European Fish, the Commons, and Business

The sea and its denizens have long been fertile subjects for myth and metaphor. That tradition continues in The Economist, December 15-21, “A Fishy Tale”.


The [EC’s] Court of Auditors recently found that the European Union’s Common Fisheries Policy does not work…A survey found 81% of fish stocks to be dangerously over-exploited.

…the commission proposes quotas that are larger than those recommended by its scientific advisers. National ministers then expand the quotas once again [by about 50%]. And then national fishing fleets break even these higher quotas.

To most Eurocrats, the problem is selfish national interests, and the solution is tougher EU-wide controls…but if countries parceled out the fish among themselves there would be none left, says one official…some fishermen quietly discard lots of fish so as to pack their holds only with the most valuable.

Many fishermen cheat because they believe the scientists are wrong, or because everyone else is, or because they cannot make a living otherwise.

And so it goes.

Economists know this as “the tragedy of the commons,” based on the problem a few centuries ago of sheep overgrazing the town lands held in common. The problem is that people’s individual search for economic self-interest ends up, paradoxically, destroying everyone’s self-interest.

The airline industry knows this dilemma well. Any given airline on any given route is incented to have a plurality of available-seat-miles. This leads to endemic over-capacity, hence lower profitability for all. The only sure-fire route to airline profitability is not clever marketing, a la Southwest Airlines—it’s domination of routes, something Southwest also knows a thing or two about.

But back to fish. Issues of the commons show up first in government, later in business, because government by default gets the un-economic propositions. But the issues are increasingly not unique to government.

The business world has its own version of the commons. When every company seeks to gain sustainable competitive advantage, maximizing its own shareholder value, driving that logic into every transaction, you end up with systemic suboptimal results.

Example: mortgages. In the old days, savings banks held the loans, lived in the community, knew the borrowers; the borrowers kept the house, and kept the mortgage company. Inefficient, yes; but the common interest was enforced.

Today, we got efficiency—but at the cost of a common interest. The players in the subprime mortgage game ended up just like Portugal, Britain and Poland duking it out over declining fish stocks. The only losers were the fish. Until the fish disappear.

Business is diving headlong into certain practices—the slicing and dicing of business processes, the slicing and dicing of securities into finer and finer tranches of ownership, the rapidly diminishing time of ownership, and the establishment of myriad markets where ownership and time can be freely exchanged.

Lots of markets, lots of efficiency—and very little overlap of the common good.

The ideology of competitive separateness is precisely the wrong ideology in a world of increasing interdependence.
Ironically, since the “commons” problems first show up in government, it is government that must provide examples for business to follow—yet we are saddled with an ideological bias that says business has nothing to learn from government, only the reverse.

The Economist’s conclusion about fish is as right as it is predictable: Europe needs to “ponder the example of one of the EU’s few uncontested triumphs, the single market, and apply its lessons to the seas. That would be rational. It might even be good for the fish.”

And for business at large. It’s difficult to believe that a global economy built on the theory of sustainable competitive advantage is going to solve the energy problem. Or the health care problem. Or the immigration problem. Or the trade problem.

We need an ideology of trust. A set of beliefs that link, rather than divide.

10 replies
  1. Shaula Evans
    Shaula Evans says:

    Great post, Charlie, but it makes me feel like Moses:  you’ve taken me as far as the River Jordan, but not across into the campground. 😉

    "The Tragedy of the Commons" is really the crux of so many issues we’re dealing with . . . and I find it very hard to change the minds of people invested in the tragedy part (vs the commons part), whether they’re destructively exploiting resources at the level of overgrazing sheep or at the scale of global warming.

    Let’s go back to the specific case you start with, over fishing, along with all of the players and stakeholders and their competing agendas that you’ve outlined.

    There’s a deficit of trust, communication and cooperation fueling the problem: how on earth do you begin to address that?  Where do you start?  And what can you do to pull together a band-aid fix (that saves the fish) in the short term to buy you the time for a longer-term solution?

    Yes, I’m asking for a follow-up post more than a comment.  Call me greedy. But now that you’ve outlined the problem, you’ve got me hooked, and I am really interested in your thinking on the strategy to work out the solution.

  2. Shaula Evans
    Shaula Evans says:

    (I just want to clarify that I’m not asking you for a freebie solution to the EU’s over-fishing problem.  What I am asking is, in a case like this where there’s a critical and fundamental trust issue, once you’ve defined the problem, where does a trust framework take you next?)

  3. Nancy Arter
    Nancy Arter says:

    WOW!  Talk about thought-provoking.  I wholeheartedly agree with you that competitive separateness is completely the wrong ideology in a world that is growing more and more interdependent.

    As a consulting firm that daily deals with large marketing data firms, I am consistently amazed by how little trust exists in business today.  For example, one large company that I have both worked for in the past and am now a customer of, sees me as a competitive threat as opposed to a client.  I’m buying stuff from them on behalf of my clients.  Yet, I have a difficult time in getting them to deliver what they promise, give me information that will enable me to more effectively sell their products and services. It’s always a battle — and it’s the oddest thing, it makes absolutely no sense to me.

