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.
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