The Ostrom Nobel

by Henry on October 12, 2009

To amplify what Kieran has just said – political scientists are going to be very, very happy today. I had seen Lin cited as a 50-1 outsider by one betting agency a few days ago, and had been surprised that she was at the races at all, given that economists tend (like the rest of us) to be possessive of their field’s collective goodies. I’m delighted to see that my cynicism was completely misplaced. But this is also a very interesting statement of what the Nobel committee see as important in economics.

Lin’s work focuses on the empirical analysis of collective goods problems – how it is that people can come up with their own solutions to problems of the commons if they are given enough room to do so. Her landmark book, Governing the Commons, provides an empirical rejoinder to the pessimism of Garret Hardin and others about the tragedy of the commons – it documents how people can and do solve these problems in e.g the management of water resources, forestry, pasturage and fishing rights. She and her colleagues gather large sets of data on the conditions under which people are or are not able to solve these problems, and the kinds of rules that they come up with in order to solve them.

This is, as Kieran suggests, a vote in favor of detailed, working-from-the-ground-up, empirical work, which doesn’t rely on sharply contoured theoretical simplifications and flashy statistical techniques so much as the accumulation of good data, which reflects the messiness of the real social institutions from which it is gathered. Quoting from Governing the Commons:

An important challenge facing policy scientists is to develop theories of human organization based on realistic assessment of human capabilities and limitations in dealing with a variety of situations that initially share some or all aspects of a tragedy of the commons. … Theoretical inquiry involves a search for regularities … As a theorist, and at times a modeler, I see these efforts [as being] at the core of a policy science. One can, however, get trapped in one’s own intellectual web. When years have been spent in the development of a theory with considerable power and elegance, analysts obviously will want to apply this tool to as many situations as possible. The power of a theory is exactly proportionate to the diversity of situations it can explain. All theories, however, have limits. Models of a theory are limited still further because many parameters must be fixed in a model, rather than allowed to vary. Confusing a model – such as that of a perfectly competitive market – with the theory of which it is one representation can limit applicability still further. (pp.24-25)

One plausible characterization of her life’s work is that it is about demonstrating the empirical weaknesses of a ‘cute’ economic model (the Tragedy of the Commons) that assumed a role in policy discussions far out of proportion to its actual explanatory power, and replacing it with a set of explanations that are nowhere near as neat, but are far more true to the real world. It is also worth pointing out in passing (as an email correspondent has brought to my attention) that she has received roughly a dozen grants under the NSF program that Senator Tom Coburn wants to abolish. Tom Coburn vs. the Nobel committee as a judge of scholarly quality – you decide.

It is also a vote in favor of supplementing quantitative work with qualitative understanding – Lin spends a lot of time (albeit less than she used to) in the field, soaking up practical knowledge which informs her work in striking ways. She is hands-on in a way that very few economists, political scientists or sociologists are. It is also interesting to note that the Nobel committee pays specific attention to the political implications of her work.

Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories.

This reflects what she and her husband Vincent refer to as “polycentricity,” a normative approach to governance which stresses the degree to which higher levels of government should not crowd out self-organization at lower levels. Her work implies that both pure marketization and top-down government control can have badly adverse consequences for resource management, because they rob individuals of the capacity to govern themselves, and because they both lead to the depletion of important forms of local collective knowledge. Alex Tabarrok is right to see something Hayekian in Ostrom’s arguments – but it is Hayek against Hayek. Ostrom stresses repeatedly that even the best functioning markets are undergirded by an array of collective institutions which order people’s market interactions, and that in the absence of such rules, self interested behaviour will have highly adverse consequences. Perhaps the closest parallel to Ostrom’s work is Jane Jacobs’. Obviously, Jacobs was not a social scientist and didn’t write like one, but both straddle the divide between libertarian and left politics in very interesting ways that challenge some of the underlying assumptions of both.

Finally, I reckon that this prize couldn’t have been given to a nicer, warmer, more wonderful person. Perhaps I’m biased – I’m one of the younger academics whom Lin has taken under her wing – but I note that (a) I am only one of many younger people in the field whom she has been generous to, and (b) she didn’t have any of the usual institutional reasons to be so kind in my case. There are a lot of very smart and successful senior academics out there – a significantly smaller subset of them are notable for their generosity to people who are not their peers. I’m very happy that this award has gone to one of that subset, and for purely personal reasons, I’m delighted that it was Lin. A Good Outcome.

{ 62 comments }

1

Guano 10.12.09 at 4:28 pm

Indeed. “Governing the Commons” is a fascinating book. I suspect, however, that it hasn’t had as much impact as it could simply because it doesn’t fit into the dominant political outlooks of marketisation and top-down government control.

2

bekzod 10.12.09 at 4:54 pm

this is a very nice, honest essay. But don’t you mean polycentricity, not polyarchy?

