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Nobel Winner Challenges a Cardinal Rule of Economics

 

By Janice Molloy

The Nobel Prize committees had a number of surprises up their sleeves this year, beyond their bombshell awarding of the Peace Prize to President Obama. According to The Wall Street Journal, the economics award went to two people who "have highlighted areas where standard approaches of economics are inadequate at explaining what actually occurs." Of particular interest from a Medal for The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobelsystems thinking perspective is Elinor Ostrom and her work on the "Tragedy of the Commons" dynamic. Her research challenges the assumption that, when people share a finite resource, they will inevitably destroy it unless it is regulated or privatized. 

As a graduate student, Ostrom studied a group that spontaneously formed in Los Angeles during the 1940s to develop strategies for protecting the local water supply. She has since explored how voluntary, collective associations around the world have evolved efficient and equitable rules for the use of common resources. According to economist Alex Tabarrok, "For Ostrom it's not the tragedy of the commons but the opportunity of the commons. Not only can a commons be well-governed but the rules which help to provide efficiency in resource use are also those that foster community and engagement."

Ostrom, who defines herself as a political economist, cautions that there's unlikely to be a set of guidelines that applies in all cases. But she's optimistic about people's abilities to self-organize and self-govern in the face of a shared need. In a profile by the National Academy of Sciences, Ostrom is quoted as saying, "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." In her classic book, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge University Press, 1990), Ostrom highlights the importance of fostering mutual commitment among a group's members: "I will commit myself to follow the set of rules we have devised in all instances except dire emergencies if the rest of those affected make a similar commitment and act accordingly."

Ostrom's findings contradict the idea that people are, by nature, driven mainly by self-interest. Given the large, complex challenges we face, from revamping our financial system to combating climate change, it's heartening to know that models exist for effective, collective action. Three cheers to the Nobel committee for bringing this important, timely work to the public eye.   

Janice MolloyJanice Molloy is content director of Pegasus Communications, managing editor of The Systems Thinker newsletter, and program director of the annual Systems Thinking in Action conference.

The award shown above is a registered trademark of the Nobel Foundation.

A Happy Reversal for This Tragedy of the Cod?

 

by Vicky Schubert

Anyone who has visited New England is aware of how important seafood is to the culture here. From clam bakes to lobster rolls to the so-called Sacred Cod hanging from the dome of the Massachusetts House of Representatives chamber, Atlantic bounty has both delighted our palettes and driven our economy for centuries.

Atlantic cod

But, in a classic illustration of the Tragedy of the Commons systems archetype, the fisheries here have been woefully mismanaged. As Robert Johnson and Jon Sutinen point out in their recent report, "One Last Chance: The Economic Case for a New Approach to Fisheries Management in New England," "Species that provided a historical foundation for economic growth in New England--Atlantic halibut, cod, flounder, and others--have been fished to decline, biological collapse or commercial extinction."

At the heart of the matter is the always difficult challenge of looking beyond our individual incentives--feeding ourselves and our families; turning a healthy profit--to stewardship of the collective interest. So, it's heartening to see signs that the region is starting to get a grip on adopting shared goals for protecting and sustaining this invaluable community resource from the individual to the industry level.

One case in point is the New England Aquarium's Sustainable Seafood Programs, which promotes intelligent fisheries management by, among other things, helping individuals "choose seafood that is good for you and good for the environment," and offering recipes that require "ocean-friendly" seafood choices.

More important, at the industry level, the New England Fishery Management Council just last month adopted promising new rules for regulating threatened regional fish stocks, as recommended in the Johnson and Sutinen report. The new rules will over time shift accountability for responsible harvesting from individual fishermen to cooperative groups of fishermen--known as sectors--coordinating their activities to balance profit with environmental impact.

The sector approach replaces aggregate species limits and limits on individual fishermen's "days-at-sea," both regulation methods that have proven tragically ineffective. The new system offers fishermen flexibility around when and where to fish. By sharing, trading, or consolidating catch privileges among sector members, fishermen can reduce their costs and eliminate the practice of throwing back waste fish that they've overcaught.

The new rules may not be perfect; some are concerned about fairness, and enforcement mechanisms will have to be carefully monitored. But these first steps toward a cooperative, community-based management structure seem to offer evidence that New England fishermen are ready to moderate the collective impact of their individual efforts in the interest of sustaining this cherished resource for everyone.

Vicky SchubertVicky Schubert is marketing director of Pegasus Communications.

 

Cod Illustration: Altered and prepared plate from the NOAA Photo Library

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