Commons sense

Elinor Ostrom, winner of this year’s Nobel Prize for Economics, awarded for her path-breaking work on governance of common pool resources such as land and forests, believes that part of the solution to many of the world’s key problems  lies at the local level.

In an exclusive interview with G Sampath, she discusses climate change, India’s development dilemmas, and the limitations of orthodox economics.

While awarding the 2009 Nobel Prize for Economics to Elinor Ostrom (which she shared with Oliver Williamson) the Nobel Committee in its citation said, “Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatised. Based on numerous studies of user-managed fish stocks… groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories.”

Indeed, it should hardly be a surprise that the 76-year-old Ostrom’s lifetime of work on economic governance debunks many of the standard shibboleths of mainstream economics, for she is not even an economist in the first place — she is a professor of political science at Indian University, Bloomington, in the US.

The biggest myth she busts is that of that of the “tragedy of the commons,” espoused most convincingly by Garrett Hardin in 1968. The Wikipedia describes Hardin’s hypothesis thus: “multiple individuals acting independently and solely and rationally consulting their own self-interest will ultimately destroy a shared limited resource even when it is clear that it is not in anyone’s long term interest for this to happen.”

The consequence of embracing such a theory is to prescribe either government regulation or private ownership of common resources (or commons), such as forests, rivers, lakes, pastures. This is what most governments the world over have done, resulting in, more often than not, the denial of access to such resources to the original community of users, and conflicts thereof.

Ostrom’s work demonstrates that Hardin’s conclusions were an “overstatement.” By making a strong case for user-management of common resources, and ground-up, “polycentric” policy-making, Ostrom’s work is a key resource for all who are concerned to strengthen and protect democratic rights at local and community levels, and at the same time, follow a sustainable approach to the management of the commons. In a telephonic interview, Ostrom spoke to The Mag about, among other things, how best India can manage its ongoing conflicts over common pool resources.

Climate, too, is a ‘common’ resource. How do you visualise ‘governing the commons’ operating at the international level, in the context of the debates over carbon caps and the summit next month at Copenhagen?
Climate change is a global phenomenon that requires a global response. But by focusing only on the level of global governance, we could miss out on benefits that could result from responding to the issue at individual, local, regional and national levels. Developing effective nested institutions at multiple levels is one of the key challenges of the contemporary era. For example, in Berkeley, California, there are city initiatives to help residents pay for installing solar panels; California has stringent state targets for air pollution; then there is the Regional Greenhouse Gas Consortium, made up of 10 northeastern states. Critics may argue that local and regional actions won’t solve the climate change problem, but cumulatively, they’re significant.

Right now in India there is a huge conflict over common pool resources, such as land and forests. While existing populations depend on these resources for survival, there are also developmental needs emerging from industrialisation, leading to clashes such as farmers versus industry, or indigenous communities versus mining companies. How do we resolve such conflicts over the commons?
This is a very tricky issue. If Mahatma Gandhi were alive, he would be with the people who have been sustaining the land and the resources and the trees. He would not consider going through big industry and lots of money as necessarily the best way. For example, in Mexico, there is a group of indigenous people that do have pretty good rights to their land, rights they obtained after considerable struggle. They have an NGO working with them, and they’ve set up a biological lab. They have figured out a way of growing orchids in their forests. And they don’t have to cut down their trees as the orchids grow in the trees, and they sell the orchids for a good price. They’ve also figured out a way of growing beautiful mushrooms, and selling them. So, without destroying the forest, they are getting good income to the local community. And with that money, they have built a better school in their locality. They send kids to college, and those who hold masters degrees come back and serve the community for five years, which is a requirement. But many then stay on. So it is possible to develop with high respect for the indigenous people.

In your work, you make a strong case for ground-up management of resources instead of the currently dominant paradigm of top-down management. But is the ground-up model feasible in a globalised economy?
It is. But to make it feasible, you need a court system that is rapid. I understand that the backlog of cases in the Indian judicial system is enormous, so it’s hard to get conflicts resolved. In such a setting, it is hard to make contracts at the local level that are binding. It’s important that when there is conflict, there are ways of resolving it rapidly. If you have a local community, and there is conflict, and you can’t find arenas in which the conflict can be heard with respect and speed, then you turn to violence. So this is how I would understand some of the conflicts in India that I’ve read about: if land that people thought they had claims to, are turned over to large corporates, and the people don’t get any of the income the corporates would earn from that land, and part of their livelihood is threatened, then such development increases the difficulty for a significant part of the population. My main message is that there is an incredible amount of talent and ingenuity out there. If people have trust that others will be trustworthy, including their government, and each other, and they can develop rules that fit a local ecology, then they can do much better than doing it all top-down.

Today, quantitative factors, such as the GDP and growth rate, matter more than qualitative understanding of lived human realities. In the interests of effective policy-making in a democracy, is there a bias towards the quantitative that economics as a discipline needs to correct?
Not only economists but all social scientists prefer large survey analyses and disdain qualitative work. I think all of us in the social sciences should try to do two things that are difficult to do simultaneously: one, respect humans; listen, understand, see how they see the world, and at the same time, not take political positions. There is a difference between having respect for human ingenuity while trying to understand a problem, and having no respect for the humans involved. It’s the latter that I am critical of.

How does one make common ownership of resources work in a market economy, where private ownership is the norm?
There is a brand of oranges in the United States that is very famous: Sunkist Oranges. It’s a brand of a cooperative farmers group that’s been in existence for at least 50 years. Sunkist oranges are out there in the market, but it’s a co-operative. A co-operative model is one way of approaching the idea of the commons, making it work in a market economy through common ownership.

But plenty of co-operatives have failed…
Sure, not all cooperatives succeed. But we need to keep in mind that one-third of private business firms that try to get started fail. Failure rate in the first five years of a private corporation is very high, and yet, because of them, there is innovation, and a variety of other things. Yes, some co-operatives fail. And governments fail, too, and private corporations fail, and recently, some pretty big ones, too!

Yet conventional wisdom still holds that common property is poorly managed and should either be privatised or run by government, the so-called ‘tragedy of the commons’...
We have strong empirical evidence from around the world that local people who have common property manage their resources very well. There have been econometric studies done on forests around the world which show that when people have harvesting capabilities, they will also monitor to ensure that the forest is protected. My colleague Arun Agrawal from the University of Michigan has done good statistical analysis that shows the difference it makes when people are able to have a voice. Being a member of a million people who elect an official — that is important. But to have true democracy in a large country, you need democratic institutions at different levels — community, small scale, regional, and so on, all the way up.