3

Henry 10.12.09 at 5:10 pm

I did indeed – many thanks for pointing out the error (now corrected). Polyarchy being, of course, Dahl’s quite different account …

4

Guano 10.12.09 at 5:11 pm

I hope so.

5

Sebastian 10.12.09 at 5:21 pm

“but it is Hayek against Hayek. Ostrom stresses repeatedly that even the best functioning markets are undergirded by an array of collective institutions which order people’s market interactions, and that in the absence of such rules, self interested behaviour will have highly adverse consequences. Perhaps the closest parallel to Ostrom’s work is Jane Jacobs’. Obviously, Jacobs was not a social scientist and didn’t write like one, but both straddle the divide between libertarian and left politics in very interesting ways that challenge some of the underlying assumptions of both.”

It is an interesting problem, Will Wilkinson or Virginia Postrel seem like some of the best political advocates of that political space. They want to allow government to set up frameworks with the ultimate aim of letting more people do what they want. They tend to be from the “let bad outcomes of bad choices happen” point of view, but with a floor–so that really awful outcomes of bad choices don’t happen. I think the main divide between those type of libertarians and leftists might be on how high the outcomes from bad choices floor can be.

6

Matt 10.12.09 at 5:33 pm

Thanks for this over-view, Henry. I’d not known of her work before. Do you know how it compares with Robert Ellickson’s work in his book _Order without Law_, by chance? They sound very similar but neither seems to mention the other, if a quick of indexes can be relied on. Ellickson’s work is well known to legal scholars, so if you know if there are similarities (or important differences) it might be a nice way to open her work up to those working in that field.

7

Admiral 10.12.09 at 5:50 pm

Although this is a heroic effort to try and twist her work into something both anti-Hayek, the reality is that her work largely contradicts such a position. The “collectivist” part of many the institutions she writes of are *voluntary*, and Hayek always understood the importance of such institutions.

Naturally, missing from this review is how important her work has been to the Public Choice School, whose intellectual leaders have almost always been strongly libertarian, though, yes, they have sometimes leaned left. Her research’s implications for PCS, a school of thought sadly ignored by the left for its own patronage-giving purposes, are the main reason she won the Nobel.

Finally, the words you quoted might as well have come from Human Action, written by Ludwig von Mises. Libertarians understand well the limits of theory. The real problem in the economic sciences is the desire by some to look so deeply into data, at the expense of developing any explanatory power. Indeed, Ostrom’s ability to straddle *that* line is her real gift.

8

Henry 10.12.09 at 6:11 pm

There are similarities but Ellickson is much less interested in comparison and large scale data collection to figure out where there are or are not observable regularities across space. As I recall Ellickson (15+ years since I read it), he is more interested in telling lawyers – ‘OK, you can have people organizing themselves, allocating property rights etc without law’ without necessarily trying to figure out which sets of people choose which sets of institutions for which purposes etc.

9

Barry 10.12.09 at 6:15 pm

Speaking of political scientists and long odds, I’d have bet good money that the link to Mark Kleiman’s (et al.) blog would *not* have been removed from the list on the right. Did he do something wrong?

10

Kent 10.12.09 at 6:16 pm

Terrific post. I’m an outsider who’s never heard of her before today and now that I’ve read this looking forward to picking up her book. Thanks muchly much.

11

Mario 10.12.09 at 6:42 pm

Jacobs is actually on the anarchist (left) side of the anarchist-libertarian divide. To classify her as libertarian is a mistake, I think. To quote from Jacobs’s The Economy of Cities:

Earlier in this century, it was conventionally supposed by American philanthropists that poverty is caused by disease. Healthy people, it was reasoned, would be more productive, have more initiative, be more capable of helping themselves, than people in ill health. Poverty was analyzed as a vicious circle in which poverty leads to disease and disease reinforces poverty. Measures to combat disease turned out to be quite successful at combating disease, irrelevant for combating poverty. They helped lead to a situation that is now being diagnosed as a different vicious circle- poverty-overpopulation-poverty. To seek “causes” of poverty in this way is to enter an intellectual dead end because poverty has no causes. Only prosperity has causes. Analogically, heat is a result of active processes; it has causes. But cold is not the result of any processes; it is only the absence of heat. Just so, the great cold of poverty and economic stagnation is merely the absence of economic development. It can be overcome only if the relevant economic processes are in motion.

While Jacobs isn’t an anti-capitalist per se, she is greatly concerned with poverty and inequality, and greatly opposed to forces that claim to ‘naturalize’ it (my word). The archetypal libertarian position is actually the opposite of what you see here–it tends to talk about inequality, on the rare occasions that it talks about inequality at all, as something normal and almost as an inescapable condition of the pursuit of eudaimonia (if it’s a value-thinker) or the pursuit of the greater good (if it’s a utilitarian argument)

What Jacobs presented, in her time, was a left that is concerned equally with inequality on all fronts. This includes the ways that powerful groups ostensibly on the left–the socialist-inclined left–reenact power structures that perpetuate inequality even as they claim to lift people from poverty.

