The Woman Who Just Might Save the Planet and Our Pocketbooks
April 11, 2010 9:41 AM   Subscribe

What if our economy was not built on competition? Nobel Prize winner Elinor Ostrom talks about her work on cooperation in economics.

No Funny Business: Social Norms and Joke Theft
Rules are ideas about how people interact with each other. They are the formal laws and social norms that govern daily life. The legitimacy of formal laws often depends on their compatibility with social norms. Social norms can complement formal laws and, in some cases, stand in when formal legal enforcement is absent or inefficient. In a guest post for the Freakonomics blog, Kal Raustiala and Chris Sprigman write about social norms among stand-up comedians...

In a related post, Rajiv Sethi explores other situations in which social norms operate as substitutes for formal laws. He points to Elinor Ostrom's work on self-governance among groups of people with collective rights to natural resources... Sethi also points out that social norms can enforce bad equilibria, citing oppressive attitudes about race, gender, or caste. A related issue is the extent to which formal laws and enforcement can change social norms about acceptable attitudes and behavior.
Social Capital and Community Governance
Social capital generally refers to trust, concern for one's associates, a willingness to live by the norms of one's community, and to punish those who do not. While essential to good governance, these behaviors and dispositions appear to conflict with the fundamental behavioral assumptions of economics whose archetypal individual--"Homo economicus"--is entirely self-regarding. We regard these behaviors and dispositions as aspects of what we term community governance.

We suggest that (i) community governance addresses some common market and state failures but typically relies on insider-outsider distinctions that may be morally repugnant; (ii) the individual motivations supporting community governance are not captured by either the conventional self-interested preferences of "Homo economicus" or by unconditional altruism towards one's fellow community members; (iii) well-designed institutions make communities, markets, and states complements, not substitutes; (iv) with poorly designed institutions, markets and states can crowd out community governance; (v) some distributions of property rights are better than others at fostering community governance and assuring complementarity among communities, states, and markets; and (vi) far from representing holdovers from a premodern era, the small-scale local interactions that characterize communities are likely to increase in importance as the economic problems that community governance handles relatively well become more important.
To come up with new policies aimed at widely shared prosperity
His academic work is focused on identifying government's appropriate role — through regulations, taxes, or spending — in a market economy. He is currently engaged in a project to estimate the economic costs of climate change and has worked extensively on the Clean Air Act. He argues that government environmental regulation has improved air quality, leading to reductions in infant mortality rates and higher housing values, while also imposing costs through reducing the scale of manufacturing activity. Greenstone also has done research on topics ranging from the beneficial impacts of mandatory disclosure laws on stock prices to the role of antidiscrimination laws in reducing African-American infant mortality rates.
Complexity and doom
Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. In retrospect, this can seem mystifying. Why didn't these societies just re-tool in less complex ways? The answer Tainter gives is the simplest one: When societies fail to respond to reduced circumstances through orderly downsizing, it isn't because they don't want to, it's because they can't.

In such systems, there is no way to make things a little bit simpler – the whole edifice becomes a huge, interlocking system not readily amenable to change. Tainter doesn't regard the sudden decoherence of these societies as either a tragedy or a mistake—"[U]nder a situation of declining marginal returns collapse may be the most appropriate response", to use his pitiless phrase. Furthermore, even when moderate adjustments could be made, they tend to be resisted, because any simplification discomfits elites.
Do we need a bubble?
There are two sorts of world. In a normal world, the equilibrium rate of interest is above the growth rate of the economy. In a weird world, the equilibrium rate of interest is below the growth rate of the economy. What's weird about a weird world is that it needs a bubble, a Ponzi scheme, a chain-letter swindle, for the economy to work well.

Utility, The Deus Ex Machina of Economics
Nicholas Bernoulli came up with the St. Petersburg Paradox, a position that stands in stark contradiction to Pascal's Wager, arguing that there is no limit to the amount you should be prepared to gamble in quest of a greater fortune... The classical solution to the paradox was proposed by Daniel Bernoulli who argued that the problem was that a dollar isn't a dollar for everyone. What he suggested was that the value of any given amount of money reduced as you became richer... He called this relative value 'utility'.

