What does a Nobel Prize in Economics have to do with Gabriola Island? A whole lot more than you’d imagine. Here’s the story.
When a friend emailed on Thanksgiving Day to tell me Elinor Ostrom had won the Nobel Prize in economics, she probably thought that, as a woman economist, I’d be glad because the prestigious prize had been awarded for the first time to a woman. She couldn’t know just how wonderful a Thanksgiving gift this news was for me.
You’ve never heard of Elinor Ostrom? You’re in good company. As Steven Levitt wrote in the New York Times: “If you had done a poll of academic economists yesterday and asked who Elinor Ostrom was, or what she worked on, I doubt that more than one in five economists could have given you an answer … I have no recollection of ever seeing or hearing her name mentioned by an economist.” Even last year’s winner of the economics Nobel Prize, Paul Krugman, in congratulating this year’s winners, admitted that he was not familiar with Ostrom’s work before today.
I am gleefully smug to be able to say that I am familiar with Ostrom’s work, and as soon as I stop capering about, I’ll tell you why.
Backtrack to 1993, University of Victoria. A graduate student in economics, I discovered Elinor Ostrom’s 1990 book, Governing the Commons: The Evolution of Institutions for Collective Action. My professors had never heard of her, so I wrote a paper explaining why her work was so critical in designing community-level arrangements for managing shared resources.
Fast-forward to 2005, Gabriola Island. Retired from my decade of work as an economist, I was a member of the Steering Committee which nurtured the Gabriola Commons through its early days. We were struggling to define a Commons, and to find ways to protect and sustain it for the future. One of the major sources I brought to our discussion was Ostrom’s Governing the Commons.
To clarify why, let’s look at the whole idea of “the commons”. The commons consists of stuff we share and stuff we inherit, like a street or a river or the air or the vast store of human knowledge - gifts inherited either from nature or from the collective efforts of millions of humans. The commons consists of that which nobody owns or which we all own together, in contrast to the market, which consists of that which is owned privately, and the state, which consists of that which is owned publicly, i.e. by government.
The state is not the commons. The mere fact that the state owns public lands doesn’t guarantee that they will be managed as the commons should be managed. The Public Trust Doctrine, a legal principle arising from common law, holds that natural resources belong to the people rather than to the state and that it is the state’s responsibility to act as trustee of these resources for present and future generations – but if the state does not act as a trustee should, the people have the right to hire another trustee.
We’ve all heard of the Tragedy of the Commons – in fact, it may be the only reference to the Commons that many people have ever heard. The idea was described by Garret Hardin – that any commons will inevitably be degraded by overuse by free-riding opportunists. And the standard economist’s answer to the tragedy is to privatize the commons, to make it part of the market.
Elinor Ostrom’s genius – and the reason she deserves the Nobel Prize – is that she has demonstrated that many commons-type resources have been successfully and sustainably managed for centuries by groups who have created robust user-organized systems that prevent the so-called Tragedy of the Commons. She has investigated thousands of these user-organized systems around the world. For example, she describes a Spanish user-managed irrigation system that has survived for over a thousand years – how’s that for sustainability!
The Royal Swedish Academy of Sciences, in announcing the Nobel Prize, said, “Elinor Ostrom has demonstrated how common property can be successfully managed by user associations …. (she) has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized.”
Many of Ostrom’s ‘design principles’ – for example, ‘those who use a resource should be the ones to create the rules which govern it’ – have been consciously adopted by the Gabriola Commons. Perhaps we can now rightfully claim that our visionary practices are not just hippy-dippy flakey notions, but have been validated by the world’s premier judges of scientific achievement.
Levitt says, “… the economics profession is going to hate the prize going to Ostrom even more than Republicans hated the Peace prize going to Obama.” Never mind, Elinor – the howls of outrage from economists will be drowned out by the squeals of jubilation from the commoners of Gabriola!
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