Most of us have heard of Adam Smith’s theory of invisible hand. (If you haven’t, the gist of it is: Left to pursue our personal self-interest, we will also inevitably help the greater good as well.)
Here’s a lesser-known theory by WiIlliam Lloyd, a contemporary of Smith. It’s called The Tragedy of the Commons. It goes like this.
Many herdsmen over the centuries grazed their cows in the commons (ie. a space owned by no-one, and used by anyone). Herdsmen naturally tried to maximize the number of cows they had grazing there. Because of disease, tribal warfare and poaching, the numbers were still small enough that the commons was not overgrazed.
Eventually, social stability was achieved and veterinary practices improved, so that the former limits on growth were no longer in place.
When an individual herder would decide whether or not to purchase another cow, he/she had to factor in the cost/benefit.
The benefit was all those included in having another cow – increased milk production, ability to sire other calves, and money gained at slaughter.
The cost was increased grazing in the commons – but this cost was distributed among all the herders, ie., the overgrazing meant everyone’s cattle suffered a bit, not just the individual’s new cow.
You see the dilemma – each herdsman is motivated to maximize the number of cows they have, yet collectively, they rush towards ruin (overgrazing and hungry, unhealthy cattle).
OK, Readers, over to you: What’s the solution?
Photo Credit: Erin