I was very happy to hear about Elinor Ostrom’s Nobel Prize in Economics. Her work focuses on the tragedy of the commons and collective action problems, which overlaps several of my own research interests. When Ostrom began writing in this field in the 1960s, the conventional wisdom in economics and political science was that the tragedy of the commons and other similar collective action problems could only be addressed through government intervention. Some dissenting economists (such as Ronald Coase) argued that they could often be addressed through privatization — converting common property into property owned by individuals, who would then have strong incentives not to overuse or destroy it. In a series of influential articles and books, Ostrom showed that there is a third way: often individuals can use social norms and informal institutions to manage common property resources and prevent tragedies of the commons. In many situations, Ostrom demonstrates, informal, decentralized approaches to managing common property resources are superior to government-imposed ones. The former take more account of the specialized local knowledge possessed by the people who actually use the resources and depend on them for their livelihoods.
For the best summary of Ostrom’s work, see her excellent 1990 book Governing the Commons.
Ostrom’s theories are often seen as an alternative to traditional libertarian thought, which emphasizes the importance of private property and markets. However, it actually fits well with libertarianism defined more broadly as advocacy of the superiority of private sector institutions over government. In some respects, Ostrom’s norm-based approach to dealing with tragedies of the commons is actually less dependent on government than the more traditional libertarian approach of relying on exclusive private property rights. The latter, after all, often depend on enforcement by government. Even where private property rights exist, it is often easier and cheaper to solve some collective action problems by norms rather than relying on the law. And, obviously, Ostrom’s emphasis on the importance of local knowledge is similar to the earlier work of libertarian theorist F.A. Hayek.
Not all tragedies of the commons can be solved by the kinds of mechanisms studied by Ostrom. Her research shows that such approaches usually work well only in groups with no more than a few thousand members. Beyond that point, resource usage norms become hard to enforce and free-riding difficult to suppress. Informal norms and institutions probably cannot solve nationwide collective action problems such as rational political ignorance (the focus of much of my own work), or worldwide ones such as global warming. Still, they can address a great many environmental and economic dangers that most experts once believed required government-imposed solutions.
Because Ostrom is a political scientist, her work hasn’t been as widely recognized by economists as it probably should be; this despite the fact that collective action problems are a major focus of study for modern economics. Steve Levitt writes that he had not even heard of Ostrom before she won the Nobel. However, her work has been enormously influential in political science and legal scholarship.
I’m not going to argue the question of whether Ostrom deserves the Prize more than various other candidates who are professional economists. Other people are far better qualified to judge that issue than I am. However, there is no doubt that her work is a major contribution to the study of important economic issues. Hopefully, the Nobel will make her scholarship better known in economics and other fields.
UPDATE: Paul Krugman admits that he, like Levitt, was unfamiliar with Ostrom’s work before she won the prize. But he goes on to suggest that she is deserving of the award based on her work on institutions.
Gordo says:
Her work sounds very interesting, and I will try to look at it in more detail.
On the surface, the smaller communes she analyzes look a lot like what the end state of Marxism/Communism was supposed to look like — except that people like Lenin, Stalin, Mao, Pol Pot, the North Korean Kims, Castro, etc. seem to always be getting in the way!
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October 13, 2009, 12:46 amSteve says:
Ostrom’s recommendation is basically to have a government solution, only don’t call it government.
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October 13, 2009, 12:52 amIlya Somin says:
Ostrom’s recommendation is basically to have a government solution, only don’t call it government.
Since her recommendation requires neither 1) centralized coercion, 2) taxation, or 3) a territorial monopoly of force, I fail to see how it is “a government solution.”
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October 13, 2009, 12:54 amIlya Somin says:
On the surface, the smaller communes she analyzes look a lot like what the end state of Marxism/Communism was supposed to look like – except that people like Lenin, Stalin, Mao, Pol Pot, the North Korean Kims, Castro, etc. seem to always be getting in the way!
First, her approach does not require “communes,” in the sense of societies with no private property. Second, as I noted in the last comment, it doesn’t require any kind of centralized apparatus of coercion. That is a fundamental difference between her and Marx, to say nothing of Lenin, Stalin, et al.
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October 13, 2009, 12:55 amSteve says:
Since her recommendation requires neither 1) centralized coercion, 2) taxation, or 3) a territorial monopoly of force, I fail to see how it is “a government solution.”
