Perspectives from New Institutional Economics
Edited by Claude Ménard
Chapter 5: Ronald Coase and the new microeconomics
Lars Werin Ronald Coase is a great economist and a great scholar. Let me begin by directly asking the questions, what makes Coase stand out as a scientist and what lies behind his achievements? I think above all the following. First, he has always refused to take anything for granted. He has a skepticism toward conventional wisdom which is both sound and productive: if facts do not accord with that wisdom, trust the facts. Then there is his insistence on what is the primary task of economists. That task, he argues, is to explain the phenomena we observe around us; making blueprints for a better economic world should wait until we know more about the world we live in. Third, he stubbornly adheres to the old principle called Occam’s Razor. No explanation, no theory should be made more complex than needed; no reﬁnements should be added just for the sake of giving an analysis an air of profundity or technical elegance. These guiding principles have served Coase well. By so doing, we have all beneﬁtted. There is no doubt that Coase has improved remarkably our understanding of the way the economic system works. We used to think we knew all the essential things through Léon Walras, Alfred Marshall, John Hicks, Kenneth Arrow, Gérard Debreu and Maurice Allais, to mention some major names – but this was a serious mistake. At the same time, he has provided a basis for a better understanding of the legal system as...
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