A third way

The 2009 Nobel Prize for Economics has been awarded not to an economist but to a political scientist who refuses to be boxed by disciplinal boundaries.  Elinor Ostrom, a professor of political science at Indiana University, is being recognized for her path-breaking research on economic governance, particularly the administration of what are called “common-pool resources,” such as communal forests, ground water basins, fishing grounds, grazing lands, irrigation systems, etc.

Common-pool resources have been known to be subject to rapid depletion, destruction, and waste – a situation that has been labeled “the tragedy of the commons.” This tragedy has been explained as the outcome of the wanton appropriation of these resources by users who jostle against one another to take the maximum they can get, with little or no thought of allowing the resources to regenerate.  To prevent this from happening, the conventional solution has been either to privatize or to place these under State control.

Ostrom questions the presumed inevitability of the “tragedy of the commons.” Her research documents numerous cases of successful communal management in a variety of settings, showing how far more effective these existing traditional decentralized mechanisms are than the State or the market in maintaining sustainable appropriation of these resources.  She complements her field studies with careful analyses of behavior in controlled game settings.

In another time, Ostrom’s conclusions would have been dismissed as the sentimental musings of a philosopher who remains hopelessly trapped in a “small-is-beautiful” vision of the world.  But the world suddenly changed last year, and from the rubble of collapsing financial markets and failed states, the Nobel Committee found this fascinating lady.

There is a third way, Ostrom says – a path that lies between “Smith’s concept of market order for all private goods and Hobbes’s conception of the Leviathan – now called ‘the sovereign State’ – for all collective goods.”  Between the State and the market, there is the local community, which, in the light of its own values and traditions, has evolved social arrangements suitable to the orderly utilization and preservation of the resources from which it draws its livelihood.

Being local and traditional does not mean that these arrangements are inferior to the modern organizational forms associated with the State or market.  On the contrary, they are often superior, having sprung from a trial-and-error design process sometimes spanning centuries.  Ostrom of course is fully aware that human communities themselves undergo wrenching transformation as a result of migration, urbanization, and the spread of transportation and communication networks.  In time, as we know, communities do lose interest, or lose their collective grip over these resources.

The decline of the community has typically supplied the rationale for mindless nationalization or privatization schemes, both of which may actually hasten the destruction of the shared resources.  This onesize-fits-all way of solving the problem of common pool resource management often completely ignores not only the sheer variety of historical and social settings, but also the hidden social capital that could be harnessed in the sustainable use of these commons.

Some may think that decentralized communal administration belongs to a bygone age, and that it has no place in modern complex societies.  Nothing could be farther from the truth.  The principle that undergirds modern condominium living, says Ostrom in an interview, is the same one that is found in traditional self-governing communities.  “While individual families own the apartments in a ‘condo,’ they have joint rights and duties in relation to the building and the grounds of the condominium complex…. The Internet is another commons that is certainly relevant to modern life.”

What is interesting about Ostrom’s work is its clear policy thrust.  She is not content with merely describing the functioning of a broad range of “self-organizing and self-governing forms of collective action.” She wants to know what they teach us in terms of designing future social systems that promote sustainable living in this shared planet.

She identifies eight design principles for stable local common pool resource management (CPR) that have far-reaching implications for various areas of human organization: (1) Clear boundaries (2) Rules adapted to local conditions (3) Participation of resource users in collective decision-making (4) Effective and accountable monitoring (5) Graduated sanctions for violators of community rules (6) Cheap and accessible conflict-resolution mechanisms (7) Recognition of local self-determination by higher authorities, and (8) In the case of large common-pool resources, the setting up of multiple layers of “nested enterprises” coupled with small local CPRs at the base.

If Ostrom’s empirically-grounded work seems familiar, it can only be because it resonates with the themes of Subsidiarity, an old and tested principle of governance that is worth revisiting as we desperately grapple with the problems of ecosystem collapse, mass poverty, corruption, underdevelopment, and political instability.

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