|
| Anything but markets |
| Martin Hutchinson / Oct 14, 2009, 00:07 IST |
|
Nobel/economics: The 2009 Economics Nobel followed the current anti-market zeitgeist. Elinor Ostrom studies collective and traditional management of resources and Oliver Williamson shows why many transactions take place inside rather than between organizations. Diverse work by both recipients, but a common theme: interest in decisions made outside of the conventional market.
Williamson has studied why some firms own their suppliers while others eschew such vertical integration in favour of market relations. One of his answers is that non-market structures are chosen when suppliers and customers depend on each other and can’t easily find alternatives.
His thinking isn’t naïvely anti-market. Williamson provides both theory and practical examples to show that markets are generally the best way to organise economic relationships when there’s sufficient competition. But his thinking is far from the market fundamentalism often espoused by enthusiasts for financial deregulation during the credit boom. As for Ostrom, her main thesis is that traditional "common" management of resources can be more successful than either purely private or absolutist state control. Ostrom’s detailed studies of resource management from Mongolia to California demonstrate that locals can know more than even the best intentioned distant bureaucrats. The first woman to win the prize also shows the benefits of collaboration in establishing and enforcing rules.
Her work is not a direct attack on market arrangements, but it emphasises the value of other considerations. The Ostrom approach is different from most economic historians and development theorists, who emphasise the importance of clear property rights in spurring economic growth, from the British enclosure movement of the 16th-18th centuries to the slums of contemporary Latin America.
The two winners are less well known and less controversial than last year’s winner, newspaper columnist Paul Krugman. But that award was decided before the crisis damaged the reputation of so many conventional “free market” economists. The anti-free market judgement is unjust. Government actions, from low policy interest rates to controlled exchange rates, played a major role in the crisis. But the Swedish Riksbank, which gives the award, may have wanted to turn the spotlight on some more unconventional thinking.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
