Tuesday, May 03, 2011

tragedy of the commons versus common ownership

In 1968 an American biologist Garrett Hardin invented a parable to explain why, in his view, common ownership was no solution to the environmental crisis and why in fact it would make matters worse. This was sweet music to the defenders of capitalist ownership of the means of producing wealth, and Hardin’s parable was soon incorporated into the arsenal of anti-socialist arguments.

Called "The tragedy of the commons", his parable went like this:-
Picture a pasture open to all, assume its a pasture to which all herdsmen have free access to graze their cattle. In these circumstances, it is to be expected that each herdsman will try to keep as many cattle as possible on the commons. Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long desired goal of social stability becomes a reality At this point, the inherent logic of the commons remorselessly generates tragedy.

As a rational being, each herdsman seeks to maximise his gain. Explicitly or implicitly, more or less consciously, he asks "What is the utility to me of adding one more animal to my herd?" This utility has one negative and one positive component.
1. The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly +1.
2. The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular decision-making herdsman is only a fraction of -1.
Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another; and another… But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit—in a world that is limited. In the end, its carrying capacity would be exceeded, resulting in environmental degradation. Ruin is the destination towards which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons. Freedom in the commons bring ruin to all.

Hardin's solution to this tragedy of the commons is "mutual coercion". An appeal to conscience, he argues, is altogether futile. Mutual coercion can be effected through, as it were, enclosing the commons and instituting a system of private property which will enforce a sense of responsibility among herdsmen as to the appropriate number of cattle their land can provide for without resulting in overgrazing. Since they cannot encroach on land owned by other herdsmen, the consequences of keeping too many cattle will be exclusively borne by them. This knowledge will therefore deter them from acting irresponsibly in the first place. Governments drew from Hardin’s theorising was that in existing cases where producers had rights of access to a “common-pool resource” the solution was either to privatise the resource or to subject the producers to outside control via quotas, fines and other restrictions.

The problem here is that Hardin has quite obviously got hold of the wrong end of the stick. It is not the "inherent logic of the commons" which "remorselessly generates tragedy". The "commons" simply provides the setting in which this tragedy is played out. It does not embody the cause of the tragedy itself—that is, the overgrazing of the land by too many cattle. That cause lies elsewhere, in the dynamism of competition which compels each herdsman to increase his herd beyond the carrying capacity of the land since his own livelihood is directly dependent on the number of cattle at his disposal. Had the cattle, like the land, been the communal possession of the herdsmen then it would have been possible to make a rational decision about the total number of cattle. In that case, the livelihood of each herdsman would be directly dependent on their collective wellbeing, which in turn would rest on securing an optimum ratio of cattle to land. As it was, each was obliged to make what was the only rational decision open to him within an irrational framework of decision-making, with inevitably tragic consequences. (So much for the view expounded by Adam Smith in The Wealth of Nations that the individual who "intends only his own gain" is "led by an invisible hand to promote the public interest".)

"In a reverse way", argues Hardin, "the tragedy of the commons re-appears in problems of pollution. Here it is not a question of taking something out of the commons but of putting something in". Just as in the case of the herdsman, a factory owner will be "locked into a system" that will ensure that the commons are treated as a convenient cesspool for the disposal of waste products. The owner will see that it will pay to avoid the costs of purifying the pollutants by simply dumping them in the environment because the saving this represents far exceeds the environmental cost the factory may have to bear though others bear it as well. Rational self interest will therefore demand pollution. Following Hardin's suggestion let us assume that the commons have been enclosed. In theory, this would mean that anyone could prevent their neighbour from polluting their land just as the herdsmen could prevent their neighbour's cattle from straying onto their land. Anyone who chose not to purify their pollutants would be obliged to contain them within their own property and bear the total costs such pollution entailed. But what sounds fine in theory will prove quite unworkable in practice since what we mean by the "commons" embraces not just the land but the air and water surrounding us. These, as Hardin concedes, "cannot readily be fenced".

A simple example will make this clearer. Suppose my neighbour decided to build a factory alongside a stream into which were pumped the factory's effluents. Suppose I delighted in fishing but now with all the fish killed I could no longer pursue my interest. What could I then do? I could of course purchase the right of ownership of that section of the stream that flowed past my back door but my neighbour, upstream of me, could do the same and argue plausibly for the right to use that section of the stream as they chose. Of course, the consequence of my neighbour's decision to site a factory on their property need not be confined to this. Its visual impact on the neighbourhood could depress the price of residential properties all around. The constant noise might disturb my sleep. The lorries carrying the raw materials it processed may congest the roads making commuting to work a hazardous slog.

If I were to grant my neighbour the absolute right to dispose of their property as they chose, it would be inconsistent of me to complain of the consequences. If, on the other hand, I sought to restrict the ways in which my neighbour could use their property then I would be asserting the need to retain the "commons" as an entity in one or other respect—the tranquility of the neighbourhood or the right to fish in an unpolluted stream. We cannot live in a cocoon. Even capitalism itself, the most competitive and atomistic form of society that has ever evolved, cannot afford not to make some concession to this stark fact.

