Sunday, October 18, 2009

Nobel Prize in Anarchy

For awhile now I've been saying that economists should be paying attention to open-source and other commons-based models of production. How often does a radically new way to organize production come along, after all? It seems like academic economists should be studying the hell out of it. There are some books by Yochai Benkler and Steven Weber but they barely scratch the surface.

I was making this argument to Herbert Gintis, a prominent political scientist with a good book-review blog on Amazon. Gintis is a smart guy but has some weird blind spots (Israel and open source, for starters) which I could not resist poking at. Anyway, in the middle of the conversation, the Nobels in Economics were announced. I had never heard of the awardees but it turns out that one of them, Elinor Ostrom, won it specifically work on the structures of economic governance for in-common resources such as fishery stocks, water resources, and also "knowledge commons" such as open-source software projects. Huzzah! Well, I felt somewhat vindicated and also somewhat embarrassed to find that the economics profession was actually ahead of my recommendations. On the other hand, Ostrom is not an economist, she's in political science, and apparently a couple of famous economists who write for the New York Times were unfamiliar with her as well. Gintis was very familiar with her work but for whatever reason that didn't seem to affect his view of open source as economically trivial.

One of the famous economists who had not heard of Ostrom, Steven Levitt said: "...the short answer is that the economics profession is going to hate the prize going to Ostrom even more than Republicans hated the Peace prize going to Obama." I'm not sure that's true. I see many libertarians on the net trying to get in front of this wave, even though her work is essentially a complete refutation of the libertarian framework of thought.

Libertarianism is erected on a foundation of individual rights, private property, self-interest, and markets. Notice what's missing? Any notion of society and in particular institutions, the very thing both of this years laureates were studying. People like Somin would like to think that because the institutions Ostrom is studying are not (in general) states that she's on his side. But Ostrom's work (OK, I haven't actually read it yet so I'm just going on net commentary) has more in common with critics of capitalism such as Karl Polanyi and left-anarchist theorists of cooperation like Kropotkin.

On reading some more of the Hayekian blogs I fear I may be doing an injustice to them (and maybe Ostrom), probably because I tend to conflate idiocies of net.libertarians with the more sophisticated theories of academics. Perhaps her work transcends left and right, which wouldn't bother me, those categories from the French Revolution seem to be increasingly stale. Not that they don't have some validity but for the last hundred years or so the two sides seem to spend most of their time taking on each other's worst characteristics. It would be nice to have some new ideas about how society should be governed and it would be nice to have those solidly grounded in empirical research. Ostrom's work seems to fit the bill.

One question I have is how these cooperatively-owned resources enforce their rules. For things like fisheries, there are community and peer enforcement of rules, but at some scale this turns into a state or something indistinguishable from it, I would think. Of course, with informational commons like Wikipedia or open-source their is no scarcity and hence no need to patrol for cheaters. Unfortunately we can't yet eat information, so the extension of open-source models to the physical world is questionable.

Some links:
Ostrom's win is a blow against simplistic private, market-based economies.

Academics debate just how Hayekian Ostrom's work is.

Creative Commons notices.

Here's Ostrom talking on "Beyond the Tragedy of the Commons":

I note she cautions against "top-down solutions".


TGGP said...

I had already heard of Ostrom because I read Boettke's blog. He's not trying to catch a wave, he already wrote a book in large part about her ideas before she won the prize.

My initial reaction was that Kevin Carson would like the Ostrom prize but dislike that Williamson won as well. I was surprised to hear that Williamson was the most cited economist of all time. I hadn't heard of him before, though I had heard of Coase, Alchian, Demsetz and some others who wrote on the theory of the firm.

I don't know much about the economics of open source. I write strictly proprietary code.

mtraven said...

Yeah, I think the short form of what I was trying to say is that academic libertarianoids overlap with Ostrom-style institutional economics in ways that were surprising to me.

Here's another libertarian with an appreciation of Williamson. Hm, I see I was trying to separate out the intelligent libertarians from the riffraff a couple of years ago, Szabo included.

exuberance said...

I found the economics literature on "club goods", and "public goods" very thought provoking in my puzzling out what's up with open source. Cornes and Sandler's book in particular is dense and meaty.

I was and am very please by taking their example of the leeve and repurposing it for open source -

That said, most of that work is done under the shadow of a presumption that these are extremely suspect and if only we could get micro-currencies or something to work we could kill 'em.

exuberance said...

I try to stick to my personal rule of never thinking about Libertarians.

But, how extreme they are about institutions varies widely. It is difficult to be anti-institution and pro-corporation. Most of them are quite adamant that they lovz clubs of many kinds.

For the majority of them the non-market institutions that achieve large scale are what the hatz on; gov, relig., ngos, labor, etc. But they can lovz even those if the are substitutes for the other one's they hatz more.

TGGP said...

I second the recommendation of Gilder's Amazon reviews. From his comments he didn't seem to have that odd of a view of open-source. I'll also add that no one expects me to engage in any unpaid open-source labor. But I guess I'm a lowly code grinder rather than an authentic hacker.

I didn't find the views expressed by Gintis on open-source to be that odd/distinctive. He even said that he formed his opinion years ago and perhaps he should update on new information that you are more aware of than he. Based on what Larison wrote, I expected the Israel Test to be a joke of a book (the author being behind the Discover Institute didn't help either), but I found Gintis' review pretty good.

marry said...

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Hal Morris said...

One of the famous economists who had not heard of Ostrom, Steven Levitt said: "...the short answer is that the economics profession is going to hate the prize going to Ostrom even more than Republicans hated the Peace prize going to Obama."

I wonder some times if that was the key mistake of his whole presidency, not to have refused that idiotic prize.

"You guys are out of your minds -- I haven't done anything yet! Now if I actually do something for peace, then keep me in mind."