|Government and Microsoft: |
a Libertarian View on Monopolies
Abstract: We hereby clarify the radical libertarian stance about Microsoft and government, and more generally about monopolies. We explain how the original evil behind Microsoft's monopoly is government intervention in the form of intellectual property privileges, and how any solution should begin by abolishing these privileges.
1 Misunderstandings about Libertarianism and Monopolies
1.1 Myth: Libertarianism as a Lobby
1.2 Myth: Government as the Warrant against Monopolies
1.3 Partial Truth: the Case against Anti-Trust
1.4 Empty Truth: the Case against Monopolies
2.1 Monopolies, In Fact or In Law
2.2 The Irrelevance of de facto Monopolies
2.3 An Economic Analysis of de facto Monopolies
2.4 An Economic Analysis of de jure Monopolies
2.5 The Dynamics of de jure Monopolies
3 The Microsoft Case
3.1 What Makes Microsoft A de jure Monopoly: so called ``Intellectual Property´´
3.2 An Account Of Microsoft's Success
3.3 The Role Of Government
3.4 Monopoly Justice
4 Restoring Justice
4.1 The Difficulty of Repairing Distributed Damages
4.2 The Urgent Problem
4.3 Privilege Containment vs Privilege Factories
4.4 What About The Bigger Monopoly?
I only issued an official complete version of this article in November 2003, but I had begun writing it in 2000, and most of the ideas were already in the draft available on my page at that time.
In 2000, the Clinton administration was leading a much publicized judicial prosecution against Microsoft, and there was heated debate about the meaning of it all, in the general public, but also among free software advocates, and particularly among libertarians. With the end of the Clinton administration, the new US government issued a settlement largely considered to be very favorable to Microsoft as compared to the charges established during the finding of fact. Nevertheless, the question of whether Microsoft is a monopoly, and what Government should or shouldn't do about it, is pretty much as much of a current topic as it ever was. Moreover, this article seeks to explain the principles upon which the libertarian stand on monopolies is built. These principles are timeless, and will still hold long after the whole Microsoft mess has become obsolete and forgotten, for many many similar cases exist and will continue to appear, until these principles ultimately are recognized and made to prevail.
PS: Note that inasmuch as you believe in Intellectual Property Rights, you are bound by the License Agreement that covers this article (included near the end of it). By continuing to read this article, you implicitly express your consent to it. You have been warned.
PPS: many thanks to C. David Eagle for his patient and careful proof-reading.
PPPS: A reading of this article (minus footnotes) has since been recorded; you can listen to it as a a series of four videos on Youtube: 1- Misunderstandings about Libertarianism and Monopolies, 2- Monopolies, 3- The Microsoft Case, 4- Restoring Justice.
The case of Microsoft vs the US Government has confused many libertarians who have come to mutually contradictory conclusions, and sometimes even to self-contradictory conclusions. These conclusions seem to be based on partial or incorrect understanding of libertarianism, and such a case provides a good opportunity to reexamine basic principles, so as to define a proper, consistent, libertarian stance.
First, we'll debunk some myths about the libertarian stance on monopolies. Next, we'll expand on the notion of monopoly, and distinguish de jure monopolies from alleged de facto monopolies. Third, we'll see how the notion of de jure monopoly applies to the case of Microsoft and the Government. Finally, we'll study what justice should be, when faced with such monopoly situations.
|1 Misunderstandings about Libertarianism and Monopolies|
Libertarianism is often wrongly thought of, by a few libertarians and by most authoritarians, as a lobby in favor of private companies; these people therefore conclude that libertarians must take sides with Microsoft, a private company, when faced with tentative intervention by government.
The idea that libertarianism would be a justification for corporate lobbying, of course, appears as utter misunderstanding to enlightened libertarians. Indeed, for one general thing, libertarians reject all political lobbying together with all politics; they do not want privileges for some people rather than some others, they want the abolition of privileges; they do not see the world as a cosmic struggle between irreconcilable conflicting interests, they see the world as a harmonic system where people have a natural interest in cooperation .
But as a more specific critique, they also reject the very notions of ``public´´ vs ``private´´: To a libertarian, there are but individuals, and no amount of rubber stamping or uniform wearing, no matter how proclaimedly ``official´´, can give any individual any legitimacy to invade the life and property of any other individual against their will.
Thus, the distinction among companies as well as among institutions in general is not a matter of ``public´´ or ``private´´, but one of being respectful or not of everyone's liberty, property, and responsibility, including those of people who fund the institution, those of people who work for it, those of people who deal with it, and those of people who are unconcerned by it [B8].
All institutions are ``private´´, i.e. made of individuals who follow their private interest. Among them, those institutions that respect all concerned are those that serve the public better. Not being a state monopoly is thus a necessary condition for serving the public without injustice, and the best ``public´´ institution is a free market of ``private´´ companies. In such a market, the successful civil servants will be ``private companies´´ by the statists' standards. But not being a state-run monopoly isn't the only condition for best serving the public, it isn't always even the most compelling condition, and it certainly isn't a sufficient condition — and we'll see that the Microsoft case illustrates this point very well.1.2 Myth: Government as the Warrant against Monopolies
Another false preconception about libertarianism is to misunderstand it as an economic doctrine opposed to monopolies, one that would recommend ``pure and perfect competition´´ as an economic model to seek and enforce. This is notably the gross misrepresentation of classical liberalism under which the statists from the european political institutions and other national parliaments claim that they act as libertarians when they enact a variety of laws and bills to ``regulate´´ the market.
However, libertarianism is not an economic doctrine, and it doesn't aim at promoting any kind of economic model . It is a theory of Law, and seeks to promote a juridic model for the relationships between individuals, based on mutual consent, respect for each other's liberty, and individual responsibility. It rejects the very principle of coercion by a monopolist authority that underlies any kind of government intervention and regulation.
As applied to ``regulating monopolies´´, the authentic libertarian stance is that if a monopoly is evil in itself, how much greater an evil is the monopoly of force that the government constitutes when it has enough power to be capable of keeping the former in check! Government intervention and regulation is not and cannot be a way to deal with evil. The proper way to deal with evil is first to identify its very principle; only then can this evil be abolished. Intervention and regulation, instead of banishing evil, only institutionalize it, and use public coercion to promote and continue this evil in official ways, instead of dispelling it. If government somehow monopolized the efforts to keep other monopolies in check, the urgent thing to do is not to use this government monopoly, but to abolish it .
Identifying the evil behind the Microsoft monopoly will be the topic of the next part of this article (see section Monopolies). As it will turn out, government is the one and only source for evil monopolies, either by its action or its inaction, by its very own monopoly on the use of public force.1.3 Partial Truth: the Case against Anti-Trust
By elaborating on the principles mentioned above, many libertarian intellectuals have indeed demonstrated how the case led by the US Department of Justice against Microsoft was unfounded, as are anti-trust interventions in general [B16] [B13]. They explain one by one how each of the arguments that government used in justifying its prosecution of Microsoft, and each of the arguments used to justify anti-trust laws in general, are fallacies. We'll expand on that below, but suffice it to say that on the one hand, the government never sued Microsoft for the actual evil that it did, only for legitimate and benign aspects of its activity, and that on the other hand, the sanctions considered against Microsoft would not even attempt to either repair any past evil or to stop any future evil; they have only been adding to the evil being done.
However, just because they oppose the very principle of government intervention in anti-trust cases as well as the particular arguments used against Microsoft in the current case certainly does not mean that libertarians support Microsoft, or any other of the monopolies that were previously sued or dismantled. As for not supporting Microsoft, Eric Raymond [B5] for instance explained how many libertarians envision the way we can fight against Microsoft without government intervention or judicial prosecution — and despite the current privileges that the government enforces to Microsoft's benefit, other libertarians would add.
Indeed, many libertarian intellectuals have also openly opposed Microsoft, and proposed it should be sued for its behaviour. But government isn't the right way to achieve that, and in the case against Microsoft, government has been more of an impediment to victims claiming justice than it has been a help in their obtaining justice: the government has stolen the case from the real victims, it has led the case astray for years, dismissing real evidence against Microsoft, insisting on ungrounded charges and non-sensical settlements, and monopolizing prosecution efforts for decades, thereby excluding any just resolution of the case. In other words, the government has nationalized grievances, and prevented real justice from being sought by the actual victims. Even if the governmental prosecutor had its way, the victims would feel no relief, and the crime would not stop, still making for as many new victims as it currently does.1.4 Empty Truth: the Case against Monopolies
Libertarianism has a long-standing reputation of opposing monopolies; yet this reputation seems not to be accompanied by an understanding of what this opposition is about. Indeed, the notion of monopoly that is now used by governments and statist propaganda is quite different from the notion of monopoly that libertarians have used for centuries, when defining their stance. In their usual entreprise of confusing people's minds so as to enslave them by fraud rather than by force, statists have thus managed to corrupt the meaning of words to the point that libertarians cannot express their stance without either having to spend a lot of time explaining it, or else being misunderstood. Consequently, although it is true that libertarians could once say unequivocally that they oppose monopolies, the sentence is now an empty shell without substance, when repeated all around by people who do not understand what it means.
