Understanding the Commons
- What is the Commons?
- Key Functions of the Commons
- The Commons, the Market and the State
- Why the Commons matter now
- Principles of Commons management
- How much is it worth?
WHAT IS THE COMMONS?
By the law of nature these things are common to mankind — the air, running water, the sea, and consequently the shore of the sea.
— Institutes of Justinian (535 A.D.)
In this report we use the terms commons, common assets, common property and common wealth. They all refer to the same thing in slightly different ways.
Commons is the generic term. It embraces all the creations of nature and society that we inherit jointly and freely, and hold in trust for future generations.
Common assets are those parts of the commons that have a value in the market. Radio airwaves are a common asset, as are timber and minerals on public lands. So, increasingly, are air and water.
Common property refers to a class of human-made rights that lies somewhere between private property and state property. Examples include conservation easements held by land trusts, Alaskans’ right to dividends from the Alaska Permanent Fund, and everyone’s right to waterfront access.
Common wealth refers to the monetary and non-monetary value of the commons in supporting life and well-being. Like stockholders’ equity in a corporation, it may increase or decrease from year to year depending on how well the commons is managed.
The commons itself is as old as the earth, and the concept of the commons goes back many hundreds of years.
The Romans distinguished between three types of property: res privatae, res publicae and res communes. The first consisted of things capable of being possessed by an individual or family. The second consisted of things built and set aside for public use by the state, such as public buildings and roads. The third consisted of natural things used by all, such as air, water and wild animals.
In the United Kingdom during the Middle Ages, the commons were shared lands used by villagers for foraging, hunting, planting crops and gathering wood. In 1215, the Magna Carta established forests and fisheries as res communes, resources available to all. (Prior to the Magna Carta, the king could grant or sell exclusive usage rights.)
In America, four early states — Massachusetts, Pennsylvania, Virginia and Kentucky — called themselves ‘commonwealths.’ Several states declared in their constitutions that natural resources belong to the people and that government acts as the people’s trustee.
The most useful way to understand the commons today is as the sum of all we inherit together and should pass on, undiminished, to our heirs.
In this way of viewing things, the economy is divided between the market and the commons. The market encompasses private things (which we mostly manage for short-term monetary gain), while the commons comprises shared things (which we manage, or should manage, for shared long-term life enhancement).
The boundaries between the market and the commons shift over time. Redefining those boundaries is a task each generation undertakes anew.
Ultimate waste sink
Knowledge bank and seedbed
Pennsylvania's public natural resources are the common property of all the people, including generations yet to come. As trustee of these resources, the Commonwealth shall conserve and maintain them for the benefit of all the people.
Conventional thinking divides the world between the market and the state. The market is responsible for productivity, while the state is responsible for control.
In reality, the economy has another sector that’s as valuable as the market and its necessary complement as well. This sector is the commons.
The commons precedes and surrounds the market, is the source of most that enters it and the sink for all that leaves.
At one time the commons was vastly larger than the market. Today, however, the commons is in grave danger because the market relentlessly attacks it.
The market assault comes from two sides. With one hand, the market takes valuable stuff from the commons and privatizes it. Historians have called this ‘enclosure.’ With its other hand, the market dumps wastes and side-effects into the commons and says, ‘It’s your problem.’ Economists call this ‘externalizing.’
Much that is called ‘growth’ today is actually a form of cannibalization in which the market diminishes the commons that ultimately sustains it.
The state’s role is to nurture both the commons and the market, and to maintain a healthy balance between them. This balancing role is essential to prevent humanity from devouring its own nest. Unfortunately, in recent years, the state has abandoned a balancing role and become a single-minded champion of the market
The state’s role is to nurture both the commons and the market, and to maintain a healthy balance between them.
Our old Manifest Destiny was to carve up the commons. Our new task is to rebuild it.
Both the idea and the reality of the commons have been declining since the 18th century. Why now, at the beginning of the 21st century, should we revive them?
The simple answer is that we have to.
Despite the many benefits it brings, the market is like a runaway steam engine. It has no internal governor to tell it when to stop depleting the commons that sustains it.
To put this another way, we’ve been living off common capital and we have to stop.
In the beginning, America was a vast commons. The original inhabitants lived off the commons and shared it with other species. They took what they needed and left the rest alone.
Then new settlers came. They filled the continent with cities, highways and shopping malls — more stuff than the earth had ever seen. They built a great multi-cultural nation. But as they did so, they turned forests into plywood, wetlands into parking lots, the atmosphere into a dump.
If our old Manifest Destiny was to carve up the commons, our new task is to rebuild it. We must do this to protect the planet, enhance our quality of life, reduce inequality and leave a better world for our children.
