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Kenneth,

I agree on most of what you say.

As to the potential sale not being harmed, that's not exactly the problem. It is not a potential sale that is harmed in your example, it is the value of the item. What is the furniture worth if it can be duplicated for free? Well, then it is worth nothing. The value was destroyed by the duplication. In filesharing it goes beyond that. If someone owns a copyright, then they have the right, within the law, to control the making of a copy. Value has not even entered into it, at that point. If the copyright is registered at the Library of Congress, then current U.S. law also allows for damages to be recouped.

Right now, as you say, the economy is not foundationally based on value, but there is the floating value of a currency. There is a dollar amount assigned by law in certain transactions concerning music (the per unit fee for mechanical royalties for example.) The very technology that allows for filesharing also allows individual artists to become their own "machine." One such artist, a friend of mine who wrote novelty tunes, songs about Texas college football, invested money in a bunch of cd's and a tour in Texas after having some of his songs get a big response on Texas radio. This was very early in the downloading phenomenon (it wasn't "filesharing" then.) With a local "hit" on his hands, he couldn't sell hardly a cd and had to cancel the tour early. Why? Because the value of his cd was reduced. No one wanted to pay him for a cd when they already had burned one on their computers in the dorm. He lost a lot of potential sales, lost money on his product and didn't make enough on the tour to offset the cost of his cd duplication. That's a real world example of lost potential sale from a very talented indie artist who was not part of the machine.