Ronald Coase | On Externalities, the Firm, and the State of Economics (MP3 audio)| May 21, 2012 | EconTalk

In Ronald Coase interview, surprised to hear the “price system is a very expensive system”, agreeing that “firms act like socialists, because it’s cheaper”. On the recording, around 27:00:

Ronald Coase

Roberts: How did you come to write that paper as an undergraduate?

Coase: I was interested in how firms actually operate. And if you start studying how firms actually operate, you find that they are not concerned with prices directly, at all.

A person who is working in a firm does what he’s told. That’s the way it operates.

Roberts: So, a firm is an island of socialism in a capitalist world.

Coase: Oh, when I was a socialist at that time, I had some influence on the items starting with the views that I now have. I was a socialist. My parents voted for the Labour Party. And one Ernest Bevin, who was General Secretary of the Transport and General Workers Union, which was the largest union in Britain. In those early days, I was a socialist.

And that may have had some effect in leading me to the Nature of the Firm. I don’t know. Very likely.

Roberts: So your insight was that firms act like socialists, because it’s cheaper.

Coase: That’s right.

Roberts: And it’s cheaper because it’s not free to use the price system.

Coase: It’s cheaper because the price system is a very expensive system. If you think of all of the things you have to know in order to make a bargain, it’s obvious it’s not a cheap system. In a system that avoids negotiations, it’s one that saves a lot of costs.

Roberts: So, one of the things that I love about that paper is it forces you to think about these costs, which you might not notice. It forces you to notice that some systems that you think might not work so well, actually work better than you think. But it’s hard to test those ideas, right? One of the implications of the paper is that when transaction costs are high, you’re more likely to use command-and-control, but it’s hard to measure transaction costs. It’s hard to quantify the theory. Is that correct?

Coase: Yes.

Roberts: Or is it irrelevant?

Coase: No, it’s very relevant. But the state of economics is that people don’t try to measure these, or try to study them. People try to engage in discussion and explanation without any real knowledge of what happens in the real world.

On the Econtalk page, in addition to the downloadable audio, there’s some text highlights from the talk.  Here’s the description of the interview.

Nobel Laureate Ronald Coase of the University of Chicago talks with EconTalk host Russ Roberts about his career, the current state of economics, and the Chinese economy. Coase, born in 1910, reflects on his youth, his two great papers, “The Nature of the Firm” and “The Problem of Social Cost”. At the end of conversation he discusses his new book on China, How China Became Capitalist (co-authored with Ning Wang), and the future of the Chinese and world economies.

[MP3 audio]

Coase on Externalities, the Firm, and the State of Economics | EconTalk | Library of Economics and Liberty at http://www.econtalk.org/archives/2012/05/coase_on_extern.html.

Some of the content from this interview turns up on “Ronald H. Coase” | The Concise Encyclopedia of Economics | The Library of Economics and Liberty, at http://www.econlib.org/library/Enc/bios/Coase.html

Advertisements
About

David Ing blogs at coevolving.com , photoblogs at daviding.com , and microblogs at http://ingbrief.wordpress.com . See .

