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A basic question throughout human history has been how to balance the self-interest of the individual against a society's collective benefit. The recent research of Jane Mansbridge examines how post-WWII developments in game theory have led to insights about the workings of societies and the role of democracy.
Mansbridge, Adams professor of political leadership and democratic values, is affiliated with the Kennedy School's Wiener Center for Social Policy and is the author of "Beyond Adversary Democracy."
Q: In your work you describe the "free rider problem," a concept of game theory, which arises when individuals are confronted with a good — like law and order or clean air — from which many will benefit whether or not they have contributed to that good. What is the significance of the free rider problem in understanding challenges that confront societies?
Mansbridge: Many goods from which an individual benefits are ones that you can buy and own individually. With that kind of good, to have it you have to pay for it. Only the person who pays for it gets it. But there are some goods that once you bring them into being — like national defense or a clean environment — anybody gets the benefit, whether or not they've contributed, and it's that kind of 'free-rider good' that you need government for.
As an example, take a situation in which there is a factory spewing smoke into the air and causing lung problems. We can do one of two things. We might put a filter on the smokestack, costing $1000. Or we could sell each of the townspeople — say there are a thousand of them — a gasmask for a dollar. That would also cost $1000. Now, most of us would say that the filter is a much better idea. Why not just get everyone to give in the dollar they would have paid for the gasmask towards the filter?
With the gasmasks, if you don't buy the gasmask you have to breathe dirty air. With the filter, if each dollar makes it 1000th more efficient, an individual might say, "Okay, it's 1000th less efficient without my dollar; I can live with that. I've got a lot of other things I'd like to do with my dollar!" That person is "free-riding" on everyone else's contributions. Now of course, if everyone does that no filter gets built. Everyone is a lot worse off.
Taking this concept more broadly, in the classics of political theory — the frontier of thinking that the framers of the U.S. constitution had to work with — the goals of government were thought to be 1) defense and 2) the preservation of property. Both of these are free-rider goods. But the framers didn't have an analytic handle on exactly what was going on. They just looked around and noticed that governments did in fact produce national defense and the protection of property. They didn't realize then — no one realized until this conceptual breakthrough in the second half of the twentieth century — that these were classic free-rider goods, and that the same logic that applied to them applied to all free-rider goods.
This new piece of analysis, this new way of looking at things, helps us recognize the instances in which we really need government.
Q: Describe how the concepts of "coercion" and "legitimacy" are key to your understanding of what keeps the fabric of a society from unraveling. Where does democracy come into the picture?
Mansbridge: Maybe at one point in history people thought monarchy was the most legitimate government, because they thought that God had appointed the monarch. But in modern times, people stopped believing in monarchies appointed by God. Today it's one person/one vote that has the legitimacy. People think a law ought to be obeyed — even if they would benefit from not obeying it — if they think it was voted in democratically. If people obey a law because they think it was made legitimately, then you have less need for coercion — you don't have to have as many police and as many punishments. You can get the whole thing to go along pretty smoothly by itself with most people doing the right thing because they believe that the law has been made legitimately and they should obey it. You still have to have some punishment, for the folks who aren't as virtuous as most. But the less coercion and the less punishment you need, the more efficiently your society can operate.
Q: How does religion fit into the dynamic you describe?
Mansbridge: Especially in historical moments when governments have been weak, religions have helped hold societies together by giving people an incentive to do their part towards these free-rider goods. You can think of times in the Middle Ages, in Christianity or certain moments in Islam, in which states weren't very strong and they weren't very legitimate —people didn't in fact think that the laws that came from these robber-barons or kings at particular moments were legitimate, and at that point a religion could provide some legitimacy for people. Christianity and Islam also have some forms of coercion to bring into play because they both have hell in the afterlife. The Roman Catholic form of Christianity also has excommunication and Islam has fatwahs. So religions can mobilize both virtue and coercion.
Q: Why is it crucial that contemporary societies solve what you call "the extraordinary free-rider problems that we have created in the last generation"?
Mansbridge: Understanding the logic of the free rider problem is a discovery as world-changing in its importance as discovering the logic of supply and demand. The implication in discovering the logic of supply and demand is that self-interest can really help the world go round, and it can; it was a very important insight which then really helped market societies happen. The problem is, that applies to goods that you can buy and own individually. It doesn't apply to these larger goods, these free-rider goods where, once you bring them into effect, anybody can use them whether or not they've contributed. For those goods, simple self-interest is not going to work. So there you need this combination of legitimacy, virtue -doing the right thing, doing your part - and a little bit of coercion around the edges. You need that to make those goods come into being.
If we can harness this new discovery the way we harnessed the discovery of supply and demand we can begin to understand, for example, how we have created the huge environmental problems we now have and begin to solve those problems. We have to realize that most environmental problems are free-rider problems. They can't be handled the way we handle goods you can buy and own. A new logic is required, and we now have that logic. The problem is that, although most educated people now know the logic of supply and demand, only scholars at this point know the logic of the free-rider problem.
