Tragedy of the Commons

The Cost of Wealth Creation

The individualist ethos enables an enormous array of activities and organizations within the private sector—itself within a civil society at arms length from the state apparatus.

Q: But where, in the institutions of the pluralist, legitimist or individualist mode, are there values and institutions to protect markets (as required by individualist values)? And what about protecting other common goods (e.g. air, water) used by businesses?

A:Closed There will be informal concerns and some traditional protection, but nothing remotely capable of dealing with the onslaught of the profit principle and determined businessmen.

The human desire for power and wealth does not weaken one jot as we move through the political modes. Why should it? What alters is how that power and wealth is generated and used—and by whom.

At this Stage the political elites are no longer automatically wealthy and yet want wealth as much as ever. The political class regards private business wealth as a challenge—both to their power and to their ability to tax as much as possible.

The bigger and more powerful players in any market are ruthless. They not only seek to crush competitors by fair means or foul, they are ready to take on governments via the weaknesses of their politicians and officials. Some combination of money, sex, drugs and hospitality usually does the trick.

Politicians in societies at this stage of development will be more than willing to be bought off to provide support and immunity for such players. Despite attempts to hide favours given in return for campaign finances and bribes, there are regular public scandals.

Closed«Robber Barons»…

The tragedy of the common leads to pressure for a transition from the Individualist mode to the Rationalist mode in Politics.

How the Tragedy Develops

Enterprise and wealth-generation are inherent progenitors of social problems, rather than an unalloyed good:

Garrett Hardin popularized the phrase «tragedy of the commons» to refer to the social reality that «any resource free for all to use is invariably downgraded and destroyed by individuals acting independently in search of their own good».

More generally, production of goods and services for profit invariably uses commons-type resources like air, water, space, natural beauty, roads, money and labour. Markets are also a commons.

There is no doubt about the existence of this tragedy. All over the world businesses do degrade and even destroy common resources. Currently the focus is on the environment, but this is just one example of the tragedy.

Three Solutions & One Non-Solution

Privatise…Closed the commons so each individual owner is incentivized to look after their own patch, and can sell it at will.

Regulate…Closed the commons, so each individual user is legally constrained to pursue sustainable activities.

Ration…Closed the commons and prevent degradation by limiting the number of users using one of two approaches:
n
► selling access at a price that attracts no more than the limiting number of users,
or
► assigning right of access as a political favour.

The Requirement: Any solution requires considerable understanding and knowledge of the commons, as well as of the existing or potential users, to devise a viable implementation of the chosen solution. In general, distant government bureaucrats are more expensive and less effective than local users who are more committed and more knowledgeable.

ClosedSelf-regulation is never a solution:

Big firms and umbrella organizations representing business sectors strive to inhibit regulation as long as possible, and often do so by promising self-regulation. But this makes no sense.

The tragedy of the commons is a tragedy precisely because self-regulation is guaranteed to fail. In the case of a business, competitive pressures remove any possibility of restraint.

Any show of self-restraint in one firm gives immediate advantages to others who reject limitations. As a result, the ethical firm quickly sees its profits fall. Over time, it will collapse or exit from the scene.

It can be rather difficult to know what is appropriate (pluralist) and fair (legitimist) in dealing with a commons.

The legitimist mode is insufficient because…Closed these problems cannot be solved by the automatic introduction of a new regulation. There is no easy answer without a careful unbiased inquiry. As a result, any regulation will normally be inadequate, counterproductive or unfair, whatever its immediate populist or ideological appeal.

The pluralist mode is irrelevant, because…Closed the structure of power (i.e. organized groups) is tilted to towards particular businesses or business sectors showing massive growth in wealth. No-one in power wants to disturb that.

Originally posted: July 2009; Last updated: 27 Jan 2010