The official photo gallery of Elinor Ostrom, joint winner of this year’s Nobel memorial prize in economics, says it all. In one picture, she stands behind a lectern in a tie-dyed T-shirt, gesticulating wildly with her right arm. In another, she squats for a portrait in traditional Nepalese garb in an otherwise male group studying local irrigation systems.

It is no coincidence the same year that brought us the global financial crisis brought us the first female winner in the prize’s 41-year history. Economics is changing.

Once considered the domain of men in tweed jackets constructing abstract models of the world, a new breed of economics, fermenting for a couple of decades, burst into the spotlight recently thanks to greedy Wall Street types who carelessly exposed the pitfalls of a loosely regulated free market.

Now Ostrom, a 76-year-old American professor of political science specialising in community-based and self-managed eco-systems, is one of our leading economic lights. When asked if it was important that a woman won, she was unequivocal: ”Of course! Someone at my age has lived through an era in which women were discouraged from going to graduate schools at an earlier juncture and so it is a great satisfaction. There are many, many women out there who will be winning the prize in the future.”

One up for girl power. But more important is the traditionally female approach she has applied to studying systems of economic governance. She took economics’ traditional rational man, or ”homoeconomicus”, and refashioned him to better resemble real humans, adding a softer, more community-minded edge.

She is most renowned for her work investigating how societies manage ”the commons”, scarce shared resources such as pastures, fish stocks, groundwater basins and the atmosphere. It is a response to the 1968 book by the biologist Garrett Hardin The Tragedy of the Commons.

He asserted that societies, left to their own devices, would always exploit and overuse common resources. A certain pasture will only sustain so many cows. But individual farmers would each benefit from getting an extra cow to produce more milk, while the cost of this over-farming would be spread among many. Because farmers will always pursue selfish interests, some external body, be it the government or a system of private ownership, must be introduced to organise things.

In her 1990 book, Governing the Commons, Ostrom rejected the idea of exclusively selfish and greedy individuals, along with the assumed dichotomy that either the free market or government must impose control.

She catalogued many instances, from fieldwork in countries such as Kenya, Nepal and Uganda, where communities successfully managed their own communal resources. It was common for small groups to create rules for sharing, and these rules were more likely to be obeyed than externally imposed ones.

For a world struggling to come to terms with the overuse of scarce environmental resources, Ostrom’s research is timely. However, as she freely admits, it is no easy thing to engineer such communal responses to big challenges like climate change.

”When asked whether easy solutions are likely to be achieved for problems involving large, amorphous groups that face significant problems of communicating, such as the overuse of ocean fisheries or global warming, I always respond in the negative,” she wrote.

But there are better and worse ways of going about it. In 2007, she outlined the six challenges academics and policy makers must overcome if we hope to achieve a framework for sustainable socio-ecological system.

First, we must stop looking for one ”panacea” to solve all troubles. Second, we must embrace complexity. Simple models may be attractive, but are worthless if they fail to reflect reality. Third, analysts must take a multidisciplinary approach to addressing problems. Fourth, models must be built from the ground up and to suit different scales – country, region, family – as no one size fits all. Fifth, theoretical predictions must be backed up by real data to prove they work. And finally, we must recognise the benefits of ”institutional diversity” – local communities may have their own different and successful ways of doing things.

source: http://www.smh.com.au/opinion/society-and-culture/girl-power-takes-on-selfishness-20091015-gz2n.html

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Prime Minister Brown and President Obama are doing precisely that with their rescue packages, though they think they have gone beyond that by discussing new regulatory frameworks. That, however, is only what should have been there in the first place, and might have been so, were it not for the Thatcher/Reagan free market folly. I am amazed that she/he did not know that powerful greedy people will take advantage of any loophole, relatively speaking, or is that a jibe to close to home in her case? New regulations do not change a rotten system; they perpetuate it.

The next generation of Madoffs and Goodwins will find their way round any new regulations legally or illegally, and other banks will provide the secret services that Swiss banks have now been reluctantly obliged to curtail. People will continue to overlend so that others can overspend, and economic and land policies will continue to concentrate wealth in fewer hands and foster further social injustice and unrest. The inevitable result in quick time will be even greater crises; that is until we are forced to restructure the whole global trading system. The longer we delay making the inevitable fundamental change, the harder and more painful the process will be. At least this generation of politicians will be off the hook, which seems to be all they care about anyway.

So what might a whole system perspective reveal? It takes no more than an early glance to see that capitalism, as we know it, has no long term future as a stable structure for the fair and equitable existence of all of life on this planet. This is so for as long as the level of human consciousness fails to evolve beyond where it is today. Ultimately conscious is more significant than systems, and a variety of systems could be made to work.

