Elinor Ostrom’s findings on behavioral theory’s relation to collective action are imperative to the formation and sustainability of a libertarian order.

The prevailing myth of statism is that the larger, more uniform the institution of monopolistic governance, the more efficient people are to experience common goals of security, justice and resource allocation. This is what Professor Elinor Ostrom called, in a revised draft [.pdf] of her acceptance of the 2009 Nobel Prize in economics, the “presumption that governments always do a better job than users in organizing and protecting important resources”. (Sorry, professor, I’m quoting it.)

Prof. Ostrom reveals the statist rationalization as:

When analysts perceive the human beings they model as being trapped inside perverse situations, they then assume that other human beings external to those involved—scholars and public officials—are able to analyze the situation, ascertain why counterproductive outcomes are reached, and posit what changes in the rules-in-use will enable participants to improve outcomes. Then, external officials are expected to impose an optimal set of rules on those individuals involved. It is assumed that the momentum for change must come from outside the situation rather than from the self-reflection and creativity of those within a situation to restructure their own patterns of interaction.

The inefficiencies and immorality of government is assumed to be understood and not the purpose of this post. Libertarian theory and practice has recognized this to varying degrees—always greater than that of conventional wisdom—but arguments persist as to how we get from a statist society to a libertarian society. Arguments persist as to what avenues of activism are to be taken. Arguments persist as to cultural ecosystems of a libertarian society. What is agreed upon is that non-violent human action is not to be prohibited by force and no forceful barriers should inhibit the polycentric legal order. The combination of these two basic fundamentals of a free society are expressed in one concept: self-management.

A libertarian society is one where individuals’ rational self-interests are not inhibited, but freely pursued. For those whose self-interest is not isolated to a shack in a remote forest, it is a society which challenges the finite time-space construct usage of the current order to maximize pursuit of eudaimonia. We’ve evolved, in the technical sense, past the hunter-gatherer and feudal orders, but industrialized capitalism and the technological grid, artificial intelligence has not maximized our liberty and happiness. The fact is that many of our lives are much more governed by non-governmental organizations—the workplace, our families, schools—than the state apparatus. I don’t argue that the State doesn’t make these aspects of life more difficult, but when we eat, rest, socialize—establish, enrich and maintain relationships—exercise, secure our psychological stability, learn to understand the world around us and beyond, fancy ourselves with hobbies and the like are largely scheduled and experienced by these non-governmental institutions we exploit to fulfill our most primal needs to survive and infinitely varying sophistical degrees of desire.

Liberating the mind from orthodoxy is a challenge to achieving a free society, but ask the people you know—or random people, for that matter—what they want in life and it’s seldom a lifestyle of complete inaction or one of constant career-based labor. It’s usually one where their labor fulfills their basic needs with minimal interference in—or maximum opportunity to—fulfill higher needs of social interaction, esteem and self-actualization, as modeled by Abraham Maslow. Neither the State nor our workplaces, churches, families, schools, social circles meet these needs in totality by themselves.

Self-interest in a bubble can be misleading and limiting as our inner collective interest is rarely self-sufficient. The most benign avatars of the State collectivize interests of the loudest factions at the expense of violently marginalizing others, but its primary objective of preservation requires the conflicting interest of serving oligarchical circles with privilege. Doing away with the State yesterday establishes a void. Let’s say the already inefficient and immoral institutions of security and service—on which society is heavily dependent—no longer exist as we’ve known them, but the needs, desires and opportunity in them don’t disappear with the monopoly of the State. Human action decides the direction of these institutions—their objectives, conduct and sustainability. The assumption that all will become benign for-profit service providers or mutual community councils that create solutions to the natural crisis of diversity are irresponsible, at best. In short, a libertarian society understands that aggression is counter-intuitive to harmony, therefore anti-social methods of solving social problems are futile.

Prof. Ostrom’s dialectic addresses:

The dichotomous view of the world explained patterns of interaction and outcomes related to markets for the production and exchange of strictly private goods (Alchian 1950), but it has not adequately accounted for internal dynamics within private firms (Williamson 1975, 1986). Nor does it adequately deal with the wide diversity of institutional arrangements that humans craft to govern, provide, and manage public goods and common-pool resources.

