Okay, let's unpack this. I want you to mentally
travel back in time with me. It's October 12th,
2009. Can you picture where you were? Because
the mood of the world at that specific moment
was, well, it was heavy. To put it mildly. Heavy
is a very polite way of putting it. I mean, we
were barely a year past the collapse of Lehman
Brothers. The global financial crisis had just
finished, you know, tearing through the world
economy like a hurricane. People were losing
their homes. Their retirement funds were just
evaporating. Absolutely. And there was this.
palpable sense of anger and betrayal in the air.
Exactly. The trust was gone. I mean, for 30 years,
we'd all been told that the markets were efficient,
that they were self -correcting. Right. The invisible
hand had it all sorted. That the smartest guys
in the room, the ones with the incredibly complex
mathematical models had everything under control.
And then just poof. It all melted down. It really
was a genuine crisis of faith. You had the entire
free market dogma just collapsing on one side.
But the alternative, I mean, these massive government
bailouts, the state stepping in to save the very
banks that caused the problem, that didn't feel
like a victory to anyone either. No, not at all.
It felt like we were trapped between two completely
broken options. This ruthless crashing marmot
or the clumsy heavy handed state. You're either
going to get run over by the market. Or smothered
by the government. That was the choice. And right
in the middle of this huge global existential
hangover, the Royal Swedish Academy of Sciences
steps up to the microphone. They're about to
announce the winner of the Nobel Memorial Prize
in Economic Sciences. And you have to understand,
this is usually the Super Bowl for a very, very
specific type of person. Right. It's a coronation
for the academic elite. Totally. And the betting
markets. And yes, of course, economists bet on
this stuff. We're all favoring the usual suspects.
Someone from Chicago. Chicago, maybe MIT. Almost
certainly a man, almost certainly someone who
deals in high level abstract mathematics. You
know, someone who models the entire world as
a series of equations. So the committee steps
up. There's this global press conference. They
clear their throat and they read the name. Eleanor
Ostrom. And the collective reaction from the
economics world. It wasn't applause. It was just
silence. followed by, I imagine, the sound of
thousands of keyboards frantically Googling,
who is Eleanor Ostrom? It was a genuine shock
to the system. And not just because she was a
woman, though. Let's be very, very clear. Yeah,
that was a huge deal in itself. It was massive.
She was the first woman to ever win the prize
in its entire history. That was a headline on
its own. But the deeper shock, the one that really
rattled the cages of the profession, was that
she wasn't even... you know technically an economist
right she was a political scientist her phd wasn't
an econ she didn't teach at the london school
of economics or harvard or princeton no she was
at indiana university indiana university and
her work it wasn't about interest rates or derivatives
or stock market fluctuations it was about well
it was about farmers and irrigation ditches and
fisheries and uh police departments in the midwest
things that mainstream economics just did not
consider to be economics and that is exactly
why this story is so incredible by choosing her
especially in that moment in 2009 the committee
was making a radical statement they were basically
acknowledging that the dominant theories had
failed they were they were saying the emperor
has no clothes Eleanor Ostrom Lynn, as everyone
called her, had spent her entire life fundamentally
dismantling the dogma that ruled economics. She
looked at the accepted wisdom that said humans
are just selfish, rational egoists who will destroy
everything they touch unless they're controlled.
And she said, actually, I have data that says
otherwise. She didn't just say it. She went out
and proved it. She went out into the real world,
you know. muddy boots and all that and watched
how actual people behave when they have to share
something. And what she found gave us what we
now call Ostrom's Law, which is one of the wittiest
concepts we're going to discuss today. It's this
idea that, well, reality is stranger and often
a lot better than theory. I love that. It's the
ultimate underdog story of academia, isn't it?
It really is. You have this woman who was told
she couldn't even study economics because of
her high school math grades. We'll get to that.
It's an infuriating story. And she comes back
decades later to completely revolutionize the
field and prove that the smartest guys in the
room were looking at the world through a keyhole.
So the mission for this deep dive is pretty clear.
We are going to explore how one woman took down
the tragedy of the commons. A theory that a lot
of us just sort of accept as truth. We're going
to learn why your local homeowners association,
as annoying as they can be, might actually be
onto something deep and primal about human nature.
And we're going to unpack her eight design principles,
which are essentially the cheat codes for human
cooperation. And we're drawing from a huge stack
of sources here. Extensive biographies, her seminal
book, Governing the Commons, and accounts of
the legendary workshop she built at Indiana.