• Clearly Adam Smith’s founding principle of capitalism that, “The trickledown theory will take care of the less well off” was plain wrong. Despite all the economic growth in the past two hundred years and the vast wealth accumulated by some, the gap between the rich and the poor is now widening at an ever increasing rate. The description by US economist J. K. Galbraith was more apposite, “If one feeds a horse enough oats, some will pass through it onto the road for the sparrows.”

• Economic growth, an essential tenet of capitalism, demands ever more production and consumption of energy and resources which we simply do not have – and more emissions that we don’t need. Despite all the efforts today to use renewables to meet our needs, and new fuels and ideas in the pipeline, only massive cutbacks in consumption will save us in time. To promote growth and consumerism to save the economy at this time is counter productive, short sighted and irresponsible, but that is precisely what our politicians are doing.

• Capitalism, especially the Thatcher/Reagan version, glorifies the success of the individual at the expense of the collective. That expense goes far beyond merely increasing the rich/poor divide to create a catalogue of social problems from obesity to teenage pregnancy and produces diagnosable emotional distress. (The Selfish Capitalist by Oliver James 2008, Published by Vermillion)

• Another failure of capitalism is the social impact of land ownership. It concentrates land and wealth in the hands of the few and severely constrains future generations. We need to see ourselves as stewards of the land that we tend for future generations, and we need to pay for the right to use it, but not own it. “People cannot own mother earth, they just think they do. If we don’t care for it, our mother may reclaim it at a cost.”

• Capitalism is a system that, by its very nature, invites people to seek competitive advantage for gain, which in turn encourages people to sail close to the wind, in other words to bend or break the rules. We have enough hardened rule breakers not to have a system that causes other ordinarily naturally honourable people to see no option but to join that club and play that game.

Capitalism is a system designed and modified occasionally by and for people at the level of consciousness that prevails at the time. The creators may be a step ahead of the average consciousness and the followers a step behind, but the system will nevertheless reflect the collective group think. The group think of capitalism was for competitive individual material gain, something akin to what we see in adolescents trying to make their mark in life.

Capitalism gained traction as the industrial revolution took hold and the new found coal and oil provided the opportunity for great feats of engineering in the form of steel and steam ships, bridges, railways and later cars and aeroplanes, and now it is electronics. It also created wealth and lifted many out of poverty. We became enamoured with knowledge and technology, and the belief grew that we could engineer our way to Utopia. This in turned skewed our education towards the quantitative away from the qualitative, towards knowledge rather than wisdom and towards outer riches rather than the riches that lie within.

Materialism took hold, but without the wisdom to use our technology wisely, within 200 years we had taken humanity to the brink of self-destruction through a lack of vision and wisdom, and through over consumption in the illusion that more stuff will make us happy. Meanwhile we in the industrialised countries having plundered the resources from the less “developed” world, we left them behind in poverty, yes, one third of the world’s population. Where is the wisdom it that? For many it may not have been the intention of capitalism, but that has been its effect, and now it is in trouble with only ourselves, our bankers and our politicians to blame.

The riches that lie within, and the wisdom referred to in these two paragraphs, could and should have been ours along the journey of evolving consciousness, except that we failed to foster and later even recognise that journey in our rush for other things that we deemed more important and now we have the consequences. Our whole educational purpose is skewed by the perceived needs of capitalism. We educate our children to be good consumers rather than to be wise or self-responsible.

When the human evolutionary process goes too far off track in one direction, in the end it will hit the guard rails. Those guard rail collisions are lined up before us, and setting aside several earlier ones from futile wars to unnatural disasters, we have now met the economic one. The environmental one that is far more consequential awaits us if we don’t wake up fast, and to a considerable extent even if we do. Fortunately there is a new groundswell of conscious people arising all over the world who see through the transparent folly of unconscious political and corporate leaders who are acting out of fear, and as I suggested before, behaving at an adolescent level of consciousness. As Albert Einstein reminds us “We will never solve the problems at the same level of consciousness that created them in the first place.” (Blessed Unrest by Paul Hawken 2007 Published by Viking)

Hope lies not in our current leadership, but within ourselves along with all those humble but wise people who are awakening from the illusion of the consumerist dream, and can envision a better world, one that is back on the psychosocial evolutionary track. The task of divesting the power from those politicians and corporations that are driven by growth, greed, fear and self-interest is not easy task. The challenges we face are huge, but evolution is on our side and we have vision and wisdom, something that they lack. That is apparent. We may have to use methods that seem a little distasteful at times, such is the planetary urgency. I compliment Leila Deen for dishing out green custard to Lord Mandleson, though that may not have been distasteful enough.