Correcting Some Common Libertarian Misconceptions (2011)

Wow that is high praise. Thanks Helio. I did enjoy it a lot. It was less scripted than most of my speeches, and I think my teaching Mises Academy courses helped since I had gone over a lot of this already. Anyway it was great to see you, and thanks for the feedback.

From Mises blog:

Gil June 5, 2011 at 6:04 am

sweatervest June 5, 2011 at 2:01 pm

“If we considering schoolyard bullying to be one example of an anarchic arena”

That is crazy, a schoolyard is populated with subjects of the most totalitarian regimes that exist in the world: schools. That is nowhere close to voluntary association.

“Since people who commit vile acts of violence and/or fraud have little moral conscience what makes you think they’ll merely turn up to someone sort of private court ready to be punished with private jail time or restitution”

Because part of the contract they signed with their security/justice provider requires that they show up to any trials from any other recognized security/justice providers. The second they do not they lose their own security/justice services. All private security/justice agencies would have this as part of the contract because if they did not they would fail to produce what people are paying them to produce.

“Why can’t you cede ownership of your physical body? Libertarians already believe people should be able to sell off all their organs – so why can’t sell their body to science and give the proceeds to their family”

How would that work? If you sell your body you obviously die in the process so what becomes of the money that was paid for your body? It ends up in the hands of someone else who becomes the de facto seller of your body.

Andras June 5, 2011 at 2:20 pm

@sweatervest “How would that work?”
Watch The Tenth Man with Anthony Hopkins.

Gil June 6, 2011 at 12:19 am

Firstly, the schoolyeard is a perfect place for Anarchism to be tested because violence isn’t punished or is a slap on the wrist.

And Secondly, no one is going to be forced to sign a contract (“I signed no stinkin’ Social Contract” – every Libertarian) however even if a criminally-prone person did then they just break it anyway. It’s like the joke about a lawyer ask the accused on the stand if he knows the difference between perjury and murder and the accused replies “I do and the penalty for perjury is a lot less than that for murder.”

sweatervest June 6, 2011 at 4:35 pm

“Firstly, the schoolyeard is a perfect place for Anarchism to be tested because violence isn’t punished or is a slap on the wrist”

No, that is insane and a complete misrepresentation of what anarchism is. First of all, by no stretch of the imagination can anarchism be tested in a 100% totalitarian regime. The children in a schoolyard did not congregate their voluntarily and so nothing they do is a test of voluntary association, which is what anarchy is.

Who said anarchy is when violence isn’t punished? That almost sounds like something you’d hear on a mainstream news channel!

“And Secondly, no one is going to be forced to sign a contract”

Contracts came into existence by themselves because lots of people understand that cooperation is more fruitful than self-sufficiency. People will decide for themselves to abide by contracts because they recognize meaningful contracts as useful means for interaction. To suggest otherwise is to imply that contracts have no value beyond the fact they are something the state enforces.

“however even if a criminally-prone person did then they just break it anyway”

And no one will enter contracts with them again and they can’t get insurance, security, justice, running water, electricity, cable, internet, etc. Is that not a good enough reason to abide by contracts?

Gil June 6, 2011 at 11:21 pm

Yeah, in your perfect little world everyone wants to magically cooperate and only does minor transgressions which are easily punished.

nate-m June 5, 2011 at 2:02 pm

1. Since people who commit vile acts of violence and/or fraud have little moral conscience what makes you think they’ll merely turn up to someone sort of private court ready to be punished with private jail time or restitution?

Same reason they show up to public jail: You hire people to go and fetch them. The difference between public and private is that with public the ‘justice’ is involuntary and carried out by people with almost no accountability and no liability.

If you want some details on how this could possibly work:
http://mises.org/media/category/215Chaos-Theory-Two-Essays-On-Market-Anarchy

There are two essays with that give a theoretical framework on how private justice and private defense can be made to work in a ‘state free’ market anarchist society.

2. Why can’t you cede ownership of your physical body?

Because you cannot separate yourself from your body unless you kill yourself or perfect ‘out of body’ spectral projection (that is a joke). Your physical body is the one piece of property you never homestead. It is unique in this manner and has some unique properties to the individual that other types of physical property does not possess.

so why can’t sell their body to science and give the proceeds to their family?

That’s tangential to what is being discussed. Of course you can do that.

Gil June 6, 2011 at 12:27 am

However in Anarchtopia PDAs and bounty hunters have no jurisdiction and if they’re not careful they’ll be the ones engaging in kidnapping (or get shot at for attempted to kidnap someone). Indeed the whole point of justice is that it’s involuntary – crime is not supposed to be optional. Few who commit crimes do so out of sense of meanness but out of their twisted view of morality. Hence a criminal usually believes he has his reasons for what he did. Alternatively, a thief will defend his booty against the actions of other thieves.

sweatervest June 6, 2011 at 5:01 pm

“Indeed the whole point of justice is that it’s involuntary – crime is not supposed to be optional”

Production of security does not involve the criminal at all. The purpose of security is to prevent a crime from happening (i.e. building a fence). If a crime occurs, the security has failed to do its job. Nothing that happens after a crime is committed (i.e. chasing down and arresting the criminal) has anything to do with the production of security.

Once a crime is committed and property is damaged or lost that is where insurance and justice come in. Insurance simply pools together dues and uses them to pay for damages and, again, does not involve the criminal at all. The only one of these three that involves the criminal is justice.

Justice would be produced along with insurance. Insurance companies would design their contracts so that if any case is made against a client and the other party wins, that client is required to pay restitution. Failure to do so would be a breach of contract, and the insurance company would immediately cancel their policy, leaving the criminal’s property uninsured. Security providers would do the same. Both would do so because to not put those terms in their contracts would severely hinder the quality of their services. The second any one firm does this it will gain all the market until other competitors adopt those terms themselves.

Because his property is now uninsured, the victims of his crimes, or their insurers (possibly the very company that just canceled their policy with this criminal) will have little opposition in attempted to seek restitution (they could also seek much more than this, and commit crimes themselves against the criminal. If the criminal is worried about this, he should probably show up to his court case and pay the restitution as his insurance contract spells out, so he can continue to enjoy his insurance and security services.

But we don’t need to wait for big established security or justice producers to come around to do something about criminals. No private property owner, business owners especially, ever wants to deal with a property violator. Dealing with them puts them around your property. As soon as it becomes known to the general public that a person has committed a crime, and especially if he has refused to pay restitution for that crime, one can almost be assured that every business will close their doors to this person, not out of some overblown selfless concern for society but out of a concern for their own property. This criminal will be cut out of productive society and be forced to do pretty much everything on his own. He cannot buy a house because no realtor will deal with him. If he has a house he cannot get any utilities. He can’t buy food. He can’t buy clothes. He’ll get fired from his job and run out of money anyways. That’s a pretty big incentive to not commit crimes, much bigger than anything a statutory law could muster up.

Gil June 6, 2011 at 11:23 pm

I would agree with notion that dealing with crime in Libertopia would be more focused in prevention/fortification as well as catching the criminal in the act.

Andras June 5, 2011 at 1:49 pm

sweatervest June 5, 2011 at 1:55 pm

“it will pop and reveal the fact that Property is a human device based only on consent of the majority”

No, property does not exist just because enough people think it does. That just determines whether property rights are recognized or trampled on. If everyone steals at will it doesn’t stop being stealing. The concept of property itself does not disappear when everyone decides to act in defiance of it.

Kid Salami June 6, 2011 at 5:03 pm

What is “property” then? For you to say what you just said, you must have a very clear definition of property – what is it?

Wildberry June 8, 2011 at 12:08 pm

@sweatervest June 5, 2011 at 1:55 pm

In light of your recent complaint about my lack of clarity on property rights, I’m surprised you didn’t jump right on this challange from Kid Salami.

Waass up?

Kid Salami June 8, 2011 at 1:03 pm

Indeed – what gives? I’ll give him one thing, he’s certainly good at repeating stuff he’s seen Kinsella and his hero Hoppe say. I’ve nearly finished that Friedman book by the way, there is some great stuff in there.

Wildberry June 8, 2011 at 2:25 pm

Great. He does a good job with externalities, theories of remedies, and property v. liability, and much more. What a great resource, I thought. Glad you’re enjoying it.

