Triumph of the Commons—Part I
Towards an Ecologically Regenerative human economy
In this blog I will explore some of the fundamentals of Elinor Ostrom’s Nobel prize winning work on commons management theory and outline how it has influenced the design of Regen Network. In the second part of this blog series I will dig deeper into Ostrom’s frameworks, and link these frameworks more explicitly to the functionality that Regen Network provides for making ecological agreements. This blog is slightly “handwavey” and offers opinionated critique of what might loosely be defined as “neo-liberal economic dogma” and “authoritarian centralization as each ideology relates to questions around coordinating human economic action in the face of climate change. Enjoy the dive into the intersection of commons and markets, as we explore decentralization and polycentrism as guiding principles for regenerating ecosystems.
Step One: Debunking the Tragedy
The false narrative of the tragedy of the commons has permeated economic theory and thinking. The Tragedy of the commons was a term coined by Garret Hardin in his famous work published in Science Magazine in 1968 by that name. In this paper, Hardin’s description of an imaginary piece of “free common” land in which grazers have the incentive to cheat one another is a startling abstraction. The historical context of Hardin’s imagined landscape is most closely correlated to the early transition from common land to private land during the era of enclosures, but the mythical moment of landscapes without governance is historically inaccurate. Commons scholar David Bollier defines a commons as consisting of three parts: a community, a capital base, and a governance structure; the third element is blatantly missing from Hardin’s story. Although his work is of enormous importance, its transformation into a metaphor to explain “how the world works” and “human nature” has lead to fifty years of failed environmental policy and environmental markets.
The real story behind the depletion of our ecological wealth is one of enclosures for productive efficiency — stripping resources from ancestral ownership and well-run management systems that had lasted generations in order to increase agrarian-derived profit for the aristocracy and free up labor for growing industrialization of production.
Naked capitalism — in which markets are not nested in healthy relationships with the participants, resources and context from which the markets emerge — is just the process of looking for the next commons to enclose and liquidate.
What do we mean when we refer to a commons, and what is the definition of a market? Now that I’ve rattled the cage enclosing your understanding of markets and commons a bit, things will start to swing back towards a market-compatible (if not market-driven) approach.
A commons can be defined as the following:
- A shared resource
- A user group of that resource
- A protocol for governing the use of the resource by the user group
- A protocol for upgrading the governing protocol that is managed by the user group itself.
Successful commons usually follow the eight principles of Nobel-winning economist, Elinor Ostrom, which will be elucidated later.
That is not to say that there are not challenges in managing resources, nor is it to explain in some idealistic way the triumph of the collective over the individual. No, it is to point out that a commons is a shared resource in which the users of that resource govern the protocol of governance itself. In fact, as I mentioned above, those who truly desire to uplift individual liberty and dignity must eventually come around to the fact that individual liberty and dignity are only relevant or even possible in context. And that the context most suitable for individual autonomy and free will is that of a highly functional commons of which an individual is a governing steward. The irony here is that to actualize the desires of libertarians they must actively embrace the process of choosing which of their unlimited freedoms they will relinquish for their own good and the good of the whole system and resources upon which they depend.
Knowing this definition, one begins to see commons everywhere. If clear boundaries around use rights and responsibilities exist, with a mechanism to upgrade those rights and responsibilities: it is a commons.
Commons and Markets
Blockchains can be thought of as a commons, with the trust in a public ledger being the common pool resource being managed. For instance, in the case of the newly launched Cosmos Hub, the common pool resource being stewarded by the community is a durable, distributed and consistent ledger. Other commons that we interact with daily are landscapes, the air we breath, and open source software. Commons can be global, regional, local and of course digital. As noted, commons are anything but anti-individual — although, in order to properly manage a shared resource, rights and responsibilities must be assigned and then upgraded as conditions necessitate. It goes without saying that individual freedom to do whatever one wants will be limited to a set of options that either do not degrade or hopefully upgrade or regenerate the common resource.
Markets can be an essential tool for the management of commons — coordinating the relationship between nested commons and the individuals that make up various commons. Private property and individual liberty also may or may not play a role in how a group choses to implement a governance system around shared resources. For instance an indigenous group living in the Amazon may have a very different approach than a group of rancher in Wyoming. The key is to allow the local resource users to define their own rules.
You might think of the commons as the boundary conditions and markets as the connective function. Or, if we are to use a living systems metaphor, commons are like the nested hierarchy of life — each whole bounded by barriers that maintain integrity and functionality in relationship to a larger nested system. From cell to organism to ecosystem to biosphere, we can look to the living world of which we are a part to understand how life itself strives to create homeostatic conditions that maintain a structure and at the same time dynamically cycle nutrients on a massive scale.
