Presentation slides are here: https://meet.lucidmeetings.com/a/sJVq…

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In other words, Ostrom and the commons movement have yet to define the dynamic equilibrium which they seek as the balance between two opposing forces – population and resources – which continually counteract each other. Instead, the commons movement is more focused on counteracting the Market and the State than on measuring the replenishment of renewable and non-renewable resources and managing them to sustain their yield. In short, the commons movement does not seem to be producing alternative indicators for the production and provisioning which can be used to guide policy.

The book, Secular Cycles, made me realize that the commons, as Ostrom viewed it and as others are now envisioning it, is too informal and small-scale to work in a way that establishes empirical targets that will bring down exponential growth to arithmetic growth levels; and thus organizing society according to the dynamic equilibrium between population and the availability of food, water and energy. Instead, what we get in the commons movement is a general opposition to quantitative analysis because it reminds people too much of the metrics of unbridled capitalism.

My point is that if we don’t know how to develop evidence-based policy for a soft landing toward a reasonable level of subsistence — and I’ve seen very little of this in the commons movement — then I don’t know how we expect to create a long-term system for meeting human needs through sustainable yields. I would hope that the commons movement begins to create the basis for a viable new society by actually focusing on the optimum rate at which a resource can be harvested or used without damaging its ability to replenish itself. That would be something.

Let me put this in more structural terms. First, the carrying capacity rate for renewable resources follows a carefully guided policy of maintenance and sustenance to ensure that resources are replenished sustainably in meeting the needs of people in the present. This requires that social policies are made more equitable to ensure that everyone’s needs are met. Meanwhile, the needs of people in the future are in no jeopardy, so long as renewable resources continue to be replenished and provisioned within their carrying capacity. Hence, the carrying capacity rate of renewables is geared toward market coefficients for provisioning resources, goods and services for people at the current time, and will continue to be sustainable far into the future. This carrying capacity rate, based on renewable resources, in no way precludes (in fact, should be accompanied with) the creation of taxes toward a universal basic income and for maintenance of renewable resources.

Second, the carrying capacity rates of non-renewable resources are much more challenging and must be treated very differently. Society must decide scientifically how much non-renewable resources to use in the present and how much to save for the future. By guaranteeing that valuable resources will be ‘left in the ground’ or put away securely into a tamperproof lockbox, as it were, this formula has a benefit which, in one way, is similar to how gold used to function as a guarantee of reserve asset values and as a disciplining measure for currency exchange rates. Since a certain percentage of non-renewables are held in strict reserve for future generations, adherence to this process creates a value which is entirely *independent of the market* and is based on a relative scarcity index of non-renewable resources. This fraction (how much non-renewables to use for people now / how much non-renewables to set aside for people in the future) provides for a fixed and stable monetary rate that is tailor-made for the valuation of currency in the present.

In a society which is facing net energy loss and steep declines in non-renewable resources, this would be an extremely stable, strong, treasured, desired, sacrosanct and entirely non-marketized value. Instead of looking at productivity indices, commodity market rates, price inflation or unemployment indicators, monetary economists really ought to be turning their attention to the long-term carrying capacity of the planet’s non-renewables and their sustainability rates. I am in no way suggesting that the world should return to a gold standard; but to generate a system in which currency values are fixed to a meaningful measure of non-renewable resources, similar in some ways to the way that gold used to function. If this is done, the correlation of ecological sustainability with monetary sustainability will become a primary way of steering the world’s economy on a middle path between exponential growth and arithmetic growth, ensuring the sustenance and safely of society during a period of economic decline (originally posted to Facebook, August 2017).

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The blockchain is a new institutional variable. It is a new institutional technology that directly competes with other coordinating technologies—firms, markets and government. However, it is also not new, because the social technology it is modelled on is actually the oldest of all coordinating technologies for economies—namely, the commons.

On the convergence of the blockchain and the commons, with the blockchain as the new institutional technology that makes the commons scale.

Excerpted from Trent MacDonald:

“There will always be economies. An economy is made of resources (matter-energy), physical technologies (knowledge) and social technologies (institutions). All economies involve specialisation (the division of labour) and coordination (putting it back together again). All economies are social, make use of specialised knowledge, and transform inputs into higher valued outputs.

What changes as an economy grows, develops and evolves are not the resources; what changes are the technologies. For the past few hundred years, economics has focused mostly on the physical technologies, because that is what has changed the most. The social technologies—markets, firms and governments—have changed less so.

But the blockchain is a new institutional variable. It is a new institutional technology that directly competes with other coordinating technologies—firms, markets and government. However, it is also not new, because the social technology it is modelled on is actually the oldest of all coordinating technologies for economies—namely, the commons.

But the commons has never been competitive as a generalisable coordinating technology because it scales poorly. Firms and markets have through the past few hundred years historically been far more effective governance institutions for ordering ‘economies’ because they can draw upon centralised monopoly government institutions (provided by nation-states) to provide rules, record-keeping, adjudication, money, property rights definition and enforcement, and all the governance necessary to underwrite the social technologies that enable firms and market forms of economic ordering to be efficient.

The commons, on the other hand, while much maligned, is not as flawed as an institution as the proponents of firm-market-government institutional efficiency would have us believe. Elinor Ostrom has taught us this. The commons works at small scale—where it is actually more efficient than firms, markets, and government—when it can effectively make use of local feedback to create private governance.

But the problem is that it doesn’t scale, essentially because of information, monitoring, and enforcement problems. Blockchain changes that equation. And the implications of that are far-reaching.

The blockchain is a shared, trusted, decentralised public ledger. It continually updates, and is secured through cryptography. Anyone can see everything on it, and no single person controls it: it operates by consensus, backed by proof of work (this is the cryptography part). It is a trustworthy record, protected by mathematics. It is also a transaction database; a technology layer protocol (like TCP/IP); and an information technology.

