The award of the inappropriately named Nobel PrizeFootnote 1 in Economics to Elinor Ostrom (together with Oliver Williamson) was remarkable.Footnote 2 Apart from those working in a particular way on institutional or environmental economics, she would have been known to few economists, having published little in the discipline's core journals. And yet her work clearly has had an impact sufficient to merit the prize. In what follows, I reflect on this idiosyncratic and somewhat paradoxical award, focusing on why her work might prove so attractive to at least some economists, even though that work would seem far from the economics mainstream. Focusing on her major book, Governing the Commons—published 20 years ago—I will suggest that the appeal of her work is explained by the particular way it reflects, modifies, and yet reproduces the colonization of the other social sciences by economics.
Such talk of “colonization” would no doubt be rejected by Ostrom. An outspoken advocate and practitioner of interdisciplinarity, she views relations between economics and politics as “a potlatch, rather than one of imperialism” (Ostrom Reference Ostrom2007, 240). At the same time, her theoretical points of reference are all firmly attached to methodological individualism, if not the cruder forms of rational choice, her appeal to anthropological metaphor notwithstanding. Indeed, her appeal to the example of primitive exchange and gift giving practiced by indigeneous communities is telling if probably unintended, and could be shifted to a metaphor on the topic of her own work to highlight the way in which economics has governed its own commons as a discipline—jealously monopolizing and guarding its content, if freely projecting it across other disciplines from which it crudely plunders and tragically degrades, as I will suggest.
Ostrom's work fits comfortably into what Robert Merton (Reference Merton1957) long ago characterized as middle-range theory, suspended somewhere between the individual and society (though heavily skewed theoretically in her case to the former as the foundation for the latter) and between minutiae and grand historical and social issues (as exemplified by her focus upon commons and institutions). At the same time, Ostrom purports “to advance theoretical understanding of a theory of self-organized collective action to complement the existing theories of externally organized collective action: the theory of the firm and the theory of the state” (p. 57; emphasis added).Footnote 3 Such an approach takes an awful lot for granted, from the firm to the state. And while Ostrom's work has a strong ethnographic dimension, this identification with “existing theories” constitutes her primary theoretical commitment. And in the same way that economics as a discipline relies heavily on the work of “ceteris paribus” clauses, her own work proceeds from one large ceteris paribus—the assumption that the basic parameters of marginalist analysis are beyond reproach.
In addition, employing Merton's caricatured scheme, Ostrom falls within the U.S. as opposed to the European tradition of social research, focused as it is on empirical work that might pragmatically enhance policy analysis. Averse to robust concept development (in the manner of Marx, Durkheim, and Weber), this approach to “theory” seeks to abstract from the concrete richness of the empirical, and to delineate certain generic features of the structure of social action understood as a complex set of individual transactions, or “game.” As Ostrom writes (p. 55):
The basic strategy is to identify those aspects of the physical, cultural, and institutional setting that are likely to affect the determination of who is to be involved in a situation, the actions they can take and the costs of those actions, the outcomes that can be achieved, how actions are linked to outcomes, what information is to be made available, how much control individuals can exercise, and what payoffs are to be assigned to particular combinations of actions and outcomes. Once one has all the needed information, one can then abstract from the richness of the empirical situation to devise a playable game that will capture the essence of the problems individuals are facing.
It is a moot point whether such a process of intellectual abstraction is a reduction of the richness found in Ostrom's important and highly acclaimed ethnographic case studies or is, instead, an intellectual operation essential to the understanding of social dynamics. For such a methodological approach has clearly proven itself both enormously prolific and equally esteemed within the social science hierarchy. In my view, while the work itself is often interesting, the reason for its “academic capital” (Pierre Bourdieu) lies elsewhere: in that it is a perfect conduit for the imperialism of the economics discipline.