Taxation is obviously a red herring. As to the other two elements, which share the common denominator of force, the difference is less than meets the eye. Either Ostrom’s “informal institutions” will impose rules which carry some penalty for violation, or not. If there’s no detriment to breaking the rules, then you’re right back in the tragedy of the commons where selfish behavior is rewarded. If there is a sanction, then at best you have something marginally more creative than the penalty of fines/jail that government typically imposes.
Libertarians like to speak of government as though it’s something uniquely pernicious, but it’s really just one variant of collective action.
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October 13, 2009, 2:17 amMark N. says:
It depends on the nature of the penalty, I think. Of course it depends on your brand of libertarianism, but most libertarians object mainly to the coercion involved in application of force— the government may lock you up, execute you, etc. But few (no?) libertarians would object to freely constituted groups of people choosing with whom and how to associate. For example, shunning and refusing to do business with someone whose actions offend your morals seems like a perfectly reasonable right of an individual. If many people choose to thus punish a certain kind of behavior, avoiding that behavior become a norm, with shunning and exclusion from business with those who uphold the norm the consequence. Yet this is clearly not government; it’s free individuals choosing whom they wish to associate and do business with.
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October 13, 2009, 4:02 amzuch says:
Mark N:
But you fail to understand that when the libertarians rule the world, everyone will think like them, and no one will do such dastardly things as shun others for doing what they themselves are also doing. Since everyone will toe the libertarian party line, there will be no such disagreements, and everyone can go on merrily screwing each other and stabbing them in the back every chance they get....
Cheers,
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October 13, 2009, 4:49 amDavid Welker says:
I think if tragedy of the commons problems can be solved with or without government action, that is a good thing. I haven’t read any of Elinor Ostrom’s work, but I look forward to coming to an understanding of her insights.
That said, I feel compelled to reiterate that Ilya Somin is extremely biased. Everything is analyzed from an anti-government perspective. This is an unhealthy obsession, and it isn’t rational. I think Somin would praise nearly any idea that was not completely outrageous, if he found some way that it could plausibly be used to advance his obsessive views against government.
So, I am not sure what Somin’s praise of Ostrom’s work really means. Does it mean the work is good? Or does it mean that Somin is excited by any idea that he might spin in some way to advance his own idiosyncratic views?
The vast majority of things that government does are neither perfectly good nor perfectly awful. That is true of actions in the private sector as well. A little more balance would greatly improve the persuasiveness of Mr. Somin’s arguments. But of course, such balance should not be a matter of rhetoric, but substance.
That said, it is perfectly possible that Ms. Ostrom’s ideas could be really great, despite Somin’s praise. I will just have to read them myself. =)
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October 13, 2009, 4:57 amDavid Welker says:
I think if tragedy of the commons problems can be solved with or without government action, that is a good thing. I haven’t read any of Elinor Ostrom’s work, but I look forward to coming to an understanding of her insights.
That said, I feel compelled to reiterate that Ilya Somin is extremely biased. Everything is analyzed from an anti-government perspective. This is an unhealthy obsession, and it isn’t rational. I think Somin would praise nearly any idea that was not completely outrageous, if he found some way that it could plausibly be used to advance his obsessive views against government.
So, I am not sure what Somin’s praise of Ostrom’s work really means. Does it mean the work is good? Or does it mean that Somin is excited by any idea that he might spin in some way to advance his own idiosyncratic views?
The vast majority of things that government does are neither perfectly good nor perfectly awful. That is true of actions in the private sector as well. A little more balance would greatly improve the persuasiveness of Mr. Somin’s arguments. But of course, such balance should not be a matter of rhetoric, but substance.
That said, it is perfectly possible that Ms. Ostrom’s ideas could be really great, despite Somin’s praise. I will just have to read them myself. =)
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October 13, 2009, 4:57 amMark says:
Steve’s comment assumes that human motivation is essentially egoistic, so that norms would have to carry sanctions of a standard sort to be effective. Part of the point of Ostrom’s work, I take it, is that this is a false assumption — that institutions that are built around this assumption of egoism tend to support and foster egoistic motivation, whereas there are some institutions that do not make this assumption and tend to foster non-egoistic motivation.
This is another way in which Ostrom’s work has a Marxist air about it, though you could equally well say that it has an Aristotelian air.
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October 13, 2009, 7:46 amUbu Walker says:
So locally created institutions are great, unless there is social change. Which is true in our society. But she also concludes that “complex, redundant, and layered institutions; a mix of institutional types; and designs that facilitate experimentation, learning, and change” can overcome these tradgities of the commons. Sounds more liberal progressive, than libertarian, to me.
