That Elinor Ostrom received the Nobel prize for economics in 2009 may be read as a sign of a shift in mainstream economics thinking, a signal that the neoclassical project of formulating general propositions into neat formal models was showing some cracks. According to the Nobel prize committee, her contribution lay in challenging the conventional wisdom 'by demonstrating how local property can be successfully managed by local commons without any regulation by central authorities or privatization'. In other words, her theory of governance represents a break from the states-markets dichotomy in which a resource can either be governed by the state, or via the market and private property rights. In contrast, Ostrom's empirical and theoretical work focused on studying forms of collective action based on self-organization and self-governing – and the implication of her work was that Hardin's prediction of the tragedy of the commons can be avoided; people can manage resources in a sustainable way. She focused primarily on common-pool resources such as fisheries and communal forests, but since 1990 when the book Governing the Commons came out, her work has been extended far beyond principles for governing natural resources. Not only that, recently we are witnessing the development of an international commons movement. In May this year, over 200 people from 30 countries gathered in Berlin for the Economics of the Commons Conference, discussing ideas, practices and alliances for developing the commons into a core paradigm for the economy and society.

Taking all this on board, it seems worthwhile to engage with Ostrom's work. In this essay I focus on three aspects in which I consider her work important - if read critically. The first is moving 'beyond states and markets', the second is her underlying theory of social change and the third is her focus on governance principles.

I.

Ostrom theorised examples of collective action outside the state or market, where communities organized themselves into sustainable self-managed cooperatives. She did not suggest that we need to bring down capitalism or for the state to wither away. Instead she saw commons governance principles as complementary to them; we may think of this as a kind of Third Way approach. In some situations, she argued, the best way of managing resources was through self-organisation and collective ownership rights.

Her focus on a domain beyond states and markets in important because it can be used to criticise processes of privatization and commodification of ever new domains of social life, as well as the failings of representative democracy. Demands for self-organisation and collective ownership couched in the language of the commons have been an important force in contemporary social movements across Europe which are struggling against the privatization of utilities, infrastructure and services in the public sector.

At the same time, Ostrom's critique of the states and markets dichotomy is incomplete. Ostrom was concerned with theorising principles of sustainable governance, and not with challenging the underlying logic of capitalism. As a result, the potential for social change within her conception of the commons is limited. If we use Nancy Fraser's typology of affirmative and transformative struggles, Ostrom's conception of the commons inspires mostly affirmative action, which remedies some unwanted consequences of capitalist modes of production, but leaves the underlying structure intact. For instance, many commons initiatives focus on urban gardens, communal childcare, or developing workplace democracy. While they are worthwhile as sites of individual emancipation and as valuable experience of grassroots organising - on their own they often represent a-political, fragmented actions that cannot address the underlying structural logic of the problems at hand. In addition to that, these 'complementary commons' initiatives often represent middle-class life projects, since only people with sufficient income and spare time can engage in them.

To be blunt, we may introduce hundreds of worker-owned factories, but if they operate within a capitalist logic of production than we have not brought about a transformative social change towards radical egalitarian democracy. In contrast to that, the theory of the commons should be advanced, as Ugo Mattei and others have argued, by rejecting the conception of the commons as a Third Way. Ostrom's work should be built on in the direction that affirms the values of radical democracy, material sustainability and egalitarianism without forgetting to critically examine capitalism as a site of exploitation and domination.

II.

Elinor Ostrom's work is important in part for the way it demonstrates the virtues of institutional economics. The focus on institutions undermines neoclassical accounts by exposing capitalism as a historically specific social formation based in particular social and legal norms. At the same time, her work falls within rational choice institutionalism, which means that it is grounded in understanding how individuals make decision is social dilemmas – that is, how collective action happens given what we know about individual behaviour. In other words, Ostrom's theory is based in methodological individualism, whereby social outcomes are explained by understanding individual behaviour. In a nutshell, in the big agency-structure debate, hers is a theory of agency.

Now, we do need a theory of agency if we are interested in social change, and we need an empirically sound conception of individual motivation. In this respect Ostrom's work represents an important qualification of the homo economicus model because she argues that humans are 'better than rational'. Her conception of human nature does not deny that we are rational beings which are striving to exercise some control over our lives, but it denies the deeply pessimistic premise of the rational actor theory according to which all choices in life boil down to a rational calculus of costs and benefits. Instead she argues that our actions and choices are deeply imbedded in norms and social relations, offering up a vision of humans as deeply social: communicative, trustworthy and cooperative.

In contrast to the neoclassical economics perspective which starts from the premise that collective action will not happen or is doomed to fail in some sort of tragedy of the commons, Ostrom’s work advances a different conception of human nature, in which people are naturally social actors. In addition to that, she stressed the pivotal role of communication in engendering collective action. It is through communication that we are able to actively shape social rules rather than passively complying with top-down directives. In other words, it is through communication that the so-called 'non-cooperative outcomes' are transformed to cooperative ones, where collective action may lead to sustainable and equitable governance practices. Without such a concept of humankind we have no business trying to theorise emancipatory social change.

At the same time, because of its focus on individual behaviour Ostrom's theory is weak in addressing the structural origins of injustice. When we apply a theoretical lens which is blind to 'society' and only sees individuals making choices, we have divested ourselves of even perceiving, let along addressing power relations which originate in the systemic properties of existing economic and political systems. In this respect Ostrom's theory falls short of the mark both in diagnosing the causes of contemporary social ills and in devising ways out of it.

III.

As is clear by now, I advance a critical political conception of the commons in which they represent vehicles for taking power over conditions needed for life and its reproduction. This is related to the third aspect of Ostrom's work that I wanted to reflect on: the concept of the commons should be understood as centrally concerned with principles of governance, not ownership regimes as some contemporary theorists contend. In identifying key principles for governing sustainably, Ostrom shifted the focus away from ownership regimes towards emphasising governance principles. The foundational principle of the commons that emerges from her work is that those affected by a given rule should participate in making it, irrespective of the ownership regime. For collective action to bring about sustainable governance regimes it needs to be deeply democratic, reliant on self-organisation and based in the principle of subsidiarity.

In distilling hundreds of case studies of sustainable management of commons into basic components, Ostrom's theory can be read as an attempt to identify the main foundational principles of successful collective action. I believe this is the way forward in theorising a socialist governmentality, in the sense of devising specific principles that would ground the socialist state and economy. For Foucault, governmentality refers to techniques and procedures through which individuals and populations are governed. Governmentality encompasses both the ideational and the practical component (knowledge and power), while according to Foucault socialism possesses only the former - it lacks the practical capacity to generate political institutions that would embody its economic rationales. If we start from that premise, then the design of institutions that would embody socialist power is the primary task of the Left. Considering the sources of resilience of the liberal governmentality, I think that, rather than attempting to create blueprints for the overall institutional structure of a socialist state, it is more useful to identify the key principles of socialist governmentality, as Ostrom did with principles of sustainable governance of natural resources.