Intellectual Property and the Problem of Disruptive Innovations

In this post, Sam Duncan discusses his recent article in Journal of Applied Philosophy on the rights and duties of intellectual property.

Intellectual property is perhaps the most valuable form of property in the modern economy, and many recently minted multimillionaires and billionaires owe their fortunes to some sort of intellectual property claim. But why think that the creators of intellectual property deserve such outsized rewards? The most obvious answer seems to be to invoke some kind of Lockean or labor-based theory of intellectual property, which are usually taken to grant strong property rights to intellectual property with few obligations. However, as I argue in my recent article, these theories actually entail that those who claim many forms of intellectual property have very strong obligations to those made worse off by them. In fact, they would rule popular solutions to the job losses that many forms of intellectual property bring about, such as the universal basic income, to be entirely inadequate.

The basic idea of Lockean and other labor-based theories is that we have a right to any new ideas or inventions we create because we have rights to our labor and we create our ideas using only our intellectual labor. Provided our inventions or creations leave no one worse off—or in Locke’s terminology as long as our property claims leave as enough and as good for others— we owe no one any of the wealth or other rewards such ideas might bring us. Now this theory has quite a lot of intuitive punch when the intellectual property in question is an artistic creation like say the Harry Potter series. The enjoyment the novels and films bring many people enriches their lives and it’s hard to think of how anyone could be made worse off by either in any meaningful way. And those of us who don’t enjoy them need not watch the movies or read the books. Why think that someone like Rowling owes any of the money others give her for her creations to anyone else?

However well the theory works for things like artistic creations, it works much less well when it comes to some of the most lucrative and important forms of intellectual property. Consider the innovations that bring about the disruption so prized by the tech sector such as digital cameras, ride sharing services, or the self-driving car. Such inventions do make many of our lives better in numerous ways: It’s now much easier and cheaper for us to get a ride due to Über, we no longer have to pay the cost of buying and developing film, and the self-driving car promises not just to lower the cost of consumer goods by making shipping more efficient and cheaper but also to prevent numerous highway deaths and injuries. Unlike artistic creations though such disruptive innovations also make some people worse off, often far worse off. The digital sensor caused a huge decline in the demand for film and film developing, and this lead to massive layoffs at Kodak, which devastated the economy of Rochester, NY where its production had been concentrated. Über and Lyft have forced some cabbies out of business and put increasing financial pressure on the ones that remain. Self-driving automobiles threaten not only to put the remaining cabbies along with Über and Lyft drivers out of work but to do away with the need for long-haul truckers.

Locke’s own theory of property is quite clear that labor generates legitimate property rights only when no one is left significantly worse off by the labor and property claim in question. Since intellectual property claims take no property out of the common stock it is initially hard to see how they could leave anyone with less than before and with some pieces of intellectual property this first impression may well be true. However, by their very nature disruptive innovations do not leave everyone with enough and as good since they put people out of work. According to Lockean theories’ own standards this means either that claims to disruptive innovations are unjustified or that they can only be justified if those who would otherwise be left without as much and as good are adequately compensated. Considering the massive impacts joblessness has on financial, emotional, other forms of well-being such compensation would have to be substantial.

So rather than justifying huge rewards for the tech industry with little or no obligation to others a consistent labor-based theory of intellectual property would hold any claim to property rights in disruptive innovations comes with strong special obligations to those rendered jobless by them or even those who would find their labor devalued. This is a radical conclusion indeed. Tech billionaires such as Elon Musk and Jeff Bezos have been praised for their vision for advocating for a universal basic income (UBI) as a panacea for the job losses brought about by disruptive innovations. And Andrew Yang gained a surprising amount of traction for his presidential run largely on the basis of his advocacy of this supposedly radical and visionary policy.

But a Lockean theory of intellectual property would rule the UBI entirely inadequate to the problem created by disruptive innovations. Yang’s UBI would be financed by general tax revenues and those who hold intellectual property in disruptive innovations would bear no special burdens. However, on a Lockean theory it is specifically those who profit from such innovations who owe those made worse off compensation. Moreover, the paltry sums proposed for the UBI by Yang and others—usually in the neighborhood of $1,000 a month—would not even come close to satisfying the enough and as good principle when it comes to those left jobless by disruptive innovations.

This shows that justifying the rewards that now accrue to those who claim intellectual property in disruptive innovations will be difficult indeed. If Lockean and labor-based theories cannot do so it is hard to imagine a plausible theory of intellectual property that could. This unexpected result shows that Lockean theories are more interesting and complex than they may initially seem to many. Rather than being a thin intellectual veneer for an ideology of possessive individualism as some have alleged, labor-based theories of property may well represent a promising way to balance the property claims of those who create disruptive innovations and the claims to assistance made by those left worse off by them.