The tragedy of the commons suggests that, left to our own devices, we will overuse and overconsume our shared resources in the name of self-interest. And that either privatization or state control is required to keep us in check. But Elinor Ostrom advanced a third option, a polycentric governance approach in which the people involved solve the problem on their own through a commons solution.
Dr. Nick Cowen is a lecturer in the School of Social and Political Sciences at the University of Lincoln and the author of the paper, ‘Cost and Choice in the Commons: Ostrom and the Case of British Flood Management’. Today, Nick joins Ross to discuss the differences among state, market, and commons solutions to the environmental problems we face. He explains how Ostrom’s work changed the way we think about the tragedy of the commons and walks us through several examples of communal solutions that preserve shared resources.
Nick goes on to introduce the concepts of residual-claimancy and the transitional gains trap, describing how government intervention in flood management followed by a period of privatization led to the current dilemma in Great Britain. Listen in for insight around how Ostrom’s communal systems might appeal to both conservative and liberal politics and learn how we can apply her interdisciplinary ideas to protect our shared resources.
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‘Cost and Choice in the Commons: Ostrom and the Case of British Flood Management’ by Nick Cowen
Ludwig Von Mises’ Insights on Intervention
‘The Transitional Gains Trap’ by Gordon Tullock
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Full Transcript
Ross Kenyon: Hey everyone, welcome to season two of Reversing Climate Change. We are doing that podcast thing now and launching a Patreon. You can find it at patreon. com slash noripodcasts. There are various tiers with different types of goodies available. Do you want to receive a special newsletter digest of what norinauts are reading that week? Be a part of a nori book club? Get special access to nori events? Go take a look at patreon. com slash noripodcasts for what we’re offering. And in that spirit of being lean in that startup kind of way that, you know, we like to do, this list of goodies is subject to change and we’d very much like your feedback.
Is there something that you’d really like to see but it isn’t listed here? Honest feedback does a lot to help us shape what we offer to you. You can send an email to podcast. nori. com or fill out our podcast survey anonymously in our newsletter which you can find at nori. com slash subscribe. And thank you so much for listening to another season of Reversing Climate Change. Hello and welcome to the Reversing Climate Change podcast. I’m Ross Kenyon. Today I have with me Dr. Nick Cowan of the University of Lincoln.
He wrote a paper along with a co-author, Dr. Charles Delmont, called Cost and Choice in the Commons, Ostrom in the Case of British Flood Management. Thanks for being here, Nick.
Dr. Nick Cowen: Oh, it’s great to be here, Ross. Great to be here, actually. I think in some ways this pandemic situation kind of brought us to have this conversation because I find myself in front of a screen talking to students, talking to potential graduate students, and I kind of realised, wow, I’ve kind of got this. I’m all set up finally. Finally, I can talk to Ross and appear on the podcast. So, yeah, I’m really looking forward to it.
Ross Kenyon: Your lobbying efforts of me were successful because I have long wanted to do an episode about the Bloomington School, about new institutional economics, about Eleanor Ostrom, Common Pool Resources. It is time. You have the discreet pleasure of being the one to introduce this. So your lobbying could not have come at a better time, Nick. Fantastic. Indeed, and I’m not sure who out there listening knows much about Eleanor Ostrom. She’s a Nobel laureate in economics. Her husband, political scientist. They are both deceased. They actually died very near to each other. It was, wasn’t it like a month or two apart?
It was very close, wasn’t it?
Dr. Nick Cowen: Yes, yes. It was a tragedy for the world of liberal political economy and for academia in general. In fact, I believe I had the opportunity to meet her just a few months before she died. She had a talk at the Institute of Economic Affairs on her work, focusing actually a great deal on her workshop method. She always used to joke, actually perhaps she wasn’t joking, but she always used to say that she wasn’t sure if she actually could hack it. She also learned some crafting. She did some wood furniture crafting.
She went out to Bloomington, which I’m not sure if it was on the map at the time when she went out there. It certainly is on the map now, Bloomington in Indiana. Yeah. And basically, she kind of developed a kind of way of working with graduate students and people across the world, which she called the workshop, I suppose, which is, I suppose, in contrast to a seminar or a kind of conference framework where basically... So, you know, Eleanor Ostrom, just take a look. You’ll see enormous stuff that she’s written personally, but also an enormous number of varied collaborations.
