Tragedy of the Commons

 

Little is known about Elinor Olstrom, beyond those that have studied public sector Economics or Welfare Economics. And perhaps if Mrs. Olstrom had her own way, she would have remained the obscure dutiful wife for her university professor husband Vincent Olstrom. A bespectacled, soft spoken political scientist, Mrs. Olstrom is now famous for having been the first woman to win the Nobel prize in Economics in 2009, for her work in helping understand the working of the “Commons”.

It has been said about Olstrom, that she only seriously got into academia as a “pastime” to support her husband who himself was a distinguished academic. Yet in her work to try and develop on previous studies done around how communities rationalize common resources, be they grazing grounds, watering holes or public amenities, she ended up achieving groundbreaking acclaim.

The concept around “Tragedy of the Commons” is simple enough. It seeks to find ways in which communities can work together to preserve amenities that allow for the deriving of common economic benefit, but which may be finite in nature.

Imagine a hypothetical community of ten goat keeping households with common grazing grounds. However, individual households can only keep a maximum of ten goats, otherwise exceeding this number would lead to depleting the grazing grounds in the long run, even though in the short term it would lead to the maximizing of profit for that individual household.

This is a common problem and although the example is about goats and grazing grounds, can be replicated across different scenarios including companies seeking to rationalize finite resources at the same time trying to meet the competing needs of those that have invested in it. In fact, anywhere were individual satisfaction competes with communal and corporate sustenance presents a variation of the “Tragedy of the Commons”. The problem is made tricky in that it is counter-intuitive to the profit seeking individual rationalization models of classic economic behavior.

Elinor Olstrom was able to demonstrate through a series of studies that when individual households are fully vested and sensitized on the impact of their individual actions on the sustainability of the commons, they are more likely to take deliberate steps to preserve the commons. In the goat keeping community example, it would mean that individual households can become self-regulating, as their primary objective would be about sustaining the communal grazing grounds, to the neglect of individual profit.

It also shows that when an organisations objectives are clearly spelt out and explained all the way to the least in an organisation, the chances of having a buy-in are increased and with that the need to sustain an organisation. It is a classic case of the balance between individual and corporate aspirations.

I recently came across a story of footballer Gerard Pique deciding to take a pay-cut so that his club (Barcelona) can have much needed financial breathing space. There are probably other examples that I do not know of, regarding similar magnanimous acts aimed and conserving the commons. What these examples offer is hope that amid seemingly unbridled consumer power, commodification and everything in between, there remains hope for the commons.

The same hope that can be extended to the biggest common that houses us all, the Earth..