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Hardin vs. Demsetz, or The Tragedy of the Commons versus the Economists

By Gordon Hull

I’m going to be teaching Harold Demsetz’s “Toward a Theory of Property Rights” (1967) tomorrow, and noticed a couple of things that I hadn’t before. I suspect they’re related, and say something about the moment the article appeared.  At least, that’s what I want to propose here.  To set it up: Demsetz is known for the theory that property rights emerge when it is efficient to internalize externalities.  His example is land rights among Native Americans; he says that property in land increases with the arrival of the fur trade.  Absent land rights, there was always a risk in overly intensive hunting occurring: without private property, it is in nobody’s interest to invest in the growth and maintenance of hunting stock.  Before the arrival of Europeans, this was fine because there was no particular incentive to hunt too intensively.  When the European fur trade arrived however, the incentives to intensive hunting grew, and property rights emerged as a management strategy.  If I have to live with the consequences of depletion of the hunting stock on my land, I’ll have the incentive to manage it correctly.  That, at least, is the story.  It’s quasi descriptive in the sense that Demsetz thinks this is an explanation for why we have property regimes, and somewhat normative in that it’s clear between the lines that he thinks private property is a good way to go.  Here’s the observations: first, the piece is heavily reliant on Ronald Coase, and second, although the narrative sounds like a tragedy of the commons narrative, it actually flies in the face of what Hardin was trying to do in that article.

The Internet of Nature

Big Data theorists have, for a while, been warily eyeing the growth of the “Internet of Things” (IoT), which is when “smart” technology is integrated into ordinary household devices like refrigerators and toasters.  New fridges all have warning lights that remind you to change the water filter; IoT fridges will order the new filter for you.  “Smart” utility meters are another example: they can monitor your utility usage moment by moment, making adjustments, say, to the HVAC to optimize power (or to prevent brownouts by automatically raising the temperature of everybody’s house a degree or two during peak hours).  Such smart meters are obviously key if those with rooftop solar are going to sell their surplus capacity to the power company.  They also enable very detailed surveillance of people’s home lives: they apparently know when you’re using power for the dishwasher, the shower, the TV, and so on.

Capital knows opportunity when it arrives; if your dishwasher is using more power than the average dishwasher, expect advertising for a new, energy-efficient model.  If you routinely have lights on until very late at night, maybe you need some medicine to help you sleep, delivered to your web browser.  Your boss sees opportunity as well: if you routinely disarm the alarm, turn on the lights and open the fridge at 3:30am, maybe you’ve been out clubbing too late to be a good worker, and you need to have your desk cleared by 5:00 today.  This inference will be assisted by the fact that clubs now keep networked electronic records - ostensibly for security purposes - of who goes in and out (and who is banned: if you get thrown out of a club, all the other clubs on that network can refuse you entrance).  What if your boss buys the data from the club networks, and the utility company and crunches it to measure productivity?  Or, sells it to the insurance company, where you’re told that your new wellness initiative requires you to allow your devices to report that you come home and stay there by midnight every night, under penalty of punitive premiums?  Your auto insurance bill will almost certainly go up too, because you’ll have installed the vehicle tracking devices that will, by then, be necessary to avoid punitive insurance rates.

But all of that is about surveilling the human.  In a fascinating new paper, Kevin Haggerty and Daniel Trottier extend the study of surveillance to nature, noting that the practice is both pervasive and growing, on the one hand, and nearly completely ignored, on the other, with the partial exceptions of Latour and Haraway.  I suspect that this is a paper destined to have a big impact; Haggerty in particular is a very significant surveillance theorist, and in a 2000 paper, he and Richard Ericson made a very influential push to orient surveillance studies around the Deleuzian notion of an “assemblage,” arguing that the Foucauldian “panopticon” had become dated.  In the current paper, Haggerty and Trottier look at several ways that we now surveil nature that they expect to grow exponentially with developing technologies.  None of them are exactly new, but things like RFID tags will make them a lot cheaper, easier, and more commonplace: the representation of ever-more-remote aspects of nature, often turning it into spectacle; using animals as agents (for example, as the Germans did during WWI, attaching cameras to homing pigeons); the increased use of biosentinels (where we rely on an animal’s response to the environment to infer information about that environment.  The canary in the coal mine or the drug-sniffing dog are the textbook examples); and taking surveillance inspiration from nature (looking at insect eyes to develop cameras that can see a full 360 degrees, for example).  They then suggest three implications for research into surveillance: (1) there are non-technological aspects of surveillance that need highlighting and study; (2) not all surveillance is of humans (contrary to what most of the literature talks about); and (3) we need to look carefully at inspirations for surveillance.  They close by highlighting that the human/nature boundary has never been a particularly bright one, and it’s likely to get less so as we move on.

Economics and Philosophy - Ecology in Finance

Following on from Eric Schleisser's post, some might be interested in what's happening at the Bank of England, where regulators have for some time been working with complex systems theorists from the natural sciences to develop new models of financial regulation. This article was published by Andrew G. Haldane (Head of Financial Stability at the Bank of England) and the ecologist Robert May in Nature earlier this year. This podcast from the BBC on 'Scientists of the Subprime' may also be of interest. Interestingly, this raises the question of the enduring influence of Hayek (especially the later Hayek, who advocated a turn to complex biological models of markets) on that most improbable of institutions, the central bank (improbable because the Austrians called for the complete abolition of the central bank).