Wolfgang Hoeschele on the Economics of the Commons

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Biographical Material


Bibliographical Material

Books:

  • Wolfgang Hoeschele. The Economics of Abundance: A Political Economy of Freedom, Equity, and Sustainability. Gower Publishing, 2010


Articles:

Available via http://www.icape.org/b5-Hoeschele.pdf

Excerpts


Atmosphere Commons

Wolfgang Hoeschele:

'The final example of shared property I will consider here is the atmosphere. The global atmosphere is truly indivisible; the air I breathe includes gas molecules that may have recently been part of the biomass of a plant or animal or human anywhere on the planet. This also means that private property in the atmosphere is impossible. And yet, pollution rights are being created and traded as private property. To a degree, such tradable pollution permits can achieve positive outcomes (as in reducing sulfur dioxide pollution in some regions), but at the level of greenhouse gas emissions into the global atmosphere, there are severe problems with the cap and trade systems so far developed. These allow big polluters to obtain free permits, which they can then sell if they reduce their pollution, instead of making it very clear that all polluters must pay the public at large for permits to pollute. And unless the revenue from the sale or auction of pollution permits benefits all people equally, cap and trade systems are likely to have regressive income effects, i.e., affecting the poor the most adversely.

A very interesting proposal that would rectify these problems has been made by Peter Barnes (2001, 2006). Building on the idea of the Alaska Permanent Fund, which distributes oil wealth equally to all Alaska residents, Barnes proposed that a similar system be established to limit carbon dioxide emissions, or other kinds of pollutants. The basic idea is that all polluters pay into a fund in proportion to the amount of pollution they emit, while all residents of an area receive payments out of that fund on an equal per capita basis, as equal co-owners of the atmosphere or of the water or land resources of an area. Instead of monetary payments, the fund could also provide for public benefits, such as health care or education, but it is critical that at least half of the payments would be in cash. The cash part of the payment would allow people toward the lower end of the income spectrum to pay for the increased costs. In fact, because people would pay in proportion to their consumption but receive on an equal per capita basis, poor people, who consume less of everything, should receive a net benefit, while rich people would pay more than they received. It is this feature which would allow environmentally beneficial higher costs for pollution or resource degradation (which lead to higher costs of many consumer products) to have a socially progressive income redistribution effect. In fact, if they did the math, poor people would lobby to increase the fees paid to polluters, because they would receive a greater payment every month that would more than compensate for any increases in their expenditures! Furthermore, because a rather small number of people in any country enjoy disproportionately high incomes, far more than half the people earn less than the average income of a country (in other words, the median income is far lower than the average income). This means that far more than half the people of a country would experience a net benefit from this system, while at the same time environmentally destructive practices would become economically inefficient.

What makes this scheme even more interesting is that the rich and middle class people would have no cause to claim that their hard-earned money is being squandered to pay for the laziness of the poor. Everyone would be receiving unearned income, and if the poor received greater payments, so would everyone else. Given that there are large amounts of unearned income (rents), it makes much more sense to spread unearned income evenly among all the people rather than allow only a few to get all those benefits! Hence, making environmental resources such as clean air and clean water our collective property in a way that is truly enforceable and provides benefits for everyone would make it possible to reconcile environmental protection with social equity. This is in marked contrast with efforts to make environmental destruction expensive, which tend to have regressive impacts on income distribution. We’d have both abundant natural resources, and abundant livelihoods! " (http://www.icape.org/b5-Hoeschele.pdf)


The Fisheries of Baja California

Wolfgang Hoeschele:

"Fish and other marine organisms that freely move around in the open sea cannot be owned – they only come into private or other ownership once they have been captured. However, there can be collectively imposed property rights regulating who is allowed to fish where and when, and using which methods. An interesting case has been described by Emily Young (2001) in two localities along the Pacific Coast of Baja California Sur, Mexico. In the 1920s and 1930s, these localities (Laguna San Ignacio and Bahia Magdalena) were rather isolated and distant from markets. Small communities of fishers fished for subsistence purposes as well as transporting dried fish to markets by burro (a 12-day trip) or selling them to passing merchant ships. At that time, there was an essentially open access regime (absence of property rights), which was sustainable because demand was limited by the small local population and the difficulty of accessing markets elsewhere.

As transportation infrastructure was extended to these places and the Mexican state became interested in developing the fisheries from the 1930s onwards, the open access regime was replaced by a complex and contradictory set of property rights. Federal laws created three sets of fishers, pescadores libres, cooperativistas, and permisionarios. The “free” fishers were allowed to fish from local fishing grounds for subsistence purposes only (and were thus not allowed to sell their fish), while members of cooperatives were given concessions to fish commercially valuable species (e.g., abalone, lobster, and sea turtle), but were allowed to sell these only to a government-owned monospony company which sold these products abroad. The permit holders were allowed to harvest fish not reserved for the cooperatives, and could sell them on the open market. The government continued to claim the right to enforce regulations, such as fishing seasons, quotas, and restrictions on equipment. This not only created a complex set of overlapping private, communal (cooperative) and state property rights that were technically difficult to enforce, but also left enforcement to a government that had relatively little stake in the preservation of the resource. The result was overfishing and the degradation of the fisheries.

