Institutions for Assuring Our Common Future

Abstract

"There has been a rich interplay between economic theory and the interpretation of institutions to manage resources held in common. Economic models readily show how, in the absence of common property institutions, the individualist behavior associated with private property and markets leads to the inefficient use of resources held in common. Anthropologists, political scientists, and sociologists are well aware that market failure, or Garrett Hardin's 'Tragedy of the Commons,' does not occur to the extent social norms for the use of the commons guide individual behavior. The very existence of institutions for managing the commons is also readily explained by economic reasoning. If resources are being used inefficiently due to inadequate institutions, all can be made better off by adopting better institutions. Similarly, the empirical work addressing common property has expanded the range of understanding in economics of the diverse and innovative ways societies organize to manage commons.

"The richness of the feedbacks between economic theory and the interpretation of commons institutions by other social scientists has been seriously limited, however, because economists have misframed the future. Economic theory admits many possible efficient allocations of resources depending upon how property rights are assigned. In practice, however, even economic theorists have derived simply one efficient allocation, the one associated with the current distribution of property rights. With respect to the use of resources over time, economists have implicitly assumed that the current generation never reconsiders the rights of future generations to resources. The term 'rights' itself, of course, is burdened with cultural and operational significance. Thus, in more general terms, the issue is that economists have not elaborated their theory with respect to changes in rights, social obligations, or other manifestations of caring for others. Anthropologists and sociologists, meanwhile, have observed behavior among and recounted explanations given by traditional and modern peoples which clearly imply current generations have obligations to and other means of caring for future generations. Political scientists studying modern environmental politics observe the same phenomena. Commons institutions exist and are modified both to manage resources efficiently for the current generation and to fulfill obligations to future generations. And yet economic theory as commonly elaborated and practiced has only addressed the former. This paper will stress economic efficiency, intergenerational equity, and institutions for managing common interests over generations, but the theoretical and institutional implications for intergroup equity or any other social objective are analogous. In this sense, this essay parallels and complements much of the thinking of Daniel Bromley (1989, 1990)."