Here’s a nice summary of Elinor Ostrom’s work on voluntary solutions to commons problems from Ilya Somin:
Ostrom’s theories are often seen as an alternative to traditional libertarian thought, which emphasizes the importance of private property and markets. However, it actually fits well with libertarianism defined more broadly as advocacy of the superiority of private sector institutions over government. In some respects, Ostrom’s norm-based approach to dealing with tragedies of the commons is actually less dependent on government than the more traditional libertarian approach of relying on exclusive private property rights. The latter, after all, often depend on enforcement by government. Even where private property rights exist, it is often easier and cheaper to solve some collective action problems by norms rather than relying on the law. And, obviously, Ostrom’s emphasis on the importance of local knowledge is similar to the earlier work of libertarian theorist F.A. Hayek.
Not all tragedies of the commons can be solved by the kinds of mechanisms studied by Ostrom. Her research shows that such approaches usually work well only in groups with no more than a few thousand members. Beyond that point, resource usage norms become hard to enforce and free-riding difficult to suppress. Informal norms and institutions probably cannot solve nationwide collective action problems such as rational political ignorance (the focus of much of my own work), or worldwide ones such as global warming. Still, they can address a great many environmental and economic dangers that most experts once believed required government-imposed solutions.
And here’s 2002 Nobel-winner Vernon Smith:
Relentlessly, Ostrom has pursued answers to two questions:
(1) Since “everybody’s property is nobody’s property,” how is it that there are so many cases where collectives of ordinary people with no education and with none of the economists’ knowledge of “the tragedy of the commons,” in fact discover ingenious rules (institutions) for taking the “tragedy” out of a productive resource they hold in common? If you read her book you will find among the diversity of examples a Swiss village whose people have private property in the plots they plant and harvest, but also have a communal summer meadow for grazing their cows. One rule, still enforced, dating back to 1517 states that “no citizen could send more cows to the alp than he could feed during the winter.” Wintering a cow is costly, and this rule rations access to the commons by tying it to private property rights. Numerous other examples include Japanese lands held by thousands in common under governance structures that avoided “tragedy;” also ancient solutions to communal water and irrigation systems that create effective enough private rights conferring benefits and costs that constrain use. This should not be too surprising, because “property (originally propriety) rights” are about human rights and the challenge of defining them incentive-compatibly for mutual benefit.
(2) As a distinguished political-economic scientist she will be the first to tell you that there are also plenty of commons problems that represent institutional failures and fragilities; she has asked why, and what makes the difference between success and failure? The fragilities include inshore fisheries and groundwater basins with continuing commons problems; failures include salt water fisheries and irrigation systems hamstrung by the complexity of the rules.
Success is associated with clarity in the definition of and bounds on individual rights (and opportunities) to take action, and the geography of the commons; details for monitoring, operations, sanctions and mechanisms for conflict resolution emerge from within the collective and out of motivated people’s direct experience with environmental context and each other. When too many of these problem-solving elements fail, the governance systems fail or require continuing attention to their fragility characteristics. A fatal source of disintegration is the inappropriate application of uninformed external authority, including intervention to prevent application of efficacious rules to political favorites. Also detrimental to good solutions is the OPM (other people’s money) problem.
I spent the weekend after last at a Liberty Fund conference held at Vernon’s Economic Science Institute at Chapman. As cranky as the ignoramus junior applied mathematicians are, Ostrom’s work, like Vernon’s, actually counts as social science. It’s wonderful that the committee has so consistently awarded actual economic scientists. If only the message would get through to the profession.
UPDATE: Ah! Just watch! Via Art Carden…