Ronald Coase

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The Darwin Economy: Liberty, Competition, and the Common Good by Robert H. Frank

Alan Greenspan, behavioural economics, carbon footprint, carbon tax, carried interest, Cass Sunstein, clean water, congestion charging, congestion pricing, corporate governance, deliberate practice, full employment, Garrett Hardin, Gary Kildall, high-speed rail, income inequality, independent contractor, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Paul Samuelson, plutocrats, positional goods, profit motive, Ralph Nader, rent control, Richard Thaler, Ronald Coase, Ronald Reagan, sealed-bid auction, smart grid, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thomas Malthus, Tragedy of the Commons, transaction costs, trickle-down economics, Tyler Cowen, ultimatum game, vertical integration, winner-take-all economy

Similarly, a firm is permitted to cut its price and thereby harm its rivals, perhaps even drive them out of business, because failure to allow this would cause even greater harm to consumers. For the harm principle to make any sense at all, it must be understood to mean that the legitimacy of a restriction must be decided by weighing its cost to those being restricted against the harm others would suffer if the behavior weren’t restricted. The Pivotal Contribution of Ronald Coase Ronald Coase (rhymes with “rose”) won the Nobel Prize in economics in 1991 largely on the strength of his contribution to our way of thinking about this delicate balancing act. An economist born and educated in England, Coase spent the latter part of his career on the faculty of the University of Chicago Law School, where he was revered by that university’s free-market 86 CHAPTER SIX enthusiasts as the world’s foremost authority on behavior that causes harm to others.

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Coase acknowledged that the wealth levels of the doctor and the factory owner would be affected by liability rules, but he insisted that their decision about how to solve the problem would not be. Never ones to shrink from debate, a group of University of Chicago economists invited Coase, who was then teaching at the University of Virginia, to Chicago to discuss his ideas with them. Twenty economists and Ronald Coase met for dinner at the home of Aaron Director, who was then editor of the Journal of Law and Economics, in which Coase’s paper had appeared. Years later, Stigler offered this recollection of the evening’s conversation: “Milton Friedman did most of the talking, as usual. He also did much of the thinking, as usual.

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Those solutions would always place the burden of adjusting to externalities on the party for whom that burden was least costly. Sometimes that would entail assigning liability to the party whom most would describe as the perpetrator. But not always. There is a measure of irony in the fact that Ronald Coase quickly emerged as the reigning intellectual hero of free-market conservatives on all matters related to activities that cause harm to others. Their embrace of Coase stems largely from the perception that his framework helped expand the range of problems believed to be soluble without regulatory intervention.

Licence to be Bad by Jonathan Aldred

"Friedman doctrine" OR "shareholder theory", Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, availability heuristic, Ayatollah Khomeini, behavioural economics, Benoit Mandelbrot, Berlin Wall, Black Monday: stock market crash in 1987, Black Swan, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, Charles Babbage, clean water, cognitive dissonance, corporate governance, correlation does not imply causation, cuban missile crisis, Daniel Kahneman / Amos Tversky, Donald Trump, Douglas Engelbart, Douglas Engelbart, Dr. Strangelove, Edward Snowden, fake news, Fall of the Berlin Wall, falling living standards, feminist movement, framing effect, Frederick Winslow Taylor, From Mathematics to the Technologies of Life and Death, full employment, Gary Kildall, George Akerlof, glass ceiling, Glass-Steagall Act, Herman Kahn, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Isaac Newton, Jeff Bezos, John Nash: game theory, John von Neumann, Linda problem, Long Term Capital Management, Louis Bachelier, mandelbrot fractal, meta-analysis, Mont Pelerin Society, mutually assured destruction, Myron Scholes, Nash equilibrium, Norbert Wiener, nudge unit, obamacare, offshore financial centre, Pareto efficiency, Paul Samuelson, plutocrats, positional goods, power law, precautionary principle, profit maximization, profit motive, race to the bottom, RAND corporation, rent-seeking, Richard Thaler, ride hailing / ride sharing, risk tolerance, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, scientific management, Skinner box, Skype, Social Responsibility of Business Is to Increase Its Profits, spectrum auction, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, trickle-down economics, Vilfredo Pareto, wealth creators, zero-sum game

And yet the impact has not been quite what Hayek might have imagined at that inaugural meeting of the Mont Pèlerin Society, because economics has itself changed greatly since then. The rise of the society turns out to be just a small part of the story. And this is where the conspiracy theories break down. Many of the most influential thinkers behind the triumph of market economics were Mont Pèlerin Society members, including Gary Becker, James Buchanan, Ronald Coase, Milton Friedman, Richard Posner and George Stigler. But they did not always share Hayek’s views. And a few economists, such as Ken Arrow and Tom Schelling, were equally influential yet had a very different political outlook to the Mont Pèlerin gang. In the following chapters I explore how the radical ideas of these thinkers did so much to make modern mainstream economics.

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Moreover, the economists seemed unaware that offering your prospective employer a bribe to take you on might be embarrassing or awkward: the information given to participants included specific instructions on how to introduce the $500 offer, as if it were just another piece of advice on what to say in interviews. The economists’ odd view of the world was inspired by the Coase Theorem, a piece of economic theory attributed to the British economist Ronald Coase, who, coincidentally or not, was an Illinois resident. The theorem presumes that everyone, in all aspects of life, is always willing to do a deal: offering cash to get what you want or accepting cash in return for giving someone else what they want. The law, moral rules or social conventions – the social convention against bribing your way into a job, for example – will, ultimately, not get in the way of mutually beneficial deal-making.

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Other than introducing markets into areas where they did not previously exist, the Coase Theorem is a do-nothing manifesto: the government should do nothing, it should not intervene, because private deals between affected parties can solve all problems. And all this by accident. THE ACCIDENTAL ECONOMIST AND HIS ACCIDENTAL THEOREM Ronald Coase was born in December 1910, in the north-west London suburb of Willesden. Later, Coase would recollect having a ‘weakness in his legs’ as a child, a condition treated by putting him in leg irons, and his first school was a ‘school for physical defectives’.3 This seems to have led to him entering his next school, Kilburn Grammar, at the age of twelve rather than eleven.

Why Information Grows: The Evolution of Order, From Atoms to Economies by Cesar Hidalgo

Ada Lovelace, Albert Einstein, Arthur Eddington, assortative mating, business cycle, Claude Shannon: information theory, David Ricardo: comparative advantage, Douglas Hofstadter, Everything should be made as simple as possible, Ford Model T, frictionless, frictionless market, George Akerlof, Gödel, Escher, Bach, income inequality, income per capita, industrial cluster, information asymmetry, invention of the telegraph, invisible hand, Isaac Newton, James Watt: steam engine, Jane Jacobs, job satisfaction, John von Neumann, Joi Ito, New Economic Geography, Norbert Wiener, p-value, Paul Samuelson, phenotype, price mechanism, Richard Florida, Robert Solow, Ronald Coase, Rubik’s Cube, seminal paper, Silicon Valley, Simon Kuznets, Skype, statistical model, Steve Jobs, Steve Wozniak, Steven Pinker, Stuart Kauffman, tacit knowledge, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, working-age population

Transaction cost theory, or new institutional economics, is the branch of economics that studies the costs of transactions and the institutions that people develop to govern them. In simpler terms, it is the branch studying the cost of economic links and the ways in which people organize to deal with commercial interactions. The origins of transaction cost theory can be traced back to a 1937 paper by Ronald Coase, “The Nature of the Firm.”4 As a young scholar, Coase realized that the descriptions of the economy that were prevalent at the time tended to overlook one aspect of the economy that seemed obvious to him: the fact that economic transactions are costly. As a student at the London School of Economics, Coase attended a seminar organized by Arnold Plant, who had been recently appointed as a professor of commerce.5 It was there that Coase heard a description of the economy that contradicted his intuition and would accompany his thoughts throughout his life.

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Some firm-to-firm interactions are simple, such as ordering ink cartridges from a catalog, while others are incredibly complex, such as developing a partnership for the construction of a new manufacturing plant. Moreover, many firm interactions are embedded in social networks, which is a fact that we will consider in the next chapter. So talking about the cost of links is not simple, and it makes sense only when we define links narrowly enough. Oliver Williamson, a student of Ronald Coase, understood that commercial links come in different sizes. He wrote extensively about the connection between the cost of firm-to-firm interactions and the institutions that people develop to manage these links.11 Williamson’s classification of links is based on two axes. On the first, he separated transactions by frequency, into recurrent and occasional.

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Despite the brevity of our interactions, I drew support from them, and I am also greatly indebted to them for contributing to the environment in which these words took shape. I would be crazy not to thank them. During the summer of 2013 I wrote what became Chapters 6 and 7 at Voltage. I also studied the ideas of Ronald Coase and Oliver Williamson there. This set the foundation for what became Part III. In the fall of 2013 this book was still unfinished, but my daughter was ready to see the light of day. Iris’ birth changed this book. In a previous draft I already had a narrative explaining birth as an alien process—which had been inspired by Anna’s pregnancy—but I was lacking the emotional thrust of the actual event.

Milton Friedman: A Biography by Lanny Ebenstein

Abraham Wald, affirmative action, Alan Greenspan, banking crisis, Berlin Wall, Bretton Woods, business cycle, classic study, Deng Xiaoping, Fall of the Berlin Wall, fiat currency, floating exchange rates, Francis Fukuyama: the end of history, full employment, Hernando de Soto, hiring and firing, inflation targeting, invisible hand, Joseph Schumpeter, Kenneth Arrow, Lao Tzu, liquidity trap, means of production, Modern Monetary Theory, Mont Pelerin Society, Myron Scholes, Pareto efficiency, Paul Samuelson, Phillips curve, Ponzi scheme, price stability, public intellectual, rent control, road to serfdom, Robert Bork, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, school choice, school vouchers, secular stagnation, Simon Kuznets, stem cell, The Chicago School, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, Thorstein Veblen, zero-sum game

Others who gave interviews include Gary Becker, Anna Jacobson Schwartz, Lester Telser, Larry Sjaastad, Thomas Sowell, Sam Peltzman, Stephen Stigler, Larry Wimmer, John Turner, and the late D. Gale Johnson. Paul Samuelson sent a useful letter with reactions to some questions. For my biography of Hayek, I had the opportunity to interview W. Allen Wallis, Edwin Meese, and Ronald Coase, among others, and to talk briefly on the phone with Aaron Director. I also thank in particular J. Daniel Hammond, Robert Leeson, and William Frazer for their work on Friedman; the University of California at Santa Barbara for use of its library and interlibrary loan program; the Hoover Institution on War, Revolution and Peace for use of its Friedman archive; the Intercollegiate Studies Institute and Young America’s Foundation for participation in conferences on Friedman; the Liberty Fund for participation in a conference on Frank Knight; Walter Mead for encouragement and assistance; Tom Schrock for continuing advice; Mark Skousen for calling various articles to my attention; Joe Atwill and Curtis Ridling, and Cyndy x Phillips for reviewing the manuscript; and Nik Schiffmann and Lee Gientke for research contributions.

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Shultz says that Milton’s “brilliance as an economist is well known but perhaps as important and less exalted is his capacity as an expositor. He has a gift of clarity.... [I]f he winds up talking with someone he thinks is worthwhile he has immense patience, and a willingness to engage and argue. Milton is a great arguer, and we used to say that everyone loved to argue with Milton—when he wasn’t there!”38 Ronald Coase was among the leading economists of the twentieth century, and his influence continues to grow. His best-known contribution is the Coase theorem, essentially the idea that freedom of exchange is the ultimate requirement to reach Pareto optimality, whereby no exchange will increase any party’s welfare.

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.), “The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932–1970,” Journal of Law and Economics (April 1983), is the transcript of an exceptional gathering of thirty former University of Chicago students and former and current faculty focusing on the contributions of Aaron Director and Ronald Coase to the field of law and economics. Among the participants are Milton and Rose Friedman, Stigler, Wallis, Becker, and Robert Bork, in addition to Director and Coase. There is much history and exploration of the development of ideas. A number of obituaries were written on Director’s death in September 2004.

Capitalism 3.0: A Guide to Reclaiming the Commons by Peter Barnes

Albert Einstein, car-free, carbon tax, clean water, collective bargaining, corporate governance, corporate personhood, corporate raider, corporate social responsibility, cotton gin, dark matter, digital divide, diversified portfolio, do well by doing good, Easter island, en.wikipedia.org, Garrett Hardin, gentrification, hypertext link, Isaac Newton, James Watt: steam engine, jitney, junk bonds, Michael Milken, military-industrial complex, money market fund, new economy, patent troll, precautionary principle, profit maximization, Ronald Coase, telemarketer, The Wealth of Nations by Adam Smith, Tragedy of the Commons, transaction costs, War on Poverty, Yogi Berra

So, whether they knew it or not, were Dean Baker, Harriet Barlow, Connie Best, James Boyce, Rachel Breen, Marc Breslow, Peter Brown, Chuck Collins, Chris Desser, Peter Dorman, Brett Frischmann, Robert Glennon, Charles Halpern, Ann Hancock, Lewis Hyde, Marjorie Kelly, George Lakoff, Frances and Anna Lappé, Kathleen Maloney, Neil Mendenhall, David Morris, Richard Norgaard, Matt Pawa, Carolyn Raffensperger, Julie Ristau, Mark Sommer, Allen White, Bob Wilkinson, Susan Witt, and Oran Young. T | xvii | xviii | C A P I TA L I S M 3.0 Others whose writings have influenced me include E. F. Schumacher, Herman Daly, John Maynard Keynes, John Kenneth Galbraith, Ronald Coase, Louis Kelso, and Henry George. This entire undertaking would not have been possible without the love and support of my entire family, especially Eli and Zack. Thank you so much. Part 1 THE PROBLEM Chapter 1 Time toUpgrade Society is indeed a contract . . . between those who are living, those who are dead, and those who are to be born. — Edmund Burke (1792) or the first time in history, the natural world we leave our children will be frightfully worse than the one we inherited from our parents.

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Its premise is that nature can be preserved, and pollution reduced, by expanding private property rights. This line of thought is called free market environmentalism, and it’s favored by libertarian think tanks such as the Cato Institute. The origins of free market environmentalism go back to an influential paper by University of Chicago economist Ronald Coase. Writing in 1960, Coase challenged the then-prevailing orthodoxy that government regulation is the only way to protect nature. In fact, he argued, nature can be protected through property rights, provided they’re clearly defined and the cost of enforcing them is low. In Coase’s model, pollution is a two-sided problem involving a polluter and a pollutee.

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What I’m suggesting is that economists treat them as if they were common property held in trust. This simple supposition would not only put 90 | A SOLUTION ecosystems on the books, enabling us to track them better; it would also pave the way to real-world property rights that actually protect those ecosystems. Beyond Coase’s Supposes “Let us suppose,” economist Ronald Coase wrote in 1960, “that a farmer and a cattle-raiser are operating on neighboring properties.” He went on to suppose further that the cattle-raiser’s animals wander onto the farmer’s land and damage his crops. From this hypothetical starting point Coase examined the problem of externalities and proposed a solution—the creation of rights to pollute or not be polluted upon.

Company: A Short History of a Revolutionary Idea by John Micklethwait, Adrian Wooldridge

affirmative action, AOL-Time Warner, barriers to entry, Bear Stearns, Bonfire of the Vanities, book value, borderless world, business process, Carl Icahn, Charles Lindbergh, classic study, company town, Corn Laws, Cornelius Vanderbilt, corporate governance, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, double entry bookkeeping, Etonian, Fairchild Semiconductor, financial engineering, Great Leap Forward, hiring and firing, Ida Tarbell, industrial cluster, invisible hand, James Watt: steam engine, John Perry Barlow, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, Michael Milken, military-industrial complex, mittelstand, new economy, North Sea oil, pneumatic tube, race to the bottom, railway mania, Ronald Coase, scientific management, Silicon Valley, six sigma, South Sea Bubble, Steve Jobs, Steve Wozniak, strikebreaker, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, Triangle Shirtwaist Factory, tulip mania, wage slave, William Shockley: the traitorous eight

The much-vaunted idea that companies are now bigger than mere governments is, as we shall see, statistically fraudulent. Big companies are giving way to small ones, so much so, in fact, that an old question is now more pressing: What is the point of companies? That question was most succinctly answered back in 1937 by Ronald Coase, a young British economist. In an article called “The Nature of the Firm,” he argued that the main reason why a company exists (as opposed to individual buyers and sellers making ad hoc deals at every stage of production) is because it minimizes the transaction costs of coordinating a particular economic activity.

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Three works published in the 1930s and 1940s asked fundamental questions about this awkward institution: Why did companies exist? Whom were they run for? And what about the workers? The most basic of these three works began as a lecture in 1932 to a group of Dundee students by a twenty-one-year-old economist just back from a tour of American industry. Five years later, Ronald Coase published his ideas in a paper in Economica called “The Nature of the Firm.” Coase tried to explain why the economy had moved beyond individuals selling goods and services to each other. The answer, he argued, had to do with the imperfections of the market and particularly to do with transaction costs—the costs sole traders might incur in getting the best deal and coordinating processes such as manufacturing and marketing.

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In 1999, America’s most valuable export was intellectual capital: the country raked in $37 billion in licensing fees and royalties, compared with $29 billion for its main physical export, aircraft.6 The story of the company in the last quarter of the twentieth century is of a structure being unbundled. Companies were gradually forced to focus on their “core competencies.” Ronald Coase’s requirement of the company—it had to do things more efficiently than the open market—was being much more sorely tested. The managers of big companies liked to claim that new technology made it more efficient to bundle things together in a single company. In a few cases, this proved correct. Big media conglomerates were able to sell the same “content” through different channels.

Humans as a Service: The Promise and Perils of Work in the Gig Economy by Jeremias Prassl

3D printing, Affordable Care Act / Obamacare, Airbnb, algorithmic management, Amazon Mechanical Turk, Andrei Shleifer, asset light, autonomous vehicles, barriers to entry, call centre, cashless society, Clayton Christensen, collaborative consumption, collaborative economy, collective bargaining, creative destruction, crowdsourcing, death from overwork, Didi Chuxing, disruptive innovation, Donald Trump, driverless car, Erik Brynjolfsson, full employment, future of work, George Akerlof, gig economy, global supply chain, Greyball, hiring and firing, income inequality, independent contractor, information asymmetry, invisible hand, Jeff Bezos, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kevin Roose, Kickstarter, low skilled workers, Lyft, machine readable, Mahatma Gandhi, Mark Zuckerberg, market friction, means of production, moral hazard, Network effects, new economy, obamacare, pattern recognition, platform as a service, Productivity paradox, race to the bottom, regulatory arbitrage, remote working, ride hailing / ride sharing, Robert Gordon, Ronald Coase, Rosa Parks, scientific management, Second Machine Age, secular stagnation, self-driving car, shareholder value, sharing economy, Silicon Valley, Silicon Valley billionaire, Silicon Valley ideology, Simon Singh, software as a service, Steve Jobs, TaskRabbit, TechCrunch disrupt, The Future of Employment, The Market for Lemons, The Nature of the Firm, The Rise and Fall of American Growth, transaction costs, transportation-network company, Travis Kalanick, two tier labour market, two-sided market, Uber and Lyft, Uber for X, uber lyft, union organizing, warehouse automation, work culture , working-age population

This is the real value of digital work intermediation: gig-economy operators also provide information about how reliable a worker is, take care of invoicing and pay- ments, and provide a (digital) infrastructure within which the entire exchange can take place. With transaction cost so drastically reduced, the narrative continues, the traditional firm as described by Ronald Coase becomes obsolete; instead, we move into a hybrid world between markets and hierarchies. According to Coase’s theory of the firm, companies exist because the control exercised by an entrepreneur-coordinator over her workforce and other factors of pro- duction is much cheaper than the cost involved in going out to the market and haggling over each individual transaction.31 On the other hand, once an app has taken all of the hassle out of such transactions, Coase’s entrepreneur will no longer need to strike long-term bargains with workers, let alone invest in assets; she can replace her workforce with an external crowd, ready to complete individual tasks as and when required.

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If in doubt, workers and their employers can turn to the courts. Through a series of legal tests (often including elements such as control, subordination, and/or eco- nomic dependence), experienced labour judges determine who is a worker— and who is a genuine entrepreneur. Nobel-Prize-winning economist Ronald Coase was amongst the first to develop a theory underpinning this approach. He famously identified the bilateral contract of employment as the secret behind entrepreneurs’ tight control over their workforce: in return for regular wages, employees submit- ted themselves to the employer’s orders.2 Employment and social security law responded to ensure that these powers were exercised responsibly.

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For an overview, see Christopher Pissarides, ‘Equilibrium in the labor market with search frictions’ (2011) 101(4) American Economic Review 1092. His Nobel lecture is also available at http://www.nobelprize.org/nobel_prizes/ economic-sciences/laureates/2010/pissarides-lecture.pdf, archived at https:// perma.cc/U64H-QRP7 31. Ronald Coase, ‘The nature of the firm’ (1937) 4(16) Economica 386. 32. Julia Tomassetti, ‘Does Uber redefine the firm? The postindustrial corporation and advanced information technology’ (2016) 34(1) Hofstra Labor and Employ- ment Law Journal 1, 17. 33. Ibid., pt IV. 34. Ibid., 34. 35. Victor Fleischer, ‘Regulatory arbitrage’ (2010) 89(2) Texas Law Review 227, 230.

The Future of Ideas: The Fate of the Commons in a Connected World by Lawrence Lessig

AltaVista, Andy Kessler, AOL-Time Warner, barriers to entry, Bill Atkinson, business process, Cass Sunstein, commoditize, computer age, creative destruction, dark matter, decentralized internet, Dennis Ritchie, disintermediation, disruptive innovation, Donald Davies, Erik Brynjolfsson, Free Software Foundation, Garrett Hardin, George Gilder, Hacker Ethic, Hedy Lamarr / George Antheil, history of Unix, Howard Rheingold, Hush-A-Phone, HyperCard, hypertext link, Innovator's Dilemma, invention of hypertext, inventory management, invisible hand, Jean Tirole, Jeff Bezos, John Gilmore, John Perry Barlow, Joseph Schumpeter, Ken Thompson, Kenneth Arrow, Larry Wall, Leonard Kleinrock, linked data, Marc Andreessen, Menlo Park, Mitch Kapor, Network effects, new economy, OSI model, packet switching, peer-to-peer, peer-to-peer model, price mechanism, profit maximization, RAND corporation, rent control, rent-seeking, RFC: Request For Comment, Richard Stallman, Richard Thaler, Robert Bork, Ronald Coase, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, smart grid, software patent, spectrum auction, Steve Crocker, Steven Levy, Stewart Brand, systematic bias, Ted Nelson, Telecommunications Act of 1996, the Cathedral and the Bazaar, The Chicago School, tragedy of the anticommons, Tragedy of the Commons, transaction costs, vertical integration, Yochai Benkler, zero-sum game

For most resources, most of the time, the market trumps the state. There are exceptions, of course, and dissenters still. But if the twentieth century taught us one lesson, it is the dominance of private over state ordering. Markets work better than Tammany Hall in deciding who should get what, when. Or as Nobel Prize-winning economist Ronald Coase put it, whatever problems there are with the market, the problems with government are far more profound. This, however, is a new century; our questions will be different. The issue for us will not be which system of exclusive control—the government or the market—should govern a given resource.

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Otherwise there would be chaos, and radio's usefulness would be largely destroyed.12 It was in the nature of things, the government argued and the Court agreed, that only if spectrum were controlled by the government would spectrum be usable. Spectrum could not be free. ABOUT THE TIME the Supreme Court came to this conclusion, an English economist was concluding just the opposite. In a review of the FCC's regulation of spectrum, economist Ronald Coase concluded that there was no justification for political regulation of access to spectrum.13 Spectrum was no more “scarce” than land or trees were scarce. Scarcity is the nature of all valuable resources; but not all valuable resources are allocated by the government—at least, not in a free society. 14 Rather than a regime of licensing, Coase argued, spectrum should be allocated into property rights and sold to the highest bidder.15 A market for spectrum would better and more efficiently allocate spectrum than a system of government-granted licenses.

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If you want to sell very weird widgets, and only a hundred thousand people are within range, then you're not likely to be able to sell enough widgets to make it worthwhile. But if you had the world as your market—if the code layer facilitated broad distribution of selective information about widgets, thus lowering the cost of information—then you might have a market large enough to make your weird widget factory work. As Ronald Coase puts it: People talk about increases in improvements in technology, but just as important are improvements in the way in which people make contracts and deals. If you can lower the costs there, you can have more specialization and greater production. . . . By improving the way the market works, you can produce immense benefits, not because it invents new technologies, but because it enables new technologies to be used. 28 The net of these layers of control in real space is relatively simple to map.

Reinventing the Bazaar: A Natural History of Markets by John McMillan

accounting loophole / creative accounting, Albert Einstein, Alvin Roth, Andrei Shleifer, Anton Chekhov, Asian financial crisis, classic study, congestion charging, corporate governance, corporate raider, crony capitalism, Dava Sobel, decentralized internet, Deng Xiaoping, Dutch auction, electricity market, experimental economics, experimental subject, fear of failure, first-price auction, frictionless, frictionless market, George Akerlof, George Gilder, global village, Great Leap Forward, Hacker News, Hernando de Soto, I think there is a world market for maybe five computers, income inequality, income per capita, independent contractor, informal economy, information asymmetry, invisible hand, Isaac Newton, job-hopping, John Harrison: Longitude, John Perry Barlow, John von Neumann, Kenneth Arrow, land reform, lone genius, manufacturing employment, market clearing, market design, market friction, market microstructure, means of production, Network effects, new economy, offshore financial centre, ought to be enough for anybody, pez dispenser, pre–internet, price mechanism, profit maximization, profit motive, proxy bid, purchasing power parity, Robert Solow, Ronald Coase, Ronald Reagan, sealed-bid auction, search costs, second-price auction, Silicon Valley, spectrum auction, Stewart Brand, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, trade liberalization, transaction costs, War on Poverty, world market for maybe five computers, Xiaogang Anhui farmers, yield management

Three Nobel laureates noted this oddity. George Stigler found it “a source of embarrassment that so little attention has been paid to the theory of markets.” Douglass North noted the “peculiar fact” that economics “contains so little discussion of the central institution that underlies neoclassical economics—the market.” Ronald Coase complained that the market has a “shadowy role” in economic theory, and “discussion of the market itself has entirely disappeared.” The Nobel laureates’ critique has now been addressed. Modern economics has a lot to say about the workings of markets. Theorists have opened up the black box of supply and demand and peered inside.

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If the air were private property, the owner could charge polluters for the “use” of it, and then there would be no externality. No one can own the air, of course, but in some other cases broadening property rights can be an effective solution. Given clearly defined property rights, individuals may negotiate a mutually beneficial solution to an externality, as Nobel laureate Ronald Coase pointed out. Imagine a cattle rancher who harms his neighbor, a corn grower, by not maintaining the fence, so the cattle wander into the cornfield and damage the crop. Suppose that fixing the fence would create value (since the repair cost is smaller than the cattle’s damage). If the corn grower has recourse to the courts, then the cattle rancher would fix the fence under the threat of being sued.

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The answer is that firms exist as a response to market frictions. Sometimes it is less expensive to run a hierarchy than to use the market. Whether a firm produces its inputs in-house or procures them from other firms depends on the relative costs of each form of transaction. One of the factors affecting this comparison, as Ronald Coase wrote in 1937, is the efficiency with which markets work. Where the transaction costs of using the market are high, firms tend to make inputs themselves. Where markets work smoothly, firms contract out much of the work. Firms do not necessarily need their own in-house production capabilities to benefit from economies of scale.

