Elinor Ostrom as an Intellectual

Elinor Ostrom is best known for her work on common pool resources, but, on this episode of the Hayek Program Podcast, we take a deeper dive into her work as Bobbi Herzberg interviews Vlad Tarko on Elinor Ostrom's role as an intellectual. Learn why students of Elinor Ostrom should start with her work on polycentrism and metropolitan governance, discover the ways in which the Ostroms dealt with skepticism about their work, and understand why Elinor Ostrom was selected for the Nobel Prize in Economics as we continue the Hayek Program's celebration of her life and work.

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Bobbi Herzberg
Calendar Date: 
Jun 12, 2019
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An Interview Between Bobbi Herzberg and Vlad Tarko

Elinor Ostrom as a Mentor

On this episode of the Hayek Program Podcast, we continue the Hayek Program's celebration of Elinor Ostrom as Vlad Tarko, assistant professor and author of 'The Intellectual Biography of Elinor Ostrom,' interviews Hayek Program distinguished senior fellow Bobbi Herzberg on Elinor Ostrom's role as a mentor and friend. Herzberg recounts heartwarming memories from her time working with Elinor Ostrom, including those on Elinor Ostrom's work ethic, humble personality, and role as a bridge to Vincent Ostrom. Herzberg also describes her journey from rational choice theory to the Ostrom's teaching and tells how both Vincent and Elinor Ostrom helped guide her through "being a student again" before briefly discussing the history of the Bloomington workshop.

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Bobbi Herzberg
Calendar Date: 
May 29, 2019
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An Interview Between Vlad Tarko and Bobbi Herzberg

Public Governance and the Classical-Liberal Perspective

June, 2019

Classical liberalism entails not only a theory about the scope of government and its relationship with the market but also a distinct view about how government should operate within its proper domain of public choices in non-market settings. Building on the political economy principles underpinning the works of diverse authors such as Friedrich Hayek, James Buchanan and Vincent and Elinor Ostrom, this book challenges the technocratic-epistocratic perspective in which social goals are defined by an aggregated social function and experts simply provide the means to attain them. The authors argue that individualism, freedom of choice, and freedom of association have deep implications on how we design, manage and assess our public governance arrangements. 

The book examines the knowledge and incentive problems associated with bureaucratic public administration while contrasting it with democratic governance. Aligica, Boettke, and Tarko argue that the focus should be on the diversity of opinions in any society regarding "what should be done" and on the design of democratic and polycentric institutions capable of limiting social conflicts and satisfying the preferences of as many people as possible. They thus fill a large gap in the literature, the public discourse, and the ways decision makers understand the nature and administration of the public sector.

Polycentric Stakeholder Analysis

November, 2017

This paper presents a method of stakeholder analysis based on recent developments in the theory of polycentricity and co-production. A polycentric system of governance is a collection of heterogeneous decision centers acting independently, but under a common system of rules and/or norms limiting negative externalities and free riding, and the theory of co-production describes how the different stakeholders are involved in establishing these over-arching rules. We use this theory to model the interactions between different stakeholders of a corporation and the corporate management, providing a new perspective on the broad business case for corporate social responsibility (CSR). The Polycentric Stakeholder Analysis (PSA) framework accommodates stakeholders’ heterogeneity of preferences, beliefs and values, and the complex nestedness of stakeholders’ governance systems; it is realistic in capturing the imperfect rationality, limited information and potentially opportunistic behavior, while also preserving the key elements of the normative democratic ethos that drives CSR more broadly. We show how CSR managers can determine who the salient stakeholders are, without adopting unrealistic homogenizing assumptions about "hypernorms" or "integrative social contracts," and we provide a simple public economics model, inspired by the calculus of consent, showing how to allocate CSR resources efficiently.

"Elinor Ostrom: An Intellectual Biography" Book Panel

Elinor Ostrom was the first woman to win the Nobel Prize in economics. She has been at the forefront of New Institutional Economics and Public Choice revolutions, discovering surprising ways in which communities around the world have succeeded in solving difficult collective problems. In 'Elinor Ostrom: An Intellectual Biography,' Vlad Tarko takes readers on an intellectual journey through Elinor's career and highlights the theoretical foundations that underpin her research and propel the continuation of New Institutional economics.

