One of the great hopes for environmentally clean energy to reduce the impact of climate change is of course wind power. One of the places where, through as combination of geography, technology and economy, you would have thought wind power had a good chance of proving itself is the American Midwest. Where, according to a paper just published in the Journal of Geophysical Research, wind speeds are have been falling for decades. Because of climate change.
Never let it be said that Mother Nature doesn't have a sense of humour.
Source: Pryor, S.C., R.J. Barthelmie, D.T. Young, E. S. Takle, R. W. Arritt, D. Flory, W. J. Gutowski, A. Nunes, and J. Roads (2009), Wind speed trends over the contiguous USA, J. Geophys. Res., doi:10.1029/2008JD011416, in press.
Saturday, 13 June 2009
Wednesday, 3 June 2009
China shakes the road
China has certainly bought into consumerism in a big and perhaps irreversible way. General Motors has sold off now its Hummer division to a Chinese buyer, the Sichuan Tengzhong Heavy Industrial Machinery Company. Tengzhong’s CEO is quoted int eh New York Times as saying that:
‘The Hummer brand is synonymous with adventure, freedom and exhilaration,
and we plan to continue that heritage’.
Plainly he hasn't heard of peak oil.
One might take issue with this interpretation of such ‘a symbol of gas-guzzling, road-hogging American excess’ (as the FT's correspondents put it), but it is hard to avoid also seeing it as yet another symptom of China’s growing environmental impact still farther. And contrary to China’s stated defence of its unwillingness to impose carbon emission limits on itself, this is hardly the kind of development that a poor country needs to create a decent standard of living for its people.
Friday, 15 May 2009
Some market failures cannot be corrected
Currently reading Nicholas Stern’s Blueprint for a Safer Planet, and I find – as I usually do when reading authors for whom the market is some kind of shibboleth – that he really doesn’t understand how secondary the market is to strictly political decisions – or the absence of decisions – about how we want our economy to work.
Markets are rather like games: how well they work and what their consequences are depend very much on how you set up the rules and referee individual games. Without that there is no game, so to appeal to ‘the game’ as a solution to problems with the game itself makes very little sense. In the case of markets, to imagine that ‘the market’ can solve social, environmental or even economic problems on its own is irrational, to say the least.
In the present context, we know that markets will not, in their current incarnations, solve environmental problems of the size and kind we now face. Stern himself lists a very large number of market failures and rightly insists that markets need to be regulated in very deliberate ways if they are to contribute to environmental solutions. But what he does not seem to recognise three fundamental problems with the entire model.
- Firstly, many of these problems – asymmetric information, externalities, imbalances of economic power – are direct products of the market economy.
- Secondly, especially in markets with relatively few major producers (which is currently most markets of any global significance), these same ‘market failures’ are quite consciously wielded by all major players in the markets to ensure that markets do not in fact operate as their apologies imagine.
- Finally, markets have failure built into them in a more important and enduring sense. Whatever ‘correction’ they may be subjected to, unless that correction is perfect the market will continue blindly on, unable to envision or anticipate the next disastrous shortcoming. The only signal markets respond to, once all the regulations are in place, is price. Since price is inherently indifferent to anything but the current rules of the market, it cannot ‘see’ that there is something else wrong. So another round of intervention becomes necessary, which disrupts the markets again, and in fact will probably only be introduced because a new crisis is upon us. Which is exactly what, in a warming, degrading and ever more crowded world, we cannot afford to wait for.
In summary, ‘market failure’ is actively created by markets, is deliberately perpetuated by participants in that market, and is in fact an inescapable fact until markets can no longer operate solely in terms of prices – which is an unlikely state of affairs without very substantial political intervention.
Wednesday, 15 April 2009
Global solutions: effective, efficient, equitable?
A persistent theme in much writing about the coming decades is the need for global agreements that go a good deal further than the technical questions of environment management. Nicholas Stern (the author of the authoritative Stern Review on the economics of climate change) is typical of this line of thought:
I just don’t believe it will happen. In fact I suspect that the most we can realistically expect is that the actions we take will be moderately effective. Civilisation will probably not collapse. But as for efficiency and equity, what is it in our performance to date that would lead anyone to expect either? I doubt that, whatever the deals we collectively agree too, our collective response will be anything of the kind. There are far too many countervailing forces for that to happen.