Not to suggest a reading list, but have you had a chance to check out Kathleen Touchstone?

Stephan Kinsella June 8, 2011 at 4:41 pm

I published Touchstone here http://libertarianpapers.org/2010/18-touchstone-rand-rothbard-and-rights-reconsidered/

Kid Salami June 8, 2011 at 4:52 pm

Its a great book and not just the theory but the examples in it too. I’m very surprised I’d not heard of Stack Island before – it sounds like something that would be brought up here when someone wants to derail an argument.

I did read one of her papers a while back – one which i recall is about arguing that there was some inconsistency about children in ancap heaven or something. Was that the one you meant?

Wildberry June 8, 2011 at 5:13 pm

Check out Stephan’s link. I read that paper and on the strength of that ordered her book.

It wasn’t about kid’s heaven, it was that children and the infirm could not be protected under ancap natural rights theory. Her analysis is pretty interesting and goes back to the difference between deriving natural rights from the Crusoe device, where man is alone and participation in society is voluntary, which leads to ancap theory, v. mother/child as the Primary Social Unit, in which the cooperative relationship is not voluntary, and how the existence of positive natural rights exist for the child, and transition to the negative rights of an adult over the course of attaining majority.

Stephan, how do you keep track of all the links you generously post along with your comments? How can you be that organized?

Have you read her book yourself? Unlike me, she is an accomplished scholar, and her treatment of property theory and property rights is pretty fantastic.

Wildberry June 8, 2011 at 6:17 pm

Here is what he says about Stack Island: “In the law of real property, fuzzy boundaries are the exception. In patent law, which tries to draw boundaries around ideas, they are the norm.”

It is unfortunate that he uses the word “ideas” since I criticize SK for conflating IP with ideas, but I’ve commented on the fuzzy boundary problem of property rights here before. I have never thought to enlist the Stack Island analogy.

This story, along with the one concering how property lines shift with the undulations of the Nile, are two great examples illustrating how the human device of property rights operates in situations which defy normal property rights assumptions; i.e. the physical boundaries are fixed, known and obvious.

Cheers.

nate-m June 5, 2011 at 2:16 pm

When you narrow the concept of property to the physical Homesteading

That’s not what is happening. First off: physical property can be acquired through many different means other then homesteading.

Homesteading is just how physical property comes into being. It is how physical property first becomes acquired. Once property is acquired via homesteading then it can be modified and transferred from individual to individual. Ideally through voluntary means.

However, as soon as you start scratching your bubble hard enough, from the inside, it will pop and reveal the fact that Property is a human device based only on consent of the majority.

That’s far from true. Properties rights describe the mechanism in which human beings decide who gets to acquire and use physical property. Physical property has the natural aspect that in order to be used it must be in the possession by a individual. That is in order to use a piece of property you have to have sole possession of it in some manner.

The most obvious example is the ‘spoon’. You can have a ‘community’ spoon in a communist society were it’s officially declared that the spoon has no owner… but that is just semantics: a twist of language or a confusion of metaphors. In order for any individual to be able to use the spoon to eat (or whatever) they must acquire the spoon and be in sole possession of it. Property rights describes the mechanism which how people decide who gets to use the spoon at any one point.

There are de facto property rights and there are de jure property rights. De Jure property rights get decided via a variety of means… a majority of people agreeing to it is just one possibility. De facto physical property rights have existed as long as human action has.

Wildberry June 6, 2011 at 5:39 pm

Brialliant! Your use of the Latin sums things up nicely.

Andras June 5, 2011 at 2:45 pm

nate-m June 5, 2011 at 3:34 pm

Please realize that the very act of homesteading, its rules and its processes are all totally arbitrary! You are building your system on quicksand.

How so? There is minerals, plants, animals, land. etc. If it does not belong to anybody else and I reach out and take it… in what situation does it NOT become my property?

In what way can property be created if not by homesteading?

Andras June 5, 2011 at 4:02 pm

Just for a start, how do you decide on the size of the property, especially in an environment surrounded with alternative claims?

sweatervest June 6, 2011 at 5:09 pm

It would involve the details of the specific situation. What matters is that homesteading provides a means to do that, when the details are given (i.e. how much land or whatever is actually transformed permanently by being used). When they are not no sound theory will help us make a decision.

Andras June 5, 2011 at 4:03 pm

“In what way can property be created if not by homesteading?”

In any way people consent to it and accept it.

nate-m June 5, 2011 at 6:02 pm

Just for a start, how do you decide on the size of the property,

That’s just legal details. It doesn’t change anything about the requirement for homesteading to initially create or obtain title to property.

Whether it’s a single guy going out into the wilderness to stake a claim in the dirt, or a child picking up a discarded book, or a committee of ten thousand people deciding how to best divide up a newly created volcanic island it doesn’t change anything about the validity of the concept of homesteading.

especially in an environment surrounded with alternative claims?

What do you mean ‘surrounded’?

Like a circle around that the property has property claims around it, but does not have any claims on it yet? If that is what you mean then I don’t see how it matters, except maybe in some legal technicality when it comes to documenting the title on the property or something.

But if nobody owns it I don’t see how it really matters if somebody else owns something in close proximity to it. At least not whether homesteading is a valid concept or not.

If your talking about ‘surrounded’, but you mean that there are competing claims on that particular property…. then either it’s not homesteading at all and has nothing to do with it (since it’s already ‘homesteaded’ by somebody else and you have no right to it unless you buy it or convince the owner to do some sort of title transfer) or your going to have to depend on arbitration to determine who is the owner of the property since the ownership of the property is in dispute.

If you want to prove your point you going to have to come up with some actual concrete examples of what your talking about. Asking vague questions about legal technical details and then hoping I’d guess at what your getting at isn’t going to work out very well for you. I need something a bit more to understand how you think that homesteading is a invalid concept.

To me it seems a very basic matter-of-fact item based simply on the physical laws of the universe:

* In order to use a item you need to be able to have sole possession of it for the period of time you use the item.
* Property rights lies at the core of how you determine who gets possession of it.
* If nobody owns a property then homesteading is how it comes into the possession of a individual initially.

RC June 5, 2011 at 7:07 pm

nate-m,

“If nobody owns a property then homesteading is how it comes into the possession of a individual initially.”

But possession isn’t property, you know… If something is your property then you have a right to exclude others from it, even with a threat of force. Possession, on the other hand, is temporary – you can possess a plucked apple, for instance, but once you let it go, someone else can take it (possess it).

nate-m June 5, 2011 at 8:11 pm

Yeah that’s a important distinction.

Andras June 5, 2011 at 8:26 pm

@nate-m, “If you want to prove your point you going to have to come up with some actual concrete examples of what your talking about. Asking vague questions about legal technical details and then hoping I’d guess at what your getting at isn’t going to work out very well for you. I need something a bit more to understand how you think that homesteading is a invalid concept.”

I certainly don’t believe that homesteading is an invalid concept. However, ignoring the characteristics of homesteading will mislead you. Homesteading, that is of economic properties, is not some natural right but also a human device. For you all those details are but puny legal matters. But that is the very point! Just try to walk through the technicalities of these details.
Have you driven through the US? Have you ever noticed that everything is fenced? What makes Americans love barbed wire so much? Is it in their genes, i.e., natural? Or this is the way they advertize that the land is taken. How did this happened? From an unfenced, free roaming indian land to this monstrosity. Does it has to do anything with the customs they came from? They wanted to leave that behind. Or just the scarcity of barbed wire? Who knows?
So they fenced (how much?) and then you walked into some Title Office to register their claim(, while you try to protect your fence to uphold your claim). What happens meanwhile? Your competition does the same. How do they decide? Customs! Let the kabuki start. But what happens if they arrive to a virgin land from different cultures? Some cultures appreciate rights based on fight, even blood. Again, we are getting closer not farther from Might is Right. Not knowing will not save you.
The point is, customs, cultures etc are all human devices. These are what ossifies homesteading whether you admit it or not.
And so many other arbitrary factors in the process.

sweatervest June 6, 2011 at 5:15 pm

Forgive me if I am oversimplifying, but it seems to me like you are simply acknowledging that humans are in fact capable of trespass.