The challenge or our generation is to explore and find balance or relationship between these two dynamic forces of markets and commons. We believe that the reconciler — the third force that generates the will to bring these two seemingly opposing forces into harmony — is planetary regeneration of biospheric health. This is the macro-system that creates boundaries and through which the nested systems of commons as connective tissue, and the metabolic inner functions of markets can be seen with startling clarity.
It is through this living systems lens that we will attempt to lay out a cogent and clear vision for a market solution to commons management, particularly focused on ecosystem stewardship.
Regen Network is building the tool kit to create agreements based on ecological health between the stakeholders, stewards and beneficiaries of ecosystem function. Some of the agreement types we are most excited about are “tokens” or crypto-currencies that are issued and “backed” by ecological health. In part two of this series I will explore the mechanisms for currency design to create currencies that are ecologically regenerative by design.
Designing Our Way Out of the Dilemma
Another commonly used and quoted tool of misunderstanding the challenges facing coordinating human activity in service to healthy outcomes is the Prisoner’s Dilemma.
Elinor Ostrom put it brilliantly in her critique on page 7 of Governing The Commons:
The prisoners in the famous dilemma cannot change the constraints imposed on them by the district attorney, they are in jail. Not all users of natural resources are similarly incapable of changing their constraints. As long as individuals are viewed as prisoners, policy prescriptions will address this metaphor. I would rather address the question of how to enhance the capabilities of those involved to change the constraining rules of the game, to lead to outcomes other than remorseless tragedies.
In other words: in what conditions do two people come together with a total incapacity to have a conversation in which they change the restraints they are facing? Incarceration. In this situation they clearly lack free will.
This dilemma has been expounded and used as the basis of economic theory and policy around environmental markets for nearly fifty years.
We would do well to ask ourselves, in what way do we impose upon ourselves or others the conditions of the Prisoners Dilemma?
As Ostrom notes, the three standard metaphors — Tragedy of the Commons (Hardin, 1968), Prisoner’s Dilemma (Dawes, 1973), and Collective Action Problems (Olson 1965) — are generally accepted as fact. Responses to these issues generally also fall into two categories:
Bad Idea Number One
Leviathan: An omniscient central authority — the communist central party, or perhaps the machine super intelligence being born from the depths of Silicon Valley as we speak. ”Have no fear our machine overlords will design a nice game for us to play.”
Sometimes, much to my chagrin, Regen Network has been asked to become this benevolent leviathan, perhaps to be later purchased by Alphabet Inc. after we perfect our earth monitoring algorithms.
As attractive as building a business, selling out and retreating to some private island might be to some of us, it does not at all appeal to the Regen Network team. It would be completely antithetical to the entire point! Why? Because we understand, in large part due to Ostrom’s work, that decision making and governance needs to be polycentric. Land Stewards and communities need to have the agency to manage their resources towards regeneration if we are to face the existential threat of climate change. So, you cannot sell to a centralized company, the governance of a platform in service to monitoring ecological commons. It would simply cease to work.
Leviathan can never have all the information, nor would it behave properly if it did. The techno-singularity-ubiquitous computing dream/nightmare is only the latest in a series of ill-fated collectivist pseudo-utopian quagmires that I would equate with Stalinism. That said, Google Earth is fucking cool.
Bad Idea Number Two
Privatization: Instead of playing against each other, play against nature. Take as much as you can from the parcel you’ve been granted (or stolen).
Of course nature had no voice in this game and perhaps the central authority is preferable to the degradation and insanity of simply dividing the earth into ever smaller parcels and granting the rights to the “owner” to “do as you will”. Even if land stewardship were to be accomplished by this privatization strategy (which it is demonstrably not), the real resource base of a landscape (hydrological, carbon cycle, and living biota that generate the abundance being harvested by farmers or ranchers) cannot be privatized successfully as it includes water tables, rivers, aquifers, air, migrating animals, and other factors that are oblivious to socially-constructed boundaries.
The immensity of the flows of living systems is irreducible to a single landowner or parcel of land, therefore making this strategy untenable even if we are philosophically in favor of private property and individual liberty as the panacea that will save us.
The two options outlined above are patently absurd when thought of as universal options. However these are the only two options being seriously considered by policy makers, corporate leaders, intergovernmental bodies and even emerging blockchain and technology developers. “Privatize or regulate” is not the right question, indeed it is not a binary choice. Both will have their place, but to consider either as universal misses the point. What happens when you get the right answer to the wrong question?
The Path Forward
Instead of universal application of privatized markets or state run policy schemes, we suggest a third way — the way that Elinor Ostrom brilliantly and formally outlined models and inspiration for —Polycentric, place and user driven governance of shared resources. This has only become possible at scale with the advent of cryptographic network technology intersecting with advances in the science of earth observation and ecological monitoring.