The fundamental rules for commons management are similar to those for private trusts.
Garrett Hardin’s 1968 essay, The Tragedy of the Commons, led many people to think that all commons are self-destructive. But Hardin’s essay was misleading.
Hardin assumed there’s only one kind of commons, the unfenced pasture or waste dump with no management system. In such a situation, overuse can lead to destruction.
What Hardin overlooked is that there are many kinds of commons and many ways to run them. For example, you can have a fenced commons with a gate-keeper, or fishing limits with licenses, or a cultural commons with infinite possibilities. There’s no tragedy inherent in these and many other commons. (See page 27 for a sampling of successful American commons.)
Still, the proper way to manage a commons isn’t always obvious. So let’s explore some basic principles, beginning with a look at standard business management.
There are two sets of rules for managing private assets. One applies to corporations, the other to trusts such as pension funds, charitable foundations and family estates.
The goal of corporate rules is to maximize short-term return to capital. The goal of trust rules is to preserve assets for the long term and assure that beneficiaries receive their due. It’s these latter rules that merit attention here.
Over centuries, several principles of trust management have evolved. These include:
• Managers have a fiduciary responsibility to beneficiaries. If a manager fails this obligation, s/he can be removed and penalized.
• Managers must preserve the principal. It’s okay to spend income, but don’t invade the corpus.
• Managers must assure transparency. Information about money flows should be readily available to beneficiaries.
A university endowment is a private trust that is managed for long-term preservation.
The precautionary principle’s fundamental idea is that we prevent problems rather than clean them up afterward.
— Carolyn Raffensperger
As with private trusts, the goal of commons management is to preserve assets and share benefits. Hence, the basic principles of commons management are similar to those of private trusts.
Commons managers must, first and foremost, protect shared assets for the long term. They must also assure that the benefits flowing from the assets are widely shared.
Beyond these basic principles, specific rules for commons management vary from one commons to another. Broadly speaking, they depend on the level of use society wishes to allow or encourage.
If a commons needs to be off limits to all but the most non-invasive use — a wilderness area, for example — the guiding rule is, ‘No trespassing.’
If a commons has no inherent limits on use — like the Internet or the cultural commons — the guiding rule is, ‘The more the merrier.’ Use should be as free as possible, and management’s main job should be to minimize private toll booths.
If a commons can be used up to, but not beyond, some physical threshold — fisheries, aquifers and the atmosphere are examples — management’s job is to set and enforce sustainable use limits. In economic terms, its challenge is to live off income without diminishing capital.
In managing physically limited commons, it’s often desirable to cap total use and charge users a fee. Such caps and prices assure preservation, let markets sort out competing uses, and generate revenue for social and environmental needs.
Setting a total usage cap can be controversial. If the physical threshold is uncertain, a critical question is, “Which side should we err on?” Under the precautionary principle, if the potential harm from overuse is substantial (e.g. the polar ice caps could melt), the cap should be set with safety as the guide.
The process of protecting and sustaining a commons involves several steps. The asset must first be identified and given a legal and/or institutional structure. In some cases, usage caps and new kinds of property rights may be necessary. It may also be necessary to appoint trustees and acquire pre-existing property rights.
Once a commons is protected and and given a proper management regime, markets can come into play.
The assets we share are worth more than the assets we own privately.
It’s impossible to give an exact answer. Many of our shared inheritances are simply beyond pricing. Others are potentially quantifiable, but there’s no current market for them.
Nevertheless, based on numerous studies, it’s possible to get an order of magnitude. It turns out that the assets we share are worth trillions of dollars — more in fact than the assets we own privately.
Which raises an obvious question: why is so much attention paid to the management of private wealth, and so little to the management of common wealth?
One answer is that it’s easier to study things that can be measured precisely. Another is that we have a direct personal interest in private wealth. But the main reason is that economists don’t think the commons is important. That belief must change.
THE VALUE OF SKY
The sky does a lot of valuable things for us. It shields us from asteroids and ultra-violet rays, regulates the earth’s temperature, replenishes our fresh water and delivers oxygen to our lungs and machines. Such services are worth a lot of money.
Exactly how much is, of course, impossible to say. And it’s important to distinguish between the sky’s intrinsic value, which is truly beyond knowing, and its exchange value, which is what markets understand.
In our calculations we use the estimated exchange value of just one vital sky service, carbon dioxide absorption. This represents real income that could be earned from the sale of carbon emission permits.
According to recent government studies, this could range up to $400 billion annually, depending on many variables. This means the value of the sky as an income producing asset easily exceeds $1 trillion.
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