Property is very different from a cultural custom. Cultural customs (clothes styles, music styles, etc.) have varied across a wide spectrum for different cultures, and yet property has remained a central device to all cultures, much how math is central to all cultures (perhaps more for some than others). Deciding to respect property may have been an arbitrary decision and cultural custom, but that property exists and can be respected (and that property works a particular way) is like two and two being four. People can write down that two plus two is five, and act according to it (and fail as a result) but they of course cannot undo the truth that two and two is really four.

Likewise, different cultures may have recognized property rights to different degrees, but if any of them were to deny that they exist they would be manifestly wrong. Is math a human device? Well, yes it was constructed by humans. But it is not fiction, it is constrained by something that humans did not decide upon. So property may be a human device in the sense that humans had the idea of property and constructed the theories concerning it, but it remains that such an idea is rooted in reality and those theories are descriptions of something real. No particular dress or music style is any more rooted in reality than any other, but only one concept of property is rooted in reality.

nate-m June 8, 2011 at 12:54 pm

For you all those details are but puny legal matters. But that is the very point! Just try to walk through the technicalities of these details.

Not puny technical details. Legal technicalities created to deal with the complexity of human action and relationships. It doesn’t change anything about the fundamental concepts, however.

Have you driven through the US?

I’ve lived there most of my life, so yes.

Have you ever noticed that everything is fenced?

Some of it.

What makes Americans love barbed wire so much?

It’s a cheap and effective animal control mechanism. It’s necessary for the management of domesticated animals.

It’s not terribly useful at preventing humans from trespassing. Which is ok since that it’s not it’s purpose.

BTW, I hope you understand that homesteading has to do with more then just land (ie: ground) grants.

Wildberry June 8, 2011 at 12:22 pm

@ nate-m June 5, 2011 at 6:02 pm

In this limited sense of homesteading, it is equivalent to the rule of capture in standard property law. However, property law extends beyond this narrow rule covering very limited circumstances.

Most land finds its original title in conquest and decree. Therefore, most property does not find its original title in the act of homesteading, so the theory as the sole basis for property rights is fundamentally bankrupt.

Rothbard deals with this by declaring that if the “crime” is so far back in time that the original owners cannot make a case for misappropriation, then the present owner has legitimate title.

This is a negation of the very theory he proposes, since in most cases property is acquired by the exception rather than the rule.

It is better to simply understand that property is a human device, and it arises to serve a purpose in a cooperating social unit; i.e. society.

One example of this has to do with indigenous Americans in the Eastern territories of pre-colonial America during the beaver trade. They did not have a property rights system, but developed one under the pressure of beaver trapping.

Stephan Kinsella June 8, 2011 at 12:48 pm

The rule of capture is not the only possible rule. Libertarian homesteading theory as applied to subterranean minerals is not yet well developed. Rob Bradley touches on it in his Cato treatise (http://www.cato.org/pubs/policy_report/pr-nd-rb.html), and I, as a former oil & gas lawyer and libertarian legal theorist, have had thoughts on it (https://www.stephankinsella.com/2009/08/mutualists-and-randians-on-arab-oil/), but don’t assume, “Wildberry.” You know what happens when you ass-u-me, right?

Wildberry June 8, 2011 at 2:18 pm

OK Stephan, but it looks like I was pretty close, given the “not yet well developed” nature of the alternative/derivative rules.

At any rate, I would find it useful and refreshing if you found it possible to acknowledge the reasonable similarities between your theories (or at least the ones you ascribe to) and the body of traditional rules that we currently live by.

It appears that the rule of capture and homesteading have something fundamental in common. No harm in admitting that not everything “libertarian” is by definition contrary to every existing rule or law.

sweatervest June 8, 2011 at 2:27 pm

“Most land finds its original title in conquest and decree. Therefore, most property does not find its original title in the act of homesteading, so the theory as the sole basis for property rights is fundamentally bankrupt.”

Aha! I just caught one of those railing against us “IP communists” quoting Marx more or less!

Not that you ever called us communists, Wildberry, but I want to point that out to those who do. And, yes, that little bit about homesteading not being the reality is straight out of Marx’s writings.

And it always involves the same semantic trick (thank you Hoppe for stating this in a very clear and concise way): current so-called property was hardly ever homesteaded, therefore the very concept of homesteading is bankrupt.

That’s a big non-sequitur right there. That most current property titles are invalid does not invalidate the very concept of property titles, and it certainly does not stop us from identifying them as invalid property titles.

It was never the purpose of property rights theory to be a history of human interactions.

But this seems to go along with your (perhaps unconscious) insistence that ethics is pointless and the only things worth saying are historical facts. It doesn’t matter that all that conquest was undeniably a violation of peoples’ rights, it just matters that it was the way things happened!

“No harm in admitting that not everything “libertarian” is by definition contrary to every existing rule or law.”

I do believe this is one of those straw men.

nate-m June 5, 2011 at 3:45 pm

But try to invoke it when you are clubbed to death protecting your “property”.

That’s the sort of violence we are trying to avoid by getting rid of the state and such things as ‘IP’. You know, evolving society and improving the general welfare of humanity.

I am talking about established, consented Economic Property Rights, exchangeable on markets.

It’s all just a logical evolution of society’s sophistication based on some basic fundamental rights that never change.

Once you recognize and respect its rules you can move away, by gaining the majority through education, from the “Might is Right” view on your cited level of the “spoon”.

How is the fact that you must be in possession of a item in order to use it have anything to do with ‘Might is Right’?

My example was actually in a communistic society that denied the concept of property rights, yet it was obvious that property rights was still in effect. Absolutely despite anything the majority agreed on. You can’t get away from it.

Show me a example of how a person can use a spoon to eat while not being in possession of it in some manner because the majority agreed on it. How multiple people can use the same spoon to eat soup simultaneously. Nothing you can do can change it. Any sort of complex economic system must be based on these sort of basic premises in order to be valid.

I suppose I am just not understanding your point here.

Andras June 5, 2011 at 4:32 pm

There is no communistic society in isolation. They die fast as it can not function. There are communistic people temporarily converging in a communa/kibutz.
The very definition of spoon includes feeding the individual. However, consider a cafeteria. You do not own the spoons but you can have access and you can also be denied access to them. And still a bully can come any time and overwrite the rules if he is allowed.
When you want to comprehend society and steer it into your preferred direction you need to consider all of these factors not just an idealized system with selected people. Also keep in mind the consequences on individuals, not only on their survivors. After all, libertarianism should be about individuals.

nate-m June 5, 2011 at 5:45 pm

There is no communistic society in isolation.

Sure, but that’s besides the point. You stated that
“””Property is a human device based only on consent of the majority.”””

I created a example were even though the majority of the people did not consent, or even acknowledge, the existence of private property it did nothing to negate the need for it in order to function. The best they can do is refuse to acknowledge it.

The very definition of spoon includes feeding the individual. However, consider a cafeteria. You do not own the spoons but you can have access and you can also be denied access to them.

Sure. Typically I pay the cafeteria a fee and the spoon is provided to me by the cafeteria operator or somebody leasing space in the cafeteria. Something like that. That still doesn’t change the fact that I need to be in possession of the spoon in order to use it. There there is exclusivity involved at multiple stages here. You can choose to make the example as complicated as possible, but it doesn’t change anything about my original point.

And still a bully can come any time and overwrite the rules if he is allowed.

Ok? That’s called violence and is immoral. What is the point here? I don’t get it. If the Bully takes the spoon through force then that is immoral and violent, but that doesn’t change anything about the basic concept here. I lost my de facto rights to the property and he gained de facto rights to the property through the use of violence. I may still retain De Jure rights and those De Jure rights can be created and defended in many different ways.

However completely regardless property and property rights still exists. The fact that a guy is a dick about it doesn’t change anything.

When you want to comprehend society and steer it into your preferred direction you need to consider all of these factors not just an idealized system with selected people. Also keep in mind the consequences on individuals, not only on their survivors. After all, libertarianism should be about individuals.

I still don’t get it. How does this negate anything that Stephan said?
Do you think that I don’t understand the necessity for cooperation or the ability to defend property or something?

Andras June 5, 2011 at 7:47 pm

Nate,
I agree, there are valid points in Stephan’s presentation, he speaks the truth in certain directions. (So did Marx.) Stephan bases his ideology on accepting only the physical as potential property. I believe if the foundation is wrong the rest can not be better.
Furthermore, as almost every serious debate initiated by Stephan boils down to anarchy vs. minarchy I thought let the fluff out and go directly there. Claiming that libertarianism equals anarchy is his favorite obsession. I guess the rest you can put together.

nate-m June 5, 2011 at 8:48 pm

Stephan bases his ideology on accepting only the physical as potential property.

