A nobel price for the commons

Here are the reasons given by the Nobel price committee for the award to Elinor Ostrom. For the general public and for who wants to know about the scientific background of the decision.

Telephone interview with Elinor Ostrom following her award.

National Academy of Science Profile of Dr Ostrom

Here you can find summary of Ostrom’s book Governing the Commons.

Here is an interesting post from a colleague offering his congratulations.

I also find it very interesting that Oliver Williamson shared the price with Elinor Ostrom . . .

Below is an extract from the Nobel committee justifying the award.

“Traditionally, economic theory has by and large been a theory of markets or, more precisely, about market prices. However, there are at least two reasons why economic science should extend beyond price theory. First, markets do not function properly unless suitable contracts can be formulated and enforced. Hence, we need to understand the institutions that support markets. Second, considerable economic activity takes place outside of markets – within households, firms, associations, agencies, and other organizations. Hence, we need theories to explain why these entities exist and how they work. This year’s Laureates have been instrumental in establishing economic governance as a field of research. Elinor Ostrom has provided evidence on the rules and enforcement mechanisms that govern the exploitation of common pools by associations of users. Oliver Williamson has proposed a theory to clarify why some transactions take place inside firms and not in markets. Both scholars have greatly enhanced our understanding of non-market institutions.” (nobelprize.org)

In a nutshel, one author (Ostrom) studies the commons outside capital, while the other (Williamson) studies the rules defining when it is convenient to have firms or markets as a main organisational context for production. Notice that this “convenience” in Williamson argument has to do with the minimisation of the cost of conflict, i.e. with the condition for “efficient conflict resolution”:

“In the early 1970s, Oliver Williamson argued that hierarchical organizations sometimes dominate markets because they provide a cheaper way to resolve conflicts. If two employees quarrel about the allocation of tasks or the distribution of revenues, a chief executive is entitled to
decide. In a market, on the other hand, negotiations have to continue until both parties agree. Haggling costs can be substantial, and there is no guarantee that the final agreement will be either immediate or efficient.” (nobelprize.org/nobel_prizes/economics/laureates/2009/info.pdf)

But firms, i.e. capitalist firms, also rely on some sort of commons. According to Ostrom, “even the best functioning markets are undergirded by an array of collective institutions which order people’s market interactions, and that in the absence of such rules, self interested behaviour will have highly adverse consequences.” (see crookedtimber.org/2009/10/12/the-ostrom-nobel/#more-13312). Thus I wonder whether one could expand Williamson problematic and apply it to commons rather than firms. His theory then would also guide decisions on when it is “economically rational” in terms of “efficient handling of conflict” to rely on markets or when on commons linked to markets, i.e. commons set in competition with one another.
I feel that the two approaches combined or linked in some way could give a workable theoretical framework to advance capital by coopting commons and commons discourse. There are some signs that a “discursive recomposition” of capital is occurring along these lines. As a very minor indication see for example The Economist’s interest in workers co-operatives, especially in moment of crisis and austerity.

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