Hive Mind: How Your Nation’s IQ Matters So Much More Than Your Own by Garett Jones

behavioural economics, centre right, classic study, clean water, corporate governance, David Ricardo: comparative advantage, en.wikipedia.org, experimental economics, Flynn Effect, Gordon Gekko, greed is good, hive mind, invisible hand, Kenneth Arrow, law of one price, meta-analysis, prediction markets, Robert Gordon, Ronald Coase, Saturday Night Live, social intelligence, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tyler Cowen, wikimedia commons, zero-sum game

In these countries, governments will tend to be more trustworthy. I’ll provide reasons for thinking that in general, groups with higher average cognitive skills build governments that are better at creating long-term wealth. And economist Ronald Coase, whose Nobel-winning idea, the Coase Theorem, bridges the land of game theory and the land of politics, is a crucial figure in this story. Ronald Coase and the Astonishing Power of Haggling Informally, we can sum up the Coase Theorem this way: if it’s easy for two or more parties to bargain with each other, they can bargain to an efficient, win-win outcome regardless of which party has the most power going in to the negotiation.

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., 60 Canada: average cognitive ability score in, 169; average IQ score in, 72, 117, 169; British Columbia, 44; IQ-income relationship in, 32 Caplan, Bryan: on conformity, 73; on immigrants and politics, 162–63; on informed voters, 123–25, 130, 161, 167; on irrational voters, 121; The Myth of the Rational Voter, 121, 123; on pro-market attitudes, 124–25, 129 CEOs, 83 Cesarini, David, 94–95 Chabris, Christopher, 146–47 cheap talk, 147, 149–51 Chile, 67; average cognitive ability score in, 169; average IQ score in, 72, 117 China: average IQ in, 72, 117; average national test scores in, 2, 7, 45, 72; economic conditions in, 2, 45; as lender to U.S., 82; political conditions in, 2; savings rate in, 72, 80 Christiakis, Nicholas: Connected, 59–60 Coase, Ronald/Coase Theorem, 106–13, 118, 166 Cobb-Douglas production function, 153–58 cognitive ability, 2, 10; cross-country comparisons regarding, 7–9, 169, 170, 171n5; of elites, 28–29, 165–66; and human relationships, 147–48; Rindermann on, 7–9, 46, 47, 166, 170, 171n5; skill in one area predicting skill in another, 15–16, 18–20, 22, 23, 28–29, 44, 46–47, 68, 70, 123, 167.

The Wisdom of Crowds by James Surowiecki

Alan Greenspan, AltaVista, Andrei Shleifer, Apollo 13, asset allocation, behavioural economics, Cass Sunstein, classic study, congestion pricing, coronavirus, Daniel Kahneman / Amos Tversky, experimental economics, Frederick Winslow Taylor, George Akerlof, Great Leap Forward, Gregor Mendel, Howard Rheingold, I think there is a world market for maybe five computers, interchangeable parts, Jeff Bezos, John Bogle, John Meriwether, Joseph Schumpeter, knowledge economy, lone genius, Long Term Capital Management, market bubble, market clearing, market design, Monkeys Reject Unequal Pay, moral hazard, Myron Scholes, new economy, offshore financial centre, Picturephone, prediction markets, profit maximization, Richard Feynman, Richard Feynman: Challenger O-ring, Richard Thaler, Robert Shiller, Ronald Coase, Ronald Reagan, seminal paper, shareholder value, short selling, Silicon Valley, South Sea Bubble, tacit knowledge, The Nature of the Firm, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Toyota Production System, transaction costs, ultimatum game, vertical integration, world market for maybe five computers, Yogi Berra, zero-sum game

Instead, a group of people comes together: someone writes a script, someone agrees to direct, someone else puts up the money, actors and a production crew get chosen, the film is made, a distributor is found, and then the group disassembles, perhaps never to see each other again. Why not do everything this way? The oldest—and still the best—answer to that question was offered by British economist Ronald Coase in 1937. The problem with the “outsource everything” model, Coase saw, was that setting up and monitoring all those different deals and contracts takes a lot of time and effort. It takes work to find the right people, and to haggle with them over how much you’ll pay them. It takes work to ensure that everyone’s doing what they promised they would do.

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This model allows people to be handpicked for their diverse abilities (planning, safecracking, explosives, etc.), so that the group can have exactly what it needs for the job. And the one-off nature of the project ensures that everyone on the team has an incentive to perform well. The problems with this model, though, are precisely those that Ronald Coase had in mind when he talked about transaction costs. It takes a lot of work to put the group together. It’s difficult to ensure that people are working in the group’s interest and not their own. And when there’s a lack of trust between the members of the group (which isn’t surprising given that they don’t really know each other), considerable energy is wasted trying to determine each other’s bona fides.

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But, in general, whatever sacrifice might be entailed in ruling out a possibly brilliant hunch is compensated for by the better-than-average results which can be expected from a policy that can be strongly defended against well-informed and sympathetic criticism.” Similarly, Welch’s most important initiative as CEO of General Electric was his transformation of the company into what he called a “boundaryless corporation.” Harking back to the questions raised by Ronald Coase, Welch tried to make the boundaries between GE and outside markets more permeable. He broke down boundaries between GE’s different divisions, arguing that a more interdisciplinary approach to problems fostered diversity. He sharply reduced the layers of management separating the people at the top from the rest of the company.

Big Three in Economics: Adam Smith, Karl Marx, and John Maynard Keynes by Mark Skousen

Albert Einstein, banking crisis, behavioural economics, Berlin Wall, Bretton Woods, business climate, business cycle, creative destruction, David Ricardo: comparative advantage, delayed gratification, experimental economics, financial independence, Financial Instability Hypothesis, foreign exchange controls, full employment, Hernando de Soto, housing crisis, Hyman Minsky, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, laissez-faire capitalism, liberation theology, liquidity trap, low interest rates, means of production, Meghnad Desai, microcredit, minimum wage unemployment, money market fund, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, Post-Keynesian economics, price stability, pushing on a string, rent control, Richard Thaler, rising living standards, road to serfdom, Robert Shiller, Robert Solow, rolodex, Ronald Coase, Ronald Reagan, school choice, secular stagnation, Simon Kuznets, The Chicago School, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, Tobin tax, Tragedy of the Commons, unorthodox policies, Vilfredo Pareto, zero-sum game

In short, Smith desired to integrate economics and moral behavior (Fitzgibbons 1995, 3-4; Tvede 1997, 29). The Scottish philosopher believed man to be motivated by both self-interest and benevolence, but in a complex market economy, where individuals move away from their closest friends and family, self-interest becomes a more powerful force. In Ronald Coase's interpretation, "The great advantage of the market is that it is able to use the strength of self-interest to offset the weakness and partiality of benevolence, so that those who are unknown, unattractive, and unimportant will have their wants served" (Coase 1976, 544). How Monopoly Hurts the Market System Smith said that competition was absolutely essential to turning self-interest into benevolence in a self-regulating society.

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The invisible hand idea, that laissez-faire leads to the common good, has become known as the first fundamental theorem of welfare economics (as noted in chapter 1). Welfare economics deals with the issues of efficiency, justice, economic waste, and the political process in the economy. Since the late 1930s, when welfare economics was popularized by John Hicks, Kenneth Arrow, Paul Samuelson, and Ronald Coase (all of whom became Nobel Prize winners), the technique of welfare economics has been extended to issues of monopoly and government policies. In most cases, the welfare economists have demonstrated that government-imposed monopoly and subsidies lead to inefficiency and waste. Walras, Pareto, and Edgeworth were the first economists to use advanced mathematical formulas and graphic devices to prove certain hypotheses in welfare economics.

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In short, twenty-first-century economics is the "imperial science" (Skousen 2001, 7-10). Here are just a few examples of the expanding role of economics in other areas: Gary Becker has been instrumental in applying the principles of supply and demand to the human behavioral sciences in areas such as racial discrimination, crime, and marriage. Ronald Coase, Richard Posner, and Richard Epstein have contributed to the development of law and economics. Harry Markowitz, Merton Miller, William Sharpe, Burton Malkiel, and Fischer Black, among others, have created the field of financial economics, especially the application of efficiency markets to Wall Street.

The Limits of the Market: The Pendulum Between Government and Market by Paul de Grauwe, Anna Asbury

Alan Greenspan, banking crisis, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, conceptual framework, crony capitalism, Easter island, Erik Brynjolfsson, eurozone crisis, Honoré de Balzac, income inequality, income per capita, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kitchen Debate, means of production, Money creation, moral hazard, Paul Samuelson, price discrimination, price mechanism, profit motive, Robert Gordon, Robert Solow, Ronald Coase, Simon Kuznets, The Nature of the Firm, The Rise and Fall of American Growth, too big to fail, transaction costs, trickle-down economics, ultimatum game, very high income

There are millions of companies, many more than there are markets. This means that a great many economic decisions are made outside the market, within companies in which cooperation is the rule, not competition. Why do we see so many cooperative relationships within companies? One answer is offered by British economist Ronald Coase, who won the Nobel Prize in Economics in . His answer was as follows. Market transactions lead to transaction costs. The buyers and sellers have to find and trust one another. Contracts must be drawn up and the quality of goods and services evaluated. If contractual terms are not met, action must be taken.

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Rogoff, This Time is Different: Eight Centuries of Financial Folly (Princeton, NJ: Princeton University Press, ). . Michael J. Sandel, What Money Can’t Buy: The Moral Limits of Markets (London: Allen Lane, ). . Kenneth J. Arrow, ‘Gifts and exchanges’, Philosophy and Public Affairs, / (), pp. –. . Ronald Coase, ‘ The Nature of the Firm’, Economica, / (November ), pp. –. . See Frans de Waal, Our Inner Ape: The Best and Worst of Human Nature (London: Granta Books, ). See also Matt Ridley, The Origins of Virtue (London: Penguin Books, ). . Erik Brynjolfsson and Andrew McAfee, Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy (Lexington, MA: Digital Frontier Press, ). .

Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World by Don Tapscott, Alex Tapscott

"World Economic Forum" Davos, Airbnb, altcoin, Alvin Toffler, asset-backed security, autonomous vehicles, barriers to entry, behavioural economics, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, Bretton Woods, business logic, business process, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, clean water, cloud computing, cognitive dissonance, commoditize, commons-based peer production, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, crowdsourcing, cryptocurrency, currency risk, decentralized internet, digital capitalism, disintermediation, disruptive innovation, distributed ledger, do well by doing good, Donald Trump, double entry bookkeeping, driverless car, Edward Snowden, Elon Musk, Erik Brynjolfsson, Ethereum, ethereum blockchain, failed state, fiat currency, financial innovation, Firefox, first square of the chessboard, first square of the chessboard / second half of the chessboard, future of work, Future Shock, Galaxy Zoo, general purpose technology, George Gilder, glass ceiling, Google bus, GPS: selective availability, Hacker News, Hernando de Soto, Higgs boson, holacracy, income inequality, independent contractor, informal economy, information asymmetry, information security, intangible asset, interest rate swap, Internet of things, Jeff Bezos, jimmy wales, Kickstarter, knowledge worker, Kodak vs Instagram, Lean Startup, litecoin, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, Marshall McLuhan, means of production, microcredit, mobile money, money market fund, Neal Stephenson, Network effects, new economy, Oculus Rift, off grid, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, performance metric, Peter Thiel, planetary scale, Ponzi scheme, prediction markets, price mechanism, Productivity paradox, QR code, quantitative easing, radical decentralization, ransomware, Ray Kurzweil, renewable energy credits, rent-seeking, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Salesforce, Satoshi Nakamoto, search costs, Second Machine Age, seigniorage, self-driving car, sharing economy, Silicon Valley, Skype, smart contracts, smart grid, Snow Crash, social graph, social intelligence, social software, standardized shipping container, Stephen Hawking, Steve Jobs, Steve Wozniak, Stewart Brand, supply-chain management, systems thinking, TaskRabbit, TED Talk, The Fortune at the Bottom of the Pyramid, The Nature of the Firm, The Soul of a New Machine, The Wisdom of Crowds, transaction costs, Turing complete, Turing test, Tyler Cowen, Uber and Lyft, uber lyft, unbanked and underbanked, underbanked, unorthodox policies, vertical integration, Vitalik Buterin, wealth creators, X Prize, Y2K, Yochai Benkler, Zipcar

His deceptively simple invention was a formula known as double-entry accounting, where every transaction has two effects on each participant, that is, each must enter both a debit and a credit onto the balance sheet, the ledger of corporate assets and liabilities. By codifying these rules, Pacioli provided order to an otherwise ad hoc practice that prevented enterprises from scaling. Ronald Coase thought accounting was cultlike. While a student at the London School of Economics, Coase saw “aspects of a religion” in the practice. “The books entrusted to the accountants’ keeping were apparently sacred books.” Accounting students deemed his challenges “sacrilegious.”53 How dare he question their “many methods of calculating depreciation, valuing inventories, allocating on-costs, and so on, all of which gave different results but all of which were perfectly acceptable accounting practices,” and other nearly identical practices that were nonetheless deemed entirely “unrespectable.”

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So why would any established firm—particularly ones that make their money off other people’s data, operate largely behind closed doors, and suffer surprisingly little in data breach after data breach—want to leverage blockchain technologies to distribute power, increase transparency, respect user privacy and anonymity, and include far more people who can afford far less than those already served? Transaction Costs and the Structure of the Firm Let’s start with a little economics. In 1995, Don used Nobel Prize–winning economist Ronald Coase’s theory of the firm to explain how the Internet would affect the architecture of the corporation. In his 1937 paper “The Nature of the Firm,” Coase identified three types of costs in the economy: the costs of search (finding all the right information, people, resources to create something); coordination (getting all these people to work together efficiently); and contracting (negotiating the costs for labor and materials for every activity in production, keeping trade secrets, and policing and enforcing these agreements).

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Overall, the open networked enterprise shows profound, even radical potential to supercharge innovation and harness extraordinary capability to create good value for shareholders, customers, and societies as a whole. HACKING YOUR FUTURE: BUSINESS MODEL INNOVATION As for a company managed by software agents, Ronald Coase must be high-fiving up there somewhere in Economists’ Heaven (although some might dispute that such a place exists). Remember the reverse of Coase’s law? A corporation should shrink until the costs of transactions inside are less than the costs of transactions outside its boundaries. As technology continues to drop costs in the market, it’s conceivable that corporations could and should have very little inside—except software and capital.

Modern Monopolies: What It Takes to Dominate the 21st Century Economy by Alex Moazed, Nicholas L. Johnson

3D printing, Affordable Care Act / Obamacare, Airbnb, altcoin, Amazon Web Services, Andy Rubin, barriers to entry, basic income, bitcoin, blockchain, book value, Chuck Templeton: OpenTable:, cloud computing, commoditize, connected car, disintermediation, driverless car, fake it until you make it, future of work, gig economy, hockey-stick growth, if you build it, they will come, information asymmetry, Infrastructure as a Service, intangible asset, Internet of things, invisible hand, jimmy wales, John Gruber, Kickstarter, Lean Startup, Lyft, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, means of production, Metcalfe’s law, money market fund, multi-sided market, Network effects, PalmPilot, patent troll, peer-to-peer lending, Peter Thiel, pets.com, platform as a service, power law, QWERTY keyboard, Ray Kurzweil, ride hailing / ride sharing, road to serfdom, Robert Metcalfe, Ronald Coase, Salesforce, self-driving car, sharing economy, Sheryl Sandberg, Silicon Valley, Skype, Snapchat, social graph, software as a service, software is eating the world, source of truth, Startup school, Steve Jobs, TaskRabbit, technological determinism, the medium is the message, transaction costs, transportation-network company, traveling salesman, Travis Kalanick, two-sided market, Uber and Lyft, Uber for X, uber lyft, vertical integration, white flight, winner-take-all economy, Y Combinator

First, as we described earlier, the platform makes it easier for developers to manage software projects. And if you’re looking for other projects, GitHub makes it easy to find them. In economic terms, GitHub significantly reduces transaction costs for people collaborating on software projects. The term “transaction cost,” coined by the economist Ronald Coase, refers to any cost incurred in making an exchange. Another term for it is a “coordination cost.” In essence, a transaction or coordination cost is the cost of participating in an interaction. Transaction costs arise because markets and communities in the real world aren’t like the perfect markets you learn about in Economics 101.

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Centralized coordination eventually lost out to decentralized markets, and market economies based on the price system have since become the default of most modern societies. The Theory of the Firm Though Hayek was able to make a persuasive case for markets over central planning, there are other important objections to the efficient markets theory to consider. This brings us to another influential economist, Ronald Coase, whom we encountered briefly in chapter 1. Coase recognized another big hole in the concept of efficient markets. If markets could coordinate economic activity efficiently, why did companies exist? What value did companies add if markets themselves were perfectly efficient? This was a problem for pro-market economists, because, as Coase noted in his Nobel Prize acceptance speech, “most resources in a modern economic system are employed within firms, with how these resources are used dependent on administrative decisions and not directly on the operation of a market.

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Royal Swedish Academy of Sciences, press release, October 14, 1975, http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1975/press.html. 3. Friedrich Hayek, Individualism and the Economic Order (Chicago, IL: University of Chicago Press, 1948). Subsequent quotes by Hayek are from this book. 4. Ibid. 5. Credit for this analogy goes to Microsoft senior researcher E. Glen Weyl. 6. Ronald Coase, “The Institutional Structure of Production,” in Nobel Lectures, Economics 1991-1995, ed. Torsten Persson (Hackensack, NJ: World Scientific Publishing, 1997). 7. Martin Reeves, George Stalk, and Filippo L. Scognamiglio Pasini, “BCG Classics Revisited: The Experience Curve,” BCG Perspectives, May 28, 2013, https://www.bcgperspectives.com/content/articles/growth_business_unit_strategy_experience_curve_bcg_classics_revisited/. 8.

Termites of the State: Why Complexity Leads to Inequality by Vito Tanzi

accounting loophole / creative accounting, Affordable Care Act / Obamacare, Alan Greenspan, Andrei Shleifer, Andrew Keen, Asian financial crisis, asset allocation, barriers to entry, basic income, behavioural economics, bitcoin, Black Swan, Bretton Woods, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, clean water, crony capitalism, David Graeber, David Ricardo: comparative advantage, deindustrialization, Donald Trump, Double Irish / Dutch Sandwich, experimental economics, financial engineering, financial repression, full employment, George Akerlof, Gini coefficient, Gunnar Myrdal, high net worth, hiring and firing, illegal immigration, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labor-force participation, libertarian paternalism, Long Term Capital Management, low interest rates, market fundamentalism, means of production, military-industrial complex, moral hazard, Naomi Klein, New Urbanism, obamacare, offshore financial centre, open economy, Pareto efficiency, Paul Samuelson, Phillips curve, price stability, principal–agent problem, profit maximization, pushing on a string, quantitative easing, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Silicon Valley, Simon Kuznets, synthetic biology, The Chicago School, The Great Moderation, The Market for Lemons, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, Tyler Cowen: Great Stagnation, universal basic income, unorthodox policies, urban planning, very high income, Vilfredo Pareto, War on Poverty, Washington Consensus, women in the workforce

At first it was challenged by a few isolated, conservative critics, and then by an increasing number of economists, political scientists, and plain citizens. Among economists, the earlier challenges had come mainly from conservative, or libertarian, pro-market economists, such as F. A. Hayek, Milton Friedman, George Stigler, James Buchanan, Ronald Coase, Alan Peacock, and a few others, and from some politicians and philosophers, such as Barry Goldwater, Robert Nozick, and others in the United States, and some in the United Kingdom and in other countries. These individuals had followed with alarm, suspicion, and growing concerns the expansion of government activities that had taken place in those years.

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However, some individuals may claim that dealing with them may be too expensive in terms of reduced economic growth or loss of employment opportunities. These concerns merit attention. What if genetic modifications significantly increase the productivity of a crop but generate a few cases of cancer? This benefit-cost criterion is in part at the base of the argument, promoted by Ronald Coase, about how to deal with externalities. It has been increasingly used in the fields of law and economics. Coase pointed out that just because an externality exists, it may not be, by itself, a sufficient argument to stop the activity that generates it, if that activity has great social value, such as a large increase in productivity.

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Pigou (1920), had been that the government should tax those who generate significant negative externalities and subsidize those who are damaged by these externalities. Alternatively, the government could impose regulations to eliminate or to reduce the negative externalities. In 1960, the British economist Ronald Coase, who later earned a Nobel Prize in economics, challenged the Pigouvian view with what came to be called the Coase theorem, which has already been referred to in this book. Coase pointed out that the activity that generates an externality might be important to society, so it might be socially inefficient to stop that activity because of the negative externality.

Ghost Work: How to Stop Silicon Valley From Building a New Global Underclass by Mary L. Gray, Siddharth Suri

"World Economic Forum" Davos, Affordable Care Act / Obamacare, AlphaGo, Amazon Mechanical Turk, Apollo 13, augmented reality, autonomous vehicles, barriers to entry, basic income, benefit corporation, Big Tech, big-box store, bitcoin, blue-collar work, business process, business process outsourcing, call centre, Capital in the Twenty-First Century by Thomas Piketty, cloud computing, cognitive load, collaborative consumption, collective bargaining, computer vision, corporate social responsibility, cotton gin, crowdsourcing, data is the new oil, data science, deep learning, DeepMind, deindustrialization, deskilling, digital divide, do well by doing good, do what you love, don't be evil, Donald Trump, Elon Musk, employer provided health coverage, en.wikipedia.org, equal pay for equal work, Erik Brynjolfsson, fake news, financial independence, Frank Levy and Richard Murnane: The New Division of Labor, fulfillment center, future of work, gig economy, glass ceiling, global supply chain, hiring and firing, ImageNet competition, independent contractor, industrial robot, informal economy, information asymmetry, Jeff Bezos, job automation, knowledge economy, low skilled workers, low-wage service sector, machine translation, market friction, Mars Rover, natural language processing, new economy, operational security, passive income, pattern recognition, post-materialism, post-work, power law, race to the bottom, Rana Plaza, recommendation engine, ride hailing / ride sharing, Ronald Coase, scientific management, search costs, Second Machine Age, sentiment analysis, sharing economy, Shoshana Zuboff, side project, Silicon Valley, Silicon Valley startup, Skype, software as a service, speech recognition, spinning jenny, Stephen Hawking, TED Talk, The Future of Employment, The Nature of the Firm, Tragedy of the Commons, transaction costs, two-sided market, union organizing, universal basic income, Vilfredo Pareto, Wayback Machine, women in the workforce, work culture , Works Progress Administration, Y Combinator, Yochai Benkler

And in the absence of set hours, work sites, or agreement about who’s the official boss in charge, it is difficult to gauge how much ghost work is done across this burgeoning industry, who’s paying for it, and which workers are completing the tasks. The transaction costs that economist and Nobel laureate Ronald Coase so long ago identified as the reason for the very existence of firms seemed to melt away with the new on-demand systems. Platforms could keep themselves and requesters at arm’s length from workers, shielded from a formal employer’s legal responsibilities. WHEN YOUR WORK HAS NO CATEGORY The paradox of automation’s last mile suggests that the shift to using ghost work to deliver services is just heating up.32 As of today, there are hundreds of companies offering on-demand ghost work services to evaluate, sort, annotate, and refine the terabytes of “big data” that consumers produce every moment they spend online, and an explosion of companies hosting larger tasks that are, at least in part, managed by APIs.33 Still, treating ghost work as a consumable good drains ghost work jobs of any protections.

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So the humans, on both sides of the market, are left with the task of resolving these complexities at their own expense, though the workers bear the heavier brunt of these costs. The Cost of Doing Business At the heart of the on-demand economy is the premise that relying on ghost work cuts transaction costs and, therefore, boosts profits. Transaction costs are those expenses associated with managing the production and exchange of goods or services. Nobel laureate Ronald Coase, a key contributor to modern economic theory, popularized the notion of transaction costs, though he did not coin the phrase itself. His seminal 1937 article “The Nature of the Firm” was published only two years after Wagner passed the National Labor Relations Act. In it, Coase argued that businesses had to coordinate their operations, such as finding, hiring, and training workers, to reduce market frictions.

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In either case, with fewer hires needed for set, in-house tasks and more talented people necessary for rapid prototyping and testing new product ideas, many companies will have less need for full-time employees and an expanding dependency on an on-demand workforce at the ready for dynamic requests. While some transaction costs for hiring permanent workers will shrink, all businesses will continue to require some organization, at some cost, as Ronald Coase predicted.11 The question is not whether the transaction costs disappear but, rather, who pays for them? We need large corporations, which use vendor management systems to hire ghost work in bulk, to pull ghost work out of the shadows and into the daylight. As noted above, recent economic analyses of contingent labor markets confirm a sharp increase in both the amount and breadth of this type of employment.12 Corporations using an on-demand approach for enterprise-level work have, so far, increased the fissuring of the workplace, driving up the number of self-employed, independent, and vendor-managed workers to meet business-to-business needs and consumer demands for ever-evolving AI-driven products.

You've Been Played: How Corporations, Governments, and Schools Use Games to Control Us All by Adrian Hon

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", 4chan, Adam Curtis, Adrian Hon, Airbnb, Amazon Mechanical Turk, Amazon Web Services, Astronomia nova, augmented reality, barriers to entry, Bellingcat, Big Tech, bitcoin, bread and circuses, British Empire, buy and hold, call centre, computer vision, conceptual framework, contact tracing, coronavirus, corporate governance, COVID-19, crowdsourcing, cryptocurrency, David Graeber, David Sedaris, deep learning, delayed gratification, democratizing finance, deplatforming, disinformation, disintermediation, Dogecoin, electronic logging device, Elon Musk, en.wikipedia.org, Ethereum, fake news, fiat currency, Filter Bubble, Frederick Winslow Taylor, fulfillment center, Galaxy Zoo, game design, gamification, George Floyd, gig economy, GitHub removed activity streaks, Google Glasses, Hacker News, Hans Moravec, Ian Bogost, independent contractor, index fund, informal economy, Jeff Bezos, job automation, jobs below the API, Johannes Kepler, Kevin Kelly, Kevin Roose, Kickstarter, Kiva Systems, knowledge worker, Lewis Mumford, lifelogging, linked data, lockdown, longitudinal study, loss aversion, LuLaRoe, Lyft, Marshall McLuhan, megaproject, meme stock, meta-analysis, Minecraft, moral panic, multilevel marketing, non-fungible token, Ocado, Oculus Rift, One Laptop per Child (OLPC), orbital mechanics / astrodynamics, Parler "social media", passive income, payment for order flow, prisoner's dilemma, QAnon, QR code, quantitative trading / quantitative finance, r/findbostonbombers, replication crisis, ride hailing / ride sharing, Robinhood: mobile stock trading app, Ronald Coase, Rubik’s Cube, Salesforce, Satoshi Nakamoto, scientific management, shareholder value, sharing economy, short selling, short squeeze, Silicon Valley, SimCity, Skinner box, spinning jenny, Stanford marshmallow experiment, Steve Jobs, Stewart Brand, TED Talk, The Nature of the Firm, the scientific method, TikTok, Tragedy of the Commons, transaction costs, Twitter Arab Spring, Tyler Cowen, Uber and Lyft, uber lyft, urban planning, warehouse robotics, Whole Earth Catalog, why are manhole covers round?, workplace surveillance

David Markovits, “How McKinsey Destroyed the Middle Class,” Atlantic, February 3, 2020, www.theatlantic.com/ideas/archive/2020/02/how-mckinsey-destroyed-middle-class/605878. 100. Lawrence Mishel and Julia Wolfe, “CEO Compensation Has Grown 940% since 1978,” Economic Policy Institute, August 14, 2019, www.epi.org/publication/ceo-compensation-2018. 101. “In the Eternal Inferno, Fiends Torment Ronald Coase with the Fate of His Ideas,” Yorkshire Ranter, January 31, 2018, www.harrowell.org.uk/blog/2018/01/31/in-the-eternal-inferno-fiends-torment-ronald-coase-with-the-fate-of-his-ideas. 102. Ronald H. Coase, “The Nature of the Firm,” Economica 4, no. 16 (November 1937): 386–405, https://doi.org/10.1111/j.1468-0335.1937.tb00002.x. 103. Blake Droesch, “Amazon Dominates US Ecommerce, Though Its Market Share Varies by Category,” Insider Intelligence, eMarketer, April 27, 2021, www.emarketer.com/content/amazon-dominates-us-ecommerce-though-its-market-share-varies-by-category; Todd W.