12

OO 10.12.09 at 6:50 pm

“Alex Tabarrok is right to see something Hayekian in Ostrom’s arguments – but it is Hayek against Hayek. Ostrom stresses repeatedly that even the best functioning markets are undergirded by an array of collective institutions which order people’s market interactions, and that in the absence of such rules, self interested behaviour will have highly adverse consequences.”

I would argue that she is closer to the utopian Marx. See Marx’s Paris Manuscripts and the Grundrisse.

13

Martin Bento 10.12.09 at 7:30 pm

Don’t know her work, but sounds like it reinforces the emphasis on decentralization in much of the non-establishment Left, such as Greens (at least in the US) and the globalization protesters. A bit towards anarchism – not black, but maybe charcoal grey, the half-circled A, that sort of thing.

14

Henry 10.12.09 at 7:55 pm

Admiral – nice try but no cigar. Read e.g. this “short overview piece”:http://isites.harvard.edu/fs/docs/icb.topic464862.files/Revisiting_the_Commons.pdf and try to reconcile it with Hayek.

bq. The prediction that resource users are led inevitably to destroy CPRs is based on a model that assumes all individuals are selfish, norm-free, and maximizers of short-run results. This model explains why market institutions facilitate an efficient allocation of private goods and services, and it is strongly supported by empirical data from open, competitive markets in industrial societies (20). However, predictions based on this model are not supported in field research or in laboratory experiments in which individuals face a public good or CPR problem and are able to communicate, sanction one another, or make new rules (21). Humans adopt a narrow, self interested perspective in many settings, but can also use reciprocity to overcome social dilemmas (22). Users of a CPR include (i) those who always behave in a narrow, self interested way and never cooperate in dilemma situations (free-riders); (ii) those who are unwilling to cooperate with others unless assured that they will not be exploited by freeriders; (iii) those who are willing to initiate reciprocal cooperation in the hopes that others will return their trust; and (iv) perhaps a few genuine altruists who always try to achieve higher returns for a group.

bq. Whether norms to cope with CPR dilemmas evolve without extensive, self-conscious design depends on the relative proportion of these behavioral types in a particular setting. Reciprocal cooperation can be established, sustain itself, and even grow if the proportion of those who always act in a narrow, self interested manner is initially not too high (23). When interactions enable those who use reciprocity to gain a reputation for trustworthiness, others will be willing to cooperate with them to overcome CPR dilemmas, which leads to increased gains for themselves and their offspring (24). Thus, groups of people who can identify one another are more likely than groups of strangers to draw on trust, reciprocity, and reputation to develop norms that limit use. In earlier times, this restricted the size of groups who relied primarily upon evolved and shared norms. Citizen-band radios, tracking devices, the Internet, geographic information systems, and other aspects of modern technology and the news media now enable large groups to monitor one another’s behavior and coordinate activities in order to solve CPR problems.

bq. Evolved norms, however, are not always sufficient to prevent overexploitation. Participants or external authorities must deliberately devise (and then monitor and enforce) rules that limit who can use a CPR, specify how much and when that use will be allowed, create and finance formal monitoring arrangements, and establish sanctions for nonconformance. Whether the users themselves are able to overcome the higher level dilemmas they face in bearing the cost of designing, testing, and modifying governance systems depends on the benefits they perceive to result from a change as well as the expected costs of negotiating, monitoring, and enforcing these rules (25).

Lin is emphatically clear on a number of key points:
(1) Self interested behaviour in perfect markets can be highly destructive.
(2) Appropriate norms and rules will not rely on pure self interest, but instead build on the capacity of (many) actors for conditional cooperation and reciprocity.
(3) Norms rely on collectively mandated sanctioning mechanisms if they are to work properly.

These are not, as I understand Hayek, Hayekian claims.

The claim that:

Her research’s implications for PCS, a school of thought sadly ignored by the left for its own patronage-giving purposes, are the main reason she won the Nobel.

is a decidedly peculiar one, given that the Nobel citation specifically singles out her arguments about the problems with privatization. I’ve “previously written”:http://crookedtimber.org/2006/11/15/economics-and-ideology/ on Charles Rowley’s similar claims about the reasons why political scientists ignore public choice; all that I will add is that “overt ideological bias” and “weakness on empirics” are more plausible explanations of this lack of interest imo than the ones that you and Rowley proffer. And as for your last suggestion – I do think that there is a lot that you (and lots of people from lots of different ideological persuasions) can learn from Lin’s work and I am happy that you appreciate it. But if you think that she is working within the cookie-cutter public choice tradition, then you are clearly missing some of the more interesting facets of her work.

15

Matthias Wasser 10.12.09 at 7:59 pm

I think James C. Scott defines the political archetype here. Or at least he falls into it.

16

Walt 10.12.09 at 8:12 pm

I read the Nobel announcement, and I’m not really clear what she found, exactly. It seems that she found that traditional arrangements can solve collection action problems, but what happens when there’s no traditional arrangement?

