October 13, 2009

Elinor Ostrom and social capital

This year's Nobel Prize in Economics to Elinor Ostrom is well deserved and a good reminder that we can study all of human collective behavior through the lens of economics, i. e., of science. It also seems that the prize has almost everybody happy. Ostrom advocates neither government intervention nor individual property rights as the solution to problems of commons. This allows both pro-market and anti-market spin doctors to celebrate Ostrom as one of theirs.

I squirm at some of Ostrom's ideas. And I am somewhat relieved that I am not alone.

This is from an article by Thomas Dietz, Elinor Ostrom and Paul C. Stern:
Effective commons governance is easier to achieve when (i) the resources and use of the resources by humans can be monitored, and the information can be verified and understood at relatively low cost (e.g., trees are easier to monitor than fish, and lakes are easier to monitor than rivers) (29); (ii) rates of change in resources, resource-user populations, technology, and economic and social conditions are moderate (30–32); (iii) communities maintain frequent face-to-face communication and dense social networks—sometimes called social capital— that increase the potential for trust, allow people to express and see emotional reactions to distrust, and lower the cost of monitoring behavior and inducing rule compliance (33–36); (iv) outsiders can be excluded at relatively low cost from using the resource (new entrants add to the harvesting pressure and typically lack understanding of the rules); and (v) users support effective monitoring and rule enforcement (37–39). Few settings in the world are characterized by all of these conditions. The challenge is to devise institutional arrangements that help to establish such conditions or, as we discuss below, meet the main challenges of governance in the absence of ideal conditions (6, 40, 41).
This is an anonymous comment in Marginal Revolution:
Effective commons governance is easier to achieve when (i) ... (v)
Reading this list, it almost sounds like the "cure" is worse than the disease, if back-to-the-future means old-boys networks, guanxi, cartels, provincialism and mistrust of outsiders, resistance to disruptive and innovative technological change, a world where who you know or who your parents were is more important than your character or ability, rule of law and equal opportunity is trumped by hoary traditions, and so forth.
Maybe I'm reading too much into it, but some elements of this program sound like a sinister throwback to old ways that we spent centuries trying to overcome.
The challenge is to devise institutional arrangements that help to establish such conditions...
How about no?

3 comments:

  1. happening on this now, through Google. Couldn't disagree more with what you say. The places with low levels of social capital are less happy, poorer, mostly less democratic.

    And they are ruled precisely by even smaller cliques, from the top down.

    Not everything is a conservative conspiracy.

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  2. While it's important to have criteria, it's also important to match theory and reality, I think we need to be clear. Are "old boy networks" and "mistrust of outsiders" actually abolished in modern society?
    Old boy networks? How many Goldman Sachs boys have circulated through the US government?
    Sociologist CW Mills wrote The Power Elite by 1960, and more recently G Domhoff wrote Who Rules America? which highlight existing networks.
    "Mistrust of outsiders"? Conventional economists make little or no reference to real world studies of human behavior such as in psychology, sociology, or anthropology, as Ostrom in fact did.
    Corporations have railroaded their way to concentrated power over decades through monopolistic practices and political influence, treated in articles like Kroszner and Stratmann's 2005 article in the Journal of Law and Economics.

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  3. Are "old boy networks" and "mistrust of outsiders" actually abolished in modern society?

    No, they aren't.

    How many Goldman Sachs boys have circulated through the US government?

    Too many.

    ReplyDelete