“Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins . . . she observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest . . .”—Press Release of Nobel Prize Committee awarding Elinor Ostrom the 2009 Nobel Prize in economics 1
The concepts of proprietary management of property and non-state dispute resolution may seem inapplicable and inappropriate to the governance of human use of natural resources such as rivers, oceans, lakes, scenic wonders, the electromagnetic spectrum, etc. By the very nature of such resources, human use must be a shared use.
“The commons” is a term that has come into use to describe such shared-use resources. In the 21st century it has become the conventional wisdom, at least in America and Europe, that only the state can regulate use of the commons for the good of all. This view assumes that only the state could have the disinterested point of view and the power not only to govern use of shared resources, but also to protect the environment of planet earth from pollution of common resources.
We posit that private property principles and proprietary dispute resolution are the best means available for the use, conservation, and protection of the commons; and that coercive political control of the commons by the state is not beneficial to humanity.
Humankind has developed spontaneously a variety of ways to share peacefully in the use of the commons. The credit mechanism, insurance, and proprietary dispute resolution can combine to minimize and mitigate pollution of the environment and to bring about remediation and financial restitution for avoidable pollution.
THE PROBLEM OF THE COMMONS
Rivers, oceans, lakes . . .open pastures, fish stocks, forests, wetlands . . . Yosemite, the Amazon jungle, the Great Barrier Reef . . . clean air and even the electromagnetic spectrum, which includes radio waves that enable broadcast communications . . . All these things constitute what is commonly referred to as “the commons.” Since the emergence of homo sapiens on planet Earth 90,000 years ago, the species has availed itself of the variety of natural resources available. However, as the human population increases and as technology allows for more efficient exploitation of resources, humanity has intensified the pressure on shared – and finite – assets. Our principal challenge regarding the commons is to figure out how to utilize common resources in a way that enables people to benefit from them today while sustaining them for future generations.
How would the commons be managed in a free society absent the political state? That is the subject of this chapter. Many people accept that private enterprise can replace a variety of basic state functions from the postal service to fire protection. But envisioning how private enterprise could equitably manage the commons seems to be more challenging.
In 1968, Science magazine featured an article by ecologist Garrett Hardin entitled “The Tragedy of the Commons.” In it Hardin contemplates what happens to finite resources when groups of people share these scarce resources in common. Hardin describes a pasture “open to all” where “each herdsman will try to keep as many cattle as possible on the commons.” 2 While this is individually beneficial to each herdsman in the short term, in the long term, by trying to get his fair share while it’s still available, each will have contributed to the ultimate degradation of the pasture by overgrazing.
Hardin explains that the utility of adding an additional animal to the grazing land is “+1.” However, the effects of overgrazing are shared by all the herdsmen. Therefore, the negative utility of adding the extra animal is diluted, and is therefore only a fraction of -1. Hardin writes:
“Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit – in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons.” 3
Hardin opined, “If ruin is to be avoided in a crowded world, people must be responsive to a coercive force outside their individual psyches, a ‘Leviathan,’ to use Hobbe’s term.” 4 And there are many who echo Hardin’s view. Ophuls argues, for example, that “because of the tragedy of the commons, environmental problems cannot be solved through cooperation. . . and the rationale for government with major coercive powers is overwhelming.” 5
There seem to be two competing schools of thought about how best to manage the commons. Some argue that the only way to prevent the degradation of the commons is to extend top-down, institutionalized state regulation of the commons; in other words, a strong state entity must enforce rules to manage common pool resources. Another school of thought asserts that for effective management and preservation, the commons must be privatized. For example, in an article entitled “Resolving the Tragedy of the Commons,” Robert J. Smith argues, “the only way to avoid the tragedy of the commons in natural resources and wildlife is to end the common-property system by creating a system of private property rights.” Smith concluded that it is “by treating a resource as a common property that we become locked into its inexorable destruction.” 6
Privatization and the institution of private property rights are most often the best solution to the commons dilemma. We explore this in various cases throughout this chapter. However, there have been many examples where resource users have innovated protocols to manage the commons peacefully on a sustained-yield basis, not necessarily through property rights, but through mutual cooperation. Such resource users, from their proximity and experience, understand the complexities of a particular shared resource – such as a fishing location, where boundaries are malleable – and are thus able to innovate complex but effective solutions that a government regulator far from the scene would be hard pressed to design.
Whether property rights are instituted, or whether people in a community create a protocol for sharing, from a freedom-oriented point of view, the beauty of both these solutions is that they are voluntary; they do not require state coercion.
Despite those who maintain that state regulation is imperative in the quest to preserve common resources, we will show below that state management of the commons 1) comes with an enormous price tag, and 2) typically yields disappointing results. Moreover, state control is unacceptable no matter how desirable it may initially seem because once society allows even a limited role for the state, over time state power expands until it becomes an all-powerful force for coercion and theft (wars and taxes being the hallmark examples).
Ultimately, the solution to the tragedy of the commons is privatization, the institution of private property rights, and voluntary solutions arising spontaneously from resource users at the grassroots level. But before we explore these solutions, let’s first look at what happens when management of our common pool resources is left to the political state.
STATE MISMANGEMENT OF THE COMMONS
The facts show that the political state does a poor job in managing the commons – not just in the U.S., but globally.
