The sad news of the passing of Elinor Ostrom, winner of the 2009 Nobel Prize in economics (the first woman to win the economics Nobel), has just hit the news in the last hour. Ostrom’s Nobel, though much deserved, was still something of a surprise, as her highly original work on the evolution of cooperative institutions for managing common pool problems runs directly against conventional thinking that favors centralized bureaucratic and regulatory solutions to public problems. As such, her framework represents a serious intellectual challenge to managerial liberalism. She in many ways builds on Hayek. (Her thesis is best set out in her 1990 book Governing the Commons: The Evolution of Institutions for Collective Action.) Time magazine in April named Ostrom one of the 100 most influential people in the world, a list that is sometimes merely trendy rather than trenchant, but in this case fitting. I only met her once, at a conference many years ago, and her original insights have stayed with me. Her framework has been the key to successful reforms of many ocean fisheries, watersheds, forestlands, and other common resource problems.
Here’s how Roger Scruton summarizes Ostrom in his new book (about which more this afternoon):
Ostrom shows that “common pool resources” can be managed as a stable asset, provided that: they are managed by a local community; those with a right to them are clearly identified and others clearly excluded; there is a system of sanctions in place to punish misappropriation and abuse; there is a collective decision-making process with easily accessible procedures for resolving conflict; and the rights of the community are recognized by higher-level authorities. Ostrom’s far-ranging examples are of great relevance to issues of planning and local government. For they show how, when sufficiently localized, a common resource can be managed from below, by the people who share it, and within a broader regime of private property.