The thing here is that this makes it very cheap to make a community and supply it with infrastructure to manage interactions on a platform, because the third party trust problem (and associated problems of free-riding) is already solved. Blockchain enables people who don’t know each other to collaborate/cooperate without requiring a third party to intermediate.

This is about new structures of community and commons-based governance. Ostrom’s key insight: people are good at making up rules to deal with novel situations. They can in this way self-govern (or self-regulate). Ostrom’s design principles: boundaries, congruence, monitoring, participation, proportionality, conflicts, autonomy, nested systems.

Yet the Ostrom model hinged on small groups, because cheap talk and costly punishment. The problem was that they didn’t scale. Today, traditional issues related to shared common-pool resources—such as the free rider problem or the tragedy of the commons—could be addressed with the implementation of blockchain-based governance, through the adoption of transparent decision-making procedures and the introduction decentralised incentives systems for collaboration and cooperation.

The transparent and decentralised nature of the blockchain makes it easier for small and large communities to reach consensus and implement innovative forms of self-governance. The possibility to record every interaction on a incorruptible public ledger and the ability to encode a particular set rules linking these interactions to a specific transactions (e.g., the assignment of cryptographic tokens) makes it possible to design new sophisticated incentive systems, which might significantly differ from traditional market-based mechanisms.

But what of our economists of the blockchain?

When I first started thinking about the economics of the blockchain, I immediately saw this as an information technology revolution, and reached for Joseph Schumpeter and Ken Arrow. But then I realised this was really about Ronald Coase, because of transactions costs and the economics of efficient coordinating institutions.

These are not flawed insights. You can get a long way with those (still somewhat radical) economic approaches. But to get to the heart of what is going on here, we need to look past the technological change dynamics and the marginal substitution between existing institutional economic forms and realise that what is actually being reinvented here are economies themselves.

Paging Professor Hayek:

An economy is a designed order, as an intended outcome of a firm or a government-planned economy. A catallaxy is an emergent order that results from the divergent goals of many different individuals interacting within a market exchange.

Hayek’s point was that the economic order of a nation-state (he preferred the term ‘great society’) is not that of an economy, but of a catallaxy—it is an emergent order. In other words, the economy only exists in its parts, in the firms and organisations, but the broader order of the market is that of a catallaxy, and not of an economy. Hayek meant this as a critique of government central planning: you can plan an economy, but never a catallaxy.

And his most important work—‘The use of knowledge in society’, published in 1945—was based on a distinction between two types of knowledge, technical or scientific knowledge, and knowledge of time and place, or market knowledge. His point was that economies can only coordinate the first type of knowledge, but it requires a catallaxy to coordinate the second type of knowledge.

The first thing to understand about the revolutionary economics of the blockchain is that Hayek’s insight is new again. The real question is not Coasean: what are the boundaries of the firm and the market? (Or even more generally in neoclassical economics on the boundaries between the market and government.) The basic question is Hayekian: what are the boundaries between an economy and a catallaxy? This is the fundamental margin that blockchain technology reengineers.

To understand why, we need to turn the other two economists of the blockchain: Elinor Ostrom and James Buchanan.

Many blockchain types who dabble in economics might have come across Elinor Ostrom—a political scientist who won the Nobel Prize in economics—because of the sublime resonance between her work on effective self-governance in small-scale natural resource using communities and its similarities to effective peer-to-peer crypto-governance.

But perhaps fewer are familiar with James Buchanan, who won the 1990 Nobel economics prize for his work on constitutional economics and the problems of public choice. In fact, he laid the theoretic foundations to explain the political dynamic of cryptosecession even before formative cypherpunk writer Timothy May declared his Crypto Anarchist Manifesto.

What connects Hayek, Ostrom, and Buchanan is that they were all focused, in very different ways, on the problem of how communities coordinate to choose in groups, and thereby create economies. They were all obsessed with social rules, and with rules for making and choosing rules.

What Hayek gave us was an understanding of what decentralisation actually does: it processes distributed information. For Hayek, market prices were the beginning of the separation of catallaxy from economy. What Ostrom gave us was an understanding of how local governance forms, as a social architecture of community created rules, to create an economy. What Buchanan gave us was the constitutional principles, and specifically the principles of unanimity in collective decision mechanisms, that connected a catallaxy to a web of economies.

The blockchain is a new information and social technology, and it is currently being analysed as such. This is a good start, and it is useful to orient our thinking, but it also risks being profoundly misleading because it does not get at the essence of the revolutionary change that is happening:

What blockchain does is not to shift the boundaries between firms and markets, creating more nimble and well-formed organisations. Nor is it to shift the boundaries between markets and government, breaking the vast monopolies of governance that have accumulated over the past few centuries. Or rather it does all of these things, but these are consequences, not causes. We focus on these aspects because they make sense in terms of changes to our received economic models.

But what is actually changing is something deeper, but something that can be read in Hayek, Buchanan, and Ostrom. What blockchain does is to shift the boundaries of an economy into a space previously occupied only by catallaxies. It does so by changing the level at which the rules of governance operate. Blockchain technologies are social technologies for whole new institutional forms of economies.

This new conception of an economy that the blockchain gives us can actually be rebuilt from within modern economics—just not from the standard textbook models. Our new foundations are Hayek, Ostrom, and Buchanan.

An economy is a group of people coming together (connecting, into a community) to do something of value, using coordinated specialised knowledge, and applying that to a resource context. A few nouns and adverbs aside, that’s actually the same definition we started with. But now look at it anew, without the institutional priors of firms, markets or governments: what is needed to achieve an ‘economy’?

In essence, an economy is achieved through rules of governance, which in large part are rules of what you can and cannot do in a social context, and the pay-off consequences (i.e., as analysed in game theory). This is where analysis usually stops, as in institutional economics, which is the deeper form of the once deep neoclassical economics.

But now go one step further, and ask what needs to be true for that to be true, and you arrive at the genius of the blockchain. The blockchain is the secure, verifiable, trustless (i.e. cryptographically secure) mechanism to record the actions upon the rules.