For instance, Microsoft has been identified as a monopoly, because it has few or no competitors in its field. But then, it is the very characteristic of an innovator to have no competitors at all, because its products are too new to have been copied yet. So that alone does not prove anything wrong about Microsoft. Sometimes it is claimed that Microsoft must be a monopoly because its profit margins have been abnormally high for an abnormally long period of time. But there again, this could be interpreted in quite the opposite way, as indicating that Microsoft is a company exceptionally well managed by a marketing genius, that has a outstanding track record of serving the public with innovative products and services. Are those moaning unsuccessful competitors to Microsoft really proposing better products and services? Why not consider that the consumers have chosen Microsoft over its competitors? Who's claiming to judge such things? Who is claiming to be ``more responsible than the consumers´´ about identifying what the consumers really want, or what should be done despite what they want?
To a libertarian, these grieves are on the wrong track. Crime and Justice are not about the ends reached by any party; they are about means used, whatever the end results. It is no crime being successful, and it is no title of glory being unsuccessful. Crime is in infringing on someone else's property (including someone else's person and liberties); Justice is in respecting everyone else's property, and in paying back for damages caused to other people. Someone getting rich by honest means is a respectable gentleman. Someone remaining poor by honest means is also a respectable gentleman. Someone getting rich through dishonest means is a robber. Someone remaining poor despite dishonest behaviour is a vandal. Robbers and vandals are criminals as well. The question is not whether Microsoft has reached some market share, but whether, disregarding its success, it has resorted to dishonest practices. Did it at any moment resort to robbery, fraud, extortion or any delusive or coercive practice to force anyone to purchase their products, or to prevent any competitor from entering their market? If they did, then they are guilty according to libertarian criteria; and they must pay damages and interest to their victims, plus all the additional expenses incurred by victims while striving to reclaim their rights. If they didn't, then they are innocent according to libertarian criteria; and those who sue them should be made to pay for all the expenses incurred during the judicial procedure. Once again, ends do not matter; only means matter.
So the real issue is: if Microsoft is a monopoly, what makes it so? And what is a monopoly, to begin with? Are monopolies truly evil? If so, what makes them evil? How can we measure the damage done and repair it? More urgently, what can we do to stop the evil? The libertarian point of view will consist in distinguishing a means-oriented definition of monopoly, which may justify prosecution in libertarian law, from the ends-oriented definition used by governments, which may not justify any judicial action in libertarian law.
Libertarianism is a theory of Law — a theory of what is or isn't lawful to do, of how we can organize such knowledge into general rules, of how we can discover such rules, of the ways these rules differ from the rules of morality [B4], etc. It is conspicuously neutral as to the goals that people seek, and to the results that they reach, except inasmuch as it denounces some goals as doomed to fail because they contradict nature (or even themselves) whereas it gives hints as to the means that can or can't be used so as to successfully achieve other, legitimate, goals.
Therefore, as far as identifying monopolies is concerned, as well as for making any judgement on the lawfulness of anything, libertarians will carefully distinguish between criteria that involve means of action and criteria that involve goals and results. Libertarians thus distinguish the relevant means-oriented concept of monopolies in law, or de jure monopolies, from the irrelevant ends-oriented concept of monopolies in fact, or de facto monopolies.
Criteria based on facts, goals and results define monopolies in fact: there is a (quasi)monopoly in fact when there happens to be (mostly) only one provider for a certain class of services or products. To a libertarian, there is nothing to say for, against or about monopolies in fact. They could be judged morally as good or bad, but this all depends on the considered alternatives, and is a matter of individual morality.
Criteria based on law and other legal constraints define monopolies in law: there is a (quasi)monopoly in law when laws (or any kind of rules enforced by the use of public force) establish a monopoly by preventing customers from seeking providers not blessed by the political power, or equivalently by preventing potential competitors from providing services that compete with those from the protected provider(s). To a libertarian, such laws that promote a de jure monopoly are an assault on the liberties of consumers and competitors, even when they fail to result in a monopoly in fact.
It is remarkable that classical liberal authors have always used the word ``monopoly´´ only meaning what I now have to qualify as de jure monopoly; it is statists who have corrupted the word into meaning something altogether different and meaningless. Remarkably, the word for libertarian at the time (early nineteenth century) was ``economist´´, which word has also been stolen and corrupted by statists. The process is similar to that described by George Orwell in 1984 [B12]: statists corrupt words and remove their meaning, so that people become unable to clearly formulate objections to the state's intervention.2.2 The Irrelevance of de facto Monopolies
Actually, post facto, in retrospect after the fact, every transaction involves a unique producer and a unique consumer and thus is both a de facto monopoly and de facto monopsony. Whether other transactions for ``similar´´ services involve the same producer or not is irrelevant; indeed, by choosing appropriate definitions of ``similar´´ for services, one can establish either the monopoly status or lack thereof of any firm. At one extreme, every company has a monopoly on the specific services issued with its name and address in the contracts and invoices; at the other extreme, all services are in competition with all other services for the resources of the consumers, who can always spend their resources in altogether different activities, provide for their own services, go to the black market, etc., so there is never really a monopoly. Is a trip in the same plane on a different seat a similar enough service to qualify as a competitive offer? Is a trip from a nearby airport similar enough? Is a trip by train ``similar´´ to a trip on a plane? A trip by car? What about working or touring in nearby places instead of abroad? What about staying at home? Depending on the arbitrary answer to such questions, any single activity may or may not be tagged as a de facto monopoly.
In other words, the concept of de facto monopoly is a fraud that can serve to assert whatever one wants, giving undue power to the authority that arbitrarily defines the ``similarity´´ of services, and opening the door to a corrupt oppressive government. Libertarians contend that this notion of de facto monopoly is at worst an absurdity, at best something utterly irrelevant, in all cases, a fake alibi used to fool people into accepting government control on various services and industries. To libertarians, coercion in general and governments in particular are not a legitimate tool to work either towards or against such de facto monopolies.2.3 An Economic Analysis of de facto Monopolies
A monopoly in fact cannot ever take advantage of its situation to abuse consumers as long as there is freedom to compete in law. Indeed, as soon as it raises its prices such that its profit rate (that is, the difference between the income and the marginal production cost including investment amortization) are noticeably above the average rate in other industries, then capital will rush into competing firms to leverage such profit opportunities, cancelling any situation of de facto monopoly. Similarly, if the main or unique producer decreases the quality of its services in such a way that there is an unsatisfied market segment that could pay enough to generate above average profit by investing in the field, then new competitors will appear. Hence, as long as there is freedom for new competitors to enter the market, there is no situation in which enough people can legitimately feel harmed or wronged or unserved by the market. Freedom to compete implies that de facto monopolies have ``virtual competitors´´, even though they may have few or no actual competitors. In a free market, as characterized by the presence of freedom to compete, no company may ever extract arbitrarily high profits or ``undue´´ profits from any so-called ``dominant position´´.
If needed, the very people who think there is something wrong about the current state of the market, including any complaining customers, any disgruntled employee, any manager or investor of the current monopoly, etc., can invest in the field so as to propose their own services to better serve the needs of currently unsatisfied customers and potential customers. If their anticipation is correct, if indeed they can be better and cheaper than the de facto monopoly, amortization of the initial investment included, then they will indeed earn a lot of money, while fixing the ``wrong´´ they felt existed. On the other hand, if their anticipation is incorrect, then they will lose their stake, and will thus prove how unfair was their claim about the monopoly making ``undue´´ profits. In any case, freedom to compete means that people can be made responsible for their own claims, reaping rewards when they are right, suffering losses when they are wrong . In other words, in a free market, there are no market failures — there are but market opportunities.
An objection frequently raised by advocates of state intervention is that it is very difficult to raise large amounts of capital in a coordinated way, and that this gives an ``unfair advantage´´ to big corporations possessing large infrastructures, so they must be regulated by government. Actually, quite the opposite phenomenon is true: the difficulty of raising large amounts of capital is part of the transaction costs inevitable in any venture; such transaction costs are included in the capital investment the amortization of which is considered when evaluating the profit rate. But these costs are mostly unaffected by the size of the investment, and are thus a relatively smaller overhead for big ventures than they are for smaller enterprises — that is, they are all the less of a problem as the capital investment needed to compete is big .