China is an example. This country’s air pollution is one of the more egregious – and visible – examples of commons mismanagement. According to the World Bank, in 2007 sixteen of the world’s twenty most polluted cities were in China. 7
For those who argue that a strong central government is critical to preserving the commons (which include clean air), logic dictates that environmental stewardship in communist nations should be the best. However, just the opposite is true. In a country where a “strong central government” regulates almost every aspect of personal and economic life, air pollution in China has risen to dangerous levels. China’s smog problem is in large part a result of the government’s “growth at any cost” mandate, which has drastically increased industry in a very short period of time with little regard for the environment. Also, in the transition from a Third World nation to a growing economic powerhouse, environmental preservation has not factored very high on the priority list. As we will discuss below, there is a direct correlation between economic prosperity and care for the environment. China has only recently begun to enjoy new levels of economic prosperity, and so concern for environmental preservation has not been a priority. Yet as smog climbs to increasingly hazardous levels, the Chinese state in the last few years has endeavored to regulate polluters. Unfortunately, but not surprisingly, its efforts have been unsuccessful. The Financial Times reports, “For years, the central government has had a series of targets for reducing sulfur dioxide and nitrogen oxide emissions, and improving water quality…but monitoring and enforcement have tended to fall short of standards.” 8
Turning to the Third World, in the poorest nations, environmental concerns factor very low on the list of daily priorities (if they factor at all). In Time Magazine’s list of the top 10 most polluted places on Earth, each of the 10 areas fall within an impoverished, communist, or formerly communist state. 9 Leaders in a few poor, developing nations have taken action to set up wildlife preservation programs, but these efforts have mostly been ineffective. Robert Smith of the CATO Institute writes,
“In spite of the noble intentions of India and some African and South American nations to preserve their vanishing wildlife, there are few signs of any real accomplishments. Impoverished people have little patience with elephants rampaging through their meager crops or with lions, cheetahs, and leopards preying on their livestock. Poachers take a terrible toll, for food as well as for ivory and spotted cat skins that bring high prices on the black market. And there is ready evidence that government officials in many of these countries, while publicly showing great concern for wildlife, are profiting handsomely from the illegal trade. If these common property resources are going to be depleted anyway, what incentives do they have to act otherwise?” 10
The problems with state regulation can be seen closer to home as well. The U.S. owns huge amounts of forestland, but instead of being “pristine oases of wildlife and natural ecology” 11 these forests are in terrible shape due to decades of mismanagement. For example, for many decades forests on federal land have been severely overcut. In some regions, entire ancient forest ecosystems on federal lands have been destroyed. The Washington Post reported in 2004 that a large area of the Tongass National Forest in Alaska was clearcut, and that trees had been left to rot – all due to poor planning and mismanagement by the forest service. 12
In addition to deforestation, the Forest Service has unwisely suppressed natural cycles of forest fires for decades, which has turned America’s precious forests into “tinderboxes waiting to burn.” 13 A study by the American Geophysical Union showed that severe wildfires in the American West have been increasing significantly in the last three decades, with the total number of acres destroyed increasing an average of 90,000 per year from 1984 to 2011. Robert Nelson, Senior Fellow at the Independent Institute and Professor of Environmental Policy at the University of Maryland writes, “The greatest blame for faulty fire management practices lies squarely with the U.S. Forest Service, which has helped turn many national forests into literal tinderboxes.” 14 He added that the agency is aware of its problems. In a 2002 report, the Forest Service admitted that it was operating “within a statutory, regulatory and administrative framework that has kept the agency from effectively addressing rapid declines in forest health.” 15
Suppressing natural wildfire cycles ultimately makes forests vulnerable to larger and more intense fires, which is exactly what, we’ve seen in the U.S. over the past few decades. (Not surprisingly, the reason for such irresponsible fire suppression is a result of politics. Congress has given the Forest Service virtually unlimited funds for its fire suppression activities. In a cycle of continually escalating costs, the more the Forest Service requires, the more funding the agency receives from Congress, creating a built-in incentive to pursue activities that will maximize federal support.) 16 Moreover, these fires emit huge amounts of carbon dioxide into the atmosphere.
To add insult to injury, the Forest Service’s efforts have come with a huge price tag. A 2003 report by the Government Accountability Office (GAO) stated: “Historically, the Forest Service has not been able to provide Congress or the public with a clear understanding of what the Forest Service’s 30,000 employees accomplish with the approximately $5 billion the agency receives each year. Since 1990, the GAO has reported seven times on performance accountability weaknesses at the Forest Service.” 17 And the agency’s financial operations were on the GAO’s “high-risk” list for waste between 1999 and 2005.” 18 Additional examples include:
- In California, state regulation to protect what the EPA claims is threatened smelt and salmon has cut off water to farmlands, which has led to water shortages, disappearing farms, and widespread unemployment. The situation in the state has been dubbed “The Man-Made California Drought” and is the cause of state regulation to control the common pool resource of water. 19
- Investigation after Hurricane Katrina in New Orleans revealed that the levees built by the Army Corps of Engineers had been constructed improperly and were in urgent need of reinforcement. Despite many warnings, the state did nothing. The organization of civil engineers that conducted the investigation stated that there were no assurances that the miles of concrete “I-walls” in New Orleans would have “held up against even a moderate hurricane.” 20
- The Tennessee Valley Authority (TVA) was established in the “New Deal” of the 1930’s to dam rivers in the Tennessee Valley and build electricity-generating power plants with the water flow being the source of kinetic energy to turn the turbines, which generate electricity. There have been claims that the entire project was a mistake; that under the TVA flooding worsened; and that decades of mismanagement has led to toxic ground water pollution at various TVA plants. 21
Nuclear power is the cleanest and safest source of generating electricity. This is controversial only because of widespread lack of knowledge as to how nuclear energy is used to generate electricity. For example, some people fear that a nuclear reactor could explode like a nuclear bomb. That is not true. Some people fear deadly radiation would emanate from spent nuclear fuel that must be disposed of when it is no longer capable of powering a reactor. However, there is technology available for managing spent nuclear fuel without hazard to the public. 22
Since the Three Mile Island incident in Pennsylvania in 1979, 23 no new nuclear power plants have been built in the U.S. although four have been approved recently for construction in the southeastern United States. The federal agency in charge made the permitting process formidably and prohibitively expensive. Very recently the NRC has authorized a few nuclear power plants in the southeast.