With the advent of neoliberal policies in the 1980s and 1990s, fisheries were liberalized in Baja California Sur. Cooperatives no longer had exclusive fishing rights to certain species, and had to compete with permisionarios for permits to fish the same species. The monopsony buying company was privatized and deprived of its exclusive buying rights. The access to international markets was further facilitated. This led to increased profit potential in the fisheries, more incursions by fishing companies from outside, and more conflict between different groups of fishers. Now there was a mix of private and state property rights that remained equally difficult to enforce, and government still had little stake in the preservation of the resource. The result was accelerated overfishing, the creation of scarcity of fish and the undermining of local livelihoods.

A method to overcome these conflicts of interest that support what Young calls a “tragedy of incursion” would be to assign property rights to the people who have the greatest stake in preserving the local resource, and assigning the property rights to a collective rather than to individuals in order not to favor short-term individual interests over the long-term collective interest in sustainability. This could be done by identifying the fishers who are residents of the local community, and having them create a collective structure that then regulates fishing in the area – catch limits for individual species, fishing seasons, limits on technologies to be used, and so on. Collectively, they would have an interest not only in the long-term survival of the species they fish, but also in avoiding a glut in the market now that would undercut their own profitability. Individually, each member would have an interest in other members abiding by the rules, so there would be mutual enforcement of the rules. While there would have to be government support in enforcement (e.g., preventing the incursion of large trawlers from outside), the overall government enforcement effort could be drastically reduced. Hence, a shared ownership mechanism that ensures that the collective interest in the preservation of the commons prevails over individual or outside interests would also ensure the continued abundance of fish, and of fishers’ livelihoods. Such goals have apparently been achieved in the case of some fisheries through catch-shares, where fishers within a fishing community can acquire the rights to a certain percentage of the total (both now and in the future), and each year’s catch is determined through study of the fish populations (Environmental Defense Fund 2011)." (http://www.icape.org/b5-Hoeschele.pdf)


Oppressive Scarcities

Book Source: Wolfgang Hoeschele. The Economics of Abundance: A Political Economy of Freedom, Equity, and Sustainability. pp. 19-20

Wolfgang Hoeschele:

"The discussion in Chapter 1 claims that needs and wants can be consciously generated in order to create profitable scarcities. However, it is important to go beyond such general claims and systematically examine the various methods of scarcity generation. Scarcity, we must remember, is the condition when available goods do not meet current demands. There are basically three ways in which scarcity can be generated. First, the total amount of a good or service can be reduced. For example, the expansion of market activities may reduce the amount of goods provided by nature (such as clean air) or by nonmarket mechanisms (for example, self-provisioning of food, free exchange of knowledge), or those that result from the absence of commercial activities (such as silence and open space). Second, barriers can be placed between people and a good. Of potentially many ways to obtain that good, only one or a few may be left available, leading to the creation of a bottleneck. People can be made to pay in various ways for taking goods through the bottleneck. An example of this mechanism is the elimination of diverse forms of movement to the point that “mobility” is reduced to the use of a privately owned car. Monopolies also fit into this category of scarcity generation—a particular good is available, but must be purchased from a single seller. Third, new wants or needs can be created, or existing ones modified, so that demand for a commodity exceeds supply—for example, by means of advertising, ideological indoctrination, or legal standards. All three basic mechanisms not only increase scarcity, but also curtail freedom by forcing increased expenditures on people and reducing available options of how to satisfy their needs.

Throughout history, we can conceive of social power as having been based in part on the construction of scarcity, but the methods of producing scarcity have continuously changed as a result of changing social circumstances, new technologies, and differing natural environments. Every historical period is characterized not only by varying combinations of methods to create scarcity, but also by specific ways of institutionalizing these methods—that is, its own scarcity-generating institutions. In this chapter, I begin the discussion with several such institutions which are normally considered neither economic nor modern, but which continue to persist and interact with modern economic institutions. Any attempt to avoid the scarcities invented in modern times should also avoid the scarcities created by these older institutions—romanticizing the past will not lead us forward. What these institutions have in common is that they explicitly prohibit people from engaging in certain types of behavior or expressing deviant thoughts, often based on the “station in life” into which they were born. In a word, they oppress."


Pleonexia

= the disease of overconsumption

Wolfgang Hoeschele:

"The phenomenon that some people cannot be happy even at a high level of material consumption will not be seen as a justification for more consumption, but rather as a pathology akin to alcoholism or overeating (the ancient Greeks called this “malaise of the soul” pleonexia; see Booth 1993: 247–248). An alcoholic’s life cannot be improved by supplying him with more alcohol, and an obese person’s life cannot be improved by providing her with unlimited food. These people’s lives can only be improved by curing them of their addictions, and so it is with “consumptives” or “pleonexics,” who think they are suffering from scarcity even if they are consuming endless commodities. What these people are lacking is not the addictive substance, but other resources, both material and non-material, needed for dealing effectively with the challenges of life, and for living life as art."

Book Source: Wolfgang Hoeschele. The Economics of Abundance: A Political Economy of Freedom, Equity, and Sustainability. pp. 131-44