We see this in the way conventional thinking approaches the problem of pollution. Hardin himself points out that while , "our particular concept of private property deters us from exhausting the positive resources of the earth" it actually "favours pollution". The solution which he and many others suggest is the direct intervention of the state in the form of legislation to temper the excesses of competition committed by private citizens. "Mutual coercion", apparently, will not suffice.

The weaknesses in this approach are twofold. It does not strike at the root cause of the problem—at the competitive advantage to be gained by minimising costs—in this case, the costs of purifying and disposing of pollutants in an ecologically acceptable manner—incurred by capitalist enterprises. It blandly assumes that the state is a more or less autonomous institution which presides over society and legislates in the interests of the whole community. But in fact the state is a class institution, financed through taxation by the very enterprises whose activities it seeks to regulate. Legislation is a matter of finely balancing the losses and gains that accrue to the capitalists themselves. Too lenient an approach might be politically unacceptable and excessively ruinous to the health of the workers who create the profits for the businesses that employ them. Too punitive an approach, on the other hand, can erode profit margins and drive investment into other parts of the world where regulations are more lax. And all the time, the dividing line between what is acceptable and what is not shifts as the economic climate itself changes the more desperate the plight of business, the more lenient does the law become.

Twenty years later, in a letter to the New Scientist (22 October 1988), Hardin modified his position a little, writing that his parable should have been called ‘The tragedy of the unmanaged commons’ and re-stating his thesis as ‘under conditions of scarcity, where the number of players is not small, an unmanaged commons inevitably ends in ruin.’ He went on to discuss possible ways of managing a commons, one of which he called ‘commonism’ and attributed it to Marx:

"Karl Marx gave the best summary of this policy in 1875: “From each according to his ability, to each according to his needs!” (the “!” is Marx’s) . Who determines “his ability” and “his needs”? … therein lie the seeds to tragedy. At least some of the members will be too self-seeking. This group, possibly a minority initially, determines the outcome of the Marxian game. As the more altruistically minded members see their selfish brethren prosper they are corrupted into abandoning their high ideals – to save their families if nothing else."

Marx of course never envisaged the principle of "to each according to their needs" being implemented in conditions of scarcity, but only "when all the springs of co-operative wealth flow more abundantly".

Hardin’s parable is completely unhistorical. Wherever commons existed there were also rules governing their use (in the form of traditions or arrangements for decision-making in common) which precluded such over-grazing and other threats to the sustainability of the system. The commons came to an end in England through the ruling class using its control of the state to abolish them, as a means of consolidating landed property and driving the rural poor off the land and into the factories.

Hardin’s parable describes not the failure of common ownership but what happens under capitalism to those natural resources which have not yet been taken into private ownership, such as the oceans. Here capitalist firms engaged in fishing for profit all have free access to a particular fishing area. Motivated by short-term considerations – their own profit – it is in the interest of each of them to behave in the way herdsmen do in Hardin’s parable and the result is indeed overfishing and depletion of stocks. But this is the result, not of property rights not existing over natural resources, but of an economic system where production is organized by separate, competing profit-seeking enterprises. Hardin’s parable would more accurately have been called "The tragedy of the commons under capitalism".

As an argument against socialism, the paradox has no validity whatsoever. It assumes not the complete absence of property rights over productive resources generally, but only an absence of such rights over one particular resource (grazing land) while the others (the cattle, produce and so on) are privately owned. It also assumes that their owners are motivated to maximise their short-term economic gain. In other words, the behaviour of those making decisions about production under capitalism is transposed into a quite different historical context.

In socialism, where there will indeed be no property rights over land, the sea or any other natural resource, there would be no property rights over instruments of production either. The cattle as well as the land would be commonly owned. In these circumstances those responsible for looking after the cattle would not be under any pressure to behave in the way Hardin presumes. They would merely be carrying out a particular function on behalf of the community which, in the rules it would draw up for the use of grazing land, would obviously take steps to avoid overgrazing.

Nor is the World Socialist Movement alone in challenging Hardin' proposition. Every year the Bank of Sweden awards a prize to some economist, often called the Nobel Prize for Economics. In 2009 it went to Elinor Ostrom whose 1990 book "Governing the Commons: The Evolution of Institutions for Collective Action" refuted the so-called “Tragedy of the Commons” parable that is often used to try to show that socialism wouldn’t work. Hardin’s parable was completely unhistorical. Wherever commons have existed there also existed rules governing their use, sometimes in the form of traditions, sometimes in the form of arrangements for decision-making in common, which precluded such overgrazing and other threats to the long-term sustainability of the system. Ostrom took the trouble to study various common property arrangements some of which had lasted for centuries, including grazing pastures in Switzerland, forests in Japan, and irrigation systems in Spain and the Philippines. According to The Times (13 October),

“Based on numerous studies of user-managed fish stocks, pastures, woods, lakes and groundwater basins, she asserts that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest”.

In other words, common ownership did not necessarily have to lead to resource depletion as predicted by Hardin and trumpeted by opponents of socialism. The cases Ostrom examined were not socialism as the common owners were private producers. In socialism the producers, the immediate users of the common resources, would not be trying to make an independent living for themselves but would be carrying out a particular function on behalf of the community in a social context where the aim of production would be to satisfy needs on a sustainable basis. But the rules they would draw up for the use of the grazing land, forests, fishing grounds and the like would be similar to those in the cases she studied.

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