I’ve had the pleasure of reading Catherine Knight’s 2025 Book, and attending two of her speaking events regarding the content. My interests in institutional theory led me to the work, and I greatly enjoyed reading it. The economic theory, however, is light compared to my usual reading habits, which is to be expected: Catherine Knight is not an economist. However, she did use an economic phrase in her title and throughout her work, and I’d like to clarify what it means when she uses it.

Catherine Knight’s book is pitched to the reading public, and therefore holds the voice of a fresh set of eyes on what economists regard as a well-worn idea. Knight wishes us to adopt a ‘commons mindset’ when thinking about the future of our economic systems, and here it is worth taking the time to address what that could mean.

Firstly, the commons is a term gifted to the economics discipline by Hardin in the 1970’s, and Knight’s primary reference to the concept. A common resource is one that is rival in consumption yet also non-excludable. This definition needs careful explanation, term by term, for the reading public to understand, and this explanation is missing in Knight’s book, therefore:

Consumption is the use of the resource, rivality means that one person interrupts the other in their use; therefore, a single piece of fruit is certainly rival when consumed, as its consumptive use value is destroyed when eaten by a person. That fruit can be cut into pieces, sure, but that only allows the resource to be divided (or unitised), and each piece, along with its whole, remains rival. One could think of rivality like a competition; when we want something, and we take it, we take it away from anyone else who wants it too. Things can be rival in consumption yet have no meaningful competition at all: Imagine an infinite number of fruit, and only two people to eat them. The rivality remains, however, and must be remembered despite the lack of limits on the resource, as things can change that cause rivality to become a constraint on consumption. As a resource is consumed, it may initially be thought of as so plentiful that its rivality is trivial, but as consumption increases, say over generations from larger human populations, then eventually the capacity of the resource may become exposed; and the rivality then becomes a consumption constraint once there isn’t enough to go around. Discovering the capacity constraints of resources that were previously effectively limitless is how global commons have been damaged; these are atmospheric conditions and oceanic fish stocks, for example. Fresh, breathable air is rival in consumption too, but its plenty remains so great that it is not treated as a competitive possession, at least not yet.

Excludability is often described as property rights, and this is fair if that definition is better understood by the reader. If not, a close but still unknown synonym has no educational value. To have the ability to exclude, a person must be able to control access to or consumption of the resource to a great enough extent that they choose who uses and who doesn’t. One could imagine a lock and key, physically preventing anyone but the key possessor from using the resource. Locking the resource away is exerting a property right, or enforcing its exclusivity. Some resources are naturally excludable, like things that can easily be possessed such as personal belongings (jewellery, the meal in front of you, your worn clothing). Other resources, like those just mentioned but sitting in your house when you are away, are excludable with the assistance of societal rules we all agree to follow (don’t take things from empty houses without permission). Permission is the societal lock and key, an invisible rule we follow to keep society working as intended.

Taking these ideas together, most of the things one may see and feel are private goods: They are naturally or societally constructed to be both rival in consumption and excludable. They can be owned, controlled, and managed by the possessor of the exclusion rights (property right) and the literal physical possession (the winner of the rivality competition). Private goods can be stolen; they are rival, therefore the physical possessor has ultimate control over its consumption, yet as long as the excludability is actually enforceable, the owner of those rights tends to maintain control.

Looking back to Knight’s recommendation that we in New Zealand adopt a previously unused system of commons, we can now describe more accurately what that is. Common goods are rival in consumption (like private goods), however they are non-excludable. These resources are free for anyone to take advantage of, but its first in first served, because once they are used, they are destroyed for any subsequent user. These common goods suffer a Tragedy, named by Hardins (the Tragedy of the Commons), as they are routinely exploited by self-interested users until they are all used up. They are rival, after all, and no one can stop anyone else from consuming them, otherwise they’d be privately controlled.

Knight suggests that because the British Isles used common land for use by the masses successfully for many centuries, we could do the same, despite having never done so in all our history, both Māori and Pākehā, and it being a system long since abandoned by Britain itself. This is where history and economics must diverge, at least as long as Knight represents the New Zealand historian’s consensus view (apparently she doesn’t). Common land, being exploitable by anyone, is enclosed by the very actions of its users. This overuse doesn’t matter as long as rivality is not in effect reaching the capacity constraints of the resource. Therefore, when there are few people and plenty of land, the common land is maintained. As the needs of the population rise, both through actual population growth and the demand for increased standards of living, the land reaches capacity, and the tragedy begins. The free for all that made no difference to our land, oceans and atmosphere, becomes relevant, and the various resource’s ability to recover from use stops being able to keep up. The productive or absorptive capacity of these commons is exhausted, and in the full sense of the word, a tragic outcome is the resource is either destroyed or so greatly diminished it might as well be.

