The ׳tragedy of the commons׳ is a situation in which free access to a resource, coupled with unlimited demand, will inevitably lead to over-exploitation and depletion of the resource.
It was first described by British writer on economics William Forster Lloyd in 1833. Lloyed was concerned with issues of population growth and its influence on resources. He gave an example of a common that is overused by its commoners (the farmers with rights of use and access to the common). His claim was, that in the case of an unmanaged common, individuals will act in their own self-interest, and contrary to the good of all others, by overusing the shared common.
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Lloyd’s idea was revived and further developed by ecologist Garrett Hardin in 1968, who coined the phrase tragedy of the commons. Hardin's use of Lloyd's example was often misinterpreted, leading him to write, thirty years later, that he should have titled his work Tragedy of the Unmanaged Commons.
For this “tragedy” to occur, the resource in question needs to be scarce, rivalrous, and non-excludable. And its overuse leads not only to the depletion of the resource but also to overconsumption and under-investment.
What’s wrong with the current system?
Hardin’s work led many to believe that the only possible solutions to the tragedy of the commons were privatization, regulations, and top-down centralized governance. Hardin, as he clarified years later, didn’t mean any of the above. In fact, he wasn’t in the solution-finding business. He was pointing out a problem, saying that population growth meant that commons needed some form of management.
Looking at our situation today – at everything from the rich getting richer, to hunger, to heading towards the point of no return for global warming – it’s clear that the system is broken. It’s clear that the forms of resource management and governance that we’re using are no good.
And while some see the free market as a success, because it provides goods and services without an overseeing organizer, the problem with the free market is the power that drives it, and the implications of that power. Profit incentives – which are at the core of the capitalist society – are also at the core of the abuse of the commons.
Privatization – the institutional transfer of publicly owned resources to private ownership or operation – creates negative externalities. Corporations exploit resources, and we all pay the price of pollution, to name one example. As a theoretical solution, privatization assumes a long-term commitment, which is supposed to encourage owners to invest in the resource. But in reality, the vast majority of privately operated corporations use up an entire resource until there is nothing left. According to the FAO, about 60% of the world's fish stocks are fully fished, meaning they are right at the limit of sustainability, while 33% are overfished. Only about 7% are underfished. This tells you a lot about privatization’s ability to ensure investment in sustainability.
Regulations, and centralized top-down government solutions, that operate on a national level, also create two major problems for all humanity. The first is that they promote NIMBY politics. NIMBY – standing for "not in my back yard", is an attitude of wanting improvements, without risking any skin in the game. For example, wanting fewer homeless people, but not wanting your property’s value driven down by having low-cost housing built in your neighborhood.
“This leads to a global tragedy of the commons around environmental and other global concerns, affecting each and every one of us — although the global poor are hardest hit,” writes Jeff Emmett. “Many call these ‘market externalities’, but this term is misleading, and leads the reader to believe these costs (and the liability) lie outside our current system. The reality is, that when profit is the sole motive of extractive industries, these problems are more a feature than a bug of the extreme capitalist economy we live in.”
The other major problem caused by regulations and centralized top-down government solutions is that it tends to suffer from rent-seeking behavior -- such as lobbying the government for grants, subsidies and tariff protection. It also suffers from knowledge problems, which characterize all central planning and politically driven processes.
In short, governments can never know the right solution as well as the people who are the first and foremost users of a resource. Just think of yourself, wherever it is you live; isn’t it true that you know better than your local government what’s needed in order to improve life in your neighborhood?
“States lack the information acquired by local users over thousands of years,” says economist Partha Dasgupta at the University of Cambridge in the United Kingdom. “Sending round a bunch of bureaucrats to look at the problem was often not very useful.”
Are the commons really tragic?
Shui Yan Tang, Professor in Public Administration Chair, Department of Governance and Management at USCPrice, examined case studies of 47 irrigation systems -- some owned by farmers and some by governments. Among the government-owned systems, he found that 43% performed well. However, farmer-owned systems did better, with 72% performing well, despite generally being low-tech constructions.
This proves the point of Economics Nobel Prize winner, Elinor Ostrom, who, after conducting massive field research, argued that common resources are actually well managed, in cases when those who benefit from them the most are in close proximity to that resource.
Ostrom’s research also showed that when communities that benefit the most from the resource and are in close proximity to it are allowed to run it, it is economically and ecologically sustainable in the long term.
According to Ostrom’s work, the tragedy occurred when external groups used their power -- politically, economically, or socially -- to gain a personal advantage.
Ostrom’s findings were eye-opening. But they did concern local communities, living in close proximity to the resource and benefiting from it directly. So the question remains: how can we implement this model of community self-governance, that prevents the commons from becoming a tragedy, on a global scale? Taking into consideration the miserable failure of centralized top-down systems to do so?
How can we reintroduce the commons on a global scale?
"I'm not trying to copy Nature, I'm trying to find the principles she's using."
R. Buckminster Fuller
“If we look around at nature, we can find many examples of self-organizing systems that achieve complex and efficient system design and management — without anyone in charge.” Jeff Emmett
We humans can’t start extracting pheromone trails like ants, but as Buckminster Fuller suggests, we can look to nature to learn her principles. Such are principles of peer-to-peer communication or decentralized governance, demonstrated by ants, fungi, or birds.
The very same principles can be used to build a truly decentralized, consensus-driven, crypto-based network for self-governance. A bottom-up, emergent network, for the management of digital commons.
“Technology networks have the potential to take the commons-community model and enhance it. Although applying these rules at scale can be challenging, recent research suggests that blockchain technology may have a role to play in overcoming key obstacles, further enabling communities to manage themselves. Elevating trust from the interpersonal to the protocol level opens up space for experimentation with new forms of collective action to achieve common goals,” says Jeff Emmett, who identified several tools and processes that could helptranslate Ostrom’s principles into DAO templates, which form a ‘cyber-physical commons’ framework.
When you think of the matter like that, it’s not surprising that Hardin’s work was described by some as giving birth to the concept of “emergent behavior”. It is exactly this natural phenomenon, that crypto has the potential to breathe life into if it is purely decentralized.
But there are two very important takeaways from this, that we would like you to consider.
The first is that it’s never about the technology, it’s about human behavior. We need to lead with thought, and technology must follow and serve. As Daniel Schmachtenberger put it, in his talk with Lex Fridman, “we’re going to need some progress rapidly in the social technologies, that can guide and bind and direct the physical technologies so that we are safe vessels to the amount of power that we’re getting.”
The second is, that in order to propel change of this magnitude, we need to put commons first on our priority list. To make it, if you so wish, sacred to us as humans. To be completely devoted to the notion of using only as much as we need, so that there’s enough left for others and for sustainable use, rather than be guided by profit.
In the next issue of Smesher, part 2 of this series: Is money Evil?
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Want to go down the rabbit hole on the tragedy of the commons? Here are some additional resources
