Home > Uncategorized > The fundamental socialism of capitalism: Elinor Ostrom echoes Hayek in explaining that rules and institutions are a form of social capital

The fundamental socialism of capitalism: Elinor Ostrom echoes Hayek in explaining that rules and institutions are a form of social capital

I hope you’re not wondering just WHO Elinor Ostrom is, but I’ve blogged quite a bit about her.

For those of you who need a reminder, Peter Boettke said the following when this brilliant, hard-working political scientist deservedly won the Nobel Prize in Economics in 2009:

Lin Ostrom is firmly seated in the mainline tradition of economic scholarship from Adam Smith and David Hume to F. A. Hayek and James Buchanan ….. Instead,   she has been a major contributor to public choice economics, new institutional economics, and to our understanding of polycentricity and political economy.


Her presidential address to the APSA summed up her theoretical agenda as “A Behavioral Approach to the Rational Choice Theory of Collective Action.”

She is most deserving of this Nobel, and she has made a unique contribution theoretically and empirically to the study of self-governance. But there is no need to pick a fight where one isn’t there. Her prize fits nicely in a stream of recognitions ANALYTICALLY by the committee to scholars such as Hayek (1974), Buchanan (1986), Coase (1991), North (1993), and V. Smith (2002). These are all scholars within the discipline of economics/political economy that recognize the cognitive limitations of man, and focus analytical effort on institutional analysis.

Lin Ostrom’s contributions come from an analytical framework that grounded in rational choice theory (as if the choosers are human) and builds to an institutional analysis (as if history mattered). The distinction between “rules in form” and “rules in use” means she studies in close detail the social norms that underlie self-governance in the management of resources and the management of social relationships.

It is amazing body of work.

Now for the pitch:

The Gund Institute for Ecological Economics has just posted on YouTube this thought-provoking 38-minute lecture that Ostrom gave in 2006:


The Challenge of Building Social Capital in a Sustainable & Desirable Future



Hmm, you mean even the institutions of “private property” and corporations are forms of social capital, and dependent on shared institutions and even “trust”?

And that such “social capital” might include negative externalities?

Just what the heck IS “property“, then?

And corporations might have negative characteristics?

And indigenous “primitives” might have valuable, adaptive social capital?

And are large corporations as well as “government” responsible for the erosion of Hayek’s “market morals”?

So many questions, and so much distrust eating away at the social capital! …

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