Hostname: page-component-586b7cd67f-rcrh6 Total loading time: 0 Render date: 2024-11-25T00:43:18.113Z Has data issue: false hasContentIssue false
  • English
  • Français

RONALD COASE’S “NATURE OF THE FIRM” AND THE ARGUMENT FOR ECONOMIC PLANNING

Published online by Cambridge University Press:  17 July 2014

PER L. BYLUND
PER L. BYLUND*
Affiliation:
Baylor University, Waco, TX. Email: [email protected].
Get access Rights & Permissions [Opens in a new window]

Abstract

Ronald Coase was in his early twenties when he developed his groundbreaking theory of the firm. This theory represented a new approach with no obvious precursors, but from where did it arise? This article traces the origins of Coase’s theory of the firm and provides a context for its formation. I argue that Coase’s arguments were rooted in the exchange of ideas in the Socialist Calculation Debate, and that, in this context, one could read his theory of the firm as an argument in defense of economic planning.

Type
Articles
Information
Journal of the History of Economic Thought , Volume 36 , Issue 3 , September 2014 , pp. 305 - 329
Copyright
Copyright © The History of Economics Society 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Barone, Enrico. 1908. “Il ministro della produzione nello stato collettivista.” Giornale degli economisti 37: 267–293.Google Scholar
Blaug, Mark. 1997. Economic Theory in Retrospect. Cambridge: Cambridge University Press.Google Scholar
Boettke, Peter J. 1998. “Coase, Communism and the 'Black Box' of Soviet-Type Economies.” In Medema, S. G., ed., Coasean Economics: Law and Economics and the New Institutional Economics. Boston: Kluwer Academic Publishers, pp. 193–207.Google Scholar
Boettke, Peter J. 2006. “Hayek and Market Socialism.” In Feser, E., ed., The Cambridge Companion to Hayek. Cambridge: Cambridge University Press, pp. 51–66.Google Scholar
Böhm-Bawerk, Eugen von. [1889] 1959. Positive Theory of Capital. South Holland, Ill.: Libertarian Press.Google Scholar
Buchanan, James M., and Thirlby, George F.. [1973] 1981. LSE Essays on Cost. New York: New York University Press.Google Scholar
Bylund, Per L. 2011. “Division of Labor and the Firm: An Austrian Attempt at Explaining the Firm in the Market.” Quarterly Journal of Austrian Economics 14 (2): 188–215.Google Scholar
Bylund, Per L. 2014. “Explaining Firm Emergence: Specialization, Transaction Costs, and the Integration Process.” Managerial and Decision Economics. Forthcoming; online at http://onlinelibrary.wiley.com/doi/10.1002/mde.2661/abstract.Google Scholar
Caldwell, Bruce. 1995. “Introduction.” In Caldwell, B., ed., The Collected Works of F. A. Hayek, vol. 9, Contra Keynes and Cambridge: Essays, Correspondence. Chicago: University of Chicago Press, pp. 1–48.Google Scholar
Campbell, David, and Klaes, Matthias. 2005. “The Principle of Institutional Direction: Coase's Regulatory Critique of Intervention.” Cambridge Journal of Economics 29 (2): 263–288.Google Scholar
Casadesus-Masanell, Ramon, and Spulber, Daniel F.. 2000. “The Fable of Fisher Body.” Journal of Law and Economics 43 (1): 67–104.Google Scholar
Cheung, Steven N. S. 1970. “The Structure of a Contract and the Theory of a Non-exclusive Resource.” Journal of Law and Economics 13 (1): 49–70.Google Scholar
Cheung, Steven N. S. 1992. “On the New Institutional Economics.” In Werin, L. and Wijkander, H., eds., Contract Economics. Oxford: Basil Blackwell, pp. 48–65.Google Scholar
Coase, Ronald H. 1937. “The Nature of the Firm.” Economica 4 (16): 386–405.CrossRefGoogle Scholar
Coase, Ronald H. 1938a. “Business Organisation and the Accountant.” The Accountant 13 (October–December): 470–472, 505–507, 537–538, 559–560, 607–608, 631–632, 665–666, 705–706, 737–739, 775–777, 814–815, 834–835.Google Scholar
Coase, Ronald H. 1938b. “Business Organisation and the Accountant—I.” The Accountant 13 (1 October): 470–472.Google Scholar
