Governing the Commons
Arthur Warmoth, Ph.D.
Sonoma State University
The commons (1) includes all resources, goods, services, and assets that must be produced and/or consumed (used), at least in part, collectively. In other words, the commons includes all social system and ecological system assets essential to, or useful for, human wealth and well-being that cannot be produced and/or distributed to individuals operating in price auction markets. We find most aspects of the commons, ranging from the integrity of the environment to the social fabric of our communities, are in a state of crisis today. This is because we simply do not know how to think about the economics of these critical systems, including politics, health care, education, public safety, retirement security, employment security, energy, transportation, environmental quality, land use, affordable housing, and culture and the arts.
(1) The term "commons" was first popularized by Garret Hardin's article "The Tragedy of the Commons" (1968). In 1958, John Kenneth Galbraith observed that modern industrial societies are awash in private material goods and starved for public goods. It is remarkable how little has changed in half a century. In the 19th century Henry George (1879) argued that the wealth created by social organization per se should be taxed to fund social purposes.
There are two domains of the commons: the natural commons and the social commons. The natural commons includes air, water, earth, sunlight--all natural resources. It also includes all ecological and genetic processes, the basis of all life on earth. It includes all of the processes summarized in the Gaia metaphor. The social commons includes our cultural heritage. Jonathan Rowe's (2001) view of the commons includes our "languages and cultures, the stores of human knowledge, the informal support systems of community, the peace and quiet that we crave." It also includes our instinctive relationship with nature and our impulse for creative expression. And it includes public services such as public safety, education, transportation infrastructure, public health and health care access, and environmental protection.
The economics of the commons are fundamentally different from the economics of markets. Unfortunately, the economics of the commons does not include an elegant self-regulating mechanism comparable to the "invisible hand" of price auction markets that serves the economics of commerce so well. Our relationship to the commons is characterized by mechanisms that operate according to rhythms and orders of conceptual complexity that are different from those governing markets. In the long view of history, the commons has primarily been managed by the largely unconscious (or more accurately, embodied in iconic and narrative consciousness) hand of incrementally evolving tradition. Since the Renaissance, it has become increasingly the province of the conscious hand of politics, which is ideally guided, though often misguided, by reason. These political processes are widely recognized as vulnerable to whim and corruption. The founding fathers of the United States believed that they had succeeded in creating a new form of democratic political process that provided historically unparalleled accountability to the people. It embodied an innovative system of checks and balances that they believed would limit the negative impact of unbridled self-interest and provide a level of reflective deliberation that would generally permit wisdom and the long view of the public interest to prevail. While this system has served us reasonably well for the past two centuries, the last half century has seen the ascendance of economic power and the acceleration of rates of social change powered primarily by the information technology revolution. This increasing domination of politics by economic power has led an increasing bias in the direction of short term economic interests in our approach to issues related to the commons. In particular, it has led to an ideological emphasis on the reliance on markets as the solution to all economic and political problems. This in turn has tended to obfuscate our efforts to respond politically to the negative ecological side effects of industrial production and to directly address pressing issues of social equity and cultural pluralism. However, information technology also gives us the historically unprecedented ability to examine and interpret the fine structure of the commons in ways that could conceivably enhance our ability to make informed political decisions.
A Primer on the Economics of the Commons
One reason we need an economics of the commons is because the globalization of market economics has led to the monetization of all aspects of human existence. This is the culmination of a trend that has been developing since the Renaissance in which tradition as the primary mechanism for managing social relations and the human-environment interface has been increasingly replaced by science and technology, economic systems and organizations, and politics and law. Since accountants are everywhere--and hopefully in the wake of the recent Wall Street scandals are now being required to act with more integrity--we need to develop methods for tracking our wealth and well-being held in common, as well as the wealth that is held by individuals (and those individuals created by legal fiction called "corporations").
Historically, societies have managed the commons in three main ways:
The development of agriculture made the larger scale social organizations of cities and feudal societies possible. As scale of organization increased, the rule of law and evolution of strategic policy began to supplement tradition as the basis for social organization. Whereas traditional arrangements generally evolve on the basic of incremental innovations that are generally the result of conscious reflection, law and strategic policy are the result of conscious thought on a much more elaborate scale. These innovations are dependent on the level of ecological sophistication achieved by a given society. They generally take the requirements of ecological systems into account, although there have been major miscalculations, for example some of the world's major deserts were created by deforestation and overgrazing.