17

Sebastian 10.12.09 at 8:15 pm

“While Jacobs isn’t an anti-capitalist per se, she is greatly concerned with poverty and inequality, and greatly opposed to forces that claim to ‘naturalize’ it (my word). The archetypal libertarian position is actually the opposite of what you see here—it tends to talk about inequality, on the rare occasions that it talks about inequality at all, as something normal “

I read Jacobs almost in the opposite way you do.

“Only prosperity has causes. Analogically, heat is a result of active processes; it has causes. But cold is not the result of any processes; it is only the absence of heat. Just so, the great cold of poverty and economic stagnation is merely the absence of economic development. It can be overcome only if the relevant economic processes are in motion.”

Poverty is the natural state. It can only be overcome by economic development. Part of the reason you read it the way you do is because you seem to use poverty and the low end of inequality as almost precisely the same thing (you step between them interchangeably in your comment). I don’t think Jacobs does.

18

John Quiggin 10.12.09 at 8:22 pm

It’s a great choice. My Masters thesis was on common property systems and I did a lot of work on it back in the 1980s. Ostrom really set the standard in this field.

19

trane 10.12.09 at 8:31 pm

Martin:
“Don’t know her work, but sounds like it reinforces the emphasis on decentralization in much of the non-establishment Left, such as Greens (at least in the US) and the globalization protesters. A bit towards anarchism – not black, but maybe charcoal grey, the half-circled A, that sort of thing.”

She has written a good paper on ““Radical Decentralization in Developing Countries: a Recommended Panacea Without an Empirically Grounded Institutional Theory”. It criticises the optimism that has surrounded efforts to decentralise in developing countries. I think there is a sentiment of what you, and Henry, point to in her work in the comparison with Jane Jacobs. I would say that it is more present still in Vincent Ostrom’s 1997 book, which is a difficult but wonderful book also.

20

gmoke 10.12.09 at 8:44 pm

I’ve seen her speak twice and have admired her work since I first learned of it. Linked to your introduction from my diary on Ostrom’s Nobel at DailyKos:

Based on a survey of several thousand cases, political scientist Elinor Ostrom has listed several basic requirements for locally sustainable, collective environmental management (Governing the Commons, Cambridge University Press, 1990, p. 90):

clearly defined boundaries
congruence between rules & local conditions
collective-choice arrangements
monitoring
graduated sanctions
conflict-resolution mechanisms
recognition of rights to organize
nested in & recognized by higher institutional levels
As Elinor Ostrom notes for successful common property systems, “the populations in these locations have remained stable over long periods of time. Individuals have shared a past and expect to share a future…” (Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action, 1990, op. cit., p. 88).”

I saw her last at Tufts in February or March where she was receiving another award. Took the opportunity to thank her for her work which I believe is extremely important. Judging from that brief contact, she is a kind and gracious lady.

21

Sean O Riain 10.12.09 at 8:59 pm

Perhaps a good time for a book event to revisit Governing the Commons? Many interesting and rich points raised already.

22

The Raven 10.12.09 at 9:46 pm

This work strikes me as social democratic in character. Would you agree?

23

Barry Wellman 10.12.09 at 10:19 pm

In an aside, Henry writes: “She is hands-on in a way that very few economists, political scientists or sociologists are.” I would agree about economists, don’t know abut political scientists, but would disagree about sociologists — we’re heavily in the field gathering evidence by a variety of means: ethnographic fieldwork, in-depth interviews, observations, and I’d even include personally-done surveys. The gratuitous put-down wasn’t necessary in an otherwise nice piece.

24

John Quiggin 10.12.09 at 11:27 pm

The negative contribution of the work of Ostrom and others on common property is clearer and arguably more important in policy terms. The work on common property did a lot to undermine the simplistic arguments of the (private) property rights economics school of the 1970s, to the effect that only unrestricted private property rights could achieve an efficient allocation of resources. Hardin relied pretty heavily on these arguments, backed up by bogus history.

The positive contribution can be read in a lot of different ways as some of the comments above illustrate. Reflecting my own preferences, I read it as suggesting that a mixed economy can involve not just private and public ownership but a range of other possible institutional structures, historically illustrated by common property in resource management, but also potentially applicable in modern problems involving externalities, local public goods and so on. A straightforward, if not particularly exciting modern example is co-operative/condominium arrangements in housing.

25

srp 10.12.09 at 11:47 pm

Looking at gmoke’s list above reminds me of the tradition in industrial organization that tries to predict when collusive industry behavior is likely. (Think of an industry’s profit potential as a common pool where price-cutting lets one firm take more than its “fair share.”) Similar factors seem to apply–e.g., expecting lots of future periods of interactions with the same players, being able to clearly distinguish the members of the industry, and the amount of support or not of higher authorities (antitrust) . Of course, the normative evaluation of cooperation differs in the two cases…

26

Canadian 10.12.09 at 11:53 pm

Ostrom is a less controversial figure in economics than Williamson. Her ideas are mainstream in the sense that they can be formalzied and therefore evaluated by the norms of the profession. She is often cited but not criticized in scholarly economic journals. Williamson is a different kettle of fish. His ideas are hard to formalize So many ecoomists think Williamson is over rated whereas others think he is deep although we cannot yet do him justice.