The ‘privatization of the means of production’ is a difficult term to use because it’s too commonly accepted that “public” means owned and controlled by the State, while “private” means owned and controlled by non-State actors. The State is a partial reflection of some—at least minimally—rational value in common-pool resources. Even in a anarchotopian version of Lockean-Rothbardian privatization, resource control and dependency overlap. The anarcho-syndicalists of Spain—no matter what your opinion of them—understood that their society of anarcho-communists, libertarian socialists and republicans could neither be completely communally controlled nor sustainable by sectarianism.

In short: Common interests among individuals that overlap with conflicting interests are a fundamental aspect of the natural law of markets. Economists call this “market failure” and—from my extremely general experiences with economists—explore material incentive-based methods to marginalize the “failure”. In political science, we call this the “social dilemma” and—from more my more substantial experiences—explore cooperation-based methods of maximizing the incentives of organization. Economists tend to isolate the political means to immorally, self-defeating aggressive acts of the State and political scientists tend to isolate the economic means to dehumanizing, materialistic resource acquisition. Coalescing rational theories of economic sustainability with that of political organization is imperative to the progression of libertarianism.

The conflict between the common views of private and public goods is a false dichotomy between absolutist views of exclusivity and inclusiveness, at its most benign, in theory—morally hazardous forms of domination in practice, at its most destructive. Libertarian narratives have a—in my view, nefarious—tendency to ignore the interdependent cultural dynamics of self-management, free association and property rights. (Defining property rights in Prof. Ostrom’s “bundled rights” concept of rights to: access, withdrawal, management, exclusion and alienation.) These discussions become lazy conflicts between centralizing the final arbiter and mob rule majoritarianism—the former, in the interest of finality and the latter is… well, just lazy.

I literally just finished reading Polycentric Games and Institutions: Readings from the Workshop in Political Theory and Policy Analysis (2000), from which I want to explore an essay written by Prof. Ostrom titled, “A Behaviorial Theory to the Rational Choice Theory of Collective Action”. She begins:

“You would not be reading this essay if were not for some of our ancestors learning how to undertake collective action to solve social dilemmas…. What our ancestors and contemporaries have learned about engaging in collective action for mutual defense, child rearing, and survival is not, however, understood or explained by the extant theory of collective action” (472).

Actually existing capitalism‘s pyramid approach to social dilemmas are primitive relative to, what Prof. Ostrom calls, “first-generation models of rational choice” limited by “bounded or incomplete rationality” as political science is moving toward a “second-generation theory of boundedly, rational, innovative, and normative behavior” (487).

She continues:

If political scientists do not have an empirically grounded theory of collective action, then we are hand-waving at our central questions. I am afraid that we are doing a lot of hand-waving (472)…. We have not yet developed a behavioral theory of collective action based on models of the individual consistent with empirical evidence about how individuals make decision in social-dilemma situation. A behavioral commitment to theory grounded in empirical inquiry is essential is we are to understand such basic question as why face-to-face communication so consistently enhances cooperation in social dilemmas or how structural variables facilitate or impeded effective collective action. Social dilemmas occur whenever individuals in interdependent situations face choice in which the maximization of short-term interest yields outcomes leaving all participants worse off than feasible alternatives. In a public good dilemma, for example, all those who would benefit from the provision of a public good—such as pollution control, radio broadcasts, or weather forecasting—find it costly to contribute and would prefer others to pay for the good instead. If everyone follows the equilibrium strategy, then the good is not provided or is underprovided. Yet, everyone would be better off if everyone were to contribute (473). In prehistoric times, simple survival was dependent both on the aggressive pursuit of self-interest and on collective action to achieve cooperation in defense, food acquisition, and child rearing. Reciprocity among close kin was used to solve social dilemmas, leading to a higher survival rate for those indivdual who lived in families and used reciprocity within the family (Hamilton 1964)…. Evolutionary psychologists have produced substantial evidence that human beings have evolved the capactity—similar to that of learning a language—to learn reciprocity norms and general social rules that enhance returns from collective action (Cosmides and Tooby 1992). At the same time, cognitive scientists have also shown that our genetic inheritance doesn’t give us the capabilities to do unbiased, complex and full analyses without substantial acquired knowledge and practice as well as reliable feedback from the relevant environment… All long-enduring political philosophies have recognized human nature to be complex mixtures of the pursuit of self-interest combined with the capability of acquiring internal norms of behavior and following enforced rules when understood and perceived to be legitimate (474)… Field research also shows that individuals systematically engage in collective action to provide local public goods or manage common-pool resources without an external authority to offer inducements or impose sanctions (474-475).