I think the testament to it is really that she’s a political scientist. She was told she couldn’t quite manage it as an economist. Eventually, she won the Nobel Prize in economics. Sadly, there is no Nobel Prize in political science. Well, perhaps that’s a good thing, but that shows the extent of her interdisciplinarity.
Ross Kenyon: That’s a nice summation. And we should get into what sorts of problems was she trying to solve with her intellectual legacy while she was alive. And maybe the best way to do so is to start with the tragedy of the commons. Which, depending on how you’re approaching environmental and climate issues, is either a thought experiment that you hate, that you’re sick of talking about, or that you think it’s just much more complicated than it’s typically presented. So let’s tell the simple story of what exactly the tragedy of the commons is, and then we’ll get into how Eleanor Ostrom complicated it, but also made it legible in a very useful way as well.
Dr. Nick Cowen: Yeah, no, that’s right. So, you know, under the sort of classic tragedy of the common scenario, you kind of imagine that you’ve got a pasture that’s kind of used by, say, a lot of shepherds with their own flocks. So there’s a kind of And basically, without coercion, without some rules to manage that area, you’re going to end up overusing it. So you’re going to end up turning your grassland into a plain. And so the traditional answer to this is to say, well, you probably need to privatise that commons. You need to take some parcels of land and you’re going to give that to these shepherds.
I suppose they’re going to become farmers instead of some sort because they’re not going to be roaming anymore. And that’s going to be your solution. They’re going to shepherd, they’re going to look after their own resources and that way, that will be the way of maintaining it. And if for some reason, privatization isn’t going to work, well, you’re going to have to have, you know, some big guy, the state or some proto state is going to have to come along and keep an eye on what people are doing. License the ability of people who want to use the pasture.
Basically, you’ve got this dilemma. You’ve got these two solutions that are meant to work, privatisation or state control. That was the kind of setup that Ostrom initially encountered.
Ross Kenyon: Okay, that’s great, Nick. That’s a nice way to start the conversation. And it also breaks neatly along left-right lines too. You have people on the left typically prefer the government to either set regulations or to control this asset. And then you have people on the right who tend to trust the market and private property to do this. So this sort of makes sense. And maybe just to refresh people in case we covered it a bit too quickly. But the problem is if this pasture is commons, I’m putting this in quotes because we’re going to complicate this story here in just a second.
It’s unowned or it’s in quote unquote commons. It just means that people can run their cows or their goats or their sheep up into the commons and graze it. But if you leave any grass there, who’s to say your neighbor’s not just going to send their cows up and eat it the next day? Your incentive is to consume as fast as possible for yourself. And that is the tragedy of the commons when that happens. There’s no clear property rights. So everyone who’s using this resource, the incentive is to just go for it.
Is that broadly the case?
Dr. Nick Cowen: That’s right. And having the correct enforcement mechanism, essentially mutual or peer enforcement in many cases, this allowed them to preserve this common resource after all. Hence, the tragedy of the commons was not quite so tragic after all. It was more of a drama.
Ross Kenyon: Yeah. How many times have you said that line?
Dr. Nick Cowen: Actually, it’s the first time I’ve said it. I’ve read it quite a bit. You should write that down. It’s a good one.
Ross Kenyon: That’s good. So I associate, I think maybe the first thing I read by Eleanor Ostrom, I think it’s her Nobel acceptance speech was where I started and it was beyond markets and states. And it was this Kind of banal when you think about it. Of course, the details matter more than like it isn’t you can’t just say property rights. You can’t just say, you know, state ownership or or regulation. And that’s the end of the conversation. Clearly, there are good versions and bad versions of both. And there are places where these should apply and places where they should not.
She was very interested in looking at actual empirical examples where people have solved their own problems collectively. These are often in relatively smaller environments where people tend to know each other. They can enforce norms. It’s interesting because, of course, the fact that something is communal and kind of involves...
Dr. Nick Cowen: So yeah, once again, it’s another detail to kind of add to Ostrom’s discoveries.
