Nobel laureate economist Elinor Ostrom died Tuesday of pancreatic cancer in Bloomington, Ind. Although she based her career at Indiana University, the groundbreaking insights that led to her becoming the only female Nobel economist in history have wide applicability to Idaho's natural resources.
Ostrom began her career working in public choice economics. Many mainstream economists analyze how and why markets fail, and public choice theory brought that same analysis to learning how and why governments fail. The work that made Ostrom famous, though, went beyond this into a study of how and why voluntary cooperation works. Specifically, she examined the use of commons, and the ways in which people have evolved fair, efficient and conservationist methods of sharing resources that they do not own individually. Her studies found that the best such systems made robust use of local knowledge rather than imposing rules codified by remote authorities.
"Contrary to the presumption that only external coercion constrains individual selfish appetites, throughout history communities have used informal social controls, often complementing them through modest use of formal enforcement, to manage their water," Ostrom wrote. "Among the most important is the use of indigenous knowledge of the characteristics of the resource system and culturally acceptable ways of restricting the use of commonly held assets. Such commons management has often achieved long-term sustainability."
She went on to point out that the default method of regulating common resources in many modern jurisdictions, through an official, centralized bureaucracy, stands at the root of many problems that those agencies were theoretically designed to alleviate.
"Many disasters of resource management during the 20th century have been caused by replacing effective community management with ineffective or corrupt government management," she wrote.
The phrase "tragedy of the commons" will be familiar to many readers as describing the overuse of shared resources. If there is no penalty for taking more than necessary, for spoiling such resources or for helping to replenish them, a situation can arise in which community assets are quickly diminished or destroyed. For many, this possibility suggests the need for strong external oversight. Based on her extensive research into communities throughout the world that managed community resources in a sustainable and lasting manner, Ostrom was able to point out that the most successful paths lie between those extremes.
"Many policy analysts presume that without major external resources and top down planning by national officials, there can be no provision of public goods and sustainable common-pool resources," Ostrom wrote. "This presumption is wrong. The opposite presumption that local communities will always solve collective-action problems is also wrong. It is a struggle to find effective ways of providing these services, but public entrepreneurs working closely with citizens frequently do find new ways of putting services together using a mixture of local talent and resources."
It would be tempting to try building a master list of which social features lead to efficient community resource management, but if Ostrom's work reveals anything it's that efficient solutions are as varied as the problems they address. The primary overarching condition for success is that people be allowed to discover those solutions together from the bottom up, rather than being dictated to from the top down.
"She is trying to understand human societies in all their variety," wrote George Mason University economist Peter Boettke. "To do so she had to get up close and personal: from local government in California to irrigation systems in Nepal—and everything in between. Her field work in economics and political economy is guided by the logic of human choice. She describes her research program as 'a behavioral approach to the rational choice theory of collective action.' If you take away the academic language, it translates into a research program that begins with human beings and their purposes and plans, and ends with their stumbling and groping to find voluntary solutions to difficult social dilemmas through norms, conventions, and rules."