In detail:

“Behavior in social dilemmas is affected by many structural variables” which include “size of group, heterogeneity of participants, their dependence on the benefits received, their discount rates, the type and predictability of transformation processes involved, the nesting of organizational levels, monitoring techniques, and the information available to the participants”;

A diversity of disciplines “have active research programs focusing on how groups of individuals achieve collective action”. Valid theories of a free society, solutions to social problems should move toward an “empirically supported theoretical framework for the analysis of social dilemmas [to] integrate and link their efforts … based in theories consistent with out evolutionary and adaptive heritage need to join ranks of theoretical tools used in the social and biological sciences” A libertarian society, as opposed to a command economy or one with a pre-packaged system of ownership norms would further prove that “individuals systematically engage in collective action to provide public good or manage common-pool resources without an external authority to offer inducements or impose sanctions” To argue otherwise is to argue for the coerced implementation of tyrannical ‘final arbiter’ elements of the State.

“In all [social dilemma] models, a set of individuals is involved in a game in which a strategy leading to a Nash equilibrium for a single iteration of a game yields less than an optimal outcome for all involved. The equilibrium is thus Pareto inferior. The optimal outcome for all involved could be achieved if those involved “cooperated” by selecting strategies other than those prescribed by an equilibrium solution to a noncooperative game (Harsanyi and Selten 1988).” Cooperation being: (1) All participants have common knowledge of the exogenously fixed structure of the situation and of the payoffs to be received by all individuals under all combination of strategies; (2) Decision about strategies are made independently, often simultaneously; (3) In a symmetric game, all participants have available the same strategies; (4) No external actor (or central authority) is present to enforce agreement among participants about their choices”.

In finitely repeated experiments, the “rate of decay” was compared “when experienced subjects are explicitly told an experiment will last 10,40, or 60 rounds”. The more rounds, the more “subjects appear to be learning how to cooperate at a moderate level for even longer periods. Cooperation rates approach zero only in the last few periods, whenever these occur”. Politically, we see this crisis of apathy, noncooperation, submission to the decisions of others all the time. Take the antiwar movement in the U.S.—on a fairly steep upward trend throughout the Bush Administration, began a slight decline to align with the support of John Kerry, began a sharper upward trend after the incumbent’s victory, began a slighter decline to align with the toned-down rhetoric and illusions of Barack Obama to the point where the illusions of finality through the president’s victory was perceived.

The experiments not only showed increased mutualization, but also “how individuals are able to obtain results that are substantially ‘better than rational'”, as defined by the “currently accepted models” for two reasons: (1) “cheap talk allows individuals an opportunity to make conditional promises to one another and potentially to build trust that others will reciprocate”; and (2) “the capacity to solve second-order social dilemmas that change the structure of the first-order dilemma” (478-482).

The ‘supreme final arbiter’ model of decision-making employs a “noncooperative game theory” where “players are assumed to be unable to make enforceable agreements”, so mutualization methods of “communication is viewed”—I would say, the self-interest of those affected by decision are deliberately suppressed and marginalized to sustain and enrich the supremacy of the final arbiter—“as cheap talk (Farrell 1987).” I would say the threat of their domination are circumstances where in:

a social dilemma, self-interested players are expected to use communication to try to convince others to cooperate and promise cooperative action but then to choose the Nash equilibrium strategy when they make their private decision (483).

Top-down hierarchies are contrary to “consistent, strong, and replicable findings” that “substantial increases in the levels of cooperation are achieved when individuals are allowed to communicate face to face”. Analyzing more than 100 experiments involving over 5,000 subjects conducted across the lines of academic disciplines:

Sally (1995) finds that opportunities for face-to-face communication in one-shot experiments significantly raise the cooperation rate, on average, by more than 45 percentage points [achieving] 40 percentage points more an average than in repeated games without communication (483).

In discussing the voluntary cooperative ownership of goods, minorities—participating and non-participating—are the most common vocalized concern to critics of self-management. Rule changes and thin coercion methods of “using scarce resources to punish those who do not cooperate or keep agreements are usually not considered viable options”. There can be no libertarian theory to universally command second-order social dilemmas, which is a common criticism made by those who will jump through hoops to maintain the suppression of the cooperation in the first place in favor of unjust command-based structures. A truism to be accepted by libertarians is that in opposing command social systems is that individualist ethical theories of self-interest are participatory in practice. Diversity increases the probability of second-order social dilemmas. Suppression by force is the destruction of communication and the creation of moral hazard for future dilemmas. Ignorance brings us back to “hand-waving”. The natural, moral, efficient solution for the diversity problem is in reducing scale and cooperative trial-and-error with lesser stakes in these “highly unpredictable environments” (485).