It's a fantastic story. It is. But before she
was a Nobel laureate. She was just a kid in Los
Angeles. Now I read the bio and I see born in
Los Angeles, grew up in Beverly Hills, and I
immediately picture, you know, the movie Clueless.
Right. Mansions, convertibles, ridiculous wealth.
Exactly. But that wasn't her life at all, was
it? Not even close. She was born Eleanor Claire
Awan in 1933. And while the zip code said Beverly
Hills, her reality was... post -depression survival
she always described herself as a poor kid in
a rich kid's school her parents were artists
right which sounds very romantic but in the 1930s
that usually means financially unstable that's
a good way to put it her mother was a musician
and her father was a set designer for the opera
but they separated when she was quite young and
the separation it didn't just split her time
between two houses it really split her identity
how so well She lived with her mother who was
Protestant in a very, very modest house on the
edge of the district. But then she spent her
weekends with her father's family who were Jewish.
Wow. That a fascinating duality to grow up with,
especially in the 1930s and 40s. It was. And
she talked about this later in life. She said
she never felt like she fully belonged in either
world. She was always the odd one out. Exactly.
At school, she was the poor kid among the children
of movie stars. At home during the week, she
was the Protestant girl. On the weekends, she
was the Jewish daughter. She said this gave her
an outsider's perspective from the very beginning.
She learned to observe systems. She had to. She
learned to watch how rules worked because she
was always slightly on the margins of them. She
wasn't an insider anywhere. And she had to hustle.
There's this detail in her biography that I just
love. She swam competitively in high school.
But it wasn't just for the glory of the sport.
No, no, and it was entirely practical. She figured
out that if she got her water safety instructor
certification, she could teach swimming lessons.
And that paid well. And teaching swimming paid
real money. That money was her ticket to college.
Her mother, you know, didn't actually see the
point of her going to university. Yeah, the prevailing
attitude for a girl in her position at the time
was, you graduate high school, you get a steady
job as a secretary or something, you find a husband,
end of story. But she clearly had this engine
in her, this intellectual hunger. She wanted
to know how the world worked. Oh, absolutely.
However, she hit a wall in high school that I
think is maybe the most infuriating and revealing
part of her entire story. We have to talk about
the trigonometry incident. This is the moment
that nearly derailed her entire intellectual
trajectory. It's just maddening. So set the scene.
Okay, so... She's in high school, Beverly Hills
High. She likes math. She's good at it. She wants
to take trigonometry. Which is a pretty standard
prerequisite for any serious science or economics
degree later on. It's the gateway. So she goes
to the administration and they look at her transcript.
Now, her grades in algebra and geometry were
good. They were fine. But they weren't, you know,
straight A's, top of the class. And in the late
1940s, if you were a girl, good just wasn't good
enough, was it? Not for something like advanced
math. The policy, whether it was written down
or just understood, was that girls were generally
discouraged from taking it unless they were undeniable
off -the -charts geniuses. So they just told
her no? They just said no. They gatekept her
out of trigonometry? A simple administrative
decision? It makes my blood boil. Just some bureaucrat
in an office saying, eh, you don't need that.
That's for the boys. And the consequences of
that one decision were massive. Because she didn't
take trig in high school, she couldn't take calculus
as an undergraduate at UCLA. Right. And because
she didn't have calculus on her transcript, the
door to the hard sciences and, crucially, to
the entire field of mainstream economics was
slammed shut in her face before she even started.
Let's think about the irony of that. The woman
who would eventually win the Nobel Prize in economics
was told she wasn't allowed to learn the basic
math required to even enter the field. It's staggering.
It's an incredible story of institutional blindness.
But, and this is where we really see her resilience,
she didn't just give up on learning. She pivoted.
She joined the debate team. She joined the debate
team. And she credits debate as her real education.
Why debate? What did that give her that math
didn't? Debate forces you to look at public policy
from all sides. If the topic is, say, should
we build a dam on this river? You have to be
ready to argue yes and no with equal conviction
and with quality evidence. You have to understand
both arguments inside and out. Exactly. It taught
her that there is rarely one single right answer
in human affairs. There are always tradeoffs.
There are always competing interests and values.
It moved her thinking away from a kind of black
and white mathematical logic and toward understanding
the messy complexity of human rules and arguments.
