The Elgar Companion to Ronald H. Coase
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The Elgar Companion to Ronald H. Coase

Edited by Claude Ménard and Elodie Bertrand

Ronald H. Coase was one of the most innovative and provocative economists of the twentieth century. Besides his best known papers on ‘The Nature of the Firm’ and ‘The Problem of Social Cost’, he had a major role in the development of the field of law and economics, and made numerous influential contributions to topics including public utilities, regulation and the functioning of markets. In this comprehensive Companion, 31 leading economists, social scientists and legal scholars assess the impact of his work with particular reference to the research programs initiated, the influence on policymakers, and the challenge to conventional perspectives.
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Chapter 20: Emerging markets: what can we learn from Ronald Coase?

Ning Wang


The most lasting lesson from the life and work of Ronald Coase may well be his persistent vision of economics and a distinct research program it entails. Over his long and illustrious career, Coase tenaciously criticized modern economics for first ignoring and later altogether denying its subject matter, the working of the economic system, in which wealth is created in society through the division of labor, free enterprises and exchange. As a result, what we find in the vast modern economics literature is “the circulation of the blood without the body” (Coase 1998: 73; 2002). The “body economic” Coase had in mind is what he termed “the institutional structure of production” (Coase 1992). In emerging markets, what is emerging and currently wanting includes legal institutions protecting property rights and enforcing contracts, and a regulatory framework reducing uncertainty and fostering competition. Together with the network of firms and markets, the legal and regulatory systems make up the economic body, which determines the extent of the market and the cost of transaction, ultimately responsible for generating the low of goods and services in an economy and thus dictates material wellbeing in society.

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