Coase, Ronald H. 1938c. “Business Organisation and the Accountant—IV.” The Accountant 13 (22 October): 559–560.Google Scholar
Coase, Ronald H. 1959. “The Federal Communications Commission.” Journal of Law and Economics 2: 1–40.Google Scholar
Coase, Ronald H. 1960. “The Problem of Social Cost.” Journal of Law and Economics 3 (1): 1–44.CrossRefGoogle Scholar
Coase, Ronald H. 1972. “Industrial Organization: A Proposal for Research.” In Fuchs, V. R., ed., Policy Issues and Research Opportunities in Industrial Organization. New York: National Bureau of Economic Research, pp. 59–73.Google Scholar
Coase, Ronald H. 1973. “Business Organization and the Accountant.” In Buchanan, J. B. and Thirlby, G. F., eds., LSE Essays on Cost. New York: New York University Press, pp. 95–132.Google Scholar
Coase, Ronald H. 1981. “The Coase Theorem and the Empty Core: A Comment.” Journal of Law and Economics 24 (1): 183–187.Google Scholar
Coase, Ronald H. 1982. “Economics at LSE in the 1930s: A Personal View.” Atlantic Economic Journal 10 (1): 31–34.Google Scholar
Coase, Ronald H. 1988a. “The Nature of the Firm: Influence.” Journal of Law, Economics and Organization 4 (1): 33–47.Google Scholar
Coase, Ronald H. 1988b. “The Nature of the Firm: Meaning.” Journal of Law, Economics and Organization 4 (1): 19–32.Google Scholar
Coase, Ronald H. 1988c. “The Nature of the Firm: Origin.” Journal of Law, Economics and Organization 4 (1): 3–17.Google Scholar
Coase, Ronald H. 1990. “Accounting and the Theory of the Firm.” Journal of Accounting and Economics 12 (1–3): 3–13.CrossRefGoogle Scholar
Coase, Ronald H. 1993. “Law and Economics at Chicago.” Journal of Law and Economics 36 (1): 239–254.CrossRefGoogle Scholar
Coase, Ronald H. 1994a. “Arnold Plant.” In Coase, R. H., ed., Essays on Economics and Economists. Chicago: University of Chicago Press, pp. 176–184.Google Scholar
Coase, Ronald H. 1994b. “How Should Economists Choose?” In Coase, R. H., ed., Essays on Economics and Economists. Chicago: University of Chicago Press, pp. 15–33.Google Scholar
Coase, Ronald H. 1995a. Essays on Economics and Economists. Chicago: University of Chicago Press.Google Scholar
Coase, Ronald H. 1995b. “My Evolution as an Economist.” In Breit, W. and Spencer, R. W., ed., Lives of the Laureates. Cambridge: MIT Press, pp. 227–249.Google Scholar
Coase, Ronald H. 1996. “Law and Economics and A. W. Brian Simpson.” Journal of Legal Studies 25 (1): 103–119.Google Scholar
Coase, Ronald H. 1998. “The New Institutional Economics.” American Economic Review 88 (2): 72–74.Google Scholar
Coase, Ronald H. 2000. “The Acquisition of Fisher Body by General Motors.” Journal of Law and Economics 43 (1): 15–31.Google Scholar
Coase, Ronald H. 2006. “The Conduct of Economics: The Example of Fisher Body and General Motors.” Journal of Economics & Management Strategy 15 (2): 255–278.Google Scholar
Coase, Ronald H., and Wang, Ning. 2012. How China Became Capitalist. New York: Palgrave Macmillan.Google Scholar
Coats, A. W. 1982. “The Distinctive LSE Ethos in the Inter-War Years.” Atlantic Economic Journal 10 (1): 18–30.CrossRefGoogle Scholar
Craver, Earlene. 1986. “The Emigration of the Austrian Economists.” History of Political Economy 18 (1): 1–32.Google Scholar
Demsetz, Harold. 2011. “R. H. Coase and the Neoclassical Model of the Economic System.” Journal of Law and Economics 54 (4): S7–S13.Google Scholar
Dobb, Maurice H. 1925. Capitalist Enterprise and Social Progress. London: Routledge.Google Scholar
Dobb, Maurice H. 1933. “Economic Theory and the Problems of a Socialist Economy.” Economic Journal 43: 588–598.Google Scholar
Dobb, Maurice H. 1955. On Economic Theory and Socialism: Collected Papers. New York: International Publishers.Google Scholar
Durkheim, Emile. [1892] 1933. The Division of Labor in Society. New York: The Free Press.Google Scholar
Ebeling, Richard M. 1978. The Austrian Theory of the Trade Cycle and Other Essays. Auburn, AL: Ludwig von Mises Institute, 1996.Google Scholar