If the task is so difficult that not anyone can undertake it, then what appears as huge profits is but the just reward for hard work that no one else proved able to do — and if one brings benefits that no one else could otherwise bring, how can one be accused of depriving anyone else from what didn't, wouldn't and couldn't exist without one's work? All in all, a de facto monopoly, just like any other company (and we saw there is no notion of de facto monopoly that can make any praxeological difference between two companies) can only remain in existence by constantly providing valuable service at affordable rates, without ever making an undue profit, without ever abusing from a so-called ``dominant position´´. Freedom to choose one's provider is what keeps everyone in check.
Finally, if reasoning doesn't suffice, there is no historical record in any free market of dumping or concentration ever earning anyone undue profits, of ever permitting anyone to raise prices for any length of time above what they were prior to dumping or concentration — but there is record of companies maintaining low prices for extended periods of time without ever raising them above competition; there is record of concentration helping some companies keep prices low, and record of other cases where concentration didn't help and the concentrating conglomerate collapsed  as consumers turned to other smaller companies for their services.
The only monopolies that can make undue profits and last are de jure monopolies — those that are supported by public force. And there is plenty of evidence for all the evils of monopolies, as soon as de jure monopolies are considered.2.4 An Economic Analysis of de jure Monopolies
Whereas a de facto monopoly cannot levy any ``monopoly rent´´ from its situation, because of actual and virtual competition, a de jure monopoly can and will levy such a rent, because it can use the force of aggression of government to discourage or annihilate competitors [B2].
Indeed, in as much as consumers need a service monopolized by law, they will have to accept the conditions set forth by the monopolist provider — and if they cannot or will not accept these conditions, then they must live without the monopolized service (if possible and allowed by law — often, a de jure monopoly is established for a category of services that cannot be avoided, or is accompanied by an obligation to consume from the monopolist provider). Now, each and every penny that a monopolist earns because of his de jure monopoly is by definition a penny that would otherwise not have been paid, if competitors were allowed to enter the market — which implies that the public would have been served better and cheaper. Each such monopoly-earned penny is thus the sign of an equivalent or greater destruction of riches, as compared to what would have happened in a free market without state intervention in favor of the monopoly.
The rent is precisely what motivates the monopoly to begin with — theorists of patents, tariffs, monopolies, state subsidies, and all other kinds of protectionist and mercantilist policies use the incentive created by this very rent as the ultimate pseudo-utilitarian economic justification for their monopolies. If the laws had it that the direct and indirect benefits from monopoly were taxed away from the monopolist, you'd find that few monopolists still find monopoly attractive after all. However, law could hardly do that, since monopolies usually result in losses to the public and to the monopoly; and indeed, what we often see is massive direct and indirect subsidies from government in favor of its protected monopolies, to keep them going, rather than taxes away from them to repay for the damages done. Monopolists thus clearly enjoy a rent from their destruction of riches, from their destruction of civilization.
Companies that are without an official obvious explicit patent monopoly, but that somehow benefit from public force to compel customers or exclude competitors, are still de jure monopolies even without the official name. And they are just as malicious as if they were openly admitted as such. Hence, all the legal regulations that impose ``security´´ requirements, government licensing, check by some special ``authority´´, all the so-called ``regulations´´ and ``checks´´ on the free-market, instituted by governments, are actually monopolies in hiding. They give citizens a false sense of security, and serve only to prevent competition toward different arrangements that would better fit the tastes of their customers; these ``laws´´ exclude solutions that would be better for all concerned, and give an unfair advantage to those who are comparatively ``protected´´ from the competition of those better solutions. The result may be a broad or narrow oligopoly in fact, of government-sanctioned ``solutions´´, of government-licensed ``providers´´, or of people or institutions with some kind or another of government privilege, rather than a de facto monopoly — but the essence of the injustice is the same, and these de facto oligopolies are really sharing a de jure monopoly.2.5 The Dynamics of de jure Monopolies
In contrast to de facto monopolies, the concept of de jure monopolies is not arbitrary. The question of whether a given company is a de jure monopoly doesn't rely on any arbitrary decision by a political institution. There is no need for any specific law or any government office to identify and fight such monopolies; on the contrary, such monopolies only exist because some laws and government offices protect the monopolists to the detriment of reluctant customers and of potential competitors. Fighting these monopolies is a matter of abolishing the protectionist laws, of stopping government intervention. It is not a matter of extending these laws and furthering this intervention.
We already saw that not only do de jure monopolies exist in an obvious form whereby the government explicitly grants such a monopoly by laws excluding competition per se, they also exist in subtler forms of de jure monopoly where the power to exclude competition and ransom customers is wielded by a corporation, a commission, a congress, or any ``public´´ or ``private´´ institution whatsoever . Government intervention, subventions, privileges, regulations, taxes, differential treatment, legal discriminations, and all pieces of legislation, are indeed coercive destruction of riches that generate de jure monopolies. Often, this intervention takes the form of laws enacted in the name of the ``public welfare´´, that limit the freedom to contract: the government forces certain transactions to take certain forms, with employers, landlords, retailers and others being bound to conditions not born from the mutual interests of exchangers: minimal and maximal prices, minimal and maximal limitations in the schedule, duration, quality and other conditions of work, of housing, of retail, etc.
Although these state regulations may give an apparent advantage to one side of the transaction, the long term effects of such political privileges are not to the permanent advantage of the privileged party. Indeed, after a short time of adaptation by the market, such privileges will be internalized in the form of price (either monetary or non-monetary) attached to the acquisition of the privileged position. Thus, although some people do receive an immediate advantage from the enactment of political privileges (namely those who could acquire a privileged position while paying a price agreed before the privilege was established), latecomers, even though they are officially ``protected´´ by law, do not get any advantage from it. The increased efforts through which they will have to earn their privileged position will be as much as the efforts needed to get the advantage from a free market, and the only thing brought by law is that they don't have the choice anymore to not pay for an ``advantage´´ that they may not like at that price .
Those rent seekers who initially lobbied for a regulation will reap benefits from the transition toward the protectionist system; but once established, and after a short transition period, the system will no longer bring them actual benefits, and will be only a hurdle detrimental to all concerned. Increase in visible revenues from protectionism correspond to a continuous overall destruction, whereas the actual opportunity gains are but a one-time premium earned during the transition period. In the long run, the global destruction due to protectionism in turn decreases the utility of all revenues, including those visibly inflated by the protection. However, the increase in short term marginal utility to protectionists may be valued greater than the reduction of long-term utility by protectionism, thus people who are shorter sighted, will be interested in protectionism, to the detriment of everyone else, including their future selves; they will be similarly interested in spreading specific economic fallacies and have some protectionist propaganda prevail, so that other people, under the false perception of a long-term gain from protectionism, will agree to government intervention.
Rent-seekers still have to ``work hard´´ so as to constantly ``earn´´ their share of the loot from transient protectionist gains. Indeed, convertibility of capital from one activity to the other, though it may be slowed by natural and legal hurdles, means that inasmuch as the activity of rent-seeking would be more (respectively less) profitable than other activities, then capital would flow to it (respectively from it), until the marginal return of investment is about the same in all activities, including rent-seeking. In other words, in the long run, even looters do not in the average benefit from the system of legal plunder — the marginal return on investment from their looting will not be substantially higher than that in the other industries. They will have to constantly struggle, maintain their army of men-at-arms, propagandists, and courtiers; and all these expenses will not be substantially more ``productive´´ to the rent-seekers than similar expenses in legitimate productive work are to honest entrepreneurs of the same country. Then why does rent-seeking persist beyond the initial stage of vastly profitable looting? Why do rent-seekers keep investing more and more in rent-seeking, rather than convert to honest activities? Why don't they move to new vastly profitable looting opportunities?  Why do they act to their own long-term detriment, when in the average, they could as well invest in honest activities? Because although to their average interest, honest activities are to their marginal detriment. Indeed, rent-seekers have invested a lot in the destructive activity of looting. In accord with the natural specialization of tasks, rent-seeking is done mostly by people who are specialized in this activity: their assets, their capital, is mainly invested in looting, and though part of it is convertible, a lot of it is immobilized, or inconvertible — and all this capital will lose its value if converted, so that even when an individual looter sells out, his capital is likely to be bought and used by another looter, old or new, who is more eager than the seller to use the capital in looting activities . All in all, there is a considerable amount of capital invested in looting, that ensures that the vested interests of looters as such will be defended, harshly, whenever looting is put at risk by the libertarian ideals of justice.
In conclusion, when government exerts its power to force people to do things, or when it prevents them from doing the things over which it enforces its monopoly, the results are a momentary advantage to those who are privileged by this action or inaction to the detriment of the others, and a permanent destruction of freedom and riches to the detriment of everyone, without advantage to the privileged. The momentariness of the advantage means that rent-seekers must earn their loot from continuously renewed lobbying, lobbying being the activity remunerated by protectionism, which can be considered as a service sold by politicians to rent-seekers, with citizens being victims of a huge negative externality associated with this predation (as opposed to production) .
|3 The Microsoft Case|
Microsoft has always lived on a particular kind of Government-granted privilege called ``Intellectual Property´´. Consider in the early history of Microsoft the article that first made Bill Gates famous, An Open Letter to Hobbyists, published in February 1976 to threaten with prosecution people who were freely exchanging copies of Microsoft BASIC. Since the beginning, Microsoft claims a right to revenue not just from services it actually renders, but from those it prevents competitors from rendering. According to their argument, people should not copy, use, modify, enhance, adapt or redistribute software upon which Microsoft lays a claim of ``Intellectual Property´´, without acquiring a ``license´´ by paying a tribute to Microsoft at Microsoft's conditions.
