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« The Intellectual Cultural That Is Shifting | Main | Microfoundations and Macroeconomics in Paperback on November 15 »

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Thanks for this, Pete. I like to think of the mythical physicist who insisted that bumble bees can't fly because their wings are too small, oblivious of the bumble bees flying right in front of him. So when someone says "the market" or people unaided by the State can't do X, I want to shout: Look outside. Bumble bees fly!

The Coase Theorem is considered a useless tautology by a ton of economists today. If numbers are small then there are all sorts of strategic bargaining problems; if numbers are large there are high transactions costs. So, of course, we should never observe transactions.

Steven G. Medema's new book, "The Hesitant Hand: Taming Self-Interest in the History of Economic Ideas" (Princeton University Press, 2009), presents a very clear and fairly thorough exposition of Ronald Coase's ideas (both in his article on the Federal Communications Commission, and his later writings on "social cost," transaction costs, and the institutional order).

What is also useful in the book is that Medema does so in a setting of showing the rise of modern "welfare economics" in the late 19th and early 20th centuries (including Pigou's regulatory proposals to handle externalities), the dead-end of the hyper-mathematical general equilibrium approach in dealing with public goods and externality issues, and the important challenge the "market failure" literature received at the hands of Coase and the emerging Public Choice approach in the second half of the 20th century.

Coases's signficance in the arena of issues relating to property rights, regulation, and the state is emphasized by Medema with great force.

Richard Ebeling

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Economic minimalism is especially important in today's society. Great teacher in Ronald Coase. He hit the century mark in December!

99 years is a good age to live to but as you say it is more important that there is a 50 year anniversary for the economic theory that has enhanced thinking it terms of how the world may be viewed.

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