The Tragedy of Market-Oriented Societies

In our market-oriented societies, housing is viewed mainly as a commodity supplied and allocated by the market with occasional government intervention to assist low-income families and individuals.  But housing is not simply a commodity.  It is a complex good that, above all, is a fundamental human need.  Beyond that, housing is also viewed as an investment good, offering an income stream to the owner, protection against rising house prices and the potential of capital gain and associated income tax benefits.  As an investment, housing also attracts a special kind of investor - the speculator.  This multi-faceted nature of housing complicates the allocation of housing and impacts its affordability. 

There are three main alternatives for providing housing in our market-oriented society:  by the private sector through the market, by the public sector through direct or indirect government intervention and by civil society through self-organized initiatives.  By far, the majority of housing is provided through the market. 

With our newly-awakened awareness of the inequalities in our societies and the lack of access to affordable housing, we are hearing growing calls for government to “do something”, to intervene to ensure families and individuals all have access to adequate, affordable housing.  But, how realistic is it to expect governments can, in fact, “do anything” to address this growing problem in these times of economic and financial crisis when they clearly were unable, or unwilling, to do something to guarantee the right to housing before the 2008 economic crisis?  We are looking in the wrong direction if we expect government or the market to get us out of the very situation they are responsible for creating in the first place.  We need to turn our gaze, instead, to the commons.

Almost everyone associates the commons with Garrett Hardin’s 1968 essay on “The Tragedy of the Commons” – the hypothetical story Hardin told about an open pasture and how, if herders were left to their own devices, they would put more and more cattle out on the pasture until it was inevitably overgrazed and destroyed.  His solution to this perceived problem was to privatize the land or place it under the control of the state.  Fortunately, thanks to the groundbreaking work of Nobel Laureate Elinor Ostrom , more and more people are learning about the tragedy of Hardin’s mistake.  As Ostrom points out, Hardin was not describing a commons, he was describing an unorganized, open-access regime with no rules, norms or practices regarding access or use.  Ostrom has clearly demonstrated that, under certain conditions, groups of stakeholders can and do self-organize to protect, preserve and manage their commons.  Unfortunately, however, Hardin’s prescription to privatize the commons or place it under state control is still the dominant thinking and we are only gradually awakening to the powerful capacities of civil society to self-organize to manage our commons. 

That's not to say there won't be a role for government and the market in a commons-oriented society - indeed there will be, but it will be a negotiated role that empowers civil society through our rightful access to our natural and human-created commons.