Economics & Finance
June Wed 27, 2012
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Between the seventeenth and nineteenth centuries, England promulgated the Enclosure Acts, which were responsible for privatizing (and fencing in) the lands for grazing livestock, so that they could be devoted to intensive cultivation. Until that point, those lands were common and under-used, without an owner except the sovereign, in a purely formal sense, but freely accessible to anyone. The English shepherds, farmers, cultivators, and hunters who, until then, had freely used the commons for their livelihood were excluded or limited in access due to the enclosures and had to move with their families from the countryside into the cities.This Great Transformation, as the socio-economist Karl Polanyi defined it, caused low-cost labor to be concentrated in places like the city, a precondition for exploiting the use of Watt's steam engine and opening the English Industrial Revolution. In about the same years, with the promulgation of the Homestead Act, a similar process occurred in the U.S. at the expense of the Native Americans.The privatization of land had the advantage of allowing for a more intensive use of resources and thus promoting the economic development of the West, but at the cost of shameful socio-hygienic conditions for most of the worker population that were only solved (at least partially) after many decades (or centuries) with the labor laws and a welfare state.Around the same time, but in another place in the world, in Törbel, Switzerland, there was a substantially different definition of the law on land. The management of land was not assigned to either a private or a government entity, but belonged to a community of people that used it. This particular instance of “collective” institutions was stable and efficient for centuries in Törbel, showing that there may be a third way (and an efficient and effective one) that lies between the strictly state management of resources (like in England before the enclosures) and strictly private management (in England after the enclosures). This represents the greatest empirical and theoretical contribution of Elinor Ostrom.Unfortunately, Elinor Ostrom, the first woman (and currently the only one!) to win the Nobel Prize for Economic Sciences in 2009, died on June 12 at age 78 from cancer. In April of 2012, Time magazine had named her one of the 100 most influential people in the world. She worked at the University of Indiana and headed the “Vincent and Elinor Ostrom” Research Center for political studies and analysis with her husband.
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