For years I have begun classes with a collective action problem. We use imaginary money, so the stakes are very low. I give every student “$100” and offer to double whatever amount students put in a common pool that they will then share equally. Each student decides whether to give me $0 or $100, writing the choice anonymously on a folded piece of paper. I double whatever I receive and return it equally to all. In this set-up, it pays each individual to contribute nothing but still rake in an equal share of the returns from others' contributions. Yet the less the students contribute collectively, the less they benefit from my capacity to double their contributions. All else being equal, the group in which all contribute will do better than the group in which some do not. Yet even with the stakes so low, only about 65% typically contribute. When we repeat the exercise, the percentage of contributors falls each time because the contributors don't like being “suckered” by free-riders. As a result, the cooperative dynamic unravels.

The asset-doubling resource in this set-up (me) is much like a fishing ground where fish reproduce, a commons where grass renews itself, or a society in which law and order facilitate positive-sum transactions among strangers. Without a combination of internal sanctions (norms and guilt) and external sanctions (informal or formal) on free-riders, the fishing ground will be fished out, the commons will be overgrazed, and law and order will break down. In my classroom example, the value of the asset-doubling resource is lost as cooperation unravels.

Whenever people must deal with a non-excludable good—a good from which non-contributors cannot be excluded—there is an inbuilt trajectory to failure in collective action. This is probably the most important problem of human organization. It is certainly the most important problem of our time. It shapes the dynamics of global warming, the environment generally, nuclear proliferation, taxes, health care provision, and most other issues for which human beings have devised (or failed to devise) public governing systems.

Elinor Ostrom has spent her life figuring out how, over the centuries, human beings have managed to prevent tragic outcomes when a non-excludable good produces a collective action (or “free-rider”) problem. When the Nobel Committee awarded Ostrom the 2009 Prize in Economics, it might have drawn the attention of the general public to this problem. Yet in describing her accomplishments, the committee took a narrow view, designed to explain its choice to an audience of economists, not to educate the public on the broader dynamic of free-rider problems—a dynamic that has the potential to end life as we know it.

Most people have always understood that the lazy or self-interested often try to free-ride on others' contributions. But until game theorists uncovered the logic of the collective action problem in the 1950s, we did not have the intellectual tools to single out as analytically central the fact that certain goods have an intrinsic character such that it is impossible or highly costly to exclude non-contributors from their benefits. For example, once the nation has been protected by its armed forces, everyone benefits from not being overrun by the enemy, whether or not they have contributed to the common defense. Once law and order have been established, everyone benefits, whether or not they have contributed. Once the clean dishes have been put away in the open cupboard, everyone can take and use a dish, whether or not they helped wash or put away the dishes. It is this feature of non-excludability that allows free-riding and creates the collective action problem.

To deal with this problem, we have at our disposal three generic responses. First, we can divide up the resource and restrict its use to contributors (privatize it). Second, we can use a combination of socialization, guilt, religion and philosophical reason to create and maintain internal sanctions against free-riding. Third, we can use external sanctions—either informal and social in small groups or formal and political in larger groups—to coerce or enhance the incentives for cooperation. Ostrom considers the collective action problem the primary reason for government (the source of formal external coercion). It is, thus, the root of political science. I agree with this analysis.

The two traditional tasks of government specified in the European Middle Ages and early modern era were to provide common defense and law and order. These two tasks are classic non-excludable goods. In each case, individuals who make no contribution benefit as much as or more than those who contribute. The contribution of game theory has been to recognize that these classic tasks are only examples of a broader dynamic.

Elinor Ostrom has focused her attention on one extremely important form of the collective action problem—the problem of common-pool resources, such as groundwater, fisheries, or forests. In a common-pool resource problem, not only is the good to which people do or do not contribute available to all whether or not they have contributed; it can also be used up by the non-contributors. Ostrom first took on this problem in her dissertation, which analyzed the depletion of groundwater in the Los Angeles metropolitan area. Her great contribution, based on this and many other cases, has been to show that centralized government (which she often calls “the state”) and privatization often produce disastrous solutions that deplete or destroy the common-pool resource, whereas “self-governing” systems, devised and implemented by the users of the common-pool, often adopt forms of monitoring and coercion appropriate to the situation.