Tagged with: , , ,
Posted in Talk Audio Download

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

Translate
Beyond this media queue
This content is syndicated to Twitter. For professional perspectives, look to Coevolving Innovations; for a photoblog, look to Reflections, Distractions.
  • Open Innovation Learning, Book Launch
    Video and audio recordings of the launch of my book, Open Innovation Learning, may be a more accessible preliminary way into the content, with the open access publication better as a reference.
  • Eight infographics on Systems Methods (UToronto iSchool 2018)
    The UToronto iSchool graduate student groups created 8 infographics reflecting impressions on the systems methods most relevant to their research in winter 2018.
  • Negotiating Order with Generative Pattern Language
    A workshop at PLoP 2017 framed dialogue as "Creating Order of" and "Negotiating Order with" frames of reference, to encourage collective sensemaking
  • Exploring the Context of Pattern Languages
    Pattern language is not for wicked problems, said Max Jacobson, coauthor with Christopher Alexander of the 1977 A Pattern Language: Towns, Building, Construction.  In addition, the conventional definition of an Alexandrian pattern as “a solution to a problem in context” when applied to social change might better use the term “intervention”, rather than “solu […]
  • Multiparadigm Inquiry Generating Service Systems Thinking
    Expanding pattern language to service systems through multiparadigm inquiry sweeps in research by scholars contemporaneous to Christopher Alexander.
  • Christopher Alexander, Horst Rittel, C. West Churchman
    Christopher Alexander (pattern languages), Horst Rittel (wicked problems) and C. West Churchman (the systems approach) were neighbours on campus at U.C. Berkeley in the 1960s and 1970s. What might we synthesize from their joint wisdom?
  • 2018/05 Moments May 2018
    Barely recovered from jet lag from China, bounced back to west coast for some continuing research. Returned home as spring turns into summer.
  • 2018/03 Moments March 2018
    A month in Toronto, as I came out of the Air Cast for my Achilles Tendon injury from December, and started physiotherapy.
  • 2018/04 Moments April 2018
    Relearning to walk, after ankle in cast, across Shanghai, Wuhan and Vancouver, with DY as my sherpa.
  • 2018/02 Moments February 2018
    A second month when the only occasions to leave the house required my spouse to accompany me.
  • 2018/01 Moments January 2018
    Ankle in a cast, a limited mobility month, maximum 10km from home
  • 2017/12 Moments December 2017
    Completed round-the-world trip Helsinki-Hameenlinna-London, then busy holiday season including an Achilles tendon injury from parkour, and our da shou Double 60 celebration.
  • The Systems Approach and its Enemies Helps Us Find the Morality of a Revised Democracy | van Gigch | 2006
    In a book series celebrating C. West Churchman, John P. van Gigch digests (and portends to extend) The Systems Approach and its Enemies. On enemies … 4.1 A MATTER OF DEFINITIONS: ADVERSARIES VERSUS ENEMIES I note the similarity/difference between the words ‘enemy’ and ‘adversary.’ Other authors use the word adversary (ies) to denote all the […]
  • Restoring Legitimacy to the Systems Approach | Clinton J. Andrews | 2000
    A public policy professor, Clinton J. Andrews, looks at how The Systems Approach may encounter problems in skepticism from engineering practice. The systems approach is one general way of going about tackling a problem; some others include the experimental, political, moral, religious, and aesthetic approaches [1,p. 5], [2]. The systems approach to a problem […]
  • The Systems Approach: Its Variety of Aspects | Richard Mattessich | 1982
    An informed view of the Systems Approach from 1982.  (Richard Mattessich was a well-respected professor at UBC when I started in the doctoral program in 1982, but I wouldn’t get to appreciate the Systems Approach as described by C. West Churchman until the ISSS 1998 meeting). In his latest work [The Systems Approach and its […]
  • A logic model for philanthropic effectiveness | Peter Frumkin | 2006
    Program evaluation can be approached from the philanthropic perspective. In searching for ways to give money effectively, donors have many options and confront a wide range of theories about how to achieve impact. It is possible to think about these theories as falling into three main categories: theories of change, theories of leverage, and theories […]
  • Program Logic Models and Theory of Change | Kellogg Foundation | 2004
    From the program evaluation community, with the W.K. Kellogg Foundation … The program logic model is defined as a picture of how your organization does its work – the theory and assumptions underlying the program. A program logic model links outcomes (both short- and long-term) with program activities/processes and the theoretical assumptions/principles of t […]
  • Restoring Manjaro Grub after Ubuntu upgrade
    On a multi-boot Linux computer where Ubuntu has already been installed, adding on Manjaro Linux installs its own version of Grub (that I’ll call Arch-Grub) that is different but compatible with that previously installed (that I’ll call Debian-Grub). Updating Ubuntu to a newer version (or installing an older version) restores Debian-Grub, replacing the workin […]
Contact
I welcome your e-mail. If you don't have my address, here's a contact page.
%d bloggers like this: