of cows and collective action, ostrom wins a nobel

Elinor Ostrom has won the Nobel Prize in Economics.  Boo rah!

For a lot of orgTheory readers, Oliver Williamson’s win will be the more exciting and relevant of this year’s laureates.  Oliver Williamson is really one of us; many orgTheorists find his work compelling or at least a useful foil.  But I’ll let others comment on Williamson because, for my money, the questions and topics that Ostrom work on are as (if not more) relevant and compelling to my understanding of organizations and of organization theory.

Sometimes it is the quality of the questions one asks — more, perhaps, even than the answer one gives — that makes for a great thinker.  To some degree, I think this applies to Ostrom.  In the end, I find her answers somehow incomplete.  But, the questions she asks as she breaks down the larger puzzle are compelling.

Her fundamental question is this: in a world of abundant but rapidly depletable resources, where individuals have incentives for survival that, if acted on, would undermine the long-term viability of the resources on which they depend, how does coordination and cooperation emerge? That is, she’s interested in the Tragedy of the Commons.  The term derives from the fact that farmers with access to the local grazing land (The Commons) have an incentive to feed their cattle as much as possible.  But if all farmers fed their cattle as much as possible it would rapidly deplete the grass leading all of their cattle to suffer.  There are two prevailing answers to that dillema: (1) may the best farmer win (which would mean the commons would no longer be a commons) or (2) institute some set of rules and enforcement mechanisms to govern the behavior of farmers.  Obviously, the second often wins out.  The question is how.

Her conclusion: it’s complex.  There is no silver bullet (which makes it all the more surprising that the Nobel committee has decided to honor her work.  Economists, I’ve noticed, put a lot of value on “elegance”; Ostrom is a strong writer, but elegant… not so much).  There are a series of mechanisms that come into play to keep good order and that, if harnessed and understood, can lead to behavior that sustains survival.

Here’s the kicker (and what makes it sociological): She finds that coordination happens through self-organization and local (very local) governance.  There is a meso level — between the individual and the grand institutional structures of society — that is big enough to bite off a significant chunk of population, but not so big so as to transcend the interpersonal. The only way that self-organizing can really overcome collective action problems, in her view, is to go small.  It is like a fractal theory of economics: to build a stable, strong macro economy, you need to reproduce the structures of society over and over and in smaller and smaller scale down to the smallest units possible.

In other words, Ostrom discovered organization, through the back door of economics as it were.

Of course she did.  How could she have avoided it?  Like all great empiricists, Ostrom has never been satisfied with numbers and formulas as a means of understanding the world.  She is interested in water management, so she goes to Nepal to study water use.  She is interested in fisheries, so she goes to Maine to talk to fishermen.  She is interested in sanctioning behavior, so she runs a lab experiment. And what one finds when one does that is that organizations are the fundamental units of society.  Her work is as influenced by the stories and observations of the ways people self-organize as it is by any one theory.  It is in the productive dialogue between observation and theory that her insights emerge.

But those insights… at base, they are sociological.  Whats are the keys to self-organization and governance?  Trust.  Reciprocity.  Closure.  Density.  Social Capital.  She won the economics prize because, apparently, those insights are novel… to economists.

And there’s the rub.  Ostrom is not in the mainstream of economics.  And its important that the prize should go to people with diverse views.  Her work is particularly compelling.  But it is as compelling as Granovetter’s.  Or Ron Burt’s.  Or Woody Powell’s.  Or Paul DiMaggio’s.  Or Chuck Sabel’s.  Or Dick Scott’s.  Or Art Stinchcombe’s.  Or Harrison White’s.  She draws on each of their insights to arrive at her own.  Yet none of those people are eligible for this prize.  Its too bad. The world is a big complicated place and there are a lot of different perspectives that can be brought to bear on understanding it better.  Ostrom is a good choice.  But there is an untapped pool of thinkers who’s voices could stand being elevated.  One day…