Creating the Commons: A Tragedy in No Acts
Two articles in The New York Times today got me thinking about the tragedy of the commons. This is not new thinking, but it’s not widespread enough, in my opinion. And, I hope this expresses it in a somewhat new way.
One of the articles talks about the ongoing failure of pharmaceutical companies to develop new antibiotics to replace the increasingly ineffective drugs in our collective arsenal. The second describes a newly developed T-cell treatment for leukemia that really has to be described as a miracle treatment (at least in some cases).
Both made me realize what’s wrong with the standard Tragedy of the Commons thought-experiment, at least as it is commonly deployed by less-thoughtful libertarians.
In its standard form: many sheep farmers share a common pasture. Each has every incentive to add more sheep, so inevitably, the commons is consumed and destroyed.
The standard (at least libertarian) solution is to privatize the commons — split it up among the farmers and give them each property rights on their share. They’ll each have incentive to use and maintain the land judiciously.
But like most (all?) economic thought experiments, this one rests on an assumption: that the amount of land — the quantity of commons — is fixed.
And that ignores a crucial reality of the larger economic world: we — individually and collectively — are constantly creating the commons. If there are no roads on which the farmers can get their wool to market, they have no incentive to produce that wool. (And no: they “didn’t build” those roads.) Some complement of common goods is necessary for the private incentives to emerge and be maximized.
This points to the other tragedy: none of those individual farmers has the incentive to build roads — to create the commons — unless they’re guaranteed to profit (at least semi-)exclusively from those roads. So the commons doesn’t get built.
I think everyone would agree that we’d all be better off (more well-being, more “prosperity”) if anyone could produce and sell the (nonexistent) new antibiotics, and offer the T-cell therapy — if those things were part of the “commons” the way Newton’s Laws, the germ theory of disease, and word-processing are. But: The antibiotics article explains in simple supply/demand/profit terms why the institutions called “drug companies” don’t have an incentive to create new, tightly targeted antibiotics (so the people who work for them don’t either). The T-cell article explains why their current business model doesn’t work when developing cures that can’t be produced in mass quantities in factories — so, no incentive.
So not only are these things not part of the commons, they aren’t even created (or not as prolifically as we would like). The market doesn’t provide the proper incentives.
Libertarians seem to be woefully blind to this tragedy.
My friend Steve is constantly saying “it’s about incentives, not motives.”* But this ignores the fact that we can agree collectively on virtuous motives and goals that make us all better off. (And we do so — really have no choice but to do so — and have for millenia.) We can collectively create, empower, and fund institutions in which people are individually incentivized to adopt those motives, and seek those goals. (And we do so, and we have for millenia.) Few people will spend decades of their lives creating new life-saving therapies absent institutions that pay them to do so. (Financial incentives matter!) And we’ve already seen that the private market doesn’t “naturally” or necessarily result in the creation of such institutions. If it did, we’d have new antibiotics coming online in spades. We don’t. There is, however, a wide variety of Gangnam Style t-shirts available.
The two NYT articles point to several ways (which I will leave to your delectation) in which we overcome this inherent, inevitable market failure and collectively fund things like new antibiotics and T-cell therapies. Some of the impetus comes from private charities. Some from government funding. Both are driven by “motives” — to develope life-saving cures — not individual financial incentives. (Though the institutions do provide financial incentives to individuals to adopt the goals that those motives imply.) Both often seek to harness and realign market incentives to implement their motives and achieve their goals.
Yes, in many cases government “picks [potential] winners.” Think: NIH funding grants. (And one hopes that entities such as the NIH do some “central planning” before throwing grants around.)
Returning to the thrust of this post: you might say that those new discoveries end up being offered by private entities, for a price — and individuals are free to choose among the available offerings. They’re not part of “the commons.” But that ignores another reality: the set of available choices is itself part of the commons. Absent the original government funding, many valuable choices would not be available. (Like, for instance, the option of shipping your goods to market via the interstate highway system.)
This reality is revealed if you read the literature on utility, choices, and preferences. While much of that literature concentrates on preferences among available choices and the ordinal utility ranking of those preferences,** those who have thought carefully on the subject (mainstream economists, by the way) have pointed out that different sets of choices themselves have different amounts of utility. We decide collectively what choices will be available, even if our decision is not to decide — to leave the decision to “the market.” But that’s all a subject for another post.
