L. Neil Smith on Mercantilism and Intellectual Property

Musings on Mercantilism
by L. Neil Smith

Attribute to The Libertarian Enterprise

All of our lives, we Baby Boomers and those who have come after  us, have been loftily informed by the culture’s intelligentsia, by  the literati, by the cognoscentithat the way we live—we  children of the Productive Class—where we choose to live, mostly in  the suburbs, is all wrong, hideous, like something out of a horror  movie.

If we choose, instead, to live out in the country, then it’s even  worse. We become—in the hallucinations of the intelligentsia, the literati, the cognoscenti, those who imagine themseves superior to  us (but who, in fact, can be reliably gulled by sleazy con-men pushing  one transparently ridiculous scam after another, hoaxes like global  warming, overpopulation, ozone depletion, acid rain, and the Sacred  Advent of Barack Obama)—we become inbred, toothless, gun-toting,  Bible-thumping cannibals, all of it played to the tune of “Duelling  Banjos”.

The fact is, the places where these specimens prefer to live—the intelligentsia, the literati, the cognoscenti—the once- great cities of a once-great America, have become rotting piles of  manure, due to the policies they advocate: extortionate taxation, rent  control, victim disarmament, professional licensing. Before it’s over,  every single one of them will look like Detroit, refashioned in the  spiritual likeness of the intelligentsia, the literati, the cognoscenti, and the bloodsucking political vampires who cater to  them.

We gaze on the wreckage of the civilizations that came before us,  on the ruins of ancient Uruk, Thebes, Persepolis, Athens, Rome, Tikal,  and we wonder how such a thing is possible, why the inhabitants of  these cities failed to stop what was clearly happening to them. In  some cases—Tenochtitlan, Carthage, Cuzco, disaster was brought to  them by their enemies. In some cases—notably the Minoans—it was  nature.

Our society suffers a number of deadly confusions—conflations—in  which one thing, innocently or not, is associated with another.  A minor instance—which can help explain a major one—is when  horror stories get slapped together inappropriately, in bookstores, on  paperback racks, on TV, or in the movies, with those of science  fiction.

In fact, as Stephen King mentioned in his book of critical essays, Dans Macabre, they are opposites. It’s a matter of epistemology, the  philosophical disciplne that asks us how we know what we know. In  horror, nothing works, people are stupid, the mind is helpless, and  the universe is unknowable. In science fiction, the universe is  consistent, lawful, and knowable. The human mind is efficious, and  people can solve problems with it and acnieve great things.

A confusion that may well spell the end of our civilization is the  conflation—almost always quite deliberate—of mercantilism with  capitalism.

Mercantilism is an ancient economic and political arrangement  under which certain businessmen acquire and use their influence with  government to suppress their competition and offer customers fewer  choices in terms of quality or price than they would have in a truly  free market. It’s the same system that Adam Smith complained about in  his 1776 book Wealth of Nations, when the King granted special  favors—powers and immunities—to groups (like the British East  India Company) for some consideration they offered, whle interfering  with others who hadn’t bought the King’s divine permission to do  business.

Unfortunately, for almost all of its history, America has been a  mercantilist, rather than a capitalist country, and it is mercantilism—aided  by its political lackeys—that remains the greatest enemy  of freedom today. Almost everywhere you look, it is businessmen and  their companies, expecting to profit by restricting our liberties, who  are the real problem. Generally, the politicians are only along for  the ride.

And free drinks.

By contrast, capitalism is an economic system in which members of  a Productive Class (as distinct from the Parasitic Classes under  fascism) compete non-violently with one another to produce the best  possible goods at the lowest possible prices. Creative individuals are  free, either working for themselves or for others, to make economic or  technological innovations that keep quality ever-rising and prices  ever-falling. Or they may discover or invent new goods or services  altogether.

When capitalists get rich it’s because they’ve earned their  wealth by making life better or more enjoyable for others. Everybody’s  living standards rise exponentially. And as capitalists get rich, so  does everyone else around them—not that it’s the purpose of  capitalism, but it is the most efficient distributor of wealth in  history.

Other words for mercantilism have been coined over the centuries:  corporatism, corporate socialism, state capitalism, and fascism, which  most people don’t understand is an economic theory, rather than a  nasty form of bondage and leather fetishism. Whereas private  capitalism is the economic and political expression of individual  freedom.