Ross Kenyon: Yeah, we’re going to get into that too. That is one of the things that is most useful about her methodological lenses that she uses, but also one of the things that makes it quite difficult to apply given that it is so place-based and unique and bespoke in all of the times when it exists. Maybe we should give people an example here. Do you have a good example of an Ostromian institution that you can just pull out of your hat and display? Yeah.
Dr. Nick Cowen: I must say, that’s a little bit of a challenge because I know that she tends to look at fisheries a great deal. And I think one of the most successful cases of commons that she looks at is in a series of lakes in Turkey. So very, very long-lived commons institutions where basically – They, you know, in a sense, quite informal because, you know, you kind of got these fishermen kind of living in some cases quite far apart, but they kind of have a rule on when they’re allowed to fish. And importantly, the individual who’s allowed to fish automatically.
In a particular time period, they are also in charge of enforcing the rule, which means it’s a self-enforcing element to it. So it’s saying, well, for the sake of this time right now, this is your property, but you have to look after it. So I think that’s the kind of examples that she came up with over the years.
Ross Kenyon: Yeah, that makes sense. One of the examples I’ve heard from James C. Scott, who, as we like to say on the podcast, we’re coming for you, James C. Scott, because your work has made a big influence on me and I think it’s very interesting. I think about how private property as we conceive of it is pretty simple, but property rights prior to private property as we currently understand it is oftentimes quite rotational and confusing and opaque to outsiders. You’ll have examples like Peasants will say, okay, your family owns this pasture this season, but the next pasture switches and then you’ll pick up this other one and then we’ll keep trading in this sort of complex weave of property rights and who gets to do what and when.
It isn’t something that’s just formalized that you can go to a court and look up who owns this piece of land, fee simple. It’s actually something much more confusing than that, but it works, right? So for the people who live there, it is very functional, but for outsiders, it is not something easily able to interact with.
Dr. Nick Cowen: Yeah, that’s right. And I think, as James Scott kind of illustrates, a lot of the times when we’ve officially formalized or codified property rights, it’s not the fact that they weren’t particularly formal before, it’s just that they were opaque to The state doesn’t like things that are opaque. So, it’s very important that your property rights are kind of transparent to the state for when it’s attempting to achieve its ends. So, naturally, if we’re looking at this from a kind of more critical standpoint, we’re not just thinking about what’s in the state’s interest.
We’re thinking, for example, about what’s in the ecological interest, what’s in the genuine public interest. Those property rights, confusing, opaque, awkward to manage as they were, probably solved a lot of problems for the inhabitants who were there. And they maybe made a decision not to formalize them, not to make them as transparent initially. We shouldn’t necessarily judge them for that. And perhaps we should try and revive a broader notion of property rights, one that includes these complex communal arrangements.
Ross Kenyon: Nick, what do you think is the appropriate place to apply all of these paradigms? On the one hand, you have the sort of like free market private property solution where you have the pastures and you say, this family owns this plot of the pastures. This other family owns this. They can do what they want with it. They can sell it. They can use it, et cetera. And the hope there is that because you own it year after year, you want to see that resource increase in value. So you’re not going to just eat everything.
And your cows aren’t. You’re going to want to foster it. And the other approach is regulation or government control in some variety. And when might that be appropriate too? Because there are some things that are good about it and there are other things that are bad about it, same as private property rights. What is the Ostromian approach or the polycentric governance approach here? Because this is sort of like emergent approach, Is it something that we can actually even apply like those other two examples of paradigms? Because it might just be something that grows out of a certain community.
You can’t just drop Ostrom on a place and expect it to happen.
Dr. Nick Cowen: Absolutely not. Well, it depends. Some people saw all these long-lived commons institutions that Ostrom observed and made a little bit more transparent to the scholars and to the policymakers. Some of them attempted to go like, oh, wow, commons are great. They’re not state. They’re not private. They’re not like state socialism, and they’re not like capitalism either. Let’s go for this kind of third way. And that is not really the lesson that Ostrom was really pushing, at least in my reading. So it’s exactly what you’re saying. The main The second lesson is you can’t apply a set of mechanisms or a set of principles at all times and in all places.