The efficiency of any future global strategy is almost certainly out of the question. As everyone admits, we are faced with global problems. But we do not have global systems in place to deal with them. On the contrary, our systems are not only fragmented but also full of conflict and antipathy between individual nations. There is also a profound conflict of interest between the owners and senior management of global corporations - the other most powerful economic players on the planet - and the rest of us.
Of course, in some profound sense we are all in this together, and completely failure will be fatal for all of us. But between here and complete failure there are many decisions to be made, each of which will benefit some and burden others. Reluctant though I am to say it of my fellow human beings, those who control the decision-making at each of these branching points will, more often than not, make sure that the decision is made in their own favour. That is to say, they will be decisions which are efficient for them. In Stern’s very appropriate words, they will be ‘keeping costs down’. This may mean keeping down the costs for humanity at large, but it will almost certainly involve minimising the costs of those who control the decisions. If this means increasing the ‘costs’ – the poverty, the danger, the hunger, the misery, the disease, the fear, the agony – of everyone else, then that will be presented as the best – or at least the least bad – alternative. Those who do not control these decisions will take the consequences. Which, in many cases, will be fatal.
As for equity, we have never taken this seriously in the past and I believe it will be a lot harder to take seriously in future. In the current (relatively) stable and affluent industrial world, only a handful of the most wealthy nations ever fulfils its public commitments on aid. We announce and re-announce help for long term development and short-term disaster, and then fail to live up to either. Given that the sums involved – currently just 0.7% of GDP – are so small that we would not miss them if we paid them in full, what can we expect of decisions about disasters that are not yet even visible. And in a future world of successive environmental crises, mass migrations, resource wars and much else, there will be far less concern for, let alone commitment to, equity. On the contrary, most of humanity will not even show up on the radar screens of the key decision-makers.
Why then should we expect equity from any future arrangements to curb climate change, resource depletion, ecosystems degradation, population growth and other environmental threats? I suspect that the real fount of future ‘equity’ is likely to be what it has always been - the economic power that countries like China, India, Brazil and Russia are already starting to wield. In a world of declining fossil fuels, the European Union will not be allowed to forget that Gazprom alone controls a sixth of the world’s natural gas reserves. The United States Treasury has long since started to eye nervously China’s enormous dollar holdings - they currently hold nearly $2 trillion in US Treasury bonds, whose manipulation could easily hole the entire western economy. These are people we will treat ‘equitably’ – because they come to the negotiating table as equals, not to mention rivals. But the hundred-plus countries that are each smaller than all of the world’s hundred largest companies? If GlaxoSmithKline, Cisco Systems and Wells Fargo are unlikely to be granted a seat at the top table, what can lesser economic entities like Estonia, Ethiopia, Cameroon, Trinidad and Tobago, Ivory Coast, Panama, El Salvador, Tanzania, Bahrain, Jordan, Iceland, Bolivia, Ghana, Paraguay, Zambia, Uganda, Botswana, Honduras and the many other yet smaller countries expect?
But not even the effectiveness of any future ‘global deal’ can be taken for granted. There are after all degrees of effectiveness. I previously suggested three levels of outcome for our current position: a setback comparable to a world war; an impact on our civilisation as a whole comparable to the fall of the Roman empire; and a threat to civilisation as such, comparable to a new ice age. As I have previously said, I do not know which we are really facing, but for all the reasons that we should expect neither efficiency nor equity, we should expect the effectiveness of our actions to be limited too - perhaps to the point where the twenty-first century goes down as the worst in history.
More precisely, we should expect rich and powerful countries that are situated in relatively cool regions to do as little as possible until they have no choice but to act in their own interests. That is after all what they have always done about global problems and what they have done so far about our current environmental threats. Even if they have the foresight to recognise that disaster in developing countries now will mean disaster for them later, they will almost certainly do only what is needed to forestall the later disaster to themselves. This will almost certainly be much less than preventing or remedying the original disaster to developing countries, no doubt accompanied by a great deal of hand-wringing, protestations of good intentions and dishonest claims to be taking ‘appropriate’ action. The real focus being on deflecting the negative consequences for the rich and powerful. Again going by our experience of aid, we will even find opportunities to benefit from the suffering of developing countries. Again, we always have. And then millions and millions of people will die.