Such an economics imperialism has gone through three phases (see Fine and Milonakis Reference Fine and Milonakis2009 for a full account). The first, originating in the 1950s only after the formalist revolution established standard microeconomics as its basis, was associated with the idea that the logic of rational choice (i.e., utility maximization) could be extended to all economic and social phenomena as if pseudomarkets were present everywhere.Footnote 4 This gave way to a second phase—both more aggressive and more palatable to the colonized—in which market imperfections were taken seriously as a source of nonmarket phenomena that themselves could generate perverse incentives, externalities, and path dependencies.Footnote 5 This has allowed economics to spawn or to rejuvenate a whole range of “new” fields that incorporate social variables and topics. The list includes the new economic history, the new institutional economics, the new economic sociology, the new economic geography, the new growth theory, ad infinitum. The current and third phase of economics imperialism, variously dubbed “freakonomics” (I prefer “zombieconomics”)Footnote 6 complements this more sophisticated rational choice theory with other behavioral elements, and with techniques such as experimentation and a prominent role for game theory.Footnote 7
This sequence of phases of economics imperialism does not so much involve the new displacing the old as the new building upon the old. As a result, the phases share certain core features. These include a technical apparatus of production and utility functions; a technical architecture around (optimizing) individual behavior; a preoccupation with efficiency and equilibrium; and a propensity to refine and qualify further the rational choice framework to account for anomalies, thereby incorporating more explanatory input and generating a wider scope of explanatory output. It is interesting to note that this has taken two routes. The first has been to expand (and stretch) the concept of “capital” to include not simply physical capital (or “capital stock,” in the parlance of economics) but human capital and other types of capital, ultimately leading to social capital, the latter of which essentially represents everything that cannot be reduced to the physical or the individual (Fine, Reference Fine2001 and Reference Fine2010a). The second is to fill the void between economy and society by various proxies, for which the institutional is by far the most common and wide-ranging, alongside custom, habit, culture, and so on. It is their contributions to these developments that are no doubt responsible for the Nobel Prizes awarded to Ronald Coase, Douglass North, Oliver Williamson, and Ostrom herself.Footnote 8 Significantly, Ostrom has contributed to both streams in parallel. Her overview of institutional analysis scarcely merits a mention of social capital (Ostrom, Reference Ostrom2007). By contrast, her coedited 600-page anthology on social capital is explicitly organized around the idea that social capital is the institutional form taken by the solution to collective action problems (Ostrom and Ahn, Reference Ostrom and Ahn2003).
These devices for incorporating the noneconomic strikingly reveal the weakness of mainstream economics. They represent a confession of failure to address the economic from within traditional economic theory itself, and an acceptance of the need for something that is missing and which can be provided only by the subject matter of other social sciences. Of course, this incorporation of the other social sciences is then presented as a strength of economics itself, as a discipline that is both “rigorously scientific” and capable of helping the other disciplines to become similarly “scientific” (by incorporating them). At the same time, these processes of intellectual incorporation involve only marginal adjustments to economic theory itself, the core terms of which are simply taken for granted.
At the same time, relative to other social sciences, the economics discipline continues to exhibit an extraordinary ignorance of alternative schools of economics (indeed, all heterodoxy is dismissed as unscientific, a move that had led some dissenters to call for a new, “postautistic” economics), alternative methodologies, and its own history as a discipline. Paradoxically, economics is extraordinarily fragile on its own terms (restrictive conditions for existence, stability, and efficiency of equilibrium, for example), let alone by wider criteria, and it can survive only by total intolerance of deviation from its rigidly imposed requirements. Yet also, on occasion, marginal deviations from standard assumptions—such as increasing as opposed to constant returns to scale—are the basis on which to construct new fields within the discipline and across its boundaries, as with the new economic geography (an extraordinarily successful but conceptually limited approach pioneered by Nobel Laureate and New York Times columnist Paul Krugman).
Equally important is the dominance of the United States in commanding both research and training, and promoting a hyper-professionalization of the economics discipline around the conditions delineated. This, in turn, is associated with a rough-and-ready complicity of economics in wider intellectual and material developments, associated with the triumph of crude forms of neoliberalism in the 1980s and the more tempered versions (which allow for a limited role for the state and civil society, as in “the Third Way”) that have marked the last decade and a half.
