OSTROM SHOWS US HOW TO SAVE THE COMMONS RACHEL HART
The climate crisis is upon us. We are becoming accustomed to reports of rising sea levels, wildfires across the globe and the impact of extreme weather events on our lives. Looking forward to the future, it seems bleak for the environment. This sentiment has been compounded by the relative lack of promised action at COP26 in Glasgow this month.
How have we got here? There are many explanations. The most compelling argument is that the current institutional interaction of the market and state has compelled the individual to consume until said consumption has dire effects, and incentivised the firm to produce irrespective as to its climate impact. The use of fossil fuels and the fossil fuel market exemplifies this. That is to say: unchecked capitalism and the way it is embedded into power structures has created this climate crisis. Solving the climate crisis cannot be done within the same system that created this existential threat. I first address why capitalism cannot solve this problem, and then move to show how Ostrom’s framework of the Commons provides an eco-socialist alternative to our current institutional set up.
Firstly, it is important to establish that capitalism is not exclusively a malign force. Markets bring about socially optimal coordination between individuals on the basis of price signals and private property. The monumental rise in living standards since the 19th century, the economic liberation of women and the internet age are largely all of its creation. (Caveats apply, of course). We can be grateful and in awe of these outcomes while also critical of its weaknesses. As we enter the 21st century, it is extremely clear that a major weakness of this
economic system is that capitalism has never centred the environment. How could it? Profit maximisation allows no space for long-termism. Especially with the rise of Friedman's approach to shareholder value - such that the ‘best’ way to run a firm is to always maximise shareholder value - a long term approach to anything external to the market is a profound challenge.
In order to attempt to respond to this challenge, traditional economic modelling refers to things that cannot be captured by a price as ‘externalities’. However as externalities cannot be modelled in terms of price, they are rarely (if ever) centred in modelling. Considering the environment as an ‘externality’ necessarily makes it of second consideration to profit maximisation. Hence we return to our familiar conclusion that within capitalist states there is far greater incentive to destroy the environment than there is to protect it. Taking lead from Elinor Ostrom and her work on the Commons in this matter helps us to make a start recentring the balance of power between capitalism and the world in which we live.
In 2009, Elinor Ostrom became the first woman to win a Nobel Prize in economics. This award was given to her on the basis of her work on the Commons. Her work was in response to the theory of the ‘Tragedy of the Commons’ proposed by ecologist Garrett Hardin. Hardin’s proposition was that the market (in theory) brings about socially optimal coordination between individuals on the basis of price signals and private property. However, these kinds of mechanisms don’t typically work in the global commons and common pool resources in general, because people don’t own these resources.
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