Steven Pinker and E. O. Wilson — two of the most profound and scientifically-based thinkers we’ve got on the subject of human nature and the human condition — bring this point home. Pinker has said on numerous occasions that three primary things set humans apart from other animals: tool use, language, and non-kin altruism. Those are the things that got us not only to the top of the food chain, but to a position of complete speci-al hegemony.
Wilson takes it further (see: The Social Conquest of Earth). Group selection based on collective altruism, or “eusociality” — our singular ability to agree on future collective plans, and implement those plans even in opposition to apparent short-term individual incentives — is the very thing that’s gotten us where we are.
Together — by acting on motives instead of just individual (financial) incentives — over the millenia we’ve created a very, very big commons that we all “profit” from in multitudinous ways. If we’re smart, we can continue to build it, rather than watching it waste away through our short-sighted individual (in)actions.
* By this he generally seems to mean financial incentives (though he’s not consistent on this), which — when’s that is his meaning — completely ignores a huge panoply of incredibly powerful human incentives, many of them coalescing around various valences of “pride.”
** The bulk of this discussion, in my opinion, constitutes a centuries-long self-serving circle-jerk by economists (yes, the intellectually masturbatory and show-off motives are significant), with a primary but largely unconscious goal of defending, preserving, and increasing the wealth of incumbent wealth holders like themselves.
Cross-posted at Asymptosis.
“none of those individual(s)… has the incentive to… create the commons…unless they’re guaranteed to profit (at least semi-)exclusively… So the commons doesn’t get built.”
There’s a wide array of examples where something freely-enjoyed was generated privately without any exclusivity whatsoever: the Musical Instrument Digital Interface specification quickly comes to my mind. You yourself said in this very post that variations on pride can incentivize.
“Absent the original government funding, many valuable choices would not be available.”
Counterfactuals, especially regarding social dynamics, are awfully difficult to prove.
“If we’re smart, we can continue to build (the commons), rather than watching it waste away through our short-sighted individual (in)actions.”
“Smart” central planning requires omniscient insight into the means and ends of production best coordinated to consumer preferences. Outside of freely produced, decentralized pricing signals, no such insight can be had.
iamallears gets it wrong. Smart central planning doesn’t have to get it right. For profit entities do, but not governments. They are playing a different game. Without the government, we wouldn’t have have railroads and highways and computers and off shore drilling and antibiotics. In fact, without government action, we would barely have any industries at all let alone corporations which are just government chartered collectives.
The government doesn’t have to pick winners and losers. It just has to set up the playing field. Sometimes this requires backing a team or two, but if some other teams come along and creams the original teams, the government still gets what it wants. In fact, it does even better for having backed the losers.
Parliament has a “house of commons” which is similar to our House of Representatives.
Parliament has a “house of Lords” which is similar to our Senate
I googled for US Commons and other similar terms and got zilch.
So I do not know what you mean by US Commons. What purpose do you foresee in the Commons you would create?
Perhaps what is needed is a bill to accomplish what you want, submitted to the House of Representatives.
Which bring up my pet project, Participatory Democracy [PD]
[Draft] PD would be structured like Swiss Government or like California with a place to submit Initiatives by US Citizens. Usually a number of citizen petitioners is required, perhaps start with five hundred thousand [500.000]. I also would suggest some criteria, such as fundamental humanitarian principles, unselfish, equitable. We could use Obama’s petition software at http://petitions.whitehouse.gov/petitions
Please comment. All the Best, Bruce
Hmm. Not sure I like that switch from the commons to public goods in there.
As to the commons the argument isn’t that privatisation must happen. Only that some form of limitation of access to that resource must happen. Which can be regulatory, consensual (Elinor Ostrom very good on this) or property rights based. Which is best depends upon hte particular resource under discussion: as Hardin himself pointed out.
That is, in order for the commons to work, there has to be excludability.
But your solution to things like antibiotics is to say that they should be collectively funded and collectively available. That is, that they should be part of the commons without excludability.
You’re deliberately trying to put things into hte commons in a manner that the very commons problem itself says doesn’t work.
Tim, I am not trying to “put things into the commons” I am trying to figure out what you think is “commons”. If you are going to create a “commons” [which does not now exist] it will take legislation.
