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Ronald Coase has died, but his individualist dogma is everywhere Ronald Coase has died, but his individualist dogma is everywhere
(12 days later)
He believed in privatising lighthouses, opposed regulating taxis, thought pollution was a price worth paying for profit, wanted to abolish the BBC and didn't think private companies could ever be monopolistic – you might not call him extreme but the label ideological would surely be applicable.He believed in privatising lighthouses, opposed regulating taxis, thought pollution was a price worth paying for profit, wanted to abolish the BBC and didn't think private companies could ever be monopolistic – you might not call him extreme but the label ideological would surely be applicable.
If, over a long career, that person had won renown as an economist but never once addressed income and wealth inequality or, in markets, the everyday imbalance of bargaining power between employers and employees, you might either think his fame overblown, or the way his reputation was inflated somewhat suspect.If, over a long career, that person had won renown as an economist but never once addressed income and wealth inequality or, in markets, the everyday imbalance of bargaining power between employers and employees, you might either think his fame overblown, or the way his reputation was inflated somewhat suspect.
This past week glory, laud and honour have been hung around the neck of Ronald Coase, who died recently. It has been quite a phenomenon, telling us how, still, market dogmatism rules the economics profession (and its hangers-on in journalism). And how a US-inflected, individualist, anti-government view gets propagated by a network of thinktanks, academics and partisans.This past week glory, laud and honour have been hung around the neck of Ronald Coase, who died recently. It has been quite a phenomenon, telling us how, still, market dogmatism rules the economics profession (and its hangers-on in journalism). And how a US-inflected, individualist, anti-government view gets propagated by a network of thinktanks, academics and partisans.
Coase, they say, was influential. But like cites like. He won a Nobel prize but by what transparent standard is a committee of the Swedish academy the sole arbiter of intellectual merit, or itself unswayed by beliefs and world views? In economics the line between scholarship and ideology is not just fine, but carefully screened from prying eyes.Coase, they say, was influential. But like cites like. He won a Nobel prize but by what transparent standard is a committee of the Swedish academy the sole arbiter of intellectual merit, or itself unswayed by beliefs and world views? In economics the line between scholarship and ideology is not just fine, but carefully screened from prying eyes.
Coase was praised for writing about the real world, for example his assertion that firms grow in relation to the cost of doing business. It's a theory, and attracted attention because so little economics is about real existing companies and the highly imperfect markets in which they operate. But Coase was careful never to frame his theory to make it empirically testable. We can't take a Google or a Virgin and plot when and where their transaction costs influenced, say, their decisions to take over Nokia or to lobby Tory ministers for a larger share of NHS contracts.Coase was praised for writing about the real world, for example his assertion that firms grow in relation to the cost of doing business. It's a theory, and attracted attention because so little economics is about real existing companies and the highly imperfect markets in which they operate. But Coase was careful never to frame his theory to make it empirically testable. We can't take a Google or a Virgin and plot when and where their transaction costs influenced, say, their decisions to take over Nokia or to lobby Tory ministers for a larger share of NHS contracts.
Coase belonged to the Chicago school. Like his pal Milton Friedman, government was anathema. Without regulation, and particularly without the welfare state, markets would resolve themselves in benign benefit – all you need are saintly courts and judges where the rampant individualism prevalent everywhere else is miraculously absent.Coase belonged to the Chicago school. Like his pal Milton Friedman, government was anathema. Without regulation, and particularly without the welfare state, markets would resolve themselves in benign benefit – all you need are saintly courts and judges where the rampant individualism prevalent everywhere else is miraculously absent.
The fact that property is unequally distributed so many people don't have blessed "property rights" gets airbrushed from the theory. And of course if staff organise themselves in unions to try in some small way to re-equilibrate the power imbalance, that's condemned as monopolistic intrusion.The fact that property is unequally distributed so many people don't have blessed "property rights" gets airbrushed from the theory. And of course if staff organise themselves in unions to try in some small way to re-equilibrate the power imbalance, that's condemned as monopolistic intrusion.
Ideas matter – cue the cliche from JM Keynes about business people responding to the notions of some long-dead scribbler. What Angus Burgin showed in his recent book The Great Persuasion is that organising ideas and inserting them into the public arena also matters. And the right have been most successful in running clubs, networks and thinktanks – especially across the Atlantic, painting American ideas as universal.Ideas matter – cue the cliche from JM Keynes about business people responding to the notions of some long-dead scribbler. What Angus Burgin showed in his recent book The Great Persuasion is that organising ideas and inserting them into the public arena also matters. And the right have been most successful in running clubs, networks and thinktanks – especially across the Atlantic, painting American ideas as universal.
The US journalist and historian of economic ideas, John Cassidy, says we mustn't blame Coase for the way he was taken up by the Friedmanites and Tea Party headbangers. No? It's the acme of moral irresponsibility to disown your intellectual progeny, especially if they get into power (as they have in the US House of Representatives and parts of the Cameron cabinet) and start to implement your programme of destroying the social and protective state.The US journalist and historian of economic ideas, John Cassidy, says we mustn't blame Coase for the way he was taken up by the Friedmanites and Tea Party headbangers. No? It's the acme of moral irresponsibility to disown your intellectual progeny, especially if they get into power (as they have in the US House of Representatives and parts of the Cameron cabinet) and start to implement your programme of destroying the social and protective state.
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