The Triumph of the (Internet) Commons

Many social scientists believe that communities are bad at sharing in commons systems where access to a shared resource is free. Garret Hardin called this the tragedy of the commons (TOC) in a famous Science article. In reality, commons systems work very well and survive for centuries. Now the commons is thriving on the Internet.

Hardin argued that if a herdsman puts out an additional animal that stresses the fragile grassland ecology, the benefit is to him alone, whereas the cost is borne by all other users of the commons. So the grassland gets overgrazed to the point of irreversible damage.

Yet people are not stupid. They notice if other users of the commons break the rules. In reality, a commons system is a cooperative arrangement rather than a competitive Darwinian arena.

Hardin Ignored Commons Self-Governance

Economist Elinor Ostrom researched commons systems around the world. Contrary to the inevitable unfolding of Hardin's tragedy, she found that some commons systems are stable over centuries and promote effective sharing of all manner of resources, from irrigation water to fish stocks, game animals, forest products, and roofing materials.

Why do commons systems persist despite the self-interested temptation to cheat? The simple answer is that they work because they are effectively self-governed. When commons resources are both valuable and fragile, users are willing to bear a cost to themselves to ensure that the commons operates fairly and that access to that resource continues.

Stable commons, such as those that regulate the use of scarce resources for mountaintop communities in Switzerland, work because they have detailed and effective systems of rules that are enforced by social conformity pressures and penalties.

As electronic communities shrink distance, a generation of (mostly) young people has begun to look upon the Internet (and even the entire global ecosystem) as something tightly interconnected and mutually supportive, like a mountaintop community.

Global Commons and the Internet

The level of cooperation achieved on the Internet would be surprising if people really were the selfish brutes of the TOC. Instead, we find them sharing information and entertainment freely on sites like YouTube or Twitter and slogging away for the better good by writing and editing entries in Wikipedia. The cooperative economy involves not just sharing books and toys and even cars but extends into bastions of capitalism like banking and finance.

The Internet allows people in developed countries to reach out across the globe and finance small businesses in microlending programs that breathe life into humble enterprises such as sheep breeders in Kazakhstan buying a new ram.

The work of financial banks is also being taken on by crowdfunding platforms such as Kickstarter and Crowdfunder that put up the funds for projects such as doing historical research or building a solar plant.

Donors may provide funds as gifts or opt to receive in-kind payments once the project is up and running, such as getting free vegetable deliveries from an urban garden.

The philanthropic global commons is viable seemingly because donors enjoy meaningful participation in online communities that create a better, and more hopeful, world.

Of course, participants can also make their own lives better by saving money. Parents are often frustrated by buying new clothes for their children and seeing the youngster outgrow them in a few months. ThredUp operates as a clothing commons that allows parents to share their castoffs with others, and it seems to work well because it operates under a system of sensible rules: The clothes must be in good condition, users are rated by peers, and cheats are ostracized after one warning. The Internet may be good for commons systems because it makes governance so efficient.

Business professor Jeremy Rifkin of the Wharton School believes that the sharing economy will continue its rapid growth long into the future, until capitalist enterprises shrink to a small proportion of the global economy. He argues that Internet sharing brings down costs, thereby cutting into capitalist profits.

Is capitalism really dying? As a keen observer of the financial world, I doubt that sharing is going to take the profit out of businesses. For instance, Microsoft continues to sell its products to original equipment manufacturers (OEMs) even though rival products, such as Open Office, are shared online for free. It does so because it functions as a legal monopoly.

There are many other legal monopolies, such as cable companies, banks that can stay in business mainly by charging arbitrary fees, oil companies that acquire drilling rights on public land for a song, not to mention hospitals and drug companies, among many others.

In another post I explain why I think that the cooperative commons can continue to grow even as the profits to large corporations continue to rise. Just look at Bill Gates and Warren Buffett, who, like Andrew Carnegie and others before them, put their outsized profits into the charitable commons.