Authors: Jeremy Rifkin
As fate would have it, Coase’s singular achievement, which helped secure him the Nobel Prize in economics, came after the controversy over marginal costs, when he penned his treatise on privatizing the spectrum. He argued for a one-time sell-off of the entire spectrum, putting it in the hands of commercial enterprises for proprietary use and exchange in the marketplace.
Coase believed that the market was a far more efficient mechanism for determining how resources should be allocated than government regulators and bureaucracies. Or, in today’s parlance, “the government should not be in the business of picking winners and losers,” not only because it lacks the vital up-to-the-moment information on value propositions that sellers and buyers bring to the market, but also because government policy makers are subject to influence peddling by special interests.
Most economists bought into Coase’s thesis, and eventually the FCC itself began to fall in line with Coase’s argument by allocating spectrum leases through public auctions to the highest bidder.
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The FCC’s decision to auction leases wasn’t entirely devoid of self-interest. The government reasoned that from a purely financial perspective, it made far more sense to sell valuable spectrum leases, which could put billions of dollars into the federal coffers, than to just give it away for free. The idea was that by selling spectrum leases, both the government and private enterprise came out on top.
The win-win collaboration was predicated on the assumption, however, that the spectrum is a highly valuable commercial asset because it is a scarce resource. That assumption began to crumble in the late 1990s with the introduction of the new technologies that transformed the spectrum from a scarce resource to an abundant one. Engineers argued that the spectrum, if not an infinite resource, was certainly a renewable one with untapped capacity that could drive the cost of using it to nearly zero.
Social critics and a small but influential group of economists seized on the opportunity of an abundant spectrum and began to frame the issue in social terms, arguing that denying millions of people the ability to communicate with each other at near zero marginal cost constituted a denial of their right to free speech. After all, much of the communication that goes on today in the United States and around the world is via e-mail, smartphones, and tablets. In the Collaborative Age, social media like Facebook and Twitter are the indispensable means by which people increasingly communicate with each other.
A new generation of scholars like Eli Noam of Columbia University, Yochai Benkler of Harvard University, and Kevin Werbach of the Wharton School at the University of Pennsylvania found common cause with the traditional market economists. All of them argued that the FCC command and control of the radio bands was, at best, inefficient and wasteful. The new activists disagreed, however, with Coase’s disciples, who argued that market management was the only viable alternative to government control. They argued that if the remaining airwaves were leased or sold to the private sector, the telecom giants would stow away large chunks of the spectrum, monopolize the rest, and assert an iron grip over the communication channels of the country—denying millions of prosumers and hundreds of thousands of businesses nearly free communications and the economic, social, and political benefits that accompany it. They support a third alternative that would take the nation’s communications beyond both government and market control. They call the new governing model the Networked Commons. Web activists are not talking about the quaint old ancestral commons of feudal yore, but a high-tech, twenty-first-century Commons that can manage the distributed, peer-to-peer, laterally scaled economic activities made possible by the Internet of Things. The Networked Commons becomes the governing body for a new collaborative economic paradigm.
What they’re advocating extends far beyond governance of the airwaves. Because IT computing, wireless telecommunications, and Internet technology are increasingly being deployed to organize and manage information, green energy and electricity, 3D printing of infofactured products, online higher education, social media marketing, and plug-in clean transport and logistics, the networked Commons becomes the governing model that envelopes the entirety of the Internet of Things. While none of the new digital commoners expect government or markets to suddenly shrivel, they see them making room for a third alternative that will come to play an increasingly mainstream role in managing much of the economic, social, and political affairs of every locale and region in a near zero marginal cost world. The Collaborative Commons has entered onto the world stage.
Part III
The Rise of the Collaborative Commons
Chapter Ten
The Comedy of the Commons
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lthough most people know little about Commons governance (as described in chapters 1 and 2), it predates the capitalistic system and proved to be an effective governing model for organizing economic life during the feudal and medieval eras. Unfortunately, in modern times, its reputation has been tarnished, first by Enlightenment philosophers and, more recently, by conventional economists committed to replacing it with a ubiquitous private property regime and market exchange model.
Likely the most well-known contemporary depiction of the Commons—
albeit a thoroughly negative one—is Garrett Hardin’s essay entitled “The Tragedy of the Commons,” which appeared in the journal
Science
in 1968. A professor of ecology at the University of California, Santa Barbara, Hardin posed the hypothetical situation of a pasture “open to all.” Each herder benefits from grazing as many cows on the pasture as he can. Yet he suffers the negative consequences of a deterioration of the pasture if every other herder attempts to optimize his benefits by similarly grazing as many cows as they can on the same open pasture. As the land continues to erode, the struggle between the herders only escalates, as each attempts to maximize his own grazing before the pasture becomes barren. The short-term race for gain dictates the inevitable diminishment of the resource. 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. Freedom in a commons brings ruin to all.
