Externalities, the Tragedy of the Commons, vs. Resilience and Sustainability

Submitted by KarlSun, 11/20/2011 - 12:16pm

The ancient Greeks recognized that the combined choices of multiple citizens led to unsustainable outcomes for the entire community.  These observations have been termed the Tragedy of the Commons.  In ancient times common land was set aside for the grazing of cattle.  But each individual, seeking to maximize his own profit, grazed as many sheep as he could on the common property.  Overgrazing destroyed the field so that it was no longer useful for any grazing. In the long term, choices that seemed good for the individual harmed the greater community, which in turn, harmed the individual. 

Modern economists term the more general form of this problem “externalities.”  Externalities are private choices that affect the greater community.  Externalities include pollution, resource depletion, and risk. Activists sometimes call externalities “privatized profit with socialized risks.” Activists have publicized this recognition with the phrase, “We all live downstream.” 

We must recognize that all of our economic choices affect others.  Some affect others positively.  Keeping beehives improves your neighbors’ crops.  Many affect others negatively.  For our economy to be sustainable and resilient our combined choices must eliminate all large scale long term negative externalities.  Otherwise we will all face together the negative impacts of our combined choices, the Tragedy of the Commons. 

The transition movement is motivated primarily by the recognition of three forms of externalities, climate change, peak oil, and debt plus financial risk accumulation.

Climate change has been the most discussed example of privatized profit with socialized risk.  Each individual company can maximize its profits by dumping its waste carbon into the atmosphere.  But, society as a whole must pay the costs of the dealing with the consequences of altered atmosphere.  The Kyoto Protocols attempts use conservative economic models to address this problem.  Carbon Trading effectively privatizes the privilege to emit carbon into the atmosphere. 

Peak Oil is a very real but less evident example of the Tragedy of the Commons.  Oil is a non-renewable resource.  Much like the ancient grazing fields, one generation reaps the benefits of using the resource and the next generation is left without.  The parents’ generation profits at the expense of their decedents. 

Debt accumulation constitutes a similar problem.  Our current economic system requires the expansion of debt.  Debt can expand so long as the economy grows.  But many environmental and social limits exist to constant expansion.  When those limits are reached the system founded in debt naturally becomes unstable and implodes.  Major examples include the crash of 1929 and the crash of 2008. Minor examples include commodity bubbles and resource wars. 

Even as the Transition movement is motivated primarily by three forms of the Tragedy of the Commons many other examples exist: pollution, overfishing, depletion of natural aquifers, mine runoff, etc. 

Resilience and sustainability demand that we must consider the externalities, the side effects, of our actions.  Do we deplete resources faster than nature can replenish them?  Do we contaminate air, water, or land faster than natural systems can clean them up again?  Do we break our tools or systems faster than they can be repaired and replaced?  Do we get short term personal gains by creating large scale or long term problems?  In traditional spiritual language, have we made decisions that will be good for the seventh generation?  Have done unto others as we would have done unto ourselves?     

The challenge of the transition movement, the challenge we currently face as a species, is to recognize the externalities of our choices. We must achieve sustainability by minimizing all our negative externalities.  We must no longer promote an economic system that allows one person or corporation to profit by passing the risks and costs to others.   

 

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