Farewell Elionor Ostrom

Elinor Ostrom, Nobel Laureate in Economics 2009, passed away on June 12th 2012.

Ostrom’s work illuminates the inner working of peer-production communities, in particular the Open Source software ones. Her work helps us to understand the mechanisms by which communities self-organize in order to take care of a common pool of resources that is important to them.

As a true scientist, Ostrom was set apart from many Economics scholars by her interest and dedication for performing fieldwork. That is, actually going into the world and exploring how actual human institutions worked, instead of limiting herself to the thought experiments and small groups experiments that are characteristic of so many research endeavours in academia.

As it is usual in science, once you go out there and measure the real world, you often find that things do not necessarily match the mental models that have dominated the field for many years. 

One of the most significant contributions of Elinor Ostrom was her findings of many institutions across the world that manage to administer common pools of resources in the absence of Government intervention and without the need of privatization of resources. Her field work included fisheries, forests, water basins, and irrigation systems, in places as diverse as Switzerland, The Philippine Islands, California, Spain, Peru and Japan, some of which have been working for several centuries.

The realization that a human group can arrive to rules of self-governance by which the use of a common pool of resource can be regulated in a sustainable manner, was a revolutionary concept in Economics, a field that has lived under the shadow of the “Tragedy of the Commons” myth, according to which, when a human group is put in charge of managing a common pool of resources, the only outcome possible is the over-utilization of resources and its ultimate depletion.

 

Just as we pointed out in a recent blog post, Ostrom showed that stable patterns of cooperation and collaboration emerge in human communities, even when they are composed of self-interested individuals.

Ostrom identified some of the essential conditions under which patterns of collaboration will emerge. Many of which related to the balanced perception of humans as social beings as much as rational self-interested optimizers.  Ostrom often insisted on the importance of “Trust” in the context of human interactions, and the fair valuation of contributions by all members of a community.

Ostrom’s legacy on revolutionizing economics is a timely contribution for the radical transformation of the means of production that has been brought about by the Internet and the empowerment of consumers as participatory producers. She leaves us with a better understanding of how to wisely manage our resources and create the condition for human societies to build economic institutions that lead to sustainable satisfying lives.

Questions or comments are always welcome!