Frank, Lawrence K. 1925. “The Significance of Industrial Integration.” Journal of Political Economy 33 (2): 179–195.Google Scholar
Freeland, Robert F. 2000. “Creating Holdup through Vertical Integration: Fisher Body Revisited.” Journal of Law and Economics 43 (1): 33–66.Google Scholar
Garrison, Roger W. 1997. “The Austrian Theory of the Business Cycle.” In Glasner, D., ed., Business Cycles and Depressions. New York: Garland Publishing Co., pp. 23–27.Google Scholar
Hayek, Friedrich A. von. 1931. “The 'Paradox' of Saving.” Economica (32): 125–169.Google Scholar
Hayek, Friedrich A. von. [1931] 1932. Prices and Production. New York: The Macmillan Company.Google Scholar
Hayek, Friedrich A. von. 1935a. Collectivist Economic Planning. London: Routledge & Sons.Google Scholar
Hayek, Friedrich A. von. 1935b. “The Present State of the Debate.” In Hayek, F. A. v., ed., Collectivist Economic Planning. London: Routledge & Kegan Paul Ltd., pp. 201–243.Google Scholar
Hayek, Friedrich A. von. 1937. “Economics and Knowledge.” Economica 4 (13): 33–54.CrossRefGoogle Scholar
Hayek, Friedrich A. von. 1945. “The Use of Knowledge in Society.” American Economic Review 35 (4): 519–530.Google Scholar
Hayek, Friedrich A. von. 1948. Individualism and Economic Order. Chicago: University of Chicago Press.Google Scholar
Hayek, Friedrich A. von. 1995. “The Economics of the 1930s as Seen from London.” In Caldwell, B., ed., The Collected Works of F. A. Hayek, vol. 9, Contra Keynes and Cambridge: Essays, Correspondence. Chicago: University of Chicago Press, pp. 49–73.Google Scholar
Hayek, Friedrich A. von. 2008. Prices and Production and Other Works. Auburn, AL: Ludwig von Mises Institute.Google Scholar
Hicks, John R. 1982. Money, Interest and Wages: Vol. II of Collected Essays in Economic Theory. Oxford: Basil Blackwell.Google Scholar
Howson, Susan. 2011. Lionel Robbins. New York: Cambridge University Press.Google Scholar
Hülsmann, Jörg Guido. 2007. Mises: The Last Knight of Liberalism. Auburn, AL: Ludwig von Mises Institute.Google Scholar
Jacobsen, Lowell R. 2008. “On Robinson, Coase and 'The Nature of the Firm.'” Journal of the History of Economic Thought 30 (1): 65–80.Google Scholar
Joskow, Paul L. 1995. “The New Institutional Economics: Alternative Approaches: Concluding Comment.” Journal of Institutional and Theoretical Economics (JITE) / Zeitschrift für die gesamte Staatswissenschaft 151 (1): 248–259.Google Scholar
Klein, Benjamin. 1988. “Vertical Integration as Organizational Ownership: The Fisher Body–General Motors Relationship Revisited.” Journal of Law, Economics, and Organization 4 (1): 199–213.Google Scholar
Klein, Benjamin. 1996. “Why Hold-ups Occur: The Self-enforcing Range of Contractual Relationships.” Economic Inquiry 34 (3): 444–463.Google Scholar
Klein, Benjamin. 2007. “The Economic Lessons of Fisher Body–General Motors.” International Journal of the Economics of Business 14 (1): 1–36.Google Scholar
Klein, Benjamin. 2010. “Asset Specificity and Holdups.” In Klein, P. G. and Sykuta, M. E., eds., The Elgar Companion to Transaction Cost Economics. Aldershot, UK: Edward Elgar, pp. 120–126.Google Scholar
Klein, Peter G. 2000. “New Institutional Economics.” In Bouckeart, B. and De Geest, G., eds., Encyclopedia of Law and Economics. Cheltenham, UK: Edward Elgar, pp. 456–489.Google Scholar
Klein, Peter G. 2005. “The Make-or-Buy Decision: Lessons from Empirical Studies.” In Ménard, C. and Shirley, M., eds., Handbook of New Institutional Economics. New York: Springer, pp. 435–464.Google Scholar
Knight, Frank H. [1921] 1985. Risk, Uncertainty and Profit. Chicago: University of Chicago Press.Google Scholar
Lachmann, Ludwig M. [1956] 1978. Capital and Its Structure. Kansas City: Sheed Andrews and McMeel.Google Scholar
Lange, Oskar. 1936. “On the Economic Theory of Socialism: Part One.” The Review of Economic Studies 4 (1): 53–71.Google Scholar
Lange, Oskar. 1937. “On the Economic Theory of Socialism: Part Two.” The Review of Economic Studies 4 (2): 123–142.CrossRefGoogle Scholar
