Monday, September 19, 2005

Law, Custom and the Commons

Law, Custom, and the Commons
by Randy T. Simmons

Dr. Simmons heads the political science department of Utah State University and is a senior associate of PERC (Political Economy Research Center) in Bozeman, Montana.

"Free and unregulated access to scarce resources has long been recognized as a serious problem. Two thousand years ago Aristotle wrote: What belongs in common to the most people is accorded the least care: they take thought for their own things above all.

More recently, the biologist and human ecologist Garrett Hardin argued: Ruin is the destination toward which all men rush, each pursuing his own best interest in a society which believes in the freedom of the commons. Freedom in a commons brings ruin to all.

Fortunately, however, there are ways to avoid such ruin.

Hardin used an example of a pasture to illustrate how the commons can produce tragedy. As long as grazing on the commonly owned pasture is below carrying capacity, each herdsman may add another cow without harming any cows—they all still have enough to eat. But once carrying capacity is reached, adding the additional cow has negative consequences for all users of the common pasture.

The rational herdsman faced with adding the extra cow calculates his share of the benefits of an additional cow. It is 100 percent. He also calculates his share of the cost. It is 1/n herdsmen; that is, it is the cost divided by the number of herdsmen. So he adds another cow. And another . . . as do all the other herdsmen. Each may care for what is common but can do nothing about it, since one person exercising restraint only assures himself a smaller herd, not a stable, preserved commons.

Thus, the commons is a trap—an individual acting in his self-interest makes himself, along with everyone else, worse off in the long run. Yet acting in the group interest cannot stop the inevitable ruin.

If the commons inevitably leads to tragedy, humans should have killed themselves off thousands of years ago. Instead, people developed ways of making individuals responsible for their own actions.

Responsibility is created by moving people out of a system of open access and creating rights of access and use. Creating such use-rights, therefore, means that a resource is no longer everybody’s property. But use-rights are meaningless unless they are protected or enforced with some degree of legal or customary agreement. The most effective system of responsibility is private property rights because owners are responsible for their own costs and benefits. If you degrade your own property, you suffer the consequences because your wealth is reduced.

If, instead, you improve the property, your wealth is increased. You capture the benefits of your actions and pay the costs of them as well. The only exception is when you create costs to others by what you do on your own property, such as damming a stream or polluting the air. Legal institutions not only protect people’s rights to do what they want with their property but also protect the rights of others (third parties) to be free from harm caused by others. "

Complete document found at http://www.fee.org/vnews.php?nid=3690

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