When I heard in 2009 that Elinor Ostrom had won the Nobel Prize for Economics I was delighted and thought it one of the best pieces of news that year, if not the best. My feelings were shared by many people, not only on what we might call the pro-market side but across the political spectrum. (Many economists I have to say disgraced themselves with public displays of ignorance regarding her work and achievements but let us pass over that). My pleasure at this recognition of her work was because Elinor Ostrom is one of the most significant thinkers and scholars in what we may call the tradition of spontaneous order analysis and is certainly the most important now alive, given that Hayek is no longer with us.
The central object of her research is common resources (such as groundwater, fisheries, forests and land) and the way in which at a local level people left to their own devices frequently work out institutions and rules that regulate access to and use of these resources in ways that avoid the ‘commons problem’ of rampant overuse or conflict first identified by Garret Hardin in his famous essay. In other words she looks at the spontaneous evolution of social institutions and orders independent of government or political power and on the basis of human interaction and an open ended discovery procedure. In many cases this is a voluntary solution but not a market one (hence her attractiveness to many who dislike government but also mistrust markets). This week the IEA had the honour of having her deliver the annual Hayek Memorial Lecture, in which she looked beyond her earlier work to the challenges that lie ahead.
The main one is that of moving beyond the study of identifiable and well defined local communities and ecologies, where there is face to face contact and much shared tacit knowledge to larger and more complex ones such as nations or even the globe. In other words the study of what she calls Social-Ecological Systems (SES). She argues that we need to develop a new and richer vocabulary and analysis to understand how larger scale social systems work and to get away for the simple dichotomy of ‘market’ and ‘government’. Her earlier work suggests a way of doing this that emphasises a range of institutions and ways in which human beings interact and a way in which solutions to problems at the larger or higher level can emerge through a process of association and mutual learning among the lower decentralised groups, in a bottom-up process.
This kind of analysis will help us to understand what kinds of evolved social institutions are robust and able to avoid the bad outcomes of collapse or conflict and how directed or top-down planned solutions are almost always likely to be more problematic in this regard. The conclusions that come from this are that we need a polycentric and pluralistic system with a wide variety of solutions to social and ecological problems and a rich and dense network of social connections and interactions. Although there is a place for government, what you do not want is prescriptive and top-down planning: although sometimes this may be inevitable, it is very much the less good option.
This kind of approach has a wide appeal to people from many different intellectual traditions and can lead all of us to rethink some of our ideas and assumptions. For any government that is interested in promoting voluntarism and liberty and is also interested in developing workable and robust solutions to major social problems including those that transcend national boundaries, this kind of work and approach is surely of great, not to say vital, interest.