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The Expanses of Sustainability and the Limits of Privatarianism

Published online by Cambridge University Press:  10 November 2009

John R. Ferguson
John R. Ferguson
Affiliation:
York University
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Abstract

A review of contributions to the resource conservation literature shows that sustainability problems are seen as caused by “common property.” This “tragedy of the commons” is understood as the result of the failure to assign fully property rights to individuals. The supporting assumptions and premises to these “privatarian” arguments are explicated and examined. After refuting the main premises, it is argued that the application of neoclassical assumptions and premises overlooks other legitimate forms of ownership as effective solutions to the tragedy of the commons. In revisiting other categories of ownership, the limits of privatarianism are identified and the prospects for solutions to sustainability problems are expanded.

Résumé

Une analyse de la litérature portant sur la conservation des ressources démontre que les problèmes de la préservation de la vie sont dûs aux « propriétés communes ». Cette « tragédie des communes » démontre l'échec des tentatives visant à attribuer de manière appropriée aux individus des droits de propriétés. Les hypothèses sous-jacentes ainsi que les a priori de ces arguments « privatistes » sont examinés et expliqués. Après avoir réfuté les a priori qui informent ces arguments, est défendue l'idée selon laquelle l'application des hypothèses néo-classiques ainsi que de ces a priori sous estime les autres formes légitimes de propriété comme solutions efficaces à la tragédie des propriétés communes. En réexaminant d'autres formes de possessions, les limites du « privatisme » sont identifiées et des pistes de solution aux problèmes du maintien de la vie sont mises de l'avant.

Type
Research Article
Information
Canadian Journal of Political Science/Revue canadienne de science politique , Volume 30 , Issue 2 , June 1997 , pp. 285 - 306
Copyright
Copyright © Canadian Political Science Association (l'Association canadienne de science politique) and/et la Société québécoise de science politique 1997

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References

1 This phrase comes from the title of Hardin's, Garrett now well-known essay “The Tragedy of the Commons: The Population Problem Has No Solution; It Requires a Fundamental Extension in Morality,” Science 162 (1968), 1243–48.Google Scholar

2 It should be noted that market failure does not always lead to inefficiency or environmental degradation. Nor does it always lead to inefficiency. For an examination of nine causes of market failure that lead to both inefficiency and environ-mental degradation see Panayotou, T., “The Economics of Environmental Degradation: Problems, Causes and Responses,” in Markandya, Anil and Richardson, Julie, eds., The Earthscan Reader in Environmental Economics (London: Earthscan, 1992Google Scholar).

3 Pigou, A. C., Economics of Welfare (4th ed.; New York: Macmillan, 1962 [1920]Google Scholar).

4 In fact, privatarian arguments imply that efficiency is the same thing as sustainability. There is also evidence in the environmental economics literature that maximization of value is not only a necessary but a sufficient condition for the achievement of sustainability. It is my view that this is mistaken. Accordingly, I have distinguished efficiency from sustainability. This is similar to the distinction made between efficiency and optimality. Efficiency is concerned only with the conservation of inputs and the maximization of outputs. Optimality is an ethical concept and is concerned with the ethically acceptable distribution of re-sources. There are many different types of optimality. Pareto optimality is the most famous, but there have been many modifications to this, including the Kaldor-Hicks criteria which slackens the Pareto criteria by allowing projects to proceed that increase aggregate value without necessarily compensating those made worse off. It is not yet the best way to resolve moral problems of optimality. Sustainability's ethical content is thought primarily to be located in the con-cern for resource allocation (especially to future generations). Sustainability is also beset with the same kinds of problems that have beset optimality. Some argue that sustainability is a superfluous concept that merely duplicates the ideas of welfare economics ( Beckerman, Wilfred, “‘Sustainable Development’: Is It a Useful Concept?” Environmental Values 3 [1994], 191–209CrossRefGoogle Scholar). Others argue that sustainability is another excuse for more (environmentally damaging) government intervention ( DiLorenzo, Thomas J., “The Mirage of Sustainable Development,” The Futurist, September/October 1993, 14–19Google Scholar). Still others are working to develop its capacity to provide ethical guidance concerning resource use and future generations. In any case, it is clear that efficiency is not the same thing as sustainability, given its ethical requirements.

5 Hereafter, “privatarian” approaches. Another way of characterizing privatarianism is as “the property rights theory of externalities” or the “property rights paradigm” (as in Alchian, A. A. and Demsetz, Harold, “The Property Rights Paradigm,” Journal of Economic History 33 [1973], 16–27CrossRefGoogle Scholar). However, there is one important difference: the privatarians argue that not just proper assignment of property rights is necessary for conservation to be effective, but that individual property rights are necessary. This obviates the recognition of a group as a sufficient locus of ownership.

