Elinor Ostrom and common pool resources — John Tomer

It's becoming clear that Earth, its atmosphere and surrounding space constitute a delicately balanced ecosystem that requires being viewed and treated as a common pool resource.

Elinor Ostrom’s (1990; 2009) research focuses on common pool resources (CPR) and the dilemmas they have posed for their users and society. A CPR is a resource such as a fishing ground, an irrigation system, ground water, pasture land for grazing animals, etc. that jointly benefits a group of people (the users) but which provides diminished benefits to the users involved if each individual pursues his or her narrow self-interest without considering other users. The CPR has a definite capacity. The problem is that each individual user has an incentive to overuse the resource. As authors such as Garret Harden (1968) have pointed out, when each user single-mindedly and independently follows the incentives, that will cause depletion of the CPR’s capacity, possibly creating a tragic overuse of the resource.

In the view of conventional economic theory, there are only two ways to deal with this overuse problem. The first is to have government impose rules and/or taxes forcing the self-interested individuals to refrain from the destructive overuse of the CPR. The second is to privatize the CPR, making it a private, marketable, excludable good (Ostrom 2009, p. 409). Ostrom and her colleagues recognize that this standard dichotomous way of understanding the options for dealing with CPRs is not adequate. They studied many CPRs around the world (see Ostrom 1990). They learned that the overharvesting can be eliminated or reduced by, for example, encouraging communication among the people in the user group, developing trust among them, thereby fostering cooperation among the group’s members (Ostrom, 2009, p. 409). They further learned how CPR users can develop credible commitments among themselves in effect creating valuable social capital. What the researches came to appreciate was that the individuals and groups involved with a CPR are not hopelessly trapped; they can make fruitful efforts to organize and solve their social dilemmas (p. 416). It turns out that there are typically many elements of any CPR situation that can be modified. Ideas for such changes can come from individuals within the CPR who rely on self-reflection and creativity to develop novel patterns of interaction that restructure the interactions among the CPR’s users (p. 417). Further, Ostrom’s research found that groups that attempt to organize and effectively manage their CPR are most likely to succeed if they follow eight core design principles....

This implies a third alternative in addition to the dichotmous solutions that Hardin proposed, government regulation or privatization. Murray Rothbard explored the privatization route and environmentalists have focused on the avenue of regulation and taxation. Ostrom's third alternative involves cooperative voluntary policing.

In my view, what is wrong with the present system can be traced to the assumptions that underlie a particularly Western view of the world that replaced the view of most indigenous peoples and is still a feature of the Eastern world view. This is reflected in "ecological civilization" as a state goal of the Chinese Communist Party.

The rise of China reveals the conundrum that this engenders between ecology and economic growth. The indigenous peoples were not concerned with this, and so it is utopian to think that their view of the world can be replicated now. But China retains enough connection with its ancient culture along with respect for it to make this one of the ideals for Chinese development, even though there is a considerable way to go to get anywhere close to that goal at the pace China is developing.

In addition, Ostrom's solution for groups self-policing cooperatively and voluntarily is quite limited in scope. And while government regulation could make a difference, concerted action is difficult to achieve, especially when free riding has a big payback and there is no mechanism to prevent or punish it. I regard Rothbard's solution as impractical even if it would work, but the tendency of capitalism to privatize the gains and socialize the liabilities doesn't give encouragement.

Presently, a worldwide paradigm shift is required and perhaps the faster than expected increase in the rate of climate change may induce it as a necessity, in the sense of an "or-else" situation called for adaptation to changing circumstances. Ecological economics is one response that has emerged. What MMT adds is an account of how the constraint is available real resources and not funding at the macro level at which currency-issuing governments operate.

Real-World Economics Review Blog
Elinor Ostrom and common pool resources

John Tomer

See also

Strategic Culture Foundation
Putin Challenges Malthusians: Fusion Energy Is a National Priority for Russia

Matthew Ehret