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In the 1960s, a US CEO’s income was a pitiful twenty times that of a production worker; today, they earn almost three hundred times as much.100 Others have described a global drive, starting from the 1980s, to replace organisations with networks of contracts; APIs are arguably yet another iteration of this trend.101 The idea that a company is basically a collection of contracts originates from economist Ronald Coase’s 1937 essay “The Nature of the Firm.”102 In it, he wondered why we have firms with full-time employees rather than loose groups of independent, self-employed contractors. His answer was that while using contractors would, in theory, be cheaper due to market competition driving the price of labour down, companies would suffer significant transaction costs if they took that route—everything from constantly arguing about costs and worrying about losing trade secrets to spending too much time looking for (and keeping) good workers.

The People's Republic of Walmart: How the World's Biggest Corporations Are Laying the Foundation for Socialism by Leigh Phillips, Michal Rozworski

Alan Greenspan, Anthropocene, Berlin Wall, Bernie Sanders, biodiversity loss, call centre, capitalist realism, carbon footprint, carbon tax, central bank independence, Colonization of Mars, combinatorial explosion, company town, complexity theory, computer age, corporate raider, crewed spaceflight, data science, decarbonisation, digital rights, discovery of penicillin, Elon Musk, financial engineering, fulfillment center, G4S, Garrett Hardin, Georg Cantor, germ theory of disease, Gordon Gekko, Great Leap Forward, greed is good, hiring and firing, independent contractor, index fund, Intergovernmental Panel on Climate Change (IPCC), Internet of things, inventory management, invisible hand, Jeff Bezos, Jeremy Corbyn, Joseph Schumpeter, Kanban, Kiva Systems, linear programming, liquidity trap, mass immigration, Mont Pelerin Society, Neal Stephenson, new economy, Norbert Wiener, oil shock, passive investing, Paul Samuelson, post scarcity, profit maximization, profit motive, purchasing power parity, recommendation engine, Ronald Coase, Ronald Reagan, sharing economy, Silicon Valley, Skype, sovereign wealth fund, strikebreaker, supply-chain management, surveillance capitalism, technoutopianism, TED Talk, The Nature of the Firm, The Wealth of Nations by Adam Smith, theory of mind, Tragedy of the Commons, transaction costs, Turing machine, union organizing, warehouse automation, warehouse robotics, We are all Keynesians now

Planning was in fact almost everywhere you looked, even though the discipline of economics had largely spun tales even more fantastical than UFOs visiting Earth: the fairy story of a harmonious and self-regulating market economy. Yet there has always been a minority of economists, like Simon, who have dissented, recognizing the pervasiveness, a few even the promise, of planning. Ronald Coase Asks Around In the Depression year of 1931, a twenty-year-old British economics student arrived in Chicago to pursue an unusual research project. He was there to study something that at first glance appeared utterly obvious; yet in reality it was anything but. Ronald Coase went to the United States to do something that, up to this point, few scholars in the still-young discipline of economics had cared to do: investigate how the firm, the black box at the heart of the economy, actually operated.

Phil Thornton by The Great Economists Ten Economists whose thinking changed the way we live-FT Publishing International (2014)

Alan Greenspan, availability heuristic, behavioural economics, Berlin Wall, bitcoin, Bretton Woods, British Empire, business cycle, business process, call centre, capital controls, Cass Sunstein, choice architecture, cognitive bias, collapse of Lehman Brothers, Corn Laws, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, double helix, endogenous growth, endowment effect, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, fixed income, Ford Model T, full employment, hindsight bias, income inequality, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Kenneth Arrow, Kenneth Rogoff, Kickstarter, liquidity trap, loss aversion, mass immigration, means of production, mental accounting, Myron Scholes, paradox of thrift, Pareto efficiency, Paul Samuelson, Post-Keynesian economics, price mechanism, pushing on a string, quantitative easing, Richard Thaler, road to serfdom, Ronald Coase, Ronald Reagan, school vouchers, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Toyota Production System, trade route, transaction costs, unorthodox policies, Vilfredo Pareto, women in the workforce

Thus it is that Alfred Marshall has gone down in the history books as being brought up in a well-to-do middle-class London household. His biography by no less a figure than John Maynard Keynes, an erstwhile student, describes his upbringing in a clerical family from the West Country, in Clapham, a ‘leafy London suburb’, where his father was a cashier at the Bank of England. Thanks to the Nobel laureate economist Ronald Coase, we now know that Marshall was a ‘master of concealment’.1 His origins were in the more humble tanneries district of south-east London, Bermondsey, where he was born in 1842 to William, who was a clerk at the Bank of England, and a mother who was a butcher’s daughter. His family background was perhaps airbrushed to make it more fitting for the Cambridge don that Marshall would ultimately become.

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Bush 139 influence on Margaret Thatcher 138–9 influence on Ronald Reagan 139 influence on the monetarists 138–9 key economic theories 122–36 key ideas 142 libertarian views 134–6, 140 long-term legacy 137–41 nature of the free market system 131–3 Nobel Prize (1974) 137 opposition to central state planning 134–6, 140 out of fashion 129–31 prices and knowledge 131–3 Prices and Production (1931) 126, 130 rejection of government control of the economy 120 study of philosophy and economics 121–22 The Road to Serfdom (1944) 135, 138, 140 time and the value of capital 124–6 verdict 141–2 Hegel, Georg 51–2, 54 herd behaviour 105 heuristics and bias in decision making 222–5 Hicks, John 173 High Speed 2 train line from London to the North 125 hindsight bias 227 242Index Hobbes, Thomas 5 hubris hypothesis 227 human behaviour, Becker’s approach 212–15 human capital theory (Becker) 200–2, 210 human decision making processes (Kahneman) 221–5 Hume, David 4, 97 Hutcheson, Francis 3–4 illusion of validity concept 220, 224 income inequality in the present day 64–6 individualism, view of Friedman 155–7 industrial districts 84–6, 87 industrial economics 84–6, 87 Industrial Revolution 11 inflation 107, 110 actions of the central banks 161 and Keynesian policies 127 and money supply 151–2 relationship with unemployment 153–5 Institute of Economic Affairs 138, 161 interest rates effects of adjustments 103–4 effects of credit expansion 123–4 natural rate of interest (Hayek) 123 intergenerational economics 178–80 International Bank of Reconstruction and Development 109 international economics and trade, view of Samuelson 183–7 International Monetary Fund (IMF) 108–9, 113, 186 international trade and comparative advantage (Ricardo) 35–8 international trade theory 184–5 intervention during economic depression, view of Keynes 92–3, 94, 105–6 investment, volatility caused by uncertainty 104–5 invisible hand concept (Smith) 7–9 Johnson, Harry 94 Johnson, Lyndon B. 110, 190 joint-stock companies 86 Kahneman, Daniel (1934– ) 206, 217–36 behavioural economics 218–19, 233–6 biases and errors in financial decision making 225–32 cognitive biases 222–5 decision making under risk 228–32 early life and influences 219–20 economic writings and theories 221–32 from psychology to economics 225–32 gambler’s fallacy (misconception of chance) 224 heuristics and bias in decision making 222–5 human decision making processes 221–5 illusion of validity concept 220, 224 long-term legacy 233–4 loss aversion 230–2 multidisciplinary approach to economics 218 Nobel Prize for economic sciences (2002) 218, 220 optimism bias and overconfidence 226–7 Prospect Theory 228–32, 234 Thinking, Fast and Slow (2012) 226–7, 234 verdict 235–6 Kennedy, John F. 110, 190 Keynes, John Maynard (1883–1946) 19, 73, 86, 91–116, 171 aggregate demand and the role of government 102–4 Bretton Woods agreement 95, 108–9 causes of unemployment 101 challenging the classical consensus 99–106 Index243 clash with Hayek 120, 126–31 criticism from monetarists 110–11 criticism of self-correction of markets 99, 105–6 criticism of the gold standard 95, 98, 107 criticism of the quantity theory of money 97 drivers of recession 101 early life and influences 93–4 effects of changes in money supply 97 effects of interest rate adjustments 103–4 effects of reducing wages 101–2 elevation to the House of Lords 106 end of the Keynesian revival 113–14 First World War and aftermath 95–7 focus on demand side economics 127 General Theory 99–106 Great Crash (1929) 98, 99 Great Depression (1930s) 99–100 International Bank of Reconstruction and Development 109 International Monetary Fund 108–9 investments as King’s College Bursar 98, 114 investor expectations and uncertainty 104–5 key ideas 115–16 liquidity preference theory 105, 113 long-term legacy 109–14 marginal propensity to consume (MPC) 103 marginal propensity to save (MPS) 103 move into economics 94–8 multiplier concept 103 national economist to international statesman 106–9 paradox of thrift 101 periods in and out of favour 92–3 plans for post-WWII international economy 107–9 popularity of Keynesianism 109–10 revival in the 2008 financial crisis 111–13 savings and investment 100–1 Second World War and aftermath 106–9 severe falls in output 101–2 state intervention during economic depression 92–3, 94, 105–6 Treaty of Versailles 95–6 and investment volatility 104–5 unpopularity beginning in the 1970s 110–11 verdict 115 Keynes, John Neville 93 Klaus, Vaclav 140 Kotlikoff, Laurence 179 Krugman, Paul 180, 191 Kuznets, Simon 148 Laar, Mart 140 labour-intensive goods, effects of increase in wages 33 labour market, human capital concept 200–2, 210 laissez-faire economic system 9 rejection by Keynes 105–6 law of diminishing returns 31 Lehman Brothers collapse (2008) 42, 67 Leviathan (Hobbes) 5 Levitt, Steve 234 libertarian views Friedman 157 Hayek 134–6, 140 life choices, economic perspective 203–6 Lindbeck, Assar 168 liquidity preference theory 105, 113 London School of Economics (LSE) 122, 126, 128 loss aversion 230–2 Lucas, Robert 202 244Index Mackintosh, William 109 Malthus, Thomas Robert 31, 33, 169 marginal analysis 80–2 marginal change concept (Marshall) 80–2 marginal propensity to consume (MPC) 103 marginal propensity to save (MPS) 103 marginal rate of substitution 180 market equilibrium price 76–7 market mechanism (Smith) 15–16 market price, supply and demand factors 15–16 market self-correction, criticism by Keynes 99, 105–6 marriage, economic perspective 203–6 Marshall, Alfred (1842–1924) 71–89, 170 and the business world 84–6 ceteris paribus approach to economic analysis 79–80 concept of time in supply and demand 77–9 early life and influences 73–4 economics as a science 73, 86 economics theories 75–86 elasticity of demand 82–4 geographical effects in economics 84–6 industrial districts 84–6, 87 industrial economics 84–6, 87 influence on Keynes 93, 95 interaction between costs and value 75–7 key ideas 88–9 long-term legacy 86–8 marginal analysis 80–2 marginal change concept 80–2 mathematical approach to economics 72 microeconomics 72, 86 political economy 74 price as interaction of supply and demand 75–9 Principles of Economics (1890) 72, 76, 77–8, 87–8, 188 supply and demand model 75–84 verdict 88 Marx, Karl (1818–83) 19, 49–68 and the global financial crisis (2008) 61–3 capitalist exploitation of the working class 56–8, 62–3 capitalist production process 54–6 communism 50 Communist Manifesto (Marx and Engels) 52, 58–61 Das Kapital 52, 53–4, 59–61, 62, 67–8 distribution of economic value 54–6 downfall of capitalism 56–8, 61–3 early life and influences 51–3 economics theories 53–8 ‘fictitious capital’ concept 62 income inequality in the present day 64–6 key ideas 68 long-term legacy 63–7 surplus value of labour 54–6 verdict 67–8 view of Marxist governments 66 mass production 11 Massachusetts Institute of Technology (MIT) 170 mathematical approach to economics Marshall 72 Samuelson 169–70 mercantilism 7–8, 22–3 mergers and acquisitions 226–7 Merton, Robert 187 microeconomics 172–3, 174, 196 work of Marshall 72, 86 Microsoft 233 middle class, rise of 64 Mieses, Ludwig von 121–2 Mill, James 30–1 Mill, John Stuart 30, 181 The Principles of Political Economy (1848) 188 Modigliani, Franco 173 monetarism 110, 138–9, 146, 151–2 monetarist rule 152 Index245 money supply and the Great Depression (1930s) 150–2 effects of changes in (Keynes) 97 role in running the economy 151–2 monopolies evil of 10–11 regulation to prevent 21–2 multiplier effect 103, 174–5 Murphy, Kevin 201, 210–12 NAIRU (non-accelerating inflation of unemployment) 153–5 Nashat, Guity 206 neoclassical synthesis 174 neo-Keynesianism 168–9, 173–5 net profit 81 New Classical Economics 159 New Deal (Franklin D. Roosevelt) 148 New Keynesianism 159, 163 New Neoclassical Synthesis 111 Nicholas I, Tsar 52 NINJA (No Income, No Job, No Assets) homebuyers 61–2 Nixon, Richard 109, 146 Nobel laureates Kenneth Arrow (1972) 191, 213 Gary Becker (1992) 194, 195–6 Ronald Coase (1991) 73 Peter Diamond (2010) 179 Eugene Fama (2013) 160, 187 Milton Friedman (1976) 146, 147–8, 154, 161 Lars Peter Hansen (2013) 160 Friedrich Hayek (1974) 137 Daniel Kahneman (2002) 218, 220 Paul Krugman (2008) 180, 191 Simon Kuznets (1971) 148 Robert Lucas (1995) 202 Robert Merton (1997) 187 Edmund Phelps (2006) 213 Paul Samuelson (1970) 168 Myron Scholes (1997) 187 Vernon Smith (2002) 218 non-accelerating inflation of unemployment (NAIRU) 153–5 Nordhaus, William 171, 178 North American Free Trade Agreement 41, 187 North, Lord 23 Obama, Barack 162, 190 offshoring of jobs 41 OPEC 22 opportunity cost concept 201, 205 optimism bias and overconfidence 226–7 outsourcing 21 overlapping generations (OLG) model 178–80 Pareto, Vilfredo 182 Pareto efficiency 182 pensions and pension funds 178 permanent income hypothesis (Friedman) 148–50 Perot, Ross 41 Phelps, Edmund 154, 213 Philip, Prince 158 Pigou, A.C. 95 Pinochet, Augusto 161 political economy 28, 74, 93 population growth theories Malthus 31 Ricardo 31, 32–3 Posner, Richard 215 Predictably Irrational (Ariely, 2009) 234 prejudice economic perspective of Becker 196–7, 198–9 views of Friedman 157 price, as interaction of supply and demand (Marshall) 75–9 prices and knowledge (Hayek) 131–3 Prices and Production (Hayek, 1931) 126, 130 Principles of Economics (Marshall, 1890) 72, 76, 77–8, 87–8, 188 private savings, influence of taxation policy 43–4 private sector windfalls, impact of stimulus measures 43–4 privatisation of state-owned monopolies 21 246Index productivity, and division of labour 11–14 Prospect Theory (Kahneman) 228–32, 234 protectionism 22–3, 33–5, 41–2, 185 public goods economics 175–8 purchasing price parity (PPP) measures 186 quantitative easing 162, 163 quantity theory of money, criticism by Keynes 97 Rae, John 23 rational choice model (Becker) 197, 212–15, 216 challenge from Kahneman 221–33 rational expectations hypothesis 111, 137 Reagan, Ronald 19, 20, 139, 146, 158, 160 recession drivers of (Keynes) 101 see also Great Recession (2009) reflection effect 229 revealed preference theory 180–1 reverse elasticity 84 Ricardo, Abraham 28–9 Ricardo, David (1772–1823) 27–46, 183 attack on the Corn Laws 33–5 early life and influences 28–30 from finance to economics 30–1 global free trade 40–2 government debt 38–9 influence of Adam Smith 30 international trade and comparative advantage 35–8 key ideas 46 long-term legacy 40–4 on the general workings of the economy 31–3 on wealth creation and distribution 31–3 political career 30 population growth theories 31, 32–3 The Principles of Political Economy and Taxation (1817) 28, 31–3, 188 Ricardian equivalence 38–9 Ricardo effect 33 verdict 45–6 wine and cloth example 35, 37, 40–1 Ricardian equivalence 38–9 Ricardo effect 33 Robbins, Lionel 122, 129 Rogeberg, Ole 211 Rogoff, Kenneth 189–90 Roosevelt, Franklin D. 148 Samuelson, Paul (1915–2009) 37, 106, 137, 159, 167–92 autarky concept 184 early life and influences 169–70 economics in action 190–1 Economics: An Introductory Analysis (1948) 168, 171–3, 188–9 efficient markets 187 ethical judgements in economics 182–3 explaining trade imbalances 184–5 factor price equalisation theorem 186–7 financial economics 187 Foundations of Economic Analysis (1947) 168, 169–70 global public goods 177–8 influence of Keynes 171–2 influence on economic theory 189–90 intergenerational economics 178–80 international economics and trade 183–7 key economic theories and writings 171–87 long-term legacy 188–91 mathematical approach to economic issues 169–70 microeconomic market system 172–3, 174 multiplier effect 174–5 Index247 neoclassical synthesis 174 neo-Keynesianism 168–9, 173–5 Nobel Prize in economic sciences (1970) 168 oscillator model of business cycles 174–5 overlapping generations (OLG) model 178–80 public goods and public finance 175–8 public goods economics 175–8 revealed preference theory 180–1 understanding consumer behaviour 180–1 verdict 191–2 warrant pricing 187 welfare economics 181–3 Scholes, Myron 187 Schwartz, Anna 150–1, 162 Scottish Enlightenment 3 Second World War 95, 96 self-interest theory of Adam Smith 2–3, 6, 8–9, 20 Skidelsky, Robert 114, 128 slavery 10–11 Smith, Adam (1723–90) 1–25, 97, 230–1 A Theory of Moral Sentiments (1759) 2, 5–6 division of labour and productivity 11–14 drivers of rates of pay 12–13 early life and character 3–5 free-market mechanism of supply and demand 8–9 free international trade 13–14 from philosophy to economics 6–7 functions funded by general taxation 16 functions of the state 16–18 functions that users should pay for 16–17 idea of ‘natural liberty’ 8 idea of ‘sympathy’ of people for each other 6 key ideas 25 long-term legacy 19–23 market price of a commodity 15–16 on slavery 10–11 personal legacy 23 pin factory example 11–13 role of the state in the economy 9, 10 self-interest theory 2–3, 6, 8–9, 20 taxation principles 17–18 the evil of cartels and monopolies 10–11 the invisible hand 7–9 the market mechanism 15–16 The Wealth of Nations (1776) 2–3, 6, 7–25, 188 verdict 23–4 Smith, Vernon 218 Smoot-Hawley Tariff Act (US) 42 social security systems 179 social welfare function 182–3 socialism 134–6 sovereign debt crisis in Greece 113–14 Soviet Union, collapse of 140, 158 Sraffa, Piero 130–1 stagflation in the 1970s 154, 173–4 Standard Oil Company of New Jersey 21 state-owned monopolies, privatisation programmes 21 Statecraft (Thatcher, 2002) 19 status quo bias 227–8 stimulus measures, debate over effects of 43–4 stimulus versus austerity debate 43–4, 140–1 Stockholm School of Economics 168 Stolper, Wolfgang 184–5 Stolper–Samuelson theorem 184–5 Strachey, Lytton 94 structural unemployment 155 substitution effect, response to price change 82, 83 Summers, Anita 190 Summers, Lawrence 190 Summers, Robert 190 Sunstein, Cass 234 248Index supply and demand market mechanism 8–9, 15–16, 75–84 supply side economics 127, 201 surplus value of labour (Marx) 54–6 taxation policy influence on private savings 43–4 views of Adam Smith 16–18 taxpayers, view of government debt (Ricardo) 38–9 Thaler, Richard 232, 234, 235 Thatcher, Margaret 19, 138–9, 155, 160–1 The General Theory of Employment, Interest and Money (Keynes, 1936) 99–106 The Principles of Political Economy (Mill, 1848) 188 The Principles of Political Economy and Taxation (Ricardo, 1817) 28, 31–3, 188 The Road to Serfdom (Hayek, 1944) 135, 138, 140 The Wealth of Nations (Smith, 1776) 2–3, 6, 7–25, 188 Thinking, Fast and Slow (Kahneman, 2012) 226–7, 234 time factor and the value of capital (Hayek) 124–6 in the supply and demand model 77–9 Townshend, Charles 5, 6–7 Toyota, production systems 21 trade barriers 22–3, 41–2, 185 Corn Laws 33–5 trade imbalances, Samuelson’s explanation 184–5 trade unions 19 transient income concept 149 Treatise on Human Nature (Hume) 4 Treaty of Versailles 95–6 Tversky, Amos 218, 220, 221–5, 228–33, 235 Ulam, Stanislaw 37 uncertainty and investment volatility 104–5 unemployment causes of (Keynes) 101 frictional 155 ‘natural’ rate of (Friedman) 153–5 relationship with inflation 153–5 structural 155 United States housing market crisis (2008) 61–2, 112 import tariffs after the Wall Street Crash 42 savings and investment imbalance with China 113 trade imbalance with China 45 US Federal Reserve 111–12 action to control inflation 161 and the 2008 financial crisis 235 influence of monetary policy 159 money supply and the Great Depression (1930s) 150–2 quantitative easing (2009 onward) 162 role in the Great Depression (1930s) 159 utilitarianism 31, 182 value and costs of production 75–7 distribution of economic value (Marx) 54–6 surplus value of labour (Marx) 54–6 Voltaire 7 wages drivers of wage rates (Smith) 12–13 effects of reducing (Keynes) 101–2 relationship to rents and profits 32–3 surplus value of labour (Marx) 54–6 Wall Street Crash (1929) 23, 42 Wallich, Henry 190–1 warrant pricing (Samuelson) 187 wealth creation and distribution, view of Ricardo 31–3 Index249 welfare economics 181–3 White, Harry Dexter 108 Wilberforce, William 10 Wittgenstein, Ludwig 121 women in the workforce 202 Wood, Kingsley 106 Woolf, Leonard 94 World Bank Group 109 World Trade Organization (WTO) 22, 40–1, 185

To Save Everything, Click Here: The Folly of Technological Solutionism by Evgeny Morozov

"World Economic Forum" Davos, 3D printing, algorithmic bias, algorithmic trading, Amazon Mechanical Turk, An Inconvenient Truth, Andrew Keen, augmented reality, Automated Insights, behavioural economics, Berlin Wall, big data - Walmart - Pop Tarts, Buckminster Fuller, call centre, carbon footprint, Cass Sunstein, choice architecture, citizen journalism, classic study, cloud computing, cognitive bias, creative destruction, crowdsourcing, data acquisition, Dava Sobel, digital divide, disintermediation, Donald Shoup, driverless car, East Village, en.wikipedia.org, Evgeny Morozov, Fall of the Berlin Wall, Filter Bubble, Firefox, Francis Fukuyama: the end of history, frictionless, future of journalism, game design, gamification, Gary Taubes, Google Glasses, Ian Bogost, illegal immigration, income inequality, invention of the printing press, Jane Jacobs, Jean Tirole, Jeff Bezos, jimmy wales, Julian Assange, Kevin Kelly, Kickstarter, license plate recognition, lifelogging, lolcat, lone genius, Louis Pasteur, machine readable, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, moral panic, Narrative Science, Nelson Mandela, Nicholas Carr, packet switching, PageRank, Parag Khanna, Paul Graham, peer-to-peer, Peter Singer: altruism, Peter Thiel, pets.com, placebo effect, pre–internet, public intellectual, Ray Kurzweil, recommendation engine, Richard Thaler, Ronald Coase, Rosa Parks, self-driving car, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Skype, Slavoj Žižek, smart meter, social graph, social web, stakhanovite, Steve Jobs, Steven Levy, Stuxnet, surveillance capitalism, systems thinking, technoutopianism, TED Talk, the built environment, The Chicago School, The Death and Life of Great American Cities, the medium is the message, The Nature of the Firm, the scientific method, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, transaction costs, Twitter Arab Spring, urban decay, urban planning, urban sprawl, Vannevar Bush, warehouse robotics, WikiLeaks, work culture , Yochai Benkler

Anderson, “The Difference between Online Knowledge and Truly Open Knowledge,” The Atlantic, February 3, 2012, http://www.theatlantic.com/technology/archive/2012/02/the-difference-between-online-knowledge-and-truly-open-knowledge/252516 . 39 “At the very same time [that “the Internet” is blamed]”: Weinberger, Too Big to Know, xii. 40 Here Comes Everybody: Clay Shirky, Here Comes Everybody: The Power of Organizing without Organizations (New York: Penguin, 2009). 40 Susanne Lohmann’s explanation of the 1989 protests in East Germany: Susanne Lohmann, “The Dynamics of Informational Cascades: The Monday Demonstrations in Leipzig, East Germany, 1989–91,” World Politics 47, no. 1 (October 1, 1994): 42–101. 40 Ronald Coase’s theory of the firm: Ronald Coase, “The Nature of the Firm,” Economica, 4 (1937): 386–405. 40 in order to explain the 1989 protests: Lohmann, “The Dynamics of Informational Cascades.” 41 “Generalizing about social movements”: Stephen Kotkin, Uncivil Society: 1989 and the Implosion of the Communist Establishment (New York: Random House Digital, Inc., 2009), 147. 41 “behavior is motivation that has been filtered through opportunity”: Clay Shirky, Cognitive Surplus: How Technology Makes Consumers into Collaborators, reprint ed.

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Take Clay Shirky’s Here Comes Everybody, which enjoys a cult status in geek circles as a seemingly original argument about the falling costs of collaboration. For much of his theoretical apparatus, Shirky draws on two sources: Susanne Lohmann’s explanation of the 1989 protests in East Germany by means of rational-choice theory (from which Shirky borrows the notion of information cascades) and Ronald Coase’s theory of the firm (from which Shirky borrows the notion of transaction costs). Alas, neither of them is an unambiguously good or neutral guide to understanding digital technologies once we liberate ourselves from Internet-centrism. Like most scholars in the rational-choice tradition, Lohmann—whom Shirky misidentifies as a historian (she’s a political scientist)—doesn’t explain collective action of East Germany by attending to historical and cultural factors or tracing the emergence of new attitudes or ideologies.

