Contributions of Elinor Ostrom

From today's op-ed by Prof. Emmanuel de Dios:

Before Ostrom, economists were wont to divide goods casually between “private goods” and “public goods”, depending on whether goods were consumed privately, or “collectively” by groups (or even the entire society). This pat dichotomy fit into a policy mind-set that assigned the provision of goods to either markets or the state: hence, Coke and rice should be left to the market’s purview, while national defence, roads and bridges are best provided by government.

Ostrom’s great service was to show that many cases actually fell between the cracks, and that many goods and services could not be efficiently provided or managed either by government or by markets. Just think of the problems of Laguna de Ba-i, of the country’s forest cover, or of Manila’s esteros. On the other hand, there are many examples of collectively consumed goods that are provided privately, from toll expressways, to cable TV, to country clubs. In short, counter-examples abound that constantly tested the rule....

Ostrom noted that markets were good at providing private goods (subtractable and exclusive), while governments were probably best suited to providing truly public goods, i.e., non-subtractable and non-exclusive goods. Examples are defence against foreign invasion, or warding off planet-threatening asteroids, urban roads, and, yes, street-lighting. The biggest problems are presented, however, by goods that are both subtractable and non-exclusive, for which Ostrom popularised the term “common-pool resources”....

Two factors are relevant. The first is population size (hello again, RH bill!).... The second, subtler factor is institutions. Ostrom—who unlike many Nobel economists actually bothered with fieldwork—noted that many traditional communities were able to manage common-pool resource problems by thrashing out rules to govern their use. She adverts to numerous historical and contemporary experiences of communally determined fishing rights and irrigation systems, including the sanjeras of Ilocos and of the Ifugao rice terraces. Part of the awkward problems of development, however, is the inevitable erosion of the homogeneity and cultural integrity of traditional communities. This process erodes the traditional rules that formerly governed and restricted the use of the commons and it frequently leads instead to the free-for-all promoted by impersonal and individualistic systems. Say good-bye to exclusiveness and hello to open access.

While the rule of broader impersonal law is gradually supposed to supplant traditional rules, this process is not straightforward and typically stalls when the state is fiscally weak and politically challenged. Population growth and modernisation meanwhile have eroded traditional resource-management systems without providing an effective alternative. The result is an awkward institutional middle-income country trap, where the old traditional rules have faded but new laws have not taken root or are only weakly enforced. Ostrom’s work raises important and difficult questions for governments and peoples of developing countries. It presents them the challenge of developing institutions and organisations to adequately address problems of common-pool resources in a contemporary setting. 

Can the state, if only properly equipped and provisioned, still serve as such an institution? Or, taking a cue from the past, must new organisations of lower order than the state but larger than individuals play that role? How can public action be mobilised for local goals in a modernising context based on the spread of anonymous exchange and impersonal relations? What is the future role, if any, for culture and social solidarity? Are there creative ways of fostering cooperation between smaller organisations and the state in resolving common-pool problems, between formal law and informal norms and customs?