The Club — The Commons, Plate ii

The volume has so far walked two corners of a square. A good may be rival or non-rival, in that my use either does or does not leave less for yours; and it may be excludable or not, in that I either can or cannot be barred from it for failing to pay. The common pasture is rival and non-excludable, and is overgrazed; the lighthouse is non-rival and non-excludable, and goes unbuilt. Both failures spring from the same missing wall — non-excludability, the absence of a gate at which to charge — and so both lie on the open side of the square, beyond the reach of the price. But the square has a fourth corner, and it is the one the failures pass over: the good that is non-rival like the lighthouse, shared without using up, and yet excludable like the apple, fenced against the one who will not pay. The swimming pool, the toll road, the members' library, the cinema, the patented design — these many may enjoy together, and these any may be kept from. They are club goods, and the plate's question is what such a thing is, and how, when its sharers grow too many and begin to crowd one another, the crowding is to be priced.

What sets the club good apart is that it keeps the gate the commons lost. Because the holder can exclude — can lock the pool, man the tollbooth, check the membership card — the maladies of the open side do not touch it. There is no tragedy of overgrazing, for the outsider who would stampede in can simply be barred; there is no strike of free riders starving the thing of funds, for those who would enjoy it can be made to pay. In this the club good is the cell where the price still turns, the one shared thing a market can supply. And yet it supplies it imperfectly, by the same logic that troubled the lighthouse: the good is non-rival, costing nothing more to extend to one further user once it exists, so any positive price charged at the gate turns away someone who would have gained at no cost to anyone — a pure loss, the price of having a gate at all. The Lighthouse plate, meeting these goods in passing, deferred them here; for they are neither the failure that volume studies nor the private good that needs no study, but a thing on the boundary, where exclusion is possible and therefore exclusion's cost must be weighed.¹

1. The club good keeps the gate the commons lost. Because the holder can exclude, the open-side maladies vanish: no overgrazing, for the outsider is barred; no free-rider strike, for users can be charged. It is the one shared thing a market can supply. Yet it supplies it imperfectly: being non-rival, it costs nothing more to extend to one further user, so any positive gate price turns away someone who would have gained at no cost to anyone — the pure loss that having a gate exacts.

The question James Buchanan made central in 1965 was not whether to provide such a good but for how many. A purely private good is consumed by one; a pure public good is consumed by all; the club good sits between, consumed by some, and the size of that some is the thing to be solved. Two forces pull against each other as the membership grows. On one side, sharing: the cost of the thing — digging the pool, paving the road — is largely fixed, borne once however many use it, so each new member admitted lightens the burden on all the rest, and on this count the club would grow without limit, toward the whole world. On the other side, crowding: past some point the good is no longer truly non-rival, for the pool fills with swimmers and the road fills with cars, and each new member now subtracts from the enjoyment of those already in, and on this count the club would shrink toward one. The right size is where these meet — where the saving in cost from one more member exactly equals the crowding that member inflicts — and Buchanan showed that a good has, in this sense, an optimal club, a best number of sharers, fixed by the shape of its cost and the onset of its congestion. The members are neither everyone nor anyone in particular, but precisely as many as the thing can bear.²

2. Buchanan (1965) asked not whether to provide the club good but for how many. Two forces pull as membership grows. Sharing: the cost is largely fixed, so each new member lightens the burden on the rest — pushing the club toward the whole world. Crowding: past a point the good ceases to be non-rival, the pool filling, each new member subtracting from those already in — pushing toward one. The optimum is where the cost saved by one more member just equals the crowding he inflicts: a best number of sharers, fixed by the cost curve and the onset of congestion.

