Non-market economics

December 1, 2009 at 12:51 pm | Posted in News | Leave a comment

It’s worth checking out details of this year nobel prize winners in economics. A good link to see details is: http://plus.maths.org/latestnews/sep-dec09/nobeleconomicsindex.html

One of the winners has studied how bottom-up decision-making and organisational structure results in better and more efficient decision. Below is a quotation from the article cited at the link above.

Elinor Ostrom has been honoured for a body of work which closely scrutinises a vast number of case studies of common ownership, from irrigation systems in Nepal to groundwater basins in California. Ostrom’s results show that, while it’s not the best solution in all cases, common ownership can and frequently does work. Often this is down to centuries’ worth of knowledge and experience that have gone into evolving a common ownership system, the subtleties of which external authorities often fail to appreciate. But Ostrom has also identified a set of more abstract rules and procedures which need to be in place to make common ownership work. Some of her more surprising conclusions hold interesting lessons for state-owned or privatised property, too. Ostrom shows, for example, that the users themselves, rather than impartial outsiders, should monitor procedures and dish out punishments where necessary. Decision making processes should be as democratic as possible, allowing every user to take part in building and amending the rules that govern the group. Ostrom also shows that a bottom-up approach to building an organisation, with well-functioning smaller groups coming together to form a larger cooperation, can be more beneficial than the opposite top-down approach.

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