    I know that I can vote with my dollars, however, more often than not, I run into the same scenario with other large data providers.

    I believe that you’ve hit it on the head.  Where no trust exists, no relationship can be created — and this just in a business environment.  When you start looking at the things that are really important, like  the trade problem, the healthcare problem, etc., it’s going to take a complete paradigm shift solutions to occur.

    As Tiny Tim said, "God Bless us, one and all!"

  4. Charles H. Green
    Charles H. Green says:

    I’m glad to hear everyone’s high level of interest.  This is basically the topic of my next book.

    I don’t have all the answers Shaula would like.  I believe that the first step looks like noticing; admitting we have a problem; coming to see bad thinking in the many places it exists, as opposed to not noticing it.

    What I want to do is identify a few core beliefs that lie at the heart of the disfunctionality–beliefs that once were valid, in a different world, but that are holding us back in the emerging world.

    And then to match up those beliefs against a host of examples like the one Nancy points out; or the HR example someone offered as comment a few posts ago (outsourcing all of HR makes it impossible to have a coherently shared HR strategy).   Examples that show how the legacy beliefs contrast with the linked world we’re entering.

    There will be some concrete suggestions too, some of which have been suggested through out the last year on this blog.

    But a silver bullet?  No.  Not from this blogger anyway.  Sorry to disappoint.  If you find it, please let us all know.

    Meanwhile, thanks for the encouragement.

  5. steve
    steve says:

    The whole issue of European fish quotas is rotten.

    The setting of the quotas is like an archaic ritual where all the fisheries ministers dance around just trying to get the best deal for their countries – science, reality, good stewardship, conservation, the fish – none of these are governing factors – only political egos and the demands of an overpopulated industry.

    But once national quotas are established they are then cascaded down to ‘quota owners’.

    Commercial fishermen were once given ‘quota allocations’ free, but now there is a multi million trade in these quotas, many of which are in the hands of people who have retired or have never even been to sea.

    But if a retired UK skipper gives his quota up it goes back into the EU pool and available to the highest bidder – it is therefore possible that the UK could lose all access to the EU waters.

    The fishermen who own/lease the quotas then set out to make money out of them – operating on minimal margins they will discard, highgrade, black land and pull every trick in the book to boost income.

    Most countries have taken setting  their bank rates out of the hands of politicians – the entire EU fisheries policy needs to be totally redesigned and operated transparently, subject to real controls and management.

  6. Shaula Evans
    Shaula Evans says:

    Steve, what you describe is really horrific.  No wonder the fish are dying.

    It also reminds me, strongly, the the cap and trade (or cap and switch) carbon emissions programs currently being debated (/hyped) in the US, because I anticipate these programs will fall prey to the same sorts of systematic problems.

  7. Shaula
    Shaula says:

    Charlie, I just read the most marvelous article and thought of you and this post:

    AP: Kenya fishermen see upside to pirates–more fish
    "Somalis took to piracy to drive off illegal commercial fishing trawlers that were depleting their waters of fish, the very fish that Somalis rely on to live. And it’s working—fisherman say that there are many more fish now that the trawlers have been scared off."

  8. Charles H. Green
    Charles H. Green says:

    Shaula, you either have the world’s longest memory, or the world’s best search algorithm.  I’d forgotten about this  blogpost!  But how cool to revisit it, and see this neat example add yet another dimension to the complex dynamics of trust.

    Thank you.

  9. Shaula
    Shaula says:

    I still haven’t forgotten this post, Charlie; I read this article in Fast Company and thought of you: Europe Has Already Run Out Of Fish For The Year: “People the world over eat more fish than the environment can sustain. In Europe, they ate a year’s worth of fish by July 2. Every fish they eat now is just pushing species closer to extinction.”

    Less commons, more tragedy. 🙁

  10. Shaula
    Shaula says:

    I’m pleased to have a link for you which might qualify as a “victory of the commons”: Nova Scotia cod fishery shows initial indications of recovery.

    I’m only going by the Ars Technica article and don’t have any deeper knowledge of the story, but if the facts are accurate as presented here, hopefully this is very good news for fish, for the Canadian Maritime province’s economies, and for the world food supply–and ideally an example to Europe that these problems can be addressed successfully.

  11. Shaula
    Shaula says:

    I just came across the work of a writer you might really enjoy, Charlie: Jennifer Jacquet, a postdoctoral researcher at the University of British Columbia researching cooperation and the tragedy of the commons.

    Coincidentally, she has written extensively from this perspective about the crisis of fish populations, including:
    Seafood Stewardship in Crisis
    Conserving wild fish in a sea of market-based efforts
    Scanning the Oceans for Solutions

    She writes the blog Guilty Planet at Scientific American and is also on Twitter.

    She has some very insightful stuff–that I think you’ll find both like-minded and interesting.


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