The upshot of all this is simple. Simply continually asserting that our approach must be efficient or equitable will result in neither. If we want our response to the many environmental threats we face in the twenty-first century to be efficient or equitable, we must take a very firm and explicit decision that it should be so. More than that, we must create global institutions that represent humanity at large – which is to say, people rather the most powerful corporations and nation states.
It is hard to imagine what such an institution would look like. After all, none of our existing systems operate at that level. But in any case, I can still think of no compelling reason to expect any such institutions to be created even if they could be easily described, and the chances of their coming into existence will recede faster and faster as the real problems caused by 3° and 4° temperature increases start to hit us, as the global economy starts to unravel in the face of accelerating oil and gas prices and whole populations start to move in the face of poverty, hunger, disease and war.
But we have to act together, to create a global deal – this is a problem that is global in both its origins and its impacts.Everyone seems to say as much, and as a statement of how we should approach the coming decades, it is impossible to contradict.
That global deal must be effective, in that it cuts back emissions on the scale required; it must be efficient, in keeping costs down; and it must be equitable in relation to abilities and responsibilities, taking into account both the origins and impact of climate change. (From Stern's A Blueprint for Safer Planet, p.4)
I just don’t believe it will happen. In fact I suspect that the most we can realistically expect is that the actions we take will be moderately effective. Civilisation will probably not collapse. But as for efficiency and equity, what is it in our performance to date that would lead anyone to expect either? I doubt that, whatever the deals we collectively agree too, our collective response will be anything of the kind. There are far too many countervailing forces for that to happen.
The efficiency of any future global strategy is almost certainly out of the question. As everyone admits, we are faced with global problems. But we do not have global systems in place to deal with them. On the contrary, our systems are not only fragmented but also full of conflict and antipathy between individual nations. There is also a profound conflict of interest between the owners and senior management of global corporations - the other most powerful economic players on the planet - and the rest of us.
Of course, in some profound sense we are all in this together, and completely failure will be fatal for all of us. But between here and complete failure there are many decisions to be made, each of which will benefit some and burden others. Reluctant though I am to say it of my fellow human beings, those who control the decision-making at each of these branching points will, more often than not, make sure that the decision is made in their own favour. That is to say, they will be decisions which are efficient for them. In Stern’s very appropriate words, they will be ‘keeping costs down’. This may mean keeping down the costs for humanity at large, but it will almost certainly involve minimising the costs of those who control the decisions. If this means increasing the ‘costs’ – the poverty, the danger, the hunger, the misery, the disease, the fear, the agony – of everyone else, then that will be presented as the best – or at least the least bad – alternative. Those who do not control these decisions will take the consequences. Which, in many cases, will be fatal.
As for equity, we have never taken this seriously in the past and I believe it will be a lot harder to take seriously in future. In the current (relatively) stable and affluent industrial world, only a handful of the most wealthy nations ever fulfils its public commitments on aid. We announce and re-announce help for long term development and short-term disaster, and then fail to live up to either. Given that the sums involved – currently just 0.7% of GDP – are so small that we would not miss them if we paid them in full, what can we expect of decisions about disasters that are not yet even visible. And in a future world of successive environmental crises, mass migrations, resource wars and much else, there will be far less concern for, let alone commitment to, equity. On the contrary, most of humanity will not even show up on the radar screens of the key decision-makers.
Why then should we expect equity from any future arrangements to curb climate change, resource depletion, ecosystems degradation, population growth and other environmental threats? I suspect that the real fount of future ‘equity’ is likely to be what it has always been - the economic power that countries like China, India, Brazil and Russia are already starting to wield. In a world of declining fossil fuels, the European Union will not be allowed to forget that Gazprom alone controls a sixth of the world’s natural gas reserves. The United States Treasury has long since started to eye nervously China’s enormous dollar holdings - they currently hold nearly $2 trillion in US Treasury bonds, whose manipulation could easily hole the entire western economy. These are people we will treat ‘equitably’ – because they come to the negotiating table as equals, not to mention rivals. But the hundred-plus countries that are each smaller than all of the world’s hundred largest companies? If GlaxoSmithKline, Cisco Systems and Wells Fargo are unlikely to be granted a seat at the top table, what can lesser economic entities like Estonia, Ethiopia, Cameroon, Trinidad and Tobago, Ivory Coast, Panama, El Salvador, Tanzania, Bahrain, Jordan, Iceland, Bolivia, Ghana, Paraguay, Zambia, Uganda, Botswana, Honduras and the many other yet smaller countries expect?
