Possibility-Space, Location Rents, and Copyright Law

A Georgist analysis of intellectual property

United States Federal Copyright Office, Washington D.C.

How should copyright be conceptualized under a Georgist analysis? There is as of yet no consensus on this question in Georgist circles generally. Georgists may note the nature of copyright as a monopoly and vehicle for rent-seeking but most do not have a developed understanding of copyright as something intimately connected to the Georgist framework. It is the aim of this article to provide a contribution to the wider discussion of this subject in the form of compiling and elaborating on copyright—and indeed other, similar concepts in intellectual property, like patents and trademarks—as something inextricably intertwined with exclusive rights (privilege) over the natural world. Hopefully this can serve as a starting point for further debate and analytical development, as well as a pointer for possible solutions to the problems with copyright. 

What is Copyright?

Firstly, we should understand that copyright is not something fundamentally “intangible”—at least not any more than other privileges over location. Like any territorial franchise, license, or permit (including typical land titles to real estate lots), copyright is a “bite” of the bundle of rights to use land within a jurisdiction. It is a form of partial tenure over land which grants exclusive rights to reproduce, prepare derivative works, distribute copies, perform publicly, and display publicly when it comes to copyrighted works in a territory.  By having a monopoly over the copyrighted work, an owner of a copyright is able to extract rents through restrictions on competition. Accordingly, copyright rents are locational in nature. They hold a monopoly privilege of favored access to geographically clustered consumers. The rental value of a copyright comes from the amount of geographically clustered wealth in a particular area. A corporation will be far more concerned about having a copyright enforced in the United States than having it enforced in Somalia or Burundi. A direct comparison can be drawn to the locational rents of a real estate lot or right-of-way used for a business. In these cases, the locational limits on competition are natural rather than artificial like copyright (in economics terminology, this is due to the rivalrous nature of real estate lots and right-of-way vs the non-rivalrous nature of using the location of an entire jurisdiction to embody ideas) but in all 3 cases, competitors are blocked out from operating in particular geographic locations.

Just like title to a real estate lot, a copyright is a form of privilege disguised as true private property and draws its exchange-value from obligation rather than production. It is akin to a tollgate which allows the holder to levy a private tax upon consumption and production while receiving a subsidy of rent. As Tom W. Bell points out, copyright actually interferes with property rights in true capital:

Although often described as a form of property, copyright relies for its very existence on violating property rights—the traditional common-law rights that each of us presumably enjoys in such tangible things as our printing presses, guitars, and throats. A copyright holder’s statutory privileges do not come out of thin air, after all; they derive from others’ property rights in tangible goods. A copyright holder’s exclusive right to reproduce a work, for instance, limits what printers can do with their presses. Copyright’s public performance right restrains wayward guitars, while the exclusive right to create derivative works would throttle any throat that dared to reinterpret a song. In effect, copyright redistributes common-law rights from we the people to authors and their assigns.

Henry George once said: “To fully secure the individual right of property in the produce of labor we must treat the elements of nature as common property” (Protection or Free Trade). Copyright is in obvious conflict with George’s definition of true free trade. To George, free trade meant the principle of free production: the abolition of all restrictions on production (save for those necessary to health, safety, and morals), not simply the abolition of tariffs. Thus the pro-copyright position held by George himself must be considered supremely odd-and this shall be addressed in detail later in this piece. 

Moving on from copyrights relationship to location and nature as a monopoly-right, we now come to more adventurous territory: the application of Georgist concepts to the realm of ideas itself. This “realm” will be referred to as the “possibility space” of ideas. The possibility space refers to the fact that every single creative work exists in a fixed, pre-existing matrix of possibilities— a library of babel for all possible artistic expressions. For example, take the book Emma by Jane Austen. Emma has “876,635 characters, 160,993 words and 2,397 paragraphs”. How many possible books are shorter or as long? Certainly the number of texts is quite large (and the texts composed mostly of random nonsense will predominate) but it is fixed. You may go through each one by one and eventually you will reach Emma. The same type of reasoning applies to other artistic expressions. Indeed, recent advances in AI art provide an excellent example of how technological innovation can aid in exploring the possibility space. These “demon lords of happiness” that I generated from the AI art program Midjourney by typing in the prompt always existed within the possibility space, Midjourney just opened up new paths to find them: 

Understanding the nature of the possibility space also allows us to properly understand the contribution of an artist. Doing artistic work can absolutely bring about a productive result, but it is a misapplication of terminology to describe this result as an act of “creation”. The possibility-space and everything in it have always existed as an inherent part of the universe. Artists—and others who explore possibility space, like scientists and mathematicians—do not create any of the idea-possibilities themselves, any more than someone who discovers a mineral deposit created the minerals. Both idea-possibilities and the standard natural world (space itself and the natural agents and resources within it) are non-produced. The function of the producer is to discover, not create them. The job of the artist is to act as a curator. They exert themselves to find and isolate parts of the possibility-space that best satisfy human desire in some way (for example, pleasure from seeing a rock that looks like a funny human face), rather than create anything intrinsically new. But just as Newton’s discovery of calculus did not give him any right to monopolize the possibility space of mathematics, an artist’s discovery of a particularly aesthetic arrangement of shapes and colors does not give them that right either. 