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To challenge this ideology and this way of talking and thinking is to be immediately dismissed as too pessimistic or optimistic, as if no other type of critique were even conceivable. It’s one of the hallmarks of Internet-centrism—at least as it manifests itself in the popular debate—that it brooks no debates about methodology, for it presumes that there’s only one way to talk about “the Internet” and its effects. Shirky’s veneration of Ronald Coase’s theory of the firm—and its accompanying discourse on transaction costs—may seem harder to dismiss, not least because Coase is a Nobel Prize–winning economist. References to Coase pop up regularly in the work of our Internet theorists; in addition to Clay Shirky, Yochai Benkler also draws heavily on Coase to discuss the open-source movement.

The End of Power: From Boardrooms to Battlefields and Churches to States, Why Being in Charge Isn’t What It Used to Be by Moises Naim

"World Economic Forum" Davos, additive manufacturing, AOL-Time Warner, barriers to entry, Berlin Wall, bilateral investment treaty, business cycle, business process, business process outsourcing, call centre, citizen journalism, Clayton Christensen, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, conceptual framework, corporate governance, creative destruction, crony capitalism, deskilling, disinformation, disintermediation, disruptive innovation, don't be evil, Evgeny Morozov, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, illegal immigration, immigration reform, income inequality, income per capita, intangible asset, intermodal, invisible hand, job-hopping, Joseph Schumpeter, Julian Assange, Kickstarter, Lewis Mumford, liberation theology, Martin Wolf, mega-rich, megacity, military-industrial complex, Naomi Klein, Nate Silver, new economy, Northern Rock, Occupy movement, open borders, open economy, Peace of Westphalia, plutocrats, price mechanism, price stability, private military company, profit maximization, prosperity theology / prosperity gospel / gospel of success, radical decentralization, Ronald Coase, Ronald Reagan, seminal paper, Silicon Valley, Skype, Steve Jobs, The Nature of the Firm, Thomas Malthus, too big to fail, trade route, transaction costs, Twitter Arab Spring, vertical integration, Washington Consensus, WikiLeaks, World Values Survey, zero-sum game

Such resources are a necessary precondition of power; but without an effective way of managing them, the power they create is less effective, more transient, or both. Weber’s central message was that without a reliable, well-functioning organization, or, to use his term, without a bureaucracy, power could not be effectively wielded. If Weber helped us understand the rationale and workings of bureaucracy in the exercise of power, the British economist Ronald Coase helped us understand the economic advantages that they conferred on companies. In 1937, Coase produced a conceptual breakthrough that explained why large organizations were not just rational according to a certain theory of profit-maximizing behavior but, indeed, often proved more efficient than the alternatives.

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Marxists argued that the expansion of capitalism brought with it the reinforcement of class divisions and, through imperialism and the spread of finance capital around the world, the replication of these divisions both within countries and between them. But the rise of large hierarchical organizations focused a very particular critique that owed a debt to Weber, for its focus, and to Marx, for its argument. In 1951, the Columbia University sociologist C. Wright Mills published a study titled White Collar: The American Middle Classes.26 Like Ronald Coase, Mills was fascinated by the rise of large managerial corporations. He argued that these firms, in their pursuit of scale and efficiency, had created a vast tier of workers who carried out repetitive, mechanistic tasks that stifled their imagination and, ultimately, their ability to fully participate in society.

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All of these differences in business scope, resources, and operating environment affect the cost of doing business, decisions to expand, and the choice of whether to take on an activity in-house or to farm it out to a supplier or contractor. In short, they produce the structure of industries. A whole field of economics—industrial organization—arose almost a century ago to make sense of industry structure and explain what made it change, or not change. As discussed in Chapter 3, the field drew on the insight of Ronald Coase, the British economist who in 1937 first propounded the notion that transaction costs helped to explain why firms and industries took particular shapes.22 Individually or together, the companies that dominate a particular industry or marketplace spend a great deal of their energy working to keep things that way.

Transaction Man: The Rise of the Deal and the Decline of the American Dream by Nicholas Lemann

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Affordable Care Act / Obamacare, Airbnb, airline deregulation, Alan Greenspan, Albert Einstein, augmented reality, basic income, Bear Stearns, behavioural economics, Bernie Sanders, Black-Scholes formula, Blitzscaling, buy and hold, capital controls, Carl Icahn, computerized trading, Cornelius Vanderbilt, corporate governance, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, deal flow, dematerialisation, diversified portfolio, Donald Trump, Elon Musk, Eugene Fama: efficient market hypothesis, Fairchild Semiconductor, financial deregulation, financial innovation, fixed income, future of work, George Akerlof, gig economy, Glass-Steagall Act, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Ida Tarbell, index fund, information asymmetry, invisible hand, Irwin Jacobs, Joi Ito, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, life extension, Long Term Capital Management, Mark Zuckerberg, Mary Meeker, mass immigration, means of production, Metcalfe’s law, Michael Milken, money market fund, Mont Pelerin Society, moral hazard, Myron Scholes, Neal Stephenson, new economy, Norman Mailer, obamacare, PalmPilot, Paul Samuelson, Performance of Mutual Funds in the Period, Peter Thiel, price mechanism, principal–agent problem, profit maximization, proprietary trading, prudent man rule, public intellectual, quantitative trading / quantitative finance, Ralph Nader, Richard Thaler, road to serfdom, Robert Bork, Robert Metcalfe, rolodex, Ronald Coase, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, short selling, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Snow Crash, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, TaskRabbit, TED Talk, The Nature of the Firm, the payments system, the strength of weak ties, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, too big to fail, transaction costs, universal basic income, War on Poverty, white flight, working poor

The financial economists had laid waste to the traditional ways of thinking about the financial mechanisms associated with the almighty corporation—stocks and bonds—but what about the corporation itself? Shouldn’t it be subject to the same kind of devastatingly rigorous and unsentimental analysis? An early crack in the intellectual edifice around the corporation appeared way back in 1937, in the form of an article called “The Nature of the Firm,” by Ronald Coase, a twenty-six-year-old British economist who joined the University of Chicago faculty not long after Michael Jensen had arrived there as a graduate student, and who later won the Nobel Prize. “Why is there any organization?” in business, Coase asked. Why not just let the unimpeded market, rather than corporate managers, decide where to build plants, when to launch products, and where to direct workers?

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Corporations were bureaucratic entities, not economic entities, and in that respect they were a black box: nobody really knew what went on inside them. But that could be changed. In 1976 Jensen and Meckling produced a long, detailed, formula-filled paper called “Theory of the Firm” (the title is a tribute to Ronald Coase’s article of forty years earlier) and submitted it to the leading economics journal that focused on organizations. The journal turned it down. (This was to Jensen’s mind, especially later, a badge of honor and a sign that a paradigm shift was arriving; several crucial papers on financial economics had also been turned down by the leading finance journals.)

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It implied, unsurprisingly, that the Economic Graph the company had been promoting was the key to growth: whether or not it was a direct case of cause and effect, cities with denser networks of LinkedIn connections produced more new jobs than cities with sparser networks. The perpetually exuberant intellectual culture of Silicon Valley had rediscovered Ronald Coase’s old essay “The Nature of the Firm”; the current read of it was that the Internet had reduced transaction costs so radically that conventional business organizations were becoming unnecessary (which of course meant that conventional benefits and pensions would be unnecessary too). Even the most complex projects could be executed by loose, temporary assemblages of talent.

The Elements of Data Analytic Style by Jeff Leek

correlation does not imply causation, data science, Netflix Prize, p-value, pattern recognition, Ronald Coase, statistical model, TED Talk

With this kind of data it is possible to describe the person or sample, but generally impossible to infer anything about a population they come from. 2.8.4 Data dredging Interpreting an exploratory analysis as inferential Similar to the idea of overfitting, if you fit a large number of models to a data set, it is generally possible to identify at least one model that will fit the observed data very well. This is especially true if you fit very flexible models that might also capture both signal and noise. Picking any of the single exploratory models and using it to infer something about the whole population will usually lead to mistakes. As Ronald Coase said: “If you torture the data enough, nature will always confess.” This chapter builds on and expands the paper “What is the question?” co-authored by the author of this book. 3. Tidying the data The point of creating a tidy data set is to get the data into a format that can be easily shared, computed on, and analyzed. 3.1 The components of a data set The work of converting the data from raw form to directly analyzable form is the first step of any data analysis.

The Innovation Illusion: How So Little Is Created by So Many Working So Hard by Fredrik Erixon, Bjorn Weigel

Airbnb, Alan Greenspan, Albert Einstein, American ideology, asset allocation, autonomous vehicles, barriers to entry, Basel III, Bernie Madoff, bitcoin, Black Swan, blockchain, Blue Ocean Strategy, BRICs, Burning Man, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, classic study, Clayton Christensen, Colonization of Mars, commoditize, commodity super cycle, corporate governance, corporate social responsibility, creative destruction, crony capitalism, dark matter, David Graeber, David Ricardo: comparative advantage, discounted cash flows, distributed ledger, Donald Trump, Dr. Strangelove, driverless car, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fear of failure, financial engineering, first square of the chessboard / second half of the chessboard, Francis Fukuyama: the end of history, general purpose technology, George Gilder, global supply chain, global value chain, Google Glasses, Google X / Alphabet X, Gordon Gekko, Greenspan put, Herman Kahn, high net worth, hiring and firing, hockey-stick growth, Hyman Minsky, income inequality, income per capita, index fund, industrial robot, Internet of things, Jeff Bezos, job automation, job satisfaction, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, Just-in-time delivery, Kevin Kelly, knowledge economy, laissez-faire capitalism, low interest rates, Lyft, manufacturing employment, Mark Zuckerberg, market design, Martin Wolf, mass affluent, means of production, middle-income trap, Mont Pelerin Society, Network effects, new economy, offshore financial centre, pensions crisis, Peter Thiel, Potemkin village, precautionary principle, price mechanism, principal–agent problem, Productivity paradox, QWERTY keyboard, RAND corporation, Ray Kurzweil, rent-seeking, risk tolerance, risk/return, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, Silicon Valley, Silicon Valley startup, Skype, sovereign wealth fund, Steve Ballmer, Steve Jobs, Steve Wozniak, subprime mortgage crisis, technological determinism, technological singularity, TED Talk, telemarketer, The Chicago School, The Future of Employment, The Nature of the Firm, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, transaction costs, transportation-network company, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, University of East Anglia, unpaid internship, Vanguard fund, vertical integration, Yogi Berra

As in most other companies operating in markets where there are quick product and technology turnover rates, the managements of failing firms also know that over time there is only one question that should keep them awake at night: should we destroy our own offering, or should we let another company do it for us? Still they failed. And to understand the mechanics of failure we need first to understand the firm and why it exists. There is no better starting point than Ronald Coase, the Nobel laureate in economics who rebelled against “blackboard economics” and made the firm the center of economic inquiry. Coase started from a simple, almost banal, observation – surprisingly controversial at the time. Companies, he argued, are not black boxes that cannot be understood by economists.

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Globalization has moved the boundaries between firm and market In order to understand second-generation globalization and how it could spur efficiency rather than contestable innovation, and generally create markets with managed competition, we need to go back to the basics of industrial organization, and especially Ronald Coase. As companies grew bigger, global, and fragmented they changed their habits but not their character. They still operate, for want of a better word, on “the Coasean principle,” the source code of corporate behavior that we introduced in the previous chapter. The beauty of globalization was that it cut market transaction costs – and, as a consequence, allowed for a reorganization of production.

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Countries such as Finland, France, Germany, and the UK are more dependent on larger enterprises (with a workforce in excess of 250 people) than Italy, Portugal, and Spain.60 As we have discussed previously, large firms are closer to the productivity frontier. They help to import new technology and better production processes, partly because they are anchored in international markets to a far greater degree than small firms. Their FDI is a vehicle for raising productivity and prosperity in many parts of the world. Ronald Coase’s simple idea helps us to understand how concentration in recent decades has gone up – and progressively reduced the space for market experimentation and contestability. As market transaction costs were reduced, firms narrowed their ownership advantages and put a lot more effort into raising the boundaries around them and their assets.

Working in Public: The Making and Maintenance of Open Source Software by Nadia Eghbal

Amazon Web Services, Apollo 11, barriers to entry, Benevolent Dictator For Life (BDFL), Big Tech, bitcoin, Clayton Christensen, cloud computing, commoditize, commons-based peer production, context collapse, continuous integration, crowdsourcing, cryptocurrency, David Heinemeier Hansson, death of newspapers, Debian, disruptive innovation, Dunbar number, en.wikipedia.org, eternal september, Ethereum, Firefox, Free Software Foundation, Guido van Rossum, Hacker Ethic, Hacker News, Induced demand, informal economy, information security, Jane Jacobs, Jean Tirole, Kevin Kelly, Kickstarter, Kubernetes, leftpad, Mark Zuckerberg, Menlo Park, Neal Stephenson, Network effects, node package manager, Norbert Wiener, pirate software, pull request, RFC: Request For Comment, Richard Stallman, Ronald Coase, Ruby on Rails, side project, Silicon Valley, Snapchat, social graph, software as a service, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, tacit knowledge, the Cathedral and the Bazaar, The Death and Life of Great American Cities, The Nature of the Firm, TikTok, Tragedy of the Commons, transaction costs, two-sided market, urban planning, web application, wikimedia commons, Yochai Benkler, Zimmermann PGP

Once companies started using open source for commercial purposes, and people realized that these “hobby projects” were able to compete with the software made by paid employees, scholars had to come up with a new framework to explain this behavior. Previously, our understanding of how and why people make things was modeled after Ronald Coase’s theory of the firm, which proposes that firms (i.e., companies, organizations, and other institutions with centralized resources) naturally emerge as a way to reduce transaction costs in the market.109 Coase would’ve told us that only companies make software because, from a coordination standpoint, managing the resources required to pull off such a feat would be most efficiently handled within the same organization.

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Taylor, Watch Me Play: Twitch and the Rise of Game Live Streaming (Princeton, NJ: Princeton University Press, 2018), 92–93. 102 MacCallum, The Art of Community, 67. 103 Nadia Eghbal, “Emerging Models for Open Source Contributions” (presentation, GitHub CodeConf, Los Angeles, June 29, 2016), https://www.slideshare.net/NadiaEghbal/emerging-models-for-open-source-contributions. 104 Mikeal Rogers, “Healthy Open Source,” Node.js Collection, Medium, February 22, 2016, https://medium.com/the-node-js-collection/healthy-open-source-967fa8be7951. 105 Taylor Wofford, “Fuck You and Die: An Oral History of Something Awful,” Vice, April 5, 2017, https://www.vice.com/amp/en_us/article/nzg4yw/fuck-you-and-die-an-oral-history-of-something-awful. 106 Adam Rowe, “Why Paid Apps Could Be the Future of Online Communities,” Tech.co, November 1, 2019, https://tech.co/news/woolfer-paid-app-online-communities-2019-11. 107 Kevin Simler, “Border Stories,” Melting Asphalt, March 2, 2015, https://meltingasphalt.com/border-stories/. 03 108 Star Simpson (@starsandrobots), “Til recently you were online . . .,” Twitter, November 5, 2017, 6:54 p.m., https://twitter.com/starsandrobots/status/927323260244463616. 109 Ronald Coase, “The Nature of the Firm,” Economica 4, no. 16 (November 1937): 386–405, https://doi.org/10.1017/cbo9780511817410.009. 110 Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge: Cambridge University Press, 1990), Loc 2053. 111 Yochai Benkler, “Coase’s Penguin, Or, Linux and ‘The Nature of the Firm,’” The Yale Law Journal 112, no. 3 (2002): 369–446, https://doi.org/10.2307/1562247. 112 Benkler, “Coase’s Penguin,” 381. 113 Guido van Rossum, “Foreword for ‘Programming Python’ (1st Ed.),” Python.org, May 1996, https://www.python.org/doc/essays/foreword/. 114 Linus Torvalds, “LINUX’s History,” Carnegie Mellon University School of Computer Science, July 31, 1992, https://www.cs.cmu.edu/~awb/linux.history.html. 115 Linus Torvalds, “Re: Kernel SCM Saga..,” Mailing List ARChive, April 7, 2005, https://marc.info/?

What's Wrong With Economics: A Primer for the Perplexed by Robert Skidelsky

additive manufacturing, agricultural Revolution, behavioural economics, Black Swan, Bretton Woods, business cycle, carbon tax, Cass Sunstein, central bank independence, cognitive bias, conceptual framework, Corn Laws, corporate social responsibility, correlation does not imply causation, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, degrowth, disruptive innovation, Donald Trump, Dr. Strangelove, full employment, George Akerlof, George Santayana, global supply chain, global village, Gunnar Myrdal, happiness index / gross national happiness, hindsight bias, Hyman Minsky, income inequality, index fund, inflation targeting, information asymmetry, Internet Archive, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labour market flexibility, loss aversion, Mahbub ul Haq, Mark Zuckerberg, market clearing, market friction, market fundamentalism, Martin Wolf, means of production, Modern Monetary Theory, moral hazard, paradox of thrift, Pareto efficiency, Paul Samuelson, Philip Mirowski, Phillips curve, precariat, price anchoring, principal–agent problem, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, shareholder value, Silicon Valley, Simon Kuznets, sunk-cost fallacy, survivorship bias, technoutopianism, The Chicago School, The Market for Lemons, The Nature of the Firm, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, Thorstein Veblen, Tragedy of the Commons, transaction costs, transfer pricing, Vilfredo Pareto, Washington Consensus, Wolfgang Streeck, zero-sum game

They start with a hypothesis and then try to prove it. The hypothesis is not ‘plucked from the air’. Nor is it based on systematic observation, even though economists often appeal to the ‘indisputable facts of experience’. Rather, it is based on the claim to ‘direct acquaintance’ or ‘intuitive’ knowledge of how humans think. Ronald Coase (1910–2013) recalled the English economist Ely Devons (1913–1967) saying to him, ‘If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, “What would I do if I were a horse?” And they would soon discover that they would maximise their utilities.’7 This joke gives a profound insight into the economic method.

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Its main idea was that individuals form institutions to reduce the ‘transaction’, especially ‘information’, costs of trading individually in markets. The neoclassical logic remains intact: individuals create institutions to maximise their utilities. The father of this approach was Nobel Laureate Ronald Coase (1910–2013), whose seminal article on the firm appeared in 1937, in reaction against the then prevalent theories of oligopolistic competition. It took the overthrow of Keynesianism by the new classical economics in the 1970s and 1980s for his ideas to gain currency. Today they comprise the orthodox microeconomics of institutions.

Cogs and Monsters: What Economics Is, and What It Should Be by Diane Coyle

3D printing, additive manufacturing, Airbnb, Al Roth, Alan Greenspan, algorithmic management, Amazon Web Services, autonomous vehicles, banking crisis, barriers to entry, behavioural economics, Big bang: deregulation of the City of London, biodiversity loss, bitcoin, Black Lives Matter, Boston Dynamics, Bretton Woods, Brexit referendum, business cycle, call centre, Carmen Reinhart, central bank independence, choice architecture, Chuck Templeton: OpenTable:, cloud computing, complexity theory, computer age, conceptual framework, congestion charging, constrained optimization, coronavirus, COVID-19, creative destruction, credit crunch, data science, DeepMind, deglobalization, deindustrialization, Diane Coyle, discounted cash flows, disintermediation, Donald Trump, Edward Glaeser, en.wikipedia.org, endogenous growth, endowment effect, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, Evgeny Morozov, experimental subject, financial deregulation, financial innovation, financial intermediation, Flash crash, framing effect, general purpose technology, George Akerlof, global supply chain, Goodhart's law, Google bus, haute cuisine, High speed trading, hockey-stick growth, Ida Tarbell, information asymmetry, intangible asset, Internet of things, invisible hand, Jaron Lanier, Jean Tirole, job automation, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, knowledge worker, Les Trente Glorieuses, libertarian paternalism, linear programming, lockdown, Long Term Capital Management, loss aversion, low earth orbit, lump of labour, machine readable, market bubble, market design, Menlo Park, millennium bug, Modern Monetary Theory, Mont Pelerin Society, multi-sided market, Myron Scholes, Nash equilibrium, Nate Silver, Network effects, Occupy movement, Pareto efficiency, payday loans, payment for order flow, Phillips curve, post-industrial society, price mechanism, Productivity paradox, quantitative easing, randomized controlled trial, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Robinhood: mobile stock trading app, Ronald Coase, Ronald Reagan, San Francisco homelessness, savings glut, school vouchers, sharing economy, Silicon Valley, software is eating the world, spectrum auction, statistical model, Steven Pinker, tacit knowledge, The Chicago School, The Future of Employment, The Great Moderation, the map is not the territory, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, Uber for X, urban planning, winner-take-all economy, Winter of Discontent, women in the workforce, Y2K

Many economists (including me [Coyle and Sensier 2020], but also Hausman [2012]) have been critical of the way cost-benefit analysis is implemented. But it is always better to make decisions aware that there are costs and benefits, and with some systematic framework for assessing them. When they are not made explicit, there will always be an implicit judgement, just as there is when we make choices in everyday life. Ronald Coase (1960) also pointed out that a cost-benefit analysis of any policy also needs to put the costs of the policy action itself into the judgement. The government economist is part of the equation she is assessing: It is clear that the government has powers which might enable it to get some things done at a lower cost than could a private organisation.… But the governmental administrative machine is not itself costless.

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This is fundamental in competition analysis and in good business economics—including estimating the effect of introducing a low-priced copy of a consumer good into a market—and I hope it is now taught in all econometrics courses. Yet even when a counterfactual or alternative hypothesis is explicitly considered, many economists will fall into the trap (described with typical clarity by Ronald Coase, as noted in Chapter One) of comparing a policy with ‘an abstract model of a market situation.… Unless we realise we are choosing between social situations which are all more or less failures, we will not make much headway.’ In other words, to evaluate a policy, realistic counterfactuals must be the point of comparison; otherwise the assessment is no more than what Coase described as ‘blackboard economics’ (Williams and Coase 1964).

Liars and Outliers: How Security Holds Society Together by Bruce Schneier

Abraham Maslow, airport security, Alvin Toffler, barriers to entry, behavioural economics, benefit corporation, Berlin Wall, Bernie Madoff, Bernie Sanders, Brian Krebs, Broken windows theory, carried interest, Cass Sunstein, Chelsea Manning, commoditize, corporate governance, crack epidemic, credit crunch, CRISPR, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Graeber, desegregation, don't be evil, Double Irish / Dutch Sandwich, Douglas Hofstadter, Dunbar number, experimental economics, Fall of the Berlin Wall, financial deregulation, Future Shock, Garrett Hardin, George Akerlof, hydraulic fracturing, impulse control, income inequality, information security, invention of agriculture, invention of gunpowder, iterative process, Jean Tirole, John Bogle, John Nash: game theory, joint-stock company, Julian Assange, language acquisition, longitudinal study, mass incarceration, meta-analysis, microcredit, mirror neurons, moral hazard, Multics, mutually assured destruction, Nate Silver, Network effects, Nick Leeson, off-the-grid, offshore financial centre, Oklahoma City bombing, patent troll, phenotype, pre–internet, principal–agent problem, prisoner's dilemma, profit maximization, profit motive, race to the bottom, Ralph Waldo Emerson, RAND corporation, Recombinant DNA, rent-seeking, RFID, Richard Thaler, risk tolerance, Ronald Coase, security theater, shareholder value, slashdot, statistical model, Steven Pinker, Stuxnet, technological singularity, The Market for Lemons, The Nature of the Firm, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Timothy McVeigh, too big to fail, traffic fines, Tragedy of the Commons, transaction costs, ultimatum game, UNCLOS, union organizing, Vernor Vinge, WikiLeaks, World Values Survey, Y2K, Yochai Benkler, zero-sum game

shoddy building practices Heather Timmons (25 Apr 2003), “Shoddy Building in the Housing Boom?” Bloomberg BusinessWeek. used to be smaller John Stopford (1998), “Multinational Corporations,” Foreign Policy, 113:12–24. Gardiner C. Means (1931), “The Growth in the Relative Importance of the Large Corporation in American Economic Life,” The American Economic Review, 21:10–42. Ronald Coase first Ronald Coase (1937), “The Nature of the Firm,” Economica, 4:386–405. Nick Leeson's Richard W. Stevenson (28 Feb 1995), “The Collapse of Barings: The Overview: Young Trader's $29 Billion Bet Brings down a Venerable Firm,” New York Times. Erik Ipsen (19 Jul 1995), “Bank of England Cites Fraud in Barings Collapse,” New York Times.

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Most organizations are hierarchical, making communications easier. And militaries have generally been examples of the largest-sized organization a particular technological level can produce. But there's a limit where the costs of communications outweigh the value of being part of one organization. Economist Ronald Coase first pointed this out in 1937. Called “Coase's limit” or “Coase's ceiling,” it's the point of diminishing returns for a company: where adding another person to an organization doesn't actually add any value to the organization. You can think of an employee inside of an organization having two parts to his job: coordinating with people inside the organization and doing actual work that makes the company money.

How Capitalism Saved America: The Untold History of Our Country, From the Pilgrims to the Present by Thomas J. Dilorenzo

air traffic controllers' union, Alan Greenspan, banking crisis, British Empire, business cycle, California energy crisis, collective bargaining, Cornelius Vanderbilt, corporate governance, corporate social responsibility, electricity market, financial deregulation, Fractional reserve banking, Hernando de Soto, Ida Tarbell, income inequality, invisible hand, Joseph Schumpeter, laissez-faire capitalism, McDonald's hot coffee lawsuit, means of production, medical malpractice, Menlo Park, minimum wage unemployment, Money creation, Norman Mailer, plutocrats, price stability, profit maximization, profit motive, Ralph Nader, rent control, rent-seeking, Robert Bork, rolling blackouts, Ronald Coase, Ronald Reagan, scientific management, Silicon Valley, statistical model, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, transcontinental railway, union organizing, Upton Sinclair, vertical integration, W. E. B. Du Bois, wealth creators, working poor, Works Progress Administration, zero-sum game

But there have been hundreds—probably thousands—of scholarly studies of the effectiveness of government regulation, and these studies show that usually regulation either is ineffective or makes a problem worse. Many of these studies have been published in the prestigious, peer-reviewed Journal of Law and Economics, published by the University of Chicago Law School. The onetime-editor of the Journal, Nobel laureate Ronald Coase, summed it up: There have been more serious studies made of government regulation of industry in the last fifteen years or so, particularly in the United States, than in the whole preceding period. These studies have been both quantitative and nonquantitative. . . . The main lesson to be drawn from these studies is clear: they all tend to suggest that the regulation is either ineffective or that when it has a noticeable impact, on balance, the effect is bad, so that consumers obtain a worse product or a higher-priced product or both as a result of regulation.

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John Kerry, meanwhile, condemned the Bush administration for its “obsession with giveaways to their friends in the oil business” and declared that “these blackouts also expose some of the failures of this administration’s energy policies” (quoted on Meet the Press, NBC, August 17, 2003). CONCLUSION: THE NEVER-ENDING WAR ON CAPITALISM 1. Michel Jensen and William Meckling, “The Future of Capitalism,” Financial Analyst’s Journal, May 1978, 1. 2. Ludwig von Mises, Liberalism: In the Classical Tradition (Irvington, NY: Foundation for Economic Education, 1985), 102. 3. Ronald Coase, “Economists and Public Policy,” in J. Fred Weston, ed., Large Corporations in a Changing Society (New York: New York University Press, 1975). 4. Fred S. McChesney, Money for Nothing: Politicians, Rent Extraction, and Political Extortion (Cambridge: Harvard University Press, 1997). 5. Ibid., inside cover. 6.

