Feb 23, 2011

State, Private or Commons and The Public Choice Theory

By Derek Wall / gonzotimes.com
State, Private or Commons and The Public Choice Theory

When Professor Elinor Ostrom became the first women to win a Nobel Prize for economics in 2009, or to be precise, the Sveriges Riksbank Prize in Economic Sciences that she shared with Richard Williamson, most economists probably sighed with surprise and said something along the lines of ‘Elinor who?’ Ostrom was not at the time well known amongst mainstream economists. Indeed, strictly speaking she is not even an economists but works in a politics faculty.

Normally, economics argue that there are two forms of property: private and state. Economies are mixed - i.e some activities such as policing are largely controlled by the state, while most others are provided by the market. Ostrom argues that a third form of property is also significant - neither privately owned nor state controlled - that of common ownership. When common ownership is added to the equation, economic activity is not merely split between the alternatives of market and state but can be regulated by collective social activity.

Ostrom can be seen as the economist or political economist best placed to conceptualize the explosion in web based activity and social media. The accelerating growth of the world wide web, peer to peer production and Wikipedia have been investigated by economists, but forcing them into the pre-existing categories of market and state is far from satisfactory. Ostrom uses the term Common Pool Resources (CPR) to categorize such forms of property.

Ostrom’s practical research looks at how common pool property systems that work or sometimes failed to work in maintaining key ecosystems including marine fisheries, forests and grazing land. 

Ostrom challenges the notion of the tragedy of the commons. Although the commons can fail, she says, we should not assume that it will always do so. Neither is ‘commons’ an absence of property rights but often is based on carefully constructed rules for management of a resource.

Ostrom shows that people can construct rules that allow them to exploit the environment without destroying it. In a world where ecological realities increasingly threaten material prosperity her work provides a way of thinking about how humanity can create truly sustainable development, living within limits while meeting human needs. The implications of Ostrom’s work are vast. Conventional economists have not directly focused on environmental issues, at best ignoring notions of environmental limits and arguing that ecological problems can simply be costed and such negative externalities internalised(?).

Despite coming from a Hayekian background based in the discipline of Public Choice Theory, Ostrom’s key theoretical interest in ‘commons’ was also one of Karl Marx’s enduring concerns. While she has never used the label she also can be understood as a feminist thinker. Her most obvious enthusiasm is for the rights of indigenous peoples and respect for the environment, especially policies for tackling climate change. However she is critical of the very notion of policy if it is imposed from above. She distances herself from socialism if it is statist but endorses collectivist solutions to economic problems. Ostrom, who once described herself ‘as a stubborn son of a gun,’ is a thinker who it is almost impossible to pigeonhole with existing categories in economics and political philosophy.

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Economics
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