I have discussed in my article on patents [B6] the evils of ``Intellectual Property´´, which I prefer to call by its true name of Information Protectionism. Though the article itself is more oriented toward the patent system, which is indeed considerably worse than the copyright system upon which resides Microsoft's most valuable privileges, the general arguments mostly apply to Information Protectionism in general, and the bibliography contains many publications that tackle the case of copyrights as well as the case of patents . To the contrary of the original trademark system (now also turned into a mess of government privileges), copyrights and patents were never born in either contract law or common law. Historically, philosophically, and from all that serve as their justifications, they are government privileges. Though licenses themselves may look like ``agreements´´, their force resides in the prohibitions issued by governments that confer some monopoly to ``Intellectual Property´´ hoarders; and such monopoly granted by governments is itself a usurpation, that binds unwilling parties that never agreed to them. What is in question is not the ``agreements´´ but the context of monopoly in which they are being proposed . This monopoly is not born in a contract, it lacks the essential liberties that define contract law: the right to denounce the contract and exit it (though it may cost you), the right to enter or not enter the contact (to begin with), and the right to enter instead any competing contract from a different provider that you'd prefer. Just because monopolies are now issued by a parliament instead of a king doesn't make these privileges any less of the usurpations they are. Consenting adults are prevented from helping each other so as to confer a monopoly to the privilege title holder. To libertarians, any such forceful intervention into the life of any non-consenting third party is illegitimate. It is notable that ``Intellectual Property´´ never succeeded in any public debate or open economic debate; rather it was imposed upon the world through the art of public choice policy-making through lobbying: buying privileges by funding friendly politicians.
Legitimate Property consists in securing the right of a creator to exchange his goods and services, with customers for money or with other partners for other services, at a mutually agreed upon price or conditions. But ``Intellectual property´´ is not this kind of legitimate Property. Just like the alleged ``Property´´ title claimed by the Company of Indies on the trade of Tea with America, it is a Government-granted privilege, that consists in preventing willing third parties from exchanging services with each other. To add insult to injury, Microsoft and other ``Intellectual Property´´ claimants require the public to bear the costs of enforcing their claims upon the public itself. ``Intellectual Property´´ is thus artificial ``property´´ the enforcement costs of which are born by those being excluded. On the other hand, natural Property is precisely born out of people having a right not to what they claim, but to what they actually create  and protect . Allowing some people to shift to other people the burden of protecting their property only results in political lobbies ever extending the cost borne by the general public for the protection of a privileged few, and excluding the same public from more and more claimed ``property´´ that ought never to exist to begin with. In other words, the principle of Protectionism is at work, through which the general public has to pay to be itself the victim of exclusions that benefit a privileged few .3.2 An Account Of Microsoft's Success
Microsoft is a software company that is successful for some of the software it develops and sells. But what Microsoft produces is not its sole or main source of revenue. What it prevents other people from producing through the legislated use of public force is much more so its main source of revenues. Or rather, its source of revenue is in combining as much protectionist privileges as possible into the services it actually delivers. Indeed, it does not follow from Microsoft being a de jure monopoly that it doesn't deliver valuable services: When the owners of ``protected´´ industries of old and of new made and make tremendous profits out of the legislated scarcity of ``protected´´ goods and services, the problem wasn't and isn't the goods and services they delivered and deliver: that and this tea, wheat, iron, coal, cloth, software services, etc., aren't and weren't useless goods and services that people had to purchase against their will. Quite to the contrary, they were and are most useful goods and services, that people seek to purchase in the greatest quality and quantity and at the lowest possible price. The problem is that protectionism creates an artificial scarcity, expensiveness and lack of quality that customers have to face when purchasing these goods . As usual, the problem with monopolists is not what they deliver, which is seen, but what they prevent other people from delivering, which is not seen.
In its owing most of its revenues from racketeering the public with the help of government privileges, Microsoft is not the only privileged party on the market of computer systems. It is interesting to study why Microsoft succeeded so tremendously as compared to the other similar de jure monopolies, and why it has become a de facto monopoly where others have failed. Actually, just like the US government succeeded by racketeering the country under its domination less than most other governments racketeer their own, Microsoft succeeded by racketeering the software market under its domination less than any other system software publisher. All other computer system vendors tried to tie their software and hardware offerings. By a serendipitous series of events, Microsoft found themselves holding a software monopoly on a puny computer line that IBM had failed to secure as a hardware monopoly, the IBM PC, at a time when the cost of computer hardware vastly exceeded those of computer software. In a few years, competition among hardware vendors turned this miserable and expensive computer platform into the greatest computer industry of all time. Other people have tried to produce systems protected by intellectual property to rival Microsoft's MS-DOS and its successor Windows NT, but Microsoft had to compete to remain the most attractive among the privilege holders, while using part of its privilege revenues to stay ahead of those competitors who didn't use privilege and profit from monopoly rent. Remarkably, for all its defects and all the misery it spreads over the world, we must thus reckon Microsoft as the current best thing that market could bring in a world where Information Protectionism rules. This seemingly paradoxical fact is but another consequence of the market working despite the hurdles of coercive government intervention.
Now, Microsoft being ``the best of a Protectionist world´´ mustn't make us forget all the destruction of competitors' efforts upon which its de jure monopoly is based. The privilege of Information Protectionism is rather abstract and its effects are indirect, but they can be clearly seen, if one has a basic understanding of the dynamics of software development. The main privilege that Information Protectionism confers is vendor lock in: customers, once they picked the monopolist that will supply them, cannot switch to any competition, or they cease to be able to reuse their existing documents. And the secret of Microsoft's success is that they found a way of extending this lock-in to all the suppliers on the PC market, by pricing their software on the basis of all of a supplier's product line, making the use of any other software marginally unattractive [B20], effectively preventing any rival software from ever being sold with a PC. They thus leveraged their de facto dominant position into a de facto monopoly (in itself not a bad thing) based on their de jure monopoly upon the dominant software they were selling.
Advocates of Information Protectionism will claim that in their system there can still be ``competition´´ on products (despite the legal hurdles by which they prevent this competition from reusing ``protected´´ components). But even if a competing product is ``compatible´´ today, you can't be sure it will remain ``compatible´´ tomorrow, because the vendor can introduce gratuitous incompatibilities, undocumented features, bugs, etc.; moreover, the competition will have to incur tremendous engineering costs and delays if it is to remain compatible, and these costs are capital that can't be invested in making useful enhancements that actually bring value to customers. Information Protectionism actually implies that one can't make long term plans based on improving or servicing proprietary software held by someone else, assuming that one finds a way to do it legally at all in the short term, to begin with. If the vendor explicitly provides a way to ``plugin´´ additional software, then one may develop such plugins, but who knows if in the next version they won't remove the plugin interface, make it incompatible, or provide their own plugin for that functionality, etc. One can't build long-term plans of production in these conditions. So one is trapped in short-term plans, unless one practically becomes a subsidiary of the vendor. ``Intellectual Property´´ hoarders effectively claim (and are granted by government) not just a monopoly on their past creation, but a monopoly on the creation of anyone who'd dare improve on their past products.
In any case, the de jure monopoly leads to a de facto monopoly by preventing competing services or original offers from surviving or from even emerging at all. The greatest damages caused by a monopoly like Microsoft are thus not the visible damages against Netscape, or against any competitor that was led to bankruptcy or insignificance; the most important victims are not those who actually wrote software that was actually outsold by Microsoft products. Rather, the greatest damages caused by Microsoft are the invisible damages against all those competitors that did not appear; the most important victims are those who could not write new software or enhance old software, and those who could not enjoy that unwritten software. The authors of DRDOS, BeOS were victims; but they were victims for the code they didn't write more than for the code they actually wrote. Also victims were all the authors that couldn't gather funds for rival operating systems projects, and all the Microsoft employees who thought of ways to offer better service than their management led them to, yet could not split and offer these better services because of Microsoft's de jure monopoly on said software. The greatest loss caused by Protectionism is all the good things that never ever happened because privileged people do not earn money by building new useful code upon old code, but instead by preventing each other from building new useful code. All the efforts wasted in destructive strategies instead of constructive endeavours, all the great inventions and cheap services that did not happen and can't be seen this is the greatest loss due to Information Protectionism.
