Wolfgang Hoeschele on Contributory Resource Use

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Book: Wolfgang Hoeschele. The Economics of Abundance: A Political Economy of Freedom, Equity, and Sustainability. pp. 150-166

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Introduction to Contributory Resource Use

Wolfgang Hoeschele:

"One of the most important contributory resource uses is the free use of knowledge. The more people use a specific kind of knowledge, the more of that knowledge is in fact available: the use of knowledge is productive rather than consumptive. Therefore, promotion, instead of restriction, of the free access to knowledge will create the greatest amount of knowledge, both because more people know something, and because users of existing knowledge can and do add to the existing knowledge base. Since all new knowledge builds on preexisting knowledge, the most important means to ensure that innovation can proceed is to ensure that everyone seeking knowledge has access to it. Any barriers to the dissemination of knowledge should then be regarded as a kind of knowledge pollution, particularly since they impede any efforts to correct errors, or to criticize others’ uses of knowledge on ethical grounds (for example, that it is being used to favor some people over others). Knowledge that helps empower people depends on openness, while knowledge that is used to coerce, to exert power over the disempowered, thrives on secrecy.

The patent regime is a powerful barrier to the free dissemination of knowledge. There are two possible ways of tackling this mechanism of creating scarcity: either reduce the privileges granted by patents, or abolish them entirely. Any proposal to abolish patents would face severe opposition by those who claim that innovation will cease in the absence of patent protection.

But, as discussed earlier (p. 43-6), this argument trades off one scarcity against another—the artificial scarcity of knowledge created by patents against the scarcity of innovation that is expected to result if patents did not exist. As also discussed in Chapter 3, this creates a situation where plenty of innovations are being made, but these are unbalanced, favoring patentable and scarcitygenerating research over research that can directly benefit everyone—genetic engineering of a few varieties of seeds by multinational companies over farmers’ development of a multitude of land races, expensive medicines over healthy practices available to everyone, software monopolized by a few corporations over free sharing of innovations by a community of computer users, and ever new chemicals with unknown environmental impacts over ecological research.

If we want to continue on this trajectory, we should support patents in their present form. The kinds of innovation that truly help to find a way out are often of a different kind, such as selecting those few among thousands of chemicals that are environmentally safe to use in the textiles industry, and working out how to make fabrics using only those safe chemicals. This was accomplished by William McDonough, a professor of industrial design; the effluent from the production of upholstery fabrics according to his design actually turned out to be cleaner than the incoming water used (Ray and Anderson 2000: 163–164)!

That is, it is far more important that we find appropriate ways to use existing technologies and fulfill real needs than that we develop ever new technologies. Such observations point to the need to rethink our very concept of innovation (see, further, Zimmerer 1996; Blake and Hanson 2005).

Advance of knowledge is quite clearly possible in the absence of patents.

A company that is the first to apply an innovation can increase its profits even if it does not enjoy a monopoly. Yet, we must look beyond just technological innovation, recognizing that many fields of knowledge (including the humanities, the social sciences, and large parts of the natural sciences) advance in the total absence of any patent protection, motivated by a range of rewards for the researchers. These include the intellectual joy of discovery, the satisfaction of imparting new knowledge to others and thereby making a positive contribution to society, and the prestige of being recognized for advancing one’s field of study. The creation of new knowledge is in fact an area where Robert Sack’s (2003: 252–265) idea of gift-value, which draws on a wider literature on the “gift economy,” seems most appropriate. According to his conception, gift-value comes from altruistic giving, which inspires others to also give freely. Several of the examples he uses are drawn from the area of intellectual knowledge (see also Bollier 2003). Where is it easier to give than in a realm where giving means no loss to the giver, but can instead enrich the lives of both giver and receiver? Yet, academic knowledge creation, of course, also depends on financial resources. Research grants and rewards that provide no intellectual property rights do not impose knowledge scarcity on anybody, while providing monetary rewards for research.