In modern industrial society, the management of the commons falls both to government and to voluntary associations (often organized as corporations). Governments and legal frameworks are created by political processes that were originally legitimized by the divine rights of feudal aristocracies. However, since the 17th and 18th centuries, political legitimacy has increasingly required some degree of democratic accountability to the citizens who make up a society. Along with the evolution of political democracy, groups of individuals have developed a diverse repertoire of voluntary self-organizing systems to manage common interests.
Governments have also created legal persons composed of many individuals called "corporations." These legal persons are expected to contribute to the well-being of society by producing goods and services with ever greater volume and efficiency. While the principal focus of corporations tends to be productivity for price auction markets, it should be borne in mind that the creation of corporations is legitimized as public policy because increasing productive capacity is recognized as a public good or social benefit. The fact that corporations are franchised to serve the common good suggests that they should be held accountable for their effectiveness in this regard. Our respect for the invisible hand of the market should not prevent us from holding corporations producing for the benefit of markets to avoid responsibility for the intended or unintended negative impact on the social and natural environment.
The three core public policy issues in the management of the economics of the commons today are:
The public sector invests in areas such as education, health, social services public safety, transportation infrastructure, housing, and environmental protection. All of these services are essential for the support of a healthy civil society, including healthy family relationships. Education, social services, and health care are especially critical for healthy families and positive social relationships within a community. The public is becoming increasingly aware of the need for public investment in our common interest in health care access and affordability.
Public policy should support, not discourage, progressive taxation and the taxation of accumulated assets, in order to recover for the public the component of economic growth that is created by collective social organization (This was the principle behind Henry George's "single tax," 1879). Furthermore, public policy needs to systematically track the return on public investments and to encourage channeling private investment into productive public and private uses.
Breakdown of public civility and community and family relationships has been the subject of much public handwringing by commentators and politicians for years. In California, the disintegration of civic society is rapidly becoming a serious political and economic problem as the state faces the largest budget deficits in its history as a consequence of the economic meltdown following the dot.com bubble and the criminal conspiracies of the "paper entrepreneurs" (Reich, 1983). Vital public services are threatened, including education, health care, public safety, transportation, and environmental protection, and we thus find ourselves loosing faith in our political leaders and in the political fabric of democracy itself. As a result our political problems are increasingly felt to be economic problems, and the second and third areas of the crisis of the commons begin to merge.
Economists generally recognize two functions of money: medium of exchange & store of value. Both of these functions are of substantial social value, which is why we have tolerated the substantial design flaws in the current systems for so long. The most basic function of money is to serve as a medium of exchange. According to Bernard Lietaer (2001), "Money is an agreement, within a community, to use something as a means of payment" (p. 41). (It should be noted that the "something" needs to be countable.) This definition describes the function of money in all times and places. Its value comes not from the fact that it is a thing, but from the fact that it is a social agreement to use some thing as a measure of value.
All contemporary national currencies are bank debt-created fiat money (Lietaer, 2001, pp. 32ff). Without going into the technical details (see Lietaer, op, cit., and Lietaer & Warmoth, 1999), this design model inevitably leads to the concentration of wealth and short termand therefore unsustainableeconomic planning. However, these problems are not insoluble. While virtually all contemporary national currencies are designed according to this model, there are many alternative, or complementary, forms of monetary design, some of which are succeeding in the real world; and they are solving these problems. For example, according to Lietaer there are more than 2,500 community currency systems currently in operation. (For a more complete discussion the design of money as a system, see Lietaer, 2001, Thomas Greco, 1994, 2001, Olaf Egeberg, 1994, and Paul Glover, 1998.)
The institutional arrangements that implement the second function of money, money as a store of value, also require scrutiny. Indeed, design flaws inherent in translating money from the first to the second function are responsible for much of the mischief attributable to the capitalist system. The breakdown on this system, as seen in the recent Wall Street scandals, has focused public attention on the failure of our financial institutions as a particularly acute example of the crisis of the commons, at least from the perspective of the investing middle class. This crisis has alerted us to the dangers inherent in attempting to privatize our retirement security, as the welfare of our elders, as well as of our children, is essentially and morally a social concern.