The fundamental principle to be understood is that all real costs in economics are opportunity costs [B8]. And the very principle of a de jure monopoly is to prevent any opportunity from ever appearing. Behind any de jure monopoly, there are the benefits for the monopolist that are seen, and the losses for the customers and excluded competitors that are not seen [B11]. And indeed, the latter negative effects not only can be predicted, but constitute the very reason why monopoly protection is being sought from the government and granted by politicians in exchange for political support.3.3 The Role Of Government
Nowadays, Government poses as the saviour that promises to protect the people from the ``economic power´´ of ``private monopolies´´. But, putting aside the propaganda, what role has Government actually taken in this affair? Has it really been protecting us from monopolies? No, not at all. The first and foremost role played by Government has been the enactment of the very monopolies against which it claims to protect us; the only illegitimate power that exists is the government's own political power; the distinction between public and private is an irrelevant accounting fallacy [B8]; and all the de jure monopolies are born in government protection. Legislated regulations granted by parliaments of politicians may have replaced personal privileges granted by kings; but under the modernized form, the principle is always the same. The new privileges are more subtle, they are concealed from the eyes of the economically ignorant, and they even deflect the anger of the masses toward free market capitalism; but they are stronger than ever.
The origin of Microsoft's monopoly is governmental intervention in the form of ``Intellectual Property´´. The times of kings are ended, wherein the sovereign could grant and revoke nominal privileges to anyone who'd please him, out of his whim and his might. Nowadays, politicians may only institute privileges by enacting legislation, and the Might on which resides their political power, by very definition of any politicial power, must now hide under the pretense of Law. Despite what some people argue, just because the laws instituting privileges aren't nominative doesn't make them any less privileges. If a King, after raiding a town and enslaving all its inhabitants, organizes a contest among his knights, the top prize of which being that the winner will choose and be granted one captured slave most beautiful to his taste, this gift isn't less of a usurpation by not being nominative and by being based on a competition with well-established rules. What makes it a usurpation is not the way the King recruits his Knights and organizes with them to fight and to share the booty; it doesn't matter whether their political entity is led by arbitrary whim or through abstract rules, whether its organization is efficient or inefficient. If during their Conquest, the Knights from town to town have come to consider the contest and its many prizes as a Right they possess, and the King finds himself dispossessed of the Right to institute and revoke such a contest, then the contest isn't more legitimate by being based on a Rule rather than on a Whim. Those who discuss such matters utterly miss the point. The gift of part of the booty is a usurpation because the booty itself is based on aggression, theft, murder, enslavement, etc. ``Intellectual Property´´ laws are indeed a much more efficient way to distribute privilege than granting patents to publishers and manufacturers who please the King; it indeed doesn't depend anymore on the whims of the topmost rulers of the country. Its aggression requires less direct deaths; in the wealthy societies of today, the fear of fines, confiscation and prison is enough to discourage most anyone from overtly opposing the rule of the new tyrants. But the fact that oppression can be done in ways that are smoother, softer, more efficient, and better organized through abstract rules, doesn't magically cancel the oppressive nature of its aggressions.
It is indeed interesting that in our times where the Absolute Democracy of Popular Right has replaced the Absolute Monarchy of Divine Right, Goverment, the nominally topmost political authority, loses the benefits of the privileges it grants, though the privileges are still as much usurpations as they ever were . Thus, to earn their share of the booty, politicians must constantly maneuver so as to invent new kinds of privileges and sell them against support from special-interest groups, and new menaces against established privileges as well as against legitimate property so as to sell their protection to those who are threatened of dispossession. This is how we can interpret the mascarade of governmental prosecution against Microsoft. It was never aimed at reducing government intervention; the prosecution never proposed to do anything about the root of the evil, that is the ``Intellectual Property´´ privileges that institute a de jure monopoly. Such a topic never even appeared in the case, and any party who'd propose to help prosecution with an argument in this direction was dismissed by the prosecutor before any hearing. The goal of the Clinton prosecution of Microsoft was to extend government intervention, to make it more subtle and stronger. The proposed ``solutions´´ were never about reducing a tiny bit of the privileges granted to Microsoft or whichever institution would have replaced it; they were all about constituting new privileges. And the whole political endeavour failed precisely because the politicians didn't find a constituency or special interest group to be bought by extorting money from Microsoft.
Therefore, in this story, we may view the respective roles of Microsoft and the Government as those of a Racketeer and a Vandal. Microsoft levies its racket money from all those who are prevented from freely exchanging services, copying or enhancing software, etc. Microsoft managers are racketeers. Government creates de jure monopolies that are detrimental to the public, without the politicians that cause this destruction benefitting much if at all from it. Politicians are vandals. Moreover, Microsoft is an efficient racketeer, successful in a market where the public is still free to choose to which monopoly to surrender a rent, whereas Government was an inefficient vandal, the mother of all monopolies, that lives out of plunder and privilege-granting, yet only manages to grab for itself but a tiny part of the plunder made possible by the destruction it unleashes.3.4 Monopoly Justice
Government is the vandal that lives by selling our rights off to the racketeers. Hence, when in a case like the Microsoft case Government champions a cause in courts, just like with all other causes it champions, it is actually fighting the symptoms of the Evil with even more Evil. It is proposing new interventions as solutions to problems caused by its own previous interventions, thereby both extending its Power, and creating the conditions for ever more problems, that will ``require´´ ever more intervention to ``solve´´ them. The selection pressure for Governments is to define policies that have the appearance of solving a problem, while creating more problems that can't be directly traced to the former, and allowing them to generate revenues that can be sold off to special interest groups. Thus what Government will never ever do, is to challenge privileges before a court. Government isn't bloody likely to ever sap the very principles of its power: distributing privileges. If people did realize that privileges are revokable by a court, then government would lose all the power it has. Government will never question privileges in court, and will deny courts the right to question privileges to begin with, making them instead instruments of the defence of privileges. The government-controlled justice system serves to uphold government-instituted privileges, whether they benefit to ``private´´ people or to ``public´´ administrations . The justice system can also serve to help the Government find those privileges that the public is ready to endure, or the shape of which fools the public into embracing them, as opposed to privileges that appear to the public as worthy of revolting against.
And, indeed, one of the main ways in which Government intervenes to establish monopolies is the way that it organizes the justice system: by making justice itself a monopoly, and by making government legislation the basis for decisions of justice. In democratic times, people are theoretically ``equal under the law´´; now not only do political connections negate this theory, but the law also isn't equal for all people: it is made to benefit some to the detriment of all, albeit in subtle ways, invisible to those uneducated masses who don't see beyond the appearance, and are subject to omnipresent propaganda to keep them ignorant and fill their heads with prejudice in favor of government intervention. What Government does to the Justice system is actually one of the main damages it does to society: not only does government plunder society to the benefit of special interest groups, it also corrupts the mechanism by which people adjust their behaviour to achieve peaceful and just social interaction. Instead of the Justice system defending those principles and laws that the public really deems as just, as would emerge from a free system of Justice where everyone would support whichever among competing justice providers best reflect his opinions, it instead is made to serve the interests of political power, to the detriment of the public, it is made to defend unjust laws that have no public support, but powerful lobbies in the capital city, and to fail to defend just laws that would have popular support, but no lobbies in Washington.
Actually, when a government achieves monopoly on the legal use of force in a country, any injustice is the inevitable consequence of its interventions as well as its passivity, whether it is the injustice directly created by government or indirectly made to happen by the government's failure to end injustice created by others, all the while actively preventing the victims from defending themselves. This is why Government is evil both by its activity or its passivity; or rather, the evil of Government isn't in what it does or fails to do, its evil is in its very nature, and has its root in its usurpation of power. In other words, by monopolizing public force, the tool that warrants enforcement of justice, government assumes the responsibility for any and all uses of force or lack thereof, and thus for any and all injustices that appear or remain in the country, whether or not these injustices are privileges explicitly instituted in written law.
|4 Restoring Justice|
Now that the libertarian case against the Microsoft Monopoly has been made, there remains to establish what should be done about it, according to libertarians.
Libertarians all agree that the current governmental settlement, with Microsoft giving zillions worth (on paper) of computer software to schools, is not any kind of atonement for the prejudice caused to millions of people who are not any of these schoolchildren — on the contrary, it is but a marketing move to increase the number of victims. And the previously considered penalty, consisting in splitting Microsoft into separate companies with a prohibition for these companies to cooperate, was even worse of a measure to take: it would have repaired absolutely nothing, and benefited absolutely no one, and only have introduced inefficacy in software development; the privileges would have remained as strong as ever, only more expensive to the public. Indeed, splitting a criminal organization into several parts doesn't make the resulting organizations any less criminal — for crime is characterized by the activity, by the fact that the means used by these organizations are disrespectful of the liberty and property of third parties. Splitting a criminal organization into smaller chunks might make the crime less visible, by being more diffuse, and it can even isolate some legitimate activities from those illegitimate activities that make the organization criminal; but it can't magically turn these illegitimate activities into legitimate activities.
