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No, the logic of public goods does not require any assumption about the economic system. Any set of actors whose actions create a negative externality, and who

by dash2 5y ago

No, the logic of public goods does not require any assumption about the economic system. Any set of actors whose actions create a negative externality, and who cannot enforce agreements to cooperate (either through the courts or via repeated interactions) will overproduce the externality. So, you could say the assumptions include the legal system. There are numerous tragedies of the commons under socialist economic systems, including environmental degradation and the inefficiency of socialist firms. There are plenty under capitalism too. Berlin under Rhineland capitalism has plenty of litter, just as New York does under Anglo-American capitalism. Hunter-gatherering bands are also perfectly capable of overusing natural resources and failing to cooperate. When they succeed, it's because they get the incentives right - at least, there is a reasonable case for that.[1] I defend homo economicus to dispel a false impression: that successfully sustained commons refute the idea that humans (a) are self-interested and (b) make optimal choices. You could say that laboratory public goods games do that, but even there you'd have to qualify your argument very carefully. [1] Guala, Francesco, 2012. Reciprocity: Weak or strong? What punishment experiments do (and do not) demonstrate. Behavioral and brain sciences, 35(1), pp.1-15.

hnbad 5y ago
I'm not sure who you think you're arguing with but so far most of your rebuttals attack points I never made. I never said that humans aren't "self-interested" or that humans, in the abstract, can be described as acting optimally within given constraints. I said that the constraints influence behavior (which you agree with) and I said that the current economic system results in a tragedy of commons (which you also agree with). I also said that it is also possible to avoid the tragedy of the commons (at least locally, for a given commons), which is demonstrated by successful commons existing and having existed under different constraints. None of that seems to be anything you disagree with, yet here we are. Note that both examples you've given — rentier capitalism in Berlin and New York, and (presumably) Soviet-style bureaucratic socialism — suffer massively from alienation, which demonstrably leads to inefficiency and disregard (e.g. littering). This is well-understood enough that creating a feeling of "ownership" or "autonomy" (without introducing monetary benefits or democratic sharing of actual control over the company) has become a management strategy to motivate employees under capitalism. As a counter-example to Berlin under capitalism in Germany, consider affluent rural areas where you see barely any littering. These regions however also have a high rate of home ownership and parallel social support networks, which I assume is what you're gesturing at as "repeated interactions" (but in this case often spanning literally generations). But these systems are unstable under laissez-faire capitalism as they present an inefficient resource use in the greater economic system and will over time erode as residents move away for job opportunities and properties are sold off and reused for more space-efficient apartment buildings. To summarize, I'm not saying a tragedy of the commons can not exist under other economic systems, I'm saying there are systems under which a given tragedy of the commons can be averted and that this is not the case for the current one.
- dash2 5y ago
  OK, fine. But this is also false. There are many tragedies of the commons that are successfully avoided under capitalism. As you point out, affluent rural areas are one, and the claim that in future these are all automatically going to die off is a post-dated cheque. (Villages in the UK stockbrocker belt have little litter, despite being composed of wealthy incomers.) Another example is cartels. In the end, what's left apart from the uninteresting claim that "constraints influence behaviour"?
  - hnbad 5y ago
    > the claim that in future these are all automatically going to die off is a post-dated cheque It's not, though. We've literally seen this development happen over and over again and it's a logical consequence of the system as is the increasing monopolization via acquisitions and buyouts. We're not in purely laissez-faire capitalist system, certainly not globally, but trying to paint present day Berlin as an example of a social market economy in the "Rhine capitalism"[0] spirit shows a complete unfamiliarity with the practical evolution of the German economic system and welfare state during the later part of the 20th century and the early 2000s, which saw a massive shift towards free market capitalism, especially under (ironically) the SPD-led Schröder government. > Villages in the UK stockbrocker belt have little litter, despite being composed of wealthy incomers. This isn't a counter-example to what I said, this is an example of what I said. Income isn't the determining factor, ownership (and legacy) is. Additionally, even if they don't expect to live there forever because they're comfortable relocating to follow the money, they're surrounded by potential business partners. This again isn't about their level of income but it creates a social mechanism that incentivizes displaying "good behavior". > Another example is cartels. An example for something avoided under capitalism? Certainly not. This is like saying Western countries don't have corruption because money is used to exert influence by signing entirely legal backroom deals (campaign financing in the US, promises of zero-effort board positions and highly paid "speaker" engagements in Germany) instead of literally handing wads of cash to police officers. And this isn't even to cede that cartels can't happen under capitalism, let alone under laissez-faire capitalism: they're not prohibited by the market but by regulations (i.e. laws), and even then there are always loopholes to enable corporations to engage in functionally identical behavior as long as they follow a sufficient number of layers of indirection (or are comfortable to use a pile of NDAs to hide actual illegal behavior). A recent US example widely discussed on HN was the "no poaching" agreements between large industry players to put a cap on the salaries of highly desired employees. [0]: The term is "Rhine capitalism" not "Rhineland capitalism", btw, and it's a gross oversimplification to use it to refer to the post-WW2 German model, the economy of France in the 1990s and the economy of Germany after the Agenda 2010 reforms as part of the EU-wide Lisbon agenda -- which was one of contributing factors to the EU debt crisis, drastically raised the poverty rate in Germany, drastically cut the income tax rate and wreaked havoc in the welfare system. It was a stretch when Albert popularized the term in the 1990s (after the German reunification) and it's frankly ridiculous to still use it today.