Rather, you’ve got to see what has been working and try and work out if something is not working, what exactly is stopping the people there from I think the reason is often that the full set of people’s governance arrangements, including individual rights and possibly market principles, but also the communal arrangements that are there, they must be. They might not be being recognised. They might not be respected appropriately. And that’s preventing people from making sufficient long-term planning. Because there’s not that many people out there who actively want to destroy the environment.
Many just think, well, I need to live. I need to look after my own wellbeing and no one else is looking after it. Therefore, I’ve just got to get mine while I can. Very few people want to be in that position. But if the rules are failing, they will end up So I think that’s kind of the first part. If I wanted to give an example of where I think regulation appears to have done very successfully, I think it would be the kind of regulation to save the ozone. So, you know, the kind of gases that were kind of being given.
It’s a kind of global public good problem, the ozone layer. So, saving it, that may well have been a case where, much as I’m usually a little skeptical of regulation, that’s the kind of case where you’d need it. Another example, I think, might be with carbon emissions. It’s This is not the same as banning CFC emissions, but it strikes me that a carbon tax might well be necessary to get stuff off the ground, either a global carbon tax or at least a carbon tax that an enormous amount of the world has opted into.
And that’s because basically you’re dealing with a kind of global commons at that kind of level with the atmosphere itself. That’s where I think you might need some state involvement. That’s not to say the state is the only actor that’s going to be in operation. Once you’ve got a carbon tax, hopefully you can unleash the kind of innovation that will lead to people being able to pay that carbon tax or be able to reduce the amount of carbon that they’re emitting on net in the most efficient way possible. And that’s where both private property market solutions and common solutions might come back in.
Ross Kenyon: That was beautiful. That was a very nice way to conceptualize it. I like that. I try not to be too ideological about any of this stuff. I think it’s important to, God, I know this is banal, but the details matter, right? Like we really want to make sure that we’re applying the right paradigm in the right place because man, there are people I know on every side of this that have that everything looks like a nail when all you have is a hammer mentality. So I definitely know some free market libertarian types and it’s just like privatize everything as a solution.
You’re like, There are cases where this is worse than the alternative. And there are definitely people I know who would favor regulation before they even know what the regulation entails. They’re attracted to that idea. And you’re like, okay, there are cases where the dynamism of markets and decentralization can be Very powerful. And then also with people I know on the commons front, they’re very fond of talking about systems thinking and complexity, but I have often found that those conversations become very muddled. There’s not a bright line that I can pull out.
It’s just sort of like, well, you have to look at everything holistically. And it’s like, okay, but I’m not even sure what you’re saying then because it’s how do you look at everything holistically and interact in a complex system? It just becomes a dog’s breakfast. As your countrymen might say. Is that your experience too?
Dr. Nick Cowen: So, you know, an important thing in these cases is perhaps the notion of residual claimancy. It’s this old common law notion that there’s a landlord or someone who has a strong fundamental claim on a piece of land or territory or piece of property such that… That if it’s destroyed or disposed of in some way, they’re the ones who kind of bear the cost. They don’t get discounted for it. On the other hand, if there’s kind of some excess profit associated with it, they also receive the benefit. And that kind of makes people a little bit more observant about...
And I think an important observation that Ostrom, especially on the more classical liberal side of Ostrom, she has many dimensions, but on that side, is to say that it’s not just individuals or corporations that have that kind of potential. Various other communities and various other kind of governance arrangements can necessarily benefit from residual claimancy.
Ross Kenyon: It’s a great $5 word or $5 concept right there. Residual claimancy. Try to shoehorn that into your daily discussion, listener. Get that out there. Okay, we’re here to talk about your paper though.
So I think we did a really nice job. Thank you for doing so of explaining the basics here. And let’s dive into a topic that you clearly know a lot about, which is British flood management and how these paradigms have been applied to varying degrees of success or failure.
Dr. Nick Cowen: Well, yeah, it’s interesting. I suppose I’m an expert on flood management in the sense that I’ve been living in Britain for a long time. And about twice a year, we get a lot of flooding. And then we also get a lot of complaints about The public sector is not doing enough. Whole villages or towns have been flooded. They’re always saying, well, the government should have done more. They should make sure that everyone gets subsidized insurance. They should make sure that the rivers are appropriately dredged so that water can flow more quickly.