Libertarians reject the above statist stances of a ``justice´´ that consists in fines that benefit unconcerned third parties while leaving the victims as helpless as ever, or in imposing regulations that make the racket inefficient without it ceasing to be a racket. Instead, Libertarians defend the principle of Reparative Justice. That is, libertarians insist that Justice should consist of the culprit repairing the damages done to his victims, together with interest and enforcement costs. Moreover, most libertarians insist that the culprit should be subject to penalties if he was acting in bad faith (as opposed to say accidental behaviour or excusable ignorance), since his denial of other people's rights justifies that he himself be denied similar rights.
Now, it is difficult to repair past crimes, especially more so when the victims are diffuse, or even worse, unknown. And in the Microsoft case, reparation is almost impossible to evaluate, since as with all cases of protectionism, the victims that suffered most are those people who were prevented from offering or purchasing services, so that these services never happened, and these people had to do something else instead. Thus, reparations are an important question to try to solve, but there is no consensus among libertarians, and not even any widely accepted theory as to what procedure to follow in such cases. If you have satisfying solutions to propose, you will certainly be listened to with attention.4.2 The Urgent Problem
However, putting aside the difficulty of a truly just reparation to be paid by Microsoft to its victims, I will propose another problem. A problem that is much more urgent than the problem of reparation, and that makes it pale in comparison to the point of being insignificant and almost irrelevant. Yet a problem much simpler, and a problem that has an obvious solution. And this problem is: how can we stop further injustice?
Indeed, making complex speculations as to how to best repair past damages done to mostly unidentified persons is all well and good; but stopping more damages to accumulate on and on should be the first and foremost problem justice has to solve. And here, the solution is simple: it is to stop enforcing Microsoft's ``Intellectual Property´´ privileges. Even if we were to believe such privileges may have some utilitarian justification in general (which they have not, as a matter of fact), in this particular case at least, they have been shown to lead to an ugly and evil monopoly, greatly detrimental to the public. So these privileges are not justified, and the very least should be to revoke them, once again, at least in this case.
Rather than argue about how to pay damages and interest back to the slaves to compensate for their losses, or conversely pay something to the slaveowners to mitigate the loss due to a change in a law they followed in good faith, the urgent act of basic justice is to free the slaves! There will always be time to think about possible reparations afterwards. Actually, once liberty is reclaimed, the forces of life will soon make all past injustice obsolete memories, reparations or no reparations. But while injustice continues, reparations are but a pretense for ever more suffering due to this continuing injustice.
Therefore, the libertarian stance about the Microsoft Monopoly is that the only urgent measure to take is to cancel the ``Intellectual Property´´ privileges of Microsoft, and to abolish the whole system of privileges that is Information Protectionism.
Note that in absence of reparations, Microsoft may very well continue to prosper once its privileges are abolished, and though libertarians would prefer that there be reparations, they won't object to the wealth of Microsoft managers in itself, and will reject any attempt by money-grubbers to extract money from Microsoft's past crimes without a due claim showing that Microsoft owes them this money as a reparation for actual damages. Indeed, libertarians are not against prosperity, but against injustice; that Microsoft would thrive in a time where justice reigns would be but a tribute to the peaceful and prosperous nature of a free world, that benefits everyone, even those who think that privilege is better for them.4.3 Privilege Containment vs Privilege Factories
Libertarians don't expect Government and its monopoly system of ``Justice´´ to ever reckon and enforce the libertarian principles of justice. In the absence of such justice, libertarians find hope in what remains of the forces of a free society.
Indeed, free market forces can slowly build ways around government monopolies. One way by which the free market reacts is through avoidance of government involvement at all: in other words, through the black market, which is the only truly free market, as opposed to the regulated ``private´´ market that pays its tribute to Government. In the case of Microsoft and the other software monopolies instituted by government, this means all the so-called ``piracy´´, with people using, copying, modifying, distributing, enhancing and otherwise servicing software copyrighted by Microsoft and other privileged parties, without any such thing as a license from the privilege holder, without an official invoice for the services being exchanged, without taxes being paid to government during the transaction. But this free market also includes software developed outside of government regulations and privileges, software that is being developed without being trademarked or registered with government bodies, and again without any official transaction as to services exchanged: the truly free software.
When free software emerges from the truly free market, and makes its way into the private markets and the public administrations, it isn't truly free software anymore; but the rules that emerged in the truly free market may be formalized with more or less success, so as to turn them into contracts that will be held in the context of the government protection racket. Thus can be understood the so-called ``Free Software´´ movement: it is a contractual relinquishment of regulatory privileges by all the parties involved in a software project. The involved parties may still have to pay tribute to the government when they make any official transactions, but at least, they cease to fight the privilege war against each other while using the software. By using these social techniques of privilege containment, the forces of the free market manage to reduce the impact of government privileges on society.
Still, what this means is that there are forces that counter and limit the evil of Government. It doesn't mean that this evil magically stops to be evil, or suddenly becomes good. Society grows natural defenses to contain the Evil, but all that is invaded and not protected by these defenses is lost, and also lost is all that it costs to establish these defenses themselves. As long as de jure monopolies exist, their consequence is that people will suffer. Resources are shifted by the monopoly from their legitimate owners who would use them responsibly in self-rewarding uses, to robbers who will use them irresponsibly so as to keep and further their monopoly.
Now, even if the natural defense mechanisms of society could very well overcome existing privileges, the problem with Information Protectionism is that it is not just a fixed set of monopolies and privileges: it is a monopoly factory, that creates ever more monopolies. ``Intellectual Property´´ hoarders constantly register more and more privileged ``works´´ into the system; they make ever broader claims in courts; they lobby Parliaments for ever more privileges, tighter legislation, increased surveillance and ruthless enforcement. And in the case of Information Protectionism as in all their interventions, legislative bodies are but factories for ever more means of protectionism, privileges, etc. Their legislation is useless or harmful: when it is ineffective, it is useless; when it is effective, it is harmful, for it may only serve to prevent legitimate activities; and of course, all the spending of resources for enacting and enforcing legislation, either effectively or ineffectively, is itself a harmful waste. That is why it is not possible to ignore the activity of these looters and hope that society will naturally override their activity with new defense mechanisms: because looters innovate and grow defenses, too; they are actively inventing new ways to loot the creators.4.4 What About The Bigger Monopoly?
The problem with Microsoft's monopoly is relatively minor. With free software and ``Free Software´´, society could ultimately make this particular monopoly irrelevant given enough time, though it may cost all the resources wasted during that time: people will end up using free software, and ignoring any software upon which ``Intellectual Property´´ claims are enforced. But the same isn't true of the problem with the source of Microsoft's monopoly, that is, Government. Government won't go away by simply ignoring it, because government consists precisely in invading people's lives whether they like it or not; it doesn't leave you the choice of not interacting with it.
So while it is important to know what should be done about Microsoft, namely to cancel its privileges, the more important question is to determine what should be done about Government, that caused the whole mess to begin with. We will soon reach the conclusion that what should be done is to identify and cancel the Government's über-privilege, the source of all privileges. The tricky problem will be how such a thing can be achieved; however the solution to this particular problem deserves a study of its own, and is beyond the scope of this long enough essay.
The first thing to do is to understand the nature of Government and of privilege, so that whatever is done to existing governments is not, like splitting Microsoft, the displacement of the very same Evil into different entities with different names, without removing anything from that Evil. To make a long story short , the source of the Evil is in Coercion: the resort to force to deprive people of the liberty of using their legitimately acquired property as they see fit, and to evade the responsibility of one's decisions. Coercion is the tool that characterizes Government when people submit to it and that characterizes Bandits when people resist it. To a libertarian, whether done by people wearing an official blue ribbon or by plain outlaws, both kinds of coercion are just as criminal. In other words, Might does not make Right. Once these basic concepts are understood, things are easily put in their place, and it is possible to determine the ``proper limits of government´´: the Government should do nothing, it shouldn't exist, for in a libertarian society, there is no place for coercion.
Of course, in a libertarian society, there is still a place for people who build roads and manage infrastructures, for people who work at ensuring justice and security, for people who teach, for people who check the size of bananas, for people who develop software and for people who have all other marginally useful jobs that coercive governments try to make believe won't happen without their direct or indirect intervention. Instead, these jobs will happen on the basis of voluntary exchange of service: each person can individually choose with whom to contract, negotiate the conditions of services and payment, and withhold one's customership from those providers who do not bring individual satisfaction. Once these principles are settled, each person's own authority becomes obvious: the limits of each of these service providers' powers are their own property, and the property voluntarily entrusted to them by their customers. As for coercive governments, just like any coercive institutions, they are wholly illegitimate, and absolutely nothing is included in the limit of things permitted to them. They ought to be made non-coercive, or simply abolished — which is one and the same.
