I confess it doesn't quite reach the level of the election of the first black man as President of the United States, but in my world the award of the Bank of Sweden prize for economics to a woman is a pretty earth-shattering event. The prize is frequently, but wrongly, referred to as the Nobel Prize for Economics. Nobel wouldn't have dreamt of endowing a prize for economics when he set his awards up in 1895. It is a latecomer - arriving only in 1968 - and an imposter.
The prize was given to Elinor Ostrom, whose work was summarised thus:
'Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes.'
So what did Elinor Ostrom do to achieve this level of esteem amongst the five men who make up the nominating committee? It is surely an indication of the lack of confidence amongst orthodox economists that they have chosen not only an academic whose work could be claimed to undermine the central tenets of a market philosophy, but one who has never actually resided in an economics department. (If she had, she would, of course, have found it very difficult to carry out this sort of work.)
Elinor Ostrom is, and always has been, a political scientist. This is entirely appropriate in a year when politics has dominated the choice of prize-winners - and perhaps it always does. So what can we ascertain from the choice of this year's award-winner? Well first it should be said that Professor Ostrom obviously could not be trusted to take this weight of responsibility alone. She has been forced to share the prize with a rank outsider, Oliver E. Williamson, who, I cynically surmise, was chosen alongside her because some of the committee couldn't stomach awarding the prize to her alone. As a student of Ronald Coase, his work is in a tradition that directly opposes that of Ostrom herself, arguing that the assignment of clear property rights is enough in itself to deal with most environmental problems.
If the committee is representative of the economics profession then there is some evidence here of the sackcloth and ashes that many feel its orthodox members deserve. Ostrom's work is also motivated by concern for the environment, and particularly the depletion of natural resources, hence her focus on fisheries and natural environments. We wait to see whether the obvious connection between market economics and environmental destruction is translated into the freedom for those of us who teach the subject to adopt a heterodox approach.