Seminarist Robert LeFevre taught his students that fascism in its  present form was born when German political and economic theorists in  the 1920s observed that in places like Mexico (which most people are  unaware had the first Marxist Revolution in 1910) and in sovietized  Russia, communism didn’t work. Whenever the “Dictatorship of the  Proletariat” expropriated assets—the “means of production”—it  assumed liabilities its bureaucrats didn’t know how to handle. Absent  capitalist incentives within the system, with no way to obtain the  all-important data that economists call “price”, production lagged or  collapsed, and couldn’t be restored by imposing quotas or threatening  managers and workers with firing squads. People starved, and had to be  shot by the tens of thousands when they complained or threatened to  revolt.

Under newly-invented fascism, originally advertised as a benign  partnership between business and government, certain individuals were  permitted the illusion that they owned the means of production, and  gladly bore all of its liabilities—payrolls, physical upkeep, the  costs of energy and materials—while government actually controlled  everything through regulations, and skimmed the profit off through  taxation.

In some places, government maintained the upper hand in this  “partnership”, while in others, business eventually controled the very  forces that had sought to control them. That’s what gives fascism so  many names and faces. One thing is clear, however, conflicts like  World War II weren’t fought between the proponents of individual  liberty and those of authoritarianism, but between competing brands of  fascism.

As useless as the old-time right-left political spectrum may be as  a tool for understanding what’s going on politically, as useful as the  Nolan-Fritz diamond may be in analyzing the political territory, the  only “diagram” that means anything is a line with individual liberty  at one end, and a total lack of individual liberty at the other.  Anyone who chooses to stand anyplace but for freedom, at the extremest  end possible, is choosig to be less than free, in an attempt to  compromise with evil. But any compromise with evil is evil, in and of  itself.

What was it Barry Goldwater said, in a quote variously attributed  to Cicero, or Henry Jaffa, or Karl Hess? “Moderation in the pursuit  of justice is no virtue; Extremism in the defense of liberty is no  vice.”

Anything less than freedom is not freedom, but something else.

And while we’re on the subject (more or less) of compromise and  conflation, let’s get something straight, once and for all. There is  no such thing as “left-libertarianism” or “right-libertarianism”. Nor  can there be. There is only libertarianism. Which is to say, you  either look for justification to initiate physical force against other  human beings—or for advocating it or delegating it—or you do  not.

You are either for freedom or you’re not.

To hold otherwise is a hoax, a transparently self-serving attempt  to inject inaccuraties and irrelevancies—possibly for political or  monetary gain—into an otherwise remarkably uncluttered argument.  (Or you may just want childishly to appear trendy to your cute little  socialist girlfriend and wear a beret or a Che Guevera shirt.) This is  why so many individuals who fraudulently call themselves libertarians  of one kind or another hate, loathe, and despise the vital and  revolutionary notion that lies at the core of libertarianism, that  constitutes its very heart and soul: the amazing concept of Zero  Aggression.

If you do not hate, loathe, and despise the Zero Aggression  Principle, if you are willing, instead, to live by it, then you are a  libertarian—whether you realize it or not. If you detest it, and  the limits you may feel it imposes on you, then you are something  else.

An enemy.

I was once lectured in my own home by a petitMarxist, when I  was a college Freshman, on the subject of coercion. (I had already  been a a libertarian more than a year, and had learned about the Zero  Aggression Principle from the writings of Ayn Rand.) It was coercion,  I was informed, that, in order to remain living in the world, we are  all cruelly expected to work, in order to earn the necessities of  life.

We were forced, asserted my minimarxist acquaintance, to do so,  and, somehow, it was all capitalism’s fault, even though it was mostly  capitalism that supplied the work for people to do in order to  survive.

This was quickly followed by psychology courses, in which it was  asserted that commercials forcepeople to buy things they wouldn’t  otherwise purchase, even though a massive psychological experiment,  conducted at the national level, using advertisements shown during the  first Super Bowl, proved only a few years later that the assertion was  absolutely false. Commericials, the experiment proved, can make us  aware of a new product, or remind us that an old product continues to  exist.


For this and a host of other reasons, I became a stickler when it  comes to defining libertarianism and especially the nature of force.  For example, I don’t believe—as many individuals appear to—that  fraud is the moral equivalent of assault, a maleum in se. It’s  unquestionably a violation of contract, a breach of honor, a reason to  take someone to civil court. It is not physical force or anything like  it. It’s also something that a truly free market can take care of very  well.

