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A Nobel for the Commons: A Tribute to Elinor Ostrom

The Nobel Prize in Economics co-awarded to Elinor Ostrom marks a rare departure from the traditional approach of the selectors which hitherto has been characterised by adherence to sub-disciplines more explicitly recognised as falling within the discipline of economics, rather than those that govern an economic system from its exterior, created at the interface of political economy, economics and social anthropology. This essay is a tribute to her work taking into consideration the implications of her thought in the context of governance of commons in general, and in south Asia in particular.

COMMENTARY

A Nobel for the Commons: A Tribute to Elinor Ostrom

Jayanta Bandyopadhyay, Kanchan Chopra, Purnamita Dasgupta, Nilanjan Ghosh

The Nobel Prize in Economics co-awarded to Elinor Ostrom

marks a rare departure from the traditional approach of the selectors which hitherto has been characterised by adherence to sub-disciplines more explicitly recognised as falling within the discipline of economics, rather than those that govern an economic system from its exterior, created at the interface of political economy, economics and social anthropology. This essay is a tribute to her work taking into consideration the implications of her thought in the context of governance of commons in general, and in south Asia in particular.

These are the personal views of the authors.

Jayanta Bandyopadhyay, Kanchan Chopra, Purnamita Dasgupta and Nilanjan Ghosh (nilanjan.ghosh@taerindia.com) are associated with the Indian Society for Ecological E conomics, Delhi.

E
linor Ostrom has been co-awarded the Nobel Memorial Prize in Economic Sciences for 2009. Ostrom, essentially a political scientist, has made seminal contributions to institutional analysis and development. The committee has recognised this contribution “for her analysis of economic governance, especially the commons”. Her selection for the Nobel Prize is a recognition which has rightly been described by Paul Krugman, as an “Institutional” Nobel. This essay is a tribute to the work of Elinor Ostrom taking into consideration the implications of her thought in the context of governance of commons in general, and in south Asia in particular.

The Nobel Prize going to Ostrom marks a rare departure from the traditional approach of the selectors, characterised by adherence to sub-disciplines more explicitly recognised as falling within the discipline of economics, rather than those that govern an economic system from its exterior, created at the interface of political economy, economics and social anthropology. Perhaps the complicated situation in which humanity finds itself with the a tmosphere as a global commons, has influenced this transition.

Ostrom’s primary interest has been in exploring how institutional rules affect the structure of action situations within which individuals face incentives, make choices and jointly affect each other. Problems involving collective goods and common pool resource systems, and how various types of institutions enhance or detract from the capabilities of individuals to achieve solutions are a central theoretical concern. In urban settings, she has been interested in the problems of collective action where citizens face problems of crime, poor education and deteriorating environmental conditions. She has straddled disciplines effectively to find answers to the questions she asks.

While Ostrom had been working on i ssues of institutional analysis, finance and project management (Ostrom 1986, 1988) for sometime, it was her book, G overning the Commons: The Evolution of Institutions for Collective Action (Ostrom 1990) that constituted a landmark in the literature on common property resources, providing an alternative empirical analysis for understanding collective action for common pool resources such as meadows, forests, rivers, irrigation systems and related rights. Her analysis suggests the emergence of an elaborate system of rules, defining rights and responsibilities among participants in local resource management. These rules relate to various aspects such as inclusion or exclusion of participants, monitoring, sanctioning and conflict resolution, appropriation strategies (benefit-sharing), and responsibilities of participants. A key element is relative auto nomy to local resource users in design and management of the resource alongside an evolutionary process of learning over time (Ostrom 2008). Her work d erives from and enhances game theoretic and experimental studies, supported as it is by extensive fieldwork and statistical analysis.

As argued by Boettke (2009), Ostrom has essentially reconciled the intellectual conflict between Adam Smith and Thomas Hobbes. As is known, much of the last century of political and economic discourse has been dominated by a debate between advocates of perfect markets and the l eftist advocates of central planning. Hence, the source of social and economic order has been attributed either to the invisible hand of market coordination (Smith) or the heavy hand of state control (Hobbes). Boettke (2009) states “… perhaps one of the best ways to understand Elinor Ostrom’s work is to see it as working out a Hobbesian problem by way of a Smithian solution”. In the process, Ostrom shows that decentralised groups can d evelop various rule systems that enable social cooperation to emerge through voluntary association. Quite under standably, this has immense implications for studies on not only economic and social governance, but also for analyses related to social conflicts.

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Economic & Political Weekly

COMMENTARY

Extending the Frontiers

Underlying the award of an Economics Nobel to a trained political scientist, perhaps, there is an indication that economics as a discipline can also evolve in a d irection different from the one in which it has done thus far. This has most aptly been appreciated by Haque (2009).