27

Lee A. Arnold 10.13.09 at 12:08 am

I think Ostrom’s work is also a good starting point for designing the provision of large-scale public goods, such as retirement security. I am struck by the way the U.S. Social Security system meets certain of the smaller-scale institutional design criteria, such as: strict focus on a topic, simplicity of understanding, inclusion of everyone concerned, clear relation between costs and benefits, transparency of accounts, ability to avoid free-riders, etc.

28

Henry 10.13.09 at 12:39 am

Barry – I certainly wasn’t meaning to put down sociologists (indeed I specifically included my own discipline in any possible critique). What I meant to say was something like ‘she combines quantitative data with something close to the detailed groundwork that anthropologists carry out’ (and I do think that anthropologists have us all beat on that front). I know that sociologists do often verge into ethnography, but my impression is (maybe I am mistaken – I know the economic sociology literature better than the others), that sociologists who do ethnography don’t do much stats, and vice versa (although sociologists who do stats are much more likely to be at least versed in the relevant qualitative literatures than e.g. economists).

29

tom s. 10.13.09 at 2:01 am

Lee Arnold: Ostrom’s work is also a good starting point for designing the provision of large-scale public goods

I’ve thought that the sad thing about the communal mechanisms she identifies is that they don’t scale very well. What makes you optimistic about this possibility?

30

Lisa 10.13.09 at 3:02 am

Congratulations to both.

31

Lee A. Arnold 10.13.09 at 3:07 am

In a nutshell, the Ostrom prerequisite of “clearly defined boundaries” (of the spatial resource and of the affected parties) is formally similar to a “restriction or tight focus upon a single topic” (e.g. upon basic retirement security, or upon universal healthcare.)

Some of the design requirements are changed, or at least kicked to another level. The ability to leave or opt-out of the institution of U.S. Social Security is not allowed. (Here, the idea is to not have to make extra social provision to take care of you, if things don’t work out. Since we are very nice we will feel compelled to do so, and since we are cognizant of the structural distribution of income, there will always be a segment of the population who will need that help.) But on the other hand, democratic input is at another level: you have every right to try to change everyone else’s mind about it.

Many of the other institutional design elements of Ostrom’s common pool resource institutions are preserved: transparency, monitoring, adjudication mechanisms.

But it’s really the tight focus that is the key. If it’s a universal problem, there’s a good chance we can form a specific institution to reduce personal and social transaction costs, thereby increasing the quality of life (though it may not all show up in the GDP,) and increasing our freedom of time, possibly leading to productivity in other realms.

32

djw 10.13.09 at 5:03 am

I read Jacobs almost in the opposite way you do.

This is rather common with Jacobs. People see what they want to see in her. I don’t think that’s her fault, but it’s remarkably common.

33

aaron_m 10.13.09 at 8:12 am

Maybe some commentators here can help me understand something that has been puzzling me about Ostrom.

I of course think she is a great choice for the prize, but what I am wondering about are some relatively recent publications/comments she has made about being optimistic about the ability to provide the global public good of climate change mitigation (i.e. protection of the global common pool resources of certain atmospheric services). It seems to me that the climate problem categorically does not meet Ostrom’s prerequisites and it is thus difficult to understand what her optimism is grounded in. The problem is not that no global commons problem cannot meet the prerequisites (e.g. I would say the ozone problem did/does to a much larger extent), but rather that the particulars of the climate problem should generate strong pessimism if we follow Ostrom.

34

aaron_m 10.13.09 at 10:53 am

Should read “The problem is not that no global commons problem can meet the prerequisites….”

35

Eric H 10.13.09 at 11:04 am

“he has received roughly a dozen grants under the NSF program that Senator Tom Coburn wants to abolish. Tom Coburn vs. the Nobel committee as a judge of scholarly quality – you decide.”

Really, Henry. She gets a Nobel, therefore her work is good, therefore the NSF program is on balance good? Hey, NASA gave us Tang which kids like 5:1 over the next best orange-flavored drink, therefore we should continue throwing good money at them.

36

James Conran 10.13.09 at 11:11 am

If people are comparing Ostrom’s work in some ways to Hayek, but also noting her winning the Nobel as a broadening out from a strict “economics” prize, it’s interesting to note that Hayek won the prize too. I have a far from exhaustive knowledge of his career and works but the bulk of what I do know doesn’t look very much like the economics of today.

I wonder if he had started his career post-1945 would he have ended up working in political or legal theory rather than an economics department? And would he then have won the Nobel?

37

James Conran 10.13.09 at 11:27 am

I don’t think Henry intended that to be a comprehensive argument for NSF funding of pol sci Eric H…

More of a data point?

