This is the Sidore Lecture delivered at Keene State College in New Hampshire on October 8, 2013:
What is the commons? What should the commons include? What responsibilities do we, the present generation, have as stewards to protect the commons for future generations? Who should the commons benefit? Who should decide how the commons is used? How should they go about making those decisions?
I was invited here to speak because, together with Michael Albert, I am co-creator of an economic “model” called a participatory economy that has now received considerable attention among people interested in alternatives to capitalism. Admittedly that is still a small percentage of the population. But as global capitalism persists in destroying the environment, and continues to prioritize the interests of the top 1% over the interests of the middle class as well as the poor, it is a percentage that may well continue to expand.
However, before I explain how a participatory economy “works,” and why I believe it provides some interesting answers to these questions about “the commons,” I want to consider some important insights from others.
Some Perspectives on the Commons
Garrett Hardin and the Tragedy of the Commons
Although he was neither the first nor most insightful to discuss the commons, Garrett Hardin’s article published in the journal Science in 1968 was treated as the definitive word on the subject for over two decades. I suspect this was largely because of his article’s catchy title — “The Tragedy of the Commons” — and its take-away message – “Unless the commons are privatized or access is strictly regulated by government, over exploitation is inevitable.”
Elnor Ostrom: A Forgotten Solution
In 1990 Elnor Ostrom challenged what had become “common wisdom” about the inevitable tragedy of the commons in her book, Governing the Commons. In chapter 3 Ostrom presented two case studies of communal tenure in high mountain pastures and forests, one in Switzerland, and one in Japan, and four case studies of communal management of common property irrigation systems, three in Spain and one in the Philippines. In all six cases the common pool resource was successfully preserved by users over very long periods of time, thereby challenging theoretical predictions of inevitable tragedy.
Over the past twenty years Ostrom and many others working in what is now known as the institutional analysis and development (IAD) framework have continued to add hundreds more case studies of community self-managed common pool resources to a database housed at the University of Indiana Center for the Study of Institutions, Population, and Environmental Change (CIPEC), founded and directed by Ostrom from 1996 to 2006. Based on these empirical studies and further theoretical work IAD researchers have identified the following key factors behind successful community self-management of CPRs:
- Who has rights to withdraw resources from the common pool must be identified, and the boundary of the resource itself must be clearly defined.
- Rules regarding appropriation must be well suited to local conditions.
- Users must be able to participate in elaborating and modifying the rules of use.
- Those who monitor use must come from the ranks of the appropriators and/or be clearly accountable to them.
- There must be effective but graduated sanctions against those who violate rules of appropriation.
- There must be quick, easy, and cheap mechanisms available to appropriators and officials to resolve conflicts.
- The right of the community to self-manage the CPR must be acknowledged by higher authorities.
When these conditions are met IAD researchers argue that users can successfully avoid over exploitation. However, whenever one or more of these conditions is not present, the tragedy of the commons becomes more likely. For her leadership role in this body of work Ostrom was awarded the Nobel Prize in Economics in 2009, prior to her death in 2012.
An Island Fishery
For years in my environmental economics classes I used the example of a salmon fishery in the San Juan Islands in Washington State — where I spent a dozen halcyon summers — to explore the logic of common pool resources.
This simple exercise helped illustrate concretely why, because fishing boat captains have no incentive to consider the fact that when they go out fishing they reduce the amount of fish other fishermen will catch, open access to a fishery predictably leads to over fishing. And why this outcome is not only ecologically and economically inefficient, but also reduces profits for salmon fishermen as a whole.
The exercise also allowed me and my students to explore the logic and distributional implications of the three “solutions” people discuss to prevent this “tragedy” of the commons: privatization, government regulation, and community self-management.
Privatization: If a single salmon fisherman is able to secure exclusive rights to the fishery he will limit the number of boats fishing to maximize his profits, which has the unintended but socially beneficial consequence of preventing over exploitation of the fishery. However, with privatization all the benefits from the common pool resource go to a single captain.