Accordingly, we can now see how the possibility space fits into a Georgist framework: it is part of what Georgists refer to as “economic land” or the natural world as a factor of production:

Land is not produced, it was created.  It is the world, the planet from which man evolved, with the sun that energizes it and the orbit that tempers it.  Land is a free gift, variously expressed in different philosophies as Spaceship Earth, the Big Blue Marble, God's Gift, Creation, Gaia, The Promised Land, or nature.  Mankind did not create The Earth with its space and resources, nor can we add to them.  We can only acquire them, often by fighting, or rent-seeking, or in other counterproductive ways.  Man at best improves and develops capacities inherent in the free gift.  It is disappointing, and should alert us and make us suspicious, that economic analysis would ever purge out this paramount, self-evident truth.

"Land" in economics means all natural resources and agents, with their sites (locations and extensions in space).  Land is not just the matter occupying space: it is space. It includes many things not colloquially called land. 

We may draw a direct comparison between production that makes use of the possibility space and production that makes use of the standard natural world. 

The process of production for minerals may go something like this: first, the producer expends labor (and probably capital) to discover the minerals. Then, she expends labor and capital in transforming the minerals into wealth by extracting the minerals from the ground. This mineral wealth must then be processed, distributed, etc using yet more labor and capital until it reaches the end consumer.

Now let us detail another example of production, this one applied to artistic works: first, the producer expends labor (and maybe capital) to discover the ideas. Then, she expends labor and capital in transforming the ideas into wealth. How? By embodying the idea into a tangible product like a book, an arrangement of some kind, etc (of course, in other examples of production, an idea can be transformed into a service rather than wealth- for example, a song that never gets placed into a physical recording device). This wealth must then be distributed to the end consumer by placing it into bookstores, encoding a digital image, etc.

Problems With Copyright Law

From these examples, we can see the essential fallacy in Lockean justifications for copyright. They are false for precisely the same reason that Lockean justifications for private property in the standard natural world are. While labor and capital are involved in artistic production, this cannot grant a right to private property in the natural resource of the possibility space, any more than the labor and capital involved in discovering, extracting, and distributing minerals can grant a right to private property in minerals. At most, the producer is only entitled to a return on their labor and capital, not the return to the natural world (rent). This return is not objective, it is determined by the market and competition—even extremely severe competition—that reduces the return to labor and capital does not render the smallness of that return illegitimate. It makes little sense to justify copyright rents on the basis of rewarding labor, as these are two different returns.

Private ownership of the possibility space entails negative consequences in similar ways to private ownership of the standard natural world. In both cases, an “anticommons” of too much private ownership causes underuse of the resource (the inverse of the well-known tragedy of the unmanaged commons). Examples of this “tragedy of the anticommons” applied to copyright and physical land can be found in references 37 and 38 respectively of Michael Hellers “The Tragedy of the Anticommons.”

The underutilization of economic land caused by private ownership is familiar to anyone familiar with rent-seeking. George noted that land speculation caused “the most stupendous waste of productive forces — of productive forces so potent that were they permitted to play freely the production of wealth would be so enormous that there would be more than a sufficiency for all.”

Copyright enables holders to act as a dog-in-the-manger. Henry George used this metaphor to refer to private landowners who blocked others from using good land, even as they didn’t use it themselves. A familiar example is when copyright holders go after the creators of derivative works. Nintendo is infamous for doing this when it comes to fangames. It is as if a homesteader were to claim unused land adjacent to the plot she occupies and prevent others from using it—despite the fact that most fan content isn’t even explicitly monetized. 

For some final examples, let us turn to the concepts of sprawl and the margin of production. Put simply, we may define sprawl as a failure to put land to its highest and best use, thus leaving superior sites undeveloped and marginal lands overused. This is inefficient in the sense that the lowest-cost factors of production are not used first, and products are not allocated to the consumers most willing to pay for them. By locking out producers from making use of the most valuable ideas, copyright forces the margin of production outwards onto more marginal sections of the possibility space, just as land speculation can preternaturally force capital and labor onto worse land by holding higher-quality land out of use.

In the context of copyright, what we see is producers being forced onto less-valuable sections of the possibility space. This is not necessary—the non-rivalrous nature of ideas means that there is no danger of congestion from everyone making use of the most valuable areas of the possibility space at the same time. It is as if everyone within New York could make use of the most valuable lots in New York at the same time. Rents would fall to 0, there would be no incentive towards sprawl, and land value taxation would be completely unnecessary in the face of radical abundance. 

Instead, immensely valuable and productive areas of the possibility space are cut off. While characters like King Arthur and works like Romeo & Juliet are thankfully in the public domain, the modern creator must submit to painful costs to use an immensely iconic modern character like Superman. These costs may come in the form of denominated rent paid to DC (if they are allowed permission to use the character at all!) or in the form of the cost in venturing towards the no-rent “margin of production” in the possibility space and discovering some superman knockoff character who hasn’t been copyrighted.