Taking Hope in the Long View
For the first time, more than half of the world will have enough food not to be hungry, enough shelter not to be wet, enough clothing not to be cold, and enough medical care not to be worried that they and most of their children will die prematurely of micro-parasites. The big problems for most of humanity will be to find enough conceptual puzzles and diversions in their work and leisure lives to avoid being bored, and enough relative status not to be green with envy of their fellows... How did this miracle come about?

The World's Free Virtual School: an interview with Salman Khan
Salman Khan is the man behind Khan Academy, a 2009 Tech Award winning site with 12+ million views and 1200+ 10-minute "videos on YouTube covering everything from basic arithmetic and algebra to differential equations, physics, chemistry, biology and finance". We talked with him about building "the world's free virtual school", the potential of open-access learning, using the format for sustainability debates, and challenges in growing a non-profit from zero to global impact.

A Short Survey of Network Economics
This paper surveys a variety of topics related to network economics. Topics covered include: consumer demand under network effects, compatibility decisions and standardization, technology advances in network industries, two-sided markets, information networks and intellectual property, and social influence.

Trust networks
The general idea is that there are numerous examples of networks of people who share substantial interests in common, and who have a high level of trust in one another that permits them to undertake risky joint activities.

Privilege Is Driving a Smooth Road And Not Even Knowing It
People with more privilege, in contrast, can easily imagine that they are independent. A big mark of privilege is that social and economic networks tend to facilitate goals, rather than block them. This makes it easier to ignore the social and economic networks around us; and it makes it easier for the privileged to imagine their accomplishments are the result of their own pure merit... No one is independent; we all rely on a network of social and economic ties to tens of thousands of strangers, just to get through a single day.

What the Founding Fathers Really Thought About Corporations
Brian Murphy, a history professor at Baruch College in New York, knows a whole lot about corporations in the early days of the American republic. When the Supreme Court struck down restrictions on political spending by corporations in January, the ruling struck him as dramatically at odds with how the Founding Fathers saw the role of the corporation.

Objects into people, people into objects, business value
That is: your species has another skill. Just like you're good at turning objects into people, you're good at turning people into objects. It's easy for you to subordinate actual humans to the beauty of a System. You're terribly prone to slip into ideology, to elevate objects to totems-to-be-deferred-to. "Business Value" is, I fear, becoming one such totem.

The Natural World Vanishes: How Species Cease To Matter
Once, on both sides of the Atlantic, fish such as salmon, eels, and, shad were abundant and played an important role in society, feeding millions and providing a livelihood for tens of thousands. But as these fish have steadily dwindled, humans have lost sight of their significance, with each generation accepting a diminished environment as the new norm.

The Future of Cities
We live in an urban age. The Future of Cities is a series in which the FT explores the appeal of the city and the problems that come with rapid urbanisation, such as health challenges, conflict, development and conservation.

The determinants of state fragility
The causes and implications of state fragility – also known as state failure – are not yet well understood. This column explores the determinants of state fragility in sub-Saharan Africa and finds that institutions – as measured by civil liberties and the number of revolutions – are the main drivers. It says institutions trump economic, geographic, and historical factors.
posted by kliuless (32 comments total) 128 users marked this as a favorite
HAMBURGER, obv. Amazing post, a lot to work through here ...
posted by kcds at 9:56 AM on April 11, 2010

*settles in, gets comfortable*
posted by infini at 10:00 AM on April 11, 2010

Wow. This is a massive post. And massively interesting. Going to comment here now, and come back in week or so, when I've read some or all of this great stuff.
posted by iamkimiam at 10:01 AM on April 11, 2010 [1 favorite]

I wasn't being snarky there, honest. I imagine this thread is going to take some time to pick up and get going. For myself, I'm going to start at the top and just work my way down. Unless somebody says something here that compels me to abandon and skip to a different article.
posted by iamkimiam at 10:07 AM on April 11, 2010

Is this post about something, or is it a completely haphazard collection of links to current thinking on economics?
posted by TypographicalError at 10:23 AM on April 11, 2010

Well, the main link is about cooperation in economics, which is very interesting to me. ... I admit the rest of the more inside is a jumble (of good reading). (It seems a little more cohesive than this one. Still ...)

