Scott Alexander writes (edited for brevity):

Imagine a lake with a thousand identical fish farms owned by a thousand competing companies. Each fish farm earns a profit of $1000/month. For a while, all is well.

But each fish farm produces waste, which fouls the water in the lake.

A thousand fish farms produce enough waste to lower productivity by $1000/month, meaning none of the fish farms are making any money. Capitalism to the rescue: someone invents a complex filtering system that removes waste products. It costs $300/month to operate.

they all sign the Filter Pact, except one person who is sort of a jerk. Let’s call him Mike. Mike earns $999/month, and everyone else earns $699/month. Slowly, people start thinking they too should be getting big bucks like Mike, and disconnect their filter for $300 extra profit…

A self-interested person has some incentive to sign a pact to make everyone use a filter, but in many cases has a stronger incentive to wait for everyone else to sign such a pact but opt out himself. This can lead to an undesirable equilibrium in which no one will sign such a pact.

This sucks. Naturally, Scott is commenting here on how a commons is a very fragile thing, and not presenting this as a slam-dunk against any specific way of arranging society more broadly.

The more I think about it, the more I feel like this is the core of my objection to libertarianism, and that Non-Libertarian FAQ 3.0 will just be this one example copy-pasted two hundred times.


The furious copy-pasting implies this is a problem libertarianism specifically has a hard time with; Without a state with a big stick to compel cooperation, a libertarian society is doomed to universal defection and everything bad that comes with it.

I don't think so. Because there are simple social technologies that are attractive for individuals and which solve these coordination problems for groups - at least if the state isn't around to forbid their use.

It's the ownership

Individual fish farmers want private ownership of the lake they use. They want this because private ownership gives them a way to penalise, and receive restitution from, polluting parties through private tort complaints. These conditions keep their businesses viable.

With the state no longer disallowing the lake to become privately owned, private ownership could take different forms. The farmers could jointly own the lake and have a contractual agreement among themselves that any of them found polluting the lake would be required to compensate the others. The contract could specify that repeat offenders be barred from using the lake altogether.

Or the farmers might each claim ownership of the parcel of lake around their own farm, with another portion remaining unowned. In this arrangement they'd be able to bring torts against polluters whose actions harmed their own parcel.

The farmers would separately, or collectively, claim ownership of the previously unowned lake in accordance with the local homesteading norms. That might mean visibly fencing off a parts of it, demonstrating that it contains their equipment and animals, and otherwise demonstrating that it's 'land' that they are making routine use of.


In principle, this is all the groundwork needed to hold a polluter liable. But in practice, at least at first, it might be technically challenging to correctly identify the polluter. Even then though, with the threat of tort, a farmer could no longer afford to pollute casually. And the longer this regime persisted, the more opportunity there'd be for social and technical innovation to deliver systems allowing the identification of polluters, all without centralised political power.

Perhaps in the future farms have the option of paying a small fee to one of several competing organisations that audit production operations and award a certificate if the firm's pollution is below an accepted threshold. As a farmer, presenting such a certificate is a convenient way to establish innocence in case of pollution complaints, but more importantly it probably becomes part of the cost of doing business; If I were running an insurance firm catering to industry, I'd want to know as much as possible about the risks I was taking on via my clients. So I'd structure my contracts to  make pollution liability payouts contingent the client's continuous ability to show a valid 'good industrialist' certificate.

That's how in Ancapistan - a libertarian society with private law and no state -coordination problems like the one faced by Scott’s fish farmers are solved organically by private ownership and torts.

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