Read her 2003 Science article here: http://www.anth.uconn.edu/faculty/handwerker/389readings/Deitz%20Ostrom%20Stern%202003%20Commons.pdf
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October 13, 2009, 8:15 amdevil's advocate says:
the liberaltarians seem to be out in force. Oh my god, Somin is biased against government. Round up the usual suspects — he being one of them. I guess I can see being concerned about this if you imagined his prose to be some kind of siren song that didn’t telegraph this very obvious context to his remarks. God forbid somebody happened to accidentally troll over here from The Daily Kos and get converted.
Albeit, I’m ambivalent about whether citation to Ostrom is the real thing in terms of suspicion of government, esp. because most of her writing seems to be behind academic firewalls. Her philosophy does, as Steve pointed out, pose the risk of simply representing federalism gone wrong unless the institutional customs around which this self-management regime is built are somewhat constitutional in nature, protecting the individual from the excesses of tribal democracy.
But one must set skepticism of a new feudalism against the equally distinct possibility that these self-emergent management regimes provide for collective action in an environment where a group of citizens may exert rights as against the government to maintain an emperical approach. This would look more like privitization, in that it relies on their manifest self interest to balance resource exploitation and exhaustion, and is guided by custom that might [and I stress might] transcend the habit of mob rule that can also attend these unions.
I have examined some of these arguments in the fisheries contexts and can recommend Folk Management in the World’s Fisheries (how about underlining? what is the html for that or is that something that could be inserted in the comments toolbar?) one of whose editors is a good friend and great thinker in this area, Christopher Dyer.
Currently, self-management seems to sit almost astride the gap between government control and privitization. It seems to me that outcomes measured in the independence and productivity of participants may indicate the utility of this third way for those committed, like Somin, to solutions that elevate rational self interest over government’s purported version thereof.
Brian
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October 13, 2009, 9:28 amSmooth, like a Rhapsody says:
Big congrats to Prof. Ostrom, who teaches at my alma mater.
I am surprised, though, that the committee could not find a grad student with lots of potential to give it to.
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October 13, 2009, 11:13 amOstrom on Commons Problems says:
[...] a nice summary of Elinor Ostrom’s work on voluntary solutions to commons problems from Ilya Somin: Ostrom’s theories are often seen as [...]
subpatre says:
David Welker claims, “The vast majority of things that government does are neither perfectly good nor perfectly awful. That is true of actions in the private sector as well.”
That may be true; but nobody does awful like government. Nobody kills 3, or 12, or 50 million people the way government not only can, but actually does.
In essence, Welker’s statement is: ‘Most things in the world are neither wonderful or dreadful’ while ignoring the not-common atrocious and deadly things. He disregards the reality that government does dreadful. Welker would have us concentrate on ‘the majority of things’ —the daily minutia— in order to ignore the genocides, massacres, deliberate starvations, and wars.
So when David Welker said “I feel compelled to reiterate that Ilya Somin is extremely biased. Everything is analyzed from an anti-government perspective. This is an unhealthy obsession, and it isn’t rational.” it isn’t Somin who has an unhealthy obsession and is irrational .
It is Welker who is irrational —completely and objectively irrational— by ignoring known, foreseeable consequences while concentrating on the mundane and inconsequential. That is obsessive.
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October 13, 2009, 12:51 pmGordo says:
In my admittedly limited understanding of classical Marxism, once the capitalists had been smashed and private property abolished, the state would “wither away” and people would cluster in smaller communes to govern themselves.
That it was all a fantasy was due to the inevitable Lenin/Stalin/Mao/Castro and his minions who had no intention of ever lettting the state “wither away.”
But perhaps Ostrom’s work is in a way a validation of at least part of the Marxist utopia, and proof that it might in some ways work.
But I really should read her work before I pontificate further.
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October 13, 2009, 1:06 pmBen P says:
While this may be true as a practical matter, I’m not really so sure it’s generally true at all. But this also just leads into the question of how does one differentiate between a corporation and a government.
Corporations (or “the market” if we’re talking in the abstract) have rarely had the power to accomplish such things because corporations have always operated under the power of the government. No government would allow a corporation to become so powerful as to effect mass murder because something so powerful would threaten the power of the government.
But when government is taken out of the picture (or is sufficently removed as to be powerless) what’s to keep actors in the “free” market from using force to amass sufficient power that they might be capable of such wrongs?
