swedish academy...

SWEDISH ACADEMYOF SCIENCES
MADE PROPER CHOICE IN AWARDING ECONOMICS? NOBEL PRIZE
(IN FAVOUR OF Professors Oliver Williamson (Economics department in his transaction cost theory) and MADAM ELINOR OSTROM OF UNIVERSITY of California, Berkeley (USA) OF POLITICAL SCIENCE DEPARTMENT, (in her social economic analysis) TO PROVE SOCIAL ANIMAL INSTINCTS IN MAN IN HER ILLUMINATIMG WORK ON NON-MARKET INSTITUTIONS IN HER STUDIES ON SEVERAL INSTITUTIONAL ARRANGEMENTS OF USER REGULATED USE OF COMMONS AS SUPERIOR TO PRIVATISATION OR RELIANCE ON SOLELY ON GOVERNMENT REGULATIONS?)
(BY Dr. G Balakrishnan, professor emeritus and visiting faculty in business schools- managerial economics & Corporate strategy and a constitutional lawyer, a former AFP JOURNALIST)
Stockholm reported Elinor Ostrom defied conventional wisdom with studies that showed that user managed properties ? such as community fish stocks or woodland areas were better run than standard theories predicted, by stating, ?Since we have found that bureaucrats sometimes do not have the correct information while citizens and users of resources do, we hope it helps encourage a sense of capacity and power. ? Her view in her work reflects a principle that people are willing to accept AVOIDABLE PERSONAL COST TO ENFORCE RULES THAT BENEFIT THE COMMUNITY. This is so because the upbringing of child in any family teaches the child this kind of life and that invariably becomes second nature in every man and that is social economics BASED PSYCHOLOGY of some sacrificing tendency in man in order of benefitting the community.

Her fellow winner professor Oliver Williamson of California university work on TCT (transaction cost theory) is a cost reduction mechanism in any product or service. That does mean ?outsourcing theory? (RELATION SPECIFIC INVESTMENT) which made many MNCs to outsource their work from companies like ?Infosys? and like.

Though Ram Singh of Delhi School of Economics just eulogized in his article, in Economic Times (issue of 14 october,09), of the Times of India group firm, and yet conflict resolutions in contracts though less in vertically integrating firm, there will be conflicts of interests, in TCT. So there is nothing like that you always get final answer by one solution.

Neo Classical theory worked for some time excessively depending on markets and market forces driving consumption to the tether ends leading to excessive consumption and that lead to serious wastages, like in foods wastages in five star hotels which reduce availability of essential commodities and that creates unnecessary artificial rise in costs of essential commodities and make poor man not to get his share of food in the society.



So centralized work regulation affects the local common man right from his daily necessities of food, shelter and clothing, and so on, and that situational analysis helped Ostrom and Williamson to research new factors in political economy, an inter disciplinary approach of descriptive sciences ? politics, economics, sociology, psychology and both inductive and deductive logics in a cohesive manner.
Previous notion was that common property was poorly managed and should be regulated centrally or privatized (a typical view challenged by Panchayati Raj system and India introduced/revived Panchayati raj system in 1991 by then Prime Minister Narasimha Rao out of own experience in Indian politics).
Nobel winners have well-recognized by their researches the views Ostrom now enunciated in her seminary work, being a political scientist (political economist) and that way inter disciplinary work only is an eye opener.

Prof Oliver Williamson (also of university of California) recognized in his research (on TCT) on analysis of conflict resolution for the ?over the last three decades and these contributions have indeed advanced economic governance research from the fringe to the forefront of scientific attention?, the committee observed.
According to Ostrom ?there are many many people who have struggled mightily and to be chosen for this prize is a great honor I am still a little bit in shock.?

Anyway it is indeed a corrective to many conventional economists to change their thinking process if social economics is a criterion.

Recent swirl in economic development overly worked on market is given a short shrift that markets alone cannot determine real factors, like protagonists view of ?Consumerism? which led to serious debts even to nations tying them to several years of debts and also monetary expansion without sensible views tied up thought to irrational economic development which led to Nandhigam problem in West Bengal and Maoist risings and declaring war by union government of India without realizing what will be the after effects. After all you have to protect all people?s living in an unequal society, a norm of the world.





It is a paradox that global in thinking while acting locally. Always local views are invariably governed by local needs, like rivers, climate, and waters and in these you will have to work holistically and not egoistically like thinking of connecting rivers.

In China also the government has to break the dam constructed across river Hoe-en-ho, just because of dam will cause very serious floods, in that river of sorrow. What is good at one place need not necessarily be always good and that good has to change on and often due to very many factors and that thought found well defined explanation in the Nobel laureates work! Too much irrational building of highways will bring havocs in climate and monsoons, have to be learned by governments is the lesson of this research! (Ends)