But not even the effectiveness of any future ‘global deal’ can be taken for granted. There are after all degrees of effectiveness. I previously suggested three levels of outcome for our current position: a setback comparable to a world war; an impact on our civilisation as a whole comparable to the fall of the Roman empire; and a threat to civilisation as such, comparable to a new ice age. As I have previously said, I do not know which we are really facing, but for all the reasons that we should expect neither efficiency nor equity, we should expect the effectiveness of our actions to be limited too - perhaps to the point where the twenty-first century goes down as the worst in history.
More precisely, we should expect rich and powerful countries that are situated in relatively cool regions to do as little as possible until they have no choice but to act in their own interests. That is after all what they have always done about global problems and what they have done so far about our current environmental threats. Even if they have the foresight to recognise that disaster in developing countries now will mean disaster for them later, they will almost certainly do only what is needed to forestall the later disaster to themselves. This will almost certainly be much less than preventing or remedying the original disaster to developing countries, no doubt accompanied by a great deal of hand-wringing, protestations of good intentions and dishonest claims to be taking ‘appropriate’ action. The real focus being on deflecting the negative consequences for the rich and powerful. Again going by our experience of aid, we will even find opportunities to benefit from the suffering of developing countries. Again, we always have. And then millions and millions of people will die.
The upshot of all this is simple. Simply continually asserting that our approach must be efficient or equitable will result in neither. If we want our response to the many environmental threats we face in the twenty-first century to be efficient or equitable, we must take a very firm and explicit decision that it should be so. More than that, we must create global institutions that represent humanity at large – which is to say, people rather the most powerful corporations and nation states.
It is hard to imagine what such an institution would look like. After all, none of our existing systems operate at that level. But in any case, I can still think of no compelling reason to expect any such institutions to be created even if they could be easily described, and the chances of their coming into existence will recede faster and faster as the real problems caused by 3° and 4° temperature increases start to hit us, as the global economy starts to unravel in the face of accelerating oil and gas prices and whole populations start to move in the face of poverty, hunger, disease and war.
Thursday, 9 April 2009
There's no money in saving the world
We continue to see the repercussions of relying on business to deliver our response to climate chaos, global warming and resource depletion. The last few days have thrown up these stories in the media:
- Canadian environmental groups on Wednesday accused Royal Dutch Shell, Europe’s biggest energy group, of reneging on its promise to reduce greenhouse gas emissions at its oil sands project in Alberta. (FT, 8/4/09)
- At least five big wind energy projects are in danger of being delayed or shelved owing to higher costs and a shortage of credit, the British Wind Energy Association said on Wednesday. (FT, 9/4/09)
- Japan is expected to restart the world’s biggest nuclear power plant shortly – nearly two years after it was damaged by an earthquake. The prolonged shutdown of the Kashiwazaki-Kariwa plant’s seven reactors knocked Tokyo Electric Power into the red and threatened Tokyo with electricity shortages during the hot summer months, when air-conditioner use pushes up demand. The facility accounts for 13 per cent of Tepco’s generating capacity and without it the company has been forced to rely on more expensive coal, oil and gas plants. (FT, 9/4/09)
- Several prominent energy companies have scaled back their commitment to renewables, including BP, Shell and Iberdrola. (FT, 9/4/09)
The fact is, a monkey will type Hamlet before profit-driven companies will create a credible and effective answer to our many, many environmental problems in the middle of a slump. (I was going to say that Hell will freeze over, but at least that is one outcome global warming protects us from.)
Wednesday, 1 April 2009
President Obama, the Climate President
So Barack Obama has flown over to the G20 Summit in London with 500 people and several identical helicopters, most of which are flying solely as decoys to potential assassins. To talk about climate change as a small (and probably completely perfunctory) part of the agenda of a conference that will involve just 4 and a bit hours of talks.
May be a clue there about a) exactly how much difference this will make, and b) what the cause of climate change is. Thank God the protestors are there: otherwise it would seem like a complete waste of time.
May be a clue there about a) exactly how much difference this will make, and b) what the cause of climate change is. Thank God the protestors are there: otherwise it would seem like a complete waste of time.