38

Matt 10.13.09 at 11:59 am

I wonder if [Hayek] had started his career post-1945 would he have ended up working in political or legal theory rather than an economics department?

This seems likely, as at least the time he spent in the US at U. Chicago wasn’t in the economics department but rather in the Committee on Social Thought (though he did teach in economics at the LSE and post-Chicago, I believe) and his formal degrees were in law and political science, not economics.

39

Peter Boettke 10.13.09 at 12:19 pm

Folks,

I just published a book on the Ostroms contributions — Challenging Institutional Analysis and Development (2009), with Dragos Paul Aligica. In writing the book we worked in close collaboration with them (Paul was one of their PhD students). To claim that Lin is using Hayek against Hayek is only because there is a misunderstanding of Hayek. Hayek is not a “perfect market” theorist — his analytical argument is different than that. If Hayek is understood correctly, then Lin’s (and Vincent) contributions can be seen as unique (but in the same vein) of social theorizing as that of Hume and Smith, and Hayek and Buchanan.

She is a former President of the Public Choice Society, as was Vincent. She uses game theory, she engages in institutional analysis, she has conducted experiements in the lab, she has conducted field work both in the US and abroad, she considers herself a political economist, etc. Her presidential address to the APSA summed up her theoretical agenda as “A Behavioral Approach to the Rational Choice Theory of Collective Action.”

She is most deserving of this Nobel, and she has made a unique contribution theoretically and empirically to the study of self-governance. But there is no need to pick a fight where one isn’t there. Her prize fits nicely in a stream of recognitions ANALYTICALLY by the committee to scholars such as Hayek (1974), Buchanan (1986), Coase (1991), North (1993), and V. Smith (2002). These are all scholars within the discipline of economics/political economy that recognize the cognitive limitations of man, and focus analytical effort on institutional analysis.

Lin Ostrom’s contributions come from an analytical framework that grounded in rational choice theory (as if the choosers are human) and builds to an institutional analysis (as if history mattered). The distinction between “rules in form” and “rules in use” means she studies in close detail the social norms that underlie self-governance in the management of resources and the management of social relationships.

It is amazing body of work.

40

Current 10.13.09 at 12:46 pm

Ostrom’s work sounds quite close to Hayek’s on political philosophy and legal theory. There is nothing in the section above the Henry mentions that Hayek would particularly disagree with.

As Peter Boettke points out what’s being discussed here sounds a lot like Chapter VIII of Human Action by Mises.

http://austrianeconomists.typepad.com/weblog/2009/10/lin-ostrom-political-economist-wins-2009-nobel.html

41

Henry 10.13.09 at 1:04 pm

Peter – I would very much like to see your book, but I do respectfully disagree with some of your contentions. First, while I can happily accept that Lin is writing “in the same vein” of social theorizing as Hayek etc, I do think that the differences are as important as the similarities. Lin is far more attentive than Hayek to the ways in which market liberalization can destroy the possibilities of local self-organization as well as possibly enhance them. The notion of social order implicit in polycentricity seems to me to be quite different from the notion of catallaxy – in particular, there is much more room in Lin’s world for the pursuit of collective goals using sometimes coercive means. Also, while Lin clearly draws upon various strains of right wing thought, she could also be seen as ‘writing in the vein of’ Marxist rat choicers like Sam Bowles, whose writing regarding conditional cooperation, the interactions between different cooperative types etc she explicitly draws on and clearly finds important.

And on whether she is (to use my expression) an exponent of ‘cookie cutter public choice’ – I really don’t think she is. With the exception of a couple of early articles with Vincent (as I recall – her cv is as you know voluminous), she seems to me to be far more plausibly identified as an institutional theorist, which is a much broader category. Again – it depends on how you understand public choice – here I am identifying it (following Rowley etc) as a program with both normative and analytic goals, aimed at rolling back the compound government, and substituting it with mechanisms of market choice. I can see Lin signing up to the first bit (with some caveats) – I suspect that she would be very hesitant indeed about the second.

To be clear – I think that there is a ‘right’ reading of the Ostroms, which is a valuable perspective and captures a lot of interesting facets of their arguments. I also think there is a ‘left’ reading of which the same can be said to be true. But for me (as I said in the post) what is _most interesting_ about Lin’s work (and Vincent’s too – I suspect that if she had the choice she would have liked to have seen the prize go to both of them) is the ways in which it challenges both left and right, brings up awkward points for both etc. And I think that reducing Lin to ‘just’ public choice as the earlier commenter did throws out a lot of what is most interesting.