On the basis of these considerations, I suggest that it may not be necessary to buy innovations at the cost of knowledge scarcity. Instead, the state as well as private foundations and individual donors could increase their support for innovation by offering grants and other supports to people with innovative ideas, to help put those ideas into practice. Any researcher using public funds would be required to publish his findings so that they become part of the public domain—as was the case in the United States prior to the passage of the Bayh- Dole Act in 1980 (see Angell 2004: ch. 4). With regard to privately funded research and development, some of our much-vaunted human ingenuity should be used to develop incentives other than patents to reward innovators who make their findings available to the public. Incidentally, none of these arguments is new: nineteenth-century free-trade liberals opposed patents as state-imposed monopolies, and also searched for other ways to promote research. It was only later that liberals conveniently forgot that patent-granted monopolies violate free-market principles (May and Sell 2006: 115 ff).

Despite the objections raised here, one can, of course, argue that patents continue to play an essential role in promoting innovation. A compromise solution would be to drastically limit the privileges granted by patents. This could occur through raising the burden of proof for patent applicants regarding their individual contribution to knowledge, restricting the scope of patents to the innovations that can truly be attributed to the patent holders, reducing the number of years that patents remain valid, and requiring patent holders to grant use-licenses for others at reasonable cost. It should also be made clear that discoveries and life-forms are not patentable. Discoveries are phenomena which have been revealed, not created, by the researcher, and include such things as gene sequences and varieties or species of plants and animals. Lifeforms, even those genetically modified by humans, consist overwhelmingly of elements not created or modified by humans (note that only one out of the multitude of genes making up an organism’s genome may have been modified).

In addition, life-forms reproduce themselves; they are not reproduced by humans. Farmers merely create the conditions that enable seeds to sprout, and laboratory technicians do no more than that when they allow organisms to reproduce in a lab. Legal patents can hardly be applied to the activities of nonhuman life-forms, which reproduce by their own efforts.

Furthermore, the issuing of globally valid patents must recognize the interest of a larger public not to suffer associated scarcities. Global patents are issued by the World Intellectual Property Organization (WIPO), which is part of the United Nations system. Although this organization provides opportunities for dispute settlement that can sometimes benefit people other than the holders of intellectual property rights, at base it is designed to promote such rights, rather than being an impartial arbiter between rights holders and everyone else. WIPO is funded by the fees for the provision of patent privileges, which gives it a vested interest in their preservation. It would be more appropriate to substantially increase these fees in order to provide large-scale funding for research and education in technologically lagging countries.

Policies such as the ones outlined here could help reinforce the idea that technological innovation can be a public choice. All too often, prevailing technological innovations are accepted as inevitable, according to the dictum that anything that can be done will be done. If this widespread opinion were correct, the world would be quite different: for example, we would have a flourishing renewable energies sector by now, since the technical challenges here are far less than those involved in nuclear energy and the disposal of nuclear waste. What is true is that, under current conditions, whatever can be done and is judged by oligopoly companies to be profitable will be done. Reclaiming those vital decisions from the oligopoly sector, transferring them to publicly responsible institutions as well as to individual innovators, and making technological advances available to a multitude of competing companies would effectively prevent the emergence of monopoly companies in new technologies, and enable ordinary citizens to regard innovation as a choice rather than a natural force beyond human control.

Innovative enterprises would retain competitive advantages even if patents were eliminated or greatly restricted in scope, since they would still be the first to acquire new knowledge, and to have incorporated its results into their production. They would be able to sell better products, or produce them more cheaply than the competition. However, it would be impossible for them to develop monopolies as a result of this knowledge, since their competitors could soon learn. Innovations would quickly overcome national boundaries, so that few countries would become dependent on foreign companies that control new technologies. There would perhaps be no more effective way to eliminate monopolies, to prevent the emergence of new monopolies, and to spread the benefits of modern industry around the world than the elimination or weakening of patent protections.

The more general activities of research and of disseminating knowledge (through publications and teaching) must retain their rewards even if knowledge itself is treated as a public good. Also, there must be mechanisms to ensure that knowledge is not degraded in the act of dissemination. Thus, copyright laws, fees for education, research grants and the like all have their proper place, though these, too, must be evaluated carefully to ensure that they do not produce scarcity in undesired ways. For example, if it is deemed necessary for the full participation of all citizens in contemporary society that they have learned certain skills, education in these skills should be available to all. If, in a given society, this objective can only be obtained by offering free schooling (and perhaps free lunches) up to a certain grade, then no fees should be charged—at least from those unable to afford them. If, on the other hand, everybody is able to pay fees that support the operation of the schools, then it is perfectly reasonable to charge those fees, rather than paying for the schools through tax revenues. Of course, mixed systems between these two extremes are possible as well.