In her most important book, Governing the Commons, Ostrom uses the analysis of several in-depth and anthropologically-based studies of common-pool resources to derive eight design principles for enduring institutions that preserve these resources: 1) The boundaries—of both the commons itself and individual rights to it—are clearly defined; 2) The rules devised to govern the commons are congruent with local conditions; 3) “Most individuals affected by the operational rules can participate in modifying the operational rules” (p. 93) (later modified to read, “are included in the group that can modify these rules” [Reference Ostrom1992, p. 70]); 4) The monitors who detect infractions are either the users themselves or accountable to the users; 5) Violators receive graduated sanctions; 6) Parties have rapid access to low-cost local arenas to resolve conflicts; 7) “The rights of appropriators to design their own institutions are not challenged by external government authorities” (p. 101); and, for institutions that are part of larger systems, 8) “Appropriation, provision, monitoring, enforcement, conflict resolution, and governance activities are organized in multiple layers of nested enterprises” (p. 101). Ostrom supports these design principles with many telling examples.

The design principles have two features on which Ostrom herself does not dwell: one at the local level, regarding democracy, and another at the higher level, regarding the state.

At the local level, design principle #2 requires “congruence between appropriation and provision rules and local conditions” (p. 92). Ostrom specifies persuasively many conditions of “time, place, technology, and/or quantity of resource units” and “labor, materials, and/or money” (p. 92), all of which users on the ground, deeply familiar with the resource, can understand better than any outsider. In the Valencia region of Spain, for example, a complex system of water rationing varies by the availability of the water (pp.72–73). In Alyana, Turkey, specific local conditions have led fishermen to divide up the fishing area using a system in which all draw lots for first position, then each moves east to the next proximate location every day from September to January, and back west every day from January to September (p. 19).

Ostrom shows over and over that only individuals with a great deal of experience in those particular territories could have crafted the subtle systems that prevent degradation of the common-pool (the water, the fish) over time. She stresses the importance for a functioning system of adapting to the particular local features of time, place, technology, quantity of resource units, labor, materials, and money. She also stresses, crucially, the costs of any system of monitoring and sanctioning. The most effective systems, she argues, come from below, because they require local knowledge and trial-and-error learning—regarding both the resource and the ways in which those who stand to lose from any cheating on the rules can most easily monitor and sanction those who stand to win.

Surprisingly for a political scientist, Ostrom rarely includes the existing political and religious culture among the local conditions to which the rules for governing the commons must be congruent. She specifies the importance of norms (e.g., pp. 35–36, 88–89, 194, 200, 204, 211), but looks only at institutional arrangements for the sources and maintenance of these norms. Only after publishing her magnum opus did she begin to argue that “the particular rules adopted by participants vary radically to reflect local circumstances and the cultural repertoire of acceptable and known rules used generally in a region” (Reference Ostrom1998, 8; emphasis added). Her work has not explored these features of local conditions in depth.

A clue to this lacuna may be gained from the cautious phrasing of principle #3 in Governing the Commons: “Most individuals affected by the operational rules can participate in modifying [are included in the group that can modify] the operational rules.” This principle avoids specifying the terms by which an individual may “participate” or, even more passively, be “included.” The principle, in short, does not require democracy, a term that appears nowhere in the book and rarely in Ostrom's other work.Footnote ¹

Ostrom's refusal to commit to democracy is a product of her realism. The coercion that makes a system of governing the commons work must be sociologically legitimate, that is, legitimate in the eyes of the users. Whether sociological legitimacy requires democracy depends on the time, place, and local culture. Indeed, the imposition of democracy, whether electoral or otherwise, may undermine sociological legitimacy. Ostrom's vagueness about the ways that individuals might be “included” in the design process could signal that democratic theorists need to expand their understanding of normatively legitimate forms of government. We should perhaps not fixate on direct democracy or elections but instead investigate the bases of express and tacit consent in any regime, exploring the sources of consent and dissent, the pressures on citizens to agree to forms of rule that are against their interests, and the reasons for the diffusion of both democratic and anti-democratic ideas. Ostrom does not explore these issues.

More foundationally, Ostrom's design principles do not require political equality. The negotiations that lead to stable systems of preserving a commons often build on existing inequalities. Big landowners, corporations, and other powerful entities rarely accede to a negotiated outcome unless it preserves much of their power. Because she is interested in systems that succeed, Ostrom urges decisions by consensus, or at least decisions that command the agreement of most of the powerful parties. Decisions by majority rule play a destructive role in some of her narratives, as do politicians who run for office by fostering division.Footnote ² This stance is again an adaptation to reality. “Participation” and “inclusion” in locally legitimate terms are essential. Political equality is not.

