Once you tune in to some academic jargon, this book is fascinating.
The firm and government have their theorists and avatars a-plenty (Smith, Coase, Hume, Hobbes, Marx, Rousseau). There's another form of economic organisation sandwiched between the two: the Commons. Or, in the jargon, Common Pool Resources. Ostrom is a brilliant guide to how these CPRs work, or sometimes don't work. Most people, from left and right of the political spectrum, seem to think CPRs don't work, based on Hardin's famous phrase of the "tragedy of the Commons". But in fact many CPRs are older than the states that enfold them, and have been working for over 1,000 years. If you live in an English village you may find that your house deeds include the right to pannage, coppice, charcoal...
Ostrom describes a range of cases: forests, irrigation and fishing are the classic examples. She derives (chapter 1, cart before the horse, this is academe) some general features and rules for successful CPRs. She describes successes and failures in subsequent chapters, from a world wide set of examples. Her rules seem robust (I'm not qualified to say) but she may be underemphasising some points. To criticise:
1. If CPRs which fail are characterised by over exploitation, CPRs which last may imply systematic underuse. It's inconceivable that a durable equilibrium would be perfect, no?
2. Monitoring and sanctioning are crucial in Ostrom's view, to prevent free riders. She says the costs of these must be low. Yes, but the costs could also be quite high if the costs of alternative organisation such as privatisation, division and nationalisation are even higher.
3. Ostrom discusses the question of changing the rules of the CPR to accomodate weather, rainfall, etc. It's excellent but does it cover revolutionary change? Swiss and Japanese foresters have adapted to the chain saw, Spanish farmers have adapted to the water pump. Newfoundland inshore fishers have simply banned new technology while the Common Fisheries Policy is a notorious scandal.
4. CPR institutions are only sort-of democratic (exclusiveness is a must) and one-man-one-vote probably is a rarity.
These four questions make me fear that there is a bureaucrat sharpening his pencil somewhere...
Common Pool Resources, despite the jargon, are wonderful. Once you start to examine them, they seem to be everywhere: church congregations, cricket clubs, PTAs, Mt Blanc, coral reefs, even maybe sharia courts in non-muslim countries.
This is an eye-opening book, worth the effort. Elinor Ostrom richly deserves her "Nobel" prize. If I could I'd give her the Freedom of the City and the right to herd bankers over London Bridge as well.