Similarly, copyright laws should be evaluated as to the extent they support the legitimate interests of authors and publishers, or unduly restrict access to knowledge or culture. For example, there is a worrying trend of extending copyrights over ever longer time periods. In the past several decades, it has been observed “with only a bit of exaggeration, that [when] Mickey Mouse is about to fall into the public domain, the term of copyright for Mickey Mouse is extended” (Lessig 2001: 107). Such use of copyright law does not benefit creative authors or even publishers who take risks with new authors, but only publishers continuing to reap advantages from the work of dead authors, and the authors’ descendants who themselves did nothing to create the works in question. In addition, copyright protections are being inappropriately applied to an increasing number of different areas, such as computer code that counts as “literary works” (see May and Sell 2006).

It also needs to be recognized that, because research is and always must be a collaborative enterprise, research models based on the concept of the individual researcher do no justice to what can be achieved through effective collaboration. For example, Participatory Rural Appraisal, as described by Chambers (1997, 2004) and practiced by numerous groups (such as the pioneering non-governmental organization MYRADA in southern India), mobilizes the knowledge of local people to solve their own problems. When outside “experts” don’t tell people what their problems are and how to solve them, but facilitate discussion or “appreciative inquiry” (Cooperrider and Whitney 2005) about visions, aspirations, locally available resources and skills, then it is possible to break out of a discourse of scarcity and lack of resources and instead discover the abundance that potentially exists in a locality (see also Gibson-Graham 2005). Such ventures create locally specific, useful knowledge precisely among the people who have an interest in improving local conditions. Creating this kind of knowledge should be regarded as equally important as creating general and replicable “universal” knowledge, and thus be supported as “research.”

In support of the wider dissemination of knowledge, the aims of education and how to achieve them need to be rethought. Currently, schools often appear to primarily serve as gatekeepers to high-status jobs and a method to socialize us into the dominant norms of behavior, including the consumption-oriented mode of modern life. Instead, education should be reformed in order to support the notion of life as art. That is, education should not be seen primarily as a method to adapt young people to the job market, but as a means for people of any age to acquire the skills and knowledge they need in order to successfully live life as art. The teaching of specific job-related skills—that is, training—is another matter, which requires a very different approach from broader education (though it can occur within the same schools). Once people are educated in life as art, they are likely to be less prone to manipulation by marketers of various sorts (including the marketers of religion and ideology), and less overt regulation of market activity will be necessary.

Some of the basic skills currently taught in schools certainly can be used as tools for life as art, such as reading, writing and computer skills. However, other, equally basic skills are today completely ignored in schools, such as the ability to read one’s own and others’ bodies, to detect tension and to treat it by massage and other similar means, to notice how one’s diet affects one’s bodily functions and to modify it accordingly. Other equally basic skills concern interpersonal relations: how to deal with conflict; how to respond to others’ as well as one’s own emotions; how to seek to understand another’s point of view. Closely connected with this is the exploration of self—figuring out one’s own needs, wants, and values, articulating one’s own feelings and analyzing them. From this follow methods of self-expression in art, writing, the pursuit of knowledge, and spirituality. An entire curriculum can be constructed around the concept of life as art.

Learning, of course, also takes place outside schools—in many informal settings, in public libraries, at workplaces, by searching the Internet. Illich (1972: 103–150) has suggested numerous strategies to increase such learning opportunities—for example, creating “learning webs” linking people willing to learn with people who have the skills or knowledge they seek, or with peers interested in the same subject. Such learning webs could be part of local exchange trading systems (LETS), further discussed below (pp. 197-8). Miller (2000) presents current projects of creating learning communities inside as well as outside formal schools.