There’s always a big debate about this. Basically, the government says, well, it’s got increasingly expensive To have all this flood management in place that we’re paying for, that eventually the taxpayers are paying for. One reason is because of climate change. We’re getting more storms, we’re getting more floods. We’re getting more unpredictable water turning up in weird places. The other side is that the government has become a little bit more environmentally conscious over the years. He realizes that these kind of wetland territories, that the government itself was aggressively draining in the immediate post-war era.
Like, who wants wetlands? Who wants marshlands? It’s just like you can’t grow anything on there. It’s not economically productive. You know, we’ve got a new kind of social ethos that now realizes that actually a lot of this stuff, which is kind of like floodplain territory, has some very unique environmental features. And so the government’s in a bit of a bind here because people are kind of living and working on this stuff. They expect the government to protect them, to make sure they’re not going to be flooded out. On the other hand, public policy is now saying, well, actually, not all of this territory really should be quite so heavily used.
In fact, it should be set aside for this kind of unique wildlife. I found that fascinating because it seemed like the government really was in a total bind. It got itself into this system, into this business of handling flood from a national planning perspective. Then suddenly, it found it couldn’t really afford it. It found that everyone’s pissed off with them at least once a year, sometimes twice a year. That’s what got me interested in this particular topic.
Ross Kenyon: I love that. That’s such a great case. I associate this too. Here’s another libertarian classic that I think has something important to say, which is Ludwig von Mises’ insights on intervention, where you have something that wouldn’t have happened without the government’s involvement. And then that changed the course of behavior in a reaction to that. So people should not have lived in these floodplains. The government made it possible and sort of encouraged it. And once people are there, you require increasingly more interventions to sustain the system that really never should have existed in the first place, but becomes politically impossible to change.
Is this a correct application of that idea?
Dr. Nick Cowen: That’s right. And in a sense, I would go further. I mean, it’s very hard to piece together who’s benefiting people. I think it looks rather like what Gordon Tullock calls a transitional gains trap. That’s where you introduce a policy which has some very immediate beneficiaries. In this case, it would be the people who are They were paid to engage in some river management, paid to drain various territories. As soon as that’s happened, as soon as that benefit has been accrued, everything else is costs. Everyone is in a funny state because people have moved in.
The people, if they’d known that they would suffer from flooding, wouldn’t have wanted to move in there in the first place. The various processes encouraged them to move in there. Everyone would like to be in a different position. And yet there’s no way of kind of actually making people better off without, I don’t know, bailing everyone out, which is like one way out of a transitional gains trap. And that means basically then you share the burden on the whole tax base. So it’s a nasty position that we’ve got ourselves into.
Ross Kenyon: Yeah, I don’t even know how you, the justice questions that come up in that are so complicated. What a shame that all is. Okay, so what has happened with these, like the way your paper is partitioned too, you talk about attempts to either privatize and use private property to address this or various types of regulation and also maybe a possible Ostromian way forward. Can you lay those out for us?
Dr. Nick Cowen: Yeah, I mean, I think that in a sense, the situation that we’re in now is a kind of result not just of public regulation. In fact, unfortunately, it’s someone who occasionally I’ve agreed with, you know, Margaret Thatcher and her administration, who kind of came on. The government shouldn’t be getting involved in all these things. The private sector, that solves everything. This is the other side of that binary. What she and her subsequent administrations did was basically privatise a lot of Water provision and water management in the United Kingdom and put them in charge of doing a great deal of flood management and basically required people to pay fees to these private companies.
For the remaining, I suppose, pure public good elements, we ended up with a very highly centralised national agency called the Environment Agency, which is basically in charge of more proactive flood management. Local communities under the regime up until very recently haven’t really had that much involvement. I think what was interesting about this is if you look back in the history of When you realise how drainage and flood management was managed, we don’t actually know that much about it, precisely because of this kind of Scott’s insight that if your system is quite opaque and quite local and quite particularistic or quite peculiar, Then it’s very hard to kind of figure it out how it fits into the rest of the system.
