Today is the 100th birthday of the great scholar Ronald Coase. Fortunately, Coase is still with us – and I’m told by friends who know him well, he’s still working diligently to deepen our understanding of the role of property rights, law, and (of course) transaction costs.
My doctoral dissertation (fortunately unpublished) was on Coase’s theory of the firm. And as my dear, late friend Hugh Macaulay never tired of saying, Ronald Coase is a “genius among geniuses.” (Hugh was referring to Coase the LSE student studying under the likes of F.A. Hayek and Arnold Plant, LSE faculty members.)
Coase’s most famous articles are his 1937 “The Nature of the Firm,” and his 1960 “The Problem of Social Cost.” And these articles are indeed worthy of their fame. But Coase’s much-less-celebrated 1946 article, in Economica, is my favorite: “The Marginal Cost Controversy.” Study carefully this article – absorb its wisdom – adopt its perspective – and you will be a damn good economist.