And right there you have it. The blockchain is doing what prices do in markets, what commands do in firms, and what laws do in governments. It is providing a clear and unambiguous public signal, as a coherent rule-system, to coordinate private action. That means that the blockchain is a technology for building new economies.

The case for the blockchain as a source of economic welfare comes from releasing the vast captured resources we have hitherto devoted to artificially manufacturing trust. The blockchain is described in its economic aspect as a new currency, a new digital ledger, a new infrastructure, a challenge to extant firms and governments, and so on.

These are all true. And they give rise to the language of radical decentralisation, autonomous corporations, distributed records, and new governance systems beyond monopolies—all of which pivots off the transition from our old centralised ways of doing things, both technologically and socially.

This is indeed a remarkable promise. And it is attractive as a foundation for social order, built on mathematical truth as verified, rather than political force as threatened.

The new economics of the blockchain is that it is a new technology for making new economies. That’s less like the invention of steam or electricity, and more like the invention of private property or government.”

Photo by AndyArmstrong

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“The purpose of the association is to promote science and research, the arts and culture, and adult and vocational education in relation to Commons.

Commons are institutions in which people in a self-determined way organize reproduction and / or production based on common resources, jointly meeting their needs while also re-/producing the shared resources.

The commons and research on the commons have been widely recognized by the awarding of the Nobel Prize in Economics to the commons researcher Elinor Ostrom on 10 December 2009.

The purpose of the institute is realized by:

• Scientific work and research: theoretical, but also grounded in practice (e.g. in cooperation with concrete commons projects)
• Education: empowerment and encouragement of people to create and participate in commons projects, creation or provision of materials, organization of workshops, lectures, conferences, seminars, summer schools, etc.
• Publications: research results, press releases, educational materials, etc.
• Cooperation: national and international, with interested people, social movements, research institutions, universities, non-governmental organizations
• Creation of a knowledge archive: sharing “project knowledge” and project ideas, archives of commons literature
• Consulting and promotion: supporting the creation and implementation of commons projects

There is an open, international, English-language listserv for information and discussion about the Commons.”

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“Picture a pasture open to all.”

For at least a generation, the very idea of the commons has been marginalized and dismissed as a misguided way to manage resources: the so-called tragedy of the commons. In a short but influential essay published in Science in 1968, ecologist Garrett Hardin gave the story a fresh formulation and a memorable tagline.

“The tragedy of the commons develops in this way,” wrote Hardin, proposing to his readers that they envision an open pasture:

It is to be expected that each herdsman will try to keep as many cattle as possible in the commons. Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long-desired goal of social stability becomes a reality. At this point, the inherent logic of the commons remorselessly generates tragedy. As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, “What is the utility to me of adding one more animal to my herd?”

The rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another…. But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd with- out 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. Freedom in a commons brings ruin to all.

The tragedy of the commons is one of those basic concepts that is drilled into the minds of every undergraduate, at least in economics courses. The idea is considered a basic principle of economics—a cautionary lesson about the impossibility of collective action. Once the class has been escorted through a ritual shudder, the professor whisks them along to the main attraction, the virtues of private property and free markets. Here, finally, economists reveal, we may surmount the dismal tragedy of a commons. The catechism is hammered home: individual freedom to own and trade private property in open markets is the only way to produce enduring personal satisfaction and social prosperity.

Hardin explains the logic this way: we can overcome the tragedy of the commons through a system of “mutual coercion, mutually agreed upon by the majority of the people affected.” For him, the best approach is “the institution of private property coupled with legal inheritance.” He concedes that this is not a perfectly just alternative, but he asserts that Darwinian natural selection is ultimately the best available option, saying, “those who are biologically more fit to be the custodians of property and power should legally inherit more.” We put up with this imperfect legal order, he adds, “because we are not convinced, at the moment, that anyone has invented a better system. The alternative of the commons is too horrifying to contemplate. Injustice is preferable to total ruin.”

Such musings by a libertarian-minded scientist have been catnip to conservative ideologues and economists (who are so often one and the same). They see Hardin’s essay as a gospel parable that affirms some core principles of neoliberal economic ideology. It affirms the importance of “free markets” and justifies the property rights of the wealthy. It bolsters a commitment to individual rights and private property as the cornerstone of economic thought and policy. People will supposedly have the motivation to take responsibility for resources if they are guaranteed private ownership and access to free markets. Tragic outcomes—“total ruin”—can thereby be avoided. The failure of the commons, in this telling, is conflated with government itself, if only to suggest that one of the few recognized vehicles for advancing collective interests, government, will also succumb to the “tragedy” paradigm. (That is the gist of Public Choice theory, which applies standard economic logic to problems in political science.)

Over the past several decades, the tragedy of the commons has taken root as an economic truism. The Hardin essay has become a staple of undergraduate education in the US, taught not just in economics courses but in political science, sociology and other fields. It is no wonder that so many people consider the commons with such glib condescension. The commons = chaos, ruin and failure.

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

To be fair, Hardin was following a long line of polemicists who projected their unexamined commitments to market individualism onto the world. As we will see later, the theories of philosopher John Locke have been widely used to justify treating the New World as terra nullius—open, unowned land—even though it was populated by millions of Native Americans who managed their natural resources as beloved commons with unwritten but highly sophisticated rules.

Hardin’s essay was inspired by his reading of an 1832 talk by William Forster Lloyd, an English lecturer who, like Hardin, was worried about overpopulation in a period of intense enclosures of land. Lloyd’s talk is notable because it rehearses the same line of argument and makes the same fanciful error—that people are incapable of negotiating a solution to the “tragedy.” Instead of a shared pasture, Lloyd’s metaphor was a joint pool of money that could be accessed by every contributor. Lloyd asserted that each individual would quickly deplete more than his share of the pool while a private purse of money would be frugally managed.