Except in order own property it must be physical. You can’t own labor, you can’t own concepts or ideas. At least not in the same way as physical property.

In order to perform a human action on a piece of physical property you must be in exclusive control of it one way or another. Physical goods, by their nature (how the universe functions) are scarce. This is the foundation to all property rights.

These two properties when combined necessitates a framework of property rights in order to have a the ability to have peaceful coexistence with other humans. However the framework, however formal or informal it appears; it must exist. Both de facto and de jure property rights.

A idea, however, requires no exclusivity. Two people, 3 people, or 4000 people can use the same idea at the same time with out issue. A idea has no real physical substance. It has no physical need for exclusivity of control in order to perform a human action with that idea. It requires a level of abstraction to even comprehend a idea.

You can’t even hold or touch idea, except abstractly or poetically. You can have a written expression of a idea, but that is only so much paper and ink. It is not a physical manifestation of a idea anymore then a tree falling in a forest with no one to hear it has a sound. In order for a idea to exist it must be read, interpreted and learned. Then the idea exists in the mind of the beholder.

The nature of physical property which necessitates property rights is completely absent when it comes to ideas.

This is why IP is diametrically apposed to physical property rights. That is you simply cannot have IP without violation of property rights. IP tries to a apply rules that cover physical goods (rules created because of their physical nature) to items that have no physical element. So it’s a non-sequitur.

The only way that IP rights manifest themselves is through de jure law that gives you the ability to control the physical property (and the related human actions) owned by other people without their consent.

You can create something resembling IP based on contract law, but it will lack fundamental features are core to the legal functions of patents and copyrights.

Andras June 5, 2011 at 9:13 pm

@nate-m,
We have arrived to IP. As Wildberry so eloquently shown in his scores of postings IP is not about owning ideas. In fact, IP laws are exactly against owning ideas. Let start again from here.

Peter Surda June 6, 2011 at 8:03 am

Andras,

Wildberry is not eloquent. He’s a demagogue. He compensates for the lack of quality with quantity, uses words in fluctuating meanings, denies elementary logic and avoids any serious debate. He accompanies it with misleading statements or outright lies, such as when he said that Mises wrote a lot about externalities (in reality he only wrote about five pages), or how Schulman was being verbally abused (whereas in reality Schulman was the one using derogatory statements).

The claim that IP is not about ownership of ideas is easily disproved by pointing out that it is impossible to interact with an idea without the use of a medium, and these media are what IP covers. I explained it many times. It is an simple fallacy. From the existence of two names for the same phenomenon IP-confusists incorrectly deduce that there are two separate phenomena. But no, you can’t have logic in a debate. You must have feelings, “think about the poor inventors” and in general anything that can distract from the logic.

BTW I’m reading Failures of Kenynesian Economics by Hazlitt. Keynes’ words remind me of the mental misuse that the IP-confusist are committing. First Keynes says that saving and investment are a part of the same thing, and subsequently builds his whole theory on the assumption that they are different.

If you want to persuade me, Andras, you need to start acting like a scientist. You know, logic and stuff.

Andras June 6, 2011 at 10:39 am

@Peter Surda,
I gave up persuading you.

sweatervest June 6, 2011 at 5:21 pm

“We have arrived to IP. As Wildberry so eloquently shown in his scores of postings IP is not about owning ideas. In fact, IP laws are exactly against owning ideas. Let start again from here.”

I don’t think Wildberry realizes he gave up the entire pro-IP position by admitting that point, one that the anti-IP side had been pushing for a while. If you admit IP is not about protecting ideas as property then you admit it is a deceptive way to justify stealing other people’s real property.

Beyond that, that IP is actually against owning an idea just seems confusing to me. How does IP *stop* what would otherwise be an ability to own an idea?

sweatervest June 6, 2011 at 5:21 pm

“I gave up persuading you.”

Well, are you trying to persuade him of something that is not persuasive, or that no one should be persuaded by?

sweatervest June 6, 2011 at 5:25 pm

Also, as I think Peter is trying to explain, Wildberry often “refuted” what other people said without actually illuminating what the truth is. He often said IP is not about protecting ideas but I at least did not see any insight into what, then, IP *is* about. I suppose that’s not necessary for the refutation, but it certainly begs a question that was never answered. Besides we cannot start talking about IP by simply knowing what it does *not* concern.

Wildberry June 6, 2011 at 5:49 pm

Andras,

Nothing will bring out Peter Surda faster than mentioning my handle.

You posts are brilliant. You definately have a handle on this. Well done.

Wildberry June 6, 2011 at 5:51 pm

@ sweatervest June 6, 2011 at 5:21 pm

I don’t think Wildberry realizes he gave up the entire pro-IP position by admitting that point, one that the anti-IP side had been pushing for a while. If you admit IP is not about protecting ideas as property then you admit it is a deceptive way to justify stealing other people’s real property.

Huh? I’m having a little trouble understanding what I gave up. Can you try to explain?

sweatervest June 8, 2011 at 2:59 pm

“You posts are brilliant. You definately have a handle on this. Well done.”

Oh yeah, you say he has a handle so he must! High fives are the path to the truth!

“Huh? I’m having a little trouble understanding what I gave up. Can you try to explain?”

The explanation is in the quote: If you admit IP is not about protecting ideas as property then you admit it is a deceptive way to justify stealing other people’s real property. It’s sitting right in front of you, you just don’t want to deal with it.

Are you suggesting that calling something “intellectual property” when it is actually *opposed* to the ownership of ideas (that is total nonsense, you have nothing to back up such a claim, it’s probably just a meaningless assemblage of words) is not dishonest?

If it’s not about property rights in the intellectual (i.e. ownership of ideas) then it is a clear act of deception to call it intellectual property. You have may something else in mind, but the discussion has always been over *intellectual property*. It *is* about the ownership of ideas. What else could it possibly be about!? It’s called intellectual property!!

nate-m June 6, 2011 at 7:43 pm

We have arrived to IP.

You’ll have to spell it out for me.

As Wildberry so eloquently shown in his scores of postings IP is not about owning ideas.

Well this is why it makes it difficult to walk through these things.

Because people speak of ‘Intellectual Property’, yet seem to insist that there is no intellect and no property involved in the same sentence paragraph as stating how it’s just another form of property.

I am using the term ‘ideas’ to cover a variety of different intellectual products. Formulas, recipes, stories, plotlines, concepts, music, etc etc.

In fact, IP laws are exactly against owning ideas. Let start again from here.

IP laws, copyright and patents, are monopolies created to control other people’s property and other people’s actions. They are handed out by the state governments and enforced by institutional violence.

IP laws in all forms that they ever existed are a direct violation of private property.

This is a undisputed fact and there is no possible way you can find a example to the contrary. A framework of IP that does not involve institutionalized violence and violation of property rights has not yet been created by humans.

I contend that it’s impossible.

It’s up to pro-IP libertarians to prove that IP _can_ exist without violating private property and without state enforcement. So far the best that most people can come up with arguments that consist little more then a string of twisted metaphors and leading questions.

Stuff like: “Property is only what the majority of people decide it is”.

I can create a theoretical framework based on contracts and purely voluntary agreements that can create something resembling IP law… This is easy and has been done a dozen times over by many people. But it always is going to lack at least some basic elements which is core to IP.

Andras June 6, 2011 at 6:48 pm

Peter Surda June 6, 2011 at 7:52 pm

Andras,

However, he is just repeating himself and goes to ad hominem when he is asked, politely, to check his premises.

On the contrary. I’m a falsificationist, I have no problem with eliminating assumptions. Rather it is you IP confusists who start with dogmas and are unable to coherently argue.

nate-m June 6, 2011 at 8:08 pm

You know, restoring to ad hominem only serves to undermine your own position. Your essentially admitting failure and giving up on your arguments half way through. Simply ignoring him would increase your credibility.