Tuesday, 31 March 2009
The tragedy of the commons: tosh
One of the most famous essays in the history of economic thought was not, at first glance, an economic essay at all. Garrett Hardin’s 1962 paper in Science, ‘The tragedy of the commons’, bestowed a name on the whole class of social phenomena in which many people are vying for a given resource (e.g., the common land on which they can all graze their cattle and sheep), but because there is no control over how much each one can use it, they all try to use it more and more, until eventually the resource collapses through overuse.
The standard interpretation of this paper is that, had someone owned the common land, those would not have happened. They would have husbanded their resources more thriftily, nurturing it so that it was not exhausted. In this way, converting the common land to private property would save the say. This is supposed to be a lesson for our various environmental conundrums: if only someone owned stuff, they'd take care of it properly and all our climate/resource/ecosystem problems would go away. Hurrah!
It is hard to say why this idea should have caught on. Certainly from an economic point of view it is not very plausible – especially in cases that impact our current environmental problems. Take the case of non-renewable resources such as oil or gas or mineral wealth. A country such as Saudi Arabia may wish to conserve its fields so that future generations may also benefit from them, but that is only a factor because the Saudi régime has responsibility for future generations. The same cannot be said for ExxonMobil, BP or Total. Their paramount interest is quite clear and usually (by environmental and social standards) very short term: profit-maximisation. If they leave the oil in the ground they will incur continuing costs (rent, interest, maintenance and operating costs) while being unable to extract a single penny from their investments. They also run the risk that their resources will be taken from them by future governments. It is even possible that future fears of carbon emissions could lead to oil being banned from vehicles, power stations and other uses for which emission control is difficult.
By and large, oil wells are costly and precarious investments. So what should be done about them? Unless there is a realistic expectation that future price spirals will raise prices high enough to justify the risks and the costs, the answer is surely to pump it out of the ground and sell it right now. From a capitalist perspective, there is after all no other point in conserving such resources. In the ground they are worth nothing, and no matter how carefully I husband them, oil will not grow again. The only question is when the right balance of risk, cost and price tells me to start pumping. Given that time is a factor in all three of these, the chances are that the correct answer will be ‘soon’. Or if not ‘soon’, then ‘right now’.
So there is little incentive for a capitalist corporation to conserve non-renewable resources, and if the ‘tragedy of the commons’ argument is deployed to ensure that such resources are properly managed from society’s point of view, it will almost certainly fail.
But renewable resources aren’t likely to fare much better, and for very similar reasons. It is true that a forest or a field of ripening wheat is a valuable resource made all the more valuable by the fact that, carefully conserved, it will generate a return indefinitely. If I over-exploit it – by clear-cutting jungle or exhausting soil by intensive monoculture cropping and massive inputs of artificial fertilisers – then I will eventually shrivel it up to the point where it ceases to be a valuable property. In that respect at least, privatising is seems to be at least a possible solution to the potential tragedy of the commons.
Unfortunately the situation is not quite so simple. As before it comes down to a balance of prices, costs and risks. What if the cost of the resource is extremely low? If, for example, it can be acquired from a friendly government for a very low price? For instance, until his government was understandably overthrown in March 2009, President Ravalomanana of Madagascar had an arrangement with the South Korean conglomerate Daewoo to lease 1.3 million hectares of farmland – an area a little less than half the size of Belgium - for nothing more than a somewhat nebulous promise concerning local employment. Rent? Nope. Guaranteed return? Nope. Or what if – as is often the case in developing countries - the local population is simply ousted from the land?
In such conditions, costs do not include a significant price for the land itself. In other circumstances, other combinations will lead to the same conclusion: that it does pay (commercially, if not for society as a whole) for a private owner to exploit a renewable resource to the point where its vitality is destroyed and it is left worthless. At that point the company moves on, to new land and rapid returns. And the people they leave behind, whose land they have destroyed? Who cares.
So again, if I hand over a non-renewable resource to private interests, will this help society avoid the tragedy of the commons? Probably not. Indeed, so great is the disparity in resources between agribusiness and individual commercial farmers that even if both took an equally predatory attitude to the land (which, in the history of farming, farmers have not always been reluctant to do ), the damage would be done far faster by the corporations.