Although slavery was the first example that popped into my head, a better example might be the British East India Company. Although it was granted a monopoly by the crown, the Company’s dominance in India through the 1700’s was not truly supported by British forces, but by their own mercenary forces within India. You can pretty easily make the case that the Company was also a government, but it was still a market actor driven primarily by profit.
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October 13, 2009, 2:07 pmDavid Nieporent says:
That’s okay; I feel compelled to point out that Welker has a weird narcissistic streak which causes him to believe that anybody cares what he thinks of the bloggers here.
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October 13, 2009, 4:16 pmDavid Welker says:
You must admit that this is an amusing and possibly self-contradictory quote. My views of the bloggers here do not matter–but my supposed narcissistic streak is something of interest and worthy of comment.
If something does not matter, it is best to ignore it.
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October 13, 2009, 5:13 pmHarryEagar says:
‘Nobody kills 3, or 12, or 50 million people the way government not only can, but actually does.’
Religion does a pretty good job of it. And rentiers did a good job on Ireland.
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October 13, 2009, 5:25 pmDavid Welker says:
Do you really think you can argue against government institutions such as the Post Office, the Forest Service, and the local Fire Department by invoking Stalin, Mao, and Pol Pot?
I think that this is a perfect illustration of the weakness of libertarian arguments. They are far too over-generalized and fail to consider particular institutional contexts. I think the story of Stalin and his mass murders, for example, is a story about a deranged and paranoid dictator who had accumulated far too much power. Any linkage of this story to universal healthcare would be extremely far-fetched to anyone who hasn’t consumed too much libertarian Kool-Aid.
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October 13, 2009, 5:26 pmTuesday Highlights | Pseudo-Polymath says:
[...] on Ms Ostrom and the tragedy of the commons. Here [...]
Tuesday Highlights | Pseudo-Polymath says:
[...] on Ms Ostrom and the tragedy of the commons. Here [...]
Stones Cry Out - If they keep silent… » Things Heard: e89v2 says:
[...] on Ms Ostrom and the tragedy of the commons. Here [...]
subpatre says:
David Welker wrote: “Do you really think you can argue against government institutions such as the Post Office, the Forest Service, and the local Fire Department by invoking Stalin, Mao, and Pol Pot? I think that this is a perfect illustration of the weakness of libertarian arguments.”
Once again, Welker illustrates an unhealthy obsession of ignoring obvious and dangerous consequences in favor of mundane, everyday tasks; tasks that could safely be replaced by private services.
And yes, the local emergency services here are volunteers; the really important letters —healthcare— are carried by couriers itching for an open market; and private forestry is superior to government ‘collective farm’ policies.
There are functions only government can do, or does best; but we can never get to those with absolutist apologists like Welker ignoring facts and realistic dangers. Death-by-government is not uncommon, from Mexico on our own border (~1.5 million killed) to our own government policies toward those fleeing from it.
Neither Somin nor Ostrom claims eliminating government is the solution; yet Welker claims the exact opposite, than any routine task —like the mail— justifies any extension and any added power of government.
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October 14, 2009, 7:42 amdevil's advocate says:
HarryEager
Dinesh D’Sousa has a rather interesting take on this assertion, comparing religiously sanctioned deaths during the crusades and the inquisition to the scale accomplished by aethistic dictators. And all of this in the context of seeking a conservative rapproahment with Islam. It was a striking argument overall.
Have to second subpatre as Welker’s incredulity at the idea that anyone could attack the post office or government fire brigade.
Come to think of it, it was the government fire brigade at issue in Adler’s death penalty post that was recently offered as evidence of libertarian indifference to the death of innocents. Go figure. . .
The loss of forests, communities and lives to the politically driven Forest Service is legion. I would think Gifford Pinchot would be turning over in his grave, albeit you could have seen this coming from the beginning.
There is a reason we have a compound verb in the lexicon, “going postal”. There is also a reason when I really want something to get there that I send it UPS.
Brian
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October 14, 2009, 9:44 amDerek Wall says:
Like Marx she believes in collective solutions, like the libertarians she rejects top down solutions...her work is the work of the internet, world wide web and collectivist solutions that draw on individual creativity.
Any way just have a read of her excellent work and try to make sense of it, she is up to something different and important, I feel.
http://www.thecornerhouse.org.uk/item.shtml?x=52004#index-01–00-00–00 is a good summary.
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October 17, 2009, 8:18 am