Against Free-Rider Problem Approaches

Born in 1933 in Los Angeles, Ostrom grew up during the Depression against the backdrop of a socially conservative America and worked as an economist until her death in 2012, at the age of seventy-eight. At school, she was denied the opportunity to study mathematics because she was a woman, a slight that had a long-lasting impact on her career.

Later, when she applied for doctoral study at the University of California Los Angeles, she was denied entry to the economics program because of her lack of earlier training in mathematics. She decided instead to study for a PhD in political science, a move that made her alert to the depoliticizing tendencies of the discipline she would come to shape. Her PhD, completed in 1965, focused on the management of shared groundwater in Southern California.

Perhaps surprisingly for someone whose work had an egalitarian bent, Ostrom associated with and participated in conservative circles. Between 1982 and 1984, she was president of the Public Choice Society. The tradition of public choice is rooted in the assumption that policymakers are self-seeking, that the capitalist market is a public good, and that privatization is desirable.

While she did not entirely accept the dominant ideology of neoliberal economics, she shared many of its assumptions. This put limits on her work that economists of the Left seeking to engage with her thinking would have to overcome.

One of the prime targets of Ostrom’s work was the aforementioned “free rider problem,” which purported to show that if a person cannot be excluded from the benefits provided by the collective action of others, then that person is motivated not to participate but to “free-ride” on gains of the others.

Perhaps the most pernicious variant of the free-rider problem was what the ecologist Garrett Hardin called the “tragedy of the commons.” In 1968, Hardin used the example of common grazing land to argue that, while it is in everyone’s interest to cooperate, individuals follow their self-interest and exploit shared resources until they are exhausted. Avoiding this tragedy required extinguishing the commons by state control or privatization.

Hardin’s thesis became popular in conservative circles as part of a backlash against a rising tide of left-wing environmentalism that had emerged in the early 1960s. For example, the marine biologist Rachel Carson’s book Silent Spring illuminated the link between corporate capital’s profit-seeking and increasingly widespread environmental destruction caused by pesticides. She proposed greater regulation of pesticide use and greater government accountability and public awareness to counter corporations’ ability to damage the environment.

Hardin’s thesis, by contrast, blamed individual’s self-interest, rather than corporate capital, for environmental degradation.

Ostrom expanded her writing about common-pool resources (CPRs) in the 1980s, when movements for environmental protection and justice were in the news. But she did not see her work as contributing to such struggles.

From the late 1960s onward, the Brazilian military dictatorship began opening the Amazon forest to “development” — a euphemism for land speculation, deforestation, logging, and the expansion of cattle ranching. In opposition to these forces, social movements, often collaborating with radical elements of the Catholic church, fought for their rights to live in and manage the natural resources of the Amazon.

By the 1980s, these struggles — especially following the murder of the Brazilian trade union leader Chico Mendes — were becoming increasingly visible and popular among populations in the Global North.

Following Brazil’s transition to democracy in the 1980s, these social movements succeeded in forcing the Brazilian state to establish new commons for rubber tappers and fisherfolk who hunted along the rivers and estuaries of the Amazon.

Such struggles were not part of Ostrom’s notion of collective action. She instead provided an image of harmonious collective action that could preserve natural resources.

Ostrom’s Notion of Common-Pool Resources

Ostrom took issue with the assumptions the free-rider problem made about the individual. “Users [of resources] are pictured as trapped in a situation they cannot change. Thus, it is argued that solutions must be imposed on users by external authorities,” she wrote in a 1999 academic paper.

Through numerous empirical studies, she showed how individuals cooperate to organize resource use in ways that are environmentally sustainable. She attributed to people the ability to communicate and to establish “institutions resembling neither the state nor the market to govern some resource systems with reasonable degrees of success over long periods of time.”

Her interlinked notions of CPRs and collective governance explain how collective action by individuals can successfully regulate resource use.

