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Elinor Ostrom and the Triumph of the Commons

6 years ago
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Lost amid the noisy speculation about the political impact of President Obama's Nobel Peace Prize (my prediction = zero) was another Nobel award that may actually have an effect on debates about such topics as health care reform, global warming and the regulation of major financial markets.

Show of hands, here. How many of you had ever heard of Elinor Ostrom until this week, when she was awarded the Nobel for economics (shared with Oliver Williamson)? I am not too proud to admit that my hand is not in the air. On the other hand, I'm in good company. I did a Nexis search to find earlier articles about her and found exactly one story, ever, where her name appeared at least five times: It was in the Memphis Commercial Appeal, in 1997, when she was given the Frank J. Seidman Distinguished Award in Political Economy.

That was it.

But when I heard the news reports about her work -- analyzing successful group management of common resources -- I knew immediately who she was not. Flashback to 1968 and an article in the journal Science titled "The Tragedy of the Commons."

Garrett Hardin, an ecologist and microbiologist, made what may be the most famous case ever for managing natural resources, rather than depending on the good intentions of individuals.

Here's his metaphor, which has ruled much of political thinking ever since:

"The tragedy of the commons develops in this way. Picture a pasture open to all. It is to be expected that each herdsman will try to keep as many cattle as possible on the commons. As a rational being, each herdsman seeks to maximize his gain. Explicitly or implicitly, more or less consciously, he asks, 'What is the utility to me of adding one more animal to my herd?' "

Paraphrasing Hardin: A herdsman who adds an animal to his herd gets the whole advantage of that animal -- but suffers only a fraction of the shared disadvantage of overgrazing. Hardin goes on:

"Adding together the component partial utilities, the rational herdsman concludes that the only sensible course for him to pursue is to add another animal to his herd. And another; and another. . . . But this is the conclusion reached by each and every rational herdsman sharing a commons. Therein is the tragedy. Each man is locked into a system that compels him to increase his herd without limit -- in a world that is limited. Ruin is the destination toward which all men rush, each pursuing his own best interest."

Translation: People are unable to put aside short-term gain for long-term benefit. It's a moral claim at least as much as it's an economic or sociological one. People, Hardin implies, are rotten at the core. Or at least too rotten to get beyond that short-term gain.

Doesn't that seem like a plausible framework in which to hold, say, the recent market meltdown, where pursuit of profit inflated the bubble? Or the inexorable rise in health-care costs, driven at least in part by the monetary advantage given doctors who perform multiple tests and procedures?

The liberal reaction to Hardin was: We need government control of the commons.

The conservative reaction to Hardin was: Kill the commons. If everything is owned by an individual entity, the problems of the commons go away.

Ostrom is the anti-Hardin. Her reaction was: Not so fast, fella. You tell a nice story, but does the real world bear it out? Decades of research, in which she applied some of the same techniques biologists were bringing to the study of ecosystems, told her that Hardin's metaphor sometimes did not apply.

As she wrote in her 1990 book, "Governing the Commons": "Relying on metaphors as the foundation for policy advice can lead to results vastly different from those presumed to be likely."

Translation: Your mileage may vary.

No kidding, that's really her point -- that all over the world we can find examples where a commons is being managed pretty well, thank you. But that no single approach or model can be imposed on any particular situation. Again from the book:

"What is missing from the policy analyst's tool kit -- and from the set of accepted, well-developed theories of human organization -- is an adequately specified theory of collective action whereby a group of principals can organize themselves voluntarily to retain the residuals of their own efforts."

What kinds of systems work? Her book analyzes a bunch of them. Relatively small, self-governing collectives where the stakeholders agree to particular kinds of enforcement of agreed-upon rules. She looked at fisheries, forests, regional police enforcement and other settings where individuals managed to agree to a successful management of common resources.

To which, as I am hardly the first to point out this week, we can add the Internet.

Ostrom is 76 but far from retired. In July of this year, she authored an essay that appeared in Science, that same journal that published the "Tragedy of the Commons." In it she's hammering her same point: People in many places have figured out how to manage their commons, and scholars can say something important about why they succeeded.

"Extensive empirical studies by scholars in diverse disciplines have found that the users of many (but not all) resources have invested in designing and implementing costly governance systems to increase the likelihood of sustaining them."

She identifies 10 factors that appear to help predict the success of these self-management arrangements: size, predictability, productivity, resource unit mobility, collective-choice rules, number of users, leadership/entrepreneurship, knowledge of mental models of the system, importance of resource and norms/social capital.

No, that's not nearly as simple as Hardin's clean metaphor. But as she was quoted in a news release from Arizona State University: "This is not a KISS (keep it simple, stupid) approach. If we keep it too simple, we lose an understanding of what's going on out there."

On the other hand, if you get too complex, it becomes impractical for real-time decision-making and governance. But that's an issue for people more learned than I to consider.

Like Hardin, Ostrom's position has powerful moral implications. If she's right, then we can find ways to be guided by our better angels. (Though she does not suggest in any way that success is inevitable. There are plenty of examples of Hardin-style failures out there.)

And there is a role for government in helping create situations where success is more likely -- without there being any particular state-imposed solution.

Like Hardin, Ostrom's work can have powerful political implications. For instance: Single-payer insurance or local co-ops? Can Ostrom's ideas be stretched far enough to apply?

Ostrom is a professor of political science at Indiana University and founding director of the Center for the Study of Institutional Diversity at Arizona State University. The early media attention to her award focused mostly on the fact that she's the first woman to get a Nobel in economics.

That's a big deal, I suppose. But I'm more impressed about why she won: For defying a powerful and entrenched metaphor with solid, empirical research. And for creating a different way to think about issues that really do affect us all.

The triumph of the commons? Maybe it can happen.

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