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Beyond states and markets

Ostrom believed that bottom-up solutions by, and for, local communities are worth exploring to break Hardin's state-market binary.
© Adam Smith Center, Singapore

It is not always the case that community governance will be more effective than privatisation or government control.

For instance, self-governing arrangements that require a high degree of mutual trust and cooperation may be less suitable for culturally heterogeneous communities. In this case, private property rights work better precisely because it minimises the need for agreement between resource users. A significant body of empirical work confirms that for a wide range of resources, including forests, minerals, oyster beds and some inshore fisheries, private property institutions work best. When there is little or no scope for both community governance and privatisation to develop, such as when there are no clear boundaries to a common resource like ocean fish stock, government control then becomes most likely to be effective.

What is more important is recognising that ordinary people are capable of governing themselves without the need for central intervention. In her Nobel prize interview, Lin said: “Humans have great capabilities and somehow we’ve had some sense that the officials had genetic capabilities that the rest of us didn’t have… I hope we can change that.”

Lin’s work on common resources exemplified once again the importance of polycentric systems where multiple centres of authority interact and co-exist. Local communities decide on their own rules autonomously, while government authorities complement local institutions by providing them with conflict resolution mechanisms as well as useful information that helps them to interact (eg the United States Geological Survey conducts important research to help local people figure out the boundaries of their resource).

Throughout all of her work, Lin was a deeply humanistic scholar. She sought to understand human societies in all their varieties and never adopted an egoistic social engineering attitude. As a result, not only did Lin pioneer a different way of thinking about common resources, her work tremendously advanced democratic processes of government. No wonder Lin was the first woman to win the Nobel prize for economics.

© Adam Smith Center, Singapore
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