Another swamp in which libertarians lately find themselves mired—and  for no good reason—is the question of intellectual property  rights.

In my experience, the anti-intellectual property rights splinter  consists of mediocre writers and artists—and pseudointellectual  purveyors of philosophical garbage—who wish to expropriate all or  part of the works of better writers and artists, against whom they  couldn’t otherwise hope to compete, or even to suppress their work altogether.

They invariably assert, nonsensically, that copying the works of  their betters deprives their victims of nothing, when in fact, for  most writers and artists, it obviates the second most important reason  they may have for working, to earn a livelihood, feed their families,  and improve their condition by selling what they create—and what I  am increasingly convinced they own in perpetuity—exclusively to  others.

Yes, the customer may own the physical book, wood pulp and cloth.  But he does not own its intellectual content or the right to reproduce  it and sell it to others. Contrary to the coercive position of certain  government-backed mercantilists, whose goal appears to be destroying  free communications, he should be free to quote it, giving proper  credit.

It’s extremely cynical—and tells people a great deal more about  you than you may wish them to know—to assert that, simply because  one’s property may be difficult to defend, it somehow mysteriously  ceases to be one’s property. The clear implication is that people act  honorably only out of fear of getting caught, and that your rights are  to be defined for you by the worst, lowest elements in society, the  thieves.

Enemies of intellectual property rights assert—utterly without  logical or factual foundation—that the desire to defend one’s work  is the same as a willingness to call government into the conflict (an  illusion of which any student of Robert LeFevre could easily disabuse  them). At the same time, asked what they would do if someone stole  their car—wouldn’t they call the police?—they pusillanimously  skitter for the baseboards just like cockroaches when you turn on the  light.

One of them recently claimed that more and more people are joining  their side. It looks quite the other way to me. It looks like they  were making great headway—until somebody they were stealing from  noticed them. I was warned by weaker spirits that these thieves and  their intellectual bodyguard were the “irresistable wave of the  future”, that standing up to them would ruin me professionally. But  since I did, my hits on Google have increased by two orders of  magnitude.

In the end, the difference between “fair use” and plagiarism—the theft of intellectual property—has nothing to do with the  nature of the property being considered. Exactly like the difference  between sex and rape, it is a matter of consent. This isn’t brain  surgery, it isn’t rocket science. It’s something that we all knew when  we were only five years old, but which some few of us seem to have  forgotten.

What’s even more fun is that I declined—and still do—to  debate the matter with them. I never debate, and neither did Ayn Rand,  for exactly the same reasons. In the first place, skill at debate has  nothing to do with being right or wrong. It always comes down to who  yells loudest or who has the cutest dimples. Moreover, socialists—and that’s what they are—are infamous for engaging their victims in  endless argument, based on their assumption that “What’s mine is mine,  and what’s yours is … negotiable.” When you come home to find a  burglar rifling through your possesions, do you engage him in a  debate?

It’s something to think about.

Four-time Prometheus Award-winner L. Neil Smith has  been called one of the world’s foremost authorities on the ethics  of self-defense. He is the author of more than 25 books, including The American Zone, Forge of the Elders, Pallas, The Probability  Broach, Hope (with Aaron Zelman), and his collected articles  and speeches, Lever Action, all of which may be purchased  through his website “The Webley Page” at lneilsmith.org.

Ceres, an exciting sequel to Neil’s 1993 Ngu family  novel Pallas is currently running as a free weekly serial  at www.bigheadpress.com/lneilsmith/?page_id=53

Neil is presently at work on Ares, the middle volume  of the epic Ngu Family Cycle, and on Where We Stand:  Libertarian Policy in a Time of Crisis with his daughter, Rylla.

See stunning full-color graphic-novelizations of The  Probability Broach and Roswell, Texas which feature the  art of Scott Bieser at www.BigHeadPress.com  Dead-tree versions may be had through the publisher, or at  http://www.Amazon.com where you will also find Phoenix Pick editions  of some of Neil’s earlier novels. Links to Neil’s books at Amazon.com are on his website

7 responses to “L. Neil Smith on Mercantilism and Intellectual Property

  1. An excellent article, particularly the part on IP.

  2. Hilariously nonsensical drivel on IP.

    Smith immediately betrays the weakness of his position by attempting cheap jibes at an imaginary group of “mediocre writers and artists—and pseudointellectual purveyors of philosophical garbage”. Unfortunately he leaves us in the dark as to just who he’s castigating. I am not surprised.