CPRs are human-constructed and natural resources where a) it is difficult to exclude potential beneficiaries, and b) exploitation of the resource by one user reduces its availability for others. CPRs include terrestrial and marine ecosystems — ranging from forests to groundwater basins to irrigation systems to fishing stocks.

CPRs can be governed by a range of institutional arrangements that shape individuals’ behavior and subsequent economic and environmental outcomes. For example, in the early 1970s in southwest Turkey, the Alanya fishing community was riven with conflict and suffering from unpredictable catches and rising costs due to unregulated fishing. In response, the community found its own collective solution to this problem.

They worked together to establish a cooperative that registered all eligible fishers and identified usable fishing locations. Boats could fish in these locations between September and May (to enable reproduction of fish stocks during the summer). Every September, each registered boat was allocated to a fishing location. They spent one day in each location before moving to the next one.

In this way, each boat had equal access and opportunity to harvest the sea, fish stock replenishment was ensured, prior conflicts were practically eliminated, and predictability (and hence incomes) maximized.

Alanya, Ostrom argued in her book Governing the Commons, “provides an example of a self-governed common-property arrangement in which the rules have been devised and modified by the participants themselves and also are monitored and enforced by them.”

Limits to Ostrom’s Thought

Ostrom married her radical ideas about cooperation to some rather conventional ones about economics. She wrote that the “competitive market — the epitome of private institutions — is itself a public good.” What this ignored was the fact that unequal power within the market effected the ability of agents within it to make rational decisions about the collective management of social goods.

While she drew on anthropological and sociological studies for her work, she filtered these insights through the narrow conceptual lens of new institutional economics (NIE), an outlook that recognized the role of the state and other social institutions in shaping market behavior while holding onto a rational-choice view of individual actions within the market.

Consequently, questions of class and power remained absent from her analysis. This omission did serious harm. Thanks to it, she missed the key driver of the degradation of the commons and environmental destruction: unequal class power.

But while Ostrom may have held onto assumptions that undermined the radical insights of her theory, later interpreters of her work did not.

For example, Craig Johnson, a political scientist, has written about how economic inequalities affect how inshore fisheries in Thailand are managed:

Even for the relatively well-endowed owner-operators, however, the benefits that accrued from common property were barely keeping pace with the escalating costs of coastal fishing and variable returns. Indeed, the only households who appeared to be “getting ahead” in the industry were those with the capital, influence and contacts to command new or vital market niches, such as contract processing and direct marketing.

Ostrom, by treating capitalist markets as natural, missed the pivotal moment in the establishment of these markets: the destruction of the commons by the enclosures. This was an insight that Karl Marx, writing more than a century earlier, had gleaned in Capital.

In the chapter entitled “Expropriation of the Agricultural Population from the Land,” Marx describes how between the fifteenth and nineteenth century, “the systematic theft of communal property was of great assistance in swelling large farms and in ‘setting free’ the agricultural population as a proletariat for the needs of industry.”

But Ostrom, despite moving far from the dogmas of her discipline, was unable to see the harm that imbalances of power have on society. This proved fatal for her understanding of global environmental destruction. In an article written for the World Bank, she wrote how

while many of the effects of climate change are global, the causes of climate change are the actions undertaken by individuals, families, firms, and actors at a much smaller scale.

Such a formulation would be music to the ears of the hundred firms responsible for over 70 percent of greenhouse gas emissions, who have collaborated to obscure their environmental impacts. This tendency to equate individuals, families, and firms stemmed from Ostrom’s NIE approach. But it did not condemn her thinking to irrelevance.

Her ideas continue to be useful as a counter to justifications of privatization and for local-level management of resources. Yet her notion of cooperation between individuals was founded upon the assumption that the definition of success was the sustainable use of local resources through capitalist markets.

Decades of environmental destruction combined with rising inequality have proved the incompatibility of free markets, democracy, and the common good. Against the backdrop of today’s social and environmental crisis, Ostrom’s writing remains valuable, both as a critique of the pathologies of the present and as evidence of the shortcomings of market-oriented solutions to these problems.