Ostrom has shown that there is a different way to practise economics thereby perceiving and modelling phenomena from a standpoint closer to reality, rather than from a more abstract and away from real-world stance. Ostrom’s work was much grounded, as she relied on fieldwork, and her logic for explaining community action often challenged the m athematical logic postulated by complicated quantitative frameworks. She described the economics of human behaviour with economic intuition, combining knowledge from other social sciences thereby creating a trans-disciplinary framework for analysis. More critically, contrary to the dominant quantitative frameworks, Ostrom’s approach, as described by Haque (2009) is mega qualitative, rich with new insights and dimensions about how m odels should be constructed.

Contrary to the visibly dominant a ssumptions of neoclassicism – rational behaviour, perfect information, etc – O strom has proposed a new configuration of g overnance, which she calls polycentric governance. While behavioural economists have long been questioning the basis of these assumptions, Ostrom challenged the same in her own style and with her own intuitive logic. Ostrom’s work challenged the neoclassical thought process of Common Property Resource (CPR) management, initiated by Hardin (1968). Given the right form of institutions, Ostrom suggests, the commons can be managed from the bottom-up perspective for a shared prosperity. Asides challenging the orthodox economics from both left and right leaning perspectives, the inferences are quite dramatic. It suggests that markets can organise production and consumption efficiently – but only when supported and nurtured by networks and communities.

From the perspective of the canonical definition of the discipline of economics as the tool for the “… allocation of scarce resources among competing ends”, made by Robbins (1935), Ostrom’s work stands as an iconoclastic statement which, surprisingly, is rooted in the fundamental thinking of economics, thereby extending the frontiers of the discipline. More interestingly, it is not only an extension of the frontiers of economics, but provides newer dimensions to the disciplines of ecological economics and development economics in particular.

CPR Management in South Asia

In the south Asian context, the key contribution by Elinor Ostrom, along with other scholars (Shivakoti and Ostrom 2002) has been to provide effective empirical understanding of the performance of different types of irrigation institutional arrangements, along with a theoretical

Call for Papers

National Seminar on

State of Democracy in North-East India

Gauhati University, Guwahati–781014, Assam 25-27th February 2010

The credibility of democracy as a political system depends on how it works and delivers. Any democratic government must be concerned about how its working is experienced by ordinary citizen. How substantive is Indian Democracy? The capacity of the state to meet its requirements of the people has remained low. The procedural norms of a rational political order are yet to find their roots in the soil. And more importantly the task of building such a rational political order has received a severe setback due to deinstitutionalising actions of the political leaders. The remedy however lies in strengthening the institutions. The growing inter-community conflict and violence in North-East India invite us to explore the working of democracy in North-east India. The objective of this seminar is to assess the contribution of the state in deepening and extension of democracy in socioeconomic field.

Panels related to the main theme will be grouped under as:

  • Institutional legitimacy, interest representation and democratic practice.
  • Democracy as an area of participation
  • Quality of governance
  • The seminar is organized by the Political Science Department, Gauhati University under the Special Assistance Programme (SAP) DRS-1,U.G.C. The tentative dates are 25-27th February 2010. We will select about 10-14 papers on any of the above issues and expect that the seminar will result in an edited volumes of articles.

    Interested participants should send an abstract of not more than 1000 words to Prof. Sandhya Goswami (email: sandhya_goswami@yahoo.com) by 15th December 2009. Please specify ‘State of Democracy in North-East India’ under Subject. Selected authors will be notified by 25th December 2009 and will be expected to submit a draft of their paper by 1st February 2010.

    Economic & Political Weekly

    EPW
    november 7, 2009 vol xliv no 45

    COMMENTARY

    understanding of how these systems work. She demonstrated the importance of involving farmer-users in the design and management of irrigation systems for successful local resource management policies in N epal. Work in Asia had amply demonstrated that large, centralised and essentially top-down government management systems tended to underperform, with lower rates of return on investment than systems where incentives to engineers were aligned to those of local farmer-users with their active participation (Wade 1982; Lam 1995; Ostrom 2002).

