SWARAJ  

One of the winners of this year’s Nobel – Elinor Ostrom (also the first women to win the Nobel in Economics) – has documented in Governing the Commons: The Evolution of Institutions for Collective Action “that around the world private associations have often, but not always, managed to avoid the tragedy of the commons and develop efficient uses of resources” (link: MR).

How is that an indictment of markets? Well, the ET editorial called ”Another non-market Nobel” thinks this is so because

The very fact of the economics Nobel going to research in such areas serves a purpose in public discourse: it is a useful counter to simpleminded fundamentalism that wants to leave everything to the markets. …Ostrom has studied several institutional arrangements of user-regulated use of commons that are superior to either privatisation or reliance solely on government regulation. Her work also shows that rather than rationally optimising costs and benefits on an individual basis, people are willing to accept avoidable personal cost to enforce rules that benefit the community.

But the editorial confuses the state and the society. I consider everything non-government to be markets, whether they are for-profit or non-profit. Whether they are composed of “selfish” “rational” “atomic” human beings as participants, or “Very Compassionate Social Beings”. What matters is that government regulation and ownership was not needed for operation of, say, the irrigation network in Nepal. Whether fishermen divide fishing areas/times and create de facto property rights in a Coasian manner, or they work out some other arrangement – the fact that in some cases that the government was not needed for efficiency-maximizing makes this Nobel very much anti-government (pro-market or not would depend on definitions as you can see). After all limited government types like me would tell you the government just needs to define property rights and provide courts for its enforcement. Now, we find out that even that may not be needed in some situations – so isn’t it one up for me and one down for the socialist/statist next door? But obviously the folks at ET never readthe opening lines of Thomas Paine’s book Common Sense, now did they?

Some writers have so confounded society with government, as to leave little or no distinction between them; whereas they are not only different, but have different origins. Society is produced by our wants, and government by our wickedness; the former promotes our happiness POSITIVELY by uniting our affections, the latter NEGATIVELY by restraining our vices. The one encourages intercourse, the other creates distinctions. The first is a patron, the last a punisher.