Partially funded by the John Templeton Foundation.
CC Music: Twisterium

People: 
Bobbi Herzberg
Michael McGinnis
Calendar Date: 
Feb 14, 2018
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Why Hayek Matters

December, 2016

Hayek’s “Use of knowledge in society” is often misunderstood. Hayek’s point is not just that prices aggregate dispersed knowledge, but also that the knowledge embedded in prices would not exist absent the market process. Later, in The Constitution of Liberty, he argues that this same idea can also be applied to the study of political and collective choice phenomena. Democracy is not just about aggregating preferences. Absent the democratic process, the knowledge necessary to solve collective problems is not generated. We compare this perspective on democracy to Bryan Caplan’s and Helen Landemore’s theories, and we argue that Hayek’s account focused on “opinion falsification” is richer. Unlike Caplan or Landemore, who adopt a static perspective, Hayek is more interested in the long-term tendencies and feed-back mechanisms. For example, why do Western democracies seem to have gradually moved away from the most deleterious types of economic policies (such as price controls)? Hayek’s conjecture is that the democratic process itself is responsible for this. We connect Hayek’s conjecture about democracy to the broader argument made by Vincent Ostrom, who has claimed that public choice should study not just incentive structures, but also collective learning processes. We believe that this line of research, that is, comparative institutional analysis based on the collective learning capacities embedded in alternative institutional arrangements, merits a lot more attention than it has received so far. The question “Which collective choice arrangements have the best epistemic properties?” is one of the most important neglected questions in political economy.

Capitalist Alternatives

November, 2014

The book's objective is to explore the challenge of thinking methodically - in a theoretically and empirically informed way - about alternative forms of capitalism. What are the most effective ways to conceptualize the existing models of capitalism that have captured the public imagination and are currently floating around in the public debate? How can one mobilize empirical analysis and theory in thinking about the realm of possibilities and about the future of economic order, but avoid the twin perils of scientism and historicism? This book is an attempt to respond to these and related challenges.

First, it delves into the substantive aspect of the debate, taking a closer look at a set of particular forms and models of capitalism that are currently discussed both in mass media and in academic circles as plausible, or at least possible, alternatives to the status quo: Crony, State, Regulatory, and Entrepreneurial Capitalisms. By elaborating and clarifying those models, it engages in a heuristic exercise that leads to a better understanding of the task of conceptualizing and assessing, in a theoretically informed way, the diversity of forms of capitalism.

Second, the book takes a step further, looking at the epistemic, theoretical and methodological dimensions of the discussion: What is involved, more precisely, in our classifying and theorizing of capitalist systems and their historical evolution? What is the epistemic basis for building plausible conjectures about the future evolution of an economic system? What are the logical and methodological parameters of our endeavors that deal with economic systems, or with the problem of continuity and change in comparative economic systems? Offering an original approach to the problem of alternative forms of capitalism, this book will be of great interest to scholars working in the field of comparative political economy.

Crony Capitalism: Rent Seeking, Institutions and Ideology

May, 2014

This paper elaborates the notion of “crony capitalism” and advances an innovative approach to the analysis of the phenomenon in case, seen as a type of rent-seeking society. The argument leads to a pioneering attempt to elaborate an original theory of crony capitalism as a sui generis system and with that end in view it combines three complementary perspectives: microeconomics (dealing with the basic economics of rent-seeking), institutional or structural (dealing with the specific structures and configurations of institutions, policies and processes via which rent seeking gets materialized), and ideological (dealing with the ideas, rhetoric, beliefs, doctrines and other forms of legitimization and justification of the specific policies and institutions). The paper identifies significant functional differences between crony capitalism in high-income and developing countries and advances a novel interpretation of the special nature of crony capitalism by focusing on the distinctive features of its ideological component.

Institutional Resilience and Economic Systems

March, 2014

Comparative economic systems literature deals extensively with ‘systemic functions’ and ‘performance criteria’ such as growth, efficiency and equity but rarely mentions the topic of resilience. This paper focuses on the issue of resilience while drawing several important lessons from the contributions in this respect of 2009 Nobel Prize in Economics co-recipient, Elinor Ostrom: The effects of alternative institutional arrangements and social norms as a source of both resilience and vulnerability; the problem of ‘highly optimized tolerance’ to specific sources of uncertainty; polycentricity as a possible structural solution to sustainability problems. A key point is that resilience is more than mere ‘absorptive capacity’ or ‘speed of recovery’: it depends on innovation and creative socio-cultural adaptations made possible by flexible and polycentric institutional processes. That has important implications for the ways we define and assess institutional performance and institutional design.

Co-Production, Polycentricity, and Value Heterogeneity

October, 2013

Revisiting the theory of institutional hybridity and diversity developed by Vincent and Elinor Ostrom to cope with the challenge of the “neither states nor markets” institutional domain, this article reconstructs the Ostromian system along the “value heterogeneity–co-production–polycentricity” axis. It articulates the elements of a theory of value heterogeneity and of the fuzzy boundaries between private and public. It rebuilds the model of co-production, clarifying the ambiguity surrounding a key technical public choice theoretical assumption, and it demonstrates (a) why it should not be confused with the Alchian-Demsetz team production model and (b) how co-production engenders a type of market failure that has been neglected so far. In light of this analysis, the article reconsiders polycentricity, the capstone of the Ostromian system, explaining why polycentricity may be seen as a solution both to this co-production market failure problem and to the problems of social choice in conditions of deep heterogeneity. It also discusses further normative corollaries.

Purchase the article at Cambridge Journals.

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