Beyond egregious mismanagement, as we mentioned above there is another problem with even “limited” state regulation. It is that state control is not acceptable no matter how desirable it may seem because government never stays limited. Once the state exists in even the most limited form its growth is inevitable. Prior chapters, especially Political Democracy in the United States, show this. The U.S. state had an extremely limited role in society at its inception, but that role has grown to unprecedented levels.
Without the state, how could the problem of pollution be addressed? As we have already seen, the political state is not a responsible environmental steward and offers no effective remedy for problems of common pool resources. The state typically fights against that which it seeks to banish. Fighting against problems, however, is never as effective as solving or mitigating them. (This truth can be seen in America’s “war on drugs” or the country’s “war on poverty,” both of which have served to aggravate, not alleviate, the very problems they were supposed to fix.)
Pollution is an inescapable byproduct of human action, and in fact occurs in nature even without human activity – consider, for example, the immense amount of gas emitted during volcanic eruptions that pollutes the air. Pollution poses a problem to the common pool resources of air and water. Yet since it is an inescapable reality of life, we must find a way to mitigate it if we want to enjoy clean air and water.
Technology and innovation, not state coercion, offer effective solutions to the problem of pollution.
The catalytic converter and its ability to reduce smog is an example. The catalytic converter is an emissions control device that was invented by French mechanical engineer Eugene Houdry in the early 1950’s while he was living in America. Widespread use of the device in automobiles began in the U.S. in the 1970’s and has had an enormous impact on reducing the air pollution created by vehicle use. The impact of the catalytic converter can be seen in Los Angeles, a city notorious for limited public transportation and heavy reliance on automobile transport.
Air pollution, known as “smog,” was a huge problem in Los Angeles from the 1940s to the 1960s. On some days it was so bad that, “parents kept their kids out of school; athletes trained indoors; citrus growers and sugar-beet producers watched in dismay as their crops withered; the elderly and young crowded into doctors’ offices and hospital ERs with throbbing heads and shortness of breath.” The foregoing quotation is from Char Miller Breathe Deep (and then thank the EPA that you can), March 16, 2011 kcet.org. While Miller attributes smog reduction in Los Angeles to the federal Environmental Protection Agency (“EPA”), the EPA has no ability to reduce air pollution.
Smog levels in Los Angeles have fallen since the 1940s, but not because of the EPA. It was the innovation of the catalytic converter that reduced air pollution by introducing a technology to increase the efficiency of the combustion process and thereby reduce exhaust emissions. Even though America’s productivity, GDP, and automobile use have increased dramatically since the 1940s, Americans enjoy cleaner air. The accompanying graph shows this. And while most people believe that it was EPA legislation that decreased smog levels, the reality is that the the EPA as a political body has no intrinsic ability to send smog levels down. It was innovation – in this case, the introduction of the catalytic converter – that helped to reduce air pollution by offering a technology that increased the efficiency of the combustion process and thereby reduce exhaust emissions.
The coal scrubber is another tool that mitigates air pollution by removing harmful particulates and gasses from industrial exhaust streams. In 1967 the first coal scrubber was installed in a U.S. coal-burning power plant. This was of course several years before the Clean Air Act of 1970. Since then, scrubbers have had a significant impact on minimizing air pollution from coal-burning activities. While the EPA presents a picture of deteriorating air quality, the research shows that coal-fired electricity generation is far cleaner today than ever before due to modern technologies that reduce air pollution. The figure below shows increasing population, energy consumption, GDP and vehicle miles traveled since 1980 compared to declining emissions of harmful pollutants. The Institute for Energy Research explains, “Today, we produce more energy, drive further, and live more comfortably than we did in the past, all the while enjoying a cleaner environment.” 24
Turning to water pollution, the dirtiest water is found in the poorest nations and has been the source of tremendous problems and suffering. For example, 3.4 million people die each year from the diseases found in dirty water, and 780 million people around the globe lack access to clean water. 25 The path from dirty, polluted water to clean water is not political action, it is innovation. Water reclamation technologies, which were created through innovation, not government legislation, allow humans to clean up even the dirtiest water. Water reclamation technology is so effective that astronauts in space are able to create drinking water from human waste.
It is time to dispel the fallacious notion that the political state is the only reliable protector of the public good, which includes common pool resources. The stereotype of the evil, capitalist corporation is also fallacious, and the story of Volvo seat belts demonstrates this.
In 1959, Volvo engineer Nils Bohlin invented the three-point safety belt, which fit over the driver’s torso as well as his or her lap. This new design proved much safer in car crashes than the earlier two-point waist restraint, which actually harmed drivers and passengers in auto accidents. Writer Patrick George commented that the three-point safety belt was “a revolutionary invention and one that could have netted Volvo a fortune on patents alone.” 26 However, in a gesture of admirable magnanimity, Volvo did not patent the three-point safety belt. The company gave the innovation away, recognizing that keeping it for themselves would limit widespread adoption and therefore save fewer lives. According to Volvo, as of 2009 over one million people have been saved by Bohlin’s safety belt design.