This sort of thing makes it very easy for people to dismiss your arguments as trolling ( http://en.wikipedia.org/wiki/Troll_(Internet) ) and even sock puppetry ( http://en.wikipedia.org/wiki/Sockpuppet_(Internet) )

Andras June 6, 2011 at 9:40 pm

If you addressed me I can only say that I meant it as a compliment.

nate-m June 9, 2011 at 6:51 am

ok. Sorry for the misunderstanding.

sweatervest June 8, 2011 at 3:01 pm

“I think Peter Surda is trying to do what Zeno of Elea (http://en.wikipedia.org/wiki/Zeno_of_Elea) did 2500 years ago.”

Do you have anything at all to back this up? I didn’t see Peter rejecting the idea of motion or change anywhere? Where/how did he resemble Zeno in the slightest way?

“He has still a long way to go in order that his sophism surpasses the master’s.”

What sophism?

Peter Surda June 8, 2011 at 3:44 pm

By the way, regarding Zeno’s paradoxes. I did not look at the wiki page about Zeno but I remember reading about them as a kid in a book about the history of math (I think I won the book in a math competition or something).

Zeno formulated his paradoxes, just like I try to formulate my “paradoxes”. But in order to refute them, you cannot just say “that’s a paradox and Zeno was a moron”. You need to formulate a counterargument. For example, the one with the Achilles and turtle can be refuted by pointing out that Zeno is making an unfounded assumption: that there cannot be a convergent series. Looks like even the wiki article on series references Zeno.

But even if refuted, that does not mean Zeno was a moron. On the contrary, he found an interesting question and challenged others to answer it. Some people took the challenge and were successful. If they just said instead “he’s a moron”, they would only underscore their own incompetence.

With a bit of exaggeration it could be said that I try to follow in Zeno’s footsteps. I formulate my arguments in a clear manner, and even explain how they could be countered should they be wrong. That IP proponents retort with logical fallacies is regrettable.

Andras June 8, 2011 at 6:29 pm

@Peter Surda, Thank you Peter for explaining Zeno’s relation to you to sweatervest.
About you: This is not intended as an “ad hominem”. If it feels like I apologize.
You are and could be a formidable debater. You appreciate logic, you can master a good body of background info and you have the stamina and temper. One thing, I believe, is still missing: what I have learned during my scientific carrier, allowing room for failure. What I mean by that is in order to explore you need to allow yourself to be wrong. (Sound un-American where “failure is not an option”.) The rest is simple: explore, admit failure, especially to yourself and build on its lessons. Being a “falsificationist” you limit yourself to ideas of other’s and approach them only in a negative sense. Upon accepting their axioms you have no way to surpass or develop these systems. You can only scratch them from the inside. If they are not strong enough they pop. But there is no next level to accept as you always approached it from the inside and have no experience of the outside. Your system collapses with the pop. As a defense you got emotionally attached to your bubble.
I don’t want to hurt you but to manage these approaches the axioms need to be attended. That is why I have targeted Kinsella’s axioms, 1) the exclusivity of only the physical accepted as property and 2) the subjectivity of what and how property is defined. If these axioms are shaken the whole system will be stronger or … falls apart.
For both issues, the next argument should, at least, give you pause: I guess you heard about the derivative market. There are lots of complains about their dangers: their size and their unregulations threaten to destroy the financial markets (allegedly). Let’s see: their size is somewhere between $500T and $1.5T (that T is a trillion). It is just an estimation as they are between only the two parties involved (no third party or discounting) and there are no reporting or other obligations. They are absolutely unregulated or free market products. Yes, I agree, some of the parties are not the champions of free markets but their derivatives are still as close to that as possible. This size is at least ten times the global GDP! And these are all derivatives written on prices, interests, or just the weather. Bets on anything. Sometimes third, fourth or even higher derivatives on derivatives. Hardly any connection to physical property, unless you call the paper written on that. However, there are some that not even paper is present just handshakes. People make and honor these contracts in mass with free will. Are they property when they written or come to payments? Are they property when they counted in accounting and future planning between writing and payment?
Are they property?
If so, what are the consequences?
And if not, what are the consequences?

Peter Surda June 9, 2011 at 4:35 am

Andras,

This is not intended as an “ad hominem”. If it feels like I apologize.

Let me assure you, there is no need to apology. I did not refer to ad hominems because I was offended, rather to point out that it’s a logical fallacy.

You are and could be a formidable debater. You appreciate logic, you can master a good body of background info and you have the stamina and temper.

Thank you, that’s a bit unexpected. But I’m not here in order to gain praise. I’m here in order to learn.

One thing, I believe, is still missing: what I have learned during my scientific carrier, allowing room for failure. What I mean by that is in order to explore you need to allow yourself to be wrong.

I think you are missing something here. This is precisely what I’ve been repeating, and pointing out that this is what my opponents are lacking.

Being a “falsificationist” you limit yourself to ideas of other’s and approach them only in a negative sense.

Being a falsificationist refers primarily to one’s own arguments, rather than other people’s arguments. Allowing for the option of being wrong is the core of falsificationist methodology. Please note how I (try to) explicitly formulate the assumptions, and also explain how it would be possible to disprove them, should they be wrong. I do not see the equivalent behaviour in my opponents. On the contrary, they make a bunch of incoherent unsubstantiated assumptions and when challenged on them, they get emotional.

Upon accepting their axioms you have no way to surpass or develop these systems. You can only scratch them from the inside. If they are not strong enough they pop. But there is no next level to accept as you always approached it from the inside and have no experience of the outside. Your system collapses with the pop. As a defense you got emotionally attached to your bubble.

The point of falsificationism is to eliminate assumptions rather than create new ones. You have your argument backwards. The result is that you have a scientifically stronger position, however at the cost of having fewer conclusions. To paraphrase Nicholas Taleb, it is better to be approximately correct than precisely wrong.

I don’t want to hurt you but to manage these approaches the axioms need to be attended.

And that is precisely what I have been doing.

the exclusivity of only the physical accepted as property

Let me repeat once again: if this assumption was wrong, it would be able to demonstrate how to interact with something non-physical without interacting with anything physical. This way the assumption is not only formulated in a proper falsificationist manner, it also explains one of the methods to refute it.

the subjectivity of what and how property is defined

I admit that any definition is subjective, but my point is that some definitions are self-contradictory and/or too vague, rather that they are subjective. We need to eliminate those first. Once we have done that, we can debate which among those that are left over has more merit. This point has not been reached yet, however, because IP proponents fail to address the logical fallacies in their arguments.

If these axioms are shaken the whole system will be stronger or … falls apart.

Correct. And, since I have been unsuccessfully challenging my opponents to refute them, I am baffled why you mention this. I do not mind if my assumptions are disproved. The scientist in me would rejoice. It is my opponents, however, whose assumptions, incoherent as they may be, are the foundation of their ideological stability. Any attack on those provokes an irrational emotional response.

People make and honor these contracts in mass with free will. Are they property when they written or come to payments?

I kindly refer you to the theories produced by Evers/Rothbard/Hoppe/Kinsella. A contract, specifically a conditional transfer of title, does not require the ownership of the condition by the party of the contract. The condition is just a logical construct. Merely because you use a noun to refer to it does not mean that the transfer of title requires that one of the party of the contract owns it, or that this is relevant for people who are not a party to the contract. Derivatives are just that: a conditional transfer of title. So, you are making here the assumption that if you put a noun into a contract as a condition, it means that in order for that contract to be valid, whatever the noun refers to must be ownable by one of the parties. I already explained this to Wildberry about two months ago, and he, as usual, completely ignored it with a grandiose brouhaha.

Are they property when they counted in accounting and future planning between writing and payment?

You are here making a very similar assumption. Assigning economic value to a noun does not require the target of that noun’s reference to be ownable by the entity that makes use of that economic value.

In a way, you are the Zeno in this thread. You’re making fallacious implicit assumptions.

Are they property?

They are property, but not in the way you mean it. They refer to property owned by other people. You are just using a new way of referring to existing property. You are not creating new property. You are merely enhancing (or reducing) the value of existing property.

If so, what are the consequences?
And if not, what are the consequences?

Reinterpreting a phenomenon under a new name does not create new property. So the questions are pointless. It would be more accurate to ask “are they a property separate from the property they refer to?”.

If yes, you’d end up with a contradiction from a theoretical point of view, and with expropriation from practical point of view.

If no, you’d have a coherent theory of property and a more predictable legal environment.

