Essays on Economics and Economists.

• Author: Brady, Gordon L.

This book is about spurs - the nettles that foster research - the grain of sand that annoys the oyster. For Professor Ronald H. Coase, doubts are a more important spur to thought than conviction. In the words of Coase:

the inspiration is most likely to come through stimulus provided by the patterns, puzzles and anomalies revealed by the systematic gathering of data, particularly when the prime need is to break our existing habits of thought [3, 71].(1)

Coase's response to spurs has often been to create them:

my contribution to economics has been to urge the inclusion in our analysis of features of the economic system so obvious that, like the postman in G.K. Chesterton's Father Brown tale, "The Invisible Man," they have tended to be overlooked.

Understanding the book requires background information about the author and his work. For Coase, the practice of "blackboard economics" amounts to "fiddling while Rome burns." By living up to his aversion to meaningless abstract exercises, Coase has become one of the most influential economists of this century and has revolutionized two fields of learning: law and economics. Coase is a towering intellectual figure in economics, a true scholar and liberal in the tradition of 18th century moral philosophers Adam Smith, David Hume, and 20th century political economists Edwin Canaan, Arnold Plant, and George Stigler. In 1991, the Royal Swedish Academy of Science awarded the Noble Prize in Economics to Coase, then in his seventies, for work he had done in his twenties and fifties. His award was based on two simply written but profound articles: "The Theory of the Firm" (1938) and "The Problem of Social Cost" (1960). One was about why we have business firms and do not all buy and sell our services individually in the market. The second paper articulated the concept of externalities as related to the legal structure and to the costs of carrying out transactions.

Unlike many of his contemporaries, Coase's work contains neither high powered mathematics nor arcane diagrams. Nor is Coase known for his forecasts of next quarter's GNP or making pronouncements on the equilibrium exchange rate of the franc [2]. His writing is typically composed of quotations from lawyers and judges; his works are written in the most straight forward prose; and he makes use of precise English with impeccable deductive reasoning and compelling logic [1]. Also indicative of Coase's perspective on spurs is his statement regarding the slow acceptance of his work: "a scholar must be content with the knowledge that what is false in what he says will soon be exposed and as for what is true, he can count on ultimately seeing it accepted, if only he lives long enough" [p. 14]. Coase's eventual acceptance and the well deserved recognition he has received is a commentary on the training of economists to communicate with each other and its effect on their "economics," woolly and otherwise. Just as language conveys meaning, what is practical in economics becomes ground down, its attributes discovered, and competition among economists can be expected...