Government Regulation: If the State of Washington declares itself owner of the fishery and simply limits the number of boats allowed to fish to prevent over exploitation, the benefits from the common pool resource owned by the state government go entirely to whichever captains are allowed to fish.
Alternatively, if the State government decides that all state residents should benefit from the common pool resource, it can limit access by selling fishing permits. If it sets permit prices high enough over exploitation can be avoided, and the benefits from the common pool resource are shared more widely in the form of state revenues from permit sales.
Community Self-management: Since users of common pool resources reduce their collective profits when they over exploit, collectively, users have an incentive to restrict access themselves. In theory, if users can get their act together, they should not need “big brother” government to come in and restrict access for them. But of course, the question is whether or not they will prove able to get their act together to restrain themselves, and as the subtitle of Ostrom’s book says, create “effective institutions for collective action.” As Ostrom and other IAD researches have demonstrated, sometimes when conditions are favorable, and users can come to an agreement about how to restrict access and how to self-police against violators, the problem of over exploitation can be solved without resort to privatization or government regulation.
Over the past two decades interest in community self-management of different parts of the “natural commons” that have thus far managed to avoid privatization has increased dramatically in progressive circles — where enthusiasm for “grassroots participation at the community level” runs high, while faith in “clumsy” government runs low.
However, progressives often fail to consider the distributive effects of what has become for many “the solution of choice.” When the problem is solved through user self-management the benefits from the common pool resource go entirely to the users. In my simple class exercise, successful community self-management distributes all of the benefits from the fishery to only fishing boat captains, leaving no benefits for other residents of Washington State.
In some cases this may be unobjectionable. For example, in coastal fishing villages in Main, New Brunswick, Nova Scotia, Labrador, and Newfoundland — where residents are generally poor and fishing profits trickle down to poor locals who do not fish — the “community self-management” solution may also be the most equitable solution. But it is often the case that the “community of users” of a CPR is wealthier than the average citizen of a region that can make a legitimate claim to deserve to benefit from the CPR. Large corporate farmers who use aquifers and streams in California’s central valley for irrigation, and ranchers who graze herds on western public lands for nominal fees are examples of well-heeled “user communities” that come to mind. In these cases, the second version of a government solution to over exploitation would seem preferable, at least on equity grounds.
In any case, the most important thing Hardin and Ostrom have to teach us in my opinion is the importance of paying careful attention to incentives. It is not enough to “wish” for the commons to be used wisely and protected. As someone once said: “If wishes were horses, beggars would ride.”
Indigenous Cultures and the Commons
It has often been remarked that the notion of owning land was foreign to Native Americans. In the Northwest where I now live, when Native Americans negotiated treaties it seldom occurred to them to negotiate over what land they would be left to own. Instead they negotiated for rights to fish, hunt, and gather native plants in particular places at particular times of year. Those were the kinds of agreements Northwest tribes had always worked out among themselves, because that was what was essential to their way of life. So that is what they tried to secure through unequal treaties with their new white adversaries who were long accustomed to treating land as a commodity to be owned. While native tribes, nations, federations, and alliances may have battled among themselves from time to time over who would have access to particular parts of the North American natural commons, it seems clear from all accounts that for the most part North American indigenous societies treated the land and its fauna and flora as comprising a sacred “commons” to be used and preserved for the benefit of all generations.
Socialism and the Commons
Historically, socialists departed from the conviction that the “means of production” should not belong to private owners, who can then extract tribute from workers in exchange for allowing them access to what they need to use to produce their “means of subsistence.” Instead, socialists argued that the “means of production” must become the common property of all, to be managed by workers for the benefit of all. I have long been a socialist, and am very familiar with this tradition and what I believe to be its impeccable logic. However, as will become apparent, I believe the traditional “socialist commons” — the machines, tools, and factories we need to produce things — is too limited.