In the case between government and Microsoft, Libertarians don't have to take sides. Their role is to refuse and denounce the common underlying assumptions behind both government and Microsoft. Their role is to reveal and delegitimize the common principle of injustice behind these two evils and their sameness of nature and origin, hidden as they are under a veil of propaganda and censorship: both are de jure monopolies established in the name of the public interest, but actually in the private interest of monopolists, under the a priori axiom that politics is a universal solution to any problem [B7]. Libertarianism rejects the political view of the world  as a struggle in which what matters is what side you identify with. Libertarians defend justice, and the natural principles of Law that underly it. For Libertarianism is a theory of Law, a theory of what is or isn't legitimate for individuals to do.
The libertarian tradition has always strived to delegitimize the privileges of those who claim to live at the expense of others, through force and fraud. But more than that, libertarians seek to delegitimize the political power that grants those privileges to begin with, and that can do nothing but grant privileges. We show the naked injustice, without its drapings of false justifications, for Truth is the greatest ally of Justice. We libertarians are abolitionists [B18] [B22].
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: Similarly, libertarianism is not a lobby for black people when libertarians want to abolish slavery. It is not a lobby for white men when libertarians want to abolish ``affirmative action´´. It is not a lobby for foreigners when libertarians want to abolish immigration control. It is not a lobby for locals against foreigners when they want to abolish governmental ``help´´ to either foreign governments or to refugees who flee the same foreign governments. Actually, libertarians promote a vision of the world based on justice and harmony of interests, and combat the illusion that individual interests are necessarily opposite. We oppose all the forms of injustice that are instituted, which can happen but with the help of instituted violence, i.e. government.
: In particular, libertarianism never promoted the implementation of such a narrow-purpose abstract mathematical model as ``pure and perfect competition´´, or of any model whatsoever, to begin with. It is remarkable that collectivists use this neo-classical model as a disparaging slogan to describe libertarianism: such a slogan is not rooted in facts, but in the emotional way of ``thinking´´ of collectivists, who react to the words, without knowing anything of the concepts, and see ``pure´´ and ``perfect´´ as adjectives that reinforce the hated word ``competition´´ into the epitome of what they hate.
: As asked Lord Sutch, ``Why is there only one Monopolies Commission?´´
: As Robin Hanson put it about speculative markets, but that applies to any market where there exists freedom to enter competition,
Betting markets, and speculative markets more generally, seem to do very well at aggregating information. To have a say in a speculative market, you have to ``put your money where your mouth is.´´ Those who know they are not relevant experts shut up, and those who do not know this eventually lose their money, and then shut up. Speculative markets in essence offer to pay anyone who sees a bias in current market prices to come and correct that bias.
: This particularly contradicts common statist propaganda that insists that government should take control over big monopolies. As usual, statists use the spectacular aspect of a big company's size as an emotional lure so as to impress people with the awe of the task of keeping big companies in check. But government officials are no supermen, and they are not better fit than private, responsible individuals, at tackling such a mighty task. The only ``special power´´ they have is the power of irresponsible coercion: whether you agree or not, you'll have to abide by their orders, and force will be used against you if you try not to obey them; force will also be used to protect them from any backlash of the evil they unleash onto the world. They won't have to suffer the consequences of their irresponsible decisions, as these consequences unfold to the detriment of the public.
: Or equivalently required massive government subsidies to remain, thus making the market not so free anymore.
: A current trend in Europe is that blatant de jure monopolies currently fall out of public acceptance; it is thus to be expected that rent seekers will lobby more and more for these subtler kinds of ``protection´´. However, the question of just why blatant monopolies are falling out of public acceptance must be asked to begin with.
Unhappily, the reason this happens in Europe is due less to an increased understanding of economic issues by the public than to the power struggle between political institutions. The winners are those whose power is more stable in time and space and thus more coherent in action, and also more legitimate-looking to the eyes of the public. At least at the European level, these winners are the legislative bodies, that initiate coercion through ``regulations´´. In this context, they contrast with executive powers, that exert direct monopoly control, and are strong at the national level and weak at the European level; the latter thus tend to push toward a relative decentralization that opposes the power of the European bureaucracy.
A sure sign that there is a deep misunderstanding about monopolies is that the most blatant monopolies go completely unquestioned! Indeed, the mass media unanimously present as obvious and inevitable that education, police, justice, environment preservation, and other services are natural ``non-commercial´´ monopolies devolved to the Government. Economic analysis of issues related to these services are systematically censored away from the public. Actually, ``non-commercial´´ really means that the monopoly is so complete that individuals are entirely prevented from resolving the issues through free and responsible cooperation. More so, the very notions of ``economics´´, ``commercial´´, ``public´´, and ``private´´ have been utterly corrupted by the statists. Their false notions must be questioned, and replaced with the meanings that libertarians use.
Statists consider the field of economics as whatever involves taxable monetary exchanges; we libertarians consider the field of economics as the whole of Human Action. Statists consider anything ``commercial´´ as a (sometimes necessary) evil, and commercial activity as something akin to war, with the implicit assumption that the interests of sellers are opposite to those of the buyers. Libertarians know that commerce can be nothing but good as long as property rights are respected, and that freedom implies that exchanges will only happen so long as it satisfies the interests of both buyers and sellers. Statists consider that there is a ``public interest´´ that is opposed to the ``private interests´´ of individuals, and must be defended by official collectivist ``public´´ political institutions. Libertarians know that there is no ``public interest´´ beside the positive combination of ``private´´ individual interests, and that those organizations that defend genuine ``public interest´´ are those private institutions born from the free association of individuals. On the other hand, any so-called political institution is composed of just as private interests that oppose the real public interest by their very coercive mode of action. Statists tend to ``understand´´ society in terms of emotional relations of alliances and opposition. Libertarians try to explain society in terms of rational structures of causes and effects.
: For instance, labour regulations, such as minimal wages, and any ``social´´ measures imposed upon employer, increase the cost of employment, and decrease the amount that employers are ultimately able to pay employees, while raising the minimal level of marginal employee productivity below which employment is profitable. Therefore, employees will receive lower wages, diminished by the costs of the ``advantages´´ thought to be born by the employer, whereas those whose productivity is too low will be excluded from employment altogether and locked into poverty. In the end, all the costs of protection are borne by the ``protected´´ category, and only those who were in the category before the protection was enacted will have received a transient advantage from it. To the rest, and even to them afterwards, protection will only be a burden limiting their freedom, and making everyone poorer.
Similarly, housing laws result in fewer housing opportunities, and a general raise in prices, lowering in quality, and exclusion of marginal house-seekers. In regulated transactions, both sides ultimately bear the additional costs of the legislation-makers' preferences, in what amounts to a forced sale, a restriction to the freedom to contract, the imposition of the political will upon the people. These regulations, by preventing newcomers from entering the market, can be seen as instituting de jure monopolies in favor of the established privileged market dealers. But their monopoly rent being reflected in a raise of the prices of those goods to which a monopoly is attached, only those being granted new monopolies will actually gain anything. Hence, rent-seeking does not benefit people officially ``protected´´ by old regulations, but only those who achieve protection by new regulations, through continual lobbying towards political powers for the extension of their protection.
: Actually, some do, but as we see below, only by selling to more entreprising newcomers, so that the capital available for rent-seeking is even more actively used than before.
: Thus, although the protectionist system does not give any average advantage to anyone for a given amount of work, it differentially benefits people who are relatively better than others at robbery, fraud, deception, people who are more devoid of scruples or able to hush those they have, people who have the morality of parasites, of robbers, of aristocrats. In other words, government intervention encourages immorality and promotes evil around the world.
It could be said that intervention, as Murray Rothbard calls it, whether the deed of ``official´´ government agents or of ``unofficial´´ outlaws, is evil in action itself; indeed the distinction between official and unofficial makes no praxeological difference. Intervention — the denial of someone else's property rights — is indeed destruction and evil unleashed upon the world, whoever commits it.
: It is worth comparing the situation between creative and destructive activities. Entrepreneurship in destruction, just like entrepreneurship in creation, thus earns its successful actor but a momentary gain (and indeed it is always this self-interested gain that drives destructive and creative entrepreneurs alike), whereas the destructive and creative effects of the entreprise are permanent. To constantly earn revenue, destructive and creative entrepreneurs must continually renew their activities, to the respective detriment and benefit of the public at large.
: Patents are extremely evil, because what they prevent is independent of what the patent holder creates. Copyright spreads its evil when the copyrighted work is being communicated, so that the evil is always attached to something good that it corrupts. Copyright on technical data has an additional particular evil, because technical data, just like patented techniques, is itself the necessary basis for creative activity, and a basis that is unescapable when the activity is centered around communication, as is the case with software. Trademarks, originally just a way to avoid fraud by deceptive labelling of content, have also recently come to be abused as privileges preventing any communication about the trademarked products and services.