    In order to be taken seriously Smith has to take on Kinsella and his devastating analysis of IP “rights”. Tellingly Smith doesn’t even mention Kinsella, let alone make the slightest attempt to refute his arguments. Has he even read Kinsella? I doubt that he has. Or perhaps he knows perfectly well that he’s unable to counter Kinsella’s case and consequently ignores him.

    As the concept of property has such an important place in libertarian thinking, we need to know what we mean when we refer to that concept. Moreover we need to know whether or not just anything under the sun can be property. Can something which doesn’t exist, at least has no material existence, be property? Something which all can share without making anyone in any way poorer as a result? But of course therein lies a profound difference between real physical property and imaginary (IP) property. The former is solid and indivisible, the latter is the very opposite.

    I also find it a little amusing that Smith makes reference to mercantilism. There can be no better example of the new mercantilism of the digital age, in which government seeks to confer “favors—powers and immunities” on powerful trade associations, than IP “rights”!

  3. So far as I can tell, nobody outside a small gang of anti-property zealots give a tinkers’ cuss what Kinsella thinks, or have bothered to read his work, since it all boils down to two arguments

    (a) you can’t stop us, and

    (b) intangibles can’t be property.

    (a) is already addressed in the above article and (b) is an arbitrary distinction which can be neither proven nor disproven. Some people argue that land can’t be property, on the basis that it is not created by the owner. It’s a similar abritrary distinction about what ought to be property and what ought not to be property, and since Hume we’ve known you can’t get an ought from an is, so it’s irrelevant. Property is arbitrary; you designate property in those things you wish to be owned, and that is all there is.

    If you want to apply a communist approach to artworks, go for it. Just don’t expect people to expend their opportunity costs creating things which cannot be owned and sold. Same problem as with any communism. Everyone gets an equal share of bugger all. Artists go off and do a job where there is a property system. Everybody loses. As a libertarian, I prefer property rights and markets, personally.

  4. “Just don’t expect people to expend their opportunity costs creating things which cannot be owned and sold.”

    Perhaps you haven’t noticed but you’ve just made a utilitarian argument. To argue that we need mercantilist intervention by the state or no-one will create anything is a utilitarian argument. Nothing wrong in that of course if you’re a utilitarian, be my guest.

    How strange then that many of the most profound, complex, subtle, satisfying and labour intensive works of art in literature, painting and music were created in the centuries before copyright was even thought of. Clearly that is something you have never noticed. Then of course it’s also real world stuff. Perhaps real world evidence has to be excluded from this discussion for some reason. However if that simple fact of life which refutes your post is in any way in dispute I’ll be happy to start listing those great creative artists who weren’t dependant on copyright mercantilism. Of course we both know that such a listing will likely overflow by many times the capacity of this blog to publish it.

    However to take the point further, when did I ever suggest that creative artists and inventors not be remunerated for their work? The answer is never!

    There is simply no need for government intervention in the process of creativity whether by patent or copyright. Such meddlesome intervention goes against libertarian principles and is ultimately mistaken, counterproductive and unjust, as are all such measures rooted in utilitarian thinking.

  5. Perhaps you haven’t noticed but you’ve just made a utilitarian argument.

    No I didn’t. I said that for a market to exist, you need property rights. If that is utilitarian, then so is all of Libertarianism. Take or leave.

    To argue that we need mercantilist intervention by the state or no-one will create anything is a utilitarian argument.

    I didn’t argue for mercantilism, I argued for a property rights system. If property rights are mercantilist, then so is all of Libertarianism. Take or leave.

    How strange then that many of the most profound, complex, subtle, satisfying and labour intensive works of art in literature, painting and music were created in the centuries before copyright was even thought of.

    Before the days of reproduction. They were created for particular buyers. If you want to go back to when the only art was in private galleries and houses, or in churches, fine. I like being able to sell copies of my art, personally. More people can buy it. There’s a proper marketplace, not just a few people commissioning works. The latter market is the only one that can exist without property rights; art that can be held in one place and hidden away. The market for reproductions vanishes.