When you look closely at the details of what improves prosperity and promotes environmental cleanliness, you will find not politics, not bureaucracies or committees, not complicated legislation, but individual innovators and the technologies they produce.
An inescapable fact of human nature is that people take better care of things they own than things they don’t own. The term “proprietary interest” encapsulates this idea. Proprietary interest, or the lack thereof, is the reason why most people don’t litter in their own back yards; why the proprietor of a business often works harder than his or her employees; and why collective farms in Communist nations such as the Soviet Union and China failed.
In his paper entitled “Toward a Theory of Property Rights,” economist Harold Demsetz’s compares private property to communal property. He explains that when land is communally owned, if a person seeks to maximize the value of his communal rights, he will tend to overexploit that land. If a single person owns a parcel of land, however, that person will attempt to maximize its present value by considering future time streams of costs and benefits and will select a course of action which best maximizes the present value of his land. 27 In other words, an individual’s proprietary interest prevents “overgrazing” and promotes a longer term outlook that typically leads to preservation and conservation.
Smith of the Cato Institute explains:
“The problems of environmental degradation, overexploitation of natural resources, and depletion of wildlife all derive from their existence as common property resources. Wherever we find an approach to the extension of private property rights in these areas, we find superior results. Wherever we have exclusive private ownership, whether it is organized around a profit-seeking or nonprofit undertaking, there are incentives for the private owners to preserve the resource. Self-interest drives the private property owners to careful management and protection of their resource.” 28
WILDLIFE IN ENGLAND vs. AMERICA
A brief comparison of English and American wildlife law illustrates how property rights positively impact common pool resources. While the history of English wildlife law regrettably reflects a classist social order based on government grants to a privileged few, the example is nonetheless helpful because it demonstrates the relationship between property rights and resource conservation.
In England, the right to hunt and harvest wildlife has historically belonged exclusively to landowners. What were termed “qualification statutes” further restricted the number of those who could lawfully hunt game to individuals who met certain income and land ownership requirements. Whether for economic gain or simply for sport (e.g. hunting), English landowners recognized the value of wildlife on their land and so possessed an incentive to preserve it through breeding and hunting only on a sustained-yield basis. It was common for landowners to employ gamekeepers to protect wildlife from predators and poaching as well as to preserve habitat.
When European settlers arrived in America, they rejected the notion that wealthy landowners had the sole right to the wildlife on their property. Whereas in England it was assumed that landowners should have the right to what is supported by their land, the American view was that wildlife was the common heritage of all; Americans considered the English tradition undemocratic and elitist. Thus, wildlife law in America was characterized by the policy of “free taking,” which recognized everyone’s right to hunt game. Laws proscribing trespass could keep poachers away, but the efficacy of such laws were compromised by the rule that landowners post signs against hunting if they wanted to maintain exclusive use. 29
By the turn of the 19th century, 28% of land in America was held privately; in Britain, 92% of land was private. 30
Thomas Lund, in his article entitled “American Wildlife Law,” states:
“Early American law sought to dispatch the antidemocratic vices of its legacy while at the same time to preserve the system’s virtues….Following these seemingly harmless improvements to the English system, American wildlife populations fell as if afflicted by a plague. . .[This] affliction upon wildlife must be attributed to a surprising source; those democratic policies that were injected into wildlife law. Their unforeseen impact was to undercut totally the bases upon which English wildlife law had been so effective.” 31
Thus, the result of the “free taking” policy in America has been that wildlife has been subject to Tragedy of the Commons. While the English system of landowner rights to wildlife is indeed based on a system of undue privilege, the example is nonetheless illustrative of the fate of common pool resources when property rights are absent. Americans could have rejected the tradition of government grants being offered to privileged ruling classes without eliminating a system of private property rights that could have better preserved wildlife.
The Department of the Interior overseas more than 500 million acres of land, which is managed by three agencies: the Bureau of Land Management (BLM), the National Park Service (NPS), and the Fish and Wildlife Service (FWS). The Forest Service, managed by the Department of Agriculture, administers the nation’s 155 national forests and 20 national grasslands.
On March 30, 2009, President Barrack Obama signed the Omnibus Public Lands Management Act which apportions a huge additional amount of wilderness to the jurisdiction of the government in an effort to safeguard it.
While the Omnibus Public Lands Management Act may sound good, the reality of federal management of public lands shows a different picture: environmental mismanagement, fiscal irresponsibility, and economic problems abound where the federal state has attempted to manage public lands.
Terry C. Anderson gives the example of the epidemic of massive fires in the western part of the U.S.
“Decades of fire suppression by the forest service have disrupted natural fire cycles and turned many western forests into tinderboxes waiting to burn. . . One result is larger, more intense fires that burn the publicly owned forests to the ground. Indeed, by the Forest Service’s own estimates, 90 to 200 million acres of federal forests are at high risk of burning in catastrophic fire events. Bans on thinning and salvage harvesting have not only exacerbated the fire danger in public forests but it has also left them more susceptible to disease, insects and high winds.” 32
If environmental mismanagement wasn’t bad enough, the federal government management of public lands costs exorbitant sums. Consider these facts:
- Between 2006 and 2008 the Forest Service lost on average $3.58 billion each year. 33
- The Government Accountability Office testified in Congress that in 2004 the Bureau of Land Management earned approximately $12 million in grazing revenues but spent $58 million implementing its grazing program. 34
- The Department of the Interior had gross budget outlays in fiscal 2011 of $20.5 billion. However, the department only collected $7.5 billion in offsetting receipts from charges for the use of its lands and resources, resulting in a $13 billion deficit – paid for, of course, by hard working American taxpayers. 35
Recent public/private partnerships show that even with the smallest amount of privatization, U.S. national parks and forests have been better off. The following example illustrates this point.
