Refers to a situation where a number of individuals are all free to make use of some sort of common resource, where if each individual tries to get their own maximum gain, the resource is exhausted or destroyed, but if each took into account the good of all individuals and limited use to a fair amount, the resource would stay around and be useful.

The hypothetical situation normally used to describe it is a field that a number of shepherds can use for grazing their sheep. If all the shepherds decide to get as much as they can out of it as quickly as possible, the land will be crowded with sheep who will soon overgraze the land, rendering it useless for future grazing - but if they limited use of that field, it would stay around and be useful.

It is often an argument for managment of community resources - for example, government regulation of pollution (usage of community resources like land and water). Because without it being managed, it is almost a race between all involved to get as much out of it as quicky as they can, before someone else gets to it.

All it takes is one individual entity to go for the maximum personal gains to destroy the balance.

It demonstrates problems with both communism and laissez-faire capitalism. Communism, because any selfish individuals ruin the balance, and laissez-faire capitalism, because a lack of regulation results in a race to take as much as possible as quickly as possible without regard for anyone else.

The "tragedy of the commons" thought experiment (described by Garrett Hardin in an eponymous 1968 article) is frequently used as an argument for laissez-faire capitalism.

Hardin argued that an individual townsperson using the commons to graze sheep (or horses or yaks or whatever) will always see that the immediate benefit to himself of adding another animal far outweighs the damage he'll do to the commons by putting Old Paint out there to feed. He gets the benefit: everyone else gets the cost.

Now, most of the time that's used to support a position like, "Hey, we've got these commons that we can't all use as much as we'd like. Maybe we should have some rules about who gets to use them when?"

If you're a hard-core Adam Smithish libertarian, however, you turn that thinking on its head. You say, "Maybe we'd be better off without any commons."

The underlying principle is that if you've got some allocation of resources that isn't working right, you should look for some area that isn't controlled by a market of private owners. In this case, the commons are, by definition, not owned by anybody -- so there's nobody who has a direct personal stake in protecting them, so nobody does. If the commons had an owner, that person could police them and make sure everybody behaved themselves, in exchange for a fee for their use.

This idea works reasonably well for something like grazing rights -- unless you've got some whacked-out neoconservatives in your government who are keen to keep lots of land in public ownership and rent it out cheap to ranchers, as the United States does -- but falls apart for things like air and water pollution, where what you do on your land has an inevitable effect on your neighbours'.

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