Tag Archives: complexity

Great Lines in Economics, Vincent Ostrom Edition

It would be more accurate to call them paragraphs, actually, but this interview excerpt from Vincent Ostrom perfectly articulates an argument that I’ve made for a long time: that at the end of the day, a critically important feature of human institutions and interactions is that they are defined by complexity and nuance and that monolithic conceptions based on those interactions or institutions (like “socialism” and “capitalism”) are are intellectually straitjacketing. Worth your while:

Probably the best way to characterize our approach would be to start with one of our most influential themes: the idea that broad concepts such as “markets” and “states”, or “socialism” and “capitalism”, do not take us very far in thinking about patterns of order in human society. For example, when some “market” economists speak of “capitalism”, they fail to distinguish between an open, competitive market economy and a state-dominated mercantile economy. In this, they follow Marx. He argued that “capitalism” has a competitive dynamic that leads to market domination by a few large monopoly or monopoly-like enterprises. But what Marx called “capitalism”, Adam Smith called “mercantilism”. Similarly, many authors who write about “capitalism” fail to recognize the complexity of capitalist economic institutions. They overlook the rich structures of communal and public enterprises in societies with open and highly competitive market economies.

Instead, we should expect to find some combination of market and non-market structures in every society, and we should recognize the complex configuration of institutions behind labels such as “capitalism”. We might usefully think about combinations of private and public economies existing side by side. However, it’s important to stress that not all forms of public enterprise are, or need to be, state-owned and operated. Markets are diverse and complex entities. Markets for different types of goods and services may take on quite different characteristics. Some may work well under the most impersonal conditions. Others may depend upon personal considerations involving high levels of trust among trading partners. In other words, the options are much greater than we imagine, and we can see this is true if we don’t allow our minds to be trapped within narrowly constrained intellectual horizons.

A later edit or post will talk about my experiences coming to this line of thought through the rich world of critical literature.

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