Cooking the Books: This year’s Nobel Prize for Economics (2009)

The Cooking the Books column from the December 2009 issue of the Socialist Standard

Every year the Bank of Sweden awards a prize to some economist, often called the Nobel Prize for Economics even though it wasn’t established by the old merchant of death himself. It has in fact only been going since 1968. Usually the prize goes to some obscure economist for work on some obscure aspect of the market economy. Sometimes it goes to a big name such as the Keynesian Paul Samuelson (1970) or the Monetarist Milton Friedman (1976). Even the mad marketeer Baron von Hayek got one, in 1974.

Very occasionally it goes to someone who has done some interesting work, as when in 1998 it went to Amartya Sen who had shown that famines were caused by a collapse in legal access to food (via money or direct production) and not by any actual shortage of food or overpopulation. This year, too, it has gone to someone whose work sounds interesting – Elinor Ostrom whose 1990 book Governing the Commons: The Evolution of Institutions for Collective Action refuted the so-called “Tragedy of the Commons” parable that is often used to try to show that socialism wouldn’t work.

In 1968 an American biologist Garrett Hardin conceived of a parable to explain why, in his view, common ownership was no solution to the environmental crisis and why in fact it would only make matters worse. Called “The Tragedy of the Commons”, his parable went like this: assume a pasture to which all herdsmen have free access to graze their cattle; in these circumstances each herdsman would try to keep as many cattle as possible on the commons and, in the end, its carrying capacity would be exceeded, resulting in environmental degradation.

Hardin’s parable was completely unhistorical. Wherever commons have existed there also existed rules governing their use, sometimes in the form of traditions, sometimes in the form of arrangements for decision-making in common, which precluded such overgrazing and other threats to the long-term sustainability of the system.

One of the conclusions that governments drew from Hardin’s armchair theorising was that in existing cases where producers had rights of access to a “common-pool resource” the solution was either to privatise the resource or to subject the producers to outside control via quotas, fines and other restrictions. Ostrom took the trouble to study various common property arrangements some of which had lasted for centuries, including grazing pastures in Switzerland, forests in Japan, and irrigation systems in Spain and the Philippines.

According to The Times (13 October),

“Based on numerous studies of user-managed fish stocks, pastures, woods, lakes and groundwater basins, she asserts that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest”.

In other words, common ownership did not necessarily have to lead to resource depletion as predicted by Hardin and trumpeted by opponents of socialism. The cases Ostrom examined were not socialism as the common owners were private producers. In socialism the producers, the immediate users of the common resources, would not be trying to make an independent living for themselves but would be carrying out a particular function on behalf of the community in a social context where the aim of production would be to satisfy needs on a sustainable basis. But the rules they would draw up for the use of the grazing land, forests, fishing grounds and the like would be similar to those in the cases she studied.

Material World: Commons - Tragedy or Blessing? (2016)

The Material World Column from the April 2016 issue of the Socialist Standard

‘These forests are our life, but they are being taken from us. Outsiders have a financial view of the land. They see it as money. We see it as life. We have to win... for the future of our people.’ Nicholas Fredericks, Wapichan people, Guyana

‘These lands are our livelihoods. From these lands we were able to harvest resources. The land belonged to us, the water belonged to us. From this, we were able to live. When we had common land we felt free.’ Mansa Ram, from a community in India’s Udaipur where lands are under threat.

In 1968 Garrett Hardin notoriously argued that collectively owned resources or ‘commons’ will be over-used and destroyed because no individual has an interest in protecting them for the long term, while everyone has an incentive to grab what they can before the others wreck it. His pessimistic analysis was that collective ownership doesn’t work and the commons should be privatised or nationalised.

Elinor Ostrom, surprising winner in 2009  of Nobel Prize for economics, from her lifetime’s study of real-life commonly owned lands and resources, concluded that communities can and do successfully manage vital commonly owned resources. A recent report by various NGOs,Common Ground: Securing land rights and safeguarding the earth, summarised below, argues that Ostrom was right.

Indigenous peoples and local communities protect half the world's land, but formally own just 10 percent. Indigenous and community lands are lands used, managed or governed collectively, under community-based governance. This governance is often based on longstanding traditions defining, distributing and regulating rights to land, individually or collectively, and is usually referred to as customary or indigenous land tenure.

Community lands are owned and managed by a variety of women and men, usually farmers, pastoralists, hunter-gatherers, fisher-folk and others using resources such as forests, water bodies and pastures as a common resource. But they are not static. Every generation adjusts how they use the land to meet new needs and aspirations. Indigenous and community lands are as important to the future as to the past. The ‘Commons’ are lands that communities maintain as their shared property. As such, they can be considered the heart of indigenous and community lands.

Some indigenous peoples and local communities use all their land as shared property. Others do not, and allocate lands to individuals and families within the community; however, the community exercises jurisdiction over the entire lands, which are held and managed collectively. Lands for grazing and wildlife, forests and woodlands, mountaintops, sacred sites, lakes and rivers are usually retained as shared property. These lands are the most vulnerable to land grabbing.

A frequent charge against collective ownership of pastures and forests is that it locks people into poverty. In reality, community tenure – either through collective rights or individual rights under community jurisdiction – is often much more productive than statistics suggest. This is partly because national statistics typically only count cash sales or income that is taxed. Around half of rural house-holds in India derive part of their income from resources on common or state lands often officially categorised as wastelands. For example, millions of rural Indians live by harvesting wild bamboo. But statistics rarely capture this.

Up to 2.5 billion people depend on indigenous and community lands, which make up over 50 percent of the land on the planet; they legally own just one-fifth. The remaining five billion hectares remain unprotected and vulnerable to land grabs from more powerful entities like governments and corporations. Ninety percent of Africa’s rural land is undocumented, leaving rural communities vulnerable to land-grabbing. The lack of land rights is directly linked, the report says, to the continent’s high poverty rates, where almost half of the population lives on less than $1.25 a day. ‘African countries and their communities could effectively end land grabs, grow significantly more food across the region, and transform their development prospects if they can modernise the complex government procedures that govern land ownership and management,’ the World Bank reported. Modernisation, it said, required not the removal of rights from communities but the ‘documentation of communal lands... recognising customary land rights and regularising tenure rights on public land’.

Collectively-owned forests and pastures are better protected and cared for than government lands. A review of 130 local studies in fourteen countries found that community-run forests suffer less deforestation and store more carbon than other forests. Another international study found that state-protected areas are deforested on average four times faster than neighbouring community forests. This evidence contradicts decades of conservation thinking, which long held that forest communities were widely responsible for deforestation through shifting cultivation.

Research now shows that under most circumstances, forests swiftly regrow after cultivators move on. The evidence, says the report, also contradicts decades of conservation practice in which governments, often at the urging of environmental groups, have removed indigenous peoples and local communities from forests in the name of environmental protection. The scale of this dispossession – and the resulting hunger and poverty – remains undocumented, but has undoubtedly affected millions of women and men.

ALJO