I mention Lloyd’s essay to illustrate how ridiculous yet persistent the misconceptions about the “tragedy” dynamic truly are. Commons scholar Lewis Hyde dryly notes, “Just as Hardin proposes a herdsman whose reason is unable to encompass the common good, so Lloyd supposes persons who have no way to speak with each other or make joint decisions. Both writers inject laissez-faire individualism into an old agrarian village and then gravely announce that the commons is dead. From the point of view of such a village, Lloyd’s assumptions are as crazy as asking us to ‘suppose a man to have a purse to which his left and right hand may freely resort, each unaware of the other’.”

This absurdity, unfortunately, is the basis for a large literature of “prisoner’s dilemma” experiments that purport to show how “rational individuals” behave when confronted with “social dilemmas,” such as how to allocate a limited resource. Should the “prisoner” cooperate with other potential claimants and share the limited rewards? Or should he or she defect by grabbing as much for himself as possible?

Needless to say, the complications are endless. But the basic premise of such social science experiments is rigged at the outset. Certain assumptions about the selfishness, rational calculation of individuals and lack of context (test subjects have no shared social history or culture) are embedded into the very design of the “game.” Test subjects are not allowed to communicate with each other, or develop bonds of trust and shared knowledge. They are given only limited time and opportunity to learn to cooperate. They are isolated in a lab setting for a single experiment, and have no shared history or future together. Aghast at the pretzel logic of economic researchers, Lewis Hyde suggested that the “tragedy” thesis be called, instead, “The Tragedy of Unmanaged, Laissez-Faire, Common-Pool Resources with Easy Access for Noncommunicating, Self-Interested Individuals.”

The dirty little secret of many prisoner’s dilemma experiments is that they subtly presuppose a market culture of “rational” individuals. Most give little consideration to the real-life ways in which people come to cooperate and share in managing resources. That is changing now that more game theory experiments are incorporating the ideas of behavioral economics, complexity theory and evolutionary sciences into their design.

Yet the fact remains that a great deal of economic theory and policy presume a rather crude, archaic model of human being. Despite its obvious unreality, Homo economicus, the fictional abstract individual who actively maximizes his personal “utility function” through rational calculation, continues to hold sway as the idealized model of human agency in the cultural entity we call the “economy.” Two introductory economics textbooks widely used in the US, by Samuelson and Nordhaus (2004) and Stiglitz and Walsh (2006), consider cooperative behaviors to be so inconsequential that they do not even mention the commons. If economists show any inclination to discuss the commons, you can be sure that the word “tragedy” will be lurking very nearby.

Paradoxically enough, the heedless quest for selfish gain— “rationally” pursued, of course, yet indifferent toward the collective good—is a better description of the conventional market economy than a commons. In the run-up to the 2008 financial crisis, such a mindset propelled the wizards of Wall Street to maximize private gains without regard for the systemic risks or local impacts. The real tragedy precipitated by “rational” individualism is not the tragedy of the commons, but the tragedy of the market.

Happily, contemporary scholarship has done much to rescue the commons from the memory hole to which it has been consigned by mainstream economics. The late American political scientist Elinor Ostrom of Indiana University deserves special credit for her role in expanding the frame of analysis of economic activity. In the 1970s, the economics profession plunged into a kind of religious fundamentalism. It celebrated highly abstract, quantitative models of the economy based on rational individualism, private property rights and free markets. A child of the Depression, Ostrom had always been interested in cooperative institutions working outside of markets. As a young political scientist in the 1960s, she began to question some of the core assumptions of economics, especially the idea that people are unable to cooperate in stable, sustainable ways. Sometimes working with political scientist Vincent Ostrom, her husband, she initiated a new kind of cross-disciplinary study of institutional systems that manage “common-pool resources,” or CPRs.

CPRs are collective resources over which no one has private property rights or exclusive control, such as fisheries, grazing lands and groundwater. All of these resources are highly vulnerable to over-exploitation because it is difficult to stop people from using them. We might call it the “tragedy of open access.”

What distinguished Ostrom’s scholarship from that of so many academic economists was her painstaking empirical fieldwork. She visited communal landholders in Ethiopia, rubber tappers in the Amazon and fishers in the Philippines. She investigated how they negotiated cooperative schemes, and how they blended their social systems with local ecosystems. As economist Nancy Folbre of the University of Massachusetts, Amherst, explained, “She would go and actually talk to Indonesian fishermen or Maine lobstermen, and ask, ‘How did you come to establish this limit on the fish catch? How did you deal with the fact that people might try to get around it?’”

From such empirical findings, Ostrom tried to figure out what makes for a successful commons. How does a community overcome its collective-action problem? The recurring challenge facing a group of principals in an interdependent situation, she wrote, is figuring out how to “organize and govern themselves to obtain continuing joint benefits when all face temptations to free-ride, shirk, or otherwise act opportunistically. Parallel questions have to do with the combinations of variables that will (1) increase the initial likelihood of self-organization; (2) enhance the capabilities of individuals to continue self-organized efforts over time; or (3) exceed the capacity of self-organization to solve CPR [common-pool resource] problems without eternal assistance of some form.”

Ostrom’s answer was Governing the Commons, a landmark 1990 book that set forth some of the basic “design principles” of effective, durable commons. These principles have been adapted and elaborated by later scholars, but her analysis remains the default framework for evaluating natural resource commons. The focus of Ostrom’s work, and of the legions of academics who now study commons, has been how communities of resource users develop social norms—and sometimes formal legal rules—that enable them to use finite resources sustainably over the long term. Standard economics, after all, declares that we are selfish individuals whose wants are unlimited. The idea that we can depend on people’s altruism and cooperation, economists object, is naive and unrealistic. The idea that commons can set and enforce limits on usage also seems improbable because it rejects the idea of humans having unbounded appetites.