It's training for looking at the gray areas,
which is exactly where she ended up living her
entire professional life. It's the perfect training.
So she graduates high school in 1951. She gets
herself to UCLA. She absolutely grinds through
her BA in three years. While working multiple
jobs. Right. Working at a dime store, working
at the library, teaching swimming lessons the
whole time. She graduates with honors and she
thinks, OK, now I'm ready. I want to get a Ph
.D. in economics. She applies to UCLA's own economics
Ph .D. program. And the ghost of the trigonometry
incident comes right back to haunt her. They
look at the transcript. They look at the transcript.
No calculus, automatic rejection. They didn't
care about her honors degree, her reasoning skills,
her work ethic. They just looked for the math
credits and she didn't have them. That was the
box you had to check. And she couldn't check
it. So she literally walked down the hall to
the political science department. And this is
the great twist of fate in her story. Because
they saw something different. They saw something
different. Political science in the 1960s was,
frankly, a bit more open -minded than economics.
They were interested in institutions. How do
governments actually work? How are rules made
and enforced in the real world? They looked at
her debate background, her incredible logic,
her honors thesis, and they said, come on in.
It makes you wonder if she had been accepted
into the economics program. She might have been
molded into just another model builder. She would
have been trained to think in exactly the same
way as the people she eventually disproved. Being
forced into political science gave her the freedom
to look at the world differently. It did. And
she didn't just stay in the ivory tower after
that either. Before starting her Ph .D., she
got these jobs in the real world. She worked
as an export clerk. Learned shorthand, I read.
Right. And then she was an assistant personnel
manager in a firm that had never hired a woman
for anything other than secretarial work. She
was constantly pushing boundaries. And what did
that teach her? It taught her about the invisible
rules of organizations. She saw how a hierarchy
actually functions day to day, which is often
very, very different from what the official organizational
chart says. The gap between theory and practice.
Exactly. That distinction between the rules on
paper and the rules in use became the absolute
central theme of all of her research. So she
gets her PhD in 1965. And she enters the academic
arena. Right. As a very specific, very powerful
theory is taking over the world. We need to introduce
the villain of the story or at least the intellectual
antagonist. Yes. The tragedy of the commons.
I feel like it's one of those phrases everyone
has heard, but few people really know where it
comes from or just how. Well, how profoundly
depressing it actually is. It was popularized
by a biologist named Garrett Hardin in a hugely
influential 1968 article in the journal Science.
The core concept is older, but Hardin's metaphor
is what made it so incredibly sticky. He asked
us to imagine a pasture, right? The commons,
it's open to everyone. Exactly. So you're a herdsman.
You have a cow grazing on this shared land. And
you are a rational economic actor. In classic
economics, that means you want to maximize your
own personal profit. So you look at the pasture
and you think to yourself, if I add one more
cow to my herd, what happens? Well, the benefit
is obvious. I get a whole extra cow to sell at
the market. The benefit to me is, you know, 100
% of that cow's value. Exactly. You get all the
milk, all the meat, all the profit. The benefit
is entirely yours. That's a positive utility
of plus one for you. But there's a cost. There
is a cost. Adding that extra cow puts a little
more strain on the grass. The pasture gets a
little bit more degraded, a little bit overgrazed.
However, that cost is shared by everyone who
uses the pasture. So if there are, say, a hundred
herdsmen using the field. You only suffer one.
one hundredth of the damage. The cost is socialized,
but the benefit is privatized. So the math is
a complete no brainer. I get 100 percent of the
gain and I only take one percent of the cost.
I would be an economic idiot not to add the extra
cow. Correct. And so would your neighbor and
the neighbor after that. Each person acting perfectly
rationally and in their own self -interest adds
another cow and another and another. Until the
pasture is a muddy wasteland and all the cows
starve. That's the tragedy. Hardin's famous line
is freedom in a commons brings ruin to all. He
believed that human beings are locked into this
remorseless system where we are compelled by
our own selfishness to destroy the very resources
we depend on. We are helpless captives of this
logic. It's such a bleak, deterministic view
of humanity. It basically says we can't have
nice things because we'll just break them. And
the policy implications that flowed from this
idea were absolutely massive because. If you
believe this tragedy is inevitable, like a law
of physics. Then you only have two choices to
stop it. Exactly. The binary choice. Solution
A is what we call Leviathan. The state. Big government.
The state. A central government comes in with
an iron fist. It puts up fences. It hires police.