Existing educational institutions already serve the purposes of an education in the art of life to varying degrees, and could be challenged by teachers, parents and students to examine to what extent they support a vision of life as art, and to change their approaches where they recognize deficiencies. Change could also occur at the political level. However, any reform of education, even if vigorously pursued, will be slow to take effect, simply because changes in teaching methods can only gradually take root, new experiments in education have to be tested before being applied to large numbers of people, and it takes decades until the students who are the product of new educational approaches make up a substantial part of the adult population. Yet, however gradually, a vision of education for a life as art could promote the emergence of an increasingly diverse mix of educational and training opportunities, differing from one country to another, and providing opportunities for all kinds of people.

Reforms of the kind indicated here could contribute to reducing the scope of knowledge as a global control system. With intellectual property rights curtailed, it would be easier for nationals of all countries to gain access to the knowledge they need, and monopolizing any kind of knowledge would be more difficult. Furthermore, if one of the main goals of knowledge and education is seen to be life as art, it is impossible to quantify who has advanced further on this road than others, making it far more difficult to divide countries into the “developed” and the “developing.” In short, making knowledge abundant would weaken the nexus between knowledge and coercive power (in Michel Foucault’s terms), while strengthening knowledge as a means of empowerment for everybody.

Beyond knowledge, additional “contributory resources” which can grow and blossom if used well include trust and love. These are even more intangible than knowledge, and luckily nobody has yet devised ways to transform them into property. However, neglect of their importance is bad enough. Economic and political theories which assume that humans are not altruistic to begin with (except when called on to consume for the greater benefit of “the economy”) lead us to neglect the social conditions which support altruism and love, while focusing only on competition and control as methods to force people to act in socially responsible ways. While certain forms of trust (for example, in a currency) are certainly considered important in economic discourse, building the trust without which no lasting social relationships can exist is often neglected. Widespread cultural support for living life as art, as well as many of the more specific measures discussed below, such as the creation of more viable common property institutions, would make people more capable of loving and more deserving of trust, and thus help build up these vital values.

Typology of Resource Use

Neutral Resource Uses

If a resource use neither improves nor diminishes the resource, open access (lack of all property arrangements) should be the rule. Thus, for example, by breathing the air, an individual causes no damage. He does at this moment add carbon dioxide to the air, but this is part of the global carbon and oxygen cycles which maintain both the quantity and the quality of the air. Air for breathing must therefore remain an open-access resource if we are to ensure the least possible scarcity. Although nobody has yet claimed ownership over the air we breathe, our access to clean air is seriously curtailed by pollution. Thus, keeping air to breathe as an open-access resource demands that air pollution be strictly limited, at the cost of the polluters. Costs of pollution control should be passed on to the consumers who buy the products of polluting industries, so that they pay the full costs of production.

Another resource use that causes no impact on the resource is the act of walking from one place to another. The resource that is being used is the surface of the earth, and the use is locomotion. Wherever pedestrians do not destroy some resource on the earth’s surface (such as a farmer’s crop, flowers planted for their beauty, somebody’s reasonable sense of privacy, or the breeding grounds of a rare or endangered species), their passage should not be restricted. Conversely, because they can cause serious damage, motor vehicles should be confined to roads designated to them (as they normally are). Another use of the earth’s surface that causes no damage is resting or sleeping. Unless somebody chooses to sleep in a location where it causes real obstruction to others, she should be left in peace. A homeless person seeking a place to rest should not be harassed! In many cases, the same piece of land can be treated as private property for production purposes, and as openly accessible land for the purpose of walking or resting. For example, there can be public rights of way in a timber reserve, and, in many countries, people can walk along and sometimes across privately owned fields as long as they do not damage the crops.

Drinking water from a river or lake, or from a well operated by a handpump or a bucket pulled by hand, in no way impairs the availability of that water for others, either in quality or quantity. Therefore, drinking from openly available sources should not be restricted. This means that no charge should be exacted for this resource use, and drinkable water should not be polluted. However, in the case of distribution systems that provide piped water to households or businesses, charges can reasonably be exacted for transporting and distributing the water. There should also be charges for consumptive or polluting water uses, in order to cover the costs to either replenish or clean the water. For these uses, the water should be treated as a form of common property (this is discussed in more detail below, pp. 172-4).

