Elinor Ostrom, 2009 Nobel Prize in Economics 121.0

For a way to manage Commons without regulation or privatization

Source: Indiana University

Professor Elinor Ostrom, winner of the 2009 Nobel Prize in Economics, studied how communities managed Commons like grazing lands, pastures and similar natural resources to their advantage.

As a political scientist, her theory shows that, with the right information, productive discussion and trust-based institutions, communities can come up with ways to manage commons that is a win-win for that community – without being government-regulated or privatized.

Unlike most of orthodox economists in the dismal science, her theory presents an optimistic view that it is possible for communities working together to get the most out of common resources.

I find this interesting because, from a Nobel Prize winner, it subtly pokes at the seemingly inexorable results, that orthodox economics seem to imply, that homo economicus in rational behavior will always destroy the environment.

(Read a reference on The Tragedy of the Commons from a SYNTHESiST post. Jeffrey Sachs is pro-active but starts from a profit maximization perspective.)

It is a subtle reminder to me to be cautious about the hidden assumption of profit maximization behind the models of my favorite orthodox economist like Professor Paul Romer, recently of Stanford University.

(I think the direction of Professor Romer’s seminal paper, Endogenous Technological Change (1990) and his experience as entrepreneur at APLIA was bound to lead him out of modeling into the real world. I read two days ago on David Warsh’s blog that he resigned from Stanford University so can work more on his new ideas on Charter Cities to jump-start development. Find link below for Professor Romer’s recent talk at TED.)

At the same time, after a quick reading about her work (See link to a Forbes article at bottom of this post.), her methodology as political scientist – ethnographic clinical cases – makes me aware of how much more difficult it is to apply her theory to the real world.

My other favorite Professor Lundvall’s group of heterodox economists working on National Innovation Systems use similar methodology as Professor Ostrom and also have some difficulty in generalization and implementation.

From Professor Lundvall’s work, there seems to be a need for cultural homogeneity, as his DISKO study on the innovation system in Denmark concluded, to facilitate consensus and get national innovation systems to work – maybe a substitute for rational expectations! (Lundvall et al, 2002 for DISKO reference .)

This interests me in other ways because we, in the Philippines, have not been able to come up with mechanisms that allow us to agree to disagree and still work out a solution to issues of common interest; it seems like their is a constant food fight for a bigger share of a shrinking pie.

Would more information and discussion help without institutions? Is there a way to break through the tribes and archipelagic thinking that our short history as Filipinos have not yet melded?

Her theory coincides with the basic assumption on why I work hard to publish SYNTHESiST. On the component of more enriching information and the opportunities for discussion, I hope to contribute to consensus-building.

I have seen how discussions work even for the least educated among us when I conducted consultations on the Constitution in Alcoy, Cebu in early 1986. Using the language of farmers and fishermen as in “Pedagogy of the Oppressed (Paolo Freire, 1984),” I was able to conduct a successful consultaton with a well-reasoned discussion and position on key provisions that I uploaded to the Cebu summary position.

In retrospect, I think the consultation worked in Alcoy because of right institutional support for the discussion. It was a national effort coordinated with the local government officials. I guess it was also done with the greatly optimistic feelings binding the country at that great moment in our history just after the People Power uprising – a surge of homogeneity, perhaps?

Do we need the cathartic high of such national historic episodes – as Conrad de Quiros insightfully implied in a teach-in for John Nery’s Journalism students in U.P. that I attended last week – to get the cultural homogeneity to simmer through?

Why not be masinop or maagap as a community to set up institutions for resolute pro-action?

Are shared experiences through cultural heroes like Erap, Manny Pacquiao, or Cory (channeled via Noynoy?) the only path to quickly reach that subliminal homogeneity or imagined community (Anderson (1983)?

Can trust-based institutions in civil society be created as countervailing powers to Big State for robust discussions and negotiations to avoid problems like the Ondoy floods or deal with corrupt leaderss on a continuing basis? Do we need to fatalistically await the floods each year or wait for the dam of anger to burst and, respectively, do bayanihan or be juramentado with People Power at such problems?

There must be some learning for us here. For one, there is a great need for such successful community action even without the impetus of calamities, when our unique bayanihan spirit comes into play.

What institutions need to be set up for us to come together and rationally discuss and act on issues, like climate change, which tend to affect all of us into the future?

Here is an interesting and very well written article on Forbes Magazine written by Elisabeth Eaves, its deputy editor: Forbes article on Elinor Ostrom.

I hope the learning from Professor Elinor Ostrom inspires us, Filipinos, toward building institutions for consensus building that allows concerted action to follow. We do need these institutions for domestic issues and to deal with supra-national ones like climate change. Or, living on our islands in the middle of the Pacific, we will become irrelevant as a nation despite our obvious talents.

P.S.

1. Click here for Professor Paul Romer talk on Charter Cities at TED .
2. Please visit SYNTHESIST in 2-3 weeks. I was one of a lucky group of five people who were able to buy the last copies of Professor Ostrom’s 1990 book, “Governing the Commons: The Evolution of Institutions for Collective Action (Political Economy of Institutions and Decisions).” I will read the book and write about her ideas.