Red Rock State Park near Sedona Arizona was closed in 2010. Despite collecting more than $300,000 in admissions fees, the park suffered yearly budget shortfalls. There was also a backlog of maintenance projects that had not been addressed due to having operated at a loss.
Also near Sedona Arizona is Crescent Moon Ranch. With the same admissions costs, visitation, and recreation, the park is comparable to Red Rock. However, Crescent Moon Ranch is not only profitable and up-to-date on maintenance projects, its profits enable approximately $60,000 each year to be added to the Forest Service recreation budget – all without requiring tax dollars to operate.
What makes Red Rock State Park and neighboring Crescent Moon Ranch different? Crescent Moon Ranch is operated by a private organization that, like any other non-governmental organization, is held accountable for performance. (While state agencies are theoretically held accountable, it is actually a false accountability due to the simple fact that the government ultimately can’t be fired; a private company can, and so has the incentive to do a good job.) Warren Meyer, author of the paper entitled A Tale of Two Parks, explains that private companies who operate state parks “substantially reduce costs while providing more accountability and customer service.” 36
And although the aforementioned parks are nearly identical, he explains, “the state-operated Red Rocks Park costs more than twice as much to operate as the privately operated Crescent Moon Ranch, which remains fully maintained and generates a return for the U.S. Forest Service….without the need for tax money.” 37
This case study raises an important question: How much could the situation improve if our wild lands were totally privatized?
There are numerous additional examples that show how privatization serves to protect and conserve scarce resources, including:
- Salmon: salmon populations that thrive in private hatcheries while wild salmon, subject to the tragedy of the commons, decline at an alarming rate; 38
- Wildlife in Africa: Preservation of wildlife in Africa (specifically Zimbabwe) through privately owned safari parks; 39
- Sea Turtles: Though the population of sea turtles in the Caribbean is woefully low, the first notable experiment with privatization via the Cayman Turtle Farm showed that keeping sea turtles as a common resource only served to hasten their decline. 40
HOW TO HANDLE THE TRANSITION FROM COMMUNAL TO PRIVATE LANDS
How does communal property become private property? How can the transition from commercial or public ownership to private ownership be fair?
A history of prior use is the most obvious, rational, and equitable basis by which to determine ownership. For example, in his Second Treatise of Government, John Locke explains that when an individual “removes [a common resource such as land] out of the state that Nature hath provided and left it in, he hath mixed his labour with it, and joined to it something that is his own, and thereby makes it his property.” 41 Economist Murray Rothbard offers the following expository example:
“If Columbus lands on a new continent, is it legitimate for him to proclaim all the new continent his own, or even that sector ‘as far as his eye can see’? Clearly, this would not be the case in the free society that we are postulating. Columbus or Crusoe would have to use the land, to ‘cultivate’ it in some way, before he could be asserted to own it…. If there is more land than can be used by a limited labor supply, then the unused land must simply remain unowned until a first user arrives on the scene. Any attempt to claim a new resource that someone does not use would have to be considered invasive of the property right of whoever the first user will turn out to be.” 42
Recent transitions of land from communal to private ownership in Kenya and Senegal offer insight as to how best approach privatization of common resources.
In 1968, the Kenyan government had established collective “group ranches” among the Maasai herders in the Kajiado district of Kenya to avoid environmental degradation and to maximize land productivity. However, these ranches were unsuccessful. What the ranch members really wanted was their own individual parcels of land. By the early 1980’s, the Kenyan government agreed to subdivide the land into individual plots.
In preparing for subdivision, ranch members agreed that land parcels must roughly be equal. Group ranchers registered their land preferences for parcel location with the official management committee. Members of the group ranches instituted certain checks and balances in the land subdivision process: they elected a management committee and a demarcation committee, comprised of individuals who had a reputation for fairness and integrity within the community. The Land Control Board, which was a body above the group ranch committee, was supposed to oversee land allocation process to ensure standardized parcel sizes.
However, the results of the subdivision process were inequitable. In several group ranches, two thirds or more of the registered members received below average parcels. Nine percent of registered members ended up owning more than 25% of the land. And committee members ended up owning 24-35% of the land that they had been entrusted to subdivide. 43
The members that had received unfair allotments appealed to every possible government body for adjudication, but their appeals went unheeded. It has been suggested that government officials were bribed.
Eventually the complainants gave up. Many that were very poor chose ultimately to abandon the land and try their luck in cities.
While group members had instituted certain checks and balances, it appears that more stringent measures should have been specified from the outset. For example, the Maasai group ranchers could have specified the minimum and maximum allowable parcel size in advance.
In Senegal, there was a similar transition from community to private property, but land of varying value was subdivided fairly, making that transition successful. One key difference was the existence of an external, unbiased agent. That agent happened to be a government body: the U.S. Agency for International Development. However, in a stateless society, the external agent would be private credit and dispute resolution companies. Just as sports leagues hire outside, independent private organizations to verify that athletes aren’t taking performance-enhancing drugs, users of a common resource could hire a private organization to help manage the subdivision process, as just one example.
SPONTANEOUS ORDER: AN ALTERNATIVE TO PRIVATIZATION
As we have seen, the condition of wildlands, forestlands, and other natural sites improves when they are privatized. However, resources that are unfixed and malleable – such as the air, the ocean, and the electromagnetic spectrum – do not as easily lend themselves to privatization. This is where the “spontaneous order” comes into play.