Ostrom nonetheless showed how, in hundreds of instances, commoners do in fact meet their needs and interests in collective, cooperative ways. The villagers of Törbel, Switzerland, have managed their high alpine forests, meadows and irrigation waters since 1224. Spaniards have shared irrigation waters through huerta social institutions for centuries while, more recently, diverse water authorities in Los Angeles learned how to coordinate their management of scarce groundwater supplies. Many commons have flourished for hundreds of years, even in periods of drought or crisis. Their success can be traced to a community’s ability to develop its own flexible, evolving rules for stewardship, oversight of access and usage, and effective punishments for rule-breakers.

Ostrom found that commons must have clearly defined boundaries so that commoners can know who has authorized rights to use a resource. Outsiders who do not contribute to the commons obviously have no rights to access or use the common-pool resource. She discovered that the rules for appropriating a resource must take account of local conditions and must include limits on what can be taken and how. For example, wild berries can only be harvested during a given period of time, or wood from the forest can only be taken from the ground and must be used for household use only, not sold at markets.

Commoners must be able to create or influence the rules that govern a commons, Ostrom noted. “If external governmental officials presume that only they have the authority to set the rules,” she discovered, “then it will be very difficult for local appropriators to sustain a rule-governed CPR over the long run.” Commoners must be willing to monitor how their resources are used (or abused) and must devise a system of sanctions to punish anyone who violates the rules, preferably through a gradation of increasingly serious sanctions. When disputes arise, commoners must have easy access to conflict-resolution mechanisms.

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

Excerpted from Think Like A Commoner: A Short Introduction to the Life of the Commons.

28 July 2015

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I recently spoke at a conference, “Property and Inequality in the 21st Century,” hosted by The Common Core of European Private Law, an annual gathering of legal scholars, mostly from Europe.  They had asked me how the commons might be a force for reducing inequality.  Below are my remarks, “The Commons as a Tool for Sharing the Wealth.”  The conference was held at the University of Göteborg, Sweden, on June 12-13, 2015.

Thank you for inviting me to speak today about the relationship between property law and inequality – a topic that receives far too little attention.  This should not be surprising.  Now that free-market ideology has become the default worldview and political consensus around the world, private property is seen as synonymous with freedom, economic growth and human progress.

Oh yes, there is this nasty side issue known as inequality.  Malcontents like the Occupy movement and renegade economists like Thomas Pikketty have brought this problem to the fore after years of neglect.  Their success has been quite an achievement because for years the very existence of inequality has been portrayed as an accident, an aberration, a mysterious and shadowy guest at the grand banquet of human progress.

I wish to argue that hunger, poverty, inadequate education and medical care, and assaults on human dignity and human rights, are not bugs in the system.  They are features. Indeed, market ideologues often argue that such deprivations are a necessary incentive to human enterprise and economic growth; poverty is supposedly needed to spur people to escape through the work ethic and entrepreneurialism.

Property rights lie at the heart of this dynamic because they are a vital tool for defining and patrolling the boundaries of private wealth, and for justifying the inevitably unequal outcomes.  So it’s important that we focus on the role of property rights in producing social inequality – without ignoring the many other forces, including social practice, culture and politics, that also play important roles.

I’d like to focus on the obsession in modern industrial societies to propertize everything, including life itself, and to use law as a tool to impose a social order of markets and private property as expansively as possible.  This cultural reflex is known as the enclosure of the commons.  The term describes how property owners assert sweeping rights – often with the active complicity of governments – as a way to appropriate collectively owned resources for private gain.

We can see this dynamic in the international land grab now underway, the incessant attempts to privatize groundwater and municipal water systems, the grotesque expansion of copyright and patent law to privatize scientific knowledge and cultural works, and the use of the Earth’s atmosphere as a free waste dump by polluters.  The mania for privatizing the world has reached such an extreme stage that even intangible wealth as public spaces, microorganisms, genetically created mammals, artificially created nanomatter and human consciousness itself are claimed as objects of private property rights.

Unfortunately, traditional property law is based on a woefully obsolete worldview and antiquated economic premises about human beings and social and ecological realities. It sees all of these expansions of property law as a form of wealth creation – when in fact it often amounts to wealth destruction (monetizing nature), redistribution from the have-nots to the haves, or a transformation of the intrinsic use-value of something into exchange-value (price).  It presumes that value is only created by individuals trucking and bartering in the marketplace, and the Invisible Hand does its magic.

Property law does not generally acknowledge the actual value generated by social collaborations, by complex natural systems and by inherited knowledge and culture.  It is blind to non-economic relationships such as gift economies, informal relationships, social communities and care work.  You could say that property law generally simply does not recognize the commons and its significant role in generating value.

What exactly do I mean by the commons?  Well, the term has been so poisoned by conservative ideologues and economists over the pasts two generations that the first idea that leaps to mind when you mention the word “commons” is the tragedy of the commons. Let me quickly dispense with this annoying distraction.

The tragedy parable, as I call it, was launched by biologist Garrett Hardin in his famous article in the journal Sciencein 1968.  Hardin said:  Imagine a pasture that can be used by anyone, and in which no individual farmer has a rational incentive to hold back his use of it.  Hardin declared without any empirical evidence that every individual farmer will of course put as many sheep on the pasture as possible.  This will inevitably result in the over-exploitation and destruction of the pasture and produce a tragedy of the commons.

The “tragedy parable” is regarded as such an economic truism that it has become a cultural cliché – an idea drummed into the heads of every undergraduate.  Champions of “free markets” have invoke the tragedy meme to celebrate private property rights and so-called free markets — and to fight government regulation and any collectivist alternatives.

The only problem is, Hardin was not describing a commons.  He was describing an open-access regime that has no rules, boundaries or indeed no community.  This is not a commons.  It is a free-for-all.  A commons is a social system for managing resources that has a bounded community, specific rules for accessing the resource, mechanisms to monitor that usage and punish free riders, and so on.  In fact, the situation Hardin was describing – in which free riders can appropriate or damage resources as they wish — is more accurately a description of unfettered markets.  You might say Hardin was describing the tragedy of the market.