But evidently, it was quite functional. That was standardised when the government introduced in the early 20th century internal drainage boards, which appear to have been based And that was kind of how they managed floods for while. The government noticed that a lot of territory was just being allowed to be flooded because at the time, a lot of the land wasn’t really worth farming or it wasn’t worth developing in a particular way. The government said, okay, we don’t want these people handling this stuff anymore. They’re clearly being lazy. That’s when they started subsidizing and pushing for more land reclamation.
One thing that we observe in the paper is that although the idea was to try and encourage farmers to use more land, Turn it into basically increased agricultural production. Generally, it wasn’t used that way unless very specifically incentivized. And that’s because labor costs are relatively high in the UK and a lot of food production. It’s not to our comparative advantage to be producing that much food. It’s a mix of public intervention at first, and then this austerity pulling back of the state. That kind of led to the mess that we’re in now.
And the reason why that happened is because we were operating on this binary that basically said that all social problems either have to be solved by the market, and if the market isn’t running it well, then the state has got to get it. So, Everyone loves trees. And I know that you guys kind of think about trees as well because it’s part of potentially carbon sequestration. I know it’s not as efficient as it ought to be, but everyone likes it. And actually, we want more, especially in these kind They do wonders if you can put them in the right place along riverbanks because they strengthen the soil, which means that the rivers can keep their shape and can continue the flow.
Now, everyone kind of wants this so everyone from an ecological perspective thinks it’s great. The trouble is getting people to actually implement it because, of course, it’s not something that you can just like plonk down, whether it’s like a market paying for trees. Or the state saying, oh, this is how it should be done. It requires local knowledge of the way these rivers are constructed, where the weak points are, and also where people can best set aside land to plant these trees. The other problem with it So it’s not like landowners themselves can do it entirely on their own bat on their own land, because if they do it alone, well, they’ll receive some benefit, but not most of it.
Most of it will go to the local community. And also, you probably need quite a lot of it spread over a given territory in order to make a sufficient difference. So basically, our argument is that we would expect, once the state has taken a step back That makes sense to me. One of the more prominent critiques of subsidiarity, which is a fancy word for saying things should be taken care of at the most local level possible, the smallest scale possible, is that one of the good things about having The government or the state do something is that there’s a guarantee that’s publicly stated that they have an obligation to do things.
Ross Kenyon: And even if it’s too standardized across diverse populations and geographies, it’s at least like the baseline. And that’s clearly stated. But people worry that if you just remove that, who’s to say that some of these more communal arrangements would actually spring up and we might just be left worse off without having anything replace the government at all.
Dr. Nick Cowen: Yeah, I mean, and that takes us back to the transitional gains trap problem, which is sort of like, well, what if it turns out that it doesn’t matter how many trees or how much dredging, how much kind of sluice gates you install, it’s still going to be prohibitively expensive to prevent some land from being flooded and people are living there. That’s very, very awkward. That’s the kind of moment where you might think that some sort of state buyout arrangement might be necessary just to try and fix the problems that people are there right now.
So in other words, you wouldn’t want to start from where you are. In principle, we probably have over-managed floods. We’ve engaged in too much prevention in the UK over the years. Environmentalists would say that there was decent habitats that wasn’t particularly agriculturally productive, but was productive in other ways and ecologically important, that we should have saved and now we should be recovering. If there’s no arrangement Another possibility is, of course, sometimes environmentalists They see the value in natural habitats and in keeping some resources in the ground or keeping some territories open for nature to develop or for careful cultivation.
But not for industrial use. And obviously, giving them the right to acquire property rights consensually, so in other words, buying people out, that is also another potential solution that I think that the more lifetime Right now, we heavily subsidise farming and agriculture. This is something that was present before we entered the European Union. It was a big problem when we were in the European Union and now we’re leaving. We’re going to have to revisit that. We’ve encouraged farming on a scale that’s much larger than we’ve really needed in this country.
And as a result, both the price signals in terms of what’s productive, they’ve been attenuated, but also we’ve tread too strongly on the environment while doing that. So part of the point of this solution is actually that there isn’t always a solution. Sometimes we should just retreat and we should let the water come in.
Ross Kenyon: Wow, I’m tickled by all of that. You’ve got to wait with words, Nick. I enjoy just listening to you explain economics to me, so thank you.
