Background
The “tragedy of the commons” is an economic theory that describes the phenomenon where individuals, acting independently and rationally according to each one’s self-interest, collectively deplete a shared resource, even when it is clear that it is not in anyone’s long-term interest for this to happen.
Historical Context
The term “tragedy of the commons” was popularized by the ecologist Garrett Hardin in his 1968 paper published in the journal Science. Hardin outlined how individuals acting in their immediate self-interest could ultimately ruin a resource that is accessible to everyone. Historically, this concept can be paralleled in 19th-century debates over the use of common lands in Britain.
Definitions and Concepts
Tragedy of the Commons (Toc): The phenomenon where shared resources are over-utilized due to the self-interest of individuals, which leads to the depletion or degradation of the resource.
Common Access Resource: A natural or man-made resource whose access is unrestricted and available to all users.
Private Marginal Cost: The cost experienced by an individual or firm in the production or consumption of goods.
Social Marginal Benefit: The overall benefit experienced by society due to the consumption or production of one additional unit of a good.
Negative Externality: An adverse side effect borne by a third party due to an individual or firm’s activity.
Social Inefficiency: A condition where resources are not allocated in a way that maximizes the overall benefit to society.
Major Analytical Frameworks
Classical Economics
Classical economics traditionally focuses on the role of self-interest and market equilibrium but tends to underemphasize the impact of externalities and common access resources.
Neoclassical Economics
Neoclassical economics includes the concept of external costs and benefits (externalities) and suggests ways to internalize these externalities (e.g., Pigouvian taxes).
Keynesian Economics
While Keynesian economics is primarily concerned with demand-side management to maintain economic stability, it also considers government intervention to correct for market failures such as the tragedy of the commons.
Marxian Economics
Marxian economics critiques the capitalist system, arguing that the pursuit of individual profit could lead to social and environmental degradation, akin to the tragedy of the commons.
Institutional Economics
Institutional economics focuses on the importance of institutions and established policies in governing and managing the usage of common resources to prevent overutilization.
Behavioral Economics
Behavioral economics examines how cognitive biases and heuristics influence individuals’ utilization of common resources, suggesting that traditional models may not fully capture human behavior.
Post-Keynesian Economics
Post-Keynesians emphasize the role of government and collective action in managing resources efficiently, acknowledging that laissez-faire approaches could lead to resource depletion.
Austrian Economics
Austrian economics values decentralized decision-making but also warns that lack of property rights can lead to resource overuse, advocating for clear property rights as a solution.
Development Economics
Development economics deals with the sustainable management of resources, especially in developing countries, acknowledging the importance of viable communities and legal structures.
Monetarism
Though primarily focused on monetary policy, monetarism also touches upon the need for proper policy frameworks to address negative externalities such as those seen in the tragedy of the commons.
Comparative Analysis
The tragedy of the commons is best viewed through comparative lenses. Different economic schools have various interpretations and solutions, ranging from government intervention and policy frameworks to achievable behavioral strategies and property rights assignments. Understanding these nuances allows policymakers to craft more effective solutions.
Case Studies
- The depletion of fishing stocks in the North Atlantic due to overfishing.
- The degradation of public parks due to overuse and insufficient funding.
- The global challenge of carbon emissions leading to climate change due to collective inaction.
Suggested Books for Further Studies
- “The Tragedy of the Commons” by Garrett Hardin
- “Governing the Commons” by Elinor Ostrom
- “Collapse: How Societies Choose to Fail or Succeed” by Jared Diamond
Related Terms with Definitions
- Externality: A cost or benefit to a third party who did not choose to incur that cost or benefit.
- Public Goods: Goods that are non-excludable and non-rivalrous.
- Private Goods: Goods that are both excludable and rivalrous.
- Sustainable Development: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.
- Free Rider Problem: A situation where individuals consume more than their fair share of a resource, or shoulder less than a fair share of the costs of its production, due to its non
