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Essi Lindstedt-White: The commons – tragedies, games and corporate citizens

17 March 2015 – One of the areas we discussed in our first week in Cambridge was the challenge of shifting business incentives from the short term to long term, which would line up better with sustainability.

Essi work

"We recognised that shifting incentives to the long term is a major undertaking and the conclusion I felt we were nudged to is that it can only happen if top leaders make those decisions."

Essi Lindstedt-White, Master's Cohort 5


One of the lecturers made a comment that stuck with me: "No CEO wants to be the last" – i.e. the one that brought the company down. I agree that key individuals can make big changes. But that leaves the question of how leaders represent and cooperate with their communities, and how we all look after the things we hold in common – nature and knowledge being two examples of that.  My reason for doing the course was (partly) to look for ways to bring different cultures together in an alliance against ‘global public bads’ such as climate change. Community management is one way to preserve ‘the commons’ (see evidence for assertion below) but businesses as we know them are called  the private sector for a reason.How could two such different things co-operate?

My one-line definition of the ‘commons’ is that it is about how we steward the things we share, i.e. the things which are not privately held – whether that is a place of wild nature, or information on the internet. It is closely connected to the idea of ‘global public goods’, and some policy types have begun talking about ‘global public bads’.

I am not pretending that ‘business’ are the bad guys. At the social level the challenge of coalescing motivation to tackle climate change is even bigger – I’ve heard people who have children and grandchildren say that they don’t care about climate change because it won’t take effect until after they are dead.  If people don’t care viscerally enough about those specific cute little members of future generations that they play peekaboo with, what hope is there that anyone would care for people from a different class, a different country, or a different time in the future?

And ultimately if people don’t care enough in their personal lives, why would they be motivated to make a difference at work – to lobby their CEO and lead in their own sphere of influence  – or to be effective as a citizen, helping their community, being clear what deals they want governments to make for the common good, and protect us from our own worst selves? And so I sink into despair, think  – what the hell, might as well enjoy myself while I can, and leave the course and spend my free time drinking Martinis, sewing cocktail hats, throwing soirées and watching Modern Family. Actually, I sometimes really wish I was doing that. Sigh. There has been a Martini soirée deficit in recent months.

But. If I was to let myself think that humanity in general is doomed to be as driven by short-term incentives as the consumer feeding frenzy of Black Friday suggests, I’d be a total jerk. The actions of people all over the world prove that people are courageous and civil and smart and rational. And yes, tutors,  there is academic literature to back that up.

The ‘Tragedy of the Commons’, the 1968 theory by Garret Hardin, is supposed to prove that rational economic agents will inevitably over-exploit a common resource. The logic would be irrefutable if humans were only rational economic agents and not also members of a community, and if you suppose that rationality excludes knowing that if you eat every fish in the sea today, there will be no fish tomorrow. (Although if you’d eaten every fish in the sea you’d probably fancy something different the next day…) There is a video explaining the theory and its flaws by Geof Glas which also refers to fish resources as a prime example of the commons. I’ll mention fish again later.

The Financial Times wrote an inspiring piece about Lin Ostrom, who worked on a much more positive approach to the commons, and was the first woman to win a Nobel Prize for Economics. If I could time-travel, I would love to spend a day in her workshop. Lin Ostrom, working with her husband Vincent, believed that common pool problems needed to be solved by a polycentric approach, i.e. that problems like climate change can be solved bottom up by communities, cities, regions: FT article (paywall, but free subscription for three articles a month).

The intergenerational commons

One of the questions that interests me is the idea of intergenerational commons.  Although at the core of the Brundtland declaration: "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs," there is also a legalistic argument which says that you cannot make commitments to future generations because they are not yet people in the legal sense. And my anecdote of people not caring about events that will happen after they die shows that this is not just a legal but a cultural issue, and perhaps an intractable one.

A brilliant piece of research ‘Co-operating with the future’ (Hauser, Rand, Peyskhovich, Nowak) created a ‘public good game’ with the intention of finding out if there are means to prevent over-extraction of resources. Their research discovered that creating a democratic system to govern extraction is effective in conserving resources in the game, but only if it is binding. I loved this as a fusion of citizenship and sustainability research.

What does the private sector have to do with sharing?

For my first assignment, I looked at the insurance sector and the role it can play, especially in poor countries, in helping people manage risks. The rationale for studying this is that climate change is going to hit Asia disproportionately; where there are lots of poor people. The insurance sector, theoretically at least, appears to be among those whose incentives are more likely to be long term, and more likely to be aligned with sustainability goals. There is a potential market (in line with 'base of the pyramid' thinking) and so it seems useful to find out why insurance schemes for low income people are currently not working, or at best are niche products, and to look at what can be done to overcome some of those problems. I’ll write another blog about my findings, about the importance of non-traditional business models (at least non-traditional to us in Europe) and how co-design could overcome some of the challenges.

I think my deeper interest in this topic is what it says about ‘the commons’ and how that concept intersects with business. Climate change and the risks it will bring (is bringing) to millions will, if we don’t stop it, be the ultimate ‘global public bad’. So looking at co-operation as a concept in the middle ground of ‘the commons’ and the private sector, I thought that insurance is an example of cooperation within capitalism. You don’t usually go to the website of a major re-insurer for an inspirational quote, but I can’t describe the concept better than the Willis Research Network did:

"How can society, at local and global level, share the costs of extreme events…?  Populations and institutions share and transfer risk by pooling resources … The principles of insurance underpin this vital function: insurance has been described as the ultimate community product; and reinsurance as the ultimate global community product. All insurance consumers participate in this global system of risk sharing and co-operation but many remain unaware of the role they are playing to support others, just as they will be supported when required. As risks increase, this global system of risk sharing will be fundamental to sustaining resilience for exposed populations and assets."

It’s actually quite beautiful and surprising to think that through the mysterious workings of the market, we are unwittingly providing help to those who need it.  Unfortunately, this market does not yet reach the most vulnerable.

Fish, community management and the commons

In the group project I am in, we are looking at the role of eco-labels in driving sustainability in the fish and seafood sector. I have come across several examples of community management as ‘by-catch’ of our research that provide examples of how and why community management works: i.e. for the simple reason that if the community exhausts its resource, its livelihood disappears so people are powerfully incentivised to conserve it. Community can operate at many different spatial levels, and this article from Swiss Re (another re-insurer) asks whether increasing national responsibility for oceans could help drive sustainability as a larger unit of community. (Sadly, the link to their earlier discussion on the ‘tragedy of the commons’ in relation to fish no longer exists.)

So, to end:

Solving the temporal aspects of sharing the commons may require political action, but there is a lot of work we can do now in civil society and in business by advocating the effectiveness of community management approaches and looking more at the benefits and drawbacks of models such as cooperatives. And there are indeed drawbacks, as the Cooperative Bank’s widely publicised disgrace in 2013 showed, creating a sense of deep betrayal among many of their loyal customers, evidenced by the number of people switching accounts. Hybrid models that draw on business traditions and community traditions may be possible. My open question to all sides of the private/public/community triangle is whether we can learn and be open to change, even if that change comes from points of the triangle where we might not be willing to look for partnership. Do we care enough about the commons to work with people with whom we might feel we have very little in common? Can the co-operative movement and corporate citizens share their ideas?

Read more on Essi's own blog: Common Threads