Such an arrangement may work reasonably satisfactorily for centuries because tribal wars, poaching, and disease keep the numbers of both man and beast well below the carrying capacity of the land. Finally, however, comes the day of reckoning, that is, the day when the long-desired goal of social stability becomes a reality. At this point, the inherent logic of the commons remorselessly generates tragedy."
Hardin wants us to remember that under the capitalist system, it is each man for himself and each organization for itself. So if a company is doing well, the benefits are his to keep but of course the economy will also benefit. This is what Smith had said but what if the benefits of the company are eroding the natural resources alongside all the profits that it is making? Who would then be responsible? Obviously every man will feel the loss of natural resources and everyone will suffer but not all men are responsible for the damage. Acting rationally, man tries to seek the benefits out of employing additional units of labor but fails to see its impact on natural resources.
As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, "What is the utility to me of adding one more animal to my herd?" This utility has one negative and one positive component.
1. The positive component is a function of the increment of one animal. Since the herdsman receives all the proceeds from the sale of the additional animal, the positive utility is nearly + 1.
2. The negative component is a function of the additional overgrazing created by one more animal. Since, however, the effects of overgrazing are shared by all the herdsmen, the negative utility for any particular...
We all know that in the last few weeks, many big companies have either gone bankrupt or sought some governmental bailout. Now if we notice the problems it caused the common man, we can side with Hardin and understand his argument quite well. In their pursuit to make more profits, the companies attracted investors from all over the country. People bought their stocks priced at say $30 apiece. Then the company realizes it has not been making money and suddenly goes bankrupt. What happens to the shares? The prices go crashing down to $2 apiece. Imagine the loss to investors. Imagine what they must have gone through- witnessing such a major tragedy. So even though it was the company that had been doing the damage, every single person paid the price. So when capitalist system is allowed to function unchecked, usually such tragedies result.
We may not be in favor of other system but we can all vouch for greater governmental regulation because recent crisis prove that had there been governmental oversight from the beginning, things wouldn't have gone this far. Each company allowed to expand unchecked only ended up costing the government more than 80 billion dollars in bailout. And what about the losses that each man suffered at the stock market? Unfortunately there is no bailout for that. They have lost their life savings but there is no help for them. This is the fault of the capitalist system. It may try to maximize the good but then it goes out of control and destroys the very things it should have protected.
Garrett Hardin. The Tragedy of the Commons, Science, 1968
