Home > Uncategorized > Elinor Ostrom and common pool resources

Elinor Ostrom and common pool resources

from John Tomer  

Elinor Ostrom’s (1990; 2009) research focuses on common pool resources (CPR) and the dilemmas they have posed for their users and society. A CPR is a resource such as a fishing ground, an irrigation system, ground water, pasture land for grazing animals, etc. that jointly benefits a group of people (the users) but which provides diminished benefits to the users involved if each individual pursues his or her narrow self-interest without considering other users. The CPR has a definite capacity. The problem is that each individual user has an incentive to overuse the resource. As authors such as Garret Harden (1968) have pointed out, when each user single-mindedly and independently follows the incentives, that will cause depletion of the CPR’s capacity, possibly creating a tragic overuse of the resource.

In the view of conventional economic theory, there are only two ways to deal with this overuse problem. The first is to have government impose rules and/or taxes forcing the self-interested individuals to refrain from the destructive overuse of the CPR. The second is to privatize the CPR, making it a private, marketable, excludable good (Ostrom 2009, p. 409). Ostrom and her colleagues recognize that this standard dichotomous way of understanding the options for dealing with CPRs is not adequate. They studied many CPRs around the world (see Ostrom 1990). They learned that the overharvesting can be eliminated or reduced by, for example, encouraging communication among the people in the user group, developing trust among them, thereby fostering cooperation among the group’s members (Ostrom, 2009, p. 409). They further learned how CPR users can develop credible commitments among themselves in effect creating valuable social capital. What the researches came to appreciate was that the individuals and groups involved with a CPR are not hopelessly trapped; they can make fruitful efforts to organize and solve their social dilemmas (p. 416). It turns out that there are typically many elements of any CPR situation that can be modified. Ideas for such changes can come from individuals within the CPR who rely on self-reflection and creativity to develop novel patterns of interaction that restructure the interactions among the CPR’s users (p. 417). Further, Ostrom’s research found that groups that attempt to organize and effectively manage their CPR are most likely to succeed if they follow eight core design principles.

The eight core design principles are (Wilson, 2015, pp. 12-13; Ostrom, 2009, p. 422):

  1. Strong group identity and understanding of purpose. The identity of the group, the shared resources, and the need to manage the resource must be clearly delineated.
  2. Proportional benefits and costs. Members of the group must negotiate a system that rewards members for their contributions.
  3. Collectivechoice arrangements. Decision making should be by consensus or another process recognized to be fair.
  4. Monitoring. To prevent free-riding and exploitation, monitoring should be used to detect violations.
  5. Graduated sanctions. Transgressions need not require heavy-handed punishment, at least initially. More severe punishment can be waiting in the wings.
  6. Conflict recognition mechanisms. Conflicts should be resolved quickly in ways perceived as fair.
  7. Minimal recognition of rights to organize. Groups must have the authority to conduct their own affairs.
  8. For groups that are part of larger social systems, there must be appropriate coordination among relevant groups.

Ostrom (2009, p. 419) found that “the capacity to overcome dilemmas and create effective governance occurred far more frequently than expected and depended upon the structure of the resource … and the rules-in-use developed by users.” Further, the success of these CPR collaborations depended on the capability of boundedly rational individuals to acquire fully reliable information in situations where dependable feedback was present (p.430).

The findings of Ostrom’s (2009) research leads to the following overall conclusion.   Individuals in CPR groups who are faced with incentives to cheat at the expense of others can overcome these disincentives and learn to work together. They do this by talking face to face with each other, trusting each other, forging good cooperative human relations, and committing themselves to their common purposes. Further, they also need to face the facts and complexity of their situation and negotiate in good faith. What does this imply for public policy? The “core goal of public policy should be to facilitate the development of institutions that bring out the best in humans” (pp. 435-436). In Ostrom’s view, well designed institutions can nudge individuals to behave successfully in CPRs and other challenging social dilemma situations (p. 435).