A Commons for Modern Times
While they focused on very different objects, it strikes me that the indigenous and socialist perspectives on the commons are, in fact, remarkably similar, and quite insightful. Whatever is needed to support a people’s way of life should be the common property of all, managed by all, for the benefit of all.For pre-agrarian, pre-industrial indigenous societies this consisted principally of access to native fauna and flora. For traditional socialists born to an industrial age this consisted principally of the machines, tools, and factories produced by those who worked before us.
But we now live in a modern age, and I think it is becoming increasingly apparent that some early notions about the defining features of the coming age were off the mark. Assuming we manage to avoid committing ecocide in the next few decades – which is by no means certain — we are not headed for a “post-industrial society” at all. If there is to be a modern age it will be an ever more “industrial” society in the sense that increasingly complex manufactured “artifacts” will become ever more important. Nor are we headed for a “post-scarcity society.” Even if we are wise enough to use future productivity increases mostly to expand leisure after meeting everyone’s basic needs, there will remain burdensome tasks to be done, and scarce resources to be used efficiently. Instead, I believe “modern times” means coping with ever tighter constraints imposed by key eco-systems, at the same time that information, knowledge, and the array of useful manufactured “artifacts” they make possible continue to expand. Which suggests that a modern perspective on the commons must include an expanded understanding of how we rely on the natural environment — the focus of indigenous societies – as well as a broader view of the means of production we produce ourselves – the focus of early socialists. How does the model of a participatory economy help us do this?
Participatory Economics: An Overview
The major institutions we propose to achieve economic democracy and economic justice, while fostering human solidarity, protecting the environment, and ensuring efficiency are: (1) self-governing democratic councils of workers and consumers where each member has one vote, (2) jobs balanced for empowerment and desirability, (3) compensation according to effort, and (4) a participatory planning procedure in which councils and federations of workers and consumers propose and revise their own interrelated activities without central planners or markets, under rules designed to generate outcomes that are efficient, equitable, and environmentally sustainable.
Compensation: We propose that each self-governing worker council come up with its own procedures for assigning what we call “effort ratings” to one another, which become the basis for their members’ consumption rights. We call this an effort rating committee, but its composition and procedures are left up to each council, and we fully expect different worker councils to come up with very different ways to go about this.
Balanced Jobs: To ensure that formally equal rights to participate in decision making in one’s workplace translate into truly equal opportunities to participate, we propose that in addition to one member one vote, jobs within workplaces be balanced for empowerment. We argue that as long as some workers sweep floors all day, every day, while others attend meetings of various kinds all day, every day, formally equal rights to participate at worker council meetings will not translate into truly equal opportunities to influence firm decisions. Again, we refer to a “job balancing committee” and discuss how it might function, but leave particulars up to individual worker councils, and expect wide variations in how they would try to combine tasks in job descriptions so that everyone’s work experience contains some empowering tasks, and pleasant and unpleasant tasks are shared by all.
Participatory Planning: Instead of competing against one another in markets, or carrying out a plan determined by a central authority, we propose that worker and consumer councils and federations participate in an iterative planning procedure. Each worker and consumer council, and each federation of consumer councils, participates by submitting a proposal for what that council or federation wants to do, i.e. councils and federations make what we call “self-activity proposals.” A consumption proposal is a list of goods the members of the consumption council wants to consume, accompanied by the average effort rating from work of their members. A production proposal is a list of goods or services the a worker council wants to produce as “outputs,” and a list of the resources and intermediate goods they will need to do this as “inputs.” There is an “iteration facilitation board” that performs one, very simple function. The IFB announces current estimates of the opportunity costs of using each kind of “capital” — natural, produced, and human — the social cost of producing every produced good and service, and the damage caused by every pollutant. The IFB raises its estimate of the “indicative price” for anything in excess demand in the previous round of the planning procedure, and lowers its price for anything in excess supply, after which councils and federations revise and resubmit new “self-activity” proposals until a feasible plan is reached, i.e. until there is no longer excess demand for any natural resource, any kind of physical capital, any category of labor, any intermediate or final good or service, or any pollutant.
