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Nobel Prize in Economics possible repudiation of central planning
By: J.P. Freire
Associate Commentary Editor
10/12/09 4:26 PM EDT
Elinor Ostrom and Oliver Williamson have won the Nobel Prize for economics. The former is most interesting not merely because it's the first female winner of the prize, but because of the intellectual drift of her work. While primarily interested in sustainability, a line that stands out in numerous news reports is that "that most people, when presented with a resource problem, can cooperate and act for the common good." This isn't an opus about forcing people to work together -- it's that people freely enter into such cooperating actions.
Take her work looking at fisheries, for example, in an article appearing in "Polycentric governance and development: Readings from the workshop in Political Theory and Policy Analysis." Using empirical data across several different coastlines, she finds that some property rights are integral to fishery success.
Her work undermines much of the conventional wisdom that government planning alone can manage effectively a shared resource (lakes, etc.). Instead, as in this interview, she notes the efficiency of "polycentric systems," that is, a system where citizens are able to organize not just one but multiple governing authorities, as well as private arrangements:
"Serious empirical research has now shown that polycentric systems tend to generate higher levels of output at similar or lower costs than monocentric systems governing similar ecological, urban, and social systems."
While some may suggest that this means that we need more bureaucracy, not less, it actually suggests that monopolies on power are counterproductive. In fact, it's free community-based associations , similar to that observed by Alexis de Toqueville and Edmund Burke, that allow these resources to thrive.
Why is this important? Because a free-market message on environmentalism, depends on locally-based governance, rather than boondoggles like the National Park Service. For a good example of how self-regulation has allowed Australia's fishing industry to thrive, look to John Tierney's multiple writings on the subject.
It would be interesting to hear Mrs. Ostrom's take on health care as a limited resource, or, more relevant to sustainability, what conclusions are drawn from her work about cap-and-trade.
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