42

James Conran 10.13.09 at 1:13 pm

“I suspect that if she had the choice she would have liked to have seen the prize go to both of them”

I should hope so, them being married and all! I’m sure we’d all like our spouse to win the Nobel Prize. OK we’d all say we would…

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Peter Boettke 10.13.09 at 1:24 pm

I agree that she challenges conventional discourse. I guess my difficulty is that I just don’t think in terms of “left” and “right” perspectives. I see her as making an argument for “respect” for ‘rules in use’ and cautions about ‘rules in form’ being imposed from afar. See Vernon Smith’s discussion of her work today — http://www.forbes.com/2009/10/12/elinor-ostrom-commons-nobel-economics-opinions-contributors-vernon-l-smith.html

She is a lifelong learner whose curiosity about the world should not be placed in any “ideological box”. But it is a mistake to not see her as a 30+ year contributor to the the field of public choice and political economy. She was the President of the Public Choice Society, and as I said her APSA presidential address explained her research agenda in its title: “A behavioral approach to the rational choice theory of collective action.”

Vincent Ostrom is a slightly different story — though he has elements in his work which can be viewed as very “left” and also very “right”. He transcends the conventional discourse as well. My favorite book of his is The Meaning of Democracy and the Vulnerability of Democracies (Michigan, 1997). It is an extended reflection of Tocqueville, but in the process draws on ideas from Hamilton and Madison, Buchanan, Tullock, Hayek, Lachmann, and also Kropotkin, etc. So it is an mix of thinkers, but it is also undeniably an effort to expand the research agenda of public choice analysis.

I think it might be best in considering Elinor’s wonderful contributions to social science that we limit our use of conventional labels and instead just look at the work she has done to study human social organizations in such a variety of settings, and also look at the amazing job she has done as a teacher and mentor to so many. The world is smarter today because the prize forced people to look up what Lin has written. It is not that often that we can say that after the announcement of such prizes.

This is a prize to be celebrated by scholar/teachers of all stripes.

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Henry 10.13.09 at 1:47 pm

My peeve expressed above was with a commenter who was, I think, trying to squeeze her work into an ideological box that is an uncomfortable fit). I think I can happily agree with pretty well everything you say here – I think of Lin more as an institutional theorist than a public choice theorist, but I have no problem whatsoever with saying that she has contributed to public choice (I do note that imo the terms rational choice and public choice are not coterminous – I imagine you agree). And I can _very_ happily agree with the last two paragraphs.

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Current 10.13.09 at 2:35 pm

As a sidenote….

James Conran: “If people are comparing Ostrom’s work in some ways to Hayek, but also noting her winning the Nobel as a broadening out from a strict “economics” prize, it’s interesting to note that Hayek won the prize too.”

Hayek didn’t win for his work on political and legal philosophy. It was for he more strictly economic work on Business Cycles.

However, Buchanan won for work on Public Choice which is a sort of Political Economy. I think some others in this area have won too.

46

Nick 10.13.09 at 2:38 pm

Mario @11: I am not sure what kinda libertarians you are used to hearing from but in my experience, we are more than receptive to an argument that considers poverty to be simply what happens when nothing else happens. In fact, it was exactly the point given by Tom Palmer in this talk: http://oxlib.blogspot.com/2008/12/tom-palmers-talk.html

I think the point to make here would be the fact that Ostrom clearly bestrides left and right divides with her work indicates that we aren’t all that different after all, and that neither side should try and claim her exclusively ideologically. Same goes for Hayek actually.

47

Chris 10.13.09 at 3:12 pm

Users of a CPR include (i) those who always behave in a narrow, self interested way and never cooperate in dilemma situations (free-riders); (ii) those who are unwilling to cooperate with others unless assured that they will not be exploited by freeriders; (iii) those who are willing to initiate reciprocal cooperation in the hopes that others will return their trust; and (iv) perhaps a few genuine altruists who always try to achieve higher returns for a group.

I think this sentence has particularly interesting political applications. (I’ll use the US because it’s what I’m most familiar with, but analogous problems probably arise in other countries.) I agree that group iv is very small (most people who might think they are in it are actually in group iii, willing to contribute to the public good but wanting others to do so also; some people may have delusions of Atlas-hood but very few aspire to it). Group i is well aware that nobody likes them and has a strong tendency to hide their nature (although they do out themselves once in a while). So in practice political discourse is shaped mainly by groups ii (“mainstream” Republicans and some independents) and iii (most Democrats). ISTM that group ii is the largest group in the US and so the political success of Democrats or a group-iii agenda in general is defined by their ability to produce adequate reassurances that there are adequate safeguards against free-riding. (Otherwise the group iis will pull out.)

ISTM that people in group iii have difficulty understanding the strength of group ii’s fear of being cheated, to the extent that they’re willing to burn down the commons rather than let someone get more than their fair share of it, and as a result, they have trouble making effective political appeals.

Republicans are far more able to play on the fears of group ii in order to try to limit collective actions that might benefit the undeserving (welfare queens, illegal immigrants and other scapegoats of the right). Group ii appeal is probably also where the perennial bashing of “waste, fraud and abuse” comes from — nobody likes waste, fraud or abuse (except the fraudsters), but group iii doesn’t consider it a major factor unless there’s evidence that it really is large in scale. For group ii the presence of even a few abusers undermines the moral credibility of the whole system, no matter how much good it is otherwise doing.