Each round in this social, iterative procedure begins with new, more accurate estimates of opportunity and social costs, followed by revised proposals from all councils and federations in light of new information about how their desires affect others. Each council and federation must revise and resubmit its own proposal until it meets with approval from the other councils. Consumption proposals are evaluated by multiplying the quantity of every good or service requested by the estimated social cost of producing a unit of the good or service, to be compared to the average effort rating of the members of the consumption council requesting the goods and services.
Production proposals are evaluated by comparing the estimated social benefits of outputs to the estimated social cost of inputs. In any round of the planning procedure the social benefits of a production proposal are calculated simply by multiplying quantities of proposed outputs by their “indicative” prices—including negative prices for emissions of pollutants — and summing. The social costs of a production proposal are calculated by multiplying inputs requested by their “indicative” prices and summing. If the social benefits exceed the social costs—that is, if the social benefit to cost ratio of a production proposal exceeds one— this implies that everyone else is made better off by allowing the worker council to do what they have proposed. On the other hand, if the benefit to cost ratio is less than one, this implies that the rest of society would be worse off if the workers go ahead and do what they have proposed.
Because estimates of opportunity and social costs are available to all it is easy for anyone to calculate whether or not a consumption or production proposal is socially responsible. This means there is no need for a central planner to be the final arbiter, approving or disapproving proposals. Councils can vote “yea” or “nay” on proposals of other councils without time consuming evaluations or contentious meetings, except in occasional cases requiring special review because “the numbers” fail to take something into account.
There are important technical issues of concern to economists. In this regard we have proved that the participatory procedure outlined above will eventually reach a feasible plan that is a Pareto optimum, i.e. efficient, under less restrictive assumptions about technologies and preferences than those necessary to prove that the general equilibrium of a private enterprise, market economy will do so. In particular, participatory planning accommodates externalities and public goods efficiently, and generates reasonably accurate estimates of damages from pollution whereas market economies do not. But this is what it boils down to:
When worker councils make proposals they are asking permission to use particular parts of the productive resources that belong to everyone. In effect their proposals say: “If the rest of you, with whom we are engaged in a cooperative division of labor, agree to allow us to use these productive resources – which belong to all of us because they are part of ‘the commons’ — then we promise to deliver the following goods and services as outputs for others to use.” When consumer councils make proposals they are asking permission to consume goods and services whose production entails social costs. In effect their proposals say: “We believe the effort ratings we received from co-workers indicate that we have earned the right to consume goods and services whose production entails an equivalent level of social costs.”
The planning procedure is designed to make it clear when a worker council production proposal is inefficient and when a consumption council proposal is unfair, and allows other worker and consumer councils to deny approval for proposals when they seem to be inefficient or unfair. But initial self-activity proposals, and all revisions of proposals, are entirely up to each worker and consumer council itself. In other words, if a production or consumption proposal is not approved, the council that made the proposal — nobody else — can revise its proposal for resubmission in the next round of the planning procedure. This aspect of the participatory planning procedure distinguishes it from all other planning models, which we believe is crucial if workers and consumers are to enjoy meaningful self-management.
So in brief, that is how a participatory economy “works.” But what does this imply about how a participatory economy treats “the commons?”
Participatory Economics and the Commons
Who Owns the Commons? In a participatory economy the commons belongs to everyone, and no more to one person than any other. While individuals own personal property, everything we need to produce our way of life is owned in common in a participatory economy.
Who Gets To Use Specific Parts of the Commons? What we might call “user rights” to different parts of the commons are distributed during the participatory planning procedure to whichever worker council demonstrates that it can generate the greatest social benefit from its use.