Sunshine and wind, which remain unaffected by human exploitation, are and should remain open-access resources. However, the structures needed to capture solar or wind energy can and should be somebody’s property, as also the land on which they are installed. Ownership may be vested in individuals, cooperatives, or private companies as part of the private sector of the economy.

Enjoying scenic beauty and silence are two non-consumptive resource uses, as long as they do not require extensive travel or the fencing off of large pieces of private property. These two kinds of enjoyment have often become the privilege of elites because access to quiet places of scenic beauty has been impeded by a variety of scarcity-generating institutions, such as urban sprawl, ugly architecture that fails to harmonize with the landscape, private property that is so extensive that it impedes access to the entire landscape, and transport systems geared exclusively to private cars. These scarcity-generating institutions must be altered in order to allow everyone to enjoy scenic beauty and silence. However, this principle should not lead to the idea that all forms of noise-generation should be outlawed! People have a legitimate wish to enjoy themselves in ways that may appear noisy or ugly to some others, to celebrate with loud music, or to otherwise express themselves through noise. Appropriate compromises may need to be negotiated.

Closely related to the enjoyment of scenic beauty is the enjoyment derived from being in the “wilderness,” a landscape minimally affected by human resource uses, or from studying the animals and plants found there. There are powerful reasons to protect such places from human depredation, in order to preserve a wealth of species and potential human knowledge. However, such protection must always recognize the needs of people who already live in these areas, as well as their contributions to knowledge, natural resource protection, and the art of living. Here, some kind of common property regime should be implemented to protect biologically valuable areas, ensuring that everyone concerned is treated equitably and can participate in decision-making (for some approaches to this issue, see Brosius, Lowenhaupt Tsing and Zerner 2005).

Rivalrous Resource Uses

We are now left with “rivalrous” resource uses that are consumptive and/or polluting—that is, they may reduce the amount or the quality of the resource. These are the resource uses that must be regulated in order to ensure that the resource is preserved rather than depleted, and where it is important to institute various forms of property rights.

In respect of rivalrous resource uses, we need to ask the second question on the flowchart (Figure 8.1): is the resource in question renewable or nonrenewable?

Renewable resources can be managed such that they can be maintained in perpetuity. Technically, this is not usually very difficult to do, but ensuring that existing incentives actually favor sustainable and equitable use can be daunting. Non-renewable resources, on the other hand, can raise difficult questions of how to balance the needs of the present with those of the future in the face of probable depletion.

The exploitation of non-renewable resources, including such things as minerals, rocks, and fossil fuels, can impose scarcities on others in three major ways: by causing environmental impacts, by depleting a resource, and by monopolizing a resource. The environmental impacts can best be addressed via property rights in clean air and water and other assets that may be affected by pollution, rather than via property rights in the mineral resource itself. The scarcities involved in monopolizing or depleting a resource can, however, be addressed through property rights in that resource. In general, these scarcities are greatest if exploitable concentrations of the resource are to be found in only a few places, and if the demand for the resource is great relative to supply—or, in other words, when it is possible to reap large rents, unearned income derived from monopolizing a scarce resource. The most important question regarding non-renewable resources thus concerns the magnitude of rents relative to the regional or national economy (question 3 in Figure 8.1). Some non-renewable resources, such as granite and sand, are so abundant that depletion can be ruled out—in such cases, private appropriation of the rather limited scarcity rents may be allowed while ensuring that common pool resources, such as clean water, are protected.

Some rather less abundant minerals (such as some metals) are used in ways that allow a large degree of recycling, which reduces concerns about ultimate depletion, even though comparative costs may currently favor mining over large-scale recycling. It may also be possible to substitute other resources for some non-renewable minerals that are being depleted. In such cases, we need not be very concerned about depletion of the resource, but monopoly rents can be very important. In the case of minerals that cannot be recycled or where the total amounts accessible in the Earth’s crust are quite limited compared to demand, however, depletion is an important concern. The most important such mineral is oil, which is not recyclable if it is used as an energy source, and which yields enormous rents.