At higher levels of government, Ostrom's analysis also leads in directions that she herself has not pursued and might not fully endorse. On the first page of Governing the Commons she states firmly, twice, that her successful self-governing enterprises resemble “neither the state nor the market” (p. 1). The Nobel Committee summarizes her work in exactly these terms, pointing out that in explicit contrast to “privatization and government regulation,” Ostrom's work focuses on systems created by the “users themselves” (2009a, 1). A summary sentence (quoted in the New York Times) concludes that Ostrom's “principles are in stark contrast to the common view that monitoring and sanctioning are the responsibility of the state and should be conducted by public employees” (2009a, 3).

The strong impression one would get from these words, and from similar words in the Nobel Committee's longer and more thorough “Scientific Background” document (2009b, 9), is that Ostrom's work is both anti-privatization and anti-state. Her own formulations also convey an anti-state stance. Design principle #7 is precisely that “The rights of appropriators to design their own institutions are not challenged by external government authorities.” In Ostrom's examples, external government authorities are often foolish, powerful, blundering, and uniformity-promoting (although often well-meaning), screwing up the fragile and delicately equilibrated systems that users with deep local knowledge have painstakingly constructed over time. This is “seeing like a state” (Scott Reference Scott1999) with a vengeance. Reading, I cheered to see her local people work out their regulatory systems themselves and groaned as the “feds” or their equivalents mowed all before them in their blind bureaucratizing zeal.

Yet to reduce Ostrom's theory to an anti-state stance would be to miss the important, often crucial, role that she assigns to the state at levels higher than that of the users themselves. Just as proponents of markets often fail to see the role that the state plays in guaranteeing contracts (and producing relative social peace and a serviceable infrastructure, as well as solving other collective action problems), so anti-state theorists will fail to see that in many cases Ostrom specifically argues for “nesting” local decision-making groups within larger structures that can provide the resources, including coercion, that make local decision-making efficient. Ostrom's final design principle (#8), for “more complex, enduring” institutions, requires that appropriation, provision, monitoring, enforcement, conflict resolution, and governance activities be “organized in multiple layers of nested enterprises.” In more recent work, she and co-authors conclude: “Scholars have found that in many cases a multilevel, polycentric system is more efficient than one large … governmental unit or only a single layer of smaller units” (Gibson, Ostrom and Ahn Reference Gibson, Ostrom and Ahn2000, 234, emphasis added).

In Ostrom's first case study, the dissertation case that is most carefully dissected in Governing the Commons, the different parties to the groundwater negotiation would probably never have come to an agreement (or would have passed several tragic points of no return without coming to agreement) had the state, in the form of its courts, not threatened to impose a solution if they did not come to agreement (p. 117). The state was also one crucial source of unbiased information that gave all parties a “common image” from which to deliberate (p. 115). Just as parties to a divorce, while using mediators to come to an agreement outside the courts, nevertheless negotiate “in the shadow of the law,” so local negotiators often need the threat of state coercion to get them to agree. The state can also provide information that the negotiators cannot provide themselves, and help in monitoring and sanctioning malfeasance, among other functions. As Ostrom concluded in her Presidential Address, “… without some external support of such institutions, it is unlikely that reciprocity alone completely solves the more challenging common-pool resource problems” (Reference Ostrom1998, 17). Purely local sanctions for defection can produce “escalating retribution,” with “feuds, raids, and overt warfare” (Idem; see also p. 21). A higher state level is often required to “provide arenas in which low-cost, enforceable agreements can be reached” (p. 146; also p. 156). Her theory is thus compatible with Archon Fung's (Reference Fung2004) concept of “accountable autonomy,” which marries participation at the lowest level with a supporting, monitoring, sanctioning, and information-spreading regime one level up.

In the international realm, where our common-pool resource problems are the most life-threatening, we have no “state.” We cannot adopt Elinor Ostrom's nesting strategy without creating overarching institutions in which local agreements can nest. Nor is it easy to know how we would adopt the strategy she urges of beginning at the local level and working up (pp. 189–90). Her own nesting theory therefore suggests that we must try to build overarching institutions at the same time that we struggle to preserve the flexible, grounded, local knowledge and the self-commitment that make possible legitimate and efficient systems of mutual monitoring and sanctions.

In the international realm we will not be able to adopt all of Ostrom's design principles. The greater the numbers involved, the harder it is to come to agreement (pp. 188, 198). We should nevertheless pay serious attention to and be guided by those principles, on the international as well as local level. Even more, we should be guided—in regard to democracy, the state, and other matters—by the sensitivity to reality and the human understanding that Ostrom has always brought to the fragile, difficult process of self-government.