Who Benefits From Using the Commons? In a participatory economy everyone benefits from the commons, and no one benefits from its use any more than anyone else. Because they can use it more efficiently, some worker councils will end up using more of the commons, or higher quality parts of the commons, than other worker councils. However – and this is crucial – since workers are awarded consumption rights only on the basis of the sacrifices they make, workers in councils using more, or better parts of the commons, receive no extra benefits from doing so.
Finally, what does all this imply about what “the commons” includes in a participatory economy?
In a participatory economy what we might call “the natural commons” includes everything non-agrarian indigenous societies treated as part of their commons — the land, water, and native flora and fauna they used to support their way of life.
It also includes things like oil, minerals, top soil, and forests that are important “inputs” in modern agrarian/industrial economies, and mainstream economists call “natural capital.”
However, the natural commons in a participatory economy includes things that do not fit neatly into the category “natural capital,” but whose health is crucial to sustaining life today and in the future. Genetic diversity, a stable climate, key eco-systems that support all life, and various eco-systems which serve as “sinks” that store and decompose wastes from human economic activity are all treated as part of the natural commons in a participatory economy.
In a participatory economy what we might call the “produced commons” includes all the machines, tools, equipment, and buildings we use to produce things, which socialists call “the means of production” and mainstream economists call “capital stocks.”
The “produced commons” also includes what economists have long called “technology” or “technical knowhow.” If we imagine a giant recipe book where there is a page describing every way we know how to “cook” every good and service we make, this recipe book is also treated as part of the commons in a participatory economy.
And finally, in a participatory economy the commons includes all of the useful talents and skills people have — both as individuals and groups — that allow us to deploy all this natural and produced wherewithal to productive ends. Mainstream economists refer to this as “human capital,” and some development economists now add the category “social capital” to describe aspects that cannot be identified with particular individuals.
In short, a participatory economy treats everything we need to produce our way of life – whether it be part of an expanded understanding of our natural environment, part of an increasingly complex array of useful manufactured artifacts, or part of the information and knowledge embodied in us, individually or collectively – as belonging to all of us, i.e. as part of what we might call “the modern commons.”
Food for Thought
But let me take the opportunity in closing to point out one implication that you students, who are in the process of accumulating more “human capital,” might want to mull over.
A participatory economy treats what many of you no doubt think of as yourhuman capital as part of the “modern commons.” Just as an acre of fertile bottom land that helps us grow corn is treated as part of the modern commons in a participatory economy; just as a drill press that helps us manufacture metal parts is treated as part of the modern commons in a participatory economy; just as a new computer code that helps us sort data more quickly is treated as part of the modern commons in a participatory economy; whatever natural talents and learned skills you may have that are helpful in producing goods and services of value will be treated as part of the modern commons in a participatory economy – to be used, like every other part of the modern commons, to best advantage to the benefit of all.
In a participatory economy extra effort or sacrifice will earn you extra consumption rights, but simply being more talented or educated than someone else will not.
Before I lose my entire audience, I hasten to add that all education and training people receive in a participatory economy will be free of charge and accompanied by living stipends – i.e. there will be no student debt! And if you are not accepted into some education program you apply to because others are deemed more qualified, while you will no doubt be disappointed, at least your rejection will not adversely affect your expected lifetime earnings!
 Those interested can find an exposition of this exercise in my book, Green Economics: Confronting the Environmental Crisis (M.E. Sharpe, 2011).
 Those interested in a fuller explanation of how a participatory economy works that requires no formal economic training should read Of the People: By the People: The Case for a Participatory Economy (AK Press, 2012).
 Any interested in these technical issues should see chapter 5 in Albert and Hahnel, The Political Economy of Participatory Economics (Princeton University Press, 1991), “Socialism As It Was Always Meant to Be,” Review of Radical Political Economics (24, 3&4), Fall and Winter 1992: 46-66, “Participatory Planning,” Science & Society (56, 1), Spring 1992: 39-59, and Hahnel, “Wanted: A Pollution Damage Revealing Mechanism,” forthcoming in the Eastern Economic Journal.