At the heart of what Ostrom and her colleagues have discovered is that determined, cooperative, purposeful individuals can produce better socio-economic outcomes, ones involving better functioning, than capitalist economies ordinarily give rise to. Of course, it should be noted that Ostrom’s CPR research applies strictly to relatively small scale situations. However, there is reason to believe that similar favorable outcomes can be expected for much larger scale situations.

http://www.paecon.net/PAEReview/issue88/Tomer88.pdf

  1. Ikonoclast
    July 17, 2019 at 2:47 am

    I would sum up the Ostrum-Wilson eight principles in one phrase, “We need more democracy.” This in turn implies, under current political realities, more democratic governance, more democratic statism, more cooperatives, more socialism and less influence for money, meaning for highly monied (highly “capitaled” or capitalized) individuals. What is required is not difficult to conceptualize. It just seems difficult or impossible to realize and implement under the current political economy system. I don’t have any quick and easy answers to this second problem. Nor does anyone else apparently or some of these answers would likely have been implemented by now. Instead, capital is in the ascendancy and still on the rise (measured by its increasing concentration of wealth) and democracy is on the retreat. Neoliberalism in winning hands down at the moment. That does not mean a rapid phase-change is impossible but it seems unlikely in the near term unless precipitated by an economic and/or environmental crash.

    Overall, I would argue that there is no way to mathematicize or scientize political economy. I am not saying Ostrum necessarily makes claims for such an agenda but this seems to be a common mistaken agenda (in my view) on this RWER blog whereby some thinkers seem to suppose that a new objective (descriptive) economics is feasible in toto. I agree that we can “quantity survey” the real economy if we stick to units measurable by hard science (physics, chemistry, biology). This means the seven SI base units and the 22 derived units for other common physical quantities. However, when it comes to analysing capital, I now follow the lead of Bichler and Nitzan’s “Capital as Power” analysis. Financial capital is not an objective measure of anything except of real social power (the power to order things to the dictates of capitalists and usually against the wishes of many, poorer others). I won’t recap such theory here. One has to read their published works and papers and those of associated thinkers like Blair Fix and Ulf Martin.

    The ontology of conventional economics is prescriptive rather than descriptive. Now, there is nothing wrong in principle with prescriptive ontologies for human actions. We require them to live in society. However, they do need to be labelled for what they are, namely moral philosophies. Neoliberal economics is a moral philosophy. Marxist economics is a moral philosophy. More precisely they are moral philosophies with praxis appendages (as applied disciplines in practice). The dishonesty comes in when such theories pretend to objectivity when in fact what they prescribe is based on deontologically derived ethics. They pretend to have found some pure and abstract truths (about humans and economies) by axiomatic deductions from praxeological premises.

    Praxeology, especially but not only of the type exemplified by Austrian economics and Neoliberalism, is bunkum (to use a plain term) but I won’t waste space refuting it here. This post would get too long. Of course, the term “praxeology”, meaning the study (so-called) of human purposive action (from a market-economy theorising point of view), is not to be confused with the “praxis” which refers to putting ideas into practice.

    “Deontological ethics” is a nicely accurate term in my view. Interpreting it very literally as I do, it is ethics without an empirical ontology, that is without a relation to real things. On the other hand, consequentialist ethics at least suggests keeping an eye on real outcomes, on real consequences (empirical observation). So, while deontological ethics prescribes adherence to abstract pure principles (like the free market), derived via deduction from assumed first principles (forming a comprehensive dogma in other words), consequentialist ethics sets up a requirement for empirical checks on the outcomes of what we are doing.

    The free market in Neoliberal theory is an unimpeachable first principle (in its own Neoliberal judgement). A consequentialist ethic would look at climate change, increasing monopolization, increasing inequality, rising human suffering and longer soup lines and say, “the real outcomes of attempting to follow the abstract principle more and more closely are not good”. At the pragmatic level it is clear what needs to be done. The laws and rules of conventional economics and neoliberalism need to be wound back, even rescinded. New laws and rules are required. That much is clear. The exact shape of the required new laws and rules, as an interacting set, is not clear. However, as the subversion of democracy by capital had led to the current pass, or rather impasse, then the heuristic prescription would be to lessen the power and concentration of money (lessen the power of oligarchs and corporations) and to increase the power of broad, indeed all-inclusive, democracy.

    None of the above reasoning can be mathematicized. It proceeds by basic philosophical language and indeed by some plain and simple language. It makes reference to moral philosophy (ethics) and democracy (the right to an equitable say in social and economic organisation). Culture and economics are one melded complex entity which cannot be mathematicized or scientized. We require a consequentialist ethics which looks at consequences to nature (the biosphere) and to humans of economic prescriptions.