Big Business: A Love Letter to an American Anti-Hero by Tyler Cowen

"Friedman doctrine" OR "shareholder theory", 23andMe, Affordable Care Act / Obamacare, augmented reality, barriers to entry, Bernie Sanders, Big Tech, bitcoin, blockchain, Bretton Woods, cloud computing, cognitive dissonance, company town, compensation consultant, corporate governance, corporate social responsibility, correlation coefficient, creative destruction, crony capitalism, cryptocurrency, dark matter, David Brooks, David Graeber, don't be evil, Donald Trump, driverless car, Elon Musk, employer provided health coverage, experimental economics, Fairchild Semiconductor, fake news, Filter Bubble, financial innovation, financial intermediation, gentrification, Glass-Steagall Act, global reserve currency, global supply chain, Google Glasses, income inequality, Internet of things, invisible hand, Jeff Bezos, junk bonds, late fees, Mark Zuckerberg, mobile money, money market fund, mortgage debt, Network effects, new economy, Nicholas Carr, obamacare, offshore financial centre, passive investing, payday loans, peer-to-peer lending, Peter Thiel, pre–internet, price discrimination, profit maximization, profit motive, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Ronald Coase, shareholder value, Silicon Valley, Silicon Valley startup, Skype, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, The Nature of the Firm, Tim Cook: Apple, too big to fail, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, ultimatum game, WikiLeaks, women in the workforce, World Values Survey, Y Combinator

I’m more likely to think of a corporation as a carrier of reputation and a kind of metaphorical personhood, and less likely to think of a corporation as a means of minimizing transactions costs, as many mainstream economists have suggested. In a famous 1937 article, “The Nature of the Firm,” the economist and Nobel laureate Ronald Coase defined the nature of economic thought about the corporation for many decades to come. In that piece, he described the corporation as essentially a means of reducing transactions costs. It’s not always easy to hire the worker you want just by going out into spot labor markets, not to mention get that worker to do your bidding.

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At the same time, those bureaucracies keep some of the employees from “going off the reservation,” or make it harder for the boss to play favorites or for shareholders to use the company for personal purposes. So corporate bureaucracy is necessary. Still, because of bureaucracy, corporate life can be tough and also deeply unfair at times. And that too is “the nature of the firm,” to refer back to Ronald Coase’s title. ACKNOWLEDGMENTS The author wishes to thank Tim Bartlett, Christina Cacioppo, Bryan Caplan, Natasha Cowen, Teresa Hartnett, Daniel Klein, Ezra Klein, Randall Kroszner, Timothy Lee, Hollis Robbins, Alex Tabarrok, and Dillon Tauzin for useful comments and discussions and assistance.

What They Do With Your Money: How the Financial System Fails Us, and How to Fix It by Stephen Davis, Jon Lukomnik, David Pitt-Watson

activist fund / activist shareholder / activist investor, Admiral Zheng, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Black Swan, buy and hold, Carl Icahn, centralized clearinghouse, clean water, compensation consultant, computerized trading, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, crowdsourcing, David Brooks, Dissolution of the Soviet Union, diversification, diversified portfolio, en.wikipedia.org, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, income inequality, index fund, information asymmetry, invisible hand, John Bogle, Kenneth Arrow, Kickstarter, light touch regulation, London Whale, Long Term Capital Management, moral hazard, Myron Scholes, Northern Rock, passive investing, Paul Volcker talking about ATMs, payment for order flow, performance metric, Ponzi scheme, post-work, principal–agent problem, rent-seeking, Ronald Coase, seminal paper, shareholder value, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, Steve Jobs, the market place, The Wealth of Nations by Adam Smith, transaction costs, Upton Sinclair, value at risk, WikiLeaks

Where transaction costs are high, it is difficult to get markets to work. For example, lighthouses find it hard to charge passing ships for their service. Traditional economists had bundled these into a separate sort of product, known as “public goods,” where markets will fail and the goods must be purchased by the state. But as the Chicago economist Ronald Coase pointed out, the difference between the transaction costs involved in the provision of lighthouses and other goods is one of degree, not of quality. He noted that the first lighthouses were privately provided by the operators of nearby ports, and concluded that by dividing the world into “private goods,” where markets would regulate prices effectively, and “public goods,” where they would not, economists had posed the wrong question.30 The issue was not about whether there should be state or private provision, but how best to manage transaction costs so that the buyer and seller could easily strike a good deal.

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Merriam-Webster.com defines capitalism as “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.” Other dictionaries similarly cite private ownership as central to the definition of capitalism. www.merriam-webster.com/dictionary/capitalism, accessed September 27, 2013. Indeed, for economists such as Ronald Coase and Friedrich Hayek, the marriage of ownership and control rights is essential to the effective working of the system. 3. Warren Buffett, letter in 2002 Annual Report of Berkshire Hathaway. 4. James Saft, “The Wisdom of Exercising Patience in Investing” (Reuters, March 2, 2012). This is not a new phenomenon.

Exponential Organizations: Why New Organizations Are Ten Times Better, Faster, and Cheaper Than Yours (And What to Do About It) by Salim Ismail, Yuri van Geest

23andMe, 3D printing, Airbnb, Amazon Mechanical Turk, Amazon Web Services, anti-fragile, augmented reality, autonomous vehicles, Baxter: Rethink Robotics, behavioural economics, Ben Horowitz, bike sharing, bioinformatics, bitcoin, Black Swan, blockchain, Blue Ocean Strategy, book value, Burning Man, business intelligence, business process, call centre, chief data officer, Chris Wanstrath, circular economy, Clayton Christensen, clean water, cloud computing, cognitive bias, collaborative consumption, collaborative economy, commoditize, corporate social responsibility, cross-subsidies, crowdsourcing, cryptocurrency, dark matter, data science, Dean Kamen, deep learning, DeepMind, dematerialisation, discounted cash flows, disruptive innovation, distributed ledger, driverless car, Edward Snowden, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fail fast, game design, gamification, Google Glasses, Google Hangouts, Google X / Alphabet X, gravity well, hiring and firing, holacracy, Hyperloop, industrial robot, Innovator's Dilemma, intangible asset, Internet of things, Iridium satellite, Isaac Newton, Jeff Bezos, Joi Ito, Kevin Kelly, Kickstarter, knowledge worker, Kodak vs Instagram, Law of Accelerating Returns, Lean Startup, life extension, lifelogging, loose coupling, loss aversion, low earth orbit, Lyft, Marc Andreessen, Mark Zuckerberg, market design, Max Levchin, means of production, Michael Milken, minimum viable product, natural language processing, Netflix Prize, NetJets, Network effects, new economy, Oculus Rift, offshore financial centre, PageRank, pattern recognition, Paul Graham, paypal mafia, peer-to-peer, peer-to-peer model, Peter H. Diamandis: Planetary Resources, Peter Thiel, Planet Labs, prediction markets, profit motive, publish or perish, radical decentralization, Ray Kurzweil, recommendation engine, RFID, ride hailing / ride sharing, risk tolerance, Ronald Coase, Rutger Bregman, Salesforce, Second Machine Age, self-driving car, sharing economy, Silicon Valley, skunkworks, Skype, smart contracts, Snapchat, social software, software is eating the world, SpaceShipOne, speech recognition, stealth mode startup, Stephen Hawking, Steve Jobs, Steve Jurvetson, subscription business, supply-chain management, synthetic biology, TaskRabbit, TED Talk, telepresence, telepresence robot, the long tail, Tony Hsieh, transaction costs, Travis Kalanick, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, urban planning, Virgin Galactic, WikiLeaks, winner-take-all economy, X Prize, Y Combinator, zero-sum game

Today it’s down to about five years. In his recent book, The Startup of You, LinkedIn founder Reid Hoffman notes that individuals will increasingly learn to manage themselves as companies, with brand management (MTP!), and marketing and sales functions all brought down to the individual. Similarly, Ronald Coase, who won the Nobel Prize in Economics in 1991, noted that enterprises are more like families than industries, and that corporations are more of a sociological construct than an economic one. For any company today, having a permanent, full-time workforce is fraught with growing peril as employees fail to keep their skills up to date, resulting in personnel in need of greater management.

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Besides, being eaten alive by an upstart competitor is anything but relaxing. This shift will, of course, be quite challenging for large organizations, which rely on drawn-out projections and tracking for planning and control purposes. 6. Smaller Beats Bigger (aka Size Does Matter, Just not the Way You Think) Ronald Coase won the 1991 Nobel Prize in Economics for his theory that larger companies do better because they aggregate assets under one roof and, as a result, enjoy lower transaction costs. Two decades later, the reach delivered by the information revolution has negated the need to aggregate assets in the first place.

The Armchair Economist: Economics and Everyday Life by Steven E. Landsburg

Albert Einstein, Arthur Eddington, business cycle, diversified portfolio, Dutch auction, first-price auction, German hyperinflation, Golden Gate Park, information asymmetry, invisible hand, junk bonds, Kenneth Arrow, low interest rates, means of production, price discrimination, profit maximization, Ralph Nader, random walk, Ronald Coase, Sam Peltzman, Savings and loan crisis, sealed-bid auction, second-price auction, second-price sealed-bid, statistical model, the scientific method, Unsafe at Any Speed

But whoever controls the resource, and however his control is protected, he will find it to his private advantage to direct the resource to its most profitable use, regardless of whether that use is by him or by his neighbor. The court cannot affect the profitability of either enterprise and therefore cannot control how the resource is employed. This startling observation about the impotence of judges was made in 1961 by Professor Ronald Coase of the University of Chicago Law School. While it is obvious once stated, it seems to have come as a revelation to economists, jurists, and legal scholars. It also marked the birth of a new academic specialty: the economic analysis of law. In Coase's honor, his observation has come to be called the Coase Theorem.

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When I presented David Friedman with the airline ticket conundrum from the end of the chapter, he immediately responded by telling me that if I believed in an efficiency standard for personal conduct, I was honor-bound not to retrieve the next dollar bill that I dropped. Of Medicine and Candy, Trains and Sparks: The entire chapter is inspired by Ronald Coase's article on social cost, published in the Journal of Law and Economics in 1960. Sound and Fury: James Kahn pointed out to me the irony of Al Gore's timing. How Statistics Lie: The observation about Star Market's misleading advertising is due to Walter Oi. The Policy Vice: The observation that the possibility of "scoops" might justify either taxing or subsidizing inventors is due to Marvin Goodfriend.

The Capitalist Manifesto by Johan Norberg

AltaVista, anti-communist, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, Boris Johnson, business climate, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, Charles Babbage, computer age, coronavirus, COVID-19, creative destruction, crony capitalism, data is not the new oil, data is the new oil, David Graeber, DeepMind, degrowth, deindustrialization, Deng Xiaoping, digital map, disinformation, Donald Trump, Elon Musk, energy transition, Erik Brynjolfsson, export processing zone, failed state, Filter Bubble, friendshoring, gig economy, Gini coefficient, global supply chain, Google Glasses, Greta Thunberg, Gunnar Myrdal, Hans Rosling, Hernando de Soto, Howard Zinn, income inequality, independent contractor, index fund, Indoor air pollution, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of the printing press, invisible hand, Jeff Bezos, Jeremy Corbyn, job automation, job satisfaction, Joseph Schumpeter, land reform, liberal capitalism, lockdown, low cost airline, low interest rates, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, means of production, meta-analysis, Minecraft, multiplanetary species, Naomi Klein, Neal Stephenson, Nelson Mandela, Network effects, open economy, passive income, Paul Graham, Paul Samuelson, payday loans, planned obsolescence, precariat, profit motive, Ralph Nader, RAND corporation, rent control, rewilding, ride hailing / ride sharing, Ronald Coase, Rosa Parks, Salesforce, Sam Bankman-Fried, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, Snapchat, social distancing, social intelligence, South China Sea, Stephen Fry, Steve Jobs, tech billionaire, The Spirit Level, The Wealth of Nations by Adam Smith, TikTok, Tim Cook: Apple, total factor productivity, trade liberalization, transatlantic slave trade, Tyler Cowen, Uber and Lyft, uber lyft, ultimatum game, Virgin Galactic, Washington Consensus, working-age population, World Values Survey, X Prize, you are the product, zero-sum game

But the general disappointment has led to a narrative that is inaccurate on almost every point and, if we embrace it, it could lead to major mistakes both in China and in the West. When China became capitalist To start from the beginning, it is a Communist Party myth that its strategic planning made China rich. On the contrary, as Ning Wang and Nobel laureate Ronald Coase showed in their book How China Became Capitalist, it was a series of popular revolts that created grassroots capitalism and set the entire reform process in motion.1 Hungry farmers began to dismantle collective farming and privatize land in the late 1970s. They wrote secret documents that stated the land would be divided between families, and they promised to raise the children of the villagers who were sent to labour camps if the party ever found out about their conspiracy.

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Even if they could probably make a lot of money on such innovations without prize competitions. It should also be noted that many of the most productive prize competitions have been established privately, such as the X Prize Foundation. 27. ‘The world’s most pointless rocket has been launched at last’, The Economist, 16 November 2022. 7. China, paper tiger 1. Ronald Coase & Ning Wang, How China Became Capitalist, Palgrave MacMillan, 2013. 2. Kate Xiao Zhou, How the Farmers Changed China: Power of the People, Westview Press, 1996, p.56. 3. Coase & Wang 2013, p.63. 4. Barry Naughton, The Rise of China’s Industrial Policy 1978 to 2020, Enero 2021, p.41. 5. Bradley M.

The Sovereign Individual: How to Survive and Thrive During the Collapse of the Welfare State by James Dale Davidson, William Rees-Mogg

affirmative action, agricultural Revolution, Alan Greenspan, Alvin Toffler, bank run, barriers to entry, Berlin Wall, borderless world, British Empire, California gold rush, classic study, clean water, colonial rule, Columbine, compound rate of return, creative destruction, Danny Hillis, debt deflation, ending welfare as we know it, epigenetics, Fall of the Berlin Wall, falling living standards, feminist movement, financial independence, Francis Fukuyama: the end of history, full employment, George Gilder, Hernando de Soto, illegal immigration, income inequality, independent contractor, informal economy, information retrieval, Isaac Newton, John Perry Barlow, Kevin Kelly, market clearing, Martin Wolf, Menlo Park, money: store of value / unit of account / medium of exchange, new economy, New Urbanism, Norman Macrae, offshore financial centre, Parkinson's law, pattern recognition, phenotype, price mechanism, profit maximization, rent-seeking, reserve currency, road to serfdom, Ronald Coase, Sam Peltzman, school vouchers, seigniorage, Silicon Valley, spice trade, statistical model, telepresence, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, trade route, transaction costs, Turing machine, union organizing, very high income, Vilfredo Pareto

They did not address what influences the optimal size of firms, why firms take the form they do, or even why firms exist at all. Why do entrepreneurs hire employees, rather than placing every task that needs doing out to bid among independent contractors in the auction market? Nobel Prize-winning economist Ronald Coase helped launch a new direction in economics by asking some of these important questions. The answers he helped to frame hint at the revolutionary consequences of information technology for the structure of business. Coase argued that firms were an efficient way to overcome information deficits and high transaction costs.26 Information and Transaction Costs To see why, consider the obstacles you would have faced in trying to operate an industrial-era assembly line without a single firm to coordinate its activities.

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"Competitive Territorial Clubs" This is more than merely a theory, as articulated first by economist Charles Tiebout in 1956.30 As economist Fred Foldvary has documented in Public Goods and Private Communities: The Market Provision of Social Services, there is no essential reason that social services and many public goods must be provided by political means. 274 Foldvary's examples, among others, also confirm the controversial theorem of Nobel Prize~winning economist Ronald Coase that "government intervention is not needed to resolve externality issues," such as problems of pollution.31 Entrepreneurs can provide collective goods by market means. Many already do so now in real world communities. Foldvary's case studies show how the privatization of communities can result in new mechanisms for providing and financing public goods and services.32 The Road to Prosperity Microtechnology itself will facilitate new means of financing and regulating the provision of goods heretofore treated as public goods.

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Country: Tom Peters & George Gilder Debate the Impact of Technology on Location," Forbes, February 1995. 18. Weber, op. cit., p.21. 19. Ibid., p.46 for London, p.73 for Paris. 20. Ibid., p.120. 21. Ibid., p.95. 22. Ibid., p.84. 23. Ibid., p.119. 24. Ibid., p.101. 25. Ibid., p.5. 26. See Ronald Coase, "The Nature of the Firm," reprinted in Louis Putterman and Randall S. Kroszner, eds., The Economic Nature of the Firm: A Reader 2nd ed. (Cambridge: Cambridge University Press, 1996), pp.89-104. 27. Quoted by West, op. cit., p.58; see also Oliver E. Williamson, "The Organization of Work: A Comparative Insititutional Assessment," Journal of Economic Behaviour and Organisation, vol.1, no.1. 28.

Radical Uncertainty: Decision-Making for an Unknowable Future by Mervyn King, John Kay

Airbus A320, Alan Greenspan, Albert Einstein, Albert Michelson, algorithmic trading, anti-fragile, Antoine Gombaud: Chevalier de Méré, Arthur Eddington, autonomous vehicles, availability heuristic, banking crisis, Barry Marshall: ulcers, battle of ideas, Bear Stearns, behavioural economics, Benoit Mandelbrot, bitcoin, Black Swan, Boeing 737 MAX, Bonfire of the Vanities, Brexit referendum, Brownian motion, business cycle, business process, capital asset pricing model, central bank independence, collapse of Lehman Brothers, correlation does not imply causation, credit crunch, cryptocurrency, cuban missile crisis, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, DeepMind, demographic transition, discounted cash flows, disruptive innovation, diversification, diversified portfolio, Donald Trump, Dutch auction, easy for humans, difficult for computers, eat what you kill, Eddington experiment, Edmond Halley, Edward Lloyd's coffeehouse, Edward Thorp, Elon Musk, Ethereum, Eugene Fama: efficient market hypothesis, experimental economics, experimental subject, fear of failure, feminist movement, financial deregulation, George Akerlof, germ theory of disease, Goodhart's law, Hans Rosling, Helicobacter pylori, high-speed rail, Ignaz Semmelweis: hand washing, income per capita, incomplete markets, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Jeff Bezos, Jim Simons, Johannes Kepler, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Snow's cholera map, John von Neumann, Kenneth Arrow, Kōnosuke Matsushita, Linda problem, Long Term Capital Management, loss aversion, Louis Pasteur, mandelbrot fractal, market bubble, market fundamentalism, military-industrial complex, Money creation, Moneyball by Michael Lewis explains big data, Monty Hall problem, Nash equilibrium, Nate Silver, new economy, Nick Leeson, Northern Rock, nudge theory, oil shock, PalmPilot, Paul Samuelson, peak oil, Peter Thiel, Philip Mirowski, Phillips curve, Pierre-Simon Laplace, popular electronics, power law, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, quantitative trading / quantitative finance, railway mania, RAND corporation, reality distortion field, rent-seeking, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Solow, Ronald Coase, sealed-bid auction, shareholder value, Silicon Valley, Simon Kuznets, Socratic dialogue, South Sea Bubble, spectrum auction, Steve Ballmer, Steve Jobs, Steve Wozniak, Suez crisis 1956, Tacoma Narrows Bridge, Thales and the olive presses, Thales of Miletus, The Chicago School, the map is not the territory, The Market for Lemons, The Nature of the Firm, The Signal and the Noise by Nate Silver, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Davenport, Thomas Malthus, Toyota Production System, transaction costs, ultimatum game, urban planning, value at risk, world market for maybe five computers, World Values Survey, Yom Kippur War, zero-sum game

They cited not only the osotua practices of those Maa speakers in Africa, but the potlatches of native tribes in the American north-west (ceremonies involving massive and sometimes destructive exchanges of gifts), and the modern American – and European – practice of marking a proposal of marriage with a costly engagement ring. The economists found an altogether different explanation for a round of drinks. The practice minimised transaction costs, reducing the number of occasions on which money needed to be handed across the bar, and the frequency with which the bartender made change. They drew an analogy with Ronald Coase’s famous analysis of when it made sense to deal through markets and when it was better to internalise the transaction within the firm. 6 It was an economist, of course, who proposed an empirical test of the alternative hypotheses. What happened if you bought more drinks than had been bought for you?

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Peter Drucker’s 1946 Concept of the Corporation was the first bestselling business book and is still in print and widely read; Alfred Chandler’s Strategy and Structure transformed business history from the hagiographic portrayal of companies and the heroic individuals who led them into the serious academic discipline it is today; and Sloan’s own My Years with General Motors is one of the few autobiographies by a senior executive worth reading. Ronald Coase’s depiction of the theory of the firm, for which he received the Nobel Prize in Economics in 1991, is a thinly disguised account of the General Motors of the inter-war period. The essence of Sloan’s management style was a mixture of a closely knit senior executive group with considerable organisational decentralisation.

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An obvious means of responding to the prior neglect of expectations would have been to undertake empirical work on the beliefs about the future which consumers and those engaged in business and finance actually held, and the processes by which they established and changed such beliefs. But little such research was undertaken. The new macroeconomic theorists instead followed a different approach; Chicago economist Ronald Coase attributed a satirical description of it to the English economist Ely Devons: ‘If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, “What would I do if I were a horse?”’ 7 These theorists – Chicago was and remains a centre of their thinking – followed the dominant paradigm of the universal applicability of subjective probability.

The Wealth of Networks: How Social Production Transforms Markets and Freedom by Yochai Benkler

affirmative action, AOL-Time Warner, barriers to entry, bioinformatics, Brownian motion, business logic, call centre, Cass Sunstein, centre right, clean water, commoditize, commons-based peer production, dark matter, desegregation, digital divide, East Village, Eben Moglen, fear of failure, Firefox, Free Software Foundation, game design, George Gilder, hiring and firing, Howard Rheingold, informal economy, information asymmetry, information security, invention of radio, Isaac Newton, iterative process, Jean Tirole, jimmy wales, John Markoff, John Perry Barlow, Kenneth Arrow, Lewis Mumford, longitudinal study, machine readable, Mahbub ul Haq, market bubble, market clearing, Marshall McLuhan, Mitch Kapor, New Journalism, optical character recognition, pattern recognition, peer-to-peer, power law, precautionary principle, pre–internet, price discrimination, profit maximization, profit motive, public intellectual, radical decentralization, random walk, Recombinant DNA, recommendation engine, regulatory arbitrage, rent-seeking, RFID, Richard Stallman, Ronald Coase, scientific management, search costs, Search for Extraterrestrial Intelligence, SETI@home, shareholder value, Silicon Valley, Skype, slashdot, social software, software patent, spectrum auction, subscription business, tacit knowledge, technological determinism, technoutopianism, The Fortune at the Bottom of the Pyramid, the long tail, The Nature of the Firm, the strength of weak ties, Timothy McVeigh, transaction costs, vertical integration, Vilfredo Pareto, work culture , Yochai Benkler

It certainly should not be that these volunteers will beat the largest and best-financed business enterprises in the world at their own game. And yet, this is precisely what is happening in the software world. 120 Industrial organization literature provides a prominent place for the transaction costs view of markets and firms, based on insights of Ronald Coase and Oliver Williamson. On this view, people use markets when the gains from doing so, net of transaction costs, exceed the gains from doing the same thing in a managed firm, net of the costs of organizing and managing a firm. Firms emerge when the opposite is true, and transaction costs can best be reduced by [pg 60] bringing an activity into a managed context that requires no individual transactions to allocate this resource or that effort.

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This engineering technique, adopted by Marconi in 1900, formed the basis of our notion of "spectrum": the range of frequencies at which we know how to generate electromagnetic waves with sufficient control and predictability that we can encode and decode information with them, as well as the notion that there are "channels" of spectrum that are "used" by a communication. For more than half a century, radio communications regulation was thought necessary because spectrum was scarce, and unless regulated, everyone would transmit at all frequencies causing chaos and an inability to send messages. From 1959, when Ronald Coase first published his critique of this regulatory approach, until the early 1990s, when spectrum auctions began, the terms of the debate over "spectrum policy," or wireless communications regulation, revolved around whether the exclusive right to transmit radio signals in a given geographic area should be granted as a regulatory license or a tradable property right.

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FCC, 512 U.S. 622 (1994) and Turner Broad. Sys. v. FCC, 520 U.S. 180 (1997). 164. Chesapeake & Potomac Tel. Co. v. United States, 42 F.3d 181 (4th Cir. 1994); Comcast Cablevision of Broward County, Inc. v. Broward County, 124 F. Supp. 2d 685, 698 (D. Fla., 2000). 165. The locus classicus of the economists' critique was Ronald Coase, "The Federal Communications Commission," Journal of Law and Economics 2 (1959): 1. The best worked-out version of how these property rights would look remains Arthur S. De Vany et al., "A Property System for Market Allocation of the Electromagnetic Spectrum: A Legal-Economic-Engineering Study," Stanford Law Review 21 (1969): 1499. 166.

Peers Inc: How People and Platforms Are Inventing the Collaborative Economy and Reinventing Capitalism by Robin Chase

Airbnb, Amazon Web Services, Andy Kessler, Anthropocene, Apollo 13, banking crisis, barriers to entry, basic income, Benevolent Dictator For Life (BDFL), bike sharing, bitcoin, blockchain, Burning Man, business climate, call centre, car-free, carbon tax, circular economy, cloud computing, collaborative consumption, collaborative economy, collective bargaining, commoditize, congestion charging, creative destruction, crowdsourcing, cryptocurrency, data science, deal flow, decarbonisation, different worldview, do-ocracy, don't be evil, Donald Shoup, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, Eyjafjallajökull, Ferguson, Missouri, Firefox, Free Software Foundation, frictionless, Gini coefficient, GPS: selective availability, high-speed rail, hive mind, income inequality, independent contractor, index fund, informal economy, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Jane Jacobs, Jeff Bezos, jimmy wales, job satisfaction, Kickstarter, Kinder Surprise, language acquisition, Larry Ellison, Lean Startup, low interest rates, Lyft, machine readable, means of production, megacity, Minecraft, minimum viable product, Network effects, new economy, Oculus Rift, off-the-grid, openstreetmap, optical character recognition, pattern recognition, peer-to-peer, peer-to-peer lending, peer-to-peer model, Post-Keynesian economics, Richard Stallman, ride hailing / ride sharing, Ronald Coase, Ronald Reagan, Salesforce, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, self-driving car, shareholder value, sharing economy, Silicon Valley, six sigma, Skype, smart cities, smart grid, Snapchat, sovereign wealth fund, Steve Crocker, Steve Jobs, Steven Levy, TaskRabbit, The Death and Life of Great American Cities, The Future of Employment, the long tail, The Nature of the Firm, Tragedy of the Commons, transaction costs, Turing test, turn-by-turn navigation, Uber and Lyft, uber lyft, vertical integration, Zipcar

In total, companies building platforms to tap into excess capacity raised more than $5.5 billion that year, which was close to four times what had been raised by similar companies in 2013, which was again more than double what had been raised in 2012.5 What is happening? The Internet has eliminated a key corporate competitive advantage. In 1937, in the influential essay “The Nature of the Firm,” British economist Ronald Coase wrote that the corporation was invented to do things that individuals and small companies couldn’t do. In particular, small companies would choose to become larger companies whenever it was cheaper to hire than to outsource. What would make hiring cheaper than outsourcing? Transaction costs (a term Coase invented).