I've always thought the future of civilization will be cooperative and interdisciplinary. Good reading here. Thanks.
posted by mrgrimm at 10:37 AM on April 11, 2010 [1 favorite]

I had thought at first that it was going to be all papers written by Elinor Ostrom. But as I peruse the links offered, I see that a lot of the links go to papers by other people. I'm confused.
posted by hippybear at 10:39 AM on April 11, 2010 [1 favorite]

While the caring and sharing brigade is helping out their weakest links, the competitive sharks will eat them. Unless the argument is we need people in charge to make everyone being cooperative in which case they'll already be in charge.
posted by codswallop at 10:58 AM on April 11, 2010 [1 favorite]

While the caring and sharing brigade is helping out their weakest links, the competitive sharks will eat them.

Quoted for truth. I've watched this happen in business, volunteer organizations, and social groups. As long as sharks are tolerated and celebrated, then cooperation will continue to be the loser.

...all of which makes me think of Steerpike and Gormenghast, for some reason.
posted by hippybear at 11:35 AM on April 11, 2010 [2 favorites]

It makes me muse upon the tension inherent in Open vs Closed innovation.

If your platform is built on openness and sharing, cooperation adn collaboration, what are the measures, if any, that could conceivably be put in place to maintain these values whilst preserving the system from competitive sharks etc?

there must be a middle path to navigate ...
posted by infini at 11:41 AM on April 11, 2010

While the caring and sharing brigade is helping out their weakest links, the competitive sharks will eat them.

True, there are predators. Every so often, though, non-predators band together, and the predator runs. My dearest hope is that humans become enlightened enough in my lifetime that this becomes the norm.
posted by Pragmatica at 11:46 AM on April 11, 2010

As long as sharks are tolerated and celebrated, then cooperation will continue to be the loser.

Tolerated and celebrated? So it's the social norms, not the sharkiness that triumphs?
posted by Obscure Reference at 11:56 AM on April 11, 2010

My dearest hope is that humans become enlightened enough in my lifetime that this becomes the norm.

Never. Never, ever, I'm sorry. Ancient greeks hoped for that. Cave men possibly. Proto-hominids, maybe.

The future belongs to the most ruthless. It always has. If the non-predators band together, among them is someone using them as camouflage or because they were too weak to be a predator in the pre-existing environment and they see an opportunity to fix the situation.

All you can do is hope you live in one of the less-sociopathic bits of human history.
posted by codswallop at 12:17 PM on April 11, 2010 [4 favorites]

otoh, I liked something I read somewhere recently "when platforms change, new leaders emerge"

we're assuming that "business as war" metaphor will continue to be the standard

and even mothers protecting their young can be ruthless. I wouldn't confuse 'ruthlessness' or the 'drive to survive' with the weaknesses of predatory types i.e. those who can't feed on those who do
posted by infini at 12:23 PM on April 11, 2010

I would have less!! That bites, you hear me, that bites.
posted by Xurando at 1:01 PM on April 11, 2010

I'm reading through the first link, the interview with Elinor Ostrom and it strikes me that 'cooperative economies' is a pattern I'd observed when seeking to understand how those at the bottom of the pyramid managed their household expenses on irregular income streams (that is, outside of the formal economy and without salaried jobs). The focus was on rural communities in the Philippines, India and remotely via a student researcher, in Malawi.

While each community/geography had their own patterns of cooperation, all demonstrated this behaviour. Without state support or safety nets, your community was your insurance - to be maintained in times of plenty (through give and take and communication) against dependence in times of need. For eg, a man whose sole source of income to support his wife and two children was daily wages labour - breaking up rocks and stones used in construction- hurt his thumb one day. His coworkers helped out for as long as they could - which was about 4 or 5 days, since payment was only made based on the amount of rocks broken each day. He acknowledged that were he to fall ill or be incapacitated for a longer period of time, they may not be able to afford to help but in the short run, they were his (and his family's) insurance during the period no income was earned.