The key innovation of Regen Network is to make tools available to ensure that stakeholders can define the game that is governing the resource in question to any group governing a common resource. Regen Network allows users to get out of the Jail of imposed and extractive economic relationships and create new forms of ecological management and markets. This is a tool for you! This is everyone!.
Healthy markets are held by health commons. The following are Ostrom’s eight principles for a thriving commons which lead to Polycentric and Decentralized governance over common resources (such as air, water, soil etc)
1. Define clear group boundaries.
Regen Network makes it possible to clearly define a set of agents and organizations, the relationships between them, and link ecological health outcomes to the whole group and individual actors in the form of attribution. This enables exchanges and contracts both between the commons as a whole and other commons in a nested global system, as well as between actors within a commons.
2. Match rules governing use of common goods to local needs and conditions.
Ecological health monitoring is built into the protocol layer of Regen Network making it possible for all users to have near perfect real time understanding of the local conditions of the commons. Local needs can be easily written into ecological contracts and agreements both at a group layer and individual layer.
3. Ensure that those affected by the rules can participate in modifying the rules.
Ecological State Protocols and Ecological Agreements are governed by the stakeholder groups curating, using and enacting these tools. The larger blockchain is governed by the users as well.
4. Make sure the rule-making rights of community members are respected by outside authorities.
Brands, governments, and organizations are taking an active interest in Regen Network and will be users themselves, helping craft the appropriate rules to launch ecological markets governed by ecological commons.
5. Develop a system, carried out by community members, for monitoring members’ behavior.
We intend to propose a system by which reputation can be linked to identity within Regen Network, enabling community oversight, which will be up to our governance to implement.
6. Use graduated sanctions for rule violators.
In the context of Regen Network you can think of the sanctions in our system as relating to
- The core functions of network state (through validators) and compute integrity (through oracles). Regen’s protocol will include graduated slashing in which the first offense is slashed less severely than the second and so on. By the third offense the cost will essentially loss of stake. We will assume that the first offense may be due to a technical error, and because we want to incentive adoption, innovation and participation it does not make sense to have heavy slashing for the first offense, especially in light of the ease of discovering Byzantine behavior in both validators and compute oracles.
- The agreement between network users about ecological health, which can be customized to run functions or contracts which will make graduated sanctions easy to generate between users.
7. Provide accessible, low-cost means for dispute resolution.
There are many ways by which disputes can be arbitrated including on-chain solutions, legal pathways, and mediation — all of which can be defined in a agreement or contract. Again this needs to be considered first on the level of arbitration related to core functions Regen Network, and arbitration of agreements between users. As noted users will be able to chose the arbitration system of their choice. Arbitration at the protocol layer essentially boils down to our PoS on-chain governance system.
8. Build responsibility for governing the common resource in nested tiers from the lowest level up to the entire interconnected system.
Regen Network can be thought of as a commons, or perhaps more accurately as a nested set of commons. Like a set of Russian dolls. This base layer of this is the blockchain itself. Regen Ledger is a protocol whereby trusted information about ecological state can be used by anyone in order to enter agreements about about ecosystem health. This could result in the issuance of non fungible tokens, the creation of various forms of futures, derivatives, compliance based agreements, product premiums etc, all of which rely on information about ecosystem health that is trusted (and audible) by the parties creating an agreement. This is a public good which users cannot be excluded from enjoying, although it also takes the form of a common pool resource in so far as to participate in producing this good and governing the blockchain you must own tokens and participate in the protocol.
The second nested layer is in the how the application logic of Regen Network allows users to create and execute the agreements that are mentioned above. Essentially any user can create an ecological resource commons to govern a shared resource (like soil health or air quality). That is the magic of Regen Network in a nutshell.
This understanding is helpful for seeing how the essence of Regen Network can express itself in service to regenerative outcomes.
The ability to easily fulfill the above eight principles is a bit part of what we are offering to our users. These principles were distilled from a lifetime of empirical observation of when common pool resources (such as soil health, air quality, fishery health, and water rights) were managed for regeneration or conservation versus when they were not. This understanding is a large part of why the blockchain is important as a base layer — because it creates a tool for social consensus and governance. Not just because it creates a distributed database, but because it creates a state machine that a group of participants can encode with the economic agreements that tend to create outcomes that benefit the whole. In the next part of this blog series I will go into more depth around the intersection between commons and markets, and how market mechanisms (such as tokenization and the creation of local, ecological health backed currencies) can de designed and launched using the Regen Network Platform. Our aim is nothing short of planetary regeneration, and a key to unlocking that potential resides in currency and token design.