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: Moral Panics and the Copyright Wars

Adam Smith and the Invisible Hand of Copyright

By William Patry, Esq

Ben?s last post was manna from heaven (Baruch Hashem). It?s one thing for me to make statements in a book about how the copyright industries view things, and another for those very views to be starkly expressed by the industries themselves; that is what Ben did in his last post, so I am grateful. In response to my quoting Jack Valenti?s 1982 testimony before Congress in which he was attempting to have Congress ban home taping of free-over-the air broadcasts via VCRs ? testimony in which Mr. Valenti asserted that the question of home taping could be answered by giving the studios the same rights as other ?property owners,? Ben wrote:

I don't think I'm revealing any big secret by saying that entertainment executives do not wake up in the morning and ask themselves, "What can I do today to promote a view of copyright that properly balances the need to provide incentives to 'promote the progress of science and the useful arts,' with a robust public domain and the right of others to remix and reuse the works that we have created?" Rather, they say, "What can I do to make my company a profit?"

I of course would not expect them to do otherwise. I do not expect them to care about whether we have a balanced or effective copyright. I do not expect them to feel as if they obligations to anyone other than themselves and their shareholders, although I note that in an earlier comment Ben criticized me for making in only slightly different language the exact point Ben himself makes above.

The manna part of Ben?s post is the end, where he quotes Adam Smith in referring to not expecting copyright industry executives to act any differently than the sole pursuit of profit:

By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

Double wow: What Ben is saying is that by acting in ways that show no concern for a balanced or effective copyright, the copyright industries are inadvertently promoting such balance and such effective laws. Adam Smith?s theory was that ?individuals were led in the pursuit of their own self-interest by an invisible hand to pursue the nation?s interest, but also that this pursuit of self-interest was a far more reliable way to ensure that the public interest would be served than any alternative,? especially government intervention. Joseph Stiglitz, however, rejoined that ?the invisible hand often seemed invisible because it was not there.? (Page 98). John Maynard Keynes also rejected this view:

It is not a correct deduction from the Principles of Economics that
enlightened self-interest always operates in the public interest. Nor is
it true that self-interest generally is enlightened; more often individuals
acting separately to promote their own ends are too ignorant or too
weak to attain even these. (See pages 98-100 of the book).

Copyright is, though, from its birth government intervention; it exists (in common law countries at least) solely by government creation; created by government officials and enforced by them too. What is being advocated is that after government intervention and aided by government enforcement, copyright industries should be able to act in ways that are dictated solely by the pursuit of profit but that when they do so, it will magically be in society?s larger interest too. This was Alan Greenspan?s view of how to treat the financial markets ? hands off, the markets know best, and in knowing best, the market will benefit all of us (even though there will be winners and losers at any given moment). Even Greenspan had to admit that his ?whole intellectual edifice collapsed? in the summer of 2007, adding ?I made a mistake in presuming that the self- interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms.? (Pages 100-101). So I was very surprised to see Ben resurrect such an obviously discredited theory: we should not expect the self-interest of copyright owners to operate any differently from the self-interests of bankers, hedge fund owners, AIG, and the real estate industry.

Nor should we expect them to act differently; it?s the nature of the system. But because it?s the nature of the system, the copyright industries will act in the public interest only when we insist that they do. Regulation in the public interest is therefore a precondition to the copyright system functioning properly, in a balanced and effective way. This is not to suggest that the copyright industries are venal; quite the contrary, it is to argue that they are all too normal.

Full post as published by Moral Panics and the Copyright Wars on August 22, 2009 (boomark / email).