by dash2 5y ago

hnbad 5y ago

I'm not sure who you think you're arguing with but so far most of your rebuttals attack points I never made. I never said that humans aren't "self-interested" or that humans, in the abstract, can be described as acting optimally within given constraints. I said that the constraints influence behavior (which you agree with) and I said that the current economic system results in a tragedy of commons (which you also agree with). I also said that it is also possible to avoid the tragedy of the commons (at least locally, for a given commons), which is demonstrated by successful commons existing and having existed under different constraints. None of that seems to be anything you disagree with, yet here we are. Note that both examples you've given — rentier capitalism in Berlin and New York, and (presumably) Soviet-style bureaucratic socialism — suffer massively from alienation, which demonstrably leads to inefficiency and disregard (e.g. littering). This is well-understood enough that creating a feeling of "ownership" or "autonomy" (without introducing monetary benefits or democratic sharing of actual control over the company) has become a management strategy to motivate employees under capitalism. As a counter-example to Berlin under capitalism in Germany, consider affluent rural areas where you see barely any littering. These regions however also have a high rate of home ownership and parallel social support networks, which I assume is what you're gesturing at as "repeated interactions" (but in this case often spanning literally generations). But these systems are unstable under laissez-faire capitalism as they present an inefficient resource use in the greater economic system and will over time erode as residents move away for job opportunities and properties are sold off and reused for more space-efficient apartment buildings. To summarize, I'm not saying a tragedy of the commons can not exist under other economic systems, I'm saying there are systems under which a given tragedy of the commons can be averted and that this is not the case for the current one.

dash2 5y ago
OK, fine. But this is also false. There are many tragedies of the commons that are successfully avoided under capitalism. As you point out, affluent rural areas are one, and the claim that in future these are all automatically going to die off is a post-dated cheque. (Villages in the UK stockbrocker belt have little litter, despite being composed of wealthy incomers.) Another example is cartels. In the end, what's left apart from the uninteresting claim that "constraints influence behaviour"?
- hnbad 5y ago
  > the claim that in future these are all automatically going to die off is a post-dated cheque It's not, though. We've literally seen this development happen over and over again and it's a logical consequence of the system as is the increasing monopolization via acquisitions and buyouts. We're not in purely laissez-faire capitalist system, certainly not globally, but trying to paint present day Berlin as an example of a social market economy in the "Rhine capitalism"[0] spirit shows a complete unfamiliarity with the practical evolution of the German economic system and welfare state during the later part of the 20th century and the early 2000s, which saw a massive shift towards free market capitalism, especially under (ironically) the SPD-led Schröder government. > Villages in the UK stockbrocker belt have little litter, despite being composed of wealthy incomers. This isn't a counter-example to what I said, this is an example of what I said. Income isn't the determining factor, ownership (and legacy) is. Additionally, even if they don't expect to live there forever because they're comfortable relocating to follow the money, they're surrounded by potential business partners. This again isn't about their level of income but it creates a social mechanism that incentivizes displaying "good behavior". > Another example is cartels. An example for something avoided under capitalism? Certainly not. This is like saying Western countries don't have corruption because money is used to exert influence by signing entirely legal backroom deals (campaign financing in the US, promises of zero-effort board positions and highly paid "speaker" engagements in Germany) instead of literally handing wads of cash to police officers. And this isn't even to cede that cartels can't happen under capitalism, let alone under laissez-faire capitalism: they're not prohibited by the market but by regulations (i.e. laws), and even then there are always loopholes to enable corporations to engage in functionally identical behavior as long as they follow a sufficient number of layers of indirection (or are comfortable to use a pile of NDAs to hide actual illegal behavior). A recent US example widely discussed on HN was the "no poaching" agreements between large industry players to put a cap on the salaries of highly desired employees. [0]: The term is "Rhine capitalism" not "Rhineland capitalism", btw, and it's a gross oversimplification to use it to refer to the post-WW2 German model, the economy of France in the 1990s and the economy of Germany after the Agenda 2010 reforms as part of the EU-wide Lisbon agenda -- which was one of contributing factors to the EU debt crisis, drastically raised the poverty rate in Germany, drastically cut the income tax rate and wreaked havoc in the welfare system. It was a stretch when Albert popularized the term in the 1990s (after the German reunification) and it's frankly ridiculous to still use it today.