If you look at satellite pictures of Mongolia, you will find evidence of the insights for which Elinor Ostrom, one of this year's Nobel laureates in economics, won her award.
Mongolia is green with pastureland. The neighbouring parts of Russia and China are not. That's because Mongolian herders developed an efficient system of collective management. This husbandry of "the commons" -- according to the Nobel committee -- was not merely superior to Communism. China also tried "privatization," which failed. Mmm.
While circa 1980s Communist China may not be the champion preferred by most fans of markets, Ms. Ostrom has arguably demonstrated that, in certain circumstances, there is a "third way." But this is in no way provides a boost -- as the media and even the Nobel committee are suggesting-- to Gore-onomics.
Economics is one of those fields that has been heavily penetrated both by ideological agendas and abstruse theorizing. However, both this year's laureates-- Ms. Ostrom, who is from the University of Indiana, and Oliver Williamson of the University of California, Berkeley -- have produced work that may actually be useful The focus has fallen on Ms. Ostrom both because of her gender (she is the first woman economics laureate) and her speciality.
As an expert in the management of collective resources, it was inevitable that the media would latch onto her as a potential source of insight into the "greatest collective action problem of our time," man-made climate change.
Unfortunately, Ms. Ostrom has allowed herself to fall in with the media obsession, which is a shame, because if anything her research suggests that grand top-down schemes such as those being hatched for consideration at Copenhagen in December are doomed to fail. More fundamentally, her work undermines one of the greatest sources of environmental fretting: the "Tragedy of the Commons." This theory, much beloved of eco-doomsters, is that when there is a common resource, such as pastureland or a fishery, individuals have no incentive to restrain themselves and so will rapidly exhaust it. Ms. Ostrom's research demonstrates that this is often not the case. Individuals with a collective interest in a resource will usually find some way to manage it. However, this reality in no way undermines free enterprise, the essence of which is voluntary cooperation, not the straw man of "individualistic" competition.
Ms. Ostrom's research not only establishes that ordinary people can sort out collective problems, it also suggests that when governments attempt to impose top-down "solutions," they almost invariably screw up. She has studied farmers in Nepal who managed elaborate water-use relationships, but whose functioning system was destroyed when aid-funded dams were built. Lobster fishermen in Maine, following the near collapse of their industry in the 1920s, developed a series of ingenious rules and ways of monitoring their relationships which have made the Maine fishery one of the most successful in the world. This might be compared with the government-managed Canadian cod fishery. Endangered elephants in Namibia were saved on the basis of Ms. Ostrom's ideas. The key was that local residents had to share in both the setting of rules and the financial benefits of tourism and hunting.
Anybody who thinks that Ms. Ostrom's ideas support Al Gore's philosophy might note that the answer he suggested for elephant poaching in his book Earth in the Balance was to reform human nature. "Clearly," he wrote, "we need to change our purely aesthetic considerations of ivory, since its source is now so threatened."
Nevertheless, the media immediately leapt on Ms. Ostrom's insights and suggested they might be useful in the "fight" against Mr. Gore's climate nemesis. And Ms. Ostrom seemed reluctant to pour cold water on grand Kyoto-type schemes, merely suggesting that "solutions" might be found at "multiple levels." She was quoted as saying that "governments should encourage and aid people where they are trying to solve the problem, such as finding ways to make it easier for them to use solar energy or to bicycle to work." Elsewhere, she reportedly said, "It is important that there is international agreement, but we can be taking steps at family level, community level, civic and national level . . . There are many steps that can be taken that will not solve it on their own but cumulatively will make a big difference."
It's hard to believe that such a sophisticated analyst would really believe that subsidizing solar panels or encouraging bike lanes could help address the threat of Armageddon.
The basic reason her theory doesn't apply to "the world's greatest market failure" is that -- and this will cause environmentalists to have conniptions -- the atmosphere may be a common resource but it is not a scarce one except at the level of local pollution. Carbon dioxide is a trace gas and not a pollutant. Moreover, it may have much less influence on climate than suggested by UN-approved science. Certainly the recent flatlining of global temperatures is a problem that alarmists are trying hard to ignore.
One of the important lessons from Ms. Ostrom's studies is how ineffective grand top-down solutions -- such as the alleged need, announced yesterday by the International Energy Agency, for 3000 carbon capture and storage plants by 2050 -- tend to be.
Professor Ostrom, as the Nobel website notes, has pointed out "many cases in which central government intervention has created more chaos than order." She has also stressed that cooperation becomes more difficult as the size of the user group increases. So a group of six billion-plus is bound to be a bit unwieldy, particularly given the multiplicity of hidden agendas, from global power lust to redistributive larceny.
Proposed climate change legislation is much more likely to produce the situation on the far side of the Mongolian border. And it's also worth noting that those Mongolian nomads didn't need economic theory to develop an efficient system.