Unlearning Economic Assumptions

Image description: Sheep grazing in a green pasture in Yorkshire. Photo by Illiya Vjestica on Unsplash

The tragedy of the commons is defined by Wikipedia as “the idea that when a resource is shared and can benefit the individual at a cost to the community, it is rational for the individual to overuse the resource, even though this collectively leads to the depletion of the resource for everyone.” This is a ubiquitous economic theory that most undergraduates are exposed to in their first economics course. If you subscribe to this way of thinking, the best course of action is to privatize shared resources as much as possible, or to police people’s behavior heavily (and at great shared cost). But what becomes possible if the tragedy of the commons is avoidable?

Elinor Ostrom was an academic who conducted rigorous research on management of common pool resources (CPRs). She looked at examples worldwide such as shared pastureland, irrigation water, and fisheries. Ostrom determined that in fact common people can and do work collaboratively to sustainably manage resources held in common over many centuries (she acknowledges some failures as well). Based on this work, she became the first woman to win the Nobel Prize for Economics in 2009.

I recently checked out Ostrom’s book, Governing the Commons, from the library to learn more. The book is dense and academic, but the parts that I absorbed were affirming. Yes, people can organize around values other than greed and self-interest and get better results!

In her conclusion, Ostrom observes that small-scale CPRs have advantages:

“In such situations, individuals repeatedly communicate and interact with one another in a localized physical setting. Thus, it is possible that they can learn whom to trust, what effects their actions will have on each other and on the CPR, and how to organize themselves to gain benefits and avoid harm. When individuals have lived in such situations for a substantial time and have developed shared norms and patterns of reciprocity, they possess social capital with which they can build institutional arrangements for resolving CPR dilemmas.”

This quote alludes to the importance of local organizing and building meaningful relationships to create a foundation of trust. This is of course a key building block for all types of ethical, mutually beneficial organizations.

Finding out about Elinor Ostrom’s work is a balm to me. We all need to continue to popularize people and research that challenge economic myths that underpin individualism and capitalism. It can be difficult to reconsider and reject things we were taught as gospel in college. If we can set aside brainwashing about the inevitability of competition and Social Darwinism, there is more space for innovation that centers collective well-being. I’m committed to continuing to reprogram my own beliefs toward reviving democracy and true prosperity for everyone.