Prof. Ostrom continues:

The particular rules adopted by participant vary radically to reflect local circumstance and the cultural repertoire of acceptable and know rules used generally in a region…. Given the complexity of the physical world that individuals frequently confront, they are rarely ever able to ‘get the rules right’ on the first or second try (485)…. Toshio Yamagishi (1986), for example, conducted experiments with subjects who had earlier completed a questionnaire including items from a scale measuring trust. Students who ranked higher on the trust scale consistently contributed about 20 percent more to collective goods that those who ranked lower. When given an opportunity to contribute to a substantial ‘punishment fund’ to be used to fine the individual who contributed the least to their joint outcomes, however, low-trusting individuals contributed significantly more to the punishment fund and also achieved the highest level of cooperation. in the last rounds of this experiment, they were contributing 90 percent of their resources to the joint fund… [and] respond more to a change in the structure of the game than those who are initially more trusting (486).

In a libertarian system of free association, the “punishment fund” is simply a lesser say in the particular decision-making process—a reduction that is most likely reflected in their participation and conduct anyway. To leave is the association is to have restricted access to the goods in common. If an individual chooses to withdraw participation, equity share would have to be transferred in proportion to the individuals’ participation as any property contribution has already been contributed to the collective. Therefore, it is in an individuals’ interest to participate, at the very least, to the degree by which decisions affect him or her. It is in the interest of all participants to pre-determine this rule on the distribution of bargaining power at the very formation of the collective.

Prof. Ostrom found from her analysis of experiments and field settings that “individuals temporarily caught in a social-dilemma structure are likely to invest resources to innovate and change the structure itself in order to improve joint outcomes” Neither the cooperative nor the noncooperative models could “adequately predict behavior in one-shot and finitely repeated social dilemma” or provide “explanation for the conditions that tend to enhance or detract from cooperation levels”. The noncooperative models’ measure of efficiency is guided by the command and quantified mostly by the gains of the ‘supreme final arbiter’—the politician, capitalist, prosecutor. How their decision effect others are the social costs, externalized to relative masses with little-to-no power in preventing this anti-social debt. It’s ignorant of the “general theory of human behavior that views all human as complex, fallible learners who seek to do as well as they can given the constraints that they face and who are able to learn heuristics, norms, rules, and how to craft rules to improve achieved outcomes” (488).

The “development of a consistent theory” to maximize cooperation “is important not only for our scientific understanding but also for the design of institutions to facilitate individuals achieving higher levels of productive outcomes in social dilemmas” (487). Theories contradictory to such progress is to perpetuate authoritarian elements of society and, worse, regress to feudalistic elements of the old order.

Many libertarians draw on institutional structures of societies past to provide model examples of liberty working. Unfortunately, industrialized capitalism has exploited the nature of the State to create a global kleptocracy. Markets free of coercion don’t exist in our advanced society as power and wealth have become centralized to the peak of the circumstantial pyramids of the zeitgeist. Conspiracy theorists conclude this to be a manufactured new world order when empirical evidence points more toward a world in great disorder due to our seemingly-archaic norm of passivity. This has left the oligopolies to employ power and wealth toward efforts to destroy one another. We’re the ignored externalized social cost of their wars, economic terrorism (odious debt, sanctions, cartelizing regulations) and usage of resources to maintain perpetuity.

The role of participatory democracy in a new order ought to be employed as an organizational method to create second-generation institutions as alternatives to the State and Wall Street as distributors of power and wealth, respectively. There is little reason to believe that the first-generation institutions which smashed the old older of the (relatively primitive) agrarian world can suffice a stateless society after two revolutions—the Industrial and Technological—and the illumination of a post-Enlightenment ethno-cultural melting pot, let alone taking liberation any substantial distance from the lecture halls and blogosphere.

[I literally just read “Polycentric Games and Institutions” and wanted to get these thoughts and impressions out while they were fresh. Any sloppiness, incoherence is a result of me typing in a stream of consciousness.]

EDIT: Kevin Carson just wrote a great piece for the May 2010 issue of The Freeman titled, “Common Versus Government Property”. Read it here.