⁂

This gives the plate its answer about price. A club good is not paid for in one sum but in two, for it has two distinct costs to recover. There is the fixed cost of the thing itself, which the membership fee collects — a charge at the door, shared among the members, that funds the building and the upkeep and admits the holder to the pool of sharers. And there is the cost each member imposes on the others by crowding, which a private market left to the fee alone would miss entirely; for once admitted, a member who swims at the busy hour makes the pool a little worse for every other swimmer, and feels none of that himself. To price the crowding is to charge for the use and not only for the access — a toll on top of the fee, set at the value of the congestion one more user's entry imposes, so that each member, in deciding whether to swim now or later or at all, faces the cost his presence lays on the rest. The two-part tariff, the fee and the toll, is how a club good is honestly priced: the fee for the standing cost of having the thing, the toll for the running cost of crowding it. Where the toll is right, the members use the good neither too much nor too little, and the congestion is held to the level worth bearing.³

3. A club good has two costs and so two prices. The fixed cost of the thing the membership fee collects — a charge at the door, shared, funding the building and admitting the holder. The cost each member imposes by crowding a fee alone misses: a member at the busy hour worsens the pool for all others and feels none of it. To price the crowding is to charge for use, not only access — a toll set at the congestion one more entry imposes, so each member faces the cost his presence lays on the rest. The two-part tariff, fee and toll, is the honest price.

Step back, and the club good shows what the whole volume has been circling: that the trouble with the commons was never sharing as such, but sharing without a gate. Give the shared thing a wall, and the tragedy and the free rider both dissolve — the wall keeps the stranger out and lets the keeper charge, so the thing is funded and is not stampeded. What remains is a milder and more manageable trouble, the trouble of the right size and the right toll, an optimization rather than a catastrophe. But the wall is not free, and that is the catch the cell carries: to exclude from a non-rival good is to waste, to turn away at the gate a person whose entry would have cost the thing nothing, purely to keep the gate meaningful. So the club good is a bargain struck between two imperfections — the inefficiency of exclusion, which keeps some out for no real cost, set against the inefficiency of the open commons, which lets all in and ruins the thing. Neither is free; the club takes the first to escape the second, accepting a little waste at the door to avoid the larger waste of the stampede. It is the shared world's compromise with the necessity of a fence.⁴

4. The trouble with the commons was never sharing but sharing without a gate. Give the shared thing a wall and tragedy and free rider both dissolve — the stranger is kept out, the keeper may charge, the thing is funded and not stampeded. What remains is milder: the right size and the right toll, an optimization not a catastrophe. But the wall is not free: to exclude from a non-rival good wastes, turning away one whose entry cost nothing. The club takes the inefficiency of exclusion to escape the inefficiency of the open commons — a little waste at the door against the larger waste of the stampede.

And this places the club among the volume's answers rather than its problems, as a quiet rebuke to the dichotomy the family keeps overturning. For a club good need be provided neither by the lone market, which prices it badly and would rather not build a thing it cannot fully charge for, nor by the state, which funds the public good from taxes because no gate can be built — but by the members themselves, banding together to raise the thing they want and to share its cost and govern its crowding among them. The swim club, the toll cooperative, the condominium, the trade association, even, at the largest scale, the city that taxes its residents for the park only they may easily reach — these are private governments of shared things, voluntary, bounded, and self-funding, a third way between the market and the state that runs straight toward the flagship of this volume.⁵ For what Ostrom will find the commoners doing with their pasture, the club has been doing all along with its pool: a circle of users, neither commanded from above nor divided into private parcels, governing together a thing they share. The club is the commons that learned to build a wall and charge at the gate; and the right number of its members, neither all the world nor one alone but as many as the thing can hold, is the answer to who shares what others may be shut out from, and the toll upon their use is the price of its crowding.

5. The club need be provided neither by the lone market, which prices a non-rival good badly and would rather not build what it cannot fully charge for, nor by the state, which funds public goods from taxes because no gate can be built — but by the members themselves, banding together to raise the thing, share its cost, and govern its crowding. The swim club, the condominium, the trade association, the city taxing residents for the park only they can reach: private governments of shared things, a third way between market and state.