The late Professor Elinor Ostrom of Indiana University powerfully rebutted the whole tragedy of the commons fable in her landmark 1990 book, Governing the Commons:  The Evolution of Institutions for Collective Action.  Her fieldwork and creative theorizing shows that it is entirely possible for communities tomanage natural resources as commons without over-exploiting them.

So the commons can actually work and work well.  How can that be possible?  Contrary to the Hardin parable and its many prisoner’s dilemma offshoots, people in real life tend to actually talk to each other.  They negotiate rules to protect community interests.  They build systems to identify and punish free riders.  They cultivate powerful cultural values and norms.  And so on.

The commons is in fact a flourishing system of self-provisioning around the world, mostly operating outside of the market and state.  Here’s an amazing fact:  An estimated two billion people depend on various natural resource commons for their everyday survival– farmland, fisheries, forests, irrigation water, wild game.  This role of the commons is largely ignored by economists, however, because the self-provisioning of the commons takes place outside of conventional markets and is therefore considered without value.  No money is changing hands; there is no boost of GDP.  How could anything worthwhile be taking place within these commons?

Professor Ostrom — an Indiana University political scientist who spend her career studying the dynamics of effective cooperation in managing resources – won the Nobel Prize in Economics for her work in 2009.  She was the first woman to win the award.  I don’t think this was incidental.  Unlike her (male) economist colleagues who treat property as an inventory of objects to be shuffled around, Ostrom opened up the discussion by exploring the rich potential of social relationships and collaboration in meeting needs.

But here’s where the story starts to get interesting.  In recent years, independent of the Ostrom-inspired academic scholars, a burgeoning international movement of commoners have arisen to build their own commons – and to challenge attempted enclosures of their shared wealth.  This eclectic, sprawling movement goes way beyond the small natural resource commons in the global South that Ostrom studied.  This movement consists of food activists trying to rebuild local agriculture through such means as permaculture, community-support agriculture, Slow Food and cooperatives.  It includes techies writing free and open source software programs that are now standard elements of most commercial software.  It includes universities and scientists and academic disciplines that are committed to sharing their research and data on open digital platforms, often with Creative Commons licenses.

The commons can be seen among seed-sharing farmers in India who wish to avoid GMO crops and practice a kind of open-source agriculture.  You see the commons in the explosion of open design and manufacturing – which is product design that is globally shared but locally manufactured and inexpensive, modular and accessible to anyone, in the style of open source software.  This movement has produced the Wikispeed car that gets 100 miles per gallon of fuel….the Farm Hack community that has produced dozens of pieces of affordable farm equipment…. and the scores of hackerspaces and Fablabs of the Maker movement.

The commons can be seen in new projects to build “shareable cities” in which urban residents play significant roles in managing parks and water systems, kindergartens and urban planning.  The commons is at work in cities that host participatory budgeting processes that let ordinary people deliberate about budgets.  It’s also at work in alternative currencies, such as the Bangla-Pesa in Kenya, which has made it possible for poor people in slum neighborhoods to exchange value with each other.

What unites these highly diverse communities?  They are all asserting a different universe of value.  They all share a basic commitment to production for use, not market exchange.  They are asserting the right of communities to participate in making the rules that govern themselves.  They want fairness and transparency in governance.  And as commoners, they are asserting a responsibility to act as long-term stewards of resources.  The commons also consists of a certain ethic – a commitment to protect everything that we inherit or create together, so that it can be passed on, undiminished, to future generations.

Far from a “tragedy, the commons should be understood as a vibrant social and political system for managing shared wealth.  It is a system of self-governance that emphasizes inclusion, fairness and sustainability.  It empowers ordinary people while avoiding crippling dependencies on the market or state.  We know how the market, by contrast – at least in its globally integrated, highly concentrated and socially disconnected and amoral forms – tends to transform customers into dependent vassals.

Now, historically, most commons have not needed nor sought formal protections of law.  Their self-organized customs and relative isolation from outside capital and markets, were enough to sustain them.  This has changed dramatically over the past thirty or forty years, however, as global commerce technology and conventional property law have expanded relentlessly, superimposing the logic and values of markets on nearly every corner of nature and social life.

Our common wealth is vulnerable because typically the state has no formal, clear property rights protecting them.  Indeed, the state has little interest in granting or clarifying collective property interests because it would prefer to collude with investors and corporations to privatize this collective wealth.  As usual, invoking the tragedy parable, the state presumes that only the private appropriation and monetization of common wealth can produce prosperity and human progress.  Expansive private property rights are crucial instruments in advancing this process.  And inequality, Pikketty and others have documented, is an inevitable result.

I wish to suggest, therefore, that – apart from some of the redistributionist strategies mentioned yesterday – the commons is a vital tool for assuring a more equitablepredistibution of wealth for all.  By that, the commons provides the most durable, structurally effective way to ensure that people’s basic needs are met – and this in turn will foster greater political equality.  Citizens must have legally guaranteed access to and use of the resources that they require for their survival, dignity and cultural identity.

If we truly wish to address inequality, then we must find ways to reclaim the commons and reinvent the Law of the Commons.  (Re)inventing the Law of the Commons may sound way ambitious, but consider this:  People in the thirteenth century arguably had stronger legal rights to subsistence and survival than people do today.  Thanks to Magna Carta and its companion document, the Charter of the Forest, people had guaranteed legal access to the forest to gather firewood, water for drinking and planting, acorns for their pigs, the right to hunt wild game and collect fruit, and much else.

Commoners had legal access to the means of production and subsistence – which is more than contemporary markets and many states are willing to guarantee today.  If you ain’t got the do re mi, as Woody Guthrie put it, you’re out of luck.

How would access to the commons ameliorate inequality?  For starters, it would help people extricate themselves from a dependency on predatory markets by helping them de-commodify their everyday existence.  We can see this among many contemporary commons:

·      Users of Linux don’t have to pay tribute to Microsoft, but can control their own software infrastructure and escape the proprietary tax of forced upgrades.

·      Locavoresdon’t have to suffer the costs and risks of GMO foods and industrialized, processed food.

·      People who live in housing owned by community land trusts can avoid the high rents and speculative prices of the open housing market.

·      Students and scholars who use open textbooks and open access scholarly journalscan avoid the exorbitant prices of commercial journals, expensive website paywalls and the surrender of copyright control.

·      Users of cooperative finance and alternative currenciescan mutualize their shared wealth and avoid the predatory practices of commercial banks and privately created fiat money.

·      City dwellers who rely upon municipally owned utilities or commons-based water systemscan escape the costly dependency on investor-owned utility monopolies, and develop more ecological alternatives.

The basic conclusion that I am making here is this:  The commons provides assured structural access to vital resources and services, outside of the market and state.  And in so doing, commons help assure greater equality in societies.  Commons help people reduce their costs, fortify their economic independence, and strengthen their political sovereignty.

To be sure, participating in a commons also entails certain responsibilities and initiative – both personal and social – to protect shared wealth.  But this, too, is a good thing – because it is an emancipation from the whole scheme of producer/consumer relationships that tend to alienate people from each other, promote consumerism and inflict nasty “market externalities” on to the environment.  As stewards of shared wealth, commoners tend to manage resources with a more holistic, long-term and collective perspective.  Commons offer a credible escape from the pathologies of the unsustainable growth economy.

But here is a key question:  What role should property law play in all of this?  If the commons is a richly generative system for meeting people’s needs, then surely property law ought to take account of this fact.  Unfortunately, as I mentioned earlier, traditional property law simply does not recognize the actual value of commons.

I am happy to report, however, that there is a massive amount of legal innovation already underway to protect the commons, using property rights and other forms of law.  Our ambitious challenge, I would argue, is to invent a new amalgamated field of inquiry that I call the Law of the Commons. 

This is a complicated challenge, mostly because the modern liberal polity and conventional law are philosophically hostile to the commons.  A system of law focused on individual rights, private property and economic growth, is not especially receptive to the paradigm of the commons.  Most commons-based legal innovations that I’ve encountered amount to hacks – i.e., they are  ingenious subterfuges and creative workarounds to the standard forms of state law.

This is exactly what Richard Stallman and the free software movement did in inventing the General Public License, of GPL, which provided a critical legal foundation for the evolution of free and open source software.  It’s what Larry Lessig and his colleagues did in inventing the Creative Commons licenses, another copyright-based license that turns copyright law inside out to make creative works automatically shareable rather than automatically private property.

Let me quickly review some of the more significant forms of commons-based law that commoners are putting forward these days.

In the global South, in order to subsistence commons, some indigenous peoples have been rallying around a legal instrument known as “biocultural protocols,” which the South African group Natural Justice developed.  The protocols are seen as a way to protect indigenous peoples from the market enclosures that would otherwise be sanctioned by international trade treaties, by declaring agro-ecological and cultural practices off-limits to markets and trade.

In India, ever since its Supreme Court formally recognized commons in a landmark 2012 ruling, Indians have been attempting to work out the legal and political implications of managing all sorts of commons such as forests, farmland and water.  There are also fascinating legal innovations such as the Potato Park in Peru, which gives indigenous peoples near Cusco the right to manage their “agroecological heritage landscape.”

Stakeholder trustsare a new frontier of legal innovation, especially in the US. These are state-chartered trusts to collect, manage and distribute revenues from natural resources such as oil, water, minerals and forests.  The great precedent for this is the Alaska Permanent Fund, which generates about US$1,000 a year for every resident of Alaska – a rare source of non-wage income for ordinary people.  Commons scholar Peter Barnes has expanded this idea to apply to many other common assets, in his book, Liberty and Dividends for All in an attempt to deal concretely, and with direct cash payments, to address in inequality.

New sorts of legal frameworks for digital commonsare a robust field of innovation as well.  There is now an attempt to move beyond copyright based licenses on open platforms, such as the GPL and Creative Commons licenses, to enable digital communities to retain for themselves the surplus value that they create.  Michel Bauwens of the P2P Foundation has proposed commons-based reciprocity licenses – of what he calls CopyFair – to ensure that digital communities can reap any monetization of their content from commercial users, while allowing non-commercial users to continue to use the work for free.  In a similar fashion, there are now efforts afoot to develop seed-sharing licenses so that farmers can protect their seeds from third parties who might appropriate and patent them.

The blockchain ledger,as pioneered by Bitcoin, may be one of the most revolutionary innovations in the Law of the Commons.  This technology is significant because it allows digital identity authentication and secure transfers of assets without third-party guarantors like banks or governments.  Although Bitcoin has used the blockchain ledger for standard libertarian, capitalist purposes, especially speculation, the technology can be used to facilitate social cooperation in radically new ways – in effect, moving law from the oral and written to digital media.

One important offshoot that many “computational lawyers” are working on is smart contracts, algorithm-based technologies that would new sorts of network-based contracts that could be negotiated on the fly, online, without the standard written contracts and lethargic court system.  This, too, is an important realm of new types of commons-based law.

Co-operative lawis another form of commons-based law that is reviving many little-used historical models while developing new types of governance.  For example, there are manymultistakeholder co-operatives in Italy and Quebec that go beyond worker and consumer co-op models, to empower third-parties to participate in such things as eldercare and social services.

The Sustainable Economies Law Center in Oakland, California, is exploring new forms of co-operative governance to empower members.  Old forms like community land trusts and “garden cities” – in which the city owns the water systems, land and other infrastructure, which it mutualizes for everyone’s benefit – are experiencing a revival.