What is the spontaneous order? It is the emergence of order out of chaos. It is how complex structures as diverse as language, free markets, and the Internet developed.
Chinese philosopher Zhuangzi observed spontaneous order as early as the 4th century BC. He is reported to have said, “Good order results spontaneously when things are let alone.” 44 Later, thinkers of the Scottish Enlightenment and the Austrian school of economics also observed this phenomenon. Philosopher Adam Ferguson (1723-1816) wrote that solutions develop as “the result of human action, but not the execution of any human design.” 45 Essentially, spontaneous order describes the voluntary self-organization of human beings to solve problems without the direction of a government body or “central planner.”
Attempts to show how the commons could be governed without the state often confound statists and collectivists. But in order to create a society free of coercion – and for the most effective preservation of the commons – “solutions” cannot be imposed from above. Top-down organization always coerces and it always fails to achieve its objective. In her Nobel Prize winning work entitled Governing the Commons, Elinor Ostrom (1933-2012) explains how solutions imposed from above are often completely ineffective because they are designed by individuals lacking adequate knowledge of the complexities surrounding a particular resource. Her work is based on decades of close research and analysis of commons management systems all over the world. Without explicitly using the term “spontaneous order,” Ostrom describes a variety of cases where resource users “frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest” in the management of common resources. 46 Moreover, Ostrom appears to understand the value of voluntary solutions when she writes, “What is missing from the. . . set of accepted, well-developed theories of human organization – is an adequately specified theory of collective action whereby a group of principals can organize themselves voluntarily to retain the residuals of their own efforts.” 47
When privatization is not feasible, the bottom up approach of spontaneous order is optimal because it is based on human freedom and the ability of at least some humans to innovate solutions and technologies for even problems that at first seem incapable of resolution.
Below are two examples that show how communities have voluntarily innovated solutions to their most pressing common resource issues.
Alanya is a fishing village and resort town in the southern part of Turkey on the Mediterranean Sea. Fish stocks in the area had been in decline for decades, but in the 1970’s the problem became urgent. As a result, the fishermen developed the following system that continues to this day.
In September of each year, a list is made of all licensed fishermen in the area. At that time, all fishing locations are named and listed. Each fisherman is assigned to an initial location. Each fishing spot is spaced to ensure that one fisherman’s nets do not disrupt the fishing activities of his neighbor.
Fish migration patterns are such that from September to January, the fish migrate from east to west and reverse their migration through the area from January to May. Therefore, every day from September to January, the fishermen show up at their assigned spots; the next day they rotate one position eastward. After January, the fishermen begin to rotate westward in order to give each person an equal opportunity to catch fish that are migrating in the other direction.
There are several notable factors in this system.
First, the system is effectively “cheat proof.” Barring any catastrophes that would keep a fisherman off the water for the day, if a would-be cheater showed up to a choice fishing spot on a day that wasn’t his, the rightful person assigned to that spot would notice and assert his right to be there. Ostrom indicated that there have been very few disputes in this system, and on the occasion that there have been, the fishers resolve it in the local coffee shop.
Second, this is a complex system. Only an individual working very close to the source over many, many seasons could truly understand the complexities and devise a system that was fair and nuanced. For example, patterns and schedules of fish migration, the most popular fishing spots, what constitutes a fair amount of time at each spot, and when to rotate the system are all factors that require specialized knowledge – knowledge that only a longtime fisherman in that area would possess. If a government administrator endeavored to create a top down, institutionalized system, chances are he or she would miss the complexities involved and fall short.
The third notable aspect is that this system did not require outside regulation. The system is self-governed. However, in situations that don’t easily lend themselves to self-government, a private, external, and independent organization can be hired to help administer and monitor the mutually agreed upon rules, much as a private mediator is hired to handle legal disputes.
The Innu People
The Innu people are the indigenous inhabitants of the northeastern portions of Quebec and the western portions of Labrador in Canada. For centuries they hunted and trapped caribou, moose, deer, and beaver for food, clothing, and shelter. Given the abundance of wild game and the Innu’s relatively small population, using these resources in common was not at all problematic; there was no threat of resource depletion.
However, when French fur traders began arriving in 1609, there was a sharp rise in demand for beaver fur, which fetched tantalizing sums in European markets.
To avoid the exploitation of the beaver, the Innu people devised a sophisticated system of resource management based on mutually agreed upon property rights: The tribe members carved family crests into trees to demarcate portions of forest belonging to specific families. They enforced these demarcations by retaliating against those who poached or trespassed within the assigned territories. They developed a rotating allotment system whereby each year a family hunted in a different section, but left an area in the center as a no-hunting zone to ensure that the beaver population remained at healthy levels. To mitigate their hunting activities, the Innu conserved and husbanded the beaver population, and by the mid-1700’s hunted the beaver on a sustained-yield basis.
By the 18th century more European fur traders arrived. However, the Europeans did not respect the property rights of the Innu People. The beaver population rapidly diminished. Eventually, the Innu succumbed to the indiscriminate hunting practices of the Europeans and gave up their elaborate system. In “Good Intentions and Self-Interest: Lessons from the American Indian,” Baden, Stroup, and Thurman explain:
“With the significant intrusion of the white trapper in the 19th century, the Indian’s property rights were violated. Because the Indian could not exclude the white trapper from the benefits of conservation both joined in trapping out the beaver. . . . In essence, the Indians lost their ability to enforce property rights and rationally stopped practicing resource conservation.” 48
Like so many other examples, the story of the Innu is notable because it shows how a group of people can innovate solutions without relying on the political state. The Innu’s establishment of property rights led to the preservation of the beaver population. Of course the arrival of Europeans disrupted this system. How would such a violation be handled in the free society Galambos advocated?