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Employers could respond more rapidly to market forces; workers could diversify their income streams and transition from dying industries or boring jobs in an adaptive way that was much more in their control. The “job for life” that was the hallmark of corporate America in the 1950s has been gone for close to two generations. Way back in Chapter 1, I talked about the economist Ronald Coase and his work showing that companies grew bigger in order to avoid transaction costs grounded in lack of information. The corollary to this insight was his prediction that as markets become more efficient because of better information flow, companies will tend to get smaller and smaller. Our platforms are such places, where tiny little companies (often independent contractors) find each other and interact, together creating larger economic processes But in a genuinely efficient platform economy, in which assets and labor flow to the most productive uses, the job-for-life benefits package provided by private companies evaporates.

The Power of Pull: How Small Moves, Smartly Made, Can Set Big Things in Motion by John Hagel Iii, John Seely Brown

Albert Einstein, Andrew Keen, barriers to entry, Black Swan, business process, call centre, Clayton Christensen, clean tech, cloud computing, commoditize, corporate governance, creative destruction, disruptive innovation, Elon Musk, en.wikipedia.org, future of work, game design, George Gilder, intangible asset, Isaac Newton, job satisfaction, Joi Ito, knowledge economy, knowledge worker, loose coupling, Louis Pasteur, Malcom McLean invented shipping containers, Marc Benioff, Maui Hawaii, medical residency, Network effects, old-boy network, packet switching, pattern recognition, peer-to-peer, pre–internet, profit motive, recommendation engine, Ronald Coase, Salesforce, shareholder value, Silicon Valley, Skype, smart transportation, software as a service, supply-chain management, tacit knowledge, The Nature of the Firm, the new new thing, the strength of weak ties, too big to fail, trade liberalization, transaction costs, TSMC, Yochai Benkler

First, during the Depression in the 1930s, business leaders in major developed economies around the world were motivated to exploit the capabilities of new communication and transportation infrastructures more effectively to harness scalable efficiency and compete during a period of stagnant or declining demand. Second, during the 1950s, another generation of business leaders broadened their horizons to scale push programs beyond national boundaries to take advantage of trade liberalization and to serve global markets. It is no coincidence that the famous British economist Ronald Coase wrote his path-breaking essay, “The Nature of the Firm,” in 1937.4 He effectively captured the primary thrust of institution-building during this period, arguing that firms existed to reduce the transaction costs that made coordinating activity across independent entities difficult. For this insight, he won the Nobel Prize in Economics.

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Chapter 1 1 Timothy Ferris, The Four-Hour Work Week (New York: Crown, 2007). 2 A Gallup poll found that 55 percent of all U.S. employees are bored at least part of the time they’re at work. See Heath Row, “Yawn and Guarded,” Fast Company Member Blog, February 8, 2008, http://www.fastcompany.com/blog/heath-row/yawn-and-guarded. 3 See for instance, Alfred D. Chandler Jr., Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge: Harvard University Press, 1994). 4 Ronald Coase, “The Nature of the Firm,” Economica 4, no. 16 (November 1937): 386-405. 5 For more about the role of real-time information in the Saffron Revolution, as well as in other political crises, see Nik Gowing, “‘Skyful of Lies’ and Black Swans: The New Tyranny of Shifting Information Power in Crises,” Reuters Institute for the Study of Journalism, May 2009, http://reutersinstitute.politics.ox.ac.uk/fileadmin/documents/Publications/Skyful_of_Lies.pdf. 6 Ibid. 7 See, for instance, “‘Neda’ Becomes Rallying Cry for Iranian Protests,” CNN, June 22, 2009, http://www.cnn.com/2009/WORLD/meast/06/21/iran.woman.twitter/index.html?

How to Fix Copyright by William Patry

A Declaration of the Independence of Cyberspace, barriers to entry, big-box store, borderless world, bread and circuses, business cycle, business intelligence, citizen journalism, cloud computing, commoditize, content marketing, creative destruction, crowdsourcing, death of newspapers, digital divide, en.wikipedia.org, facts on the ground, Frederick Winslow Taylor, George Akerlof, Glass-Steagall Act, Gordon Gekko, haute cuisine, informal economy, invisible hand, John Perry Barlow, Joseph Schumpeter, Kickstarter, knowledge economy, lone genius, means of production, moral panic, new economy, road to serfdom, Ronald Coase, Ronald Reagan, search costs, semantic web, shareholder value, Silicon Valley, The Chicago School, The Wealth of Nations by Adam Smith, trade route, transaction costs, trickle-down economics, Twitter Arab Spring, Tyler Cowen, vertical integration, winner-take-all economy, zero-sum game

Ian Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth, Executive Summary (May 2011). 52. Id. Chapter 10, paragraph 10.7. 53. Id., paragraph 10.10. 54. Id., paragraph 10.6. 55. Media Piracy in Emerging Economies at 16. Ronald Coase similarly pointed out the proper approach is to “compare the total social product yielded by ...different arrangements,” Ronald Coase, The Problem of Social Cost, 3 Journal of Law and Economics 1, 34 (1960). 56. Both charts are taken from this source: http://theunderstatement. com/post/3362645556/the-real-death-of-the-music-industry. 57. Available at: http://yarchive.net/macaulay/copyright.html.

The Fourth Revolution: The Global Race to Reinvent the State by John Micklethwait, Adrian Wooldridge

"World Economic Forum" Davos, Admiral Zheng, affirmative action, Affordable Care Act / Obamacare, Asian financial crisis, assortative mating, banking crisis, barriers to entry, battle of ideas, Berlin Wall, Bernie Madoff, bike sharing, Boris Johnson, Bretton Woods, British Empire, cashless society, central bank independence, Chelsea Manning, circulation of elites, classic study, Clayton Christensen, Corn Laws, corporate governance, credit crunch, crony capitalism, Deng Xiaoping, Detroit bankruptcy, disintermediation, Disneyland with the Death Penalty, driverless car, Edward Snowden, Etonian, failed state, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, income inequality, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, Khan Academy, Kickstarter, knowledge economy, Kodak vs Instagram, labor-force participation, laissez-faire capitalism, land reform, Les Trente Glorieuses, liberal capitalism, Martin Wolf, means of production, Michael Milken, minimum wage unemployment, mittelstand, mobile money, Mont Pelerin Society, Nelson Mandela, night-watchman state, Norman Macrae, obamacare, oil shale / tar sands, old age dependency ratio, open economy, Parag Khanna, Peace of Westphalia, pension reform, pensions crisis, personalized medicine, Peter Thiel, plutocrats, popular capitalism, profit maximization, public intellectual, rent control, rent-seeking, ride hailing / ride sharing, road to serfdom, Ronald Coase, Ronald Reagan, school choice, school vouchers, Shenzhen special economic zone , Silicon Valley, Skype, special economic zone, TED Talk, the long tail, three-martini lunch, too big to fail, total factor productivity, vertical integration, War on Poverty, Washington Consensus, Winter of Discontent, working-age population, zero-sum game

Oddly, he was employed there by an esoteric outfit called the Committee on Social Thought, but the real center of the counterrevolution against Keynesianism was the economics department. A stream of luminaries hacked away at the status quo: Frank Knight demonstrated that social reform was often counterproductive; Ronald Coase (another LSE import) and George Stigler argued that regulators were frequently captured by the people whom they regulated; Gary Becker invented the economics of human capital; James Buchanan and Gordon Tullock demonstrated that bureaucrats were motivated by the same profit-maximizing instincts as businesspeople.4 But nobody wielded the ax more vigorously than Friedman.

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So many of the things that the state does badly are ones where it is charged with pursuing impossible dreams. The more it fails to meet its impossible targets, the more it resorts to micromanagement to make up for its failures. Examining the problem of why so many government programs are either ineffective or counterproductive, one of the twentieth century’s greatest economists, Ronald Coase, put it this way: An important reason may be that government at the present time is so large that it has reached the stage of negative marginal productivity, which means that any additional function it takes on will probably result in more harm than good. . . . If a federal program were established to give financial assistance to Boy Scouts to enable them to help old ladies cross busy intersections, we could be sure that not all the money would go to Boy Scouts, that some of those they helped would be neither old nor ladies, that part of the program would be devoted to preventing old ladies from crossing busy intersections, and that many of them would be killed because they would now cross at places where, unsupervised, they were at least permitted to cross.

Bourgeois Dignity: Why Economics Can't Explain the Modern World by Deirdre N. McCloskey

"Friedman doctrine" OR "shareholder theory", Airbnb, Akira Okazaki, antiwork, behavioural economics, big-box store, Black Swan, book scanning, British Empire, business cycle, buy low sell high, Capital in the Twenty-First Century by Thomas Piketty, classic study, clean water, Columbian Exchange, conceptual framework, correlation does not imply causation, Costa Concordia, creative destruction, critique of consumerism, crony capitalism, dark matter, Dava Sobel, David Graeber, David Ricardo: comparative advantage, deindustrialization, demographic transition, Deng Xiaoping, do well by doing good, Donald Trump, double entry bookkeeping, electricity market, en.wikipedia.org, epigenetics, Erik Brynjolfsson, experimental economics, Ferguson, Missouri, food desert, Ford Model T, fundamental attribution error, Garrett Hardin, Georg Cantor, George Akerlof, George Gilder, germ theory of disease, Gini coefficient, God and Mammon, Great Leap Forward, greed is good, Gunnar Myrdal, Hans Rosling, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Hernando de Soto, immigration reform, income inequality, interchangeable parts, invention of agriculture, invention of writing, invisible hand, Isaac Newton, Islamic Golden Age, James Watt: steam engine, Jane Jacobs, John Harrison: Longitude, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Arrow, knowledge economy, labor-force participation, lake wobegon effect, land reform, liberation theology, lone genius, Lyft, Mahatma Gandhi, Mark Zuckerberg, market fundamentalism, means of production, middle-income trap, military-industrial complex, Naomi Klein, new economy, Nick Bostrom, North Sea oil, Occupy movement, open economy, out of africa, Pareto efficiency, Paul Samuelson, Pax Mongolica, Peace of Westphalia, peak oil, Peter Singer: altruism, Philip Mirowski, Pier Paolo Pasolini, pink-collar, plutocrats, positional goods, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, refrigerator car, rent control, rent-seeking, Republic of Letters, road to serfdom, Robert Gordon, Robert Shiller, Ronald Coase, Scientific racism, Scramble for Africa, Second Machine Age, secular stagnation, seminal paper, Simon Kuznets, Social Responsibility of Business Is to Increase Its Profits, spinning jenny, stakhanovite, Steve Jobs, tacit knowledge, TED Talk, the Cathedral and the Bazaar, The Chicago School, The Market for Lemons, the rule of 72, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, total factor productivity, Toyota Production System, Tragedy of the Commons, transaction costs, transatlantic slave trade, Tyler Cowen, Tyler Cowen: Great Stagnation, uber lyft, union organizing, very high income, wage slave, Washington Consensus, working poor, Yogi Berra

An embattled countersquad of economic thinkers, with quite varied politics, has in the twentieth century included Joseph Schumpeter, Ludwig von Mises, Friedrich Hayek, Thorstein Veblen, John R. Commons, John Maynard Keynes, John H. Clapham, Frank Knight, Eli Heckscher, Gunnar Myrdal, Antonio Gramsci, Luigi Einaudi, Joan Robinson, Kenneth Boulding, Ronald Coase, Paul Sweezy, Alexander Gerschenkron, John Kenneth Galbraith, George Shackle, Robert Heilbroner, Theodore Schultz, Albert Hirschman, Bert Hoselitz, Bruno Leoni, Noel Butlin, James Buchanan, Thomas Schelling, Robert Fogel, Amartya Sen, Elinor Ostrom, Israel Kirzner, and Vernon Smith. They practice what could be called (Adam) Smithian economics, or what has lately been called “humanomics.”

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And they are, conservatively measured, thirty times richer than their ancestors were in what was in 1800 one of the poorest countries in Europe.11 * Material growth in goods and services is not the only relevant sign of allocates the Great Enrichment. The word “enrichment” has a highly relevant secondary meaning of spiritual growth.12 As the economists Ronald Coase and Ning Wang put it in their peroration to How China Became Capitalist (2013), “When the markets for goods and the market for ideas are together in full swing, each supporting, augmenting, and strengthening the other, human creativity and happiness stand the best chance to prevail, and the material and spiritual civilizations march on firm ground, side by side.”13 Many of the clerisy on the left and on the right lament the mass character of modern society, agreeing for example with the leftish Australian economist Geoffrey Harcourt, who wrote in 1994 that trade-tested betterment has stunted “the Christian (and humanist) virtues of altruism, cooperation, tolerance, compassion.”

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As Montesquieu put it in 1748, “Other nations have made the interests of commerce yield to those of politics; the English, on the contrary, have ever made their political interests give way to those of commerce.”8 In truth not “ever,” but by 1748, often. The Chinese nowadays say that before 1978 the Communist cadres talked only of class war, but after 1978 they talked only of economic success. “‘Seeking truth from facts’ became the Party’s new guideline,” Ronald Coase and Ning Wang observe. “Getting rich became glorious.”9 The post-1978 mottoes of the Chinese Communist Party echo in a discordant key the empiricism, liberty, and dignity that was newly popular in northwestern Europe after about 1700. Europe went from talking only about God and hierarchy to talking only about the economy and national strength.

The Quest: Energy, Security, and the Remaking of the Modern World by Daniel Yergin

"Hurricane Katrina" Superdome, "World Economic Forum" Davos, accelerated depreciation, addicted to oil, Alan Greenspan, Albert Einstein, An Inconvenient Truth, Asian financial crisis, Ayatollah Khomeini, banking crisis, Berlin Wall, bioinformatics, book value, borderless world, BRICs, business climate, California energy crisis, carbon credits, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, clean tech, Climategate, Climatic Research Unit, colonial rule, Colonization of Mars, corporate governance, cuban missile crisis, data acquisition, decarbonisation, Deng Xiaoping, Dissolution of the Soviet Union, diversification, diversified portfolio, electricity market, Elon Musk, energy security, energy transition, Exxon Valdez, facts on the ground, Fall of the Berlin Wall, fear of failure, financial innovation, flex fuel, Ford Model T, geopolitical risk, global supply chain, global village, Great Leap Forward, Greenspan put, high net worth, high-speed rail, hydraulic fracturing, income inequality, index fund, informal economy, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), It's morning again in America, James Watt: steam engine, John Deuss, John von Neumann, Kenneth Rogoff, life extension, Long Term Capital Management, Malacca Straits, market design, means of production, megacity, megaproject, Menlo Park, Mikhail Gorbachev, military-industrial complex, Mohammed Bouazizi, mutually assured destruction, new economy, no-fly zone, Norman Macrae, North Sea oil, nuclear winter, off grid, oil rush, oil shale / tar sands, oil shock, oil-for-food scandal, Paul Samuelson, peak oil, Piper Alpha, price mechanism, purchasing power parity, rent-seeking, rising living standards, Robert Metcalfe, Robert Shiller, Robert Solow, rolling blackouts, Ronald Coase, Ronald Reagan, Sand Hill Road, Savings and loan crisis, seminal paper, shareholder value, Shenzhen special economic zone , Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, smart grid, smart meter, South China Sea, sovereign wealth fund, special economic zone, Stuxnet, Suez crisis 1956, technology bubble, the built environment, The Nature of the Firm, the new new thing, trade route, transaction costs, unemployed young men, University of East Anglia, uranium enrichment, vertical integration, William Langewiesche, Yom Kippur War

., Negotiating Climate Change: The Inside Story of the Rio Convention (Cambridge: Cambridge University Press, 1994), ch. 1, appendix (“dangerous anthropogenic interference”). 28 Interview with William Reilly. Chapter 24: Making a Market 1 Michael Sandel, “It’s Immoral to Buy the Right to Pollute,” op-ed, New York Times, December 17, 1997; interview with Fred Krupp. 2 Ronald Coase autobiography, Nobel Prize Web site (“underrate your abilities”). 3 Ronald Coase, “The Problem of Social Cost,” Journal of Law and Economics, vol. 3, (1960), pp. 1–44 (“externalities”). 4 John H. Dales, Pollution, Property & Prices: An Essay in Policy-making and Economics (Toronto: University of Toronto Press, 1968), ch. 6; David Montgomery, “Markets in Licenses and Efficient Pollution Control Programs,” Journal of Economic Theory 5, no. 3 (1972), pp. 395–418. 5 Richard Nixon, “Message to the Congress,” August 10, 1970 (“war on pollution”); Robert W.

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It goes back to what John Maynard Keynes called the “academic scribblers”—those who come to influence subsequent politicians and lawmakers and “practical men” in general—none of whom have any idea that they are channeling thinkers they had never heard of in the first place. THE “SCRIBBLER IN CHIEF” In this case, there was even a “scribbler in chief”—Ronald Coase. Yet Coase would have seemed a most unlikely candidate for this post. Born in 1910, he suffered as a child from “weakness” in his legs, thought to be polio, as a result of which he had initially been put into classes for physically and mentally handicapped children. He managed to learn to read only by studying the labels on bottles of medicine.

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Prescott recognized that Eizenstat would not budge, and reluctantly agreed to the central role of trading. With that, the Kyoto Protocol was effectively done and negotiated, the carpenters could continue, and the follow-on conference could move into the hall.27 And that it is how, in the little green room on the last day in Kyoto, “markets” became embedded in climate change. Ronald Coase’s theorem, and John Dales’s refining of it into a “market for pollution rights,” had become international policy. And, if one were looking for confirmation of Keynes’s theory about the impact of “scribblers” on people who had never heard of them, then Kyoto—including the deal made in the green room—was a prime example.

Mine!: How the Hidden Rules of Ownership Control Our Lives by Michael A. Heller, James Salzman

23andMe, Airbnb, behavioural economics, Berlin Wall, Big Tech, British Empire, Cass Sunstein, clean water, collaborative consumption, Cornelius Vanderbilt, coronavirus, COVID-19, CRISPR, crowdsourcing, Donald Trump, Downton Abbey, Elon Musk, endowment effect, estate planning, facts on the ground, Fall of the Berlin Wall, Firefox, Garrett Hardin, gig economy, Hernando de Soto, Internet of things, land tenure, Mason jar, Neil Armstrong, new economy, North Sea oil, offshore financial centre, oil rush, planetary scale, race to the bottom, recommendation engine, rent control, Richard Thaler, Ronald Coase, sharing economy, Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social distancing, South China Sea, sovereign wealth fund, stem cell, surveillance capitalism, TaskRabbit, The future is already here, Tim Cook: Apple, Tony Fadell, Tragedy of the Commons, you are the product, Zipcar

Today nuisance law is a mess—its tests are mushy and unpredictable. What’s reasonable to me may be an outrage to you. The question What is reasonable? has no objective, value-free answer. We seem caught between a rock and a hard place, between trees and sun. There’s an alternative law and economics approach, building on three insights by Ronald Coase, a Nobel Prize–winning economist. First, he noted, resource conflicts are always reciprocal—growing trees and installing solar panels are both ordinary uses; the problem arises only because they are next to each other. Asking if it’s unreasonable to plant trees that shade a neighbor’s solar panels misses the point that each use injures the other.

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British courts even developed: Sara Bronin, “Solar Rights,” Boston University Law Review 89 (2009): 1258. “would preclude development”: Hadacheck v. Sebastian, 239 U.S. 394 (1915). Nuisance law prohibits you from maintaining: Thomas Merrill, “Trespass, Nuisance, and the Costs of Determining Property Rights,” Journal of Legal Studies 14 (1985): 13–48. law and economics approach: Ronald Coase, “The Problem of Social Cost,” Journal of Law and Economics 3 (1960): 1–44. Asking these questions: The four-part framework we set out here was introduced in the canonical piece by Guido Calabresi and Douglas Melamed, “Property Rules, Liability Rules, and Inalienability: One View of the Cathedral,” Harvard Law Review 85 (1972): 1089–1128.

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, antiwork, AOL-Time Warner, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, Charles Babbage, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial engineering, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, Great Leap Forward, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land bank, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Neal Stephenson, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, proprietary trading, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, search costs, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

With new labour laws that strengthen worker rights, land reform that reduces the supply of cheap labour to factories (as more people stay in the countryside) or industrial policies that create high-skilled jobs, the choice for workers can be between low-wage jobs and higher-wage ones, rather than between low-wage jobs and no jobs. The Neoclassical school’s focus on exchange and consumption makes it neglect the sphere of production, which is a large – and the most important, according to many other schools of economics – part of our economy. Commenting on this deficiency, Ronald Coase, the Institutionalist economist, in his 1992 Nobel Economics Prize lecture, disparagingly described Neoclassical economics as a theory fit only for the analysis of ‘lone individuals exchanging nuts and berries on the edge of the forest’. The Marxist School One-sentence summary: Capitalism is a powerful vehicle for economic progress, but it will collapse, as private property ownership becomes an obstacle to further progress.

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Social institutions and the structure they create were everything; individuals were seen as being totally determined by the society they live in – ‘there is no such thing as an individual’, infamously declared Clarence Ayres, who dominated the (declining) Institutionalist school in the US in the early post-Second World War period. Transaction costs and institutions: the rise of the New Institutional Economics From the 1980s, a group of economists with Neoclassical and Austrian leanings – led by Douglass North, Ronald Coase and Oliver Williamson – started a new school of institutional economics, known as the New Institutional Economics (NIE).23 By calling themselves institutional economists, the New Institutionalist economists made it clear that they were not typical Neoclassical economists, who looked at only individuals but not the institutions that affect their behaviour.

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

"there is no alternative" (TINA), Adam Curtis, Alan Greenspan, Alvin Roth, An Inconvenient Truth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, bond market vigilante , bread and circuses, Bretton Woods, Brownian motion, business cycle, capital controls, carbon credits, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, democratizing finance, disinformation, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, Flash crash, full employment, George Akerlof, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Phillips curve, Ponzi scheme, Post-Keynesian economics, precariat, prediction markets, price mechanism, profit motive, public intellectual, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, savings glut, school choice, sealed-bid auction, search costs, Silicon Valley, South Sea Bubble, Steven Levy, subprime mortgage crisis, tail risk, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, tontine, too big to fail, transaction costs, Tyler Cowen, vertical integration, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

However, the drive to offshore outsource manufacturing in the advanced economies, which was mutually symbiotic with the frustration of capital controls, was clearly a function of neoliberal doctrines concerning the unbounded benefits of freedom of international trade, combined with neoliberal projects to reengineer the corporation as an arbitrary nexus of contractual obligations, rather than as a repository of production expertise. The MPS member Anne Krueger was brought into dialogue with her fellow member Ronald Coase, and the offspring was the flight of capital to countries such as China, India, and the Cayman Islands. The role of China as beneficiary, but simultaneously as part-time repudiator of the neoliberal globalized financial system, is a question that bedevils all concerned. While freedom of capital flows have not generally been stressed by neoliberals as salient causes of the crisis, they do manage to unite in opposition to capital controls as one reaction to the crisis

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Furthermore, professional economists are brought in to shill for this strategy, largely because they enjoy conflicts of interest in this area of a magnitude commensurate with those they have nurtured with the financial sector in general. The neoliberal genealogy of this approach is conventionally traced back to the MPS member Ronald Coase, who first proposed that pollution could be optimized by submitting it to a market calculus.22 The chequered history of traded carbon permits and their mind-numbing technicalities of the ways in which these markets were foisted upon well-meaning reformers has been explained in a number of excellent papers by Larry Lohmann, which deserve to be much better known among environmentalists and the left in general.

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Bernanke, Ben on asset purchase program Brunnermeier on as Chairman of Federal Reserve Bank Board on CRA on economic crisis as economic influence on EMH on Friedman on Great Moderation on Great Recession “hold-to-maturity” prices Kestenbaum on on Lehman failure Mirowski on on mortgage market on “Panic of 2007” paper pronounced absolution upon orthodox economics profession shadow banking on TARP testimony before FCIC Bernard, Andrew Bernstein, Jared Bertelsmann AG Besley, Tim Bhagwati, Jagdish Big Lie The Big Short (Lewis) The Birth of Biopolitics (Foucault) Black Rock Black-Scholes option pricing Blackstone Group Blackwater (Scahill) Blanchard, Olivier Blinder, Alan Bloomberg, Michael Bockman, Johanna, Markets in the Name of Socialism Body Alteration Boettke, Peter Bookstaber, Richard Bootle, Roger Born, Brooksley Boskin, Michael Bradley Foundation “Break the Glass: Bank Recapitalization Plan” (Swagel) Brenner, Robert Bretton Woods Bristol University British Academy British National Health Service British Royal Society Brookings Institution Brooks, David Brown, Gordon Brown, Wendy Brunnermeier, Markus Buchanan, James Buiter, Willem Bulow, Jeremy Bush, George Business Week Buycott C Calabria, Mark Caldwell, Bruce Calomiris, Charles Calvo, Guillermo Cambridge University Cameron, David Campbell, John Capitalism and Freedom (Friedman) Carbon emission permits Cassano, Joseph Cassidy, John Cato Institute CDS (Credit Default Swap) Center for Audit Quality Center for Market Processes at GMU Center for the Dissemination of Economic Information CETUSA (Council for Educational Travel in the USA) CFPB (Consumer Financial Protection Bureau) Change.org Chari, V. V. Charles G. Koch Charitable Foundation Check ’n’ Go Chicago Law School Chicago Mercantile Exchange Chicago School, China Christian Scientists Citigroup Clarida, Richard Clark, Greg Class denial Clemson Clinton, Bill Clower, Robert Coase, Ronald Coase Theorem Cochrane, John CoCo bonds Coffee Colander, David Colbert, Stephen The Colbert Report (TV show) Cold War Columbia University Comitato Addiopizzo Commodities Corporation Commons, John Community Reinvestment Act (1977) Competitive Enterprise Institute Complexity Conflicts of interest in economics Congress Congressional Budget Office Constant, Benjamin The Constitution of Liberty (Hayek) Consumer, Credit and Neoliberalism (Payne) Consumer Financial Protection Bureau (CFPB) Cooper, Melinda Corporate Warriors (Singer) Council for Educational Travel in the USA (CETUSA) Council of Economic Advisors Council of Trent Council on Foreign Relations Countrywide Cowen, Tyler Cox, Christopher Craigslist Cramton, Peter, “Credit Scores,” Credit Suisse Crisis as intellectual disarray Crooked Timber (blog) Crouch, Colin Cuomo, Andrew Curtis, Adam D “Dahlem report,” Daly, Herman Dark Pools (Patterson) Darwinism Davidson, Paul Davidson, Peter Davies, Will Davis, Jared D.C.

With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough by Peter Barnes

adjacent possible, Alfred Russel Wallace, banks create money, basic income, Buckminster Fuller, carbon tax, collective bargaining, computerized trading, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, diversified portfolio, driverless car, en.wikipedia.org, Fractional reserve banking, full employment, Glass-Steagall Act, hydraulic fracturing, income inequality, It's morning again in America, Jaron Lanier, Jevons paradox, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, land reform, Mark Zuckerberg, Money creation, Network effects, oil shale / tar sands, Paul Samuelson, power law, profit maximization, quantitative easing, rent-seeking, Ronald Coase, Ronald Reagan, Silicon Valley, sovereign wealth fund, Stuart Kauffman, the map is not the territory, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Upton Sinclair, Vilfredo Pareto, wealth creators, winner-take-all economy

If a declining quantity of pollution rights were issued and farmers could trade them, Dales argued, farmers themselves would find the cheapest ways to cut their pollution. Economists, if not farmers, picked up the idea and started applying it, conceptually, to other forms of pollution. In doing this, they were influenced not just by Dales but also by Nobel Prize—winning economist Ronald Coase, who in an oft-quoted paper, “The Problem of Social Cost,” argued that property rights could solve the problem of externalities without government regulation.2 (Coase was part of the University of Chicago school of thought, which holds that markets do almost everything better than government.) In 1990, the idea made its way into national legislation.