It issues a limited number of permits. It regulates
the pasture from the top down. If you add an
extra cow without permission, you go to jail.
Okay, so that's one option. What's solution B?
Privatization. The market. You take the commons,
you chop it up into a grid of little square parcels,
and you give one to each herdsman as their private
property. And the logic there is that if I own
my little plot of land, I won't overgraze it
because I'm the only one who suffers the consequences.
Precisely. The costs are no longer socialized.
If I ruin my land, it's my problem alone. So
for decades, this was the entire dogma. You either
need big government to regulate us or you need
big markets to incentivize us. There was no third
option. None. And this wasn't just some abstract
academic theory. This shaped Cold War policy.
The West pushed privatization across the globe.
The East pushed state control. But both sides
fundamentally agreed that the commons, the idea
of people just sharing stuff and figuring it
out for themselves, was a primitive relic of
the past, doomed to fail. And then comes Eleanor
Ostrom. She looks at this elegant, perfect, mathematically
sound model of the tragedy, and she asks a very
simple but very dangerous question. Is this actually
true? Does this actually happen? She called this
binary thinking the panacea trap. The idea that
there is one magic pill, either the state or
the market, for every single problem in the world.
She was an empiricist at heart. She didn't care
if the model was beautiful and elegant on paper.
She wanted to know if it matched the data from
the real world. So she started doing detective
work. That's the perfect way to put it. And let's
talk about her first big case, the one that formed
her entire PhD. The water wars of Los Angeles.
This was the subject of her dissertation published
in 1965. And it was the perfect real world laboratory.
In the 1950s, Southern California was booming.
And in the area known as the West Basin. This
is what, near the coast? Yeah, you've got cities
like Inglewood, Manhattan Beach, El Segundo.
You also have big industrial players like oil
refineries and you have farmers. And they are
all pumping massive amounts of water from the
same underground aquifer. And they were pumping
it dry. Right? It was a classic commons problem.
It was a textbook tragedy of the commons in the
making. They were pumping it so fast that the
water level in the aquifer dropped below sea
level. Which means? Salt water from the Pacific
Ocean started seeping in, contaminating the fresh
water. They were literally poisoning their own
well. It was a slow motion disaster. Now, according
to Garrett Hardin and the tragedy theory, these
people should have just kept pumping until the
water was completely gone and unusable. Yeah.
They should have been trapped. In their selfishness.
Exactly. Or they should have waited for the state
of California to come in from Sacramento and
take over the whole system, dictate who gets
what. But that's not what happened. That is not
what happened. Ostrom, through meticulous fieldwork,
observed that these people who were fierce competitors
suing each other over water rights. started talking
to each other. They communicated. They formed
a voluntary association. They started gathering
their own data on water levels. They actually
went to court, not to destroy each other, but
to get a judge to ratify an agreement they had
worked out amongst themselves. So they created
their own solution. Yeah. A solution that wasn't
the state and it wasn't privatization. It was
something else entirely. They agreed to collectively
limit their own pumping. They set up a water
master, an official paid by them, to monitor
usage. And get this, they voluntarily agreed
to pay a tax on every gallon of water they pumped.
They taxed themselves. That does not sound like
the behavior of selfish, rational egoists. Not
at all. And the money from that tax was used
to buy imported water from the Colorado River
to actively replenish the basin. They weren't
just extracting, they were stewarding. They created
what Ostrom called a polycentric system. Okay,
that's a key Ostrom word, polycentricity. It
sounds like a geometry term. Break it down for
us. Poly just means many, and centric means centers.
So instead of one big boss at the top, the state
telling everyone what to do, you have many overlapping
centers of decision making. So in this case?
You had the local water board, you had the city
councils, you had the private water companies,
you had the court system acting as a referee.
They're all formally independent of each other,
but they overlap and interact and negotiate.
To an economist who likes clean hierarchical
charts, that probably sounds like an absolute
mess. It looks chaotic. And that was the mainstream
criticism for years. It's too messy. It's redundant.
You have too many cooks in the kitchen. But Ostrom
found the opposite. She found that the messiness
was actually a strength. It created resilience.
If one part of the system failed, another part
could step in. It allowed for experimentation.
It allowed the rules to be tailored to the specific
local geology and politics rather than a clumsy
one size fits all rule handed down from the state
capitol. So she proves it works in L .A. with
this incredibly detailed case study. But her
critics probably said, OK, sure, that works in
California where people have lawyers and money
and access to courts. But what about the rest
of the world? What about poor farmers in developing
countries? And that was a very fair challenge.