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Even if the open pasture was being taken care of by some of the herders, the tragedy of the Commons could not be prevented because of the “free riders dilemma.” That is, if the pasture were open to everyone, then free riders would take advantage of the good will of others, who were attempting to steward the resources, by grazing more of their herd without contributing to the general effort of taking care of the pasture. If the free riders prevail over the stewards, the result is the ruin of the Commons.
Hardin concluded with an ominous declaration that “the alternative of the Commons is too horrifying to contemplate.”
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An ardent ecologist, Hardin was convinced that the only effective way to restore the Earth’s deteriorating ecosystems was to impose the heavy hand of centralized government command and control:
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 Hobbes’s term.
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Hardin’s description of the Commons contained more than a modicum of truth. However, it omitted the most salient factors of the Commons model that allowed it to persevere over eons of history—that is, the self-regulating, self-enforcing protocols and accompanying punishments agreed to by its members as a condition of participation. Without those protocols and punishments, the tragedy of the Commons is likely, if not inevitable. In other words, Hardin left out governance.
What I find so strange is that Hardin chose to cast the Commons as the villain responsible for the unleashing of wanton greed and destruction in the modern era. In fact, it was the excesses of a market-driven capitalist system motivated by the dogged pursuit of profit and abetted by the heavy hand of government-directed colonial and neocolonial policies that led to the pillage of resources and the wholesale exploitation of humanity in the developing world over the course of the eighteenth, nineteenth, and twentieth centuries.
Rediscovering the Commons
Until very recently, economists and historians regarded the Commons as a unique economic model whose relevance was inextricably tied to a feudal society. Over the past 25 years, however, a younger generation of scholars and practitioners has begun to reexamine the Commons as a governing model. They sense that its guiding principles and assumptions, if updated and reworked, might offer a more practical organizational model for a transitioning economy where centralized command and control of commerce is capitulating to distributed, laterally scaled, peer-to-peer production, where property exchange in markets is becoming less relevant than access to sharable goods and services in networks, and where social
capital is becoming more valued than market capital in orchestrating economic life.
In 1986—18 years after Hardin’s essay seemed to put the last proverbial nail in the coffin of Commons theory—Carol Rose pried open the casket, breathing new life into what many had already concluded was a dead idea. The Northwestern University law professor entitled her salvo “The Comedy of the Commons,” a scathing rejoinder to Hardin’s earlier thesis. Her spirited and rigorous defense of Commons governance rousted the academic community, spurring a revival of Commons scholarship and practice.
Rose began by reminding her readers that not everything is amenable to private ownership. The oceans and submerged lands at high tides, lakes and rivers, forests, glens, mountain passes, open lands, country lanes, roads and bridges, and the air we breathe are all in the nature of public goods. While they can be privatized in the form of property exchanged in markets, they have more often been overseen by government, but not always. Rose points out that
there lies outside purely private property and government-controlled “public property” a distinct class of “inherently public property” which is fully controlled by neither government nor private agents. [This is] property collectively “owned” and “managed” by society at large, with claims independent of and indeed superior to the claims of any purported governmental manager.
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In the legal field, these claims are known as customs claims and can be found in British and American law, as well as in legal doctrines in countries around the world. They are generally rights that have existed beyond memory—for example, a community’s right to use land in common to graze animals, or gather wood from local forests, or cut peat or turf from bogs and fields, or use roads, or fish in local streams, or assemble for festivals on the “public commons.” The interesting aspect of customary rights is that they are most often accompanied by informal or formal management protocols to ensure a proper stewardship of the commons.
The late University of Toronto professor Crawford Macpherson, one of the twentieth century’s distinguished authorities on the history of property, notes that we are so used to thinking of property as the right to exclude others from the use or benefit of something that we have lost sight of an older conception of property, the customary right of access to property held in common—to wit, the right to freely navigate waterways, or walk along country roads, or enjoy access to the public square.
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Rose cites the customary right to participate in the public square, noting that it has long been regarded as indispensable to social life. The public square—at least before the Internet—is where we communicate, socialize, revel in each other’s company, establish communal bonds, and create
social capital and trust, the indispensable elements for nurturing community. For that reason, the right to attend festivals and sporting events or assemble on the promenade has traditionally been the most basic of all rights. The right to be included, to have access to one another, which is the right to participate “in common,” is the fundamental property right, while private property, the right to enclose, own, and exclude is merely a qualified deviation from the norm—although in modern times the qualification has all but subsumed the norm.
Rose makes a poignant observation about the customary right to hold public festivities on the commons that has deep relevance to the current debate on the right to universal access to networked social spaces on the Internet. In regard to festivals, dances, sporting events, and other social activities in the public square, the more individuals that participate, says Rose, “the higher its value to each participant.”