The answer is: Credit and Dispute Resolution Services
Let’s consider the example of air or water pollution. Such pollution, whether created by industry or non-commercial human use, is an offense against the property of other people; that is it is an offence against their health, which according to Galambos’ teachings is part of the primordial property of life itself. A claim that any person or group including a business organization is polluting would be subject to registration in the credit mechanism. The offended person or persons could engage the services of a private dispute resolution company to demand restitution, which would consist of mitigation and remediation of the polluting activities. Failure of the polluter to mitigate and remediate would cause more damage. The injured parties (who represent the public) would notify the credit bureau of the failure of the polluter to rectify the pollution. Then the spontaneous order sanction of boycott would come into play. People could and would boycott the offender, and that would cause the offender to choose between mitigating and remediating, or being cut off from exchanges with fellow humans. More concretely, being cut off from exchanges means other people would refuse to deal with the offender. In a non-coercive, free society, the sanction of boycott would work more powerfully than any state coercion to bring about better conduct and restitution for damages.
Private dispute resolution services and the credit mechanism are already operating today; in fact, they have been operating in one form or another for the better part of human history. It is widely acknowledged that private dispute resolution services offer many advantages over the traditional legal route including flexibility, lower costs, less time, and a greater likelihood of settlement.
Our modern credit system is somewhat limited to the financial realm. If, for example, a person repeatedly does not pay his credit card bill, he will eventually lose access to credit and his credit score will be negatively impacted as well. However, with the digital age, the notion of credit is expanding to include not only an individual’s financial history, but his or her online reputation in general. Whether you’re a bookseller on Amazon, a host on Airbnb, or you have a restaurant listed on Yelp, your ability to attract new customers depends on your rating, which is an aggregate of all past customer reviews. Soon, it is likely that ratings –whether for businesses or individuals – will expand to include many aspects of character, from a FICO score to Amazon ratings, to any sort of good behavior online.
This online credit and reputation system shows how businesses and individuals are rewarded for good behavior, and suffer consequences for bad behavior. The online marketplaces that are popping up all over did not require government involvement to ensure quality, safety, or anything else. They are self-governing, self-monitoring, and self-managing. Disputes that arise in regards to common pool resources would be subject to dispute resolution services and the credit mechanism similar to what is described above. Subsequent chapters will contain detailed exposition of the credit mechanism and voluntary dispute resolution.
PRIVATE INITIATIVES TO PROMOTE ENVIRONMENTALLY RESPONSIBLE LAND USE AND MANAGEMENT
A number of non-state organizations are working to promote environmentally responsible land use and development. Such organizations include, but are not limited to Daemeter Consulting, ProForest, Rainforest Alliance, Climate Land Use Alliance, the David and Lucile Packard Foundation, and the Gordon and Betty Moore Foundation.
David Packard was a co-founder of Hewlett-Packard Company. Gordon Moore was a co-founder of Intel Corporation.
All rational individuals want to enjoy in perpetuity the common heritage of nature on this planet. From clean air and oceans, to fish stocks, pristine forests and untouched jungles, nature’s gifts give life, beauty, and offer sanctuary. Without these treasures, our planet would be unrecognizable.
This chapter offered a variety of explanations as to how a free society operating without the political state could successfully manage common pool resources to ensure efficient use for today and preservation for tomorrow. The cases examined are not exhaustive; we cannot cover each and every potentiality. Our objective is to simply impart examples that illustrate how human beings can cooperate and innovate structures in order to preserve our most valuable common resources without intervention from the state; and also to show that national or even supra-national state regulation is not necessary to manage the commons and may, in fact, do more harm than good to our shared natural resources.
- http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2009/press.html ↩
- Hardin, Garrett, “The Tragedy of the Commons”, Science, December 13, 1968, Vol. 162 no. 3859 pp. 1243-1248 (referred to below as Hardin, “Tragedy of the Commons”). ↩
- Hardin, “Tragedy of the Commons.” ↩
- Hardin, “Tragedy of the Commons.” ↩
- Ophuls, William, “Leviathan or Oblivion”. In Toward a Steady State Economy, 1973, ed. H.E. Daly, pp. 228. ↩
- Smith, Robert J., Resolving the Tragedy of the Commons, Cato Institute, 1981 (http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/1981/11/cj1n2-7.pdf) ↩
- World Bank, The Little Green Data Book 2007, http://siteresources.worldbank.org/INTDATASTA/64199955-1178226923002/21322619/LGDB2007.pdf ↩
- “China Pollution: Trouble in the Air,” Hornby, Lucy, Financial Times, Feb. 26, 2014 http://www.ft.com/cms/s/0/c8d06578-98d8-11e3-8503-00144feab7de.html#axzz2ufBj13Us ↩
