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Nobel Prize
Common Wealth
IN THIS STORY:
Elinor Ostrom, winner of this year’s Nobel Prize in economics. She challenged the conventional wisdom that common property should be either regulated by central authorities or privatised. People, she says, know how to manage their resources.

"Some people can be a real son of a gun, but most individuals are nuanced beings who can have real preferences about the welfare of others. If presented a situation where they can evolve trust and reciprocity, they will do so.”

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Who Is She?

Elinor Ostrom is considered to be one of the leading scholars in the study of community properties. These are natural resources collectively owned by people. Examples include forests, hills, fisheries, grazing lands, groundwater basins and irrigation systems. Ostrom studied the various diverse institutional arrangements that societies have developed in order to manage their natural resources.

What Is Her Work On?

To know that, we need to first look at an essay, titled Tragedy of the Commons, by ecologist Garret Hardin. In that essay, published in 1968, he examined how people use common resources and found that they are usually interested in themselves and pay scant respect to the needs of others. “Ruin is the destination toward which all men rush, each pursuing his own best interest in a society that believes in the freedom of the commons,” Hardin wrote in his paper. In other words, common-pool resources are destroyed by uncontrolled use. In the absence of a centralised authority (government control) or private property rights, depletion of common resources is unavoidable.

What Does She Say?

Ostrom decided to test Hardin’s theory and conducted extensive field research across all parts of the world, from forests and hills in Japan to lobster fisheries in Maine to irrigation systems in Nepal. She argues that there are other institutional structures that can produce a better result than privatisation or government regulation. Her study recognises the importance of local knowledge and diverse approaches in the management of resources. Self-governance, she says, works much better than strangers taking over and imposing rules and regulations.

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