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Rose says that “this is the reverse of the ‘tragedy of the commons’: it is a ‘comedy of the commons,’ as is so felicitously expressed in the phrase ‘the more the merrier.’”
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What makes Rose’s insight so uncanny is she wrote it in 1986, before the emergence of the World Wide Web. Rose, in simple prose, addressed the most important question of all: When should property claims rest in private hands and when in public trust on the Commons? The properties in question, said Rose, have to be physically capable of being monopolized by private persons. But “the public’s claim had to be superior to that of the private owner, because the properties themselves were most valuable when used by indefinite and unlimited numbers of persons—by the public at large.”
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Rose saw that the “publicness” of goods and services “created the ‘rent’ of the property, and public-property doctrines—like police-power doctrines—protected that publicly created rent from capture through private holdout.”
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Rose’s blistering attack on Hardin’s tragedy of the commons thesis and her equally spirited defense of the comedy of the commons was followed, just four years later, by the publication of Elinor Ostrom’s
The Governing of the Commons.
Ostrom, an economist who served on the faculties of both Indiana University and Arizona State University, wrote the first comprehensive economic and anthropological analysis on the history of the commons, covering a thousand-year span. Her work dazzled the intellectual community and even the economic academy. Ostrom’s insightful analysis of why commons governance had succeeded and failed in the past, and her pragmatic prescriptions for ensuring the success of future Commons management, won her the coveted Nobel Prize in economics in 2009—making her the first woman ever to receive the honor.
Ostrom, although every bit the economist, was not shy about taking on the role of an anthropologist. She studied commons management schemes from the Swiss Alps to Japanese villages to discover the underlying principles that made them effective governing models. At the very onset of her work, she took care to explain that many of the commons institutions she
cataloged had, in her words, “survived droughts, floods, wars, pestilence, and major economic and political changes” over long sweeps of history, making it crystal clear that the commons has proven itself to be a formidable governing institution and worthy of reconsideration in light of the environmental, economic, and social challenges and opportunities facing humanity in an increasingly connected global world.
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Her research contradicted Hardin’s assertion that “all” commons were destined to ruin because of free riding and cast doubt on the long-held shibboleth among economists—dating back to Adam Smith—that each individual seeks only his or her own immediate self-interest in the market.
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What Ostrom found instead is that in managing common-pool
resources—pastures for grazing animals, fisheries, irrigation systems, forests, and the like—individuals, more often than not, put the community’s interest before self-interest and the long-term preservation of the common resource above each person’s immediate circumstances, even when their plight was dire. In each instance, the glue that kept the commons viable was the agreed-upon self-management protocols entered into voluntarily by the democratic participation of all the members. It was the continuous collaboration and feedback that created bonds of social trust, generation after generation. The social bonds kept the commons from ossifying and falling apart. In the worst of times, the “social capital” proved to be the central asset that allowed the commons to soldier on. Ostrom observed in her historical research of commons management that
thousands of opportunities have arisen in which large benefits could have been reaped by breaking the rules, while the expected sanctions were comparatively low. Stealing water during a dry season in the Spanish
huertas
might on occasion save an entire season’s crop from certain destruction. Avoiding spending day after day maintaining the Philippine irrigation systems might enable a farmer to earn needed income in other pursuits. Harvesting illegal timber in the Swiss or Japanese mountain Commons would yield a valuable product. Given the temptations involved, the high levels of conformance to the rules in all these cases have been remarkable.
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All the commons build in sanctions and punishments to enforce the agreed-upon management protocols. Yet it’s striking, says Ostrom, that in almost every case study, the fines imposed for violations of the norms are “surprisingly low” and “rarely are they more than a small fraction of the monetary value that could be obtained by breaking the rules.”
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The monitoring of each other’s activities is almost always by the members themselves. The intimacy of the monitoring makes any potential violation less likely, not only because “there is no place to hide” but also because of the sense of shame and guilt a would-be violator might feel in betraying the trust of his or her neighbors and friends.
The village of Törbel, Switzerland, with a population of 600, is one of the many examples cited by Ostrom of a successful commons that has endured for more than 800 years. Törbel farm families plant their own privately owned plots, producing vegetables, grains, fruits, and hay for feeding their cows during the winter. Local herdsmen pasture their cows in communally owned Alpine meadows in the summer months. The cows produce cheese, which is a vital part of the local economy.
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The Törbel Commons covenant agreement of 1483, which has been repeatedly updated and revised over the centuries, describes the governing protocols for maintaining the Alpine grazing meadows, the forests, wastelands, irrigation systems, and lanes and roads that connect private and communally owned properties.
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