Besides being generally less remunerative per unit of labor and capital invested, this also has wider implications for the culture. Imagine if Mark Millar for example, had been forced to use a knockoff character for the critically acclaimed Superman comic Red Son. Not only would this have been less remunerative, it would have simply been a worse comic. The usage of such an iconic character inherently gives the comic more weight. The same is true of adaptations of the previously mentioned King Arthur and Romeo & Juliet. The amount of potential future demand that is left unsatisfied by current copyright law is staggering. Would an idea as creative and off-the-wall as a gameboy-themed videogame adaptation of the hit television series Better Call Saul succeed in the market? We don’t know for sure but all such febrile creativity by potential producers is stifled currently. 

Over the course of these comparisons, some readers may be inclined to bring up a particular defense of copyright-that unlike the standard natural world, the possibility space is infinite. Thus, someone who gains private ownership over a piece of the possibility space does not take or exclude anyone from anything significant because copyright only protects the particular form of an idea, not the general concepts themselves. There are plenty of other ideas they can enjoy—that for example, “you can enjoy and create plenty of stories about boy wizards at magical academies even if the Harry Potter series is privately owned” and someone can simply venture into the idea-frontier if the ideas they currently want are off-limits. This misunderstands the nature of scarcity in both the standard natural world and the possibility space. Both of them are effectively endless but with the vast majority of them being completely worthless. The standard natural world includes space itself and almost all of it has 0 value. What is valuable and scarce is the desirable parts like urban locations. This is why Henry George talked about the problems of private property in land even while the American frontier still existed (“If settlers are going into Montana and Dakota and Manitoba, it is not because there are not vast areas of untilled land much nearer the centers of population”). In the same way, portions of the possibility space derive value due to proximity. All human culture is a remix continually advancing as it builds on top of itself. Almost everyone recognizes this which is why almost no one advocates for eliminating public domain. There is a clear recognition that private ownership of ideas fundamentally takes something valuable away from society in a way that perpetual private ownership of tangible wealth doesn’t. If it didn’t, there would be no reason to not keep works and characters from Shakespeare or King Arthur permanently private. Eliminating the public domain would cripple human culture forever by degrading the foundations it’s built on and ignoring the nature of human creativity. That one could venture into submarginal sections of the possibility space and apply labor and capital to it would not change this anymore than it does for locations in the standard natural world.

Henry George’s Erroneous Defense of Copyright

Now with all this said, we must address the elephant in the room: Henry George’s own support for copyright. In his most developed writing that I could find on the subject, Henry George draws a hard distinction between patents and copyrights. He believed that patents were illegitimate because:

Ownership comes from production. It cannot come from discovery. Discovery can give no right of ownership. Islands, continents, stars, natural laws and relations, new ways of doing things, or the possibility of doing new things, may be discovered, and this discovery may be the result of labor. But no man can discover anything which, so to speak, was not put there to be discovered, and which some one else might not in time have discovered...It, or its potentiality, existed before he came…the expenditure of labor in the invention or discovery of the idea of a machine gives no natural right of ownership in the idea…the potentiality of such a machine is a part of the common heritage to which there can be in justice no exclusive claim

The “potentiality” of ideas existed before man and cannot be created, only discovered. This is precisely the possibility space argument made earlier in this piece. Patents are criticized for interfering with the equal liberty of others to do “what has already been attempted”. George attempts to avoid the obvious implications of this for copyright by arguing that copyright is not property in ideas and not grounded in the labor of discovery. Rather, he says that it “recognizes the right of property in a particular form, itself a product of labor, in which ideas are made tangible”. The “labor of production’ involved in taking an “idea” for a book and ordering it into a tangible “form” of a particular order of letter/words/etc thus grounds copyright. 

The issue with this argument is that George is arguing for a property right in a form while simultaneously claiming that the right is grounded in tangible wealth. If the form refers to the concept of words/sentences/etc being arranged in a particular way, then it is an idea and the mental production-labor is simply another version of discovery-labor. If the form refers to the tangible words on a page, then labor expended in producing tangible wealth can only give one a right to the piece of wealth the labor was applied to. If you expend mental and physical labor in ordering words on a page, you own that page. However, this doesn’t mean you have the right to prevent other people from duplicating that page, anymore than you have the right to prevent other people from duplicating the fish you catch, the crop you raise, or the house you build were that possible (and George says that copyright rests on the same ground as those specific examples). 

Understanding Copyright is Just the Beginning

Copyright is intimately tied to the Georgist framework—many of the Georgist concepts applied in the more familiar areas of real estate lots or minerals can also be applied to private ownership of ideas, and Henry George’s defense of copyright was misconceived. This piece does not, however, explicitly point towards whether copyright should be abolished or how it should be treated in policy. The goal was simply to fit copyright neatly within the Georgist framework; the best way to handle intellectual property law and encourage creative production remains an open question.