    All this is to say that money calculations are relatively unimportant. We do not so much need to “fix money” (though we need to do that too, probably by MMT-style prescriptions) we need to de-power money and indeed economics itself as a social decision mechanism. Democracy and scientific advice are far more important decision inputs. After deciding what needs to be done and how to do it, or satisfice it, with real resources then we should bend the money-capital system to that end but without generating new beneficiaries of economic rents, especially as incomes and assets formed by creating property privilege over natural, natural monopoly and other opportunities. There’s a world of hurt, for ordinary people, in this last problem when government has already been minimized or distorted according to neoliberal minarchist theory.

    I refer here to the type of problem exemplified by the Australian Murray-Darling Basin scheme. This scheme ostensibly intended, by combined scientific and administrative measures and means, to return environmental water flows to dying rivers: dying because of excess irrigation extractions. In practice, this $A13 billion, over x years, scheme has been gamed and turned into an enormous boondoggle by and for vested interests. The money is being sucked up by Australian and international petty-capitalist and mega-capitalist interests (some Canadian corporations are doing very well, thank you very much) to increase their net worth. At the same time, the gaming of the scheme has seen outcomes actually increasing ecologically unsustainable extractions in some regions and returning little to no increased water flows to the environment in the basin overall. On a continent as dry as Australia, this is nothing less than a developing ecological disaster. Combined with climate change it sounds a death-knell alarm, in the mid to long term, to Australia’s food basket.

    This event exemplifies the difficulties in turning back the neoliberal agenda once it has damaged administrative arms of the democratic state, other than the arms that neoliberalism is interested in (namely courts, police, prisons and military) to protect its wildly unequal wealth distribution. Statist projects for humane, welfarist or ecological goals become increasingly difficult to plan and execute because the government planning and administrative arms and expertise necessary for these statist and/or socialist endeavors have been deliberately minimized and weakened. The result is that capital and its neoliberal control mechanisms (through actions by owners, managers, retained lawyers etc.) can easily game and divert funds from intended uses to more capital accumulation by the super-wealthy.

    • July 17, 2019 at 10:47 am

      “Overall, I would argue that there is no way to mathematicize or scientize political economy. … this seems to be a common mistaken agenda (in my view) on this RWER blog whereby some thinkers seem to suppose that a new objective (descriptive) economics is feasible in toto”.

      Ikonoclast, I take it you are trying to get at me. I put it to you that your judgement hinges on your understanding of mathematics and science, which I suspect assumes arithmetical rigidity in contrast with the fluency of your own language. Perhaps you need to examine the concepts of fuzzy logic (going with satisficing), topology (mere ordering rather than locating, as in the difference between circuits and circles), focus (as in Newton’s “centre of gravity”), degrees of freedom in motion (i.e.none, or in one, two or three dimensions) and ambiguity in perception of direction in relative motion (here money flowing from the poor to the rich and the Copernician revolution needed – seeing it as credit rather than wealth – to allow it to flow from the rich to the poor). I can assure you “that a new objective (descriptive) economics is feasible in toto”, because I have created one that works (scientifically showing you where to look for – the centres of gravity of – the fuzzy processes Ostrom is seeing). The method of description applies to the economies we have (see my recent comment on Berners-Lee) but that shows up the power interpretations and institutionalised dishonesty that need to be cut.

      Also, you write as if the choice were between deontological and consequentialist ethics. Evidently you are not familiar with the Christian ethics of appropriateness. “It is right and just” that one gives thanks to benefactors (God our Father, Nature and our fellow humans) and only condemns others with justice, making due allowance for youth and misinformation and helping make good by being merciful. It seems to me Ostrom’s design principles needed to include such consideration of youth and victimisation.

      Apologies for this somewhat cryptic response. Being very interested in Australia (having often visited our son there), I really appreciate what you are saying about the Murray River catchment. Such a pity, especially given how one farmer worked out how to increase yields while halving irrigation by studying the drought response of his vines.

      • Ikonoclast
        July 17, 2019 at 11:26 am

        davetaylor,

        To be brief, I am not trying to direct criticism specifically at you at all. The arithmetical and methodological rigidity I am targeting is not that of hard science, which is not rigid as you brilliantly point out. The arithmetical and methodological rigidity I am targeting is that of classical economics as a pseudo-science with its non-objective, non-stable numeraire of money / capital (or Capitalist “utils” or Marxist “snalts”) and its claim that it can meaningfully aggregate all products, goods and services under this numeraire (or under “utils” or snalts).

