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The News from Kisbacs

Wednesday, October 14, 2009

Elinor Ostrom and development economics

Elinor Ostrom won the Nobel Prize in Economics for researching "the commons," that tragic space that economists predict will be undervalued, overused, and generally ravaged if left unregulated.

Free-market economists call for privatization of the commons, which I'd say is salutary in most cases.

But calls for privatization are only answers to what seems to be every modern state's solution: regulation or government takeover.

Ostrom's research focused on solutions that involve neither sell-offs nor government heavy-handedness. To quote the author of a recent interview:

The first woman to win a Nobel economics prize, announced today, emphasizes in her work, for example, how pools of users manage natural resources as common property, such as how lobster fishermen in Maine in the 1920s came together to self-police the industry due to too many of the sea creatures being captured threatened their extinction.

This means that many solutions to problems of the commons may be ancient and workable. The IMF and advisors from advanced countries would do well to heed this truth when advising the developing world. The above scheme among lobster fishermen could be illegal under, for example, antitrust codes in the U.S. and other countries. Advisers export such laws to the developing world to the potential detriment of beneficial commons-regulating arrangements.

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