As Keynes recognized, shifting liquidity from current consumption through savings into investment serves the socially useful function of investing in future increases in productivity and is essential if recession is to be avoided. However, as Robert Reich (1983) pointed out in his exploration of "paper entrepreneurialism," there is a strong temptation to achieve paper profits by the non-productive manipulation of the system, rather than by engaging in the more challenging task of finding and realizing productive investment opportunities in real space and time. Correcting this design flaw in our financial institutions will require major changes in public attitudes. It is true that the real wealth required to redeem the claims on new wealth that appeared to exist at the height of the dot.com bubble did not exist and probably could note be created using current technologies and financial institutions. But the hope for unearned income dies hard. Imperial capitalism, as it has operated in modern industrial democracies, buys sufficient voter loyalty by importing unearned wealth in the form of underpriced natural resources extorted from so-called undeveloped countries. (See Joseph E. Stiglitz, 2002.) A realistic and sustainable system of savings and investment would recognize that average return cannot exceed the overall growth rate of the economy, and some productivity growth needs to be shared with labor and management.
The impulse for speculation, or gambling, appears
to be deeply rooted in human nature. The hope for unearned riches, and
perhaps the desire to live vicariously the lives of the rich and famous,
fuels the public's willingness to accept the present system and to resist
progressive taxes such as the inheritance tax. However, it is highly unlikely
that current investment practices could adequately fund the retirement
needs of the baby boom generation, even in the absence of the recently
documented abuses of the system. Fundamental reform of the institutional
arrangements for retirement security are in order (Gates, 2001, pp. 60-64,
123-144). The key to a tolerable future will be shared participation in
increased productivity, not in increased returns on unproductive
paper entrepreneurialism. Gates proposes several mechanisms whereby this
could be accomplished by democratizing capitalism, a viable alternative
to the bureaucratic inefficiencies of traditional socialism (op. cit.,
pp. 221-295). In addition democratizing capitalism and strengthening the
transfer payment mechanism of the Social Security System, adequate provision
for the coming elder boom will require the development of a whole repertoire
of labor intensive mutual aid systems, such as the Hureai Kippu,
or Health Care Currency System in Japan (Lietaer & Warmoth, 1999).
Toward a Politics of the Commons
As the management of the commons become increasingly a question of conscious political choice, it becomes necessary to search for a theory of the politics of the commons that builds upon, but goes beyond, the parameters of the democratic tradition established by 18th century democratic philosophy. Some important principles of such a theory include:
However, the proper purpose of economic systems is the sustainable satisfaction of the full range of human needs, not just our needs for the consumption of material goods and personal services. (A useful model of human needs is Abraham Maslow's, 1954, "hierarchy of needs.") One of the problems with earlier proposals for redressing the balance, including both socialism and communism, is that they proposed to subordinate markets to political control. Unfortunately, this kind of interference tends to diminish the efficiency of their operations. A more sophisticated politics of the commons would avoid interfering in markets operating properly in their appropriate commercial sphere of activity. However, there are at least three areas where political decision-making regarding economic activity is appropriate. First, governments must take responsibility for enforcing the basic ground rules of the market and for intervening in areas where the market mechanism is clearly not working, for example with antitrust and antifraud laws. Second, the government has a proper role in setting policies that use scientific knowledge and mandate appropriate technology to manage the interface between economic activity and the natural commons. This includes both environmental regulation and incentives and mandating the design of accounting practices to account for environmentally destructive "externalities." Third, government has a role to play in determining the need for and financing of public goods and services.