It is in this light that Ostrom's work can best be understood. Located somewhere between the second and third phases of neoliberalism (Nobel Prizes tend to be awarded with a lag), her work is both more refined and acceptable to mainstream economics, as well as liable to be adopted for informal legitimacy or for model-building purposes. In contrast to the continuing traditions of critical social theory and (the best) political economy—rarely if ever referenced, let alone assessed and contested by her, let alone by others contributing to the intersection of her work with economics—her analysis, like that of mainstream economics, is silent about class, power, and a specification of capitalism and its history.Footnote 9 Conflict barely makes its way onto her agenda (p. 90), which prefers neutral references to universals—such as boundaries, congruence, sanctions, rights to organize, and so on—with which mainstream economics is more than comfortable, if slightly unfamiliar. One might have thought, for example, to put it polemically in the U.S. context, that absence of slavery and child labor, if not sexism and racism, might be considered one of the “[d]esign principles illustrated by long-enduring CPR [common-pool resource] institutions”! But these issues do not make it onto the pages of Governing the Commons.
In addition, of course, there is a notable absence of critical examination of concepts deployed, including their meaning to agents themselves. It is as if critical discourses about social science—such as interpretivism and postmodernism—never existed. Context is treated simply as exogenous circumstances under which individuals choose what, if appropriately discerned, can be modeled using game theory. Significantly, context plays the same role for Ostrom that the noneconomic plays for the economist—fixing the disparities between theory and reality, with evolution seen as the passage of time that allows for different paths to diverge from one another. As she writes (Ostrom Reference Ostrom2000, pp. 3–15, emphasis added):
Contextual variables are thus essential for understanding the initial growth and sustainability of collective action as well as the challenges that long-surviving, self-organized regimes must try to overcome. Simply saying that context matters is not, however, a satisfactory theoretical approach. Adopting an evolutionary approach is the first step toward a more general theoretical synthesis that addresses the question of how context matters. In particular, we need to address how context affects the presence or absence of conditional cooperators and willing punishers and the likelihood that the norms held by these participants are adopted and strengthened by others in a relevant population.
Such an approach takes for granted the basic “goods” that social agents value. To put it in topical terms, this overlooks the fact that there is struggle over the meaning of climate change, let alone whether we can put cooperators and punishers together; that is, the very nature of that over which we compete, cooperate, and punish is socially constructed and contested.Footnote 10
Currently, two issues have been acutely prominent on the global scene—climate change and the financial crisis. Williamson was a safe, uncontroversial choice in light of both of these, with no immediate relevance from his work. The same is so for Ostrom, but in a more subtle way so far as governing the biggest common is concerned, the planet itself. Her own views on scaling up from local to global are revealing (Ostrom et al. Reference Ostrom1999). She is deeply skeptical about scaling up because of the size and complexity of the world, but also because increasing cultural diversity makes agreements more difficult to negotiate, which is exacerbated by “North–South” conflicts stemming from economic differences between industrialized and less-industrialized countries. To put it bluntly, such an approach to global issues borders on the vacuous, not least because of its studied neutrality in relation to culture, inequality, and the terms of conflict. It allows climate change to be raised but without really raising it (and where would this place the governance of the global commons by futures' carbon trading?). Closer to U.S. homes alone, the dilution of Barack Obama's health-care plans, like those of Bill Clinton previously, owes more to the successes rather than the failures of collective action, blocked as they have been by the “social capital” formed out of “a coalition of voluntary associations including the National Rifle Association, the Christian Coalition, the National Federation of Independent Businesses and the Health Insurance Association of America” (Kunitz Reference Kunitz2004, 70).
This suggests, of course, that what needs to be explained is not the relative absence or singularity of collective action, whether through the state or otherwise. Rather, collective action is everywhere and highly successful in promoting the dominance of the powerful and the vested interests of the few over the many. (Who governed the commons that makes up U.S. national income, as the share of the top 1% of earners rose from under 10% to over 20% during the last 30 years, reversing the trend of the previous 30 years?) But, then, the idea that collective action and governance should be the analytical starting point from which both institutions and individual capabilities follow is the antithesis of Ostrom's entire approach. This approach is an ingenious variation on the core themes of mainstream economic theory. And from the vantage point of social and political theory, that is precisely the problem.
