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Elinor Ostrom and the solution to the tragedy of the commons

Elinor Ostrom's "research concerned the governance of common resources (also known as commons). The commons are natural resources, like land for grazing, fishing areas, forests for timber, water for the irrigation of farmland, and also more intangible resources, like knowledge, for which it is very expensive to control and fence in 'user' consumption. The problem with these types of resources, as shown in 1968 by Garrett Hardin (but Aristotle had already observed a similar phenomenon) is that they are over-exploited, or at least their care and sustainability is overlooked by users. The reason is that people behave opportunistically (like free-riders) and consider the resource they are accessing, without the possibility of being excluded, as a free resource, and they therefore maximize their private benefits but neglect, or collectivize, the costs.

Hardin coined the phrase 'tragedy of the commons' to describe this phenomenon and gave social sciences one of the most evocative metaphors after Adam Smith’s 'invisible hand'. These two metaphors are effective because they capture two essential social situations in marked contrast to one another. When social interactions are guided by an invisible hand, they reconcile individual choice and socially desirable results, whereas in the tragedy of the commons, individuals pursuing their private objectives cause disastrous consequences for themselves and others. The solution to the tragedy of the commons, before the contribution of Ostrom and her studies, was to privatize resources or, in a diametrically opposite view, to form a Leviathan state in order to manage them.

Instead, Ostrom demonstrated that, within communities, rules and institutions of non-market and not resulting from public planning can emerge from the bottom up to ensure a sustainable, shared management of resources, as well as one that is efficient from an economical point of view. Besides the village of Törbel, Ostrom shows examples of common lands in the Japanese villages of Hirano and Nagaike, the huerta irrigation mechanism between Valencia, Murcia and Alicante in Spain, and the zanjera irrigation community in the Philippines. Also, the property in the form of 'vicinale', neighborhoods, typical of regions of Italy like Emilia, the Belluno and the Ticino, are also collective institutions, although not investigated by Ostrom. The argument then has a more modern example if one notices that even the 'Wikipedia community' is a form of successful collective institution of a communal resource (knowledge)."

(Flavio Felice, Massimiliano Vatiero, 27 June 2012)



Adam Smith • American political economist • assets • Belluno • bottom-up organisation • collective institutions • collective interests • common pool resources (CPR) • common propertycommons • communal resource • economic governance • economic science • Elinor Ostrom • Emilia • English Industrial Revolution • exploitationfencing • Flavio Felice • Garrett Hardin • governance of common resources • Hirano • huerta irrigation mechanism • individual choice • invisible hand • Karl Polanyi • land management • Massimiliano Vatiero • Nagaike • natural resourcesopportunism • over-exploitation • political economics • political economist • political economyprivate control • privatisation • privatisation of land • public government • public planning • resource managementsocial interactionssocial situation • socially desirable results • sustainabilitysustainability thinking • Ticino • Torbel • tragedy of the commons • vicinale • Wikipedia • Wikipedia community • zanjera irrigation community


Simon Perkins
22 MARCH 2013

The Rise and Fall of Bitcoin

"In November 1, 2008, a man named Satoshi Nakamoto posted a research paper to an obscure cryptography listserv describing his design for a new digital currency that he called bitcoin. None of the list's veterans had heard of him, and what little information could be gleaned was murky and contradictory. In an online profile, he said he lived in Japan. His email address was from a free German service. Google searches for his name turned up no relevant information; it was clearly a pseudonym. But while Nakamoto himself may have been a puzzle, his creation cracked a problem that had stumped cryptographers for decades. The idea of digital money – convenient and untraceable, liberated from the oversight of governments and banks – had been a hot topic since the birth of the Internet. Cypherpunks, the 1990s movement of libertarian cryptographers, dedicated themselves to the project. Yet every effort to create virtual cash had foundered. Ecash, an anonymous system launched in the early 1990s by cryptographer David Chaum, failed in part because it depended on the existing infrastructures of government and credit card companies. Other proposals followed – bit gold, RPOW, b–money – but none got off the ground.

One of the core challenges of designing a digital currency involves something called the double–spending problem. If a digital dollar is just information, free from the corporeal strictures of paper and metal, what's to prevent people from copying and pasting it as easily as a chunk of text, 'spending' it as many times as they want? The conventional answer involved using a central clearinghouse to keep a real–time ledger of all transactions – ensuring that, if someone spends his last digital dollar, he can't then spend it again. The ledger prevents fraud, but it also requires a trusted third party to administer it.

Bitcoin did away with the third party by publicly distributing the ledger, what Nakamoto called the 'block chain.' Users willing to devote CPU power to running a special piece of software would be called miners and would form a network to maintain the block chain collectively. In the process, they would also generate new currency. Transactions would be broadcast to the network, and computers running the software would compete to solve irreversible cryptographic puzzles that contain data from several transactions. The first miner to solve each puzzle would be awarded 50 new bitcoins, and the associated block of transactions would be added to the chain. The difficulty of each puzzle would increase as the number of miners increased, which would keep production to one block of transactions roughly every 10 minutes. In addition, the size of each block bounty would halve every 210,000 blocks – first from 50 bitcoins to 25, then from 25 to 12.5, and so on. Around the year 2140, the currency would reach its preordained limit of 21 million bitcoins."

(Benjamin Wallace, 23 November 2011, Wired Magazine)



1990s2008anonymous system • b-money • bit gold • bitcoin • block chain • broadcast to the network • chain • clearinghouse • collective interests • collective participation • collective participation technology • corporeal strictures • credit card • cryptographer • cryptographic puzzle • cryptography • currency • cypherpunkDavid Chaumdecentralisation • digital currency • digital dollar • digital money • distribution models • double-spending • financial flowsfinancial transactionsfraudfree market economyglobal capital flowsinformation flowsinformation theoryinfrastructureJapan • ledger • libertarianism • Listservminermining • mining metaphor • P2Ppuzzle • pyramid scheme • RPOW • Satoshi Nakamoto • speculationspeculation and innovation • spending • trustvalue and benefit • virtual cash • Wired (magazine)


Simon Perkins
20 JULY 2012

Primal: What is Interest Networking?

"Interest networking is often seen as an extension of social networking. Rene Reinsberg (MIT) describes the Interest Graph as 'an online representation of individuals' interests, with people and interests being the nodes of the graph.'

Part of the confusion here is that social networks are often leveraged to construct interest networks, but the end shouldn't be confused with the means. By definition, a social network organizes information about people and their activities. An interest network organizes information around a set of interests, which may be yours and yours alone. Interest networks do not need social networking."

(Primal Fusion Inc., 20 Jan 2012)


2012 • build communities around topics • (service) • collectingcollective interests • content nodes • favourite things • human-like recommendations • individuals interests • information around a set of interests • interconnected nodes • interconnected nodes of content • interest clouds • Interest Graph • interest networkinterest networkinginterest networksinterest networksinterestsnodes • nodes of intersecting connections • online representation • organise and shareorganise around interestsQuora (tool) • Rene Reinsberg • share your interests • shared across groups of people • shared interest • shared interestssocial networksocial networkingsocial networkstopics of interestyour interests


Simon Perkins

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