9 Nov 2009

Elinor Ostrom has transformed economics.

I was amazed to find that Elinor Ostrom, a 76-year-old professor, had won the Nobel Prize for economics.

While everyone else seemed to be asking: "Elinor who?" I was celebrating the fact that my favourite political economist had picked up the award.

Ostrom - Lin to her friends apparently - shares the prize with Professor Oliver Williamson.

While Williamson is not a radical thinker and uses elegant theory to defend corporations rather than a collective commonwealth, it is appropriate that Ostrom, who studies the economics of sharing, shared the prize.

Ostrom is reluctant to give opinions outside her academic field, but what an important field it is.

She deals with communal property rights, a topic which is taboo for mainstream economists but a necessity for readers of the Morning Star.

Ostrom has spent her working life carefully refuting what is known as the "tragedy of the commons."

This was the title of a 1968 paper by biologist Garrett Hardin, who argued that common property will inevitably be wrecked.

Hardin takes the example of a field used for grazing cattle. Without private ownership it will be impossible to prevent overgrazing and the commons will be destroyed, he claims.

What is needed is to privatise the field and then, with one owner, it will be fine.

Hardin also developed the "lifeboat" thesis, a fascist parable that is used to justify throwing people from the boat to keep it afloat.

Hardin's ideas, distasteful as they are, look like common sense and have been used to fuel the seizure of communally owned resources.

Either privatisation or an authoritarian state can protect resources. Communal ownership is impossible, according to Hardin.

Ostrom's magisterial book Governing The Commons examined why Hardin was wrong. She studied in detail examples of commons to see if they could be made to work.

Despite the economists' argument that human self-interest makes co-operation impossible, she found that, time after time, people got together, held meetings and democratically planned systems of rationing.

In fact, people-based commons are still the most widely practised form of property found in the world's rainforests - and they work.

Ostrom studied commons used by Swiss farmers, Japanese peasants, communal irrigation systems in Sri Lanka and fisheries around the globe.

Some commons worked better than others. Some fell apart. But the impossible as far as the economists were concerned - an alternative to the market - was possible.

Ostrom's work is important to socialists because it shows that it is possible to run economic systems without private property or state control.

Marx famously argued that socialism would lead to communism based on the commons, where democratic planning would put people in control.

Ostrom has shown that even in a capitalist society such commons can be made to work.

She maintains that, while human beings may be self-interested, they are not stupid and can co-operate when this creates long-term security and prosperity.

Ostrom argues that resources and ecosystems are generally better maintained by local communities than corporations or the state, although she is careful to note that small isn't always beautiful and sometimes other institutions are necessary.

Many socialists will find her scepticism about the state unpalatable. They should not.

Marxists recognise that property rights are key and that communism is about the introduction of communal property rights.

Ostrom and Marx repeat the same words. A panacea or utopia is impossible because a thinker cannot second guess the democratic creativity of citizens.

Ostrom's work has already been used widely. For example, Alaskan policy-makers have used her ideas to create a system of sharing oil revenues.

The Creative Commons movement on the internet and the economics of social sharing advocated by thinkers such as Richard Stallman and Yochai Benkler draw upon her work.

And visionary political leaders such as Hugo Chavez and Raul Castro have been putting her ideas of a grass roots, diverse and ecological commons into action.

Castro's land reform gives peasants land but rejects privatisation and encourages ecological use.

And Chavez's 21st century socialism based on communal councils is about taking power from the state and giving it to people.

In the Peruvian Amazon, the indigenous activists are using Ostrom's work to challenge plans to privatise their commons in the rainforests.

Marx, of course, discovered the commons before Ostrom and wrote about it often.

He noted that the commons in Britain had been stolen from peasants who were forced from the land to become industrial workers.

Virtually his first piece of political journalism On The Law Of The Theft From Woods dealt with the destruction of a common, where landowners made it illegal for peasants to pick up fallen wood for fuel.

In advocating the ecological commons, Marx noted: "Even an entire society, a nation, or all simultaneously existing societies taken together, are not the owners of the Earth.

"They are simply its possessors, its beneficiaries, and have to bequeath it in an improved state to succeeding generations asboni patres familias (good heads of the household)."

But perhaps Ostrom is a little more radical than Marx for her time frame.

When she won a politics prize last year, she stated: "I am deeply indebted to the indigenous peoples in the US who had an image of seven generations being the appropriate time to think about the future.

"I think we should all reinstate in our mind the seven-generation rule. When we make really major decisions, we should ask not only what will it do for me today, but what will it do for my children, my children's children and their children's children into the future."

I can't wait for her Nobel speech, Harold Pinter rocked us when he won his Nobel but Ostrom's will be the best. However modest women and careful researcher that she is, I know she will hate my praise.

From the Morning Star newspaper, London, UK

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