Stephan Kinsella June 9, 2011 at 6:45 am

Peter, on somewhat of a tangent — I am curious if you have read and/or what your thoughts are on the “conjecturalist” approach of, say, J.C. Lester in his Against Leviathan? This is the Popperian mode that rejects the idea of justificationism per se, instead choosing to “conjecture” bold theories, then to “test” them rigorously — sort of taking the empirical method of falsificationism and applying it across the board (see David Gordon’s review here mises.org/journals/jls/17_4/17_4_4.pdf

Also, have you any thoughts on Hoppe’s view about empiricism/natural science, that even if you get a fact contrary to a theory/hypothesis, you don’t just chuck the theory, unless you have a better theory. See his detailed evisceration of D.N. McCloskey http://mises.org/journals/rae/pdf/RAE3_1_16.pdf
p. 191 et pass.

Peter Surda June 9, 2011 at 8:06 am

Stephan,

unfortunately I have to put these on hold, I’m now reading about monetary theories, digital currencies and currency competition because I want to understand Bitcoin. But I’ll put the articles you referenced onto my Kindle and will come back to them eventually.

Stephan Kinsella June 9, 2011 at 9:14 am

Interesting, Peter–curious what you conclude about bitcoin. I can’t make heads of tails of it; seems like the money equivalent of a floating anarchist nation scam to me, but I haven’t looked at it closely.

Peter Surda June 9, 2011 at 9:50 am

Stephan,

I don’t think there’s anybody can make head or tails of Bitcoin. I think the reason for it is that its future development, success or demise depend on future empirical variables (which are, of course, uncertain) and cannot be praxeologically derived. That is why it’s so difficult to understand it.

Andras June 9, 2011 at 3:39 pm

@Peter Surda June 9, 2011 at 4:35 am
Let me ask this.
When someone makes a bet how does this fit into your property theory?
Bet: anything, e.g., the number of corners in the next match of Barcelona.
What is the meaning of winning (and of loosing)?

Stephan Kinsella June 9, 2011 at 5:05 pm

A one-way bet is a unilateral, conditional transfer of title. A two-way bet contains two such transfers, each triggered by opposing conditions. E.g. if you and I bet $10–I say that it will rain tomorrow, you that it will not, then each of us has made a conditional title transfer: me, of $10 of my property, to you, IF it does not rain; you, of $10 to me, if it does rain.

In no case do we “own” the condition, the rain. It’s jsut a trigger. Same with service contracts: a service contract is actually just a one-way title transfer: money from employer to employee IF employee does X.

Peter Surda June 9, 2011 at 5:30 pm

Andras,

Stephan explained it better than I can. I’ll just turn the question around: if you make a bet, does it mean that the referenced phenomenon must be owned by one of the parties in order for that bet to be valid? Let’s say we bet who wins a football match. Now here are the questions:

– does the validity of that contract (bet) require that one of us has a property right in some of the aspects of the match, for example the field or the ball, or that we employ the players?

– does the opinion of the owners of the field, ball, or the players have an influence on the validity or effects of that contract (bet)?

Not only in accordance with the theory presented by Stephan, but also according to current law, the answer in both cases is no. Analogically, the same should also apply to derivatives (I’m not sure if that’s the case with current law but I’m pretty sure that’s the conclusion Stephan would draw). Financial derivatives reference already existing property (which may or may not belong to the people involved in the trade, but the point is they already belong to someone). They are not a new kind of property. They are a new way of looking at old property.

Wildberry June 9, 2011 at 6:34 pm

@Stephan Kinsella June 9, 2011 at 5:05 pm

This is no different that an obligation to perform on the occurance of a condition precedent.

The difference between standard contracts, and the “title transfer” theory is more to the point of the question.

In standard contract theory, a property interest in the promise is alienable, can be traded or used as a security interest, and would be enforceable agaist failure to perform. In this regard, the contract creates a property interest in the promise to perform.

In the TTT framework, my understanding is that the promise is not enforceable, because will in not alienable. The only way around this is to pre-negotiate a preformance bond that establishes liquidated damages for failure to perform. Let’s ignore the issues with negotiating liquidated damages.

Under TTT, there is no property interest created, or at least you would not describe the same outcome using a property interest concept. I assume you would say that you create an interest in the future transfer of title, secured by a performance bond, or something like that?

My question is, is this semantics, or is there a material difference in outcomes?

Andras June 9, 2011 at 6:39 pm

@Stephan and Peter,
I have never expected that any of the parties own the underlying asset (here the rain). My stand is they bet their property and at the end the winner owns the looser (or correctly its property). So their contract is about their property.
Can a contract beyond (i.e., not about or not of) your property with material consequences be valid in your system?
By the way, is it true then, that in your system, these bets (say even a winning lottery ticket) are not property?

Stephan Kinsella June 9, 2011 at 7:41 pm

Andras:

Can a contract beyond (i.e., not about or not of) your property with material consequences be valid in your system?
By the way, is it true then, that in your system, these bets (say even a winning lottery ticket) are not property?

A bet is not property. a bet is a contract. it’s a way of transferring title to property.

The penumltimate question — I don’t get. Oddly worded.

Wildberry:

This is no different that an obligation to perform on the occurance of a condition precedent.

The difference between standard contracts, and the “title transfer” theory is more to the point of the question.

In standard contract theory, a property interest in the promise is alienable, can be traded or used as a security interest, and would be enforceable agaist failure to perform. In this regard, the contract creates a property interest in the promise to perform.

In the TTT framework, my understanding is that the promise is not enforceable, because will in not alienable.

That is not my reason. That is Rothbad’s argument for inalienabiliyt. The reason a mere promise does not suffice is it is just a promise. It’s a statement of prediction about what I may do. You can rely on it or not, up to you. But a title transfer is an actual transfer of the title–even if it’s a trasnfer set up NOW, to be effective in the future, based on a conditional event (and all future title trasnfers are uncertain and conditional since the future is uncertain–the party or the property may not exist, etc.).

The only way around this is to pre-negotiate a preformance bond that establishes liquidated damages for failure to perform. Let’s ignore the issues with negotiating liquidated damages.

No. this is not rihgt. You can pre-negotiate a liquidated damages PAYMENT. You don’t need to pre-pay it as a bond. You can just arrange it. E.g., “If you sing at my kid’s party, I will give you $1000. If you fail to show up, you will pay me $7000 damages.”

Its may be SAFER to make the singer deposit $7k first in some escrow but this is not necessary. If the singer fails to show up then the condition to trigger the transfer of $7kis fulfilled and it is transferred. Then at that point the singer is in possession of $7k of money owned by the other guy, and if he refuses to hand it over it’s a type of theft.

This theory is very differnt than normal theories, and I explain why here

http://mises.org/journals/jls/17_2/17_2_2.pdf

Andras June 9, 2011 at 8:54 pm

@Stephan,
Can you put a price on a contract and can you trade it?

Peter Surda June 10, 2011 at 4:45 am

Andras and Wildberry:

merely because an act superficially looks like a sale does not mean that it actually is an exchange of a good for money. Whether you call it a sale or not is irrelevant from a legal point of view, regardless of what legal system you are using for evaluating that. I already explained that merely using a noun inside a contract does not necessarily mean that that noun represents the object of the contract. It’s a linguistic issue.

Wildberry June 10, 2011 at 12:17 pm

@Stephan Kinsella June 9, 2011 at 7:41 pm

You might be surprised to learn that I’ve read your paper as well as some others on TTT.

After all that and your explanation, I think in some large part we are talking about two systems of contract theory that arrive at similar outcomes.

For example, I continue to insist that this:

But a title transfer is an actual transfer of the title–even if it’s a trasnfer set up NOW, to be effective in the future, based on a conditional event (and all future title trasnfers are uncertain and conditional since the future is uncertain–the party or the property may not exist, etc.).

…is in fact equivalent to a condition precedent in standard contract theory.
What I’m trying to zero in on is what interest the oblige has in the obligor’s promise under TTT. If the time for performance comes, and the person or property in question doesn’t exist, is the contract is automatically void under TTT? Is this different than the impossibility defense in standard contracts?

No. this is not rihgt. You can pre-negotiate a liquidated damages PAYMENT. You don’t need to pre-pay it as a bond. You can just arrange it. E.g., “If you sing at my kid’s party, I will give you $1000. If you fail to show up, you will pay me $7000 damages.”