Whether it was volunteering time and tools to collectively help a community member build a home in ten days, or banding together to hire a carpenter on a cashless retainer of 50 sacks of wheat at harvest time, these tightly knit and resilient communities have social norms and customs developed over generations.

Dr Ostrom touches upon this a bit with her reference to Netting's work on Swiss peasants, private and commons land with a fleeting mention of Africa but since her focus has been in the developed world within the context of the formal economy, I do wonder that we'd discover indigenous and traditional methods of social and economic cooperation adn sharing have always existed, only they are just outside our radar and by seeking to understand them, what value or lessons could they offer us?

A snippet from the link,

In Ghana, it's popularly known as susu. In Cameroon, tontines or chilembe. And in South Africa, stokfel. Today, you'd most likely call it plain-old microfinance, the nearest term we have for it. Age-old indigenous credit schemes have run perfectly well without much outside intervention for generations. Although, in our excitement to implement new technologies and solutions, we sometimes fail to recognize them. Innovations such as mobile banking -- great as they may be -- are hailed as revolutionary without much consideration for what may have come before or who the original innovators may have been.
Very few businesses would willingly throw out all of their processes and procedures in order to implement a new IT system, however good it may be. The more astute ICT solutions providers know this and, wherever possible, aim to allow seamless integration of any new technology into their clients' workplaces and working practices.

Doesn't it make sense that we should take the same approach with indigenous societies and seek to build on existing procedures and traditions, and not just assume that a new, modern solution is better and replace everything that went before?

And why stop at simply developing solutions for these societies, why not consider that perhaps we have something to learn from them as well. We need to rethink all our assumptions, or at least, question them.
posted by infini at 1:01 PM on April 11, 2010 [3 favorites]

Wherever resources are finite and two or more drives, minds, or urges differ as to what to do with those resources, competition will exist. From bacteria to bugs to Bolivians, that's how it works.
posted by adipocere at 2:12 PM on April 11, 2010

Wherever resources are finite and two or more drives, minds, or urges differ as to what to do with those resources, competition will exist. From bacteria to bugs to Bolivians, that's how it works.

In human beings, negotiations to identify a satisfactory compromise often ensue. I've seen it myself. Competition will exist, but it isn't the only possible response.
posted by i_am_joe's_spleen at 3:30 PM on April 11, 2010

So it's the social norms, not the sharkiness that triumphs?

When the social norms shift toward isolating and punishing the sharks instead of celebrating them, then the paradigm will shift. So yes, social norms play a large roll in determining whether we accept the current form of economy as being the correct one. (It used to be considered okay for women to be married off at very young ages. Now we have age of consent laws. Social norms shift, and a new paradigm triumphs.)
posted by hippybear at 3:33 PM on April 11, 2010

The future belongs to the most ruthless. It always has. If the non-predators band together, among them is someone using them as camouflage or because they were too weak to be a predator in the pre-existing environment and they see an opportunity to fix the situation.

This is simply false. For example, murder rates have gone done over the course of human history-- as Steven Pinker shows here, if humans killed each other at the rates that hunter/gatherer tribes do, the Holocaust would have killed billions rather than millions. Oh yeah, and Hitler ultimately *lost*.

Research finds that children as young as 18 months prefer people who are helpful to others, rather than hurtful-- and historically, less extreme forms of violence have declined over time, too. For example, cat torture is no longer acceptable entertainment-- and the violence we watch on screens has to be faked, not real.

Too much ruthlessness is as bad for human leadership as too much compassion can be. Sociopaths may rise to the top of some organizations-- but lots of them wind up in prison, too.

Any theory of human nature which doesn't recognize this duality-- and that certain situations and cultures can vastly amp up or tone done either cooperation or competition-- is just plain wrong.
posted by Maias at 3:56 PM on April 11, 2010 [5 favorites]

Any theory of human nature which doesn't recognize this duality-- and that certain situations and cultures can vastly amp up or tone done either cooperation or competition-- is just plain wrong.

And yet these theories have wide currency. I find it very interesting how some people get het up about competition and aggression being natural and normal without stopping to think to what extent this is a cultural myth.

