People Innovation Excellence

KARL RENNER IN THE AGE OF DIGITAL DISRUPTION

Oleh Stijn Cornelis van Huis

Karl Renner (1870-1950), was both a politician and a scholar. He was prime-minister of the first government of first Austrian Republic in 1920 and in 1945 became President of the Austrian Republic after World War II. As a scholar Karl Renner made important contributions to the development of the sociology of law. In his socio-legal analysis, Karl Renner separated legal concepts (form) from their social functions. He stated: “We can only develop a complete theory of the law if we supplement positive, legal analysis with an investigation of the two adjoining provinces, the origin and the social function of the law. These three, together, form the whole of legal science.”

Renner made the observation that social change often does not (immediately) lead to the adoption of new legal concepts. Much more often, the form of the legal concept remains the same, while changes occur pertaining to the concept’s meaning. When courts, institutions, or individuals apply an old concept to new circumstances, the functions of the legal concept will be broadened, or, if new legal conditions are introduced, narrowed down. The new social functions may change the legal consequences of the legal concept. The legal concept is maintained, but its meaning may change.

Karl Renner thus pointed at the question of how it was possible that despite profound social changes, the concept of property in 1900 was still regulated by pre-capitalist laws: The Code Civil, the Prussian Land Law, the Austrian Civil Code, etc. How is it possible that 18th century laws are still functioning after capitalist industrialization had changed society – including property relations – so fundamentally? How it is possible that the legal concept “property,” can mean the same thing in 1750 as it does in 1900, and yet, in 1900 can produce economic and social effects almost opposite to those it did back in 1750?

The answer is that under influence of rapid societal changes legal change takes place even when the laws don’t change: “legal norms are only apparently unchanged; at some time, they must either be interpreted in terms of purposes their makers never foresaw, still less desired, or they are overturned by those who can no longer accept what the original purposes do to the citizens of a society” (Laski 1950: 390). The meaning of the laws changes so that it can function in the new social circumstances. According to Renner: “a legal institution is a composite of norms. If in the change of economic system, it has remained constant, but its functions have increased, diminished, changed, or disappeared, then we speak of a change in the functions.”

One of the subjects of Karl Renner’s sociolegal analysis was the legal concepts of property. Karl Renner explained how the meanings of property was broadened under the influence of the development of capitalism in Western Societies. For example, the rise of the stock market meant that significant changes took place in the relationship between ownership and production. Shareholders of a company own a company not individually but collectively.  Individual shareholders are not involved in daily decisions about how production is organized.  In the stock market ownership of a company is separated from the power to make daily decisions about the property’s management. Another example is the privatization of railways. While privatized railway companies are owned by private parties, they are bound by contract with the government and must continue the public function of the railways. Owners of railway companies are not allowed to use their property as they wish, and, for instance, cease operations one-sidedly on Thursdays. In modern society the boundaries between private and public law have become blurred. While the old laws governing property were maintained, the classic relationship between private property, private ownership, and the basic rights of the owner to exclude, enjoy, use and transfer private property had changed profoundly.

A similar situation happens today in the context of a digital economy. When someone takes property that someone else owns without permission or legal mandate to do so, this constitutes theft. When someone misappropriates and misuses someone’s copyright this formally an infringement of copyright laws. The boundaries seem to be clear. Yet, in a digital context misappropriation often takes a form of copying rather than stealing, and therefore does not comply with the classic definition of theft. For instance, England’s basic definition of theft in the Theft Act 1968 is as follows: “A person is guilty of theft, if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it; and “thief” and “steal” shall be construed accordingly.” “Theft” in this definition requires that the victim is deprived of property. In a digital age, boundaries between theft and illegal copying are not always as clear. In case of illegal downloading, the loss for the producer is not a real loss, since he is not deprived of the product and can use it as before. The damage is potential damage: the loss of a potential buyer or potential buyers of the product. When intellectual property is stolen through hacking, the owner is neither deprived of its property, and while future economic damage can be enormous, the loss does not immediately occur upon the act of misappropriation.

The old copyrights regimes in the world were written for analogue products and did no longer do their job in the digital age and therefore have been changed. Traditional copyright entailed the following: when a work is sold, the copyright holder relinquishes “exclusive” rights, yet retains “limited” rights of restricting copying or public performance. For instance, after buying a book, the owner of the book was allowed to lend it to someone, make copies of parts of the books for private, non-commercial use, and  was allowed to resell the book to a third party. In a digital age, buying a digital book means that you have access to a digital copy of a book, of which you may store many copies on many devices. Reselling of a digital book would mean selling of a digital copy to someone while keeping the original copy. Lending of a book means giving friends or colleagues a digital copy of the book, also without losing possession of the book yourself. Having access rights to a digital library through a subscription means access to hundreds of digital copies of books without the requirement to return digital copies to the library, after having downloaded them to your computer. In a digital age the lines between owning, selling, lending, borrowing, having access to, and copying of a digital product have become blurred.

Meanwhile, the increased technical possibilities governments have to monitor and control what happens on the internet, means new opportunities for the government to police the internet. Only a few decades ago, governments could not do much against digital sharing on the internet, but that has changed. In the context of these new technical capabilities of the legal system, many countries have enacted stringent intellectual property and copy rights laws. The result is that in several ways copyright has become even more powerful than ownership: often after a purchase of a digital product, for instance software, the owner is not free to lend, share or resell it:  copy rights owners have more control over their sold items than producers of traditional products have.

The example above shows how in a digital age, governments grapple with the old legal concepts of copy rights, property and theft and that the boundaries between the legal concepts have become blurred. Is “theft” broadened to include the making of illegal copies? If you purchase a digital software product, you are not allowed to resell it – and therefore, one may argue, you do not enjoy one of the basic ownership rights. Is it then still ownership? All over the world legislators have chosen to continue to work with the old concepts of “property” and attached  “ownership”, and “copyrights” in a digital context. The result is that social functions of the legal concepts have changed far beyond their original meanings.  This causes social and legal confusion sowing the seeds of the new-born concept of digital disruption (***).

 

REFERENCES

Drew, Joseph (2014) “Karl Renner on Stability, Change, and Service in Entire Legal Systems,” Comparative Civilizations Review: Vol. 70 : No. 70 , Article 8. Available at: https://scholarsarchive.byu.edu/ccr/vol70/iss70/8

Larsson, Stefan. 2014. “Karl Renner and (Intellectual) Property-How Cognitive Theory Can Enrich a Sociolegal Analysis of Contemporary Copyright”. Law & Society Review. 48 (1): 3-33.

Treviño, A. Javier. 2017. “On Karl Renner, The Institutions of Private Law and Their Social Functions”. N: Alexander, Edward. 2017. Classic Writings in Law and Society: Contemporary Comments and Criticisms.London: Routledge. Pp. 227-244.

 


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