OK, but doesn’t that amount to the same thing? If you contract for a certain performance in the future (payment) based on a condition precedent, when the obligation matures, the payment is in fact performance of the duty contracted for (payment in lieu of singing).

If singer fails to perform the duty to sing, there is a right to action to collect the performance guarantee. How is “and if he refuses to hand it over it’s a type of theft” different than a breach of contract and a suit for breach? Both theories allow coercion at that point in time, correct?

Its may be SAFER to make the singer deposit $7k first in some escrow but this is not necessary. If the singer fails to show up then the condition to trigger the transfer of $7kis fulfilled and it is transferred. Then at that point the singer is in possession of $7k of money owned by the other guy, and if he refuses to hand it over it’s a type of theft.

Whether the “singer” buys a bond or self-funds the deposit, it is in effect a performance guarantee. Failure to perform as promised transfers the title to the money to the “other guy”.

The question is about property rights. In standard (normal?) theory, since the promise is enforceable, it can be treated as a property interest in the performance (singing and & $7k), and traded or securitized.

In TTT theory, since performance is only guaranteed by a performance bond (or deposit), only the payment for failure to perform could be traded or otherwise assigned, is that right?

The original performance is uncertain, and therefore has little value to a third party, if I understand correctly. In other words, there is no alienable property interest in the original promise to perform. Rather failure to perform might be an alienable property interest, but the likelihood of the condition occurring would be relevant to a third party; (in fact such a trade would give a financial incentive for the 3rd party to prevent performance).

Whereas in standard contract theory, no bond is required (although may be advisable in some circumstances) because the promise itself is enforceable.

It seems, therefore, that TTT does not create a property interest in the promise to perform, while standard contract theory does. Is that a valid statement?

Andras June 10, 2011 at 3:18 pm

@ Peter Surda June 10, 2011 at 4:45 am
Peter, for god’s sake, the notional value of these derivatives are more than ten times the global GDP. People treat them as property when they trade them. If it walks like a duck, if it quacks like a duck, if it shits like a duck… It is a duck!
In principle, there can be an infinite number of possible (contract) theories. Their only measure is how they fit reality. If you have to massage too much the existing concepts (the meaning of the words) to fit your theory it, at least, should give you a pause. It is not just semantics, it is common sense.
You can call us anything here to avoid facing reality but don’t try to drive against the tide on the freeway. Loud cursing and ad hominems won’t help.

Peter Surda June 10, 2011 at 3:57 pm

Andras,

you have fallen prey to metaphors. A terrible mistake for a scientist.

Stephan Kinsella June 10, 2011 at 4:13 pm

Wildberry:

I continue to insist that this:

” But a title transfer is an actual transfer of the title–even if it’s a trasnfer set up NOW, to be effective in the future, based on a conditional event (and all future title trasnfers are uncertain and conditional since the future is uncertain–the party or the property may not exist, etc.).”

…is in fact equivalent to a condition precedent in standard contract theory.
What I’m trying to zero in on is what interest the oblige has in the obligor’s promise under TTT. If the time for performance comes, and the person or property in question doesn’t exist, is the contract is automatically void under TTT? Is this different than the impossibility defense in standard contracts?”

Well, pat of my argument is that you can get almost all of the features of the current contract system using a more sound and libertarian property based TTT. The fact that you can do this with TTT is a good feature not a weakness. It’s simpler and cleaner and easier to justify.

But the only reason it’s the same result is that the conventional system makes exceptions. For example there are obligations to do, and to give, in theory; but you can only enforce the former with awards of money–so it’s like a big sham since all obligations to do (to perform) are really just title transfers. Why not just call it that? That solves immediately the debate over the efficient breach hypothesis; it separates ethical or moral aspects of promising from legal transfers of title.

and it solves also IMO the difficult issue of specific performance and even voluntary slavery. The current account has to say there are obligations to do, then backtrack on this to avoid slavery. Libertarians that think promises are binding then either have to support voluntary slavery and debtor’s prison, or they have to come up with contorted reasons why it does not apply. the TTT avoids all this. It makes clear exactly waht is the status of a defaulting debtor: he owes nothing; he has no obligation; he is not stealing. It was simply a title transfer that failed.

“No. this is not rihgt. You can pre-negotiate a liquidated damages PAYMENT. You don’t need to pre-pay it as a bond. You can just arrange it. E.g., “If you sing at my kid’s party, I will give you $1000. If you fail to show up, you will pay me $7000 damages.””

OK, but doesn’t that amount to the same thing? If you contract for a certain performance in the future (payment) based on a condition precedent, when the obligation matures, the payment is in fact performance of the duty contracted for (payment in lieu of singing).

I don’t think it’s teh same–it’s not a perofrmance it’s a trasnfer of title. A performance needs the cooperation of the obligor. A title transfer does not.

Think of it like this. I own a watch. You ask to see it. I hand it to you, basically loaning it to you for a few seconds, and/or until I tell you to return it. DUring that interval you have a right-to-use it, which is like ownership, but due to the contractual undersatnding between us, the full right to control will revert to me upon a condition: my demanding it back. When I do, you must return it and if you refuse you are committing conversion (theft, trespass). The transfer of status–your having the right to control it; your losing this right–did not require your cooperation. It only requred a contractual title transfer arrangement set up ahead of time. Then, when the condition is fulfilled (the time ran out, or I demand it back), the full ownership reverts to me automatically.

This is no different in principle to a case where you own the watch and agree to transfer the title to me in 5 minutes, in excahnge for my giving you my autograph. I autograph your book, and so at that point, now the owenrship of the watch is mine automatically. This transfer does not require your cooperation any more than in the first case. IN fact in both cases if you drop dead while holding the watch, the watch still becomes my property per the previously arranged title conditions. You have no obligations at all. It is only that you acquire an obligation at the moment the title transfers: for at that moment you are now in possession of my property, and have an obligation to return it to me or not to use it without my consent etc. So any obligations that arise are soley a consequence of the current property allocation landscape, whcih itself is rearranged and determiend by contract (consent of ther owners).

So there is a differenc.e TTT is cleaner, based on property, libertarian, and solves many doctrinal problems or avoids complicated exceptions.

Wildberry June 11, 2011 at 2:46 pm

@Stephan Kinsella June 10, 2011 at 4:13 pm
Sorry for taking so long to respond, but I had other fish to fry.

Well, pat of my argument is that you can get almost all of the features of the current contract system using a more sound and libertarian property based TTT. The fact that you can do this with TTT is a good feature not a weakness. It’s simpler and cleaner and easier to justify.

Based on what I get from your responses, it does appear that you can arrive at the same (or very similar) outcomes with either system. We haven’t resolved the property issue yet, though. I am asking (lest you think I’m pettifogging) because I am trying to understand if you can create property interests in TTT contracts, which you can within traditional contract theory.

You said earlier that you cannot re-create IP using contracts. I’m trying to explore the why of that statement.

For example there are obligations to do, and to give, in theory; but you can only enforce the former with awards of money–so it’s like a big sham since all obligations to do (to perform) are really just title transfers. Why not just call it that?

As you mention below, there is the equitable remedies of specific performance. But the fact is that most contracts are financial arrangements in one form or another. Damages for breach are most naturally reduced to economic recovery for expectations unfulfilled because of breach. Also, remedies for breach calculate the size of the financial award based on the facts presented during trial, for example. This is why liquidated damages are rarely enforced, except in those rare cases where damages are difficult or impossible to calculate in advance.

Also, nearly all contracts involve a title transfer of something, although the concept of title transfer gets a little fuzzy when you are talking about a contract for a service for a service. It would be a stretch to call that a title transfer, wouldn’t it?

That solves immediately the debate over the efficient breach hypothesis; it separates ethical or moral aspects of promising from legal transfers of title.

How so? It seems that the efficiency of breach depends on the obligations likely for damages for breach. It is only when the damages for breach are less than the costs of fulfilling the contract that breach is efficient. I may be looking at this incorrectly, but it seems to me that under traditional contract theory, title transfer is most often the final result of most contracts.

Even in your example of a service for a fee, which in traditional terminology is a promise for a promise, in TTT terms it is simply a unilateral contract on a condition precedent. I’m not sure what advantage there is in one over the other, as it is just a terminology difference, unless I’m missing some other subtlety.