To whom are the rents to be paid? In other words, who is to own the resource? For example, how should the revenues obtained from mining oil in Aceh be shared among people in this province, in Indonesia as a whole, among the oil corporations, and potential others (such as governments of importing nations which impose fuel taxes)? Since nobody can justifiably claim to have a greater right than others to something no-one has produced, I would argue that ownership of non-renewable resources should be widely shared—for example, among the citizens of a nation in the case of scarce and patchily distributed resources that yield the largest rents, or among residents of a county or district in the case of more abundant and evenly distributed resources, which nevertheless generate large rents relative to the local economy.

Fees paid by mining companies for the privilege of exploiting a scarce non-renewable resource would then be destined in principle to benefit all the people of the country—for example, by funding more widespread education or by paying out direct royalties (as further discussed on pp. 167-71). This would require the institution of a representative, publicly accountable body that would govern the process whereby private companies bid for mining rights, and the distribution of the resulting revenue. Such an institution would reduce the corruption that often exists in granting resource extraction rights, and might therefore raise the costs of mining. This would ensure not only that more of the revenue remained in the country, but also that there would be more incentives for conservative resource use, recycling, and the search for alternatives. Companies bidding for the rights to extract resources would bid at a level that assures them a reasonable profit, including the potential to search for new, hitherto unknown mineral deposits. Hence, private enterprise would still get its due rewards, but the prices for natural resources would more effectively incorporate their scarcity value. This is economically beneficial because, in theory, economists argue that increasing scarcity of a non-renewable resource leads to increasing prices, and thus the market itself will ensure that people reduce their use of a resource as it is depleted. This theoretical relationship is only actualized, however, if an appropriate institutional structure is in place.

In addition, complementary strategies, such as eliminating radical monopolies in transportation, are also needed in order to reduce consumption of mineral resources, because increased price is a tool of scarcity and we must search for abundance-generating mechanisms to achieve our ends.

Turning to renewable resources, the next question (question 4 in Figure 8.1) is whether the resource is “excludable”—that is, whether the resource can be effectively divided into discrete management units, with most direct impacts of its use being confined to the unit where they are generated. For example, air that is used as a disposal site for wastes (through air pollution) cannot be subdivided into units, because the air moves freely. Surface waters can, to an extent, be divided into management units, such as drainage basins, but environmental impacts will clearly extend beyond any management unit, because pollution and sediments travel downstream beyond the drainage basin into the sea. Some of the impacts of agricultural land uses remain confined to the site (such as local depletion of soil nutrients), but others extend to various distances beyond (for example, soil erosion and groundwater withdrawal can have significant off-site effects). In such cases, we have to clearly define the spatial spread of various impacts, and accordingly develop varying ownership regimes for various resources.

A resource that cannot be subdivided into self-contained management units and is used in rivalrous ways, such as air or water used as a sink for pollution, must be treated as common property. This implies that no individual can claim the right to appropriate some portion of clean air or water, and foul it up or be paid not to pollute it. Such an action would constitute theft. Just as we do not require cost–benefit analysis to conclude that theft of private property should not be allowed (even if the thief makes better economic use of the stolen property than the owner did), we can conclude that theft of clean air or water should likewise not be allowed. Within limits, the degradation of common property resources may still be allowed, but only as a privilege obtained in return for some kind of payment.

In spite of the indivisibility of air and water, management units do have to be created in practice, but it is important to understand that they are not self-contained.

