ADOBE PHOTOSHOP AND COUNTERFEITING

by Liberty and Power

A friend just sent me this piece on Adobe including code in Photoshop that prevents users from copying and manipulating images of many of the world's major currencies, presumably to prevent counterfeiting. There are a couple of worrisome things here, including the state apparently requesting/demanding that such code be included in private software, and Adobe agreeing and not informing customers about it. In addition, it would seems to be a limit on free speech to the extent artists might like to use Photoshop to create artistic images that involved currency. (Not to mention the fact that manipulating the image of currency is not per se illegal.) But I'd like to make a point that I haven't seen raised elsewhere: once again, this whole situation creates problems,and a bad precedent for state involvement, precisely because of the existence of state monopoly central banks. Where states control the currency, they will act in understandable ways to protect those monopoly rents, and presumably pressuring Adobe into doing this would be one of those ways.

In a world of competitive banking, not only would banks have plenty of good reason to make their currencies hard to counterfeit (and banks did so historically, before central banking), they could also negotiate competitively with companies like Adobe to make these sorts of deals. Adobe would certainly be in a better position to resist where the power of the state is not involved, but rather the more decentralized forms of power we see in the market. Moreover, banks and/or software manufacturers could test the market to see whether customers really cared about an issue like this, or whether they were indifferent. The discovery processes of the market would both allow for more options and put more pressure on all parties concerned to be more forthcoming about what is and is not in their software.

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Steve Horwitz - 1/12/2004

Well if it were just about Photoshop, I'd agree. :) The problem is a lot deeper than that - and there's quite a theoretical and historical literature on the failures of central banking and the unrecognized virtues of more competitive systems. Cites available on request. The reality of competitive banking systems historically was that counterfeiting was no more, and usually less, of a problem than it is today. This point is even more powerful when you consider that central banks can much more easily engage in the worst sort of counterfeiting of all - inflation. Some of the best performance of the US economy, in the late 1800s, was during a period of competiting currencies (although there, the very significant regulations of that activity generated some undesirable unintended consequences as well).

Here's a question: if unified *currency* systems are so desirable, why not unify *bank liability* systems too? That is, we permit thousands of competing "check book dollars" throughout the economy, but don't give those a second thought. (How do YOU know the bank off of which a stranger's check is written is legit? Careful with your answer because it might apply to competing currencies as well.) And with the advent of smart cards, we're on the way to competing "currencies" anyway.

What societies really need is a common system for determining value. There's no reason individual banks can't produce competing monetary instruments that are denominated in a common commodity or instrument. Markets can and have evolved institutional arrangements for handling the problems you note above.

Jonathan Dresner - 1/12/2004

On the other hand, a decentralized banking system would facilitate fraud on a whole new level: printing authentic looking currencies that don't actually exist, or shell banks to issue worthless currency; I'm sure actual criminals could think of others.

There is a correlation, historically, between unified currency systems and powerful, dynamic societies. I'm sorry, but giving it all up just to preserve the integrity of Photoshop.... silly.