Six Degrees: The Science of a Connected Age by Duncan J. Watts

AOL-Time Warner, Berlin Wall, Bretton Woods, business process, corporate governance, Drosophila, Erdős number, experimental subject, fixed income, Frank Gehry, Geoffrey West, Santa Fe Institute, independent contractor, industrial cluster, invisible hand, it's over 9,000, Long Term Capital Management, market bubble, Milgram experiment, MITM: man-in-the-middle, Murray Gell-Mann, Network effects, new economy, Norbert Wiener, PalmPilot, Paul Erdős, peer-to-peer, power law, public intellectual, rolodex, Ronald Coase, Savings and loan crisis, scientific worldview, Silicon Valley, social contagion, social distancing, Stuart Kauffman, supply-chain management, The Nature of the Firm, the strength of weak ties, The Wealth of Nations by Adam Smith, Toyota Production System, Tragedy of the Commons, transaction costs, transcontinental railway, vertical integration, Vilfredo Pareto, Y2K

To cut a (very) long story short, the most generally agreed-upon economic theory of industrial organization essentially divides the world between hierarchies and markets. Firms, it claims, exist because markets in the real world suffer from a set of imperfections that the Nobel Prize–winning economist Ronald Coase called transaction costs. If everyone could discover, draw up, and enforce market-based contracts with everyone else (if we could all be independent contractors, for example), then the immense flexibility of market forces would effectively eliminate the need for firms entirely. But in the real world, as we have already seen in a number of contexts, information is costly to discover and hard to process.

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The Wealth of Nations (University of Chicago Press, Chicago, 1976). A precursor to Coase’s theory of transaction costs was Frank Knight’s claim that firms exist to reduce uncertainty: Knight, F. H. Risk, Uncertainty, and Profit (London School of Economics and Political Science, London, 1933). And Ronald Coase’s original argument of transaction costs as the basis for the firm is explicated in Coase, R. The nature of the firm. Economica, n.s., 4 (November 1937). Several decades later, Coase is still trying to get his ideas accepted by mainstream economics. His latest attempt is Coase, R. The Nature of the Firm (Oxford University Press, Oxford, 1991).

Seasteading: How Floating Nations Will Restore the Environment, Enrich the Poor, Cure the Sick, and Liberate Humanity From Politicians by Joe Quirk, Patri Friedman

3D printing, access to a mobile phone, addicted to oil, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, barriers to entry, biodiversity loss, Biosphere 2, Branko Milanovic, British Empire, Buckminster Fuller, Burning Man, business climate, business cycle, business process, California gold rush, Celtic Tiger, Charles Lindbergh, clean water, Colonization of Mars, Dean Kamen, Deng Xiaoping, drone strike, Elon Musk, en.wikipedia.org, export processing zone, failed state, financial intermediation, Garrett Hardin, Gini coefficient, Great Leap Forward, happiness index / gross national happiness, income inequality, intentional community, Intergovernmental Panel on Climate Change (IPCC), joint-stock company, joint-stock limited liability company, Kickstarter, low skilled workers, Machinery of Freedom by David Friedman, Mark Zuckerberg, megacity, megaproject, minimum wage unemployment, Neil Armstrong, Network effects, new economy, obamacare, ocean acidification, off-the-grid, offshore financial centre, One Laptop per Child (OLPC), open borders, Patri Friedman, paypal mafia, peak oil, Peter H. Diamandis: Planetary Resources, Peter Thiel, price stability, profit motive, radical decentralization, Ronald Coase, Ronald Reagan, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, special economic zone, standardized shipping container, stem cell, TechCrunch disrupt, TED Talk, trade route, Tragedy of the Commons, UNCLOS, UNCLOS, undersea cable, young professional

The Ming dynasty fortified the Great Wall to keep out foreigners, created a new capital known as “the Forbidden City” to keep out its own people, and ordered that the most advanced fleet of ships in the world be burned, enforcing a self-serving siege mentality that cemented Chinese stagnation. By 1961, tens of millions had starved to death. How did China reverse this trend and become an economic powerhouse? Nobel laureate Ronald Coase and Ning Wang, in their essay “How China Became Capitalist,” suggest that once the monopoly held by central planners was broken, the solution arose from a vast market of competitive governance: “When China’s 32 provinces, 282 municipalities, 2,862 counties, 19,522 towns, and 14,677 villages threw themselves into an open competition for investment and for good ideas of developing the local economy, China became a gigantic laboratory where many different economic experiments were tried simultaneously.

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Turchin, “Why Europe Is Not China,” September 29, 2012, https://evolution-institute.org/blog/why-europe-is-not-china. “Any man of genius is paralyzed”: D. S. Landes, The Wealth and Poverty of Nations: Why Some Are So Rich and Some So Poor (New York: W. W. Norton, 1998), 342. “When China’s 32 provinces, 282 municipalities”: Ronald Coase and Ning Wang, “Policy Report: How China Became Capitalist,” on the website of the Cato Institute, February 15, 2013, www.cato.org/policy-report/januaryfebruary-2013/how-china-became-capitalist. Chapter 10. FLOW STATES: How to Double Global Wealth Trade carried by sea has quadrupled since 1970: International Maritime Organization, International Shipping, Carrier of World Trade, background paper, 2005.

Smarter Than You Think: How Technology Is Changing Our Minds for the Better by Clive Thompson

4chan, A Declaration of the Independence of Cyberspace, Andy Carvin, augmented reality, barriers to entry, behavioural economics, Benjamin Mako Hill, butterfly effect, citizen journalism, Claude Shannon: information theory, compensation consultant, conceptual framework, context collapse, corporate governance, crowdsourcing, Deng Xiaoping, digital rights, discovery of penicillin, disruptive innovation, Douglas Engelbart, Douglas Engelbart, drone strike, Edward Glaeser, Edward Thorp, en.wikipedia.org, Evgeny Morozov, experimental subject, Filter Bubble, folksonomy, Freestyle chess, Galaxy Zoo, Google Earth, Google Glasses, Gunnar Myrdal, guns versus butter model, Henri Poincaré, hindsight bias, hive mind, Howard Rheingold, Ian Bogost, information retrieval, iterative process, James Bridle, jimmy wales, John Perry Barlow, Kevin Kelly, Khan Academy, knowledge worker, language acquisition, lifelogging, lolcat, Mark Zuckerberg, Marshall McLuhan, Menlo Park, Netflix Prize, Nicholas Carr, Panopticon Jeremy Bentham, patent troll, pattern recognition, pre–internet, public intellectual, Richard Feynman, Ronald Coase, Ronald Reagan, Rubik’s Cube, sentiment analysis, Silicon Valley, Skype, Snapchat, Socratic dialogue, spaced repetition, superconnector, telepresence, telepresence robot, The future is already here, The Nature of the Firm, the scientific method, the strength of weak ties, The Wisdom of Crowds, theory of mind, transaction costs, Twitter Arab Spring, Two Sigma, Vannevar Bush, Watson beat the top human players on Jeopardy!, WikiLeaks, X Prize, éminence grise

To organize a widespread group around a task in the pre-Internet period, you needed a central office, staff devoted to coordinating efforts, expensive forms of long-distance communication (telegraphs, phone lines, trains), somebody to buy pencils and paper clips and to manage inventory. These are known as transaction costs, and they’re huge. But there was no way around them. As Shirky points out, following the analysis of economist Ronald Coase’s 1937 article “The Nature of the Firm,” you either paid the heavy costs of organizing or you didn’t organize at all and got nothing done. And so for centuries, people collaborated massively only on tasks that would make enough money to afford those costs. You could work together globally at building and selling profitable cars (like the Ford Motor Company) or running a world religion (like the Catholic Church), or even running a big nonprofit that could solicit mass donations (like UNICEF).

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—they are engaging in the same collective decision making that was previously available only to well-funded organizations. This, again, is basic behavioral economics: If you make it easier for people to do something, they’ll do more of it. Finding your way around Skyrim or resolving conundrums like “Which movie are we seeing tonight?” are problems that traditionally couldn’t afford Ronald Coase–style transactional costs—they fell “under the Coasean floor,” as Shirky puts it. But things have decisively changed. “Because we can now reach beneath the Coasean floor,” he writes, “we can have groups that operate with a birthday party’s informality and a multinational’s scope. . . . Now that group-forming has gone from hard to ridiculously easy, we are seeing an explosion of experiments with new groups and new kinds of groups.”

Green Philosophy: How to Think Seriously About the Planet by Roger Scruton

An Inconvenient Truth, barriers to entry, carbon credits, carbon footprint, carbon tax, Cass Sunstein, Climategate, Climatic Research Unit, corporate social responsibility, demand response, Easter island, edge city, endowment effect, energy security, Exxon Valdez, failed state, food miles, garden city movement, Garrett Hardin, ghettoisation, happiness index / gross national happiness, Herbert Marcuse, hobby farmer, Howard Zinn, income inequality, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jane Jacobs, joint-stock company, joint-stock limited liability company, Kenneth Arrow, knowledge economy, Lewis Mumford, market friction, Martin Wolf, moral hazard, Naomi Klein, New Urbanism, Peter Singer: altruism, phenotype, precautionary principle, rent-seeking, Robert Solow, Ronald Coase, Sam Peltzman, Silicon Valley, Simon Kuznets, tacit knowledge, the built environment, The Death and Life of Great American Cities, the market place, Thomas Malthus, Tragedy of the Commons, transaction costs, University of East Anglia, urban planning, urban sprawl, Vilfredo Pareto, women in the workforce, zero-sum game

This was how the notorious case of the Exxon-Valdez oil spill on the Alaskan coast was resolved, with Exxon compelled to assume the costs of restoring a precious habitat to its previous condition.172 The comparable case of the 2010 BP spill in the Gulf of Mexico was dealt with similarly, with BP admitting liability, and preparing to meet costs that may very well exhaust its reserves. The contrast with the nuclear disasters in the Soviet Union, in which the state neither assumed liability nor even admitted that the disasters had occurred, is striking. In a famous argument the economist Ronald Coase suggested that damages in tort and contract provide the feedback that, in the absence of transaction costs, overcomes of its own accord the problem posed by externalities.173 Coase was opposing the widely accepted view of Arthur Cecil Pigou, that state action is necessary to ensure that the costs of market transactions are internalized by those who create them.174 Pigou’s suggestion was that pollution and similar externalities should be taxed, so restoring the incentive to assume the costs of market transactions along with the benefits.

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Stockport Metropolitan Borough Council, [2003] UKHL 61, qualifying the rule in Rylands v. Fletcher. 171 See George L. Priest, ‘The Invention of Enterprise Liability: A Critical History of the Intellectual Foundations of Modern Tort Law’, Journal of Legal Studies, 14.3, December 1985, pp. 461–528. 172 DeMuth and Ginsburg, op. cit., p. 25. 173 See especially Ronald Coase, ‘The Problem of Social Cost’, Journal of Law and Economics, 3, October 1960. 174 A. C. Pigou, The Economics of Welfare, London, 1920, part 2. Pigou’s solution was accepted by Garrett Hardin, in his original response to ‘the tragedy of the commons’. Later he became more ‘Coasey’. 175 Coase’s Theorem is also insensitive to the so-called ‘endowment effect’, according to which the receipt of property is in itself a value to the recipient.

Hacking Capitalism by Söderberg, Johan; Söderberg, Johan;

Abraham Maslow, air gap, Alvin Toffler, AOL-Time Warner, barriers to entry, Charles Babbage, collective bargaining, commoditize, computer age, corporate governance, creative destruction, Debian, deindustrialization, delayed gratification, Dennis Ritchie, deskilling, digital capitalism, digital divide, Donald Davies, Eben Moglen, Erik Brynjolfsson, Firefox, Free Software Foundation, frictionless, full employment, Garrett Hardin, Hacker Conference 1984, Hacker Ethic, Herbert Marcuse, Howard Rheingold, IBM and the Holocaust, informal economy, interchangeable parts, invention of radio, invention of the telephone, Jacquard loom, James Watt: steam engine, jimmy wales, John Markoff, John von Neumann, Joseph Schumpeter, Joseph-Marie Jacquard, Ken Thompson, knowledge economy, knowledge worker, labour market flexibility, late capitalism, Lewis Mumford, liberal capitalism, Marshall McLuhan, means of production, Mitch Kapor, mutually assured destruction, new economy, Norbert Wiener, On the Economy of Machinery and Manufactures, packet switching, patent troll, peer-to-peer, peer-to-peer model, planned obsolescence, post scarcity, post-Fordism, post-industrial society, price mechanism, Productivity paradox, profit motive, RFID, Richard Florida, Richard Stallman, Ronald Coase, safety bicycle, Search for Extraterrestrial Intelligence, SETI@home, Silicon Valley, Slavoj Žižek, software patent, Steven Levy, Stewart Brand, subscription business, tech worker, technological determinism, technoutopianism, the Cathedral and the Bazaar, The Nature of the Firm, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, Thomas Davenport, Thorstein Veblen, tragedy of the anticommons, Tragedy of the Commons, transaction costs, Whole Earth Catalog, Yochai Benkler

The advantage of FOSS businesses is partly that they are closely allied with free market forces, partly that they are integrated into a network that includes the hacker community. In recent years, the law professor Yochai Benkler has come forward as the chief interpreter of the FOSS development model in terms of a networked mode of production. In his view the network is distinct from both the market and firm. Benkler’s argument builds on the theories of the economist Ronald Coase. In 1937, Coase put his finger on the fact that the agents operating on the free market were firms. The existence of firms contradicts the market principle since the firm has internally dissolved the price mechanism. It runs counter to the assumption in economic theory that markets are prevalent because they are the most efficient method to organise economic interactions.

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The idea that networks is a novel mode of organising businesses and that it is distinct from markets has been in vogue since the 1990s. According to the argument, networks are supposed to be superior for sharing tacit know-how, in adapting to a volatile environment, and for perpetual learning processes.8 Unfortunately, Yochai Benkler’s decision to follow Ronald Coase and confine himself to an analysis of transaction costs puts a limitation on his thinking. The observations on networks ought instead to be framed in the debate about markets versus central planning that was waged between neoclassical and socialist economists in the first half of the twentieth century.

The Power Law: Venture Capital and the Making of the New Future by Sebastian Mallaby

"Susan Fowler" uber, 23andMe, 90 percent rule, Adam Neumann (WeWork), adjacent possible, Airbnb, Apple II, barriers to entry, Ben Horowitz, Benchmark Capital, Big Tech, bike sharing, Black Lives Matter, Blitzscaling, Bob Noyce, book value, business process, charter city, Chuck Templeton: OpenTable:, Clayton Christensen, clean tech, cloud computing, cognitive bias, collapse of Lehman Brothers, Colonization of Mars, computer vision, coronavirus, corporate governance, COVID-19, cryptocurrency, deal flow, Didi Chuxing, digital map, discounted cash flows, disruptive innovation, Donald Trump, Douglas Engelbart, driverless car, Dutch auction, Dynabook, Elon Musk, Fairchild Semiconductor, fake news, family office, financial engineering, future of work, game design, George Gilder, Greyball, guns versus butter model, Hacker Ethic, Henry Singleton, hiring and firing, Hyperloop, income inequality, industrial cluster, intangible asset, iterative process, Jeff Bezos, John Markoff, junk bonds, Kickstarter, knowledge economy, lateral thinking, liberal capitalism, Louis Pasteur, low interest rates, Lyft, Marc Andreessen, Mark Zuckerberg, market bubble, Marshall McLuhan, Mary Meeker, Masayoshi Son, Max Levchin, Metcalfe’s law, Michael Milken, microdosing, military-industrial complex, Mitch Kapor, mortgage debt, move fast and break things, Network effects, oil shock, PalmPilot, pattern recognition, Paul Graham, paypal mafia, Peter Thiel, plant based meat, plutocrats, power law, pre–internet, price mechanism, price stability, proprietary trading, prudent man rule, quantitative easing, radical decentralization, Recombinant DNA, remote working, ride hailing / ride sharing, risk tolerance, risk/return, Robert Metcalfe, ROLM, rolodex, Ronald Coase, Salesforce, Sam Altman, Sand Hill Road, self-driving car, shareholder value, side project, Silicon Valley, Silicon Valley startup, Skype, smart grid, SoftBank, software is eating the world, sovereign wealth fund, Startup school, Steve Jobs, Steve Wozniak, Steven Levy, super pumped, superconnector, survivorship bias, tech worker, Teledyne, the long tail, the new new thing, the strength of weak ties, TikTok, Travis Kalanick, two and twenty, Uber and Lyft, Uber for X, uber lyft, urban decay, UUNET, vertical integration, Vilfredo Pareto, Vision Fund, wealth creators, WeWork, William Shockley: the traitorous eight, Y Combinator, Zenefits

Next-generation cars did not come from GM and Volkswagen; they came from another Musk company, Tesla. “I can’t think of a single, major innovation coming from experts in the last thirty, forty years,” Khosla exclaims. “Think about it, isn’t that stunning?” If the future is best discovered by means of maverick moon shots, another insight follows. Thanks to the work of the Nobel laureate Ronald Coase, the economics profession has long recognized two great institutions of modern capitalism: markets, which coordinate activity via price signals and arm’s-length contracts; and corporations, which do so by assembling large teams led by top-down managers. But economists have focused less on the middle ground that Khosla inhabits: the venture-capital networks that lie somewhere between markets and corporations.

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Because of this periodic submission to the discipline of price signals, venture capitalists are good at recognizing failure and good at doubling down on early indicators of success. Their blend of corporate strategizing and respect for the market represents a third great institution of modern capitalism, to be added to the two that Ronald Coase emphasized. The underappreciated significance of venture-capital networks has become especially glaring in the past few years as the industry has expanded in three dimensions. First, it has spread beyond its historical stronghold in Silicon Valley, building thriving outposts in Asia, Israel, and Europe as well as in major U.S. cities.[34] Second, the industry has spread sectorially, colonizing new industries as venture-backed technologies reach ever more widely, touching everything from cars to the hotel business.

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Lately, however, the more pressing question is why some regions within countries leave other regions so far behind as innovation hubs and generators of prosperity. It has long been obvious that one area can outperform others, as Silicon Valley has done; but the rule of law and price stability cannot explain why the Valley is more innovative than Montana or Michigan.[39] To understand the Valley’s secret, we need to update Ronald Coase’s framework: we must study venture-capital networks as deeply as we study markets and corporations. In a world of intensifying geoeconomic competition, the countries with the most creative innovation hubs are likely to be the most prosperous and ultimately the most powerful. In a world of intensifying income inequality, the countries that can foster greater regional diversity in the locations of those hubs will be happier and more stable.

State-Building: Governance and World Order in the 21st Century by Francis Fukuyama

Asian financial crisis, behavioural economics, Berlin Wall, Bretton Woods, centre right, corporate governance, demand response, Doha Development Round, European colonialism, failed state, Fall of the Berlin Wall, Francis Fukuyama: the end of history, George Akerlof, Hernando de Soto, information asymmetry, liberal world order, Live Aid, Nick Leeson, Pareto efficiency, Potemkin village, precautionary principle, price stability, principal–agent problem, rent-seeking, road to serfdom, Ronald Coase, structural adjustment programs, Suez crisis 1956, tacit knowledge, technology bubble, The Market for Lemons, The Nature of the Firm, transaction costs, vertical integration, Washington Consensus, Westphalian system

Some economists, recognizing the limitations of their approach, are now returning to these earlier theories and trying to restate them in terms of their own methodological assumptions. They are in effect reinventing a forty- to fifty-year-old wheel, which they were responsible for forgetting how to use. Institutional Economics and the Theory of Organizations Economic theories about organizations1 begin with Ronald Coase’s (1937) theory of the firm, which established the basic For overviews of the intellectual history of the economists’s approach to organizational theory, see Furubotn and Richter (1997, chapter 8) and Moe (1984). 1 46 state-building distinction between markets and hierarchies and argued that certain resource allocation decisions were made within hierarchical organizations because of a need to economize on transaction costs.

The Code of Capital: How the Law Creates Wealth and Inequality by Katharina Pistor

Andrei Shleifer, Asian financial crisis, asset-backed security, barriers to entry, Bear Stearns, Bernie Madoff, Big Tech, bilateral investment treaty, bitcoin, blockchain, Bretton Woods, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, colonial rule, conceptual framework, Corn Laws, corporate governance, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, digital rights, Donald Trump, double helix, driverless car, Edward Glaeser, Ethereum, ethereum blockchain, facts on the ground, financial innovation, financial intermediation, fixed income, Francis Fukuyama: the end of history, full employment, global reserve currency, Gregor Mendel, Hernando de Soto, income inequality, initial coin offering, intangible asset, investor state dispute settlement, invisible hand, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, land reform, land tenure, London Interbank Offered Rate, Long Term Capital Management, means of production, money market fund, moral hazard, offshore financial centre, phenotype, Ponzi scheme, power law, price mechanism, price stability, profit maximization, railway mania, regulatory arbitrage, reserve currency, Robert Solow, Ronald Coase, Satoshi Nakamoto, secular stagnation, self-driving car, seminal paper, shareholder value, Silicon Valley, smart contracts, software patent, sovereign wealth fund, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, trade route, Tragedy of the Commons, transaction costs, Wolfgang Streeck

Made in Law The account of how land has been coded as capital offered here differs from conventional accounts that portray property rights as the quintessential institution for economic prosperity.75 For economists, the major purpose of property rights is to align the interests of the owner with the most cost-efficient use of the asset. Optimizing the use of assets was what animated Ronald Coase’s famous example of two neighboring farmers, one herding cows, the other trying to grow crops, which of course the cows eat or trample over.76 There are many solutions to this problem of conflicting interests; one of the two farmers might build a fence, move the crops elsewhere, start herding cows, or the other might pay for damages or switch from cattle to crops himself.

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Nick Szabo, a prominent voice in the world of cryptocurrency, who may be best known for his work on digital contracts, explored how to create property rights in the digital space.21 He explained that property rights are “a defined space, whether a namespace or physical space,” that marks the scope of control rights an owner can exercise. Once the initial allocation is coded in digits, there will no longer be any doubt as to who owns what, because all claims will be recorded on tamper-proof digital code. This demonstrates how important the initial allocation of property rights is, a point Ronald Coase made half a century ago.22 Szabo restates Coase’s insight by emphasizing that it is critical to “agree on simple attributes of or rights to control subdivisions of that space.”23 Only after this initial allocation has been made can transactions occur and blockchain (or similar) technology be used to verify each subsequent transaction.

Adam Smith: Father of Economics by Jesse Norman

active measures, Alan Greenspan, Andrei Shleifer, balance sheet recession, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Black Swan, Branko Milanovic, Bretton Woods, British Empire, Broken windows theory, business cycle, business process, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, centre right, cognitive dissonance, collateralized debt obligation, colonial exploitation, Corn Laws, Cornelius Vanderbilt, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, David Ricardo: comparative advantage, deindustrialization, electricity market, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Fellow of the Royal Society, financial engineering, financial intermediation, frictionless, frictionless market, future of work, George Akerlof, Glass-Steagall Act, Hyman Minsky, income inequality, incomplete markets, information asymmetry, intangible asset, invention of the telescope, invisible hand, Isaac Newton, Jean Tirole, John Nash: game theory, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, lateral thinking, loss aversion, low interest rates, market bubble, market fundamentalism, Martin Wolf, means of production, mirror neurons, money market fund, Mont Pelerin Society, moral hazard, moral panic, Naomi Klein, negative equity, Network effects, new economy, non-tariff barriers, Northern Rock, Pareto efficiency, Paul Samuelson, Peter Thiel, Philip Mirowski, price mechanism, principal–agent problem, profit maximization, public intellectual, purchasing power parity, random walk, rent-seeking, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, scientific worldview, seigniorage, Socratic dialogue, South Sea Bubble, special economic zone, speech recognition, Steven Pinker, The Chicago School, The Myth of the Rational Market, The Nature of the Firm, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Malthus, Thorstein Veblen, time value of money, transaction costs, transfer pricing, Veblen good, Vilfredo Pareto, Washington Consensus, working poor, zero-sum game

“I imagine,” said [Smith], “that you have got that fine story out of some of the magazines. If any thing can be lower than the Reviews, they are so… As to Mr. Burke, he is a worthy honest man. He married an accomplished girl, without a shilling of fortune.”’ Smith as the hinge of economic modernity: compare Ronald Coase in his bicentennial lecture: ‘What Adam Smith did was to give economics its shape… From one point of view the last two hundred years of economics have been little more than a vast “mopping up operation” in which economists have filled in the gaps, corrected the errors and refined the analysis of The Wealth of Nations’.

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Minsky in John Maynard Keynes, McGraw-Hill [1975] 2008 Different definitions of economics: as ‘the science which studies human behaviour as a relationship between given ends and scarce means’, see Lionel Robbins, An Essay on the Nature and Significance of Economic Science, Macmillan 1932; as the study of incentives, see Steve Levitt and Stephen Dubner, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, HarperCollins 2005 Centrality of institutions to economic life: for the firm as economic institution, see Ronald Coase, ‘The Nature of the Firm’, Economica, 4.16, 1937. More widely, see e.g. Douglass North, ‘Institutions’, Journal of Economic Perspectives, 5.1, Winter 1991, which includes North’s own sketch of a stadial history of market evolution, and analysis of non-evolution. For an argument that economic ideology has corrosive effects on institutions, see Stephen Marglin, The Dismal Science: How Thinking Like an Economist Undermines Community, Harvard University Press 2008 Smith and Marx: see e.g.

How Markets Fail: The Logic of Economic Calamities by John Cassidy

Abraham Wald, Alan Greenspan, Albert Einstein, An Inconvenient Truth, Andrei Shleifer, anti-communist, AOL-Time Warner, asset allocation, asset-backed security, availability heuristic, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black-Scholes formula, Blythe Masters, book value, Bretton Woods, British Empire, business cycle, capital asset pricing model, carbon tax, Carl Icahn, centralized clearinghouse, collateralized debt obligation, Columbine, conceptual framework, Corn Laws, corporate raider, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Daniel Kahneman / Amos Tversky, debt deflation, different worldview, diversification, Elliott wave, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, Garrett Hardin, George Akerlof, Glass-Steagall Act, global supply chain, Gunnar Myrdal, Haight Ashbury, hiring and firing, Hyman Minsky, income per capita, incomplete markets, index fund, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Nash: game theory, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, laissez-faire capitalism, Landlord’s Game, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, mental accounting, Mikhail Gorbachev, military-industrial complex, Minsky moment, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, Naomi Klein, negative equity, Network effects, Nick Leeson, Nixon triggered the end of the Bretton Woods system, Northern Rock, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, Ponzi scheme, precautionary principle, price discrimination, price stability, principal–agent problem, profit maximization, proprietary trading, quantitative trading / quantitative finance, race to the bottom, Ralph Nader, RAND corporation, random walk, Renaissance Technologies, rent control, Richard Thaler, risk tolerance, risk-adjusted returns, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, shareholder value, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical model, subprime mortgage crisis, tail risk, Tax Reform Act of 1986, technology bubble, The Chicago School, The Great Moderation, The Market for Lemons, The Wealth of Nations by Adam Smith, too big to fail, Tragedy of the Commons, transaction costs, Two Sigma, unorthodox policies, value at risk, Vanguard fund, Vilfredo Pareto, wealth creators, zero-sum game

Thereafter, he retreated into pure theory, publishing articles and books at regular intervals, but largely withholding public comment on the progress of the Keynesian revolution. In 1943, Pigou gave up his university professorship, retaining his fellowship at King’s. Thereafter, he retreated to his rooms and books, emerging rarely. In 1960, a year after Pigou’s death, Ronald Coase, a conservatively inclined British economist who had moved to the University of Chicago, questioned whether the presence of spillovers justified government intervention. In a paper entitled “The Problem of Social Cost,” Coase pointed out that, in most cases, the problem came down to an issue of conflicting property rights.