Dr. Nick Cowen: Thanks. I must say at this point that my PhD is in politics, not economics, so you have to get Brian Kaplan back on to make sure that I’ve got it right. Actually, having said that, I’ll say another point of inspiration for this paper is Two great scholars, one a lawyer, one an economist. So there’s a Professor Karen Bradshaw and also Professor Brian Leonard. I think they’re both based in Arizona. So I’m sure you’ve come across them, actually, even if maybe you’ve had them on the podcast already. But if not, you should definitely get them on the list because they have some very interesting discussions in this area.
Ross Kenyon: Great. Yeah, I’ll look into that. Arizona. I mean, at ASU, they had Eleanor and Vincent Ostrom. Her husband was a political scientist as well. There’s some sort of center there, but it was prior to my understanding really what they were up to when I was an undergrad there. I guess... One of the final questions to leave our audience with here too, hopefully this is what their appetite for more discussions of this ilk is this crossover seems really powerful to me. I can see like some of the people that I know who most like this third way beyond markets and A lot of them are regenerative finance, regenerative economics, permaculture.
They’re people who are thinking about ways of either reforming or replacing capitalism with something that is also dynamic, but it tends to have more of a left-wing flavor to it. And then some of the people I know who really like her work, too, and others from the Bloomington School. She was at Bloomington, Indiana, so it’s often called the Bloomington School way of thinking. A lot of people I know who like her are often people who very much admire people like F. A. Hayek and other sort of classical liberal free market thinkers who say this is actually really appealing to me as well.
How much interaction do you see between these two camps within discussions about Ostrom’s legacy? Am I just imagining this or are they even in touch with each other? Because I don’t really see that much of it.
Dr. Nick Cowen: Yeah, I’m not sure if there’s that much intellectual interaction going on at the moment. I think it might just be the nature of, you know, there’s geographical splits and there’s also disciplinary splits that are kind of going on. I mean, I think, you know, in answer to this idea that you can replace capitalism, I mean, capitalism is a very controversial word. I prefer to talk about commercial society and markets, although capital does come into my system. I don’t see why it should have to be at the centre of the system.
But what I’d say is that I think there’s some increasing body of evidence that suggests that you actually get more sophisticated communal commons arrangements when the products they’re producing are appropriately commodified, or indeed where there’s kind of deeper markets in place. It’s kind of like where I... I see some of the work that you’re doing at Nori working. If, for example, you can supply a carbon market, if you become a carbon market maker and you actually make it work and it’s not as complicated as it is to get certificates, Farmers, landowners, other people who can potentially They would realise that it actually makes sense at this point for them to form governance arrangements, to perhaps establish a company or a not-for-profit firm.
Firm or some kind of more complex, even more opaque communal system, depending on the regime that they’re in. And the market would actually encourage them to do it. So I think in many cases, markets that respect private property and also respect communal property, in other words, not kind of the sort of markets that are used to kind of go and take people’s property, the ones that actually respect existing laws and existing norms, they can actually prompt innovation at a kind of local level. If there’s one other thing that I’d say about the way that I think People coming at this from a more environmental perspective would say is, I think there’s a big dispute over the nature of growth, what economic growth is.
Because what I find that I suppose ecologists tend to assume is that more growth necessarily means more resource use rather than more efficient resource use. And I think it kind of goes back to this idea of where GDP comes from. And the answer is that GDP is kind of first invented in When we have a series of economic crises where people are kind of thrown out of work, there’s mass unemployment, incomes are kind of dropping, and we’re kind of looking for some tool to find out or some measure to find out if various government interventions are working to That’s really great.
No one likes unemployment. Mass unemployment is worse. We’re facing that right now. As a result, GDP measures are important, but that doesn’t necessarily mean growth in the broader sense. In the broader sense, we mean basically people being able to live good lives with access to the goods and services that they need. Now, if you think of it that way, then you realise that there might well be trade-offs. In fact, there’s bound to be trade-offs at various points in terms of resource use. But it’s not quite the same impression that GDP has, which is always increasing incomes through more exploitation of resources.
So I think properly construed, a market approach... To living well would say that actually you’ve got to include the costs, include kind of increasingly scarce resources in your measures. And in fact, under the right circumstances, a kind of commercial order is capable of kind of shepherding common resources effectively. You have to set the institutional framework correctly, but they’re not quite at loggerheads in the way that some ecologists think about it when they think about capitalism. Actually, one other person who I could name drop at this point, who we’ve actually used in the kind of redrafting of the paper, and that’s Ilya Mutasashvili at the University of Pittsburgh.
