I think you are misunderstanding a fundamental part of capitalism and markets, which is leading you to incorrect conclusions.

You seem to be assuming that there are a limited number of business models out there, and that they need to be very specifically (and legally) identified and protected in order for the economy to thrive. Or how else could you come to the conclusion that the market would fail without copyright?

Not only is this not true, but it is exactly backwards. The precise opposite is true. There's an unlimited number of business models that are possible, and for the vast majority, government involvement and specific "protection" only serves to limit competition and thus innovation and to hurt the economy.

"Who will invest in Bob's business if Tom can just undercut him?" With this question, you neglect the obvious possibility that Bob simply will choose a business model that can't be easily undercut. The vast majority of business models do not rely on copyright law.

"Who would make a multi-million dollar movie in your world? Write text books?" This particular quote requires multiple responses:

(1) First of all, who cares? These are arbitrary business models, and it should not be up to you or me or the government to legislate them into existence. There are a billion trillion quadrillion business models that could theoretically exist that do not exist today, and the world is just fine. For example, imagine a world where you could copyright recipes, and the first person to make a pizza could make Pizza Inc., and they'd sell all the world's pizzas or license them out, and it would be illegal for anyone else to copy. And then I came along and said, "Hey, let's get rid of recipe copyrights." You would be sitting there saying the exact same thing, "@csallen, who is going to make Lasagna LLC or Salad Inc.? Who is going to invest in a huge recipe conglomerate if any tiny restaurant could just undercut them?" And I would give you the exact same response: who cares? We do not need some particular subset of business models to exist for the world to be okay, it is a failure of imagination to assume that particular business models that thrive in the current timeline are necessary or even ideal relative to what could be.

(2) It's arrogant for any of us to think we know so much about market dynamics that we can confidently predict that BusinessModelX cannot survive without CopyrightLawY. The entirety of the world's information exists online for free, and yet textbook companies still make money. You can get free online courses from MIT, yet colleges still make money. These things are easy to explain with the benefit of hindsight. But I bet you before the existence of the web in 1992, few experts would have predicted this to be the case. It's incredibly difficult to predict how market dynamics will play out because of the limitless ingenuity and creativity of the human mind multiplied by tens of millions of profit-seeking individuals trying to seek out an edge in the market. Even barring my "who cares, other alternative business models will pop up" argument, the idea that you or I know enough to have a top-down decree about what will happen to the economy if a particular business model disappears is incredibly unrealistic. The economy is formed in a bottom-up way, from trillions of individual actions made daily by consumers and businesses.

"Capitalism MUST exist in a framework with government regulation, as classical capitalist philosophy points out." This is one of the few points you made that I absolutely agree with, and that I think is fundamentally ignored by many supporters of capitalism, especially the libertarian types. Capitalism is essentially created by laws, and made possible by laws. I 100% agree. However, this brings me to the second part of my response to you.

2. Laws

I think you possess a fundamental misunderstanding of laws here as well, or at the very least, a severe difference in our attitudes and how we view the law.

Per my view, laws are imperfect. They are self-evidently imperfect. I can find any number of laws on the books right now that you yourself would agree should probably be broken because they are so ridiculous and in need of update, revision, or repeal that it would be unconscionable to actually follow or enforce them. Once you admit that even one such law exists, and yet remains on the books (and trust me, that number is much greater than 1), then it follows when and whether it is best to follow the law is a matter of subjective judgment. It is not a black-and-white issue.

Even our courts and legal systems believe this, and are organized around this principle. Laws can and have been thrown out as unjust or unconstitutional by the judicial branch, despite the fact that they were clearly violated. Laws can and have been ignored and unenforced by the executive branch and the forces it controls, despite situations where the law is clearly being violated.

Now, I am not an anarchist. I believe in the rule of law, and I believe that it makes life better. But again, it is completely subjective which subset of the law actually does so. And I don't think it's possible for any human to live without their actions agreeing with this, even if they ideologically pronounce a black-and-white stance.

Personally, when it comes to capitalism at least, the laws that matter to me are the laws that increase competition and that protect consumers. The entire goal is to incentivize people/companies to profit by competing, innovating, improving products/services/delivery, and lowering prices. And to outlaw every other form of profit seeking that doesn't benefit consumers (monopoly, collusion, bribery, sabotage, false advertising, regulatory capture, etc), in order to disincentivize companies from taking that path. In addition, there are regulations that exist to protect consumers and keep them safe. I'm a huge fan of this kind of law.

However, there are lots of unjust and poor laws that get put on the books, as I have already mentioned. Regulatory capture is a tremendous problem in a capitalist society: using the law to reduce competition for one's own benefit, at the expense of consumers, the market, the economy, and the country. This is not some rare, exceptional thing. It's a persistent problem that must be fought against. And the primary means by which unjust laws are fought and challenged is by breaking them (peacefully), and then taking things to court.

This is not anarchy. This is how the system was intentionally designed, and how it's been upheld.

So no, I don't subscribe to any sort of oversimplified black-and-white thinking about whether or not it is okay to break the law. Every case must be assessed and adjudicated on its own.

Personally, I don't care that much when Uber and Lyft deliver a product that people want, and it flies in the face of laws that were essentially written by the taxi lobbies. While there are exceptions (as I said, these things must be looked at on a case-by-case basis), I largely see those as unjust and anti-competitive laws, created in order to serve other corporate interests with millions or billions of dollars in backing.

While I agree with you that I don't particularly love the idea of companies using billions in funding to flaunt the law for their own benefit, I find it hard to understand why you are simultaneously so happy with companies using billions of dollars to write the law in a self-serving way. When these two forces go head-to-head, I will almost 100% side with whatever promotes competition and aligns with what consumers are demanding to pay for.