Evolution for Everyone

We needn’t wait for the merits of the evolutionary perspective for economics and public policy to be recognized–they already have in the choice of Elinor Ostrom as the recipient of the 2009 Nobel Prize in Economics.

Lin (as she likes to be called) is a political scientist by training, but the study of institutional change is central to the field of political science, even if the E-word is sparsely used. She felt impelled to use the E-word in the title of her 1990 classic Governing the Commons: The Evolution of Institutions for Collective Action and liberally cites the evolutionary literature in her more recent Understanding Institutional Diversity (2005).

I was fortunate to meet Lin at a conference last year and to interview her for my own forthcoming book Evolving the City. Her PhD thesis in the 1960’s was on the seemingly mundane topic of groundwater management in southern California. Prior laws permitted anyone to sink a well and use as much water as they liked, but the water table was declining fast. If it became too low, seawater would invade from the coast and make the wells unusable. Lin studied how the various stakeholders got together and created a system for regulating groundwater use. It was a success story.

The theoretical import of Lin’s research was that people are capable of managing their commons, at least in this particular case. Conventional wisdom held that common resource situations always result in the tragedy of overuse, with privatization or externally imposed regulations as the only solutions. Lin’s work documented the existence of a third way: local groups managing their own affairs.

As a recently minted PhD, Lin accompanied her husband and colleague, Vincent Ostrom, to the University of Indiana where she struggled as an untenured adjunct and only belatedly became a tenure-track faculty member, a situation that was typical for women at the time. She expanded her study of common-use situations to include police departments, irrigation systems, and natural resources such as fisheries and forests. Around the world and for traditional in addition to modern societies, she discovered that local groups are capable of managing their own affairs, sometimes for hundreds of years, at least when certain conditions are met. Along the way, she developed methods for organizing the diffuse literature on common-use situations and identified eight conditions required for the successful management of a commons that I like to call Lin Ostrom’s recipe for success.

I will give you Lin’s recipe in the next installment, but first I want to show how her work represents the evolutionary perspective and departs from the currently dominant economic perspective.

First, her work shows that human life is permeated with situations in which the invisible hand does not operate. Again and again, behaviors that are “for the good of the group” require forms of restraint and coordination that are highly tailored to the particular situation and are undermined by narrow self-interest. In other words, Lin’s work is centered upon the conflict between levels of selection and adaptation, as I describe for multilevel selection theory in the previous installment.

Second, people are capable of managing their own affairs only by virtue of a suite of psychological traits that cannot be collapsed into the narrow construct of self-regarding preference. Human psychology must be studied in all its complexity and evolutionary theory is required to understand human psychology.

Third, certain environmental conditions are required for people to manage their own affairs. Adaptations only work in the environments to which they are adapted and can spectacularly misfire in other environments. Lin’s work recognizes the importance of studying individuals and groups in relation to their environments, far more than contemporary economic theory.

Fourth, Lin’s work recognizes the importance of ongoing cultural evolution, rather than trying to derive everything from a conception of universal human psychology. Every group trying to manage its own affairs is an experiment in open-ended cultural evolution, with all the historicity and indeterminacy inherent in any evolutionary process. Different groups trying to solve the same problem will arrive at different solutions, none optimal, some better than others, and a few meltdowns. Groups will learn from other groups, resulting in cumulative cultural evolution, especially when environmental conditions facilitate the comparison of solutions across groups. The suite of psychological traits shared by all people creates the architecture for this kind of rapid adaptation to current environmental conditions.

How does Lin’s work depart from the currently dominant perspective in economics? Steve Levitt, author of the bestselling Freakonomics and Superfreakonomics is one of the most ecumenical and widely read economists around. Nevertheless, writing in his New York Times column the day after Lin won the Nobel prize, he confessed that he had never previously heard of her and estimated that only one in five of his colleagues had either. Levitt lamented this fact, which indicates “just how substantial the boundaries between social science disciplines remain.” He speculated that “the economics profession is going to hate the prize going to Ostrom even more than the Republicans hated the Peace Prize going to Obama” and concluded that “This award demonstrates, in a way that no previous prize has, that the prize is moving toward a Nobel in Social Science, not a Nobel in economics.”

