A few weeks ago I was talking to Michael about intellectual property (specifically, patents and copyrights) and proposed that these things are artificial and probably completely unnecessary. Unfortunately, when challenged at the time I was unable to formulate any kind of an argument, other than, in effect, "just because something seems to have always been a certian way, or because you can't really concieve of how else it would work, doesn't mean it's correct or even necessary." Pretty weak, and not at all descriptive of how we would expect things like "innovation" or actual investment in new technologies to happen without patents, or for art and other activities, copyrights.
I've thought about the issue quite a bit more, and have not come up with any definitive answers. I have, however, put together some points of focus, questions that need to be asked, etc - organizing the problem and, I think, making the solution to the problem of "no IP" a bit easier to eventually get to.
Copyrights and patents are not that old. I believe the first patent law wasn't enacted until 1623, and the Statute of Anne was enacted in 1710. To say there was no innovation, or investment, or creation of works that would today be worth copyrighting before 1623 or 1710 seems to be incorrect. These facts don't really make any statement about the validity of copyrights or patents; You could just call them "advances in business technology" or something similar if you wanted, but I think it does demonstrate that the advance of technology does not grind to a halt without these concepts in place.
In effect, copyrights and patents are a state-created monopoly for a set period of time. But the necessity of this action has yet to be proved in any way. No one seems to think monopolies are good, so why would ones created by the state be different? Companies that create original products or works still have a period of monopoly - however long it takes for someone else to copy everything about it. In some cases, they are uncopyable - you can distribute all the CDs you want of a band, but you'd be hard pressed to form your own band, performing the songs off the CD, and draw the same crowd to your concert. For businesses, your monopoly would last as long as you could keep your invention secret, through obsfucation or trade secrets or anything other than government coercion. While I don't think that would last very long for most things, that doesn't mean that there would be no profit to be made, even after someone tried to copy you. Plenty of companys continue to compete in businesses where nothing they produce or do is covered by any IP laws, but they still find a way to profit.
I think a good (or at least popular) example of what may happen in the modern age without patents would be the software industry. Software patents are a very recent invention, and have been fraught with problems since their inception. Before their conception (at least in the US), we didn't have a shortage of creativity, new algorithims, etc, and the industry flourished. Perhaps it was just a young industry that, once it "matured" needed stronger IP laws. And of course they still benefited from copyrights if not from patents. But there is still no evidence that these things are needed. You do not need a copyright to sell people support for the software you make, nor do you need a patent on one-clicking or something equally ridiculous to compete in the marketplace. These are small examples and there may be a flood of instances where nothing would have been done without strong patent or copyright law, but I haven't heard of it.
Patents and Copyrights are, (unfortunately?) not universally recognized. The US has worked hard to push our IP laws on other countries, but it is far from complete. One statement Michael made was that places like China, who have weak to nonexistant copyright laws and patent laws, don't create anything. In regards to art, or other copyrightable material, that seems wrong. But most asian artists are forced to make their money through tours, personal appearances, and corporate sponsorship as opposed to CD sales. I cannot say if this is "good" or "bad", but I do not see a lack of innovation. With patents in china, while it is obvious they are behind technologically, I do not think it is fair to blame a lack of patent IP when looking at a huge, largely rural still communist contry in comparison to the western world. Historically, china produced a ridiculous amount of important technology, well before patents were in place. 40 years of communism, not patents, seems a much easier target for any blame on Chinas technological development.
The point of all this is really just an intellectual exercise, of course - plenty of people have said the same things I say here better. But they need to be said, and said again. Intellectual property is completely artificial, a relatively new concept, and, I'd say, unproven in its merits. The experiment to prove its merits is beyond me at this moment, but suffice to say development and creativity happened on a large scale before copyrights and patents, and I'd be hard pressed to believe it would cease if they went away tomorrow.