    I’ll be happy to start listing those great creative artists who weren’t dependant on copyright mercantilism

    (a) Your continual use of the word “mercantilism” is dishonest mangling of the language, and you know it. Stop it.

    (b) See above. Those great creative artists required rich patrons. They weren’t flogging Sistene Chapel Ceilings on Ebay.

    However to take the point further, when did I ever suggest that creative artists and inventors not be remunerated for their work? The answer is never!

    You are demandding the abolition of the free market and replacement of it with common ownership. With nothing to sell, there is no remuneration.

    There is simply no need for government intervention in the process of creativity whether by patent or copyright. Such meddlesome intervention goes against libertarian principles and is ultimately mistaken, counterproductive and unjust, as are all such measures rooted in utilitarian thinking.

    By the same argument, there is no need for “government intervention” in any other property. Abolish property altogether, go ahead. See how far you get with your non-“utilitarian” communist system. My bet is you won’t get very far.

  6. Creating legislation specifically demanded by lobbyists for the RIAA and the like for example isn’t conferring specific favours on them, i.e. the very essence of mercantilism?

    As I pointed out these utilitarian measures were counterproductive. Research in this instance showed that prolific downloaders using file sharing actually bought more CDs than average. Peer to peer file sharing sparked more interest in music and had its place alongside purchases.

    The reason record company sales went down had nothing to do with file sharing violating IP but everything to do with the failure to provide the market with the right product at the right price when consumers also increasingly had other alternative ways of spending their money. So what did the record companies do? Bend to the demands of the free market? Not likely. Why do that when you can always rely on brain-dead politicians to come to your rescue and make laws to your bidding? Mercantilism. As always with the state, coercion in the form of quite wickedly unjust persecution of a handful of ordinary citizens, took precedence over freedom of choice and the music industry avoided having to adapt to changed circumstances.

    As others have noted, discussing anything with you is a waste of precious time. So I’ll finish by referring to one important point, which is the implied accusation that I wish to “Abolish property altogether, go ahead.” Of course you’re perfectly well aware that this completely and wilfully misrepresents everything I have said repeatedly in the past, but then misrepresentation is how trolls habitually operate and you’re no exception.

    So for the umpteenth and last time I will point out that the exercise of IP rights makes the exercise of rights in real material property increasingly untenable with every year that passes. That’s why it is so dangerous. IP rights can only be exercised by the IP rights holder exercising control over the material property of each of perhaps as many as tens of millions of their victims. And if someone else controls their real material property they cannot be in control of it themselves. IP rights have a parasitic relationship to property rights. IP rights can have no utility without the existence of real the real property that they exist to violate, yet at the same time they gnaw away at the very heart of the concept of real property and render it meaningless. If that isn’t parasitism in its purest form I don’t know what is.

    I suggest that instead of trying to waste my time you read Kinsella properly and try to get your head around his analysis. That’s if you’re capable, that is.

    Frankly on the evidence I’ve seen, you’re not.

  7. I said nothing about the RIAA; stop trying to frame the narrative. It is a general question of IP and copyright law.

    You see, the thing you’re missing out is that the only reason anyone can sell a CD at all is due to copyright. The question of downloaders is neither here nor there. It is the prevention by property rights law of any commercial entity selling the product of another commercial entity that allows sales to exist. How hard is this to understand?

    Suppose you make a music CD. You’ve got considerable capital costs in producing the music. Nobody else has to bear those costs. If you need to sell CDs for $5.00 to make back your capital investment, I can sell them for $2.00 and outcompete you.

    But under the current property rights regime, I cannot do that. Your property rights are protected, so you can sell your CDs at the price you need to get back your capital investment.

    And stop banging on about Kinsella, as if he’s an authority. Make your own argument, I’ve no time to waste going ferreting around communists’ websites reading their verbiage.

    As to these mysterious “others” who apparently don’t like losing arguments to me, whoever they are, I can only guess. But your deployment of the word “troll” is a classic last ditch tactic of somebody who hasn’t got a leg to stand on and knows it. All I can offer you is to remind you that communism doesn’t work and markets do; I hope one day you’ll get over your juvenile leftist sloganising about The Evil Corporations and read a book on free market economics, then you’ll get a clue why communism doesn’t work.