property right is artificial in the only sense that matters: it is constituted by a rule rather than found in nature. The honest question is not whether a legally created scarcity is artificial. It is whether it is justified — whether the institution reduces conflict, supports the investment and disclosure that would otherwise not be financed, lowers transaction costs, protects reliance, disciplines opportunism, and orders production better than the available alternatives. That is an institutional and economic question, and it is the one Coase put at the centre of the analysis of rights. Coase showed that there can be no market transactions to allocate resources until rights have first been delimited — entitlements that have not been defined cannot be traded — and that once transaction costs are positive, which in the real world they always are, the assignment of those rights determines how resources are used and who captures the gains (Coase, 1960). The choice is never between an “artificial” right and a state of natural freedom. It is between one assignment of rights and another, each with its own consequences for conflict, investment, and value. “It’s artificial” is not an analysis. It is a refusal to do the analysis.
9. The sophistic structure
Step back from the individual planks and look at the shape of the argument, because the shape is the tell. It advances by a series of substitutions, each of which trades a true and narrow claim for a false and broad one while keeping the same words:-
“Ideas are not depleted by use” becomes “no economic interest around an idea is harmed by copying.” The first is true; the second ignores priority, market position, disclosure, reputation, and option value.
-
“A bare contract does not bind strangers” becomes “no non-possessory intangible right can bind strangers.” The first is true; the second ignores covenants, easements, security interests, and the whole in-rem architecture of property.
-
“You cannot own value in the abstract” becomes “no value-bearing claim can be property.” The first is true; the second ignores every debt, option, and chose in action.
-
“Intellectual property is often overbroad” becomes “all intellectual property is illegitimate.” The first is true and urgent; the second does not follow from it.
-
“State grants can be abused” becomes “legal form is itself coercion.” The first is true; the second would dissolve all law.
-
“Some exclusivity is monopoly” becomes “all exclusivity is monopoly.” The first is true; the second is a definitional trick.
-
“Scarcity calls property into being” becomes “only physical rivalry counts as scarcity.” The first is Kinsella’s own premise; the second is the unstated conclusion he needs and never earns.
This is the anatomy of the thing. It is not rigorous; it is tidy. It achieves its cleanliness by discarding, at each step, the facts that make the problem hard — the time-dimension of value, the in-rem machinery of property, the law of obligations, the difference between a bad instance and an illegitimate institution. A tidy argument that has thrown away the difficulties is more dangerous than a messy one that has kept them, because it persuades by the comfort of its symmetry. The proper response is not contempt for the conclusion but precision about the mechanism: at each substitution, a true premise is quietly swapped for a stronger one that the premise does not support. Pull the substitutions apart and there is no argument left — only a definition of property narrow enough to guarantee the result, asserted before the inquiry begins.
10. A better question, and the calculation the slogan never reaches
Critique is not enough; a serious position has to say what it would put in place. Here is the framework the scarcity-stop refuses to reach.
A rigorous theory of property does not ask the metaphysical question is the object physically rivalrous? and stop there. It asks a sequence of institutional questions. What is the scarce economic interest actually in play — the position, the priority, the disclosure, the secret, the expectation? Who created, acquired, financed, or relied upon it? Would exclusion be required to protect it, or would a weaker liability rule suffice? For how long is protection justified before the incentive saturates and the access cost dominates? What notice must be given so that strangers can see and avoid the right? What are the transaction costs of recognising it, and the deadweight costs of the exclusivity it confers? What exceptions and limits keep it from swallowing adjacent liberties? What remedy is proportionate? And, finally: does recognising a structured right of this shape order production, reliance, and exchange better than refusing to recognise it?
That sequence can be compressed into a single decision rule. Let the relevant quantities be defined as follows:
ΔV_create = additional creation, investment, and disclosure the rule induces
R_coord = reliance and coordination gains (standards, provenance, secure exchange)
ΔF_reduced = appropriation / free-riding losses the rule prevents
E = enforcement and administration cost of the right
M = monopoly / deadweight cost of the exclusivity conferred
N = notice and information cost imposed on third parties
The institution is justified when the gains it produces exceed the costs it imposes:
Recognise a structured right where:
( ΔV_create + R_coord + ΔF_reduced ) > ( E + M + N )
This is not a formula that delivers a single global verdict on “intellectual property,” and that is its virtue. Each term varies by domain. Where the fixed cost of creation is enormous and imitation after disclosure is near-free — a new medicine, say — ΔV_create and ΔF_reduced are large and the inequality can hold comfortably for a bounded term. Where the fixed cost is small and the protected object is an input into a great deal of downstream work, M and the follow-on burden can swamp the gains and the inequality fails; the rule should then be narrower, shorter, or absent. The framework is the same; the answer is local. It also explains, without any appeal to metaphysics, why the limited term of a patent is a feature rather than a refutation: the right is bounded because the incentive effect saturates while the access and follow-on costs do not, so welfare peaks at an interior term and the right is written to expire — which is why the international architecture fixes that term at twenty years from filing (TRIPS, Art. 33) and why copyright protects only expression and never the idea, leaving the teaching free (17 U.S.C. § 102(b)). The bound is the design working, not the design failing (Landes & Posner, 1989). Teece’s work on appropriability makes the institutional stakes concrete from the other side: when an innovation cannot be protected, the returns do not vanish into a commons — they flow to whoever controls the complementary assets, the manufacturing and the distribution, rather than to whoever bore the cost of creating (Teece, 1986). Non-recognition is not neutrality. It is a different allocation, with its own winners.