Once you understand this logic you no longer say 'Let's reduce government everywhere.' You say 'Where do we have free-rider problems? We need government there.' We need to understand analytically when it is that we need government so we will know when we need to welcome government, and even coercion, and when we don't. We need government to produce these kinds of free-rider goods.
Interviewed by Molly Lanzarotta on January 19, 2006.
Q: It was difficult for me to buy your concept of free-riders in a complex society where far more than two interests are present. Take the emissions of CO2 as an example. We have the Kyoto agreement, not endorsed by the American government. I believe that this has not been an issue for the American people to decide, but we can imagine that there would be those pro and those con the agreement. Now, since the issue is not brought to the American people, it is all too convenient to drive SUVs, so to say, and to not agree with some reductions as long as living standards are not lowered. Are we now facing a country of free-riders? To me the question is far more complex than free-riders, X committed folks as economical interests, political interplay and how much one man/one vote is really democracy and may challenge the concept of free-riders.
Porto Alegre, Brazil
Mansbridge: Thank you for your useful question. You are right that in a complex society we must have some organized way of speaking for "all" of us, and the best way we have come up with in the U.S. is a democracy with majority rule and minority rights. You are also right that neither Kyoto nor any other policy has been placed before the American people to decide directly. We do not have referendums nation-wide in the U.S. Finally, you are right that if the issue were put before the people, the vote would undoubtedly be divided, with some pro and some con.
My point is only that at the moment, practically none of the people who would vote pro and con on a referendum are aware of the dynamics of a free-rider problem. Their policy stances are not informed by understanding the structure or effects of a free-rider good, in which once a good has been produced, non-contributors cannot be excluded from the benefits. If people were more aware of this dynamic, they would understand better why free-rider situations require coercion.
We are, by and large, a nation of free-riders. It's not because we understand the situation and decide to free ride. It's because we don't understand the situation. People in the U.S. are not that different from people in other countries on this score, but in some other countries the elected leaders are more aware of this dynamic, or more willing to be persuaded by the experts in the field.
Thanks again for the question.
Q: Two questions: First, the free-rider problem you describe overlaps in many respects Garrett Hardin's "tragedy of the commons." Does using a free-rider analysis generate different insights (or remedies) than a tragedy of the commons analysis?
Second, in the smokestack/gasmask scenario, you do not discuss a third approach, the internalize-the full-cost approach: change the law to force the factory to pay the full cost of producing its product, include the cost of cleaning up its own waste. The factory's higher costs would then be passed on to the consumer in a higher price of the product; but would this not be better for all? The price would then reflect the full cost of
the product, not some arbitrary fraction of the full cost. And that cost would be bourne by consumers based on their consumption of that good, not equally divided among consumer and non-consumers alike. Isn't this the way the market is supposed to work, by letting consumers 'vote with their pocketbooks'? And isn't this the most efficient way to spur innovation, to encourage companies old and new to develop processes that are less costly *overall*? And isn't this the fairest way to distribute the cost burden?
These are familiar questions, I know. I just wonder why economists and policy-makers (especially ones who loudly proclaim their faith in the wisdom of the market) so rarely even mention the idea that 'the cost of doing business' should actually reflect the true cost of doing their business.
Mansbridge: Thank you for that thoughtful question. The free-rider problem I describe is exactly the same as Hardin's tragedy of the commons. It has also been called "the collective action problem" and "the problem of public goods."
Hardin does not, however, stress the solution I suggest, of internalizing the moral obligation to do one's part plus institutionalizing enough coercion (through formal government or, on the smaller scale, informal social sanctions) to keep the pact of moral obligation from unraveling. He suggests instead dividing up the commons into private parcels so that the free-rider problem disappears. With private parcels, anyone who doesn't contribute can now be excluded from the goods produced. You put your own labor into your private land and only you can reap the benefit.
Yet Hardin's solution of carving up every free-rider good into private parcels isn't always optimal, as my gasmask analogy suggests.
The solution you suggest is a good idea. I have no problem with it at all. But it is not applicable in every case of a free-rider good. It would not help us solve the huge number of free-rider problems that run from the life-threatening issues of common defense, law-and-order, and nuclear proliferation to the many everyday problems such as cleaning up dog poop. There the combination of internal obligation and some coercion (around the edges, to keep those who do their duty from being "suckers" whom others exploit) is often the best solution.
It's great that you brought up this other way of solving the smokestack problem. It lets me make the point, which I did not make in this short interview, that I'm not proposing "much-obligation-with-some-coercion" as the perfect solution for all free-rider problems. Sometimes, when it's possible and there are no other ill effects, the best thing to do is to divide up the large free-rider good into smaller private property parcels. Sometimes, when it's possible and there are no other ill effects, the best thing to do would be to use governmental coercion to force the factory to pay for the filter, then pass the cost on to the consumer. Or you could get the CEOs of all the factories together, show them the effects of their smoke, and get them all to agree voluntarily to install filters, so that the ones that did install would not be undercut by competitors who don't install. Then you could rely largely on their moral obligation to keep their promises, but you would still need some coercion to punish those who tried to renege on the deal, to keep the deal from unraveling. (And that would be a version of my much-obligation-with-some-coercion solution.)
Thanks again for giving me the opportunity to clarify this point.