Тег: Ostrom

What should libertarians who observe the NAP do in such cases?

Montenegrin fishermen are complaining about Albanians, who blocked the Bojana River with an iron net and are catching almost all the fish.

In this situation, we see a typical case of state interference in the market, which inevitably leads to the most unpleasant consequences. As can be understood from the article, it is not just some random Albanian fishermen who blocked the river, but a very specific entrepreneur to whom the Albanian state granted a fishing concession.

Elinor Ostrom explains in detail in her book Governing the Commons how such problems are solved without state intervention. In short, the community of resource users gradually develops rules for use that minimize conflicts surrounding the trade, and this usually looks like a kind of sliding schedule of who can fish where and when, so as not to elbow each other and to ensure there is enough for everyone.

In this case, the state has left only options such as enduring it and catching the scraps from the master’s table in the lower reaches of the river, or fighting—for example, by carrying out sabotage against that very net, or against the concessionaire, or against the officials who patronize him.

Another option, for the peace-loving but persistent, is to bring the problem to a higher level, which is essentially an appeal to some external arbitrator. This is likely what the Montenegrin fishing association is currently doing. I wish them success; I love eels.

The question of the socialists’ place in the KU

What is the point of rooting for CJ if it’s obvious that the most hardworking and lucky people will choose a CJ that is more pleasant in terms of tax contributions, rather than CJUSSR2.0? Who is going to feed them?

анонимный вопрос

In the article about FCJ recently translated by our team, the approaches to how consumers choose certain jurisdictions are, in my opinion, covered quite well. I want to draw attention to the first two letters of the abbreviation: these are not just contractual jurisdictions, they are also functional and overlapping.

Indeed, a purely socialist jurisdiction providing all types of services simply will not survive in the market, especially if it is contractual, meaning one can freely exit it. A socialist jurisdiction is effective when it provides the service of delivering public goods with a strong positive economy of scale.

Examples of such spontaneously emerging jurisdictions are analyzed in detail in Elinor Ostrom’s book “Governing the Commons”. For instance, mountain pastures are extremely inconvenient to divide into small plots, and they are used for grazing by residents of several surrounding villages. To prevent the predatory exploitation of this rare common resource, they develop their own complex system of norms and enforcement, thereby forming a functional contractual jurisdiction. However, this jurisdiction is responsible for conflict resolution only regarding the pasture and does not interfere at all in matters such as school education. And in this sphere, for example, a network of public schools funded on a parity basis by all CJ members (socialism again!), a private school paid for by students’ parents, and a private school funded by an endowment fund can compete perfectly. This is exactly an example of overlapping jurisdictions.

Putting up fences here to stop the neighbor’s livestock from eating private grass would cost more than it’s worth.

What about water supply and housing and communal services in a free market?

анонимный вопрос

Let me talk only about water supply so as not to dilute, pardon the pun, the topic.

To provide a city dweller with water, it is necessary to:

  • find a water source
  • extract the water
  • deliver the water to the consumer

For all of this to work in a free market, each of these stages must be able to be carried out without coercion and bring profit to the person who carries it out. Now, let’s go through the points.

Find a water source

Given the presence of bodies of water, this is a relatively simple task, so let’s consider a more difficult case: searching for an artesian basin. To carry out this work, it is necessary to hire a specialized organization that will deploy its recording equipment on the ground, use it to obtain data from depth, process it, and draw conclusions about where the boundary of the basin is and, therefore, what the water reserves are. That is, it is necessary to reach an agreement with the owners of the land where the survey will be conducted, pay them the agreed compensations, and carry out the exploration. This task is not unsolvable.

In Russia, where all subsoil belongs to the state and land can belong to private individuals, geological explorers pay landowners for land damage, and the profit will ultimately go to whoever acquired a license for extraction from the state. In a free market, it would more likely be like in the USA, where subsoil rights belong to the landowners, meaning they are even more interested in the exploration of the subsoil beneath them. Also, as far as I could understand, the data obtained during exploration possess a certain redundancy, and therefore the disagreement of some landowners or the impossibility of surveying due to the location of buildings on the land will not significantly hinder obtaining a result. In other words, at this stage there are no particular difficulties for the market—there are ordinary entrepreneurial risks, where the money for exploration is paid, but no basin is found.

Extract the water

Here, again, the greatest theoretical difficulty is the situation involving an artesian basin. The thing is that it is usually large enough that the water intake wells exploiting it can be located on the land of different owners. If there are many consumers and little water, it is important to prevent the tragedy of the commons, otherwise the source will not be able to replenish naturally due to excessive extraction.

Several such cases are analyzed in detail by Elinor Ostrom in the book “Governing the Commons”, where she presents the main principles that extraction organizations must adhere to in order to prevent the degradation of the resource. Here, they will need a fixed agreement on water extraction norms, a monitoring body, and the ability to stop abuses, using a graduated system of fines. Moreover, interestingly, it is very important that there be a possibility for contract enforcement, but no less important that no state attempts to interfere in the process of concluding the contract itself. That is, for the confident resolution of such types of property conflicts, the existence of a developed free market is not just desirable, but absolutely vital.

Deliver water to the consumer

The question of who will lay and repair the water pipeline is similar to the question of who will build roads. Roads are built by those who need them, namely the owners of the real estate to which the road leads, because it increases their value. In the same way, a water pipeline passing through a plot of land increases its value, because it means that a water-consuming facility can be built on the land and then quickly and easily connected to the water supply.

So the picture here will be roughly the same as at the exploration stage. Either the landowners pay for the pipes on their land themselves, or, at least, they grant the water supply organization permission to lay the pipes, for money or free of charge—depending on what they agree upon.

Summary

Roughly the same approach can be applied to other infrastructure objects and other spheres of housing and communal services. The process of providing a service is broken down into stages, each of which must bring profit. At each stage, property conflicts may arise, which must be resolved by concluding contracts, and these contracts will either provide direct mutual benefit, such as a land lease agreement for laying communications, or be the result of a compromise, such as an agreement on water extraction quotas. And all these complexities, of course, do not compare to the complexities of organizing the same thing through central planning mechanisms—that is where the task is truly solved haphazardly: it consumes tax money and leaves the consumer dissatisfied.