Elinor Ostrom's work on commons governance (1990) provides empirical and theoretical evidence that communities can self-regulate shared resources without relying solely on markets or state coercion. Her design principles emphasize the importance of:
Clearly defined boundaries and rules
Monitoring and graduated sanctions
Conflict-resolution mechanisms
Collective-choice arrangements
These principles emerged from deep ethnographic and case-based work and challenged the "Tragedy of the Commons" narrative (Hardin, 1968).
Ostrom's approach is inherently relational, as it places social norms, trust, and mutual monitoring at the center of economic governance. However:
Limitations and Gaps:
Her framework lacks formal dynamic modeling of shifting zones of trust, betrayal, and reconciliation.
Ostrom's work is more normative and diagnostic than predictive.
There is limited incorporation of systemic ambiguity, emotional intensity, or strategic deception, which are often critical in complex economic relationships.
RZE extends Ostrom's legacy by operationalizing multi-zone adaptive interactions, allowing institutions to be modeled not just as rule systems, but as living networks of dynamic trust and distrust, with potential for memory, healing, and collapse.
3. J. Doyne Farmer --- Econophysics, Complexity Macroeconomics, and ABM
Farmer's work brings the tools of statistical physics, complexity science, and agent-based modeling into macroeconomic domains. He emphasizes heterogeneous agents, network interactions, and non-equilibrium dynamics. Farmer advocates for a new kind of macroeconomic modeling that is empirically grounded, simulation-driven, and suitable for systemic risk analysis, especially in financial systems.
His models demonstrate:
How feedback loops in financial markets can create boom-bust cycles
The vulnerability of systems to small perturbations
The importance of inter-agent information flow and coupling strength
Limitations and Gaps:
While structurally sophisticated, Farmer's models often omit relational variables such as loyalty, betrayal, or personal interest divergence.
Emotional-regulatory zones or psychosocial dynamics remain outside the scope of econophysics frameworks.
There is minimal accommodation for intentional ambiguity, unspoken motives, or trust repair mechanisms, which are vital for explaining real-world outcomes in banking crises, negotiations, or policy reception.
RZE's Position in Complex Systems Economics
Relational Zone Economics (RZE) seeks to synthesize and extend these complex systems approaches by offering a formal relational grammar embedded in an agent-based, zone-sensitive framework. Specifically:
