Gintis Moral Sentiments and Material Interests The Foundations of Cooperation in Economic Life (MIT, 2005)

Walker 1994; Tang 1992; Lam 1998; Hess 1999). In Nepal, for example, we have now collected data about the rules and general management strategies used to govern and manage over 200 irrigation systems including systems that are managed by government agencies (agency managed irrigation systems, or AMIS) as well as those managed by the farmers themselves (farmer managed irrigation systems, or FMIS). We have consistently found that FMIS are able to achieve a higher agricultural yield than AMIS, that water is distributed more equitably in FMIS than AMIS, and that the irrigation systems are better maintained by FMIS than by AMIS (see Lam 1998; Joshi et al. 2000; Shivakoti and Ostrom 2002).

What is striking, moreover, is the difference in how rules are enforced by the farmers themselves on their own systems versus government officials on the government systems. On 23 percent of the AMIS systems, farmers report that government officials are likely to record official infractions. In contrast, farmers on 58 percent of the FMIS report that their own farmer-monitors record infractions observed ( Joshi et al. 2000, 76). In addition, fines are more likely to actually be imposed within FMIS than within AMIS. Furthermore, farmers also report that rules are highly likely to be followed 65 percent of the time in FMIS and only 35 percent of the time in AMIS ( Joshi et al. 2000, 76). Thus, rules and sanctions devised by the farmers themselves—and monitored by individuals who are responsible to the farmers—are more likely to be enforced and lead to higher levels of rule compliance than rules and sanctions imposed by an external agency. Rules enforced by FMIS crowd in cooperation levels rather than crowding out cooperation.

We are now engaged in a massive ten-country comparative, overtime study of diverse forest institutions (Gibson, McKean, and Ostrom 2000; Poteete and Ostrom 2004). We have again found that resource systems where local users have considerable authority to make their own rules and enforce them are able to increase the level of cooperation achieved as contrasted to systems where rules are imposed from the outside. We are also paying particular attention to the specific rules that individuals use to regulate entry and allocate uses of local resources.

What one learns from this research is the huge variety of rules that are used in practice—many combinations of which are successful. For example, we have identified twenty-seven different types of boundary rules used by self-organized resource regimes (for specifics, see E.

Ostrom 1999). Many of these rules enhance the likelihood that individuals know each other and will be engaged over the long-term with one another. In other words, the endogenously designed rules enhance the conditions needed to solve collective-action problems. We have also identified over 100 authority rules used to allocate resource users’ rights to the flow from a resource system (E. Ostrom 1999). Many of these rules focus on time, space, and technology rather than on the quantity of resource flow allocated. Consequently, these rules increase the information that individuals obtain about the actions taken by others at a low cost. Compliance rates increase when individuals feel that others are also following the rules.

The policy of assigning all authority to a central agency to design rules is based on a false conception that there are only a few rules that need to be considered and that only experts know these options and can design optimal policies. Our empirical research strongly challenges this assumption. There are thousands of individual rules that can be used to manage resources. No one, including a scientifically trained professional staff, can do a complete analysis of any particular situation.

All policies need to be viewed as experiments (Campbell 1969). The possibility of errors is always present given human limitations. Thus, creating some redundancy in the design of rules for well-bounded local resources (or communities) encourages considerable experimentation essential to discover some of the more successful combinations of rule systems (Low et al. 2001). Further, ecological systems vary from one place to another and from one mix of species to another. The combination of rules that works well for lobster fisheries may be a disaster for deep-sea fisheries (and vice versa) (Wilson et al. 2001). A good combination of rules for a river system that has multiple regulatory devices, such as dams, may be a disaster for a run-of-the-river system, and vice versa.

Thus, instead of proposing highly centralized governance systems, the best empirical evidence we can bring to bear on the question of building sustainable democratic systems for sustainable resource use is to design polycentric systems (V. Ostrom 1987, 1997). A polycentric system has multiple semiautonomous units of governance located at small, regional, national, and now international scales of organization (Keohane and Ostrom 1995). Some of these governance units may be organized in the private sector while others are organized in the public sector. Government is not the only form of governance that humans have devised over the centuries. The essential elements of dynamic

polycentric systems are mechanisms for generating information about patterns of interactions and outcomes and mechanisms for oversight and self-correction. A completely decentralized system of small local units without overlap is as incapable of learning and self-correction as a fully centralized system. Large-scale, overlapping units are an essential part of a modern democratic system. However, smallerto medium-scale units are also a necessary part of an overall polycentric system.

Modern policy analysis needs to catch up with contemporary empirical and theoretical research. The two implicit messages contained in much of contemporary public policy analysis are not only inefficient and ineffective, they are dangerous for the long-term sustainability of democratic systems of governance. The first message undermines the normative foundations of a free society. It basically says that it is okay to be narrowly self-interested and to wait for externally imposed inducements or sanctions before voluntarily contributing to collective action. The second message undermines the positive foundations of a free society by destroying the capacity of citizens to experiment with diverse ways of coping with multiple problems and to learn from this experimentation over time. This message basically says that there is one best way of solving all collective-action problems and it is only knowable to experts. Citizens are viewed as having little to contribute to the design of public policies.

Thus, much of contemporary policy analysis and the policies adopted in many modern democracies crowd out citizenship and voluntary levels of cooperation. They do this by crowding out norms of trust and reciprocity, by crowding out the knowledge of local circumstances, by crowding out the discussion of ethical issues with others who are affected, and by crowding out the experimentation needed to design effective institutions. Crowding out reciprocity, cooperation, and citizenship is a waste of human and material resources and presents a serious challenge to the sustainability of democratic institutions over time.

Notes

An earlier version of this paper was presented at a conference on ‘‘Intrinsic Motivation in Law and Business’’ in Gerzensee, Switzerland, June 18–22, 2001. The author thanks the MacArthur Foundation and the Ford Foundation for financial support; Bruno Frey, Herbert Gintis, and two anonymous reviewers for very useful comments; and Patty Lezotte for her excellent editing of multiple versions of this paper.

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From the Edda, a thirteenth-century collection of Norse epic verse

10.1Introduction

The modern welfare state is a remarkable human achievement. In the world’s advanced economies, a substantial fraction of total income is regularly transferred from the better off to the less well off, and the governments that preside over these transfers are regularly endorsed by publics (Atkinson 1999). The modern welfare state is thus the most significant case in human history of a voluntary egalitarian redistribution of income among total strangers. What accounts for its popular support?

We suggest below that a compelling case can be made that people support the modern welfare state because it conforms to deeply held norms of reciprocity and conditional obligations to others. Economists have for the most part offered an alternative (empirically implausible) theory of self-regarding human motivation to explain who votes for redistribution. The most widely accepted model of the demand for redistribution in economics is the median voter model, which holds that each voter desires a personal wealth-maximizing level of redistribution. Under appropriate assumptions, it follows that the redistribution implemented by a government elected under a majority rule system is that preferred by the median-income voter. Because the distribution of income is generally skewed to the right (there are a few very rich individuals), the median voter is poorer than the mean voter and will therefore demand a positive level of redistribution.