6 DiLorenzo, “The Mirage of Sustainable Development,” 12.

7 Brundtland, Gro Harlem, Our Common Future (Oxford: Oxford University Press, 1987Google Scholar).

8 DiLorenzo, “The Mirage of Sustainable Development,” 14.

9 Ibid., 16.

10 Ibid.

11 An important condition of resource depletion is usually human demand for it. Without this demand, open access does not generally create environmental degradation. Demand is therefore a necessary condition for resource exploitation. This is not to say that demand is a necessary condition for resource degradation. There are some things for which the lack of demand is an environmental problem, this is why the success of recycling programs depends on the creation of markets for the materials recycled. In this case, demand is integral to resource conservation. Privatarians make much of this point by arguing that private property is the best means to facilitate the exclusivity criteria, making it possible to exploit demand in a way that conserves resources by profiting individuals.

12 Block, W. E., ed., Economics and the Environment: A Reconciliation (Vancouver: Fraser Institute, 1990), 284.Google Scholar

13 Hardin, “The Tragedy of the Commons.”

14 Ibid., 1273.

15 Ibid., 1274.

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24 Demsetz, “Towards a Theory of Property Rights,” 354.

25 Gordon, H. Scott, “The Economic Theory of a Common Property Resource: The Fishery,” in Dorfman, Robert and Dorfman, N. S., eds., Economics and the Environment: Selected Readings (2d ed.; New York: Norton, 1977), 131.Google Scholar

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27 Hardin, Garrett, Stalking the Wild Taboo (2d ed.; Los Altos, Calif.: William Kaufmann, 1978), 226.Google Scholar

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29 Quiggin, J., “Private and Common Property Rights in the Economics of the Environment,” Journal of Economic Issues 22 (1988), 1073CrossRefGoogle Scholar; and Swaney, J. A., “Common Property, Reciprocity, and Community,” Journal of Economic Issues 24 (1990), 451.CrossRefGoogle Scholar

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32 DiLorenzo, “The Mirage of Sustainable Development,” 15.

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34 Ibid., 7.

35 For example, Berkes, ed., Common Property Resources; Ostrom, Governing the Commons; and Stevenson, Common Property Economics.

36 For example, Berkes, ed., Common Property Resources; Ostrom, Governing the Commons; Stevenson, Common Property Economics; and Bromley, “Testing for Common versus Private Property,” 94.

37 Dales, “Land, Water, and Ownership,” 176.

38 Ibid.

39 Aristotle, , The Works of Aristotle, trans, by Ross, W. D. (Oxford: Oxford University Press, 1952Google Scholar), §1261 b3.

40 Gordon, “The Economic Theory of a Common Property Resource.”

41 Ibid., 139.

42 Ibid., 140.

43 Smith, R. J., “Private Solutions to Conservation Problems,” in Cowen, Tyler, ed., The Theory of Market Failure: A Critical Examination (Fairfax, Va.: George Mason University Press, 1988), 342–43.Google Scholar

44 S. N. Cheung, “The Fable of the Bees: An Economic Investigation,” in ibid., 303–04.

45 T. L. Anderson, “The Market Process and Environmental Amenities,” in Block, ed., Economics and the Environment, 140.

46 See, for example, Berkes, ed., Common Property Resources, 10.

47 Ibid., 14.

48 McCay and Acheson, eds., The Question of the Commons, 9.

49 E. P. Durrenberger and G. Palsson, “The Grass Roots and the State: Resource Management in Icelandic Fishing,” in ibid., 371.

50 Pigou, Economics of Welfare, 13.

51 Schlager, Edella and Ostrom, Elinor, “Property-Rights Regimes and Natural Resources: A Conceptual Analysis,” Land Economics 68 (1992), 254–60.CrossRefGoogle Scholar

52 Larson and Bromley, “Property Rights, Externalities, and Resource Degradation,” 235.

53 Gordon, “The Economic Theory of a Common Property Resource,” 141.

54 DiLorenzo, “The Mirage of Sustainable Development,” 14.

55 Larson and Bromley, “Property Rights, Externalities, and Resource Degradation”; Schlager and Ostrom, “Property-Rights Regimes and Natural Resources”; and Berkes, ed., Common Property Resources.

56 Ibid., 235; C. J. N. Gibbs and D. W. Bromley, “Institutional Arrangements for Management for Rural Resources: Common Property Regimes,” in Berkes, ed., Common Property Resources, 23. The superiority of many group-ownership arrangements over “scientific management approaches” are offered by many national governments (M. M. R. Freeman, “Graphs and Gaffs: A Cautionary Tale in the Common Property Resources Debate,” in ibid., 92). The Iriai peoplés traditional fishing systems in the coastal waters of Japan have been adapted to modern licensing for efficient, conservationist shared use of the fishery (Kenneth Ruddle, “Solving the Common Property Dilemma: Village Fisheries Rights in Japanese Coastal Waters,” in ibid., 168). The Nova Scotia and Maine Lobster fisheries have effectively and sustainably managed their resource using quite informal methods of restricting access such as tied buoy warnings on first offences and destroyed gear on second (R. A. Rogers, personal correspondence, 1994; and James M. Acheson, “Where Have All the Exploiters Gone: Co-Management of the Maine Lobster Industry,” in ibid., 199). The Zanjera irrigation system in the Philippines shows groups making cooperative use of water for irrigation with equity, consent and efficiency (M. A. Concepcion Cruz, “Water as Common Property: The Case of Irrigation Water Rights in the Philippines,” in ibid., 218). The Swiss Alps and the English Open Field system are two other examples of a very effective and structured system of common property where investment and enforcement are on a par with those which private property would predict (Stevenson, Common Property Economics, 91, 156).