In all of these areas, the cliché that "the private sector produces wealth and the public sector only consumes it" is manifestly absurd. Our collectively held wealth is as real as our privately held wealth, and in the larger scheme of things it is actually of greater value. However, it is true that the political process of ten lends itself to corruption and inefficiency (although large private bureaucracies show the same weaknesses). We have not yet been able to design governmental systems that operate with the same elegant efficiency as markets. One possible approach is suggested in Reinventing Government by Osborne and Gabler (1992). In their model, the legislative process would be responsible for determining the optimum quantity and quality of public goods and services, and for taxing the economy at the level needed to obtain them. However, the executive branch of government would no longer have a monopoly on the provision of these public goods and services. In their model, public, private, and nonprofit organizations would all compete to satisfy public needs in areas ranging from trash collection to higher education.
The dynamics of scale. Historically, political and economic theory has focused most of its attention on the nation state. In the seventeenth and eighteenth centuries, when the foundations of that theory were established, governing the nation and developing the national economy were the critical problems. Local politics and economics were pretty transparent, and transnational systems barely existed. However, in the course of the twentieth century, local and regional economies have become dramatically more complex. And in the last third of the century, information technology made possible the global integration of commerce while science has made us aware of the need for global ecological policies in areas including global warming and pollution of the oceans.
This leads to the recognition that political systems need to be conceived in very different terms at different levels of scale. A useful sociological concept was developed by Ferdinand Tonniës in the late nineteenth century. Tonniës made the distinction between gemeinschaft and gesellschaft, terms that have been translated as "community" and "society." Tonniës understood communities as governed by tradition and webs of interpersonal relationships, while societies were being created by the rapidly emerging rational bureaucracies that made large scale governments and industrial corporations possible.
For the purpose of modeling the dynamics of scale in politics, it is useful to define "communities" as organizations which operate on a scale where it is possible for members to deal with one another as uniquely recognizable individuals, whereas "societies" operate on levels of scale that require that most members must necessarily be dealt with as abstractions. This is a distinction that was important to the founding fathers of the United States, when they distinguished between "democracies" and "republics."
Communities are made up of smaller groups, including families, circles of friends, neighborhoods, affinity groups, and formal organizations. These groups can exist for public or private purposes, but they are all "political" in the sense that they make collective decisions for the benefit of their members.
In the 1960s, 70s and 80s, humanistic psychology developed ground breaking innovations in the study and facilitation of interpersonal relationships on the scale of communities. These included the psychotherapeutic integration of the multiple parts of the individual self. They also included group facilitation methods ranging from group therapy and t-groups to family systems therapy and organization development in corporate settings.
The human potential movement has also made substantial contributions to our understanding of child and lifespan development, and of education and transformational learning, from infancy through the postsecondary levels. More recently, the fields of transpersonal psychology and ecopsychology have incorporated spirituality, ecology, and ethics into an agenda of cultural transformation. All of these field of theory and practice have already made substantial contributions to the evolution of popular culture in the United States. Recent initiatives toward applying the insights and practices to community politics offer the promise of moving community organizations and political processes in the direction of being more effective, tolerant, and supportive of the fulfillment of our human potential. Specific movements embodying these principles include Green politics, bioregionalism, and the "culture creatives" (Ray & Anderson, 2000).
The first phase of the human potential movement was the social reconstruction of the self, and the second phase, which is currently unfolding, is the social reconstruction of community. However, we need to begin to develop a third phase, which is the social reconstruction of democratic politics on the national and international scale.
Economic globalization has resulted in a diminution of the ability of the nation state to provide the social safety net that made the concentration of economic and political power at the national level tolerable to a majority of citizens. We are now in a situation where all of the aspects of commerce that can be globally integrated are being globally integrated. But this has cast many of the economic functions of the social commons adrift, apparently without the resources or leadership needed to provide adequate levels of these public goods and services, which include education, health care, public safety, transportation infra structure, and environmental management and protection. However, all of these sectors are characteristically dominated by the use of local human and natural resources. Therefore, the solution to the dilemma does not lie in the transfer of wealth from source outside the community or bioregion. Rather it requires new political and economic institutions that will allow us to mobilize these human and natural resources at the local level.
