Elinor Ostrom and Polycentricity

I recently learned about Elinor (Lin) Ostrom getting the Nobel in Economics last year, and her work (with her husband, Vincent) on collectives goods management. I plan to read her book, Governing The Commons, as a thread in the fabric of web culture.

From that work:

An important challenge facing policy scientists is to develop theories of human organization based on realistic assessment of human capabilities and limitations in dealing with a variety of situations that initially share some or all aspects of a tragedy of the commons. … Theoretical inquiry involves a search for regularities … As a theorist, and at times a modeler, I see these efforts [as being] at the core of a policy science. One can, however, get trapped in one’s own intellectual web. When years have been spent in the development of a theory with considerable power and elegance, analysts obviously will want to apply this tool to as many situations as possible. The power of a theory is exactly proportionate to the diversity of situations it can explain. All theories, however, have limits. Models of a theory are limited still further because many parameters must be fixed in a model, rather than allowed to vary. Confusing a model – such as that of a perfectly competitive market – with the theory of which it is one representation can limit applicability still further. (pp.24-25) (via Crooked Timber)

I am also fascinated by the concept of polycentricity. Again from Crooked Timber

Lin spends a lot of time (albeit less than she used to) in the field, soaking up practical knowledge which informs her work in striking ways. She is hands-on in a way that very few economists, political scientists or sociologists are. It is also interesting to note that the Nobel committee pays specific attention to the political implications of her work.

Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories.

This reflects what she and her husband Vincent refer to as “polycentricity,” a normative approach to governance which stresses the degree to which higher levels of government should not crowd out self-organization at lower levels. Her work implies that both pure marketization and top-down government control can have badly adverse consequences for resource management, because they rob individuals of the capacity to govern themselves, and because they both lead to the depletion of important forms of local collective knowledge. Alex Tabarrok is right to see something Hayekian in Ostrom’s arguments – but it is Hayek against Hayek. Ostrom stresses repeatedly that even the best functioning markets are undergirded by an array of collective institutions which order people’s market interactions, and that in the absence of such rules, self interested behaviour will have highly adverse consequences. Perhaps the closest parallel to Ostrom’s work is Jane Jacobs’. Obviously, Jacobs was not a social scientist and didn’t write like one, but both straddle the divide between libertarian and left politics in very interesting ways that challenge some of the underlying assumptions of both.

Political realities must be grounded in local issues or they are ideological or tyrannical. The culture that shapes out interactions is often ignored by economists, who deconstruct culture when reducing people to pure economic or analytic units to makke their models work.

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