And it solves also IMO the difficult issue of specific performance and even voluntary slavery. The current account has to say there are obligations to do, then backtrack on this to avoid slavery.

What is difficult about specific performance? It only lies in those rare cases where money damages are inadequate, like in the sale or real estate or the sale of a work of art, etc. Does TTT not contemplate any form of equitable remedy?

I suppose the exception you are thinking of for slavery is the defense of illegality. What is difficult about that? If the contract is for something that is otherwise illegal, the contact is void; murder and slavery are out, just like with TTT.

Libertarians that think promises are binding then either have to support voluntary slavery and debtor’s prison, or they have to come up with contorted reasons why it does not apply the TTT avoids all this.

Well, obviously neither of these assertions is true. I think legal promises are binding and I don’t support slavery or debtor’s prison. You can’t accomplish things that are otherwise illegal just because you make what would otherwise be a binding contract. What is contorted about that?

It makes clear exactly waht is the status of a defaulting debtor: he owes nothing; he has no obligation; he is not stealing. It was simply a title transfer that failed.

I think this is the crucial issue I’m trying to raise. If a defaulting debtor owes nothing, if his other assets, for example, cannot be reached, then the TTT contract does not create a property interest in the debt payment. It eliminates the possibility of trading or securitizing the contract, because the assignee has no assurance that the promise is good. Therefore it has no value, or would have to be traded at a large discount under face value.

In traditional theory, however, a promise is enforceable, and collateral can be reached to make the obligee whole. This creates a property interest in the contract that will trade at closer to face value. Debtor prison is outlawed on public policy grounds, just like slavery, and bankruptcy stands as an option for the debtor to avoid losing essential assets in repayment, like the home.

What problem here does TTT solve?

“No. this is not rihgt. You can pre-negotiate a liquidated damages PAYMENT. You don’t need to pre-pay it as a bond. You can just arrange it. E.g., “If you sing at my kid’s party, I will give you $1000. If you fail to show up, you will pay me $7000 damages.””

OK, but doesn’t that amount to the same thing? If you contract for a certain performance in the future (payment) based on a condition precedent, when the obligation matures, the payment is in fact performance of the duty contracted for (payment in lieu of singing).

I don’t think it’s teh same–it’s not a perofrmance it’s a trasnfer of title. A performance needs the cooperation of the obligor. A title transfer does not.

Isn’t this equivalent to saying that failure to perform is a breach, which entitles the obligee to damages, which would be, in this case, payment of the liquidated damages? There is no coercion on the part of the obligee to make the obligor sing. Upon breach (non-singing), the condition is met and the obligor’s interest in the money amount is released to the obligee. If the obligor refuses to pay, the obligee has a cause of action, and the obligor would have to offer some defense or excuse, or be ordered to pay. Same result in both theories, as non-payment authorizes coercion. I don’t see an advantage here, just another way of describing the operation of law.

Think of it like this. I own a watch. You ask to see it. I hand it to you, basically loaning it to you for a few seconds, and/or until I tell you to return it. DUring that interval you have a right-to-use it, which is like ownership, but due to the contractual undersatnding between us, the full right to control will revert to me upon a condition: my demanding it back.

This appears to just be another way of describing a bailment; a conditional transfer of possession, but not ownership, (an analogy to copyrights, in some ways).

When I do, you must return it and if you refuse you are committing conversion (theft, trespass). The transfer of status–your having the right to control it; your losing this right–did not require your cooperation. It only requred a contractual title transfer arrangement set up ahead

Bailment theory does not require that the parties reach a detailed agreement in advance. It only requires that the bailor make his intentions clear. In any case, if you gave me your watch, and I refused to give it back, saying that you sold it for example, I would have to show that I gave sufficient consideration. In the absence of such a showing, you could not legally keep the watch.

The doctrine of bailment eliminates the need for parties to recreate the doctrine in an explicit and properly worded contract in advance, greatly reducing the transaction costs of such an exchange. Imagine if I asked to see your watch, and you refused until we negotiated a contract describing the bailor/bailee arrangement intended. Are you suggesting that unless this is done, I could keep your watch and you would have no recourse?

of time. Then, when the condition is fulfilled (the time ran out, or I demand it back), the full ownership reverts to me automatically.

In the bailment doctrine, the ownership does not need to revert, because the condition of transfer did not transfer ownership, only possession. That give the owner the right to demand the property at any time, under his undisturbed property rights to the watch. What is the advantage of TTT here?

This is no different in principle to a case where you own the watch and agree to transfer the title to me in 5 minutes, in excahnge for my giving you my autograph. I autograph your book, and so at that point, now the owenrship of the watch is mine automatically. This transfer does not require your cooperation any more than in the first case. IN fact in both cases if you drop dead while holding the watch, the watch still becomes my property per the previously arranged title conditions. You have no obligations at all. It is only that you acquire an obligation at the moment the title transfers: for at that moment you are now in possession of my property, and have an obligation to return it to me or not to use it without my consent etc. So any obligations that arise are soley a consequence of the current property allocation landscape, whcih itself is rearranged and determiend by contract (consent of ther owners).

This is simply a promise for a promise where performance is not simultaneous, but condition on some occurrence before the other’s obligation matures. If I sell the watch to you, the mutual duty to perform (pay money and transfer watch) arise simultaneously. If I condition my performance on some precedent condition, your duty to perform (sign) arises before mine (payment) matures. When you sign, my duty to pay matures, and your executory interest in my watch vests; same exact result.

So there is a differenc.e TTT is cleaner, based on property, libertarian, and solves many doctrinal problems or avoids complicated exceptions.

I respectfully disagree, based on my current understanding. There appears to be a distinction without a difference, save at least two important ones.

In TTT, the inalienability of will prevents formation of a property interest in an obligation, and instead substitutes a performance guarantee that must be negotiated in advance. In addition, since it does not rely on existing doctrine, TTT terms are only operational if the parties specifically negotiate them and reduce those terms to a legally enforceable agreement.

Since this significantly adds to the transaction costs of doing business, this means that it encourages inefficient economic outcomes.

For example, if I want to hire you to sing, and am willing to pay you $100 for that service, but require that you pay me $1,000 of you don’t show up, we may not reach an agreement on the performance guarantee, even though you would accept $100 for singing and I’m willing to pay you that amount. That is an inefficient outcome, and such results would seem to be more likely under TTT than tradition contract theory.

So, while it is possible to theoretically reach similar outcomes with either theory, TTT has these two major disadvantages; the inability to form enforceable property interests in promised performance, and higher transaction costs.

I am presuming that this is why you say that IP cannot be recreated between two parties by contract? One, because you cannot enforce performance of a promise except through pre-negotiated damages for non-performance between the parties, (which of course has no effect on third parties), and second, because since you deny any property rights in an original work, for example, it is not possible to transfer by contract what you don’t already own.

Is that a fair summary?

Wildberry June 10, 2011 at 11:17 am

Peter Surda June 10, 2011 at 12:20 pm

Wildberry,

instead of confronting the arguments, you ignore 95%, misrepresent 5% and then use it as a distraction. Subsequently you present yourself as a victor. Instead you’re just a pitiful clown. But I’m not here for entertainment.

Responding to your accusation and teaching you about the basics of linguistics is a waste of time, since you’d react the same way. I already explained the problem several times. Until now you ignored it, and then suddenly make fun of it. That speaks for itself. I can’t even find words anymore to describe the level of intellectual dishonesty you present.

Wildberry June 11, 2011 at 2:53 pm

@Peter Surda June 10, 2011 at 12:20 pm

Do you really think I need you to tell me that the name for a thing is not the same as the thing itself?

Fortunately, language gives us the ability to assign meaning to words, and we can use them to communicate about concepts. Take that away, and all language is gibberish.

This expalins why so much of what you say is gibberish; you reduce language to a meaningless mish-mash of gobledygook and expect your “opponents” to try to sort is all out. It is a worthless endeavor.

Peter Surda June 11, 2011 at 7:33 pm

Wildberry,

Fortunately, language gives us the ability to assign meaning to words, and we can use them to communicate about concepts.

Oh, the audacity of someone who revels in vagueness. Pathetic.

Furthermore, I’d like to point out that again you have not confronted any of my arguments, just distract.