There are many important experiments inurban commons underway, many of which require legal innovation.  One of the most significant is the Bologna Regulation in Bologna, Italy, which is remaking local government by inviting ordinary citizens and neighborhoods to self-organize their own projects – urban agriculture, care of public spaces, parent-run kindergartens, “social street” programs – which the city then helps.  The city now has more than 90 “pacts of cooperation” with self-nominated groups in three thematic areas – “living together, growing together and making together.”

Along the same lines, a San Francisco-based group called Shareable has developed a series of papers outlining “Shareable Cities” policies, which are aimed at helping city governments work with residents to develop “sharing projects” ranging from car-sharing to tool-sharing to neighborhood services.  A number of cities such as Linz, Austria, are pioneering open digital platforms for urban renewal by making all sorts of information available online for free.

I have not yet mentioned the many new legal initiatives attempting to strengthen local self-determination, mostly through community ordinances and so-called community charters.  There are also new organizational forms such as “omni-commons,” which provide administrative, fiscal and legal assistance to help incubate small enterprises with a commons orientation.

At an even larger level, there are many legal initiatives underway attempting to re-imagine governance according to commons principles.  Some of these look to the public trust doctrine in environmental law to uphold the interests of commoners, as in a series of lawsuits seeking to force governments to deal with climate change.  Others, such as a project by some Italian jurists, are trying to establish a human right of people to access and use common assets, protecting them from market enclosure.  Just a few months ago, French legal scholars held a conference on European juridicial strategies for the commons.

We are seeing a remarkable burst of creativity to find new structures of law – in contract law, trusts, co-operative law, municipal government, copyright and patents, organizational charters, and more – to protect the social practices of commoning and the values it stands for.

What is this all about, ultimately?  It’s about honoring the sovereignty of people to devise their own forms of governance to meet their needs and local context.  It’s about the importance of bottom-up initiatives and participation, and of transparency and accountability.  It’s about meeting people’s needs without relying on the dysfunctional formalities of bureaucracy, the market/state duopoly of power, or the social inequities associated with markets.

Given the explosion of legal creativity in creating, maintaining and protecting commons, old and new, I have high hopes that this new field of legal inquiry, the Law of the Commons, will help move us beyond the limits of conventional law, governance and bureaucracy.  At bottom, the Law of the Commons is about nurturing the social norms, policy structuresandinstitutional practices that can help human beings flourish.  There is a great deal of research, creative theorizing and activist experimentation that must proceed, but I believe that commoning, as enabled by a reinvented Law of the Commons, will help address some of the most urgent ecological, social and political problems of our time.

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URL = http://sustainingthecommons.asu.edu/

David Bollier:

“For newcomers to the commons wishing to acquaint themselves with Elinor Ostrom’s work, it can be a hard slog. Her scholarly treatises, while often quite insightful, can be quite dense in delivering their hard research results and refined insights. It is a real pleasure, therefore, to greet Sustaining the Commons, a new undergraduate textbook that has just been published. The book provides a general overview of the intellectual framework, concepts and applications of Ostrom’s research on the commons.

Best of all, in a refreshing departure from most academic publishing, the authors of the 168-page book decided to make it available for free as a downloadable pdf file. Just go to the book’s website and blog, http://sustainingthecommons.asu.edu.

Sustaining the Commons is by John M. Anderies and Marco A. Janssen, both associate professors at Arizona State University and directors of the Center for the Study of Institutional Diversity, which is the publisher of the textbook. Both authors worked with Ostrom from 2000 until her death in 2012. Although Ostrom’s name is mostly associated with Indiana University, where she co-founded and ran the Workshop on Political Theory and Policy Analysis, Ostrom was also a part-time research professor at ASU from 2006-2012.

Anderies and Janssen taught a course at ASU on Ostrom’s work, with a special focus on her books Governing the Commons (1990) and Understanding Institutional Diversity (2005). Out of that teaching arose the idea for this book. Ostrom herself saw and approved of the first draft of the book in April 2012, shortly before her death.

The book is a lucid, logically presented introduction to the key concepts of Ostrom’s research. There are chapters on “defining institutions,” “action arenas and action situations,” and “social dilemmas.” There are also a series of case studies on the management of various types of common-pool resources – water, forests, domesticated animals – and a review of “design principles to sustain the commons.”

There are a number of chapters on human behavior as it is studied by social science. How do people make decisions about collective matters and how do they develop trust? How are these behaviors studied in the laboratory? What sorts of rules and social norms matter?

These are all elements of the Institutional Analysis and Development Framework, a standard research methodology for investigating commons regimes as they exist in diverse contexts. In essence, the IAD is a meta-theoretical framework that lets researchers assess diverse variables in commons from different disciplinary perspectives.

A final section on “applying the framework” looks at how Ostrom’s framework applies to public health, the digital commons and sport. It’s a useful exercise, but I confess that I found the chapter on digital commons a bit thin. For example, it didn’t adequately differentiate corporate-owned platforms for sharing (Facebook, Google) from commons-based ones (Wikipedia, free software). The authors also seem to swallow the film industry’s propaganda line about copyright theft — that stealing a DVD is the same as using online content without permission. (Anderies and Janssen: “To illegally obtain a music recording 40 years ago, it was necessary to walk into a record store and walk out with a vinyl disc! Again, before the Internet, stealing was a more personal affair—you had to actually see the victim.”) This begs the question of whether copyright actually does prohibit unauthorized uses — the fair use doctrine, which authorizes re-use and copying, is routinely ignored by copyright industries. Nor does this framing consider whether copyright law should continue to be as extensive and long-lived as it is, at the expense of the commons.

Still, give some credit where it is due: Sustaining the Commons is licensed under a Creative Commons Attribution-NonCommercial-No Derivatives license. Despite a few lapses, Sustaining the Commons is a welcome addition to the literature that provides a succinct, clear-headed introduction to Lin Ostrom’s formidable research.” (http://bollier.org/blog/sustaining-commons-textbook-overview-ostroms-research)

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