And it's the challenge that pushed her to go
global. She realized she couldn't build a whole
theory on just one case. She needed a massive
data set of how people manage commons all over
the planet. So she and her colleagues at the
workshop in Indiana started collecting case studies
from... Well, everywhere. We're talking about
high altitude irrigation systems in Nepal, community
managed forests in Japan, mountain meadows in
Switzerland that have been shared for centuries.
Fisheries in Turkey and Nova Scotia. She became
a global collector of common pool resources and
she found the same pattern over and over and
over again. OK, let's unpack this a bit because
this is amazing. She basically realized that
Swiss villagers and Indonesian fishermen had
figured out something that Nobel -winning economists
hadn't. That's exactly right. Take the Swiss
village of Turbil. She wrote about them extensively.
They have been managing their alpine grazing
lands and forests communally since the year 1224.
Wait, say that again. 1224. 1224. That's nearly
800 years of successful, sustainable sharing.
If the tragedy of the commons was a universal
law like gravity, Those pastures should have
been a desert centuries ago. They should have
been destroyed by the 1300s, but they weren't.
And Ostrom asked, why? How did they do it? And
what was the answer? They had rules, not rules
imposed by the king of Switzerland, but rules
they developed themselves. For the grazing lands,
they had the wintering rule. The wintery rule.
The rule was simple and brilliant. You can only
send as many cows up to the shared alpine pasture
in the summer as you can personally feed over
the winter with hay that you grew yourself on
your own private land. Oh, that is genius. It
naturally caps the total herd size. It links
the use of the public commons to your private
capacity. Precisely. And it was enforced not
by a policeman, but by the villagers themselves.
They had a cow official, which is a real job
title, who would count the herds going up the
mountain. If you tried to cheat, you paid a hefty
fine directly to the community. So Ostrom looks
at Turble. She looks at the Japanese forests.
She looks at the L .A. water basin. And she has
this profound realization. Humans are not trapped.
We are not helpless. we are capable of creating
our own rules to govern ourselves. Exactly. She
moved the entire conversation from it's impossible
to, okay, it's possible, but how does it work?
What are the common ingredients for success?
And this leads us to the absolute core of her
intellectual legacy. In 1990, she publishes her
magnum opus, Governing the Commons. And in it,
she lays out what she calls the eight design
principles. This is the meat of the theory. And
I just want to say these aren't rigid laws. She's
very clear about that. They're design principles
that she observed over and over again in successful,
long, enduring systems. It's a toolkit. It's
a toolkit. And if you're listening to this and
you run a team or you're part of a crypto DAO
or you manage a community garden or you're just
in a messy house with three roommates, get a
pen. These are the eight traits that successful
groups share. Let's walk through them. Principle
number one. Clearly defined boundaries. This
sounds so obvious, but it's where most efforts
fail. You need to know exactly who is allowed
to use the resource and who is not. And you also
need to know the physical boundaries of the resource
itself. Is it this lake or does it include the
stream leading into it? So a commons doesn't
actually mean open to absolutely everyone. No,
that is a huge and persistent misconception.
That's an open access free for all, which does
lead to tragedy. A successful commons is a club.
It has members. It has an inside and an outside.
You have to be able to say no to outsiders. You
must be able to exclude people. If you let the
entire world fish in your small lake, the lake
will die. You need a fence, whether it's a physical
fence or a legal one, like a membership list.
Okay, so exclusivity matters. Principle number
two, congruence with local conditions. The rules
you make have to match the reality on the ground.
A rule that works for a slow -growing lobster
fishery in Nova Scotia will destroy a fast -growing
tilapia fishery in Indonesia. So no copy -pasting.
No copy -pasting. The rule about when you can
harvest or what tools you're allowed to use need
to fit the local biology, the local culture,
and the local labor market. This is the ultimate
anti -bureaucrat principle. You can't just have
someone in the capital city writing one size
fits all laws for the entire country. Exactly.
Ostrom found again and again that top -down rules
from a distant government usually fail because
they ignore critical local knowledge. The farmers
know the land better than the regulators do.
Which flows perfectly into principle number three,
collective choice arrangements. This is basically...
democracy at the resource level, the people who
have to live by the rules should have a say in
making and modifying the rules. Why is this so
important? It's all about buy -in. If some distant
government agency sends me a letter that says
I can't catch fish on Tuesdays anymore, I'm going
to be annoyed and I'll probably try to cheat
if I can get away with it. You see it as an imposition.