Levitt is refreshing for his candor but what he says speaks volumes about both the content and culture of contemporary economics. With respect to content, neoclassical economics is so centered on the expectation of the invisible hand and the assumptions required to demonstrate its mathematical possibility, that the conflicts between levels of selection and adaptation in actual human life are barely visible. With respect to culture, economics is by far the most isolated of the social sciences and most economists are eager to keep it that way, as Levitt’s comments richly illustrate. In contrast, Lin’s perspective is a veritable melting pot of social science disciplines unified by the common language of evolutionary theory. It’s time for economists to step down from their pedestal and join the proletariat.

And now for Lin Ostrom’s recipe for success…

Comments

  1. #1 eNeMeE
    March 9, 2010

    Enjoying this series of posts, thanks.

  2. #2 Don Dwiggins
    March 9, 2010

    I’ve just encountered this blog, and am very much enjoying your essays (I’m working my way through “Truth and Reconciliation”).

    Ostrom has had a strong influence on my thinking, starting a few years ago when I ran across an essay of hers while looking for solid evidence that the Tragedy of the Commons is not an iron, universal law.

    I have a project of my own, partly theoretical, but mostly practical, centered around issues of community. My main goal is to provide an information and knowledge resource for those in the process of trying to rebuild what Robert Putnam calls “social capital” from the ground up. You can see the current state of it at my wiki: dwigki.wikispaces.com. One of the themes there is what I perceive to be a strong connection between community and commons. I’d be grateful for any useful comments or contributions.

  3. #3 Thinking Meat
    March 9, 2010

    Interesting take on Ostrom’s work in terms of evolution, thanks! (One very minor quibble: It’s Indiana University, not the University of Indiana.)

    This may be a tangent, but how does behavioral economics (or neuroeconomics, which blends the social and biological sciences) fit into your analysis of the discipline of economics?

  4. #4 David
    March 10, 2010

    For fans of Ostrom, I recommend also Natural Justice, by Ken Binmore: an economist turned evolutionary philosopher (though he calls himself a whig)

  5. #5 bob koepp
    March 10, 2010

    I’m struggling to grasp the point of these recent posts about evolution and economics. And I worry that we are being offered a caricature of economic theory — e.g., I can’t think of any serious economist who would deny that “human life is permeated with situations in which the invisible hand does not operate.” Classical economic theory is about a lot more than invisible hands.

    I’d also like to raise a question about the contrast between individual behavior and group behavior. It’s been suggested that individuals acting solely from self-interest will do things that we tend to think are morally questionable. No argument from me on that point. But how does moving up to the level of groups change the picture? Are groups competing among themselves more inclined to moral behavior than individuals competing among themselves? I don’t think so — at least not without an argument.

  6. #6 BaldApe
    March 10, 2010

    Eagerly awaiting the next installment.

  7. #7 OKThen
    September 24, 2010

    Economics is “the most isolated of the social sciences” because it aspires to be an exact physical science.

    But Ostrom social focus draws into sharp detail the “inexact” nature of such economic ideas as the “invisible hand.”

    Economists seldom acknowledge that behind their somewhat successful “statistical” ideas is not only an “invisible hand” but an “invisible emperor” with “invisible clothes.”

    But globalization means wide dissipation of value decisions capable of global economic and social impact to “visible individuals”; and the shrinking of imperial centers of stability.

    The black-box statistics of “invisible hand” economics is less and less important than explicit understanding in specific “visible hand” economic and social decisions.

  8. Beylikduzu from home, working on the house continues to transport. You contact us immediately.

New comments have been disabled.