At a reading group this week we discussed the following articles:
- Ostrom, Elinor (1990) Governing the Commons, University of Cambridge Press (Chapter 1: "Reflections on the Commons")
- Ostrom, Elinor "A Polycentric Approach for Coping with Climate Change" (.pdf) World Bank Policy Research Working Paper No. 5095 (October 2009)
This was a treat for me - my dissertation committee were Pete Boettke, Richard Wagner and Paul Dragos Aligica, so I have picked up a lot of Elinor's work through osmosis. Not only the intellectual foundations of polycentricity, institutional change, and governance, but also the methodological framework for conducting fieldwork and the sociological norms of graduate study. I've never met Elinor, but in many ways I consider myself to be her student (same goes for Don Lavoie). I read 'Governing the Commons' early on in my PhD and since then have spent more time with Vincent's work (especially "The Meaning of Democracies and the Vulnerability of Democracies" - one of the richest books on political economy I've ever read). So this was a welcome excuse to cut through the secondary sources, tangential ideas, folk wisdom etc, and critically engage with her pioneering work.
I don't normally blog about reading group discussions (Chatham House etc) but I wanted to make 3 points about Ostrom's work:
Firstly, the crux of her approach is the over-simplification of the public-private nexus. Indeed "governance" is neither markets not state. However whilst governance mechanisms are antagonistic to the state (the "state" must trump decentralised institutions), there's nothing to say that they can't exist within a market order. In other words, in the same way that the absence of a price mechanism within a family unit doesn't undermine the importance of Hayekian knowledge problems (and the price system as a method to overcome this), we can have groups of people organised by non-market institutions, that still exist within a general system of private property rights. Whilst Ostrom provided telling criticisms against "privatisation" (and indeed corporatism), don't confuse this with property rights regimes (albeit informal). The crucial point is that common pool resources are exclusive, and therefore people can be excluded from depleting the resource. It's not that groups have communal property, but that they have shared private property.
So what's the difference between the group of fishermen who agree on common rules to "govern the commons" in Alanya, Turkey, and a firm? As far as I'm concerned, a "firm" is merely an organisation of people bound by a common constitution. Ostrom is delivering a theory of organisations - and how organisations that exist within a market organise internally through non-market mechanisms. For me "Governing the Commons" is a theory of the firm (and indeed on page 25 she acknowledges that a law firm is a valid example).
Secondly, Ostrom takes as given the environmental problems that need to be solved. Indeed the key issue that creates the tragedy of the commons, prisoner's dilemmas, and the logic of collective action - is free riding. In my experience, the free rider problem can often be an effective tool to block inefficient collective action. If we present it as an unfortunate cost that prevents otherwise efficient activity from taking place, this merely begs the question - how can we deem something is efficient unless we factor in all the relavent costs? Isn't free-riding merely a cost like any other? Maybe the "tragedy of the commons" isn't such a tragedy? Whilst Ostrom is at pains to take a comparative institutional approach, maybe she doesn't go far enough. Within her framework (and this shines through in the Climate Change paper) is there a mechanism to ignore the "problem" should the costs of action begin to outweigh the benefits? The problem is taken as given, but the point of institutions is to establish what the problems really are. This is where markets are so powerful - they reconcile marginal values with opportunity costs, and thus prevent waste. If the "goal" is to reduce carbon emissions by X%, the "success" is determined in relation to this goal, as opposed to whether it's been "worth it". Markets tell us what the goals are the need solving, in this context polycentricity is a technique to solve pre-identified goals.
That said, Ostrom does go some way to the identification of problems. On page 31 she has an excellent section where she lists issues that need to be recognised so that global efforts provide "solutions" rather than "hot air". These are recognising:
- Climate change is complex
- The challenge of acquiring information is changing rapidly
- A wide diversity of policies can enable opportunism
- The danger of linking funds for policy experiments with funds for policy monitoring
- All policies involve trial and error
Again though, the above assume the existence of "the problem".
Thirdly, her main point in the Climate Change paper is that:
building such a commitment, and the trust that others are also taking responsibility, can be more effectively undertaken in small- to medium-scale governance units that are linked through information networks and monitoring at all levels
The breakdown of the Copenhagen meetings underlines this point about scale. For Ostrom, localising the framing of the problem makes it more likely that you'll solve the global problem. This is a fascinating insight. Telling everyone that every time you drive your car you add to global warming encourages free riding, as people (rationally) respond by thinking "it doesn't matter what I do". By putting it in a global context we compare our individual actions to the aggregate emissions of "China", so it's no surprise we are fatalists. Ostrom points to campaigns that tell individuals how much carbon they've produced, and ranks that against their neighbours. Although she doesn't commit herself to actually supporting such policies, it frames the problem in terms of individual action and utilises relative status and behavioural insights. Ultimately it's counter productive to convince me that I should change my human nature and care more about "the planet" than my own self-interest. You're more likely to get a result if you convince me why it's in my own self-interest to adapt my behaviour. And yes, this is an argument in favour of carbon taxes.
(As an aside the weakness of a polycentric approach is that it's easy to point out historically why failures are due to an absence of polycentricity, it's a lot harder to advocate policies going forward. When the punchline is "institutions matter" it's almost impossible to convert this into a practical plan that's any more detailed than "facilitation".)
Finally, the real strength of Ostrom's approach is the latent anarchy. In 'Governing the Commons' she refers to the enforcement mechanism that prevents outsiders from depleting the common pool resource: "the few infractions that have occurred have been handles easily by the fishers at the local coffeehouse" (p.20). It reminds me of 'Dirt Music', where those who break the norm of not fishing during darkness are ostracized from the community to the point where the gains from extra fish are offset by the losses accrued from a breakdown in social relations. You can see clearly the relevance of the work of Pete Leeson in all of this. Rather than play along with the hierarchical relationship between participants and enforcers, the self-governance means that even if you have an external enforcement agency (i.e. a "state") they need the consent of the governed. Probably the best example of this I've seen recently is Bunny Colvin's speech in Series 3 of The Wire. Watch that example of "a great moment of civic compromise" - that is polycentricity!