Of course. But if I was in the community meeting
where we all looked at the data and decided together
to ban fishing on Tuesdays to let the young fish
grow, I understand why. I own that rule. I helped
make it. I'm much more likely to follow it and
to make sure my neighbors follow it, too. It
changes the dynamic from grudging compliance
to active commitment, which leads to principle
number four, monitoring. This is the big one.
This is the enforcement question. How do you
stop the free riders? In the Leviathan model,
you hire a policeman. But policemen are expensive,
they don't know the local context, and they can
be bribed. So what's Ostrom's solution? Ostrom
found that in successful commons, the monitors
are the users themselves, or people who are directly
accountable to the users. The neighbor watching
the neighbor. Yes. It's mutual accountability.
In the irrigation system she studied in the Philippines,
the farmers literally take turns walking the
canals to make sure no one is stealing water.
Or sometimes the monitoring is built right into
the system itself. If I take too much water upstream,
your water pressure downstream drops, and you
know immediately who to talk to. But what happens
when you catch someone cheating? That brings
us to principle number five, graduated sanctions.
This is pure psychological genius. If someone
breaks a rule, you don't throw them in jail.
You don't find them a million dollars on the
first offense. Because maybe it was an honest
mistake. Exactly. Maybe I forgot. Maybe my family
was desperate. The first punishment is usually
very low cost. It might just be a warning. Or
a little bit of social shame. Hey Bob, everyone
saw you take too many fish yesterday. Cut it
out. It's designed to preserve social peace.
But the sanctions are graduated. They are graduated.
If I do it again, the fine gets bigger. If I
keep doing it, the community might suspend my
fishing rights for a week. If I'm a persistent,
unrepentant rule breaker, eventually they kick
me out of the commons entirely. But the system
is designed to correct behavior and reintegrate
people, not just punish them. Okay. Principle
number six. Conflict resolution mechanisms. People
are going to fight. It's human nature. My cow
wanders onto your land. I think you took too
much water. You need a way to solve these arguments
that is cheap, fast and seen as legitimate by
the community. So now the Supreme Court. Right.
If every little dispute over a cow or a parking
spot requires you to hire a lawyer and spend
three years in court, the system will collapse
under its own weight. You need a local council,
a weekly meeting, a group of respected elders,
some kind of local accessible arena where you
can go to get a quick, fair decision. That makes
sense. Principle number seven, minimal recognition
of rights to organize. This is about the relationship
with the bigger government. The state doesn't
have to run the commons, but it has to let it
exist. The central government needs to recognize
the right of the locals to make their own rules.
If the state comes in and says, your little local
fishing association is illegal and your rules
don't count. You're doomed. The whole system
fails. So the government has to respect the local
autonomy, at least to a minimal degree. And finally,
principle number eight. This is for the really
big, complex systems. You can't manage a massive
river basin that crosses five states with a single
town council meeting. It's too big, so you need
layers of governance. Like Russian dolls. Exactly
like Russian dolls. Small groups of farmers manage
their local irrigation ditches. Those small groups
send representatives to a regional canal board.
Those regional boards send representatives to
a basin -wide council. You build the governance
from the bottom up. It creates a system that's
robust and can manage complexity. And it's resilient.
If one local group fails, the whole river doesn't
collapse. When you laid them all out like that,
it seems so. I don't know. It seems like common
sense. But it was revolutionary because it relied
on trust, on face -to -face communication, and
it treated people as active. intelligent problem
solvers, not just passive resource users. It
was a paradigm shift. Now, Ostrom didn't build
this entire theory in a vacuum. We have to talk
about her partner in crime. Vincent Ostrom, her
husband, her collaborator, and her chief intellectual
sparring partner. They met at UCLA, right, where
she was a student. Yes, in a postgraduate seminar
on political theory. He was an associate professor,
and he was 14 years older than her. They fell
in love, married in 1963, and in 1965 they moved
to Indiana University together, where they would
spend the rest of their careers. And their relationship
wasn't just domestic. They coined a special phrase
for their dynamic, didn't they? They did. They
called it love and contestation. Love and contestation.
Yeah. That sounds intense. It was. They dedicated
books to each other using that exact phrase.