- Time.com, The World’s Most Polluted Places, Bryan Walsh http://content.time.com/time/specials/2007/completelist/0,29569,1661031,00.html ↩
- “Resolving the Tragedy of the Commons by Creating Private Property Rights in Wildlife,” Robert J. Smith, Cato Journal, Vol. 1, No. 2 (Fall 1981). ↩
- “Clearcutting: Destroying America’s Public Forests”, from Save America’s Forests Fund, http://www.saveamericasforests.org/pages/educationcda.htm. ↩
- Blaine Harden, “Reopening Forest Areas Stirs Debate in Alaska,” Washington Post, August 1, 2004, p. A3. ↩
- Terry L. Anderson and Watson, Reed, “Public Land Mismanagement,” Forbes, April 7, 2009. ↩
- Robert H. Nelson, “As Fire Season Approaches, Let’s Create ‘Charter Forests,’” The Independent Institute, May 5, 2014. http://www.independent.org/newsroom/article.asp?id=4971 ↩
- Same as above ↩
- Randal O’Toole, “The Perfect Firestorm: Bringing Forest Service Wildfire Costs under Control,” Cato Institute Policy Analysis no. 591, April 30, 2007. ↩
- Government Accountability Office, “Forest Service: Little Progress on Performance Accountability Likely Unless Management Addresses Key Challenges,” GAO-03-503, May 2003, p. 1. – See more at: http://www.downsizinggovernment.org/agriculture/forest-service#_edn7 ↩
- Government Accountability Office, “High-Risk Series: An Update,” GAO-05-207, January 2005. – See more at: http://www.downsizinggovernment.org/agriculture/forest-service#_edn7 ↩
- “The Man-Made California Drought,” by the Committee on Natural Resources, http://naturalresources.house.gov/issues/issue/?IssueID=5921 ↩
- “Army Corps is Faulted on New Orleans Levees,” by Joby Warrick and Peter Whoriskey, Washington Post, March 25, 2006. ↩
- “Report says ‘Decades of mismanagement’ led to toxic ground water pollution at TVA plants,” Chattanooga Times Free Press, Nov. 7, 2013. ↩
- Chapters in two books by Richard Muller dispel the misinformation that has prejudiced many in the public against nuclear power. They are Physics for Future Presidents: The Science Behind the Headlines (2008), chapter 11; and Energy for Future Presidents: The Science Behind the Headlines (2012), chapter 11. Richard Muller is a professor of physics at U.C. Berkeley, a past winner of the MacArthur Fellowship, and a faculty senior scientist at the Lawrence Berkeley National Laboratory. ↩
- One of the reactors at a nuclear power plant suffered a malfunction in its cooling system that developed into a meltdown of the reactor. There were no injuries from this incident, and a Congressional investigation determined there was no significant increase in radioactivity in the neighborhood of the affected reactor. ↩
- The Facts About Air Quality and Coal-Fired Power Plants, Institute for Energy Research, June 1, 2009, http://www.instituteforenergyresearch.org/pdf/the-facts-about-air-quality-and-coal-fired-power-plants-final.pdf ↩
- http://water.org/water-crisis/water-facts/water/ ↩
- Patrick George, Volvo Gave Away Their Most Important Invention to Save Lives, August 8, 2013, http://jalopnik.com/volvo-gave-away-their-most-important-invention-to-save-1069825878 ↩
- Harold Demsetz, “Toward a Theory of Property Rights,” American Economic Review 57 (May 1967): pp. 354-56. ↩
- Smith, Robert J. “Resolving the Tragedy of the Commons by Creating Property Rights in Wildlife,” Cato Institute. ↩
- Smith, Robert J., “Resolving the Tragedy of the Commons….”, Cato Institute. ↩
- Lueck, Dean, “Property Rights and the Economic Logic of Wildlife Institutions,” Natural Resources Journal Volume 35, No. 3, 1995. ↩
- Thomas A. Lund, American Wildlife Law Berkeley and Los Angeles: University of California Press, 1980. ↩
- Terry L. Anderson, Reed Watson, Public Land Mismanagement, Forbes.com, April 7, 2009. ↩
- See Anderson/Watson note above. ↩
- See Anderson/Watson note above. ↩
- From Budget of the United States Government, Fiscal Year 2012, Analytical Perspectives. Government Printing Office, February 2011), Table 33-1. http://www.downsizinggovernment.org/interior/reforming-federal-land-management#sthash.qERXFjUq.dpuf ↩
- Warren Meyer, A Tale of Two Parks, Property and Environment Research Center, Sep. 25, 2013, http://perc.org/articles/tale-two-parks. ↩
- Same as above. ↩
- Cato Journal, Robert J. Smith, Resolving the Tragedy of the Commons by Creating Private Property Rights in Wildlife, fall 1981, http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/1981/11/cj1n2-7.pdf. ↩
- Kay Muir-Leresche and Robert H. Nelson, Managing Africa’s Wildlife, Property and Environment Research Center, Vol. 19, No. 3, Fall 2001, http://perc.org/articles/managing-africas-wildlife ↩
- Cato Journal, Robert J. Smith, Resolving the Tragedy of the Commons by Creating Private Property Rights in Wildlife, fall 1981, http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/1981/11/cj1n2-7.pdf. ↩
- John Locke, Second Treatise of Government, Chapter V, “Of Property”, section 27. ↩
- Murray Rothbard, Man, Economy, and State; http://en.wikipedia.org/wiki/Labor_theory_of_property ↩
- Esther Mwangi, Pitfalls for Privatization, Volume 22, No.2, Summer 2004, Property and Environment Research Center, http://perc.org/articles/pitfalls-privatization ↩
- http://en.wikipedia.org/wiki/Spontaneous_order#cite_note-2 ↩
- Adam Ferguson, Essay on the History of Civil Society, (1767) Part III Section I. ↩
- The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2009: Press Release 12 October 2009, http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2009/press.html ↩
- Emphasis added. Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (1996) p. 25-26. ↩
- John Baden, Richard L. Stroup, and Walter Thurman, “Good Intentions and Self-Interest: Lessons from the American Indian”, in Earth Day Reconsidered, ed. John Baden (Washington D.C.: The Heritage Foundation, 1980) p. 10. ↩