Monday, April 18, 2016

The tragedy of the commons fallacy

See this article debunking the fallacy and providing a realistic alternative.

"There is just one significant flaw in the tragedy parable. It does not accurately describe a commons. Hardin’s fictional scenario sets forth a system that has no boundaries around the pasture, no rules for managing it, no punishments for over-use and no distinct community of users. But that is not a commons. It is an open-access regime, or a free-for-all. A commons has boundaries, rules, social norms and sanctions against free riders. A commons requires that there be a community willing to act as a conscientious steward of a resource. Hardin was confusing a commons with 'no-man’s-land'—and in the process, he smeared the commons as a failed paradigm for managing resources."

"Yet the fact remains that a great deal of economic theory and policy presume a rather crude, archaic model of human being. Despite its obvious unreality, Homo economicus, the fictional abstract individual who actively maximizes his personal 'utility function' through rational calculation, continues to hold sway as the idealized model of human agency in the cultural entity we call the 'economy.' [...] Paradoxically enough, the heedless quest for selfish gain— 'rationally' pursued, of course, yet indifferent toward the collective good—is a better description of the conventional market economy than a commons. In the run-up to the 2008 financial crisis, such a mindset propelled the wizards of Wall Street to maximize private gains without regard for the systemic risks or local impacts. The real tragedy precipitated by 'rational' individualism is not the tragedy of the commons, but the tragedy of the market."

"Ostrom nonetheless showed how, in hundreds of instances, commoners do in fact meet their needs and interests in collective, cooperative ways. [...] Many commons have flourished for hundreds of years, even in periods of drought or crisis. Their success can be traced to a community’s ability to develop its own flexible, evolving rules for stewardship, oversight of access and usage, and effective punishments for rule-breakers."

"Ostrom declared that commons that are part of a larger system of governance must be 'organized in multiple layers of nested enterprises.' She called this 'polycentric governance,' meaning that the authority to appropriate a resource, monitor and enforce its use, resolve conflicts and perform other governance activities must be shared across different levels— from local to regional to national to international."

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