They genuinely believe that the highest form
of respect you can show for someone's ideas is
to challenge them, to argue with them, to push
them. They would have these fierce, loud arguments
about constitutional theory and federalism over
the dinner table. They sharpened each other's
minds like two knives. And there's a personal
aspect here that Lynn was very open about later
in life. They made a conscious decision not to
have children. No, they didn't. And she said
explicitly that this gave her a different kind
of freedom. She wasn't worried about saving for
college funds for kids. She wasn't worried about
maximizing her salary to buy a bigger house.
And this allowed them to pour their personal
resources, both their time and their money, into
their work. Into their intellectual children.
And the greatest of those was the workshop. The
workshop in political theory and policy analysis
founded in 1973. And you have to pay attention
to that name. It wasn't a center or an institute.
No, it was a workshop. Like a carpenter's shop
or an artisan's studio. The metaphor was absolutely
deliberate. A workshop is a place where you make
things. where you learn a craft by doing it.
It wasn't a place where the great professor stood
at a podium and lectured down to the students.
It was a place where students and professors
worked side by side on real problems. And it
was incredibly interdisciplinary, which was rare
for the time. Radical for its time. In most universities,
even today, the economists don't talk to the
sociologists and the political scientists definitely
don't talk to the ecologists. The departments
are silos. But at the workshop. They were all
in the same room. They realized you couldn't
possibly understand a fishery just by looking
at the economics. You needed to understand the
biology of the fish, the ecology of the ocean,
and the culture of the fishermen. You needed
all the pieces. And they did some fascinating
experiments there to test their theories in a
controlled setting. Yes. They were pioneers in
what's called experimental economics. They would
bring students into a computer lab and simulate
a commons. They'd say, OK, you all have access
to this shared digital resource. You can harvest
from it. How much do you want to take? And what
happened to those first experiments? When the
students were isolated in their cubicles, forbidden
from talking to each other, they acted exactly
like the tragedy of the commons predicted they
would. They overharvested. They were greedy.
They destroyed the resource in just a few rounds.
So the model held up in a vacuum. In a social
vacuum, yes. Yeah. But then they changed one
variable. They let them talk. They let the students
stand up and talk to each other for just a few
minutes before the round started. No binding
contracts, no police, just what they called cheap
talk. They could make promises, they could strategize,
they could look each other in the eye. And the
results just completely flipped. Completely flipped.
The cooperation rates skyrocketed. The sustainability
of the resource went way up. On average, their
collective returns doubled. Just from talking.
It proved that humans are social animals. We
use language, reputation, and the threat of social
shame to build trust and enforce norms. The classic
rational egoist model failed because it assumed
we were all sociopaths living in silent bubbles.
Ostrom proved that, actually, we are neighbors.
This brings us to the famous Ostrom's Law. It's
a bit of an academic inside joke, but it sums
up her entire philosophy so perfectly. What is
it? A resource arrangement that works in practice
can work in theory. I love that. It's the ultimate
understated burn on ivory tower academics. Hey,
I know your fancy math says this is impossible,
but these farmers have been doing it successfully
for 300 years. So maybe, just maybe, your math
is wrong. It's a powerful assertion that reality
is the ultimate authority, not the elegance of
your model. And finally, in 2009, the ultimate
authority in economics, the Nobel Committee,
agreed with her. She wins the prize. She shares
it with another institutional economist, Oliver
Williamson. And in true Ostrom fashion, she does
something incredible with the prize money we're
talking about. Roughly $1 .4 million. She donated
her entire share to the workshop, every single
cent. That's incredible. She wanted to ensure
that the research would continue, that students
from developing nations could get funding to
come to Indiana and learn these methods. She
wasn't building a personal fortune. She was building
an intellectual lineage. The prize was for the
work, not for her. Exactly. But the end of her
story comes tragically fast after that incredible
peak. It does. In October 2011, just two years
after winning the Nobel, she was diagnosed with
pancreatic cancer. It's a brutal, fast -moving
diagnosis. But she didn't retire. She didn't
stop. She refused to stop working. She told her
friends she felt she had so much work left to
do, so little time. She gave the prestigious
Hayek lecture a major academic address just 11
weeks before she died. And there's this detail
that is just, it's heartbreaking. But also so
inspiring. Yeah. Right up to the very end. On
the day before she passed away, she was in her
hospital bed sending emails to her co -authors
about papers they were working on. She was checking
the edits. She was checking citations, making
sure the arguments were tight. And on the very
day she died, June 12, 2012, her final article,
an essay called Green from the Glass Roots, was
published online. She worked until her absolute
last breath. And what happened to Vincent? Vincent
died just 17 days later. He was 92 and also had
cancer complications. It was as if they couldn't
exist without each other. It was the end of an
era for the workshop and for the entire field
they helped create. So let's zoom out. We've
covered a lot of ground here. History, economics,
water rights, Swiss cows. But we are recording
this in 2026. Why does Eleanor Ostrom still matter
so much to the person listening to this right
now? Because the commons isn't just about...