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Jeremy 10.13.09 at 5:15 pm

Nice post, which I enjoyed reading and which helps me to understand where Ostrom’s work fits in. One quibble, though, which applies not just here but almost everywhere. Garrett Hardin’s original Science paper is not about the failure of all commons. It is about why some commons fail, especially when social mechanisms — he was big on shame, not just “ownership” — fail, often because the community making use of the commons grows too large.

A careful reading of the original paper and subsequent books — Filters against folly is good — would stop this silly caricature of Hardin as inevitably pessimistic about all commons.

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matthew kuzma 10.13.09 at 7:52 pm

“Perhaps the closest parallel to Ostrom’s work is Jane Jacobs’.”

Impressively, I was getting that impression as I was reading up to that point. Now I’ll definitely have to check out that book.

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jeremy 10.13.09 at 7:53 pm

yay! communitarians sounding more libertarian and libertarians sounding more communitarian. long live elinor ostrom!

admission: never actually read ostrom. i’m not much of a social-scientist-type myself — i’d rather read randolph bourne — but it’s nice to see such a conversation taking place across the social science gamut…not something one sees everyday…

51

Beryl 10.13.09 at 9:13 pm

Further to Barry @ 9… why is Samefacts (Mark Kleiman et al’s blog) missing from CT’s “Lumber Room”?

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Guano 10.14.09 at 8:00 am

I’ve always liked Elinor Ostrom’s work. Her rules about collective action are very useful for community development work. The stuff about trust, accountability, monitoring and transparence are fundamental: it is very obvious but it is interesting how many people shy away from it.

I’ve never clearly understood the categories “libertarian” and communitarian”, probably because Ostrom’s work transcends it.

Scaling up: I think that there is some potential for scaling up, and the Ostroms contributions to polycentric governance are interesting. Trust, accountability, monitoring and transparence are the key factors, and can probably be applied to more complex problems. However you get into the realm of politics and politicians, who don’t like real accountability one little bit.

53

Greg Ransom 10.14.09 at 8:04 am

You don’t know Hayek. You haven’t read Hayek.

And you are arguing against phantoms.

Really.

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Greg Ransom 10.14.09 at 8:06 am

You’re comments on Hayek are an intellectual travesty and and intellectual embarrassment as a pretended account of Hayek’s actual work.

Really.

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Peter J. Karthak 10.14.09 at 8:13 am

Where is Nepal in your longwinded article? How could you not mention even once the very country as the source of Ms Ostrom’s findings and revelations. A journalistic vacuum! A great pity!!

Peter J. Karthak
Copy Editor, Republica, Kathmandu, Nepal

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belle le triste 10.14.09 at 9:54 am

Really ? No, really. Really really really.

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Matthias Wasser 10.14.09 at 11:23 am

As someone who is a huuuuuuuuuuuge “statist,” or whatever it is libertarians call people who aren’t libertarians nowadays, and who likes what he sees in Ostrom – Ostrom and Hayek are definitely very similar. I don’t think you need to have the same politics as someone to have an intellectual affinity with them.

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John Emerson 10.14.09 at 5:16 pm

Fama was in line for the prize, but the committee chickened out. Fuck.

From this we know that there were no real economists on the committee. Just a bunch of humorless bureaucrats who were afraid to make fools of themselves.

59

Margaret Keck 10.15.09 at 12:18 pm

Besides spending a lifetime studying design principles that make institutions work, the Ostroms essentially built a vast, cross-disciplinary field of research and discussion on how institutions work from the ground up. Although CPRs have been a major focus, they haven’t been the only one (Lin Ostrom’s early work on police departments is pretty interesting). The number of highly productive people who have been involved with their Workshop in Political Theory and Policy Analysis at Indiana at some point or another is very impressive. Take a look at the Digital Library of the Commons associated with the Workshop’s web site. It’s also worth going beyond Governing the Commons and taking a look at her 2005 book Understanding Institutional Diversity. Or at her 1997 Presidential Address at the American Political Science Assn. convention, published in March 1998 APSR. Having been assigned parts of Governing the Commons a couple of weeks ago, my undergraduates had a good time discussing the prize yesterday. And hello to all, having lurked here but never left a comment before.

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Henry 10.15.09 at 7:33 pm

Welcome aboard!

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Alan Sloane 10.16.09 at 10:42 am

Today’s Irish Times has a good general audience editorial on Ostrom and Williamson, finding something in common between them.
http://www.irishtimes.com/newspaper/opinion/2009/1016/1224256786267.html

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paul 10.16.09 at 5:50 pm

Chris @ 47:

I think your formulation might be useful, except that the memberships of the groups 1, ii, iii and iv aren’t agreed on by those groups. When the ii folks talk about “free riders”, for example, they’re typically talking about a different set of people from the ones the folks in iii or iv might be talking about.

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