Of course, if we were to yield to this incorrect view of human nature, it wouldn't then follow that co-operative systems are doomed or useless. Laws about violent crime and property ownership for example defy such "natural" principles and yet we mostly feel they're worthwhile.
posted by i_am_joe's_spleen at 4:15 PM on April 11, 2010

"But comedians often enforce an informal rule against joke theft by sanctioning the offending comic."

Great example of the autantonym 'sanction'

I'm super fascinated by how social norms get established in online communities. I see how our values are being maintained and changing all the time here on MetaFilter. How things get tagged, how favorites are used, what topics get discussed repeatedly on MeTa, how people are quoted, what is appropriate to say in technology threads, obit threads, gender-focused threads, how we encourage or discourage certain types of personal storytelling on the site and how and why we (both individually and collectively) promote or disincentivize all of these things. It goes on and on. Just even looking at one tiny feature can lead to a labyrinth of factors that we're all knowingly and unknowingly supporting or disassociating from.

And for as scary as MetaFilter is to contribute to at times, it's nice that we all get an equal voice and footing to say what we want to say, as long as we're not blowing way past norm-flouting and into rule-breaking and lack-of-civility territory.
posted by iamkimiam at 4:31 PM on April 11, 2010 [2 favorites]

Humans cooperate? Yeah, that'll happen after my flying pig hunt. I think we've all seen how Marx worked out.
posted by Lutoslawski at 5:21 PM on April 11, 2010

Codswallop et al: here's your refutation.
posted by smoke at 5:34 PM on April 11, 2010

Major debates of 20th and 21st century social science settled by snarky and cocksure Metafilter comments.
posted by proj at 5:41 PM on April 11, 2010 [1 favorite]

Humans cooperate? Yeah, that'll happen after my flying pig hunt. I think we've all seen how Marx worked out.

You mean democracy doesn't involve cooperation? not that ours is a fabulous model at the moment, but please!!!
posted by Maias at 5:45 PM on April 11, 2010

Nice post, I see how it's related, but it's a little too broad to address. Are you trying to get to the root of humanity here?
I always feel like capitalism works so well because it plugs into our basest animal instincts, dog-eat-dog and "to the victor goes" & cetera. People try to distance themselves from being animals, and make abstractions that remove them from the fact, but the sooner they realize it, the sooner they can try and deal more rationally and try and be better than their basest instincts. Whenever I hear someone like Limbaugh champion our wonderful capitalist system, he talks about "achievers" and "freedom", and all I hear is the justification of pursuing self-interest at the cost of...well, anything, really. Are you poor? Well, suck it, loser. Humans seem to have competition as part of our nature. Okay, it does drive a lot of progress, too. I'm not sure you can quash it, but you'd think we could be less shitheely about it.
posted by Red Loop at 5:49 PM on April 11, 2010

See also ParEcon
posted by lalochezia at 7:21 PM on April 11, 2010

hooray! homework!
posted by artof.mulata at 8:36 PM on April 11, 2010

When we don't allow any communication among the players, then they overharvest. But when people can communicate, particularly on a face-to-face basis, and say, "Well, gee, how about if we do this? How about we do that?" Then they can come to an agreement.

just reminded me of 1 corinthians 13:12 - "For now we see through a glass, darkly; but then face to face: now I know in part; but then shall I know even as also I am known."

anyway for those wanting to know more i neglected to source my links! so if you're inclined to follow along, pls append to the fpp...
(via mr, ev, pk, fs, ek & mf's own mm ;)
oh and fwiw :P

-The Astonishing Voice of Albert Hirschman
-High Income Disparity Leads to Low Savings Rates, cf.
-15 Mind-Blowing Facts About Wealth And Inequality In America
-Why Americans are angry
-It Helps to be Rich
-Does the crisis portend communism?
-Mario Savio (via 2p)
-Norbert Elias on the individual
-QotD: "Everybody believes in something and everybody, by virtue of the fact that they believe in something, use that something to support their own existence." -Frank Zappa

posted by kliuless at 4:28 PM on April 13, 2010

Never. Never, ever, I'm sorry.

Oh, like you know.
posted by mrgrimm at 8:17 PM on April 13, 2010

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