Knight suggests that the Tragedy, almost a prophetic statement by Hardins, was defeated by the great Nobel prize winning economist Elinor Ostrom. Ostrom did challenge Hardins view, but not on the possibility or inevitability of the Tragedy. Instead, Ostrom challenged the widely believed view of economists that the Tragedy of the Commons was most effectively prevented by a State intervention, usually meaning the Government acquiring and then selling the resource as a private good. This is obvious to anyone how to do this with land, but it has also been done for the two global commons mentioned earlier, that is global fisheries and the atmosphere, although it is more complicated with these resources. Ostrom found that there were other ways to manage commons, particularly by the community (a spontaneous sort of Government), to convert the commons into a managed resource. This conversion might be to private goods like the traditional method Hardins advocated for, but it also included converting the good into a Club Good or Public Good, or otherwise applying quite complicated property rights that were not wholly held by one person. The general preference of State intervention usually meant bundling the property rights into one Title, and then selling the whole bundle to one person, although this isn’t a rule.

Club Goods are excludable, a property right is applied to them, but they are non-rival. How might one convert a rival good into non-rival? A great question, for an apple is certainly rival, and making it doubly productive with a single policy would be like magic. Hence, it is not possible to make an apple non-rival in consumption, however access to land that grows apples, as long as the number of people accessing and consuming the resources does not cause anyone else who can access it to go without, is effectively making an apple orchard non-rival due to the restricted use. This is a Club Good, where you have to be in the Apple Orchard Access Club to consume the resource. If the number of consumers is limited, the good never reaches capacity constraints, and the resource converts to a Club Good.

Alternatively, one could attempt to convert a commons into a Public Good. Public Goods, while a term used often for things owned by the Government, in this case means a non-rival, non-excludable resource. As the common resources are already non-excludable, this would require making the resource so abundant that the wider public users could never exhaust it, and therefore making it non-rival. National Parks are often cited as Public Goods in New Zealand, as their use is simply walking through them. Were the right to farm the National Parks by anyone added to the property rights that are open to all, then we would likely find the resource would reach capacity constraints and become a Common Good, with the ensuing tragedy inevitably occurring without intervention, whether by the Government or the community. Therefore, it is not usually advisable to attempt making a public good out of a common good.

That leaves us with the need to add exclusivity, property rights, to common goods so that they are managed. Both Ostrom and Hardins found the solution to the Tragedy is property rights, just through different institutional means. Knight suggests that Ostrom defeated the Tragedy, so that commons could remain a common, but that is not the conclusion an institutional economist would make of that great economist’s work.

Overall, Knight appears not to appreciate just how a common resource is enclosed. Her contributions to the State level of enclosure throughout history is appreciated, however she ignores that common resources, when consumed, are converted into private goods by the user:

Take a fish, living happily at the bottom of a river. While alive, this fish is a common resource, because it lives in the wild, and therefore no person may effectively exercise ownership rights over it. Take that fish out of the water, kill it, and place it on the lakeside, and that dead fish becomes private. Whoever took the time to catch, kill, and likely cook that fish is now exercising a private control over a rival, excludable resource. The use of commons in any productive capacity is the process of converting its resources into private goods, enjoyed by the processor and not by anyone else that they choose to deny it from. Ancient customary rights to that fish are property rights, excludable just like a fishing license (club  good-like) or a rāhui on the fish of the lake (exercising exclusion). All of these are converting the commons, and all of them work.

The enclosure of common goods, particularly land, is not just State orchestrated. To take a real example from New Zealand’s history, and therefore move this explanation out of the realm of theory, take Rangitoto Island in Auckland’s Hauraki Gulf. Rangitoto, like all land parcels in New Zealand, has a history of colonisation; of course it must, and in this case the island was quickly determined to be public land for anyone to enjoy and access – a public good. Yet what started as tenting leases in 1911 became permanent structures where people holidayed or lived on the island. To build a building, and shut its door to the public, is to enclose land as a private good. Every peasant in Europe that built a hut was enclosing the land, with or without the Crown’s permission. For Rangitoto, these baches were illegal dwellings built by self-interested individuals, in a way similar to the old times before land constraints were so important. Some of those buildings remain on the island, with continued private use and access by the possessors of those enclosed spaces; if everyone today could build a shack on the beachfront of Rangitoto, there would be a race to enclose as much of it as possible, and quickly there would be no room for the public, let alone nature.

Knight suggests that returning to a commons mindset is a good way to think about our collective future, but economists will struggle to endorse this view. Commons must be managed, or they will suffer their preordained Tragedy. To think otherwise is to either be ignorant to their features, or to wish for a world where less people can thrive at the same time. Unequal societies could get what Knight seeks, or depopulation, however she imagines it should be achieved (she did explain with some enthusiasm at her recent event that half the human population may die in the coming climate catastrophe). Economists don’t tend to recommend these solutions, as we have learned not to tempt the powerful with Machiavellian horror policy.