Property Rights the Solution, Not the Problem

‘Dan’ at Migrations Blog (HERE): writes: ‘Tragedy of the Commons Still Has Meaning’

“ “The Tragedy of the Commons” is an influential article written by Garrett Hardin and first published in the journal Science in 1968. It’s one of those pivotal articles at the dawn of the environmental and conservation movements, which describes a dilemma in which multiple individuals acting independently in their own self-interest can ultimately destroy a shared limited resource even when it is clear that it is not in anyone’s long term interest for this to happen. [He?] challenged the philosophical assumption of Adam Smith that decisions reached individually will be the best decisions for an entire society and advocated “social arrangements” that produce responsibility. These arrangements might include some form of “mutually agreed upon coercion”, although perhaps “coercion and incentives” more accurately describes his intentions.

Today, the strongest criticisms of the environmentalist and conservationist political stances, advocating regulatory measures and incentives for directing human industry, are still being voiced by the intellectual descendants of Adam Smith. These critics – Libertarians – continue to take the position that anything benefiting individuals in a competitive economy is good, and any hindrance of those liberties is bad, even when scientists indicate that the opposite is the case.”

Comment
Adam Smith did not write that ‘decisions reached individually will be the best decisions for an entire society and advocated “social arrangements” that produce responsibility.’

This idea, along with the myth of ‘his invisible hand theory’ is an idea that was invented by some modern economists, and propagated since the 1950s by people who have not read Smith’s Wealth Of Nations (1776) or his earlier book, Moral Sentiments (1759).

Dan appears to be one such miss reader of Adam Smith, who gives over 60 examples in Books I, II, and III of Wealth Of Nations, of the malign consequences of individual decisions and their detrimental outcomes for the entire society. Indeed, Book IV of Wealth Of Nations is, what Smith called, a ‘very violent attack’ on the individual decisions of the legislature (and those who influenced its members) in the mercantile political economy, both in domestic and foreign trade, since their initial interventions of governments in the economy from the 16th century.

It is amazing how the notion, honestly presented by Dan I don’t doubt, that Adam Smith wrote anything remotely like
that which he has been credited with since the 1950s by theorists of general equilibrium and neoclassical economics, such as Milton Friedman, Paul Samuelson, most Noble prizewinners and almost all economics tutors in the US and UK. The simple remedy of reading all of Smith should correct the error, instead of relying on a few quotations.

The Tragedy of the Commons by Garrett Hardin was an excellent essay, spoiled by his main obsession in the essay about population growth. He set out to prove the not difficult idea that successive population increases on a fixed area would deplete the natural resources beyond a sustainable state. Diminishing returns (Ricardo) had established such a conclusion in 1817.

Hardin’s excellent point was that the over-exploitation of any natural resource – such as the ancient ‘commons’ of pre-commercial society – would inevitably exhaust the resource, particularly where the resource, like the old commons, was open to all to use.

The proper conclusion, not discussed by Hardin, was to introduce prices for access by removing its ‘free’ status. Each free user is not constrained to limit his use, but would be if property rights were introduced. Of course, this is anathema to most environmentalists, who regard commercial pricing as the cause of the problem when in fact it is the solution.

Thus, when Dan draws on the experience of open, free, access to the fish stocks of the world by whoever has access to fishing boats (which is just about everybody with access to the world’s oceans), he misses the main point of the tragedy of the commons – the free access encourages some – it doesn’t take many – boats to over-fish, which is what has been happening for decades among all fishing fleets of all sea-going nations.

The proper response to the tragedy of the fishing stocks – property rights – is articulated by ‘the intellectual descendants of Adam Smith’, though I suspect Dan’s selection of the people who fulfill his version of who these individuals are may not be the same people that Lost Legacy would identify.