He’s an associate professor there. And he’s got some very interesting work on the role of He uses measures of forestry and increased reforestation in commercial orders to illustrate how individualist societies are actually very capable of looking after common resources, precisely because people in the appropriate framework can be made to take responsibility for their actions in a way that can be harder in more collectivist societies.
Ross Kenyon: You just complicate everything, don’t you, Nick?
Dr. Nick Cowen: That’s right. I try and keep it simple. But yeah, these things do get complicated.
Ross Kenyon: No, and that’s part of the fun, too. And I always wondered, surely there are some of these solutions that appeal to everyone. But I wonder to what degree there’s too much crossover. It’s just part of politics is expressing difference. And we like arguing and dividing ourselves into teams. I see a lot to like about it. I can read books from some of the more right-leaning or market-friendly people I know who like Eleanor Ostrom’s work and also stuff like Kate Raworth and Donut Economics and say, there’s great ideas and that are super creative in both of these.
I wish we could get together and talk more on this level rather than just screaming about markets versus states, which it seems like 95, 6, 7% of the conversation is still on that level anyways, right? Why can’t we get beyond it?
Dr. Nick Cowen: Yeah, no, I mean, it’s okay because this is kind of, you know, as much as I dislike it, especially when I’m getting this in my kind of peer review responses when I’m getting my various papers out. I mean, it is also how progress happens, you know, like people being angry, people thinking at some point is completely... Disastrous, complete misconception, and arguing about it in the literature, that’s the way these ideas get tested. In fact, you can see that happening in real time right now in epidemiology. We’re trying to figure out...
From a very, very uncertain, very, very ignorant standpoint, it’s a brand new virus, this coronavirus that we’re handling. People don’t like the debate often because they think, oh, we should just rally behind the official message. I think official messages are necessary. The classic public good problem we’re dealing with. But at the same time, it’s very important that science carries on. The science is not neat. It’s very messy. There’s a lot of conflict. There’s a lot of disagreement. It sometimes gets personal as well. But you’ve got to allow it because it’s the only way that these things So yeah, some people enjoy it, some people don’t like it, but it’s how progress happens.
And so hopefully if we provoke some debate, we can carry on this conversation here or another forum and see what I’ve got wrong and see what I can refine to make my arguments better.
Ross Kenyon: Well, if someone wanted to follow up with your work to learn more about this, I feel like we barely scratched the surface. There’s a lot here. And it’s very interesting. I like reading people, all of the traditions I named, I think there’s something of value to learn from and to dig into. So where might someone even do this beyond this podcast?
Dr. Nick Cowen: I think you could just start at ncowen. net. That’s got several links to my various accounts with academia. edu and SSRN if people are interested in looking at my work. I’d be delighted if people wanted to follow me on Twitter, which I’m on too often for the kind of work that I do. That’s another way of carrying on the discussion in a more informal setting. So yeah, ncowen. net would be, you know, there’s a few things there, but more importantly, there’s links to where all the papers are.
Ross Kenyon: Great. Thank you. We should just have you back on too. There’s a whole other thing we could do about blockchain and also Eleanor Ostrom. I bet there’s a bunch more we could talk about. So maybe we’ll have to do that in the future.
Dr. Nick Cowen: Oh yeah, Ostrom and blockchain, there’s a lot of potential overlap. Yeah. So yeah, I’d be delighted to explore that with you, Ross. And, you know, good luck with your work.
Ross Kenyon: And you as well. Well, thanks for being here, Nick. And thank you for listening. If you like the show, please rate and review us on iTunes or Apple Podcasts, on Stitcher. Tell your friends. I hope you found this interesting. I hope we were able to sufficiently cover it. And we’ll catch you next time. Well, thank you so much for listening. If you like the show, please rate and review it in Apple Podcasts and or Stitcher. It really helps us a lot to get this content to a wider audience. If you think what we’re doing is useful, interesting, fun, hopefully all three, we’d certainly appreciate your rating and review.
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