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Peter G. Klein: Coase and the Austrians

October 14, 2013

From Mises.org:

Ronald Coase passed away yesterday [2nd September] at the age of 102.  Coase is one of the most influential economists of the twentieth century, perhaps of all time. […] Coase was no Austrian, but was friendly with many Austrian economists, was deeply critical of modern positivism and instrumentalism, and was skeptical of most regulations. Austrians have generally rejected Coase’s approach to property rights, externalities, and liability (see Block, 1977Rothbard 1982, and Cordato, 1992, for examples of a large literature). However, Coase’s insight that legal entitlements are often traded, and that trading partners can often “contract around” legal and regulatory barriers, is important and useful, even if contemporary law-and-economics scholarship has drawn the mistaken implication that judges can somehow use this insight to determine the “optimal” allocation of property rights.

From Ronald H. Coase, Founding Scholar in Law and Economics, 1910-2013:

Ronald H. Coase helped create the field of law and economics, through groundbreaking scholarship that earned him the 1991 Nobel Memorial Prize in Economics and through his far-reaching influence as a journal editor.

Coase, who spent most of his academic career at the University of Chicago Law School, died at the age of 102 on Sept. 2 at St. Joseph’s Hospital in Chicago. He was the oldest living Nobel laureate, according to the Nobel Foundation.

Coase, the Clifton R. Musser Professor Emeritus of Economics, is best known for his 1937 paper, “The Nature of the Firm,” which offered groundbreaking insights about why firms exist and established the field of transaction cost economics, and “The Problem of Social Cost,” published in 1960, which is widely considered to be the seminal work in the field of law and economics. The latter set out what is now known as the Coase Theorem, which holds that under conditions of perfect competition, private and social costs are equal.

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