Lange, Oskar. 1964. “On the Economic Theory of Socialism.” In Lippincott, B. E., ed., On the Economic Theory of Socialism. New York: McGraw Hill, pp. 55–143.Google Scholar
Lavoie, Don. 1986. “The Market as a Procedure for the Discovery and Conveyance of Inarticulate Knowledge.” Comparative Economic Studies 28: 1–19.Google Scholar
Lazonick, William. 1991. Business Organization and the Myth of the Market Economy. Cambridge: Cambridge University Press.Google Scholar
Lerner, Abba P. 1934. “Economic Theory and Socialist Economy.” The Review of Economic Studies 2 (1): 51–61.Google Scholar
Lerner, Abba P. 1935. “Economic Theory and Socialist Economy.” The Review of Economic Studies 2 (2): 152–154.Google Scholar
Lerner, Abba P. 1936. “A Note on Socialist Economics.” The Review of Economic Studies 4 (1): 72–76.CrossRefGoogle Scholar
Lerner, Abba P. 1938. “Theory and Practice in Socialist Economics.” The Review of Economic Studies 6 (1): 71–75.Google Scholar
Lerner, Abba P. 1977. “Marginal Cost Pricing in the 1930s.” The American Economic Review 67 (1): 235–243.Google Scholar
Lippincott, Benjamin E. 1964. “Introduction.” In Lippincott, B. E., ed., On the Economic Theory of Socialism. New York: McGraw Hill, pp. 1–38.Google Scholar
Machaj, Mateusz. 2007. “Market Socialism and the Property Problem: Different Perspective of the Socialist Calculation Debate.” Quarterly Journal of Austrian Economics 10 (4): 257–280.Google Scholar
Marx, Karl. [1867] 1906. Capital: A Critique of Political Economy. New York: Charles H. Kerr & Company.Google Scholar
McCormick, Brian J. 1992. Hayek and the Keynesian Avalanche. New York: St. Martin's Press.Google Scholar
Medema, Steven G. 1994. “The Myth of Two Coases: What Coase Is Really Saying.” Journal of Economic Issues 28 (1): 208–217.CrossRefGoogle Scholar
Medema, Steven G. 1996. “Coase, Costs, and Coordination.” Journal of Economic Issues 30 (2): 571–578.Google Scholar
Medema, Steven G., and Zerbe, Richard O. Jr. 2000. “The Coase Theorem.” In Bouckaert, B. and De Geest, G., eds., Encyclopedia of Law and Economics. Cheltenham: Edward Elgar, pp. 36–92.Google Scholar
Mises, Ludwig von. 1912. Theorie des Geldes und der Umlaufsmittel. Leipzig: Duncker & Humblot.Google Scholar
Mises, Ludwig von. 1920. “Die Wirtschaftsrechnung im sozialistischen Gemeinwesen.” Archiv für Sozialwissenschaften 47: 86–121.Google Scholar
Mises, Ludwig von. 1922. Die Gemeinwirtschaft: Untersuchungen über den Sozialismus. Jena: Gustav Fischer Verlag.Google Scholar
Mises, Ludwig von. 1949a. Human Action: A Treatise on Economics. New Haven, Conn.: Yale University Press.Google Scholar
Mises, Ludwig von. 1949b. Human Action: A Treatise on Economics. The Scholar's Edition. Auburn, Ala.: Ludwig von Mises Institute, 1998.Google Scholar
Mises, Ludwig von. 2008. “Profit and Loss.” In Mises, Ludwig von, ed., Planning for Freedom: Let the Market System Work. Indianapolis: Liberty Fund, pp. 143–172.Google Scholar
Mises, Margit von. 1976. My Years with Ludwig von Mises. New Rochelle, N.Y.: Arlington House Publishers.Google Scholar
Mo, Zhihong. 2012. “Decentralized Planning in a Market Economy? On the Nature of Coase's Research Program.” Review of Austrian Economics 25: 115–129.Google Scholar
North, Douglass C. 1990. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.Google Scholar
Pennington, Mark. 2011. Robust Political Economy: Classical Liberalism and the Future of Public Policy. Cheltenham, UK: Edward Elgar.Google Scholar
Penrose, Edith T. 1959. The Theory of the Growth of the Firm. New York: John Wiley and Sons.Google Scholar
Plant, Arnold. 1932. “Trends in Business Administration.” Economica (35): 45–62.Google Scholar
Putterman, Louis G., and Kroszner, Randall S.. 1996. The Economic Nature of the Firm: A Reader. Cambridge: Cambridge University Press.Google Scholar
Robbins, Lionel C. 1932. An Essay on the Nature and Significance of Economic Science. London: Macmillan and Co.Google Scholar
