A third way to common-pool resources
The awarding of the Nobel Prize for economics to Elinor Ostrom and Oliver Williamson came as a surprise to the public and the economists. Both are outside the establishment of neo-liberal economics and did research without the quantitative formality. Ostrom is not only the first woman, but also the first political scientist to win the prize - she got her PhD as a student of political science at UCLA.
Ostrom's contribution is on the management and usage of common-pool resources. Contrary to the "tragedy of commons" argument of prominent ecologist Garrett Hardin, that people tend to overuse collective-owned resources such as pasture or fishery, Ostrom found out that, through her field works in many parts of the world, communities are able to formulate institutions to use and preserve public resources properly and avoid depletion. While traditional wisdom tells us that common-pool resources should either be privatized or subject to state regulation, Ostrom suggested that there is a third way.
That's why Ostrom's theory is thought-provoking and broadens our understanding on ways to resolve resource-distribution problems. Thinking outside the dichotomy of the state and the market, power and exchange, Ostrom revealed that a third type of institutions such as local communities can manage and preserve natural resources, too.
Like Ostrom, Williamson devoted most of his research on the institutions other than government and market. One of his interests is corporations. He tried to explain that it is sometimes economically more efficient and rational to internalize transactions into corporations rather than to outsource them in the market. The more complicated a transaction is, the more economic to internalize it.
Obviously, the Royal Swedish Academy of Sciences awarded the economists who think outside the neo-liberal box. Similar to the prizes to Friedrich Hayek and Milton Friedman in 1970s, the selection may reflect the change of tide in the field of economics and even the whole social sciences.
Higher prices are not the panacea
In an academic saloon held in Beijing recently, experts complained that the prices of traditional Chinese medicine (TMC) were so low that it was not profitable. TMC faces a bunch of problems including drain of talent and lack of progress due to the low profitability, contended the experts.
Indeed TMC is lagging behind now, and its prospects look a bit gloomy, but it is not convincing to blame the low prices. Many goods sell well because of the low price, and their producers and retailers can still earn handsome sums of money through large volumes. When the prices of TMC are low but patients still do not choose them, the real reason could be the low curative effect.
Of course it does not mean that TMC, which has survived the ebb and flow of 5,000 years, is substantially inferior to the Western medicine. But we have to admit the limitation of the TMC that it is not good at curing some sorts of diseases. For instance, most of the patients of cold and fever would choose Western medicine no matter what the prices of TMC are, since Western medicine is more effective in curing these diseases.
To develop TMC, we should face up to the shortcomings of TMC, seek to improve its curative effects, and facilitate complementary relations between traditional Chinese and Western medicine. Only when we consider the issue from the perspective of patients can TMC achieve progress.
(China Daily 10/20/2009 page8)