grass and water and fish anymore. We are living
in the age of the digital commons. You're talking
about the Internet. Think about it. Open source
software like Linux, Creative Commons licensing,
Wikipedia, the vast global repository of knowledge
that is the Web. This is a massive common pool
resource. And it suffers from the same kinds
of threats as the old pasture. Exactly. It suffers
from pollution in the form of misinformation,
spam and online toxicity. And it suffers from
overuse and congestion. And we see the same old
binary choice being argued today, don't we? Some
people want the government to step in and regulate
the internet like utility. That's the Leviathan
solution. And other people want to put everything
behind a paywall, privatize all the data. The
privatization solution. Ostrom's work offers
the crucial third way for the digital age. Just
look at Wikipedia. It is a classic Ostrom system.
Let's check the principles. Does it work? Number
one, clearly defined boundaries. Yes. There are
different user levels. There are editors and
administrators with special rights. Not just
anyone can go in and change the front page or
delete a major article. There's a boundary between
a casual reader and a trusted contributor. Okay.
Number four, monitoring. Constantly. The users
monitor each other. If I go in and vandalize
a page, a software bot or a human editor will
likely spot it and fix it within seconds. It's
a system of mutual surveillance for the common
good. Number five. Graduated sanctions. Absolutely.
First, you get a polite warning on your user
talk page. Then maybe a temporary 24 -hour ban.
If you keep it up, you get a permanent ban. It
fits the model perfectly. So Wikipedia works
not because of government force or a profit motive,
but because of community governance. It is one
of the greatest examples of a large -scale self
-governing commons in human history. It's Ostrom's
principles in action. That is a powerful reframing.
We aren't just scrolling through content. We
are commoners grazing on the digital pasture.
And we have a shared responsibility to keep it
healthy. And beyond the Internet, of course,
there is the biggest commons of all, the Earth's
atmosphere. Climate change is the ultimate planet
-sized tragedy of the commons. And Ostrom had
thoughts on this, too, right before she died.
She did. She was very engaged in this. And she
argued that waiting for a single, massive, top
-down global treaty, a kind of a global leviathan,
is probably a mistake. Why? It's too slow. It's
too easy for one country to veto it. And it's
incredibly hard to monitor and enforce. She advocated
for a polycentric approach to climate change.
Meaning what exactly? Many centers. Meaning we
need action at every single level, all at once,
without waiting for permission from the top.
Cities, states, individual corporations, neighborhood
groups, international agreements. If your town
decides to install solar panels on all municipal
buildings, that matters. If your company voluntarily
reduces its emissions, that matters. You don't
have to wait for the UN to solve it for you.
Right. If you build a thousand small, local and
regional solutions, they start to stack up and
create momentum. It's messier, but it's more
resilient and much faster than waiting for one
perfect global solution that may never come.
It's empowering. It puts the agency back in our
hands. We don't have to just sit back and wait
for a savior. That is the core message of Eleanor
Ostrom's entire life and work. We are not helpless.
We are not trapped by our own selfishness. We
are capable of solving our own problems, of building
our own institutions, and of working together
to govern the resources we share. So here is
a final thought to leave you with. Ostrom showed
again and again that communication, honest, often
face -to -face communication, is the secret sauce
that stops the tragedy. It builds trust. In an
age where we are more digitally connected than
ever, but perhaps less truly communicative than
ever, an age where we hide behind avatars and
shout at each other in comment sections, are
we losing that human superpower? That is the
billion -dollar question, isn't it? Are we building
a digital commons that fosters trust and cooperation,
or are we accidentally designing a system that
encourages the very tragedy Ostrom showed us
how to avoid because we've forgotten how to actually
talk to each other? The tools are there. Her
principles are there. It's up to us to use them.
Well said. Thanks for diving deep with us today.
This was fascinating.