: If indeed the ``Right to your copying or not copying a given piece of information with your computer hardware and peripherals´´ belongs to anyone, then this Right belongs to You. Of course you may sell this right in exchange of the opportunity to access this information or whatever you agree to. But the government may not sell this right for you or for me, and it has even less the right to sell it for everyone at once. And any so-called ``license agreement´´ based on the premise of your being dispossessed of that Right, and then ``granting´´ you a limited subset of that Right in exchange of money, is void. It is not a contract to be honored, it is the dictation of a robber who imposes his power upon you, but who prudently grants you a charter so that you won't revolt.
: ``Intellectual Property´´ advocates claim that a creator is entitled ``Intellectual Property´´ on any further use, copy, reference of his creation; they further argue that their principle only destroys utility that was enabled by a creator's original work to begin with. But in a free society, such claim would be as ridiculous and unsubstantiated as a shoemaker claiming the property of everything done while wearing his shoes, as well as property of the works of any other shoemaker who'd have ever seen anyone wear his shoes and would have thereafter created new versions of these shoes. Just because he made things possible doesn't entitle him to a right to extract from people any of these benefits.
The laughable principle behind this claim is that one would be entitled to never benefitting others, since any benefits from interacting with him would have to be paid back to him. Quite on the contrary, society is very much based on people having mutually beneficial interactions, where the positive consequences of one's behaviour will benefit not just one but everyone else, too. The golden rule of social interaction is not that one is entitled to the benefits of one's action, but that one is free to choose what actions to get involved in within the limits of one's legitimate property. Among these actions, one will probably try to choose the action that brings him the greatest benefits. It is indeed legitimate for one to request payment before undertaking an action beneficial to someone else. But one cannot undertake an action and afterwards demand a payment that wasn't previously agreed upon.
Can beautiful women in the street lay claim to a payment for the enjoyment of seeing them? Well, if they don't want us to see them, they can wear a burq'a. But if they don't wear such cloth that covers their whole body, then they may perhaps beg some payment from passers-by, but they may not demand it. Actually, if they want people to pay so as to see them undress, they had better get hired as strip-teasers in a night-club; then again, they can demand payment not to all passers-by, but only to people who seek to enter their night-club, and the cost of operating the night-club will be borne by its operators, and not by the public at large.
Property is not about destroying what other people do thanks to your creation, but about ensuring that you can continue to enjoy the results of your work. It is not a principle of death, but of life. In the case of physical creation, this continued enjoyment precludes other people's direct use of the creation; but this negative corollary is a consequence of limitations due to the physical nature of the created object; it isn't directly included in the positive principle of Property.
: It's all too easy to create something, and to claim a right not just to that something, but to just about everything else. Does the discoverer of a new shore own the lipful of sand he kissed, or the beach he sees, or the whole island on which he landed, or the whole continent behind it, or every previously undiscovered spot of land on earth, or maybe every previously unclaimed land in the universe?
Property isn't born in wishful claims, but in actual creation. A settler owns and only owns whatever previously unused land he actually puts to use. It isn't the respect for the words he utters, but it is the respect for the crops he grows, for the fences he erects, the roads he builds, for the irrigation systems he lays down, etc., that defines the extent to which others shall not trespass: inasmuch as trespassing would imply physically destroying, damaging or polluting something he created, this trespassing is unlawful, and entails his right to be properly compensated by the trespassers.
Now, if another man, without in any way damaging or corrupting any crop, fence, water or air flow, or anything that the settler uses as part of his creation, manages to take advantage of the ``same´´ spot of land, then this new use will be his property, not the property of the previous settler: maybe he mined deep under the land while preventing the soil on the surface from caving in, maybe he traversed the land with electromagnetic waves that do not interfere with any previous activity, etc. In any case, since the previous owner is not deprived in any way from anything he acquired through creation, he has no valid claim against the newcomer. The new use will have revealed that what may have looked like the ``same´´ spot of land is actually not the same, and is composed of distinct and independent property rights.
Finally, no one owes anyone else any limited or unlimited means to defend the other's property. Rather, everyone is responsible for his own. Of course, it is people's general interest to associate with partners, so as to mutualize the risks and costs associated to preserving one's property. And that is why people naturally do it, without having to be coerced into such associations. Now freedom of association also means freedom from leaving associations one doesn't like, and freedom of founding new different associations. A monopoly on defence associations is in itself an aggression against people's right to freely associate. Forcing other people to associate to defend one's claimed property, is but robbing them to one's benefits; it is preventing people to associate in ways that suit them better, and opening the door to exploitation by those who claim to protect them. It is organized robbery in the guise of the defence of property.
This robbery may be done by one tyrant, or by an association of tyrants dubbed (political) ``majority´´ forcing themselves upon the (political) minority. It may be done by a privileged few, under the cover of legislation; and privilege seekers may lobby for the establishment, preservation and extension of such legislation in their favor. They may even invoke contracts they have with each other to coerce disagreeing third parties into acquiring ``licenses´´. In any case, this robbery is still robbery. No amount of legislation and other agreement between robbers can justify plundering third parties. When organized under the pretense of a democratic government, where every interest group is promised its share, there is nothing but mutual robbery, unfettered violence and destruction unleashed in a climate of fraud and ignorance as to who suffers how much losses from the robbery and who gets how much ``benefits´´ from his share of the loot.
: Of course, protectionists will claim that the protection is to protect some kind of creators or another (miners, factory workers, artists, etc.). In reality, not only doesn't creation need to be specially ``protected´´ — since it contains its own rewards, — but this protection will not and cannot benefit those creators that are used to justify it. Indeed, revenues go back to their factors of production, and the creators will still be paid for what they created and no more. Actually they will be paid less, since the free market is compromised by protectionist regulation, and they won't be able to find the customers and patrons who would pay most in return for the services they propose. So the ``protected´´ creators are indeed maintained into a system of permanent dearth and crisis by the protectionist system. Those paid by the protection are those who lobby for it, those who spend time being introduced in the right circles, etc. The factor of production rewarded by protection is lobbying [B9].
: For instance, in nineteenth century France, great fortunes were made out of the protection of domestic iron and coal mines, that provided the essential raw materials of the industrial revolution. Of course, by limiting the access to raw materials, this protectionism only slowed down said industrial revolution, and was greatly detrimental to France (economic reasoning: comparing outcomes depending on the choice of protecting or not protecting). Yet, despite this protectionism, France was industrialized and the raw materials extracted and sold at inflated price served to make it a better place for all concerned (accounting reasoning: seeing who actually did what and got what, and not comparing with other opportunities that were prevented from happening). Similarly, protectionism in the software industry is a brake to the information revolution, that is being slowed down considerably; yet, the information revolution that is happening despite this protectionism is a great thing that is taking mankind several steps forward. The usual fallacy of protectionists at this point will be to make the accounting calculation of the benefits of what they produce and then make the non sequitur economic conclusion that it is beneficial to grant them protectionist privileges [B8].
: Tyrants of antique ages, who'd base their power on nothing but raw force, could buy support from their subordinate warlords by granting them revokable gifts; a disobedient servant would find his privileges revoked, and thus everyone had to obey submissively; enjoying the gifts of the day was the best anyone could hope for. These Tyrants could thus never give more than they received, they were feared and hated, but revered slavishly. On the other hand, they couldn't build long-term plans; their weakness entailed their assassination, and with their death all the on-going projects and people that had their affection would lose any support, faced with the revenge of those who would have seized power, and the whims of the new Tyrant who would emerge.
Monarchs of more recent times, by basing their power on a network of nobility and clergy with well-defined rights, could establish their rule on more modern societies, where long-terms plans and lasting dynasties were possible. They didn't enjoy the same freedom of arbitrary whims, and couldn't revoke privileges without at least a good pretense, but in exchange could exert power over much richer countries, and cultivate longer-term pleasures.
Statesmen of modern times, who are bound in a much tighter way by regulations, and who themselves exert their power through more regulations, can't arbitrarily revoke privileges. Being themselves contestants in the competition of ballot, they can't enjoy the permanent effects of the privileges they may enact, but instead are the ones to sell their enactment power to the various lobbies of instituted privileged bodies that benefit from the political stronghold on the country: civil servants, trade unions, subsidized intellectuals, big industries that work for state programs, and any constituency that can afford political influence.
: Once again, ``private´´ vs ``public´´ is an irrelevant accounting distinction made up by governments. To libertarians, what matters is the distinction between coercive vs free [B8].
: For more details, see for instance my previous essay [B7].
: The political view of the world has been well formalized by the authoritarian political thinker Carl Schmitt [B3]. It has been well denounced by libertarian antipolitical thinkers such as Ludwig von Mises [B15], Murray Rothbard [B18], Karl Hess [B14], etc.
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