Robbins, Lionel C. 1934. The Great Depression. London: Macmillan and Company.Google Scholar
Robbins, Lionel C. 1935. “The Economics of Restrictionism.” The Banker 33 (January): 19–25.Google Scholar
Robbins, Lionel C. 1936a. “The Consequences of Economic Nationalism.” Lloyds Bank Limited Monthly Review 7 (May): 226–239.Google Scholar
Robbins, Lionel C. 1936b. “Economic Nationalism and Monetary Policy.” The Banker 38 (June): 192–197.Google Scholar
Robbins, Lionel C. 1936c. “The Nature of National Planning in the Sphere of International Business.” Amsterdamsche Bank NV Financial and Economic Review 47 (April): 1–9.Google Scholar
Robbins, Lionel C. 1937. Economic Planning and International Order. London: Macmillan.Google Scholar
Robbins, Lionel C. 1971. Autobiography of an Economist. London: Macmillan.Google Scholar
Robertson, Dennis H. 1923. Control of Industry. London: Nisbet & Co.Google Scholar
Robinson, E. Austin G. 1931. The Structure of Competitive Industry. London: Nisbet.Google Scholar
Robinson, E. Austin G. 1934. “The Problem of Management and the Size of Firms.” The Economic Journal 44 (174): 242–257.CrossRefGoogle Scholar
Rothbard, Murray N. 1991. “The End of Socialism and the Calculation Debate Revisited.” Review of Austrian Economics 5 (2): 51–76.Google Scholar
Rothbard, Murray N. [1963] 2000. America's Great Depression. Auburn, AL: Ludwig von Mises Institute.Google Scholar
Rothbard, Murray N. [1962] 2004. Man, Economy, and State with Power and Market. Scholar’s Edition. Auburn, AL: Ludwig von Mises Institute.Google Scholar
Salerno, Joseph T. 1993. “Mises and Hayek Dehomogenized.” Review of Austrian Economics 6 (2): 113–146.Google Scholar
Salerno, Joseph T. 1994. “Reply to Leland B. Yeager on 'Mises and Hayek on Calculation and Knowledge.'” Review of Austrian Economics 7 (2): 111–125.Google Scholar
Salerno, Joseph T. 1996. “A Final Word: Calculation, Knowledge, and Appraisement.” Review of Austrian Economics 9 (1): 141–142.CrossRefGoogle Scholar
Schulak, Eugen Maria, and Unterköfler, Herbert. 2011. The Austrian School of Economics: A History of Its Ideas, Ambassadors, and Institutions. Auburn, AL: Ludwig von Mises Institute.Google Scholar
Simon, Herbert A. 1951. “A Formal Theory of the Employment Relationship.” Econometrica: Journal of the Econometric Society 19 (3): 293–305.Google Scholar
Smith, Adam. [1776] 1976. An Inquiry into the Nature and Causes of the Wealth of Nations. Chicago: University of Chicago Press.Google Scholar
Snavely, William P. 1969. Theory of Economic Systems: Capitalism, Socialism and Corporatism. Columbus, Ohio: Charles E. Merrill Publishing Company.Google Scholar
Taylor, Fred M. 1929. “The Guidance of Production in a Socialist State.” American Economic Review 19 (1): 1–8.Google Scholar
Veblen, Thorstein. [1904] 1978. The Theory of Business Enterprise. St. Louis: Transaction Publishers.Google Scholar
Wieser, Friedrich von. [1914] 1967. Social Economics. New York: Augustus M. Kelley.Google Scholar
Williamson, Oliver E. 1975. Markets and Hierarchies, Analysis and Antitrust Implications: A Study in the Economics of Internal Organization. New York: Free Press.Google Scholar
Williamson, Oliver E. 1985. The Economic Institutions of Capitalism. New York: Free Press.Google Scholar
Williamson, Oliver E. 1996a. “Economic Organization: The Case for Candor.” The Academy of Management Review 21 (1): 48–57.Google Scholar
Williamson, Oliver E. 1996b. The Mechanisms of Governance. Oxford: Oxford University Press.Google Scholar
Williamson, Oliver E. 2000. “The New Institutional Economics: Taking Stock, Looking Ahead.” Journal of Economic Literature 38 (3): 595–613.Google Scholar
Williamson, Oliver E., and Winter, Sidney G.. 1991. The Nature of the Firm: Origins, Evolution, and Development. Oxford: Oxford University Press.Google Scholar
Young, Allyn A. 1928. “Increasing Returns and Economic Progress.” The Economic Journal 38 (152): 527–542.Google Scholar