Thus, for example, the atmosphere knows no national boundaries, but regulation has to occur within administrative boundaries humans have created. Since there are now various pollutants which pose problems on a truly global scale, the global atmosphere could logically be treated as a global commons, governed by an institution which sets goals and standards of atmospheric quality on a global level (as advocated by Simms, 2005, for example). National governments would then implement plans to reach these goals within their borders, and might further subdivide responsibilities on a territorial and/or functional basis. As a common property resource, the global atmosphere would have to belong to all humans equally, which means that the global governing institution would have to be accountable to all people equally in order to enjoy full legitimacy. No institutional mechanism has yet been devised to ensure such accountability, but given the growing number of threats to globally shared resources, it may be time for such an innovation. Even in the absence of legitimate, democratic global institutions governing global commons, however, it is possible for national or international institutions to fill in the gap at least on a regional basis. Thus, air quality (within administratively defined borders), lakes, drainage basins, semi-enclosed seas, and even large parts of the ocean can be treated as common property resources. For example, the Mediterranean Action Plan aims to clean up the Mediterranean, recognizing that its waters are shared by people belonging to 20 countries, and that the whole region will benefit if pollution is reduced (Dardis and Smith 1997). If this region is cleaned up, it will cease to contribute to the pollution of the Atlantic Ocean. If similar programs are undertaken in other hotspots of marine pollution, the global problem of marine pollution can be substantially reduced. Global conventions, such as MARPOL (the International Convention for the Prevention of Marine Pollution from Ships), will then be needed primarily to deal with pollution on the high seas. Considerable progress has also been made in some river drainage basins, such as that of the Rhine, as a result of international cooperation (see Shmueli 1999). At the regional level just as at the global level, however, it is important to ensure that institutions charged with managing common resources are democratically legitimated, and are not captured by the interests they are supposed to control.

In the case of resources that can be divided into discrete management units, the next question (question 5 in Figure 8.1) concerns the number of management units into which they can be divided without impairing management efficiency. Sometimes, the number may be very small, particularly for utilities, transportation and communication networks, and facilities for the production of specialized high-technology manufactures (for example, factories producing large commercial airplanes and specialized military hardware). In such cases, there is an extremely strong tendency toward oligopoly or monopoly control. It bears pointing out that an oligopoly at a global or national scale may involve monopolies at smaller scales if competitors have divided up the market geographically, and thus a full analysis will have to take all spatial scales into account. For example, there can be many electric utilities, water supply companies, sewage treatment facilities, and garbage disposal companies in a country, but all of these services are usually best organized on a territorial basis, meaning that any one area is served by only one company (these have often been referred to as “natural monopolies”).

Regardless of whether these facilities are owned by the public or private entities, there is a great danger of the monopolistic creation of scarcity, either through charging excessively high rates or not delivering adequate quality. In such cases, a third alternative would consist of ownership by the customers. The customers would have an interest in efficient service delivery but not in maximizing profits; their ownership would thus offer the opportunity to obtain the best of both worlds, of private and public ownership. Institutions would have to be devised that allow customers to exercise effective ownership rights; perhaps customer/shareholder representatives could exert the same rights as shareholders and their proxies in conventional corporations. Similar arrangements might be organized for oligopolies in sectors which are not “natural monopolies.” Some relevant ventures have been organized along these lines: for example, health insurance was first organized in the nineteenth century as small-scale non-profit ventures run by the insured people; only later were these centralized under state or private-sector leadership, with professionalized management that often became remote from the needs of the insured. In some cases, formal structures allowing the insured to control management still exist, but do not actually encourage participatory control in practice—for example, because effective oversight requires the devotion of many hours of work on a purely voluntary basis. The question in such situations is how to alter the institutional structures so that they can promote meaningful participatory management.

Even if a “natural monopoly” is owned by its customers, there is still a need for public oversight because the collective interests of customers might be at variance with the interest of the public as a whole or of future generations. For example, a customer-owned water utility might be concerned with the quality of the water delivered to its customers, but be less concerned with downstream water quality affecting other users or the ocean. Public oversight would have to reflect the interests of those most likely to be ignored by the owners of the monopoly or oligopoly. In the case of the military industry, the main customer of which is the government and the product of which is supposed to be national security, public oversight would have to recognize at minimum every taxpayer’s and citizen’s right to be represented. Of course, not everyone would be able to actually engage in that oversight, which means that some kind of delegation of responsibilities would have to occur.

In contrast to those resources subject to “natural monopolies,” many other resources or assets allow a multitude of management units. Examples include land used for agricultural production (farms, forestry), urban land and buildings used for housing, and the assets of all kinds of small and mediumsized businesses. Here, the final question (question 6 on Fig. 8.1) is whether private property of these assets is compatible with equity. If it is, then private property leads to the least possible scarcity; if not, management as local common property resources or cooperatives is preferable. Some examples may help clarify this point. Forests, grazing lands, or irrigation facilities used by many members of a village community often play an essential role in rural livelihoods. They are used in ways that are potentially both depleting and degrading, which means that open access is not a feasible alternative. They can be divided into discrete management units, of which there can be very many in a single country, and even within a local administrative unit. The most serious adverse impacts of their use tend to be felt within the immediate area, and thus it is not necessary to manage them as national or global commons.

