COLLECTIVE ACTION

It turns out that just as fads can be rationalized by standard preferences, so can sticking to social norms. The basic idea is that those who violate the norm will be punished by the rest of the community.

Elinor Ostrom, the first (and so far the only) woman to receive a Nobel Prize in economics, spent her career demonstrating instances of this logic. Many of her examples were drawn from small communities—cheese makers in Switzerland, forest users in Nepal, or fishermen on the Maine coast or in Sri Lanka⁸—who live by a norm about how community members were supposed to behave that everyone stuck to.

In the Alps, for example, Swiss cheese producers had for centuries relied on common ownership of a pasture for cattle grazing. If there had been no communal understanding, this could have led to disaster. The land might have been overgrazed to barrenness since it belonged to no one and everyone had a reason to want to feed their own cows more, potentially at the expense of the others. However, there was a set of clear rules for what cattle owners could and could not do on the common pasture, and those rules were followed because violators were excluded from future grazing rights. Given that, Ostrom argued, collective ownership was actually better for everyone than private property. Dividing the land into small parcels, each owned by a separate person, increases risk, since there is always the possibility of some disease hitting the grass in any given small area.

This kind of logic also explains why, in many developing countries, a part of the land (for example, the forest abutting the village) is always held as common property. As long as the common land is used sparingly, it provides a resource of last resort for those villagers whose own economic plans have hit some headwinds; foraging in the forest or selling grass cut from the common land helps them survive. The intrusion of private property into these settings, generally inspired by economists who don’t understand the logic of the context (and love private ownership), has often been a disaster.⁹

It also suggests a selfish reason for why people in villages often seem to help each other out; it is probably partly in anticipation of receiving similar help when they need it.¹⁰ The punishment sustaining the norm is that those who refuse to help will themselves be excluded from the community’s help in the future.

Systems of mutual help are vulnerable to collapse if some community members have opportunities outside. Then the risk of being excluded is not that terrifying anymore, making it tempting to default on obligations. Anticipating this, community members may be more reluctant to help, further increasing the temptation to default. The whole system of mutual support may unravel totally, leaving everyone worse off. The community is therefore very alert to, and protective against, behavior that seems to threaten the communal norms.