Baltic Business Research

As most readers of my blog probably suspected, I cannot completely refrain from making some further comments apart from those I already made to the press. Elinor Ostrom’s research on the positive management of common property by user associations may, for example, be helpful when dealing with environmental issues on a local or regional level. I would like – and recommend – to test her findings in particularly China and India. Williamson’s organizational and institutional research contributes, for example, to a better understanding why firms many times may prefer vertical integration.  Coase’s influence on Williamson’s research is obvious.    

¤   Both this year’s winners of the Nobel Prize in Economics and their research areas (organizing/organization) were strongly recommended in my latest blog. This is nice again because I was forecasting at least one name correctly seven times out of ten in the past decade (but I should be humble since some luck is needed as well). This analysis claims quite some reading concerning research results that were achieved some 20-30 years ago and that are still relevant for current research and studies.

¤  I am happy with the professors Elinor Ostrom (Indiana)  and Oliver Williamson (Berkeley)  who will receive the highest economic award in Stockholm on December 10. But I feel somewhat sorry about Jean Tirole (Toulouse) – one of the leading European economists below 65 years – since Tirole to a high extent deals with organizational issues as well (though mainly from other angles).  However, Tirole’s time still may come.  Interestingly, Ostrom is not an advanced mathematically oriented academic but rather a field researcher (which is not bad per se since contextual economics should be regarded as important as well). In this context, some change of mind happened in the Nobel Prize Committee as well. 

¤   I also feel happy about the fact that interdisciplinary research (this time by sociologist Elinor Ostrom) gets more appreciation –  which I have been pleading for during quite some years. Our economic world has become by far too complex that we can afford to neglect other research disciplines that have an impact on the economy such as psychology, sociology, politics, law and regulations, health and the environment. The ideal world of the classical “homo oeconomicus” does not exist anymore (even if Milton Friedman once wrote that the results of modeling not necessarily have to be in line with reality).

¤   After many years of pointing at the absence of women in the list of Nobel Prize winners and at the fact that only a few women had major scientific breakthroughs some twenty years ago, I notice with satisfaction that Elinor Ostrom since several years ago was on my list of thinkable female Nobel Prize winners (and Oliver Williamson, by the way, from the very beginning of that list).

¤   Elinor Ostrom’s research is – as mentioned above – field-oriented. She made many studies on common property organization in quite a number of countries, among them Japan, Nepal, the Philippines Spain and even Switzerland.  But I have never seen any research work by Ostrom looking at China and India – and I would like to see such efforts. Maybe I missed it – but it is worthwhile mentioning this research angle.

Of course, this may have been difficult in the past when considering the structure of the China’s economy and decision-making, the distribution of property, the insufficient protection of property rights and all the institutional shortcomings. However, China is changing – though in many respects very slowly. Most Chinese see and feel the extremely poor environment every day. There may be ways to organize local fights against pollution, unpotable water and other health-affecting environmental problems in an Ostrom sense. Particularly in China, these challenges may be worked out much better without the intervention of local politicians and their many times very corruptive surroundings. This research approach could be supported by international/global organizations. Generally spoken, the solution of major environmental problems can be found on both the local and the global level. For this reason, Ostrom’s research may be relevant to China, particularly if current ownership and property right conditions will be changed more markedly at some point in the future.

 India, on the other hand, is a big country where Ostrom’s research and conclusions may be applied already today since property is more equally distributed between private and public ownership, and property rights and decision-making are more modern and democratic. Using commons, however, is not only a matter of organizing but also – if we use the terms of Douglass North – an institutional issue that includes habits. Far-reaching education should be started at all levels to reduce the very common habit to just throw things away. Picking up garbage must be much better organized, too, maybe in the way Ostrom is pleading for. Even if the environmental problems of India are much smaller than the Chinese, progress is badly needed on all levels – particularly since industrial production and car registrations will increase much more in the future.

¤   Looking  at interesting areas for next year’s selection, research on labor markets, modern growth theory, finance and modeling techniques  could become particularly relevant. This year, my wish of awarding a dignified woman became verified. For 2010, I am particularly hoping for a European Nobel Prize winner. European economic research is catching up.

I will get back to all these Nobel Prize issues in the beginning of October 2010.