Please send me SCA's fortnightly briefing:

November 18, 2009

The Victory of the Commons

Many economists argue that individuals are ruthlessly selfish by nature, and if you put those individuals onto a commonly owned resource, the resource will eventually be destroyed.  And the solution : privatise the commons.  The theory being that everyone (or at least those that were around when it was privatised)  will have ownership of small parcels and they will treat that parcel better than when they shared it. The economist, Elinor Ostrom, debunks this myth and recently won the Nobel Prize for her work.

Nobel Prize-winning economist Elinor Ostrom proved that people can—and do—work together to manage commonly-held resources without degrading them.

Over many decades, Ostrom has documented how various communities manage common resources – grazing lands, forests, irrigation waters, fisheries— equitably and sustainably over the long term. The Nobel Committee’s recognition of her work effectively debunks popular theories about the Tragedy of the Commons, which hold that private property is the only effective method to prevent finite resources from being ruined or depleted.

The Tragedy of the Commons refers to a scenario in which commonly held land is inevitably degraded because everyone in a community is allowed to graze livestock there. This parable was popularized by wildlife biologist Garrett Hardin in the late 1960s, and was embraced as a principle by the emerging environmental movement. But Ostrom’s research refutes this abstract concept with the real life experience from places like Nepal, Kenya and Guatemala.

“When local users of a forest have a long-term perspective, they are more likely to monitor each other’s use of the land, developing rules for behavior,” she cites as an example. “It is an area that standard market theory does not touch.”

Awarding the world’s most prestigious economics prize to a scholar who champions cooperative behavior greatly boosts the legitimacy of the commons as a framework for solving our social and environmental problems. Ostrom’s work also challenges the current economic orthodoxy that there are few, if any, alternatives to privatization and markets in generating wealth and human well being.

The Nobel Committee’s choice of Ostrom is significant considering that many winners of the prize since it was initiated in 1968 have been zealous advocates of unrestricted markets, such as Milton Friedman, whose selection helped fuel the rise of market theory as the be-all end-all of economics since the 1980s. Policies based upon this narrow worldview sparked the rise of corporate power and the diminishment of government’s role in protecting the commons.

While right-wing thinkers scoffed at the possibility of resources being shared in a way that maintains the common good, arguing that private property is the only practical strategy to prevent this tragedy, Ostrom’s scholarship shows otherwise.
“What we have ignored is what citizens can do and the importance of real involvement of the people involved,” she explains.