Madison on Monopolies

2007-06-13

A quote from the "Detached Memorandum" of James Madison:

Monoplies tho' in certain cases useful ought to be granted with caution, and guarded with strictness against abuse. The Constitution of the U. S. has limited them to two cases, the authors of Books, and of useful inventions, in both which they are considered as a compensation for a benefit actually gained to the community as a purchase of property which the owner might otherwise withhold from public use. There can be no just objection to a temporary monopoly in these cases but it ought to be temporary, because under that limitation a sufficient recompense and encouragement may be given. The limitation is particularly proper in the case of inventions, because they grow so much out of preceding ones that there is the less merit in the authors and because for the same reason, the discovery might be expected in a short time from other hands.

Monopolies have been granted in other Countries, and by some of the States in this, on another principle, that of supporting some useful undertaking until experience and success should render the monopoly unnecessary, & lead to a salutary competition.... But grants of this sort can be justified in very peculiar cases only, if at all, the danger being very great that the good resulting from the operation of the monopoly, will be overbalanced by the evil effect of the precedent, and it being not impossible that the monopoly itself, in its original operation, may produce more evil than good.

In all cases of monopoly, not excepting those specified in favor of authors & inventors, it would be well to reserve to the State, a right to terminate the monopoly by paying a specified and reasonable sum. This would guard against the public discontents resulting from the exorbitant gains of individuals, and from the inconvenient restrictions combined with them.

Note how Madison says that copyrights and patents are government-granted monopolies (or, as I recently argued, not rights but privileges).

The Founders had great wisdom. We ignore it at our peril.


Peter Saint-Andre > Journal