Note also the one option this approach does not allow for: that all the people who share this common resource will simply get together and agree how it will be used. Which is odd, because that is exactly how the land – the very ‘commons’ from which Hardin starts out – was managed before the triumph of capitalism. Medieval and early modern rural communities used to agree on who could use the land and how much. They also used to rotate who farmed which land, so that everyone had a fair turn at the best land. This method for avoiding the tragedy of the commons continued in use until the local landlord decided they could make more for themselves if they threw the peasants and the small farmers off the land and replaced them with sheep or cash crops. This process, know to European history as ‘the Enclosures’ is notorious as one of the most brutal in our history.
In short, the tragedy of the commons was not solved by the introduction of private property rights to the common land – rather, it was caused by converting socially managed resources into private property.
Social alternatives to privatisation have been shown to work over and over again all around the world. Over and over again local populations have demonstrated that they are capable of managing local resources is highly productive yet sustainable ways, given only access to modern knowledge and small amounts of specialised support. And yet over and over again they have been ousted by local landlords and international businesses intent on seizing their land for their own selfish purposes. This pleases international economic bodies like the IMF, the World Trade Organisation and the many other bodies that cannot imagine a solution to the world’s problems that does not start from global markets. It also pleases national governments, whose all-important economic indicators are nicely bolstered by the increase in GDP and other pleasingly visible data. After all, non-market economic activity, however fundamental it may be to the real lives of real people, is not visible in the economic data, and so is obviously not real. The only people it does not please, in fact, are the families who are expelled from the land and end up in the slums of a Sao Paulo or a Mumbai, hundreds of miles form home and with zero prospect of sharing in any benefits from their land being stolen from them.
There have been many cases where local people have organised themselves to share resources in ways that are both economically and ecologically sound. They owe little to market rationality and less to the idea that the only solution to the ‘tragedy of the commons’ is for someone to own everything and for the rest of us to work for them.
So why does enthusiasm for Hardin’s paper – historically false and logically unconvincing even when it was written – persist to this day, to the point where it is routinely cited by environmental economists and enthusiasts for markets alike? Because, I suspect, it creates a pseudo-historical, pseudo-scientific justification for the status quo. Despite the fact that capitalism is so destructive to the environment, the correct answer, say both Hardin and economic orthodoxy, is more of the same. You cannot have too much property, too much competition, too much exploitation – otherwise people might start to ask not whether we should have more but whether we should have quite as much as we have now. And that would never do.
The standard interpretation of this paper is that, had someone owned the common land, those would not have happened. They would have husbanded their resources more thriftily, nurturing it so that it was not exhausted. In this way, converting the common land to private property would save the say. This is supposed to be a lesson for our various environmental conundrums: if only someone owned stuff, they'd take care of it properly and all our climate/resource/ecosystem problems would go away. Hurrah!
It is hard to say why this idea should have caught on. Certainly from an economic point of view it is not very plausible – especially in cases that impact our current environmental problems. Take the case of non-renewable resources such as oil or gas or mineral wealth. A country such as Saudi Arabia may wish to conserve its fields so that future generations may also benefit from them, but that is only a factor because the Saudi régime has responsibility for future generations. The same cannot be said for ExxonMobil, BP or Total. Their paramount interest is quite clear and usually (by environmental and social standards) very short term: profit-maximisation. If they leave the oil in the ground they will incur continuing costs (rent, interest, maintenance and operating costs) while being unable to extract a single penny from their investments. They also run the risk that their resources will be taken from them by future governments. It is even possible that future fears of carbon emissions could lead to oil being banned from vehicles, power stations and other uses for which emission control is difficult.
By and large, oil wells are costly and precarious investments. So what should be done about them? Unless there is a realistic expectation that future price spirals will raise prices high enough to justify the risks and the costs, the answer is surely to pump it out of the ground and sell it right now. From a capitalist perspective, there is after all no other point in conserving such resources. In the ground they are worth nothing, and no matter how carefully I husband them, oil will not grow again. The only question is when the right balance of risk, cost and price tells me to start pumping. Given that time is a factor in all three of these, the chances are that the correct answer will be ‘soon’. Or if not ‘soon’, then ‘right now’.
So there is little incentive for a capitalist corporation to conserve non-renewable resources, and if the ‘tragedy of the commons’ argument is deployed to ensure that such resources are properly managed from society’s point of view, it will almost certainly fail.
