From: Lahn, Jonathan
Sent: Sat
2/5/2005 11:46 PM
To: Perritt, Hank
Subject: Property Regimes Question from Jon Lahn (a student in your Property class)

Dear Professor Perritt,


* * *


One of the principal reasons people give for recognizing property rights in general is that property rights create an incentive for production, because legally protected ownership ensures that an owner will reap the fruits of their investment in something.  In the context of the internet piracy/free-riding problem, one commonly hears that the property interests of musicians, for example, need to be protected from illegal downloading to ensure that musicians and other artists continue to invest in producing music.  In utiliarian terms, the protection of the property interest protects the financial incentive that causes artists to invest their time and energy into creating music, or other types of art.


This is just one form of a general utilitarian proposition: that, absent an incentive that is ensured by the existence of a recognized property interest, people will not expend effort on production.  But to me, the example of music/art being illegally downloaded on the internet illustrates a major problem with this proposition. 


Having hoped at one time in my life to be a rock star, and having many friends who still pursue that goal, it is clear to me that, absent any anticipated reward that could be protected by a legally recognized property right, musicians and other artists would continue to create, perform and display artwork.  That's why I've always disagreed with people who become extremely alarmed about illegal downloads. 


But, while reading and thinking about your article, I began to realize that this specific example can be generalized to human production in general.  That is, even without an external incentive, people will be productive.  Take the example of Judge Posner's farmer.  Without a property regime protecting his ownership of his crops, the farmer will have his crops stolen and realize that his labor is being appropriated by others, and cease farming, according to Posner.  Yet, unless he is suicidal, the farmer will not stop farming; rather, he will find a way to grow and protect enough of a crop to sustain his life.  His continued life is not an "incentive" but an absolute imperative that drives his production.  This is an extreme example, and perhaps inappropriate because the farmer "has to" do something to survive.  But beyond merely surviving, people do and have always done things that they don't have to do and which are not motivated by an external reward - think of the artist who struggles to exhibit their art, or the musician who will play for free because she wants to be heard.  And even activities that are compensated tend to be significant to the actor for reasons that have nothing to do with the compensation they receive from others - many people identify with and take pride in their work, and would choose that work over any other, equally or even better-compensated activity.


Inelegantly expressed as these ideas may be, I think most people would agree with them.  In short, people will engage in productive activity for intrinsic reasons - whether it be the survival instinct or a personal affinity for a certain activity - absent any external incentive that could be protected by a recognized property right.  I think this is the idea behind the Hegelian (or perhaps just "materialist") idea that human beings produce themselves, their identities,  through their interactions with the external world.


So, if we accept this, then we can say that there is a certain level of production - both of "necessary" goods and other things, such as music - that would occur even without any property regime at all, as a result of the human need/instinct to produce oneself through activity in and on the external world.  Imagine a graph where the "x" access is external incentives that can be protected by property rights, and the "y" access represents production.  When x=0, y will be a certain amount of production that occurs as a result of the intrinsic "drive" within human beings that we've just identified.  At or below this level of production, extrinsic incentives are unnecessary; this is paralleled somewhere at the far right end of the graph by the point at which, no matter how much the incentive increases, the production will not increase at all because the productive capacity is finite.


So, when we talk about the efficiency/utility benefits of a property regime that protects the actor's expectation of external reward, we are talking about production that occurs between these two extremes: the level of production that humans will do anyhow as they survive/produce themselves, and the maximum possible production (or, if we're concerned with efficient production, the point of where the marginal cost of bringing about each additional unit of production is greater than the increase in production).  It seems important, then, to ask what happens in this "zone" that is so valuable that it needs to be protected by a property law regime.


In other words, who benefits from the production in this zone?  The short answer is, everyone.  If we go back to Posner's farmer, the farmer's subsistence farming in the absence of property rights that ensure external incentives to increase production benefits him only.  If property rights are recognized, he will have an incentive to produce more than he needs, and sell the surplus, increasing his wealth.  Similarly, another person less adept at farming will be able to meet their food needs by buying the farmer's corn and invest their labor in an activity that is more efficient given their abilities.  Productive people are now able to specialize and trade their goods (or exchange money), increasing the overall wealth/efficiency of society.


So everyone benefits.  But not everyone benefits equally.  Indeed, while the producers who are now able to specialize augment their wealth under a property law regime, one person depends on the regime for their very existence.  This is the person who produces nothing, and is able to survive because the property regime has insured the external incentive that motivated the producers to surpass the base level of production and produce a surplus, making it possible for a person to survive by facilitating transactions between others.  This person owes everything to, and in fact only exists because of, the property rights regime.


So, to return to the example of music, if intellectual property rights in music are violated through internet freeloading/piracy, it is not musicians or music that will cease to exist in the absence of external incentives, but record companies.  If Judge Posner's copyrights are not respected, he probably will not stop writing, but his publishers might go out of business.  Property regimes benefit everyone, but they benefit the middleman, the facilitator, most, and are a necessary condition of his/her existence.  So when people promote or argue for property regimes for "everyone's benefit," what they really mean is, "for everyone's benefit, but especially for the middlemen."  And when we see that the "middlemen" take on many forms, and are some of the most influential people (or fictitious corporate "people") in western societies since the birth of capitalism, we might be concerned that the legal regimes they depend on, influence, and help perpetuate, are a source of their power, but not ours. 


All of which is to say that, if we believe in laws that promote everyone's equal freedom, we should regard traditional property regimes, and the claims of those who advocate their expansion or reinforcement, with suspicion, because the interests of the group/class that has the most to gain from them are necessarily going to conflict (at times?always?) with the interests of the rest of society.


So my question to you is twofold: (1) do you accept this analysis? and (2) if we can see that property rights regimes have a disparate impact in terms of the distribution of benefits between different segments/classes of society, should that alter the way we enforce or don't enforce or alter property regimes that already exist or affect the regimes we institute in new situations in order to assure that we promote the interests of society as a whole rather than certain groups/classes over others, and how could we do this?