57 Netting, “Of Mice and Meadows,” 1972.

58 Ciriacy-Wantrup and Bishop, “Common Property as a Concept in Natural Resource Policy.”

59 Larson and Bromley, “Property Rights, Externalities, and Resource Degradation,” 235. One recent example is the Chesapeake Bay oyster fishery. See Santopietro, G. D. and Shabman, L. A., “Can Privatization Be Inefficient: The Case of the Chesapeake Bay Oyster Fishery,” Journal of Economic Issues 26 (1992), 407–19.CrossRefGoogle Scholar

60 Clark, C. W., “The Economics of Over-Exploitation” Science 181 (1973), 630–34.CrossRefGoogle Scholar I am not aware of any theorist who specifically argues that property rights provide an absolute or unlimited right such as that to irretrievably destroy part of the earth. Even the most strident defenders of private property institutions feel justifiably constrained by the Lockean proviso of “enough and as good” (John Locke, 1698, II §33). Yet, even in the absence of severe demand that frequently drives environmental destruction, the increasing legitimacy of economic logic in our modem imaginations makes such trade-offs all the more “rational.” Resources can be destroyed (efficiently or inefficiently) regardless of de jure ownership arrangements. Experience has shown us repeatedly that de facto resource use (particularly when driven by the aspiration for global profit-maximization) often displays far less deference to Lockés moral limit. The present North American situation is one of daily environmental destruction, which results partly from incremental exploitation of free-ridership possibilities. However, much of it is done on the basis of myopic discount rates, where defection to another area of the earth is a clear option. For example, the history of aluminum production is a record of the extent to which narrow self-interested rationality can be combined with global possibilities to devastate resources permanently. Factories must be placed near large bauxite ore finds and high electricity generators, since these are the primary requirements of the process and bauxite is readily mined from the surface in tropical regions. Workers are hired and production begins. Third World politicians and governments are particularly attracted to the process since it creates jobs and an attractive influx of capital. However, once the bauxite is gone, the factory and the workers are laid off, the factory is closed and the land around it is left virtually uninhabitable. Produced in this way, aluminum production on any kind of property is unsustainable. The very term “transnational corporations” implies the ability and even the intention to move in and out depending on resource conditions and profitability expectations.

This raises the issue of other criteria for the proper use of a resource which is conspicuous by its absence in much of the neoclassical literature. The reason that other criteria (such as livelihood security, access, equity, conflict, wealth distribution, resource conservation) are not as much of a focal point goes back to Premise 2 (that efficiency is identical with sustainable use) and the fact that aggregate welfare is the normative goal of neoclassical economics. Distribution issues are secondary since it is argued that they tend to diminish private incentives to generate wealth. The neoclassicists have an impressively elegant system which they seek to uphold. As I have stated earlier, if it worked it is believed that a large amount of problems dealt with by welfare-oriented governments would resolve themselves. The achievement of efficiency is symbolic of so many other problematic issues coming together toward resolution. William of Occam would have been proud of the extent to which individual rationality can be said to explain so much in the neoclassical vision!

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63 Cheung, “The Structure of a Contract Theory”; Demsetz, “Towards a Theory of Property Rights”; Alchian and Demsetz, “The Property Rights Paradigm”; Anderson, T. L. and Hill, P. J., “From Free Grass to Fences: Transforming the Commons of the American West,” in Harding, Garrett and Baden, John A., eds., Managing the Commons (San Francisco: W. H. Freeman, 1977), 200–16Google Scholar; and Libecap, G. D., Locking Up the Range (Cambridge, Mass.: Ballinger, 1981Google Scholar).

64 Olson, Mancur, The Logic of Collective Action (Cambridge: Harvard University Press, 1965), 35.Google Scholar

65 Olson, Mancur, “The Failed Revolution in Iraq,” The Wall Street Journal, February 22, 1991.Google Scholar

66 Quiggin, “Private and Common Property Rights,” 1071.

67 What is needed is a fuller understanding of the origins of the individualistic economic rationality that allows private property institutions to function in ways lauded by neoclassical economic theory. The privatarian argument makes this ethos the mainspring for collective action toward more sustainable development. The question is whether this ethos is itself somehow inherently hostile to sustain-ability. While we undoubtedly must begin where we are in motivating change, we must at least leave open the question as to whether our efforts would be better spent finding a route to an entirely different sense of self and the environment.