        I really would recommend you read these two papers:

        http://www.capitalaspower.com/wp-content/uploads/2018/05/Fix_aggregation_problem.pdf

        http://www.capitalaspower.com/wp-content/uploads/2018/06/ulfmartin_2018_autocatalytic-sprawl_v012_a4-paper.pdf

      • July 17, 2019 at 12:53 pm

        Thanks, will do. My point on power is that conveying information requires very little of it, but our thinking a mere symbol has power over us can cause us to act is if it had. I’m talking about the difference between an internet-like system and an electrical power distribution system. On Christian ethics, I’ve just found a discussion I recommend you read at

        https://www.stpaulsinstitute.org.uk/dialogue/luke-bretherton/opinion/2019/apr/24/a-christian-ethic-of-debt-and-credit

      • July 18, 2019 at 10:20 am

        Ikonoclast, I found your first paper very interesting on the choice of units in aggregating, which is helpful in demonstrating what I intuitively see directly. The problem doesn’t arise when one aggregates logically by use of the term ALL. The paper on autocatalytic sprawl also contains much of interest, though it leads to a problem, not a solution. Summarily (from #3), “That doesn’t mean the social order is actually something external, it is only imagined to be” is straight Humeanism (or Ken). Logically, social order is internal to society but not necessarily to individuals currently living within it. Of most interest were #4.1.2 (Liebniz is of course well out of date) and #5.1, where it is interesting to compare bureaucratic hierarchy with that on the symbols in an arabic number. For reference, I spent twenty years running an experiment comparing hierarchical, linked key-word and indexed forms of database, with the latter in relational form not only proving by far the most reliable but explaining the significance of the structure of human brains.

        Got to go. There is so much of interest here we need to discuss it off-line.

  2. July 17, 2019 at 8:09 am

    Well written! deliberative democracy is needed. also the Democratic systems can and have to be improved. People have to be aware of the shared responsibility for wealth, which is based on our common (natural and cultural) resources. Unfortunately Ostrom’s theories are badly known and and nowhere implemented (yet).

  3. Ken Zimmerman
    July 22, 2019 at 12:19 pm

    What is the tragedy of the commons? It’s an economic theory stating that individuals use up resources shared by many to benefit themselves. The theory claims the reality is this: often because individuals tend to act in a selfish way, using resources shared by a group, everyone ends up suffering in the end. In the context of the theory, the ‘commons’ refers to any naturally occurring (I add, culturally created tools, knowledge, action formulas, etc.) resources that can be used and consumed by the public at large. The resources are not owned by any individual or company. Resources that fall under this definition include: Wildlife – birds, mammals, fish; pastures, fields, or wooded areas; oil; forests; precious metals; the atmosphere; the oceans; etc. Before humans settled into agricultural communities (villages, towns, cities) just about everything that made up humans’ lives was “the commons.” There was little or none of what we call “private property,” or private life. Due to many changes beginning from life in an agricultural settlement, divisions in resources and cultural creations began to develop. Two of these creations, government and economy exacerbated development of such divisions. There are political leaders and political followers. There are rich, less rich, and poor villagers. Since there is no inherent “human nature” these accidental divisions grew in importance, but not by accident. Villagers who found themselves in advantageous positions attempt to hold on to those positions. In that struggle monarchies and classes are created. And warred over for the next 5,000 years. These early creations placed human survival in jeopardy. Never more so than today.

    As the human population expanded the effects of the tragedy of the commons on societal and species welfare grew more severe. For example, today the consequences for humans of environmental pollution and climate change threaten species survival. As do the latest weapons created by science and technology. Ostrom is correct that the standard ways of dealing with these threats are no longer effective, if they ever were effective. In terms of chance, pollution and climate change are unlikely to kill the species. There’s a larger likelihood that nuclear war, bioengineered pandemic, superintelligence (human or artificial), nanotechnology, and perhaps other creations of human science and technology will do the job. So, my suggestion is we focus on controlling and/or stopping the creation and spread of technologies threatening Sapiens’ survival. These make great movie themes, but like the venerable movie western with real bullets in the guns these technologies can extinguish our species in a few months, weeks, or even days.

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