Obama has set up the tools at Whitehorse for “Direct Democracy” or “Participatory Democracy”, whatever you like to label it. We just need to develop procedures to use the “tools”. We could than “make it viral” and have the participation which we need to accomplish our [undefined] goals. Keep the deliberation going. :>)
If you go to FDA site, and post dandelion in search, read the PDF, you will see how FDA controls it. Likely to get worse.If you want to provide information on medicinal plants simply do so on a website. Than folks can go to a health store, or pick it themselves. ????? We are being controlled – – – – [I am guessing you wanted a way to put “natural plant medicine” on the web?]
the commons worked very well until the Lords started excluding the people from it.
moreover “public funding” of research works very well. works in defense. works in medicine. has for a long time.
public funding of medical care seems to work in europe. and it works, where tried in America, but the Lords have persuaded the Congress to leave enough of it in their hands to make them rich.
kind of like fencing off the commons.
false cleverness about proving counterfactuals is of course one of the ways folks with too much education fool themselves.
we don’t have to “prove” that without government funding some things would not be available. we just have to look around and take a chance on our common sense.
nor do we need to be “omniscient” to use a little central planning to achieve those things the “price signals” are not doing for us in this universe. we just have to “muddle through” and usually that is good enough.
allearsnothinginbetween and somecallmetim
are examples of another tragedy of the commons. in this case the commons of public education.
these no doubt good and intelligent young men could have spent happy and useful lives following the plow and bucking hay. then in the evening they would be among the stars spouting wisdom at the local pub.
and they might even have had some insights.
but because they have had an education at public expense they can now salt their wisdom with
“the tragedy of the commons,” and “can’t prove a counterfactual.” and this stuns the audience at the pub into silence. it’s as effective as “supercalifragilisticexpialodocious” at impressing the rubes. or actually meaning anything.
Dear Coberly, You are on a list in the United States of America, not England. We have no Parliament no House of Commons, no House of Lord’s.
The Congressional House has filibustered and otherwise stopped the Senate from enacting legislation which would bring the USA into a position funding public medical care, which of course like Europe is paid by the tax payer. Obama care would do this.
Indeed, it is moving in the direction of Medi-care for all, however the House which controls funding and has blocked this. Obama also reduced taxes, however the House refuses to continue this tax cut which effectively increases tax on the middle and poor classes. If you want to continue drinking, I suggest leave the “Pub” and go to a local bar or tavern.
what is so much fun about blogging is that you get to meet so many other solipsists.
of course we have a commons. and if the House of Representatives isn’t enough like the House of Commons for you for literary purposes… well, i guess you don’t get much fun out of reading.
i see Obamacare as preserving the obscene profits of the medico-insurance complex. Maybe it will evolve into Medicare for all. Sure hope it does before the insurance companies figure out what the defense industry knows.
not so sure, either, about “effective tax raises” that are just ending prior tax cuts. i don’t think the poor and middle classes are likely to be hurt much by a tax raise that ends a tax cut that didn’t do them much good in the first place. i do think that accepting the end of their Bush tax cut would be the best way we could end the Bush tax cut for the rich without blushing.
not much of a drinker myself.
To better understand “commons” [yes they are a legislative body] see: http://www.parliament.uk/business/commons/
@Tim: “Not sure I like that switch from the commons to public goods in there.”
Very good point. Need to think more about this.
Somebody should explain to Eggy (unless he is joking) that he needs to google “tragedy of the commons” to find out what the meaning of “commons” is in that statement (public land that existed in England prior to some time in the 1800’s).
Also, the OP should do some research on Wilson’s “group selection” – while an interesting idea, to my knowledge he is regarded as somewhat crankish to espouse it since the evidence for kin selection as opposed to group selection is quite strong.
Still, it was a good post except for that blip.
i wouldn’t get too worked up about the distinction between “commons” and “public goods.” I understood what you were trying to say, and so would anyone else who wasn’t committed to destroying “the commons” by exalting private ownership to a religious principle.
you will end up chasing the definitions of “words” while losing track of the reality you meant to address.
Worstalls version of the tragedy of the commons depends upon a view of human nature which turns out to be true only, first, among the conquerors, later known as “the rich,” and second.. among the people forced to live in a world in which greed unchecked by social norms is “preferred practice.”
humans got along with the idea of a “commons” protected by “common decency” for millenia… except for the occasional border war or raid by “those others.” but then they arranged for “the common defense.”
which our privatizers are glad to rely on until of course they can get rich enough to afford their own private armies.