[H]umans have a more complex motivational structure and more capability to solve social dilemmas than posited in earlier rational-choice theory. Designing institutions to force (or nudge) entirely self-interested individuals to achieve better outcomes has been the major goal posited by policy analysts for governments to accomplish for much of the past half century. Extensive empirical research leads me to argue that instead, a core goal of public policy should be to facilitate the development of institutions that bring out the best in humans. We need to ask how diverse polycentric institutions help or hinder the innovativeness, learning, adapting, trustworthiness, levels of cooperation of participants, and the achievement of more effective, equitable, and sustainable outcomes at multiple scales. Elinor Ostrom (2009) "Beyond Markets and states: Polycentric Governance of complex economic systems" (Nobel Lecture), 435-6
Elinor Ostrom, who won the 2009 Nobel Prize in economics, was not a house-hold name in economics (recall this post); she spent most of her life in a political science department in Bloomington, Indiana, where she created (together with her husband Vincent Ostrom) the Workshop in Political Theory and Policy Analysis.* While her work is clearly situated in the so-called public choice literature, her empirical work is based on a lot of-so-called field observations and comparative institutional analysis. In the Nobel lecture she describes the huge efforts that went into coding data generated by messy real world phenomena which exhibit a "diversity of human situations" (forests, water systems, fisheries, fire protection, sewage, etc.) and that often involve many kinds and levels of government, corporate, and looser informal multi-person voluntary agents, and individuals in a – to use a term her husband, Vincent Ostrom, popularized – polycentric political environment. In future postings on her work I'll discuss some of its methodological significance for relying toy-models (a non-trivial philosophical habit of thought).
A core goal of public policy should be to facilitate the development of institutions that bring out the best in humans.
I found this sentence shocking. Living in a technocracy (and the grant-driven modern research university is at the center of technocracy) habituates one into thinking that institutional design and regimes are about nudges, signals, and exploiting the rules to one's advantage. But, while technocracy has undeniable benefits – it shields the most privileged insiders like me from a lot of environmental turbulence – it crushes the human spirit. In technocracy terms like 'excellence' and 'innovation' get debased because when strategic behavior is presupposed, intrinsic ends get displaced (and even thought of as 'old-fashioned,' or 'naïve.') Rational choice theorists and power-obsessed Foucault-ians both teach us that power, agency, and control is 'where it's at.' But in so doing they have helped narrow the possibility space.
It's easy to mock Ostrom's simple sentence as almost utopian in its aspirations; in many places peaceful coping is already idealistic. One might also recoil from commitment to the 'best'—tacit aristocratic ideals may be lurking in the background; and who is to say what is 'best' in a pluralistic political community? Luckily, in the very next sentence Ostrom operationalizes 'best' by focusing on helping "innovativeness, learning, adapting, trustworthiness, levels of cooperation of participants, and the achievement of effective, equitable, and sustainable outcomes at multiple scales." Designing and operationalizing proxies and measures that can track such 'best' outcomes, and their interactions -- Ostrom's work exhibits great sensitivity to interaction effects among different factors --, is no simple matter and involves non-trivial normative judgments. Luckily, now that computer power is becoming very cheap, modeling and simulation may well allow theorists to get a handle on these notions before and after local field-work (and other ways at obtaining relevant data).+
Thus, the significance of Ostrom's work is not just that she tries hard to escape the binary State vs Market focus that, for all its fruitfullness, has impoverished philosophy and social science during the last century; rather it's that she exhibits that one can be 'scientific' about the social while relying on complex models as well as normatively thick ideals. The bibliographies of the Ostroms reveal that they read philosophy seriously and with critical acumen; it's about time that philosophers start assimilating and appropriating the Ostrom's insights (including lots of distinctions among social rules). It might well give us some strategies to break the logjam between so-called ideal and non-ideal theorists.
*Disclosure: I was sent Elinor Ostrom & Vincent Ostrom (2014) Choice, Rules, and Collective Action, Colchester: ECPR Press. The volume reproduces the Nobel lecture as well as other important methodological and philosophical papers by the Ostroms. The volume has a very useful introduction by F. Sabetti and P.D. Aligica that puts the Ostroms in intellectual context.
+At Ghent, Inspired by my colleague, Rogier De Langhe, the economist Koen Schoors, the physicist Jan Ryckebusch, and I have helped co-found the Complex Science Institute, which uses simulations and agents based models.
Thanks for this post. We watched Elinor Ostrom's Nobel Prize Lecture in an undergrad course I designed and taught at Carnegie-Mellon, and I tried to get then-colleagues in Philosophy interested in some of her basic papers on game theory and tragedy of the commons, etc. I was not successful in the latter. I hope that you will be.
Posted by: S G Sterrett | 06/26/2014 at 01:43 PM
In December, 2009, soon after Lynn Ostrom’s Nobel recognition was announced, I attended a Coase conference in celebration of Coase’s 100 birthday. There was much gossip at the opening reception about the Nobel Committee’s choice. A prominent Chicago economist said to me: “I think the committee should choose people whose work is better known.” This reveals far more about Chicago (similarly for the NY Times obituary) than about Ostrom’s work. There were many others of us who knew it and had long made use of it in our research and teaching. See my Forbes piece on her award cobbled together the day of the surprise announcement.
http://www.forbes.com/2009/10/12/elinor-ostrom-commons-nobel-economics-opinions-contributors-vernon-l-smith.html
At the Chicago celebration—consistent with what people knew of Ostrom’s work-- I also learned that a great many there did not understand what Coase had accomplished nor why it was so important. Thus, there were many references to the Coase Theorem, a label not due to Coase but George Stigler. In fact the so-called Coase theorem—property right assignments are irrelevant in a world of zero transactions cost—had nothing to do with Coase’s important contributions any more than to Ostrom’s. All you have to do is read what Coase wrote and pay attention to what he is saying instead of to what you already think. That is not easy, as it is an unconscious human frailty shared by us all, scientists or not, to seek confirming evidence of what we thing we know. Here is a piece that gets Coase right.
http://www.deirdremccloskey.com/docs/pdf/Article_306.pdf
Ostrom was a long shot to get a Nobel, but there were many others: Leo Hurwicz, Bill Vickery, Herb Simon, Ronald Coase and my own award.
Posted by: Vernon L. Smith | 07/10/2014 at 05:37 PM