Property Rights and the Environment

Sandy Ikeda offers a nice summary of Elinor Ostrom’s views in a recent Freeman column. As Sandy notes, Ostrom is famous for documenting, through carefully done case studies, how individuals work together to solve various kinds of externality problems without recourse to formal (state) institutions.

However, Sandy follows Ostrom’s somewhat confusing language in describing these voluntary solutions as “neither the state nor the market.” That is true if one defines “market” narrowly to mean formal property titles to specific parcels priced and exchanged via Coasean bargaining. But surely informal, private agreements — social conventions, relational contracts, customary law, and the like — are also part of the market, broadly defined as social cooperation under private property and the division of labor. Robert Ellickson, Bruce Benson, and others have described many kinds of these informal, private arrangements.

Perhaps it’s useful to distinguish between what Mises called “catallactics” — the analysis of exchange, pricing, formal contracting, etc. — with economic activity more generally, which takes place in non-catallactic settings like the Crusoe economy, the family, the business firm, etc. The arrangements Ostrom describes may be non-catallactic but, as long as they do not involve state intervention, are part of the market order, and consistent with property rights and libertarianism per se.


  1. With respect, I disagree.

    Of all the situations Ostrom studied, I am only really familiar with the Bangladeshi situation. Those rural lands are in no identifiable sense subject to the concept of private property. The locals govern and manage those lands centrally – at least central to each village doing the governing. The question is exactly how we choose to define “The State.” If the official Government of Bangladesh lacks the ability to manage property rights in rural Bangladesh, that does not mean that the property is being managed by private individuals, at least not in my opinion.

    Village councils may not be an example of the official state of Bangladesh, but are they not governments? I think situations like that show a greater degree of federalism, which tends to be better for freedom and for markets. But, I do not think they represent the absence of government in any meaningful way.

    So long as a committee of people are sitting around, making decisions about property – rather than people being able to manage property via transfer of ownership and other _market_ behaviors – I feel we are looking at “The State” in action. Even if the “state” that regulates these lands doesn’t happen to be the same “state” that sends representatives to the United Nations.

    • Roderick, I think some of this disagreement is terminological. I assume you and I both define “State” in the usual way, in terms of coercion. So how do we classify voluntary, non-coercive, forms of collective action? A family, church, club, or business partnership may be governed by “a committee of people … sitting around, making decisions about property.” My wife and I don’t exchange formal property titles using money and economic calculation (at least, most of the time we don’t). We both agreed freely to this arrangement. Likewise, I may agree to be governed by managerial fiat, rather than exchange, for a specified period of time and with certain limitations, when I agree to work for a firm. None of these arrangements is part of the State, simply because they involve group decision making, right?

      I’m somewhat more familiar with Ostrom’s cases. Some of them do involve legislators, bureaucrats, and courts as part of the decision-making consensus, and these actors are certainly part of the State. But others are purely voluntary, customary, conventions that don’t appear to involve any coercion. As I noted above, we can break down voluntary interactions into catallactic and non-catallactic forms, and these distinctions are important. But it seems misleading to me to classify voluntary, non-catallactic interactions as part of the State.

      • First, I should clarify that I am not Roderick T. Long, although we share a surname (but no relation that I know of) and I am a big fan of his.

        I think you make some good points. However, consider the case of a theocracy. At what point does government-by-religion depart from “tradition,” and become “the state?” To me, it is a difficult question and the line is very blurry. It almost becomes an arbitrary differentiation made by the observer: This “organization by tradition” appears small and so is not an example of a state; that “organization by tradition” appears critically large and particularly “statey,” therefore I will call it “the state.”

        Probably there is an answer, but requires some careful consideration. I certainly don’t have the answer, but it at least *feels* to me as though any collection of individuals intervening in an otherwise market-based process has all the usual risks of being a state. In the case of theocracy, for example, situations are governed by “tradition,” and we all voluntarily choose our beliefs – but the risk of eternal damnation certainly has all the hallmarks of “coersion,” too. And certainly many Americans would describe their relationship to a democratic republic as being voluntary.

        I guess I worry that this kind of analysis may set us up for being in a situation where “voluntary interaction” that we like gets deemed stateless, but “voluntary interaction” we dislike is deemed state coersion. It seems to be a very difficult line to draw – easy in the extremes, but more difficult the further we get from the “poles.”

        • Oops, sorry to RP Long and to Roderick Long for the confusion. (A quick Google would have told me that Roderick is R. T. Long, not R. P. Long.)

          I think that voluntary submission to authority is perfectly consistent with economic liberty and the free market. The exhortation “God wants you to do X” still sounds to me like persuasion, not coercion. But I’ll wait for the philosophers to weigh in.

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