    Several Indian scholars have been i nspired by Ostrom’s work to study issues of collective action and governance of common property resources, and to search for alternative frameworks for understanding how best to manage such r esources which are often vital to the very existence of rural livelihoods in India. A large body of literature exists in India on the contributions of common property r esources or CPRs as they are commonly labelled. The National Sample Survey too devoted a special round (54th round) to the de jure and de facto existence and contributions of CPRs in India, particularly in terms of their provisioning services such as fuel-wood, fodder and non-timber forest products from forests. Her work and that following hers in south Asia and elsewhere has found that institutions for colle ctive action can emerge in rural societies characterised by inequality, prior history and poor implementation of centrally d etermined legal structures. Village society was often able to accept some amount of inequality, overlook prior history and agree on common norms of behaviour to solve the problems of the commons. S everal scholars from south Asia benefited from visiting the “Workshop in Political Theory and Policy Analysis”, which O strom established in 1973, along with her husband Vincent, a political scientist at the Indiana University Bloomington. Over time, the Workshop has turned out to be an extraordinary forum for productive deliberations from evolving associations of students and professors thereby producing a wealth of theory, empirical studies and experi ments at the interface of political economy, social anthropology, economics, political science, and policy studies thereby further enriching the interdisciplinary discourse of collective action. Quite a few of the research students of Ostrom have visited Indian institutes (Institute of Economic Growth (IEG) in Delhi, being one of the prominent ones) and have worked with Indian scholars, thereby resulting in fur

    scholars, thereby resulting in further exchanges. Ostrom herself has visited academic institutions in India a few times, the most recent visit being at the IEG in October 2008, providing the researchers the intellectual space to discuss and debate design issues in moving from models of governance of local to global commons.

    Lessons for the ‘Global Village’ Commons

    Interestingly, the Nobel committee has f ocused attention on the work of Elinor O strom at a time when the global village is seeking solutions to the damage inflicted on the global commons by greenhouse gas emissions. In this case too, we have i nequity (across nations), we have prior history and we have very few global institutions whose writ is accepted by all. In other words, as the nations of the world, constituting the so-called “global village” interact on issues of limiting greenhouse gas emissions which endanger the global commons, we find many similarities with village communities. Will the “global v illage” be able to exhibit similar foresight and wisdom in solving its problems? The details of Elinor Ostrom’s work will remain very useful to humanity in a ddressing this task.

    References

    Boettke, P (2009): “Elinor Ostrom’s Nobel Prize in Economics: Why Those Who Value Liberty Should Rejoice”, http://fee.org/articles/elinor-ostroms2009-nobel-prize/ (accessed on 21 October 2009).

    Haque, U (2009): “Elinor Ostrom and the Future of Economics”, http://blogs.harvardbusiness.org/ haque/2009/10/what_you_can_learn_from_elinor. html (accessed on 21 October 2009).

    Hardin, G (1968): “The Tragedy of the Commons”, S cience, 162 (3859), pp 1243-48.

    Lam, W F (1995): “Institutional Design and Collective Actions: A Study of Irrigation Associations in T aiwan”, paper presented at a conference on “Government Action, Social Capital Formation and Third World Development” (Cambridge: M assachusetts), May.

    Ostrom, E (1986): “A Method of Institutional Analysis” in F Kaufmann, G Majone and V Ostrom, Walter de Gruyter (ed.), Guidance, Control and Evaluation in the Public Sector.

  • (1988): “Decentralisation, Finance and Management Project Document” (Burlington VT: Associates in Rural Development).
  • (1990): Governing the Commons: The Evolution of Institutions for Collective Action (New York: Cambridge University Press).
  • (2002): “The Challenge of Underperformance” in G Shivakoti and E Ostrom (ed.), Improving Irrigation Governance and Management in Nepal (Oakland, CA: ICS Press).
  • (2008): “How Do Institutions for Collective Action Evolve?”, Fourth Lecture in the Golden Jubilee Series (Delhi: Institute of Economic Growth).
  • Robbins, Lionel (1935): An Essay on the Nature and Significance of Economic Science, 2nd edition ( London: Macmillan).

    Shivakoti, G and E Ostrom, ed. (2002): Improving I rrigation Governance and Management in Nepal (Oakland, CA: ICS Press).

    Wade, R (1982): Irrigation and Agricultural Politics in South Korea (Boulder, CO: Westview Press).

    INSTITUTE OF DEVELOPMENT STUDIES KOLKATA Calcutta University Alipore Campus, 5th Floor 1, Reformatory Street, Kolkata 700 027 Requires Assistant Professors

    Applicants must possess excellent academic record with M.Phil/Ph.D in Economics/Political Science/History/Sociology/Demography and must have cleared NET/SLET in cases in which UGC stipulates it. Preference will be given to applicants having records of research in Health/Education/ Economic History/Governance/Human Development.

    Scale of Pay: Pay Band Rs.15,600-39,100/- +AGP Rs.6000/- as per UGC scale and allowances as admissible for State-aided Universities of West Bengal.

    The posts are permanent. Appointment may, however, be made on contractual or regular basis. Applications along with curriculum vitae may be sent within three weeks from the date of advertisement by post to: Professor Amiya Kumar Bagchi, Director, Institute of Development Studies Kolkata, Calcutta University Alipore Campus, 1, Reformatory Street, Kolkata-700 027.

    november 7, 2009 vol xliv no 45

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    Economic & Political Weekly

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