The framework also exposes a design choice the slogan cannot even state: the choice between an exclusion rule and a liability rule. To protect an interest, a legal system can grant the holder a right to exclude — an injunction, the power to refuse — or merely a right to be paid, a claim in damages when another uses it. The two are not interchangeable. Exclusion fits interests where bargaining before use is cheap and the holder’s valuation is hard for a court to reconstruct, so the parties should be made to strike their own price. A liability rule fits interests where pre-use bargaining is impractical — users too many, too dispersed, or too urgent — and a court can approximate the price after the fact. Much of what presents itself as a binary war over whether intellectual property should “exist” is, on inspection, an unstated argument about which rule fits which interest: compulsory licensing, statutory damages, fair-use carve-outs, and standard-essential-patent commitments are all liability-rule machinery bolted onto a property-rule frame, precisely to fix the cases where pure exclusion would over-block. The scarcity-only test cannot reach this question, because it has terminated the inquiry at the threshold; it never asks how an interest should be protected, having wrongly concluded that it cannot be protected at all. A theory that cannot distinguish an injunction from a damages award is not a theory of remedies. It is the absence of one.
The decisive point against the scarcity-only test is that it never performs this calculation at all. It halts at the threshold, asks whether the object is physically rivalrous, answers no, and declares the inquiry closed. But that is not economic analysis; it is an exclusionary definition wearing the costume of economics. The whole substance of the problem — the costs, the benefits, the duration, the notice, the externalities, the comparison to alternatives — lies on the far side of a door the slogan refuses to open. To call that rigour is to mistake the act of stopping early for the act of being careful.
11. Conclusion
Kinsella’s argument does not defeat intangible property. It defeats a caricature of intangible property — the perpetual, free-floating ownership of ideas as such — that no competent legal system asserts and that the statutes, treaties, and cases expressly disclaim. Against the real thing, the argument fails, and it fails technically, at identifiable joints. It substitutes physical rivalry for economic scarcity, and so never sees that priority, exclusivity, disclosure, and market position are scarce on its own definition of scarcity as the possibility of conflict. It demands that property be tangible, perpetual, and possessory, and so would void the lease, the easement, the covenant, the option, the share, and the debt — the bulk of property law — if it were applied with a straight face. It treats privity as the whole of private law, and so ignores the in-rem, notice-based machinery by which the law has always made selected claims run against the world. It denies that value can be owned, and so cannot account for the chose in action, the purest property right the law contains. And it brands legal scarcity “artificial” as though that were an objection, when its own homesteading rule is artificial in exactly the same sense.
What survives, once the slogan is pulled apart, is not the abolitionist’s conclusion but the abolitionist’s true premise, restored to its proper modesty: scarcity and the possibility of conflict are indeed why property exists. Quite so. And the economic interests that gather around costly creation, disclosure, secrecy, priority, reputation, and exchange are scarce, conflict-prone, costly to produce, and valuable to hold. They are, on the abolitionist’s own test, exactly the kind of interest for which property, contract, and equity exist. Whether and how far the law should give any particular one of them structured form is a hard institutional question with answers that differ by domain — answers that require the calculation, not the slogan. The non-scarcity argument is an elaborate device for never having to do that work. It is tidy. It is clean. It is too clean to survive contact with a lease, and the cleanliness was always purchased by throwing away the difficulty that is the entire point.
References
Arrow, K. J. (1962). Economic welfare and the allocation of resources for invention. In R. R. Nelson (Ed.), The Rate and Direction of Inventive Activity: Economic and Social Factors (pp. 609–626). Princeton University Press / NBER.
Coase, R. H. (1960). The problem of social cost. Journal of Law and Economics, 3, 1–44. https://www.jstor.org/stable/724810
Cornell Law School, Legal Information Institute. Covenant that runs with the land. Wex. https://www.law.cornell.edu/wex/covenant_that_runs_with_the_land
Cornell Law School, Legal Information Institute. Intangible property. Wex. https://www.law.cornell.edu/wex/intangible_property
Cornell Law School, Legal Information Institute. Leasehold. Wex. https://www.law.cornell.edu/wex/leasehold
Cornell Law School, Legal Information Institute. Property. Wex. https://www.law.cornell.edu/wex/property
Cornell Law School, Legal Information Institute. Real covenant. Wex. https://www.law.cornell.edu/wex/real_covenant
Cornell Law School, Legal Information Institute. Vertical privity. Wex. https://www.law.cornell.edu/wex/vertical_privity
Kinsella, N. S. (2008). Against Intellectual Property. Ludwig von Mises Institute. (Originally published as Kinsella, N. S. (2001), Against intellectual property, Journal of Libertarian Studies, 15(2), 1–53; argument restated in Kinsella, N. S. (2013), The case against intellectual property, in C. Luetge (Ed.), Handbook of the Philosophical Foundations of Business Ethics, Springer.)
Landes, W. M., & Posner, R. A. (1989). An economic analysis of copyright law. The Journal of Legal Studies, 18(2), 325–363. https://doi.org/10.1086/468150
Plant, A. (1934). The economic aspects of copyright in books. Economica, 1(2), 167–195. https://doi.org/10.2307/2548748
Teece, D. J. (1986). Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy, 15(6), 285–305. https://doi.org/10.1016/0048-7333(86)90027-2
Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, Art. 33 (term of protection).
Uniform Commercial Code § 9-102(a)(42) (definition of “general intangible,” including things in action).
United States Copyright Act, 17 U.S.C. § 102(b) (idea/expression distinction).