However, if they are treated as private property, only a few individuals within the village will profit from them, at the cost of increased scarcity for the rest of the village and intensified conflict over resource use. It is thus usually most appropriate to manage such resources locally as a common property resource. On the other hand, the assets of small businesses (including agricultural farms) and individuals’ or families’ own houses or apartments should be protected as private property. These are discrete management units, of which there is a multitude even within a small town, and the owners of these units do not create scarcity for others by virtue of their ownership rights.

Cooperatively and individually owned assets may, of course, exist side by side, as when some of the land in a village is held privately, and other land by groups of owners. For example, the Deccan Development Society promotes cooperatives consisting of groups of poor women in the state of Andhra Pradesh, India, without challenging the private property rights of other landowners (Agarwal 2003).

Likewise, numerous worker-owned businesses (the Mondragon cooperatives) exist alongside privately owned businesses in the Basque country of Spain (Kasmir 1996; Gibson-Graham 2006). E.F. Schumacher (1975: 274 ff) described the Scott Bader Company, which the founder, Ernest Bader, had transformed into an enterprise owned by the “Scott Bader Commonwealth,” a non-profit organization owned by the employees, which distributed half of its income among the employees, and supported charitable projects with the other half. This company still exists, selling polymer resins in the capitalist marketplace (see its website, http://www. scottbader.com/pub.nsf). Institutional pluralism of this kind allows people to learn from each institution’s successes and failures and thus develop better institutions.

The transformation of the Scott Bader company from an individually owned to a collective enterprise has been due to the altruistic vision of its owner, and the success of the Mondragon cooperatives in Spain has depended greatly on historically evolved conditions in the Basque region (as well as the original initiative of a small number of individuals). Similar transformations can be encouraged elsewhere by policies that make it easier for employees to form cooperatives and to buy out firms. In addition, inheritance laws could be modified in such a way that passing on a company to its employees would be burdened with far fewer taxes than passing it on to the owner’s descendants. Although market liberals would oppose this policy, it accords well with liberal justifications for property as reward for one’s work (both the work of the deceased owner, as well as of the current employees). Furthermore, the children of a business owner are not necessarily the most qualified persons to run an enterprise, just as the son of a monarch is not necessarily qualified to take over leadership of a kingdom. If the owner’s children have proved their leadership qualifications by being involved in management, they would receive a share of an employee-owned company in proportion to their own involvement.

A situation that is rather more difficult to resolve occurs where the potential number of discrete management units is very large, but the actual number is small. Examples include agricultural plantations employing large numbers of workers, many manufacturing enterprises, and chains in the service sector (such as chain restaurants, hotels, and retail stores). Agricultural plantations and factories often enjoy a status as a near-monopoly employer and/or landowner in an area, undermining the bargaining power of workers, while service sector chains can undercut local competition, leading to serious scarcity. Perhaps it would be possible to develop taxation or regulatory regimes to make these kinds of businesses less profitable than their smaller competitors, thus gradually leading to a deconcentration of the respective economic sectors. In many cases, agricultural plantations have had to be broken apart forcibly through land reform in order to give opportunities to large parts of the agricultural population. Simply reforming policy environments so that they hinder, rather than facilitate, the creation of monopolies could have major positive impacts.

In summary, resource-use rights should be designed to ensure that resource uses which improve or at least do not degrade a resource are both encouraged and protected from any potentially degrading resource uses. Resources that for any reason must be shared among many users (whether for reasons of environmental sustainability or of social equity, or because they simply cannot be divided) should be treated as various forms of common property. Finally, resources that can be managed in small units with widely dispersed ownership should be treated as private property or worker-owned cooperatives, allowing for the free play of the market. Questions of economic efficiency and how to refine each kind of property institution are subordinate to these fundamental considerations. Any ideology that claims that only one form of property will solve all problems will lead us astray: we need no radical monopoly of private property, state property, or any other kind of property."