But renewable resources aren’t likely to fare much better, and for very similar reasons. It is true that a forest or a field of ripening wheat is a valuable resource made all the more valuable by the fact that, carefully conserved, it will generate a return indefinitely. If I over-exploit it – by clear-cutting jungle or exhausting soil by intensive monoculture cropping and massive inputs of artificial fertilisers – then I will eventually shrivel it up to the point where it ceases to be a valuable property. In that respect at least, privatising is seems to be at least a possible solution to the potential tragedy of the commons.
Unfortunately the situation is not quite so simple. As before it comes down to a balance of prices, costs and risks. What if the cost of the resource is extremely low? If, for example, it can be acquired from a friendly government for a very low price? For instance, until his government was understandably overthrown in March 2009, President Ravalomanana of Madagascar had an arrangement with the South Korean conglomerate Daewoo to lease 1.3 million hectares of farmland – an area a little less than half the size of Belgium - for nothing more than a somewhat nebulous promise concerning local employment. Rent? Nope. Guaranteed return? Nope. Or what if – as is often the case in developing countries - the local population is simply ousted from the land?
In such conditions, costs do not include a significant price for the land itself. In other circumstances, other combinations will lead to the same conclusion: that it does pay (commercially, if not for society as a whole) for a private owner to exploit a renewable resource to the point where its vitality is destroyed and it is left worthless. At that point the company moves on, to new land and rapid returns. And the people they leave behind, whose land they have destroyed? Who cares.
So again, if I hand over a non-renewable resource to private interests, will this help society avoid the tragedy of the commons? Probably not. Indeed, so great is the disparity in resources between agribusiness and individual commercial farmers that even if both took an equally predatory attitude to the land (which, in the history of farming, farmers have not always been reluctant to do ), the damage would be done far faster by the corporations.
Note also the one option this approach does not allow for: that all the people who share this common resource will simply get together and agree how it will be used. Which is odd, because that is exactly how the land – the very ‘commons’ from which Hardin starts out – was managed before the triumph of capitalism. Medieval and early modern rural communities used to agree on who could use the land and how much. They also used to rotate who farmed which land, so that everyone had a fair turn at the best land. This method for avoiding the tragedy of the commons continued in use until the local landlord decided they could make more for themselves if they threw the peasants and the small farmers off the land and replaced them with sheep or cash crops. This process, know to European history as ‘the Enclosures’ is notorious as one of the most brutal in our history.
In short, the tragedy of the commons was not solved by the introduction of private property rights to the common land – rather, it was caused by converting socially managed resources into private property.
Social alternatives to privatisation have been shown to work over and over again all around the world. Over and over again local populations have demonstrated that they are capable of managing local resources is highly productive yet sustainable ways, given only access to modern knowledge and small amounts of specialised support. And yet over and over again they have been ousted by local landlords and international businesses intent on seizing their land for their own selfish purposes. This pleases international economic bodies like the IMF, the World Trade Organisation and the many other bodies that cannot imagine a solution to the world’s problems that does not start from global markets. It also pleases national governments, whose all-important economic indicators are nicely bolstered by the increase in GDP and other pleasingly visible data. After all, non-market economic activity, however fundamental it may be to the real lives of real people, is not visible in the economic data, and so is obviously not real. The only people it does not please, in fact, are the families who are expelled from the land and end up in the slums of a Sao Paulo or a Mumbai, hundreds of miles form home and with zero prospect of sharing in any benefits from their land being stolen from them.
There have been many cases where local people have organised themselves to share resources in ways that are both economically and ecologically sound. They owe little to market rationality and less to the idea that the only solution to the ‘tragedy of the commons’ is for someone to own everything and for the rest of us to work for them.
So why does enthusiasm for Hardin’s paper – historically false and logically unconvincing even when it was written – persist to this day, to the point where it is routinely cited by environmental economists and enthusiasts for markets alike? Because, I suspect, it creates a pseudo-historical, pseudo-scientific justification for the status quo. Despite the fact that capitalism is so destructive to the environment, the correct answer, say both Hardin and economic orthodoxy, is more of the same. You cannot have too much property, too much competition, too much exploitation – otherwise people might start to ask not whether we should have more but whether we should have quite as much as we have now. And that would never do.
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