Thus state and national political systems find themselves facing three distinct challenges. Fist, they need to find strategies that will permit the economic activities that continue to be efficiently organized on a national scale to participate effectively in the global economy. Regional trading blocs such as the European Union and NAFTA respond to this imperative. Second, they need to find ways to deal with global environmental crises such as global warming. Third, they need to learn how to encourage and support local and regional politics to develop solutions to local and regional problems in the governance of the commons. Being willing to get out of the way is a large part of achieving this goal, and part of this may mean returning the power to tax to the people. But there is also an appropriate role for national and state governments in defining goals, supporting regions that may be short of essential resources, and managing the relationship between global industries and local economies in critical areas such as the technology intensive end of health care, transportation, financial services, environmental and labor standards, and international relations in general.
Public policy, public education and scientific expertise. Thomas Jefferson was foremost among the founding fathers who recognized that a vital democracy requires educated citizens. Political leadership requires support for educational institutions, including communications media as well as public education, that are committed to the challenging task of educating citizens. And it requires a willingness to engage in to engage in political campaigns and legislative processes that are educational and not merely manipulative. This in turn requires political leaders who are willing to critical utilize the research findings of the natural and social sciences about the systems dynamics of the commons, and to participate in the responsibility of all institutions of a democratic society, to interpret these findings in ways that make them accessible and useful to the general body of citizens that holds the ultimate decision-making power under the U.S. Constitution.
The politics of the commons can draw on a substantial body of ecological science that defines the requirements of healthy ecosystems on both global and bioregional scales. Furthermore, as indicated above, humanistic psychology and social science has generated a major body of research defining the parameters of healthy community scale systems. Both of these bodies of literature largely developed in the last half of the twentieth century.
Unfortunately, there is not a comparable body of research and theory exploring societal politics. One reason for this is the fact that the political theory of the nation-state developed in the seventeenth and eighteenth centuries has served us surprisingly well during the subsequent 200 years. The institutions created by the U.S. Constitution have served us well, although they have needed to be supplemented on occasion by self-organizing systems such as political parties, labor unions, and lobbyists that have responded to the need for organized feedback loops. Comparable institutions have developed in all of the major industrialized democracies, and they have managed the co-evolution of national governments and national economies to the satisfaction of the majority of citizens.
However, recent decades have seen a deterioration in the effectiveness of national governments in dealing with the challenges facing an increasingly integrated global system. These challenges include:
The structure of political parties could also be reexamined. A vigorous regional politics involving Greens and other minor parties is fully compatible with reorganizing the national Democratic Party at the state and national level to systematically advocate for successful innovations created by a vigorous multiparty local and regional politics.
Another important area to reconsider is the area of problems that the founders solved by separating church and state. In those days, everyone knew what a church was and what a state was. And there was a broadly accepted cultural and political philosophy of the value of reason that made it possible to conceive of a politics based on reason that excluded religious belief or dogma. Furthermore, a deistic-christian morality was assumed to be universally accepted at a cultural level on the basis of national historical tradition; it therefore did not to require any constitutional status. In today's world, however, the conceptual categories we are dealing with are not so neatly defined. As geographic mobility becomes ever more the norm, societies, particularly societies offering economic opportunity, non longer operate on the basis of historically enshrined cultural values to which newcomer can assimilate. Multicultural politics has become the norm. But because there is not a coherent discourse to rationalize this development in democratic terms, parties and politicians that intuitively welcome these developments have a difficult time responding to those who are clearly defending a monocultural status quo based on traditional political and religious imagery and narrative. This debate has been called the "culture wars." On top of all this, we are developing a more sophisticated philosophical understanding of the process of the social construction of social reality in cultural, sociological, political, and psychological arenas. In this context, the lines between religion, spirituality, and psychology have become so blurred that there is no longer a set of clear philosophical distinctions for legal scholars to rely on in interpreting this historically very useful doctrine. We need to rethink at a deeper level the ways in which personal and cultural diversity can be not only tolerated but appreciated at the same time we make practical political decisions about how we mange the natural, social, and economic commons.
Political stereotypes that view all politicians as shady characters do not contribute to a political process that serves the commons effectively. However, an era of more trustworthy politics and politicians will depend on the development of more useful political theory and a body of citizens educated to understand it. In accordance with principle "think globally, act locally," we the politics of the commons needs a broadly-based debate and discussion about principles of process and policy combined with sharply focused experiments in local and regional initiatives.
What can I do? Some immediately available personal strategies for investing in the commons include:
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