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Citigroup Associated First Capital purchased by compensation of CEOs of credit default swaps of dereguation and disaster myopia of Federal Reserve and government safety net for reduction in assets of risk-management system at shadow banking system and suprime mortgage securities issued by Citron, Bob City College classical economics new Clayton Antitrust Act (1914) climate change Clinton, Bill CLSA Emerging Markets CNBC television network Coase, Ronald Coase theorem Cobden, Richard Coca-Cola Corporation Cohen, Jonathan collateralized debt obligations (CDOs) collateralized mortgage obligations (CMOs) Columbia Broadcasting System (CBS) Columbia University Earth Institute Columbine massacre Columbus, Christopher Commerce Department, U.S.

The Master Switch: The Rise and Fall of Information Empires by Tim Wu

accounting loophole / creative accounting, Alfred Russel Wallace, Andy Rubin, AOL-Time Warner, Apple II, barriers to entry, British Empire, Burning Man, business cycle, Cass Sunstein, Clayton Christensen, commoditize, corporate raider, creative destruction, disinformation, disruptive innovation, don't be evil, Douglas Engelbart, Douglas Engelbart, Eben Moglen, Ford Model T, Howard Rheingold, Hush-A-Phone, informal economy, intermodal, Internet Archive, invention of movable type, invention of the telephone, invisible hand, Jane Jacobs, John Markoff, Joseph Schumpeter, Menlo Park, open economy, packet switching, PageRank, profit motive, radical decentralization, road to serfdom, Robert Bork, Robert Metcalfe, Ronald Coase, scientific management, search costs, seminal paper, sexual politics, shareholder value, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Telecommunications Act of 1996, The Chicago School, The Death and Life of Great American Cities, the long tail, the market place, The Wisdom of Crowds, too big to fail, Upton Sinclair, urban planning, vertical integration, Yochai Benkler, zero-sum game

By combining related functions, the integrated entity can prevent rivals from depriving it of some essential component, as for instance when the Hollywood studios acquired movie theaters to prevent theater owners from shutting out studio products. Interesting, but beyond the scope of this book, is whether this defense function suggests an alternative explanation to the prevailing theory of the firm as shaped by the relative efficiency of internal and external contracting, which the economist Ronald Coase articulated in 1937. † Technically, this is achieved by placing a “robots.txt” file on the root directory of the Web server in question. Google, for its part, could ignore the robots.txt files; in the United States that would foreground an unsettled copyright question, namely, whether expressly involuntary indexing is copyright infringement

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The issues surrounding the Zenith decision and the subsequent formation of the FRC in 1927 are highly contested and subject to numerous interpretations. In contemporary accounts the Radio Act was promoted as a beneficent government response to industry “chaos”; the first to challenge this view, as a normative matter, was the economist Ronald Coase. R. H. Coase, Journal of Law and Economics vol. 2 (October 1959), 1–40. As a descriptive matter, the communications historian Robert McChesney’s groundbreaking 1993 book Telecommunications, Mass Media, and Democracy was among the first to present a highly critical history of the 1927 act, General Order 40, and all that followed—presenting the act as essentially a triumph of large corporate broadcasters.

The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas by Janek Wasserman

"World Economic Forum" Davos, Abraham Wald, Albert Einstein, American Legislative Exchange Council, anti-communist, battle of ideas, Berlin Wall, Bretton Woods, business cycle, collective bargaining, Corn Laws, correlation does not imply causation, creative destruction, David Ricardo: comparative advantage, different worldview, Donald Trump, experimental economics, Fall of the Berlin Wall, floating exchange rates, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, Gunnar Myrdal, housing crisis, Internet Archive, invisible hand, John von Neumann, Joseph Schumpeter, laissez-faire capitalism, liberal capitalism, low interest rates, market fundamentalism, mass immigration, means of production, Menlo Park, military-industrial complex, Mont Pelerin Society, New Journalism, New Urbanism, old-boy network, Paul Samuelson, Philip Mirowski, price mechanism, price stability, public intellectual, RAND corporation, random walk, rent control, road to serfdom, Robert Bork, rolodex, Ronald Coase, Ronald Reagan, Silicon Valley, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, union organizing, urban planning, Vilfredo Pareto, Washington Consensus, zero-sum game, éminence grise

Lindbeck’s intervention on the Nobel committee ushered in a more ideological phase in the prize’s history, during which neoliberal economists, many associated with the MPS, received a large number of the prizes. These included Hayek, Milton Friedman (1976), George Stigler (1982), James Buchanan (1986), Maurice Allais (1988), Ronald Coase (1991), and Gary Becker (1992).6 Even if 1974 was a remarkable year, we should not overstate its singularity. Hayek’s reputation in economics may have stood at low ebb with professional economists, but his general intellectual reputation was sound. The Nobel press release belied the narrative of neglect and rediscovery: “Hayek’s ideas and his analysis of the competence of economic systems were published in a number of works during the forties and fifties and have, without doubt, provided significant impulses to this extensive and growing field of research in comparative economic systems.

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As Steven Horwitz has put it, Austrians always “took account of the puzzles that were of interest to the economics profession and aimed their explanations of those puzzles at that audience of their professional peers.” The first issue of RAE addressed monetarism and Keynesianism. In subsequent years, discussions on public choice, macroeconomics, game theory, and experimental economics filled the pages of RAE and Advances in Austrian Economics. Austrians sparred with Nobelists like Milton Friedman, Ronald Coase, James Buchanan, and Douglass North. They reveled in taking apart the arguments of intellectual allies and opponents alike. As the economist Deirdre McCloskey has noted, her conversion to an appreciation of the role of rhetoric in economic thought had a Viennese accent: “I learned from Don [Lavoie] and Karen Vaughn and Jack High as exemplars that Austrian economics was not merely a pointlessly vicious doctrinal war against one’s natural allies carried out on the field of German texts. . . .

American Secession: The Looming Threat of a National Breakup by F. H. Buckley

Affordable Care Act / Obamacare, Andrei Shleifer, belling the cat, Bernie Sanders, British Empire, Cass Sunstein, colonial rule, crony capitalism, desegregation, diversified portfolio, Donald Trump, Francis Fukuyama: the end of history, guns versus butter model, hindsight bias, illegal immigration, immigration reform, income inequality, low interest rates, Michael Milken, military-industrial complex, old-boy network, Paris climate accords, race to the bottom, Republic of Letters, reserve currency, Ronald Coase, Stephen Fry, Suez crisis 1956, transaction costs, Washington Consensus, wealth creators

For half of the last forty years, a separatist government has been in power in Quebec. The issue is off the table for the moment, in large part because Canadians are good and sick of it. But it has diverted attention from other things the government might have been doing, and that’s a cost. The same kind of cost arises in private law bargaining, and the Nobel laureate Ronald Coase gave it a name: transaction costs. These are the costs, in both the direct expenses of bargaining and the distraction from other opportunities, incurred when the parties negotiate to reach an agreement. The costs are greater when more parties must be joined in the agreement, because there will generally be a few malcontents and holdouts when the number of parties exceeds five or six.

The Case Against Education: Why the Education System Is a Waste of Time and Money by Bryan Caplan

affirmative action, Affordable Care Act / Obamacare, assortative mating, behavioural economics, conceptual framework, correlation does not imply causation, deliberate practice, deskilling, disruptive innovation, do what you love, driverless car, en.wikipedia.org, endogenous growth, experimental subject, fear of failure, Flynn Effect, future of work, George Akerlof, ghettoisation, hive mind, job satisfaction, Kenneth Arrow, Khan Academy, labor-force participation, longitudinal study, low interest rates, low skilled workers, market bubble, mass incarceration, meta-analysis, Peter Thiel, price discrimination, profit maximization, publication bias, risk tolerance, Robert Gordon, Ronald Coase, school choice, selection bias, Silicon Valley, statistical model, Steven Pinker, The Bell Curve by Richard Herrnstein and Charles Murray, the scientific method, The Wisdom of Crowds, trickle-down economics, twin studies, Tyler Cowen, unpaid internship, upwardly mobile, women in the workforce, yield curve, zero-sum game

Government Education Spending in Perspective Sources: Figure 7.1, and Office of Management and Budget 2014, pp. 57–58. Cutting Education: Why, Where, How When once asked at a public lecture in St. Louis how large the state should be, Coase answered: “If you see a man who weighs over 400 pounds, and you ask me how much he should weigh, my answer would be . . . less.” John Nye, “Ronald Coase: An Appreciation”18 When I argue education is largely wasteful signaling, most listeners yield. Popular resistance doesn’t kick in until I add, “Let’s waste less by cutting government spending on education.” You might think conceding the wastefulness of education spending would automatically entail support for austerity, but it doesn’t.

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In Science for the Twenty-First Century: The Bush Report Revisited, edited by Claude Barfield, 81–94. Washington, DC: American Enterprise Institute. Nobel Prize. 2015. “A. Michael Spence—Facts.” Accessed November 15. http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2001/spence-facts.html. Nye, John. 2014. “Ronald Coase: An Appreciation.” Independent Review 19 (1): 101–8. Obukhova, Elena. 2012. “Motivation vs. Relevance: Using Strong Ties to Find a Job in Urban China.” Social Science Research 41 (3): 570–80. Obukhova, Elena, and George Lan. 2013. “Do Job Seekers Benefit from Contacts? A Direct Test with Contemporaneous Searches.”

The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey by Michael Huemer

Cass Sunstein, Chelsea Manning, cognitive dissonance, cuban missile crisis, Daniel Kahneman / Amos Tversky, en.wikipedia.org, Eratosthenes, experimental subject, framing effect, Garrett Hardin, Gini coefficient, illegal immigration, impulse control, Isaac Newton, Julian Assange, laissez-faire capitalism, land bank, Machinery of Freedom by David Friedman, Milgram experiment, moral hazard, Phillip Zimbardo, profit maximization, profit motive, Ralph Nader, RAND corporation, rent-seeking, Ronald Coase, Stanford prison experiment, systematic bias, The Wealth of Nations by Adam Smith, Tyler Cowen, unbiased observer, uranium enrichment, WikiLeaks

Each of these regulations is a command backed up by a threat of force issued by the state against its citizens. While some of these threats may be justified, those that are not constitute a violation of the rights of all those who are thereby coerced. Second, a surplus of laws can have large economic costs. Ronald Coase, Nobel laureate and former editor of the Journal of Law and Economics, reports that his journal published a series of empirical studies of the effects of a wide variety of regulations, in which it turned out that every regulation studied had overall negative effects on society.15 The Small Business Administration of the U.S. government has estimated the annual cost of federal regulations to the U.S. economy at $1.75 trillion, a burden that they find falls disproportionately on small businesses.16 Third, an excessive quantity of law, as well as an excessively complex and technical body of law, renders it unreasonable to demand that citizens know, understand, and follow all laws.

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A Critique of John Rawls’s Theory’, American Political Science Review 69: 594–606. Hart, H. L. A. 1955. ‘Are There Any Natural Rights?’ Philosophical Review 64: 175–91. ——. 1958. ‘Legal and Moral Obligation’ in Essays in Moral Philosophy, ed. A. I. Melden. Seattle: University of Washington Press. Hazlett, Thomas W. 1997. ‘Looking for Results’ (interview with Ronald Coase), Reason 28, 8: 40–6. Henig, Ruth. 1995. Versailles and After: 1919–1933, second edition. London: Routledge. Herring, George C. 2002. America’s Longest War: The United States and Vietnam, 1950–1975, fourth edition. Boston: McGraw-Hill. Heywood, Andrew. 1992. Political Ideologies: An Introduction.

The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, Alan Greenspan, anti-communist, bank run, banking crisis, Basel III, Bear Stearns, benefit corporation, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, export processing zone, failed state, fake news, falling living standards, family office, financial deregulation, financial engineering, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, Global Witness, high net worth, Ida Tarbell, income inequality, index fund, invisible hand, Jeff Bezos, junk bonds, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, megaproject, Michael Milken, Money creation, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, stock buybacks, Suez crisis 1956, The Chicago School, Thorstein Veblen, too big to fail, Tragedy of the Commons, transfer pricing, two and twenty, vertical integration, Wayback Machine, wealth creators, white picket fence, women in the workforce, zero-sum game

‘There can’t have been many house guests where Milton would have been accused of being too pro-government and too left wing.’ That particular night Director hosted twenty dinner guests, largely conservative thinkers, including not just Friedman but George Stigler, who would go on to make a name for himself attacking government regulation, the British economist Ronald Coase and a fire-breathing conservative lawyer called Robert Bork.1 The University of Chicago in those days was a bear pit, an arena of intense macho intellectual combat where academics were constantly struggling to outdo each other with clever theories about efficient markets – theories that often perched on toe-curling assumptions – to adopt unconventional, even anti-social positions usually supporting big business and attacking big government.

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His messianic zeal mesmerised many of his students. One was Bork, who commented, ‘Aaron gradually destroyed my dreams of socialism with price theory,’ adding that many of his colleagues ‘underwent what can only be called a religious conversion’.2 The guests that evening were there to listen to Ronald Coase present a draft paper, The Problem of Social Cost. At the start of the evening Coase summarised his argument and a vote was taken. All twenty guests opposed him, and Stigler remembered wondering ‘how so fine an economist could make such an obvious mistake’. Coase deployed a novel argument. Corporations in those days were supposed to be subject to the law – or at least the law came first.

The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism by Jeremy Rifkin

3D printing, active measures, additive manufacturing, Airbnb, autonomous vehicles, back-to-the-land, benefit corporation, big-box store, bike sharing, bioinformatics, bitcoin, business logic, business process, Chris Urmson, circular economy, clean tech, clean water, cloud computing, collaborative consumption, collaborative economy, commons-based peer production, Community Supported Agriculture, Computer Numeric Control, computer vision, crowdsourcing, demographic transition, distributed generation, DIY culture, driverless car, Eben Moglen, electricity market, en.wikipedia.org, Frederick Winslow Taylor, Free Software Foundation, Garrett Hardin, general purpose technology, global supply chain, global village, Hacker Conference 1984, Hacker Ethic, industrial robot, informal economy, information security, Intergovernmental Panel on Climate Change (IPCC), intermodal, Internet of things, invisible hand, Isaac Newton, James Watt: steam engine, job automation, John Elkington, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Julian Assange, Kickstarter, knowledge worker, longitudinal study, low interest rates, machine translation, Mahatma Gandhi, manufacturing employment, Mark Zuckerberg, market design, mass immigration, means of production, meta-analysis, Michael Milken, mirror neurons, natural language processing, new economy, New Urbanism, nuclear winter, Occupy movement, off grid, off-the-grid, oil shale / tar sands, pattern recognition, peer-to-peer, peer-to-peer lending, personalized medicine, phenotype, planetary scale, price discrimination, profit motive, QR code, RAND corporation, randomized controlled trial, Ray Kurzweil, rewilding, RFID, Richard Stallman, risk/return, Robert Solow, Rochdale Principles, Ronald Coase, scientific management, search inside the book, self-driving car, shareholder value, sharing economy, Silicon Valley, Skype, smart cities, smart grid, smart meter, social web, software as a service, spectrum auction, Steve Jobs, Stewart Brand, the built environment, the Cathedral and the Bazaar, the long tail, The Nature of the Firm, The Structural Transformation of the Public Sphere, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, Tragedy of the Commons, transaction costs, urban planning, vertical integration, warehouse automation, Watson beat the top human players on Jeopardy!, web application, Whole Earth Catalog, Whole Earth Review, WikiLeaks, working poor, Yochai Benkler, zero-sum game, Zipcar

More traditional advocates of free enterprise recognized that public goods—especially those that constitute infrastructure—were non-rivalrous, and in those instances the average cost of bringing additional units to market continued to decline with prolonged demand. Charging for “declining average cost,” they argued, was more sensible, allowing firms to recoup their investment while keeping the government’s hands off the economic life of the nation. In 1946, economist Ronald Coase stepped into the fray, taking exception to Hotelling’s thesis by arguing that the social subsidies Hotelling advocated “would bring about a maldistribution of the factors of production, a maldistribution of income, and probably a loss similar to that which the scheme was designed to avoid.”5 Coase did not disagree with Hotelling that price should equal marginal cost, but he also believed that the total cost needed to be covered.

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He reasoned that a government willing to undertake such an enterprise is, for the same reasons, ready to build other dams in other and widely scattered places, and to construct a great variety of public works. Each of these entails benefits which are diffused widely among all classes. A rough randomness in distribution should be ample to ensure such a distribution of benefits that most persons in every part of the country would be better off by reason of the program as a whole.45 Ronald Coase didn’t buy Hotelling’s arguments. Recall that Coase, a free-market advocate, didn’t think government was a good prognosticator of consumer demand, even in the case where the public good or service in question was undeniably something everybody needed. He wrote, “I do not myself believe that a government could make accurate estimates of individual demand in a regime in which all prices were based on marginal costs.”46 Coase’s first argument, on closer scrutiny, appears rather spurious.

Private Government: How Employers Rule Our Lives (And Why We Don't Talk About It) by Elizabeth S. Anderson

Affordable Care Act / Obamacare, barriers to entry, call centre, collective bargaining, corporate governance, correlation does not imply causation, declining real wages, deskilling, feminist movement, Frederick Winslow Taylor, full employment, independent contractor, invisible hand, Jeremy Corbyn, manufacturing employment, means of production, Panopticon Jeremy Bentham, principal–agent problem, profit motive, Ronald Coase, scientific management, shareholder value, Socratic dialogue, spinning jenny, The Nature of the Firm, The Wealth of Nations by Adam Smith, trickle-down economics, Tyler Cowen

It does not explain, for example, why employers continue to have authority over workers’ off-duty lives, given that their choice of sexual partner, political candidate, or Facebook posting has nothing to do with productive efficiency. Even worse, theorists of the firm appear not to even recognize how authoritarian firm governance is. Major theorists soft-pedal or even deny the very authority they are supposed to be trying to explain. Consider Ronald Coase, the originator of the theory of the firm. He acknowledges that firms are “islands of conscious power.”16 The employment contract is one in which the worker “agrees to obey the directions of an entrepreneur.” But, he insists, “the essence of the contract is that it should only state the limits to the powers of the entrepreneur.”17 This suggests that the limits of the employer’s powers are an object of negotiation or at least communication between the parties.

The Second Curve: Thoughts on Reinventing Society by Charles Handy

"Friedman doctrine" OR "shareholder theory", Abraham Maslow, Airbnb, Alan Greenspan, basic income, Bernie Madoff, bitcoin, bonus culture, British Empire, call centre, Clayton Christensen, corporate governance, delayed gratification, Diane Coyle, disruptive innovation, Edward Snowden, falling living standards, future of work, G4S, greed is good, independent contractor, informal economy, Internet of things, invisible hand, joint-stock company, joint-stock limited liability company, Kickstarter, Kodak vs Instagram, late capitalism, mass immigration, megacity, mittelstand, Occupy movement, payday loans, peer-to-peer lending, plutocrats, Ponzi scheme, Robert Solow, Ronald Coase, shareholder value, sharing economy, Skype, Social Responsibility of Business Is to Increase Its Profits, Stanford marshmallow experiment, Steve Jobs, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Veblen good, Walter Mischel

Size is all-important so the leader effectively freezes out, or buys out, all would-be competing businesses. Anti-trust laws do not seem to apply where there are no competitors to collude with and regulators seem reluctant or unable to interfere. In America the government once split up AT&T. Why not the new giants? Big may be seductive but is it necessary or sensible? Back in the 1930s Ronald Coase argued the case for the large corporation. Keeping everything in-house, he suggested, lowered the transaction costs when compared with negotiating with separate outside businesses. Put simply, if you employed them you could tell them what to do. The result of applying the Coase argument was the integrated organisation, where everything connected with the output of the organisation was both owned and managed by it.

Seriously Curious: The Facts and Figures That Turn Our World Upside Down by Tom Standage

"World Economic Forum" Davos, agricultural Revolution, augmented reality, autonomous vehicles, Big Tech, blood diamond, business logic, corporate governance, CRISPR, deep learning, Deng Xiaoping, Donald Trump, Dr. Strangelove, driverless car, Elon Musk, failed state, financial independence, gender pay gap, gig economy, Gini coefficient, high net worth, high-speed rail, income inequality, index fund, industrial robot, Internet of things, invisible hand, it's over 9,000, job-hopping, Julian Assange, life extension, Lyft, M-Pesa, Mahatma Gandhi, manufacturing employment, mega-rich, megacity, Minecraft, mobile money, natural language processing, Nelson Mandela, plutocrats, post-truth, price mechanism, private spaceflight, prosperity theology / prosperity gospel / gospel of success, purchasing power parity, ransomware, reshoring, ride hailing / ride sharing, Ronald Coase, self-driving car, Silicon Valley, Snapchat, South China Sea, speech recognition, stem cell, supply-chain management, transaction costs, Uber and Lyft, uber lyft, undersea cable, US Airways Flight 1549, WikiLeaks, zoonotic diseases

The idea of the price mechanism is central to the study of economics. Market prices convey information about what people want to buy and what others want to sell. Adam Smith used the metaphor of the “invisible hand” to describe how the economy is governed by price signals. In 1937 a paper published by Ronald Coase, a British economist, pointed out a flaw in this view: it did not explain what goes on within firms. When employees switch from one division to another, for instance, they do not do so in response to higher wages, but because they are ordered to. The question posed by Coase was a profound, if awkward, one for economics.

Speaking Code: Coding as Aesthetic and Political Expression by Geoff Cox, Alex McLean

4chan, Amazon Mechanical Turk, augmented reality, bash_history, bitcoin, Charles Babbage, cloud computing, commons-based peer production, computer age, computer vision, Computing Machinery and Intelligence, crowdsourcing, dematerialisation, Donald Knuth, Douglas Hofstadter, en.wikipedia.org, Everything should be made as simple as possible, finite state, Free Software Foundation, Gabriella Coleman, Gödel, Escher, Bach, Hacker Conference 1984, Ian Bogost, Jacques de Vaucanson, language acquisition, Larry Wall, late capitalism, means of production, natural language processing, Neal Stephenson, new economy, Norbert Wiener, Occupy movement, packet switching, peer-to-peer, power law, Richard Stallman, Ronald Coase, Slavoj Žižek, social software, social web, software studies, speech recognition, SQL injection, stem cell, Stewart Brand, systems thinking, The Nature of the Firm, Turing machine, Turing test, Vilfredo Pareto, We are Anonymous. We are Legion, We are the 99%, WikiLeaks, Yochai Benkler

., 33–34. 40. Ibid., 35. 41. GNU General Public License; available at http://www.gnu.org/copyleft/gpl.html. 42. Leach, “Modes of Creativity and the Register of Ownership,” 41. 43. Yochai Benkler, “Coase’s Penguin, or, Linux and the Nature of the Firm,” in Ghosh, Code, 169. He is referring to the economist Ronald Coase’s essay “The Nature of the Firm,” of 1937. 44. Michel Bauwens, “The Social Web and Its Social Contracts: Some Notes on Social Antagonism in Netarchical Capitalism,” Re-Public (2008; available at http://www.re-public.gr/en/?p=261). 45. Ibid. 46. Ibid. 47. Virno, A Grammar of the Multitude, 110. 48.

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World by Ruchir Sharma

"World Economic Forum" Davos, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, commodity super cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, driverless car, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, financial engineering, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, global macro, Goodhart's law, guns versus butter model, hiring and firing, hype cycle, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Japanese asset price bubble, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, Larry Ellison, lateral thinking, liberal capitalism, low interest rates, Malacca Straits, Mark Zuckerberg, market bubble, Mary Meeker, mass immigration, megacity, megaproject, Mexican peso crisis / tequila crisis, middle-income trap, military-industrial complex, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, open immigration, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, tacit knowledge, tech billionaire, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, work culture , working-age population

Rather than just favoring certain business allies, he also set up a competition among leading tycoons that would ultimately produce a few national industrial champions, companies like Samsung that made South Korea a leading export power. However, no new important emerging nation has achieved this kind of success—growing rapidly thanks largely to the guiding hand of an activist state—in recent decades. Of course, many will respond, what about China? As the Nobel Prize–winning economist Ronald Coase has pointed out, the conventional story about China gets the narrative wrong. China started on the road to becoming an industrial superpower only after the all-encompassing state started to interfere less in the economy. Around 1980 the Chinese government began to ease its grip, one step at a time and always in response to pressure from below.

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IMF Staff Discussion Note, 2011. 5 Bradford Johnson, “Retail: The Wal-Mart Effect; Information Technology Isn’t the Whole Story Behind Productivity,” McKinsey Quarterly (Winter 2002). 6 Robert Peston, “Inequality Is Bad for Growth, Says OECD,” BBC News, May 21, 2015. Chapter 4: Perils of the State 1 Roger Altman, “Blame Bond Markets, Not Politicians, for Austerity,” Financial Times, May 8, 2013. 2 Ahmed Feteha, “Welcome to Egypt’s Fake Weddings: Get High, Leave Lots of Cash,” Bloomberg News, June 23, 2015. 3 Ronald Coase and Ning Wang, How China Became Capitalist (London: Palgrave Macmillan, 2013). 4 Jun Ma, Audrey Shi, and Shan Lan, “Deregulation and Private Sector Growth,” Deutsche Bank Research Report, September 13, 2013. 5 Anders Aslund, “How Russia Mismanaged the Financial Crisis,” Moscow Times, February 27, 2013. 6 Amy Li, “Premier Li Keqiang Makes Case for Deeper Economic Reforms over Stimulus,” South China Morning Post, May 1, 2014. 7 Liz Matthew, “Manmohan Singh Should Have Put Foot Down, Cancelled 2G Licences,” Indian Express, November 8, 2014. 8 Yannis Palaiologos, “Syriza Must Let Markets and Meritocracy Rule,” Financial Times, May 12, 2015.

The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society by Binyamin Appelbaum

90 percent rule, airline deregulation, Alan Greenspan, Alvin Roth, Andrei Shleifer, anti-communist, battle of ideas, Benoit Mandelbrot, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, Celtic Tiger, central bank independence, clean water, collective bargaining, Corn Laws, correlation does not imply causation, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, desegregation, Diane Coyle, Donald Trump, Dr. Strangelove, ending welfare as we know it, financial deregulation, financial engineering, financial innovation, fixed income, flag carrier, floating exchange rates, full employment, George Akerlof, George Gilder, Gini coefficient, greed is good, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, income per capita, index fund, inflation targeting, invisible hand, Isaac Newton, It's morning again in America, Jean Tirole, John Markoff, Kenneth Arrow, Kenneth Rogoff, land reform, Les Trente Glorieuses, long and variable lags, Long Term Capital Management, low cost airline, low interest rates, manufacturing employment, means of production, Menlo Park, minimum wage unemployment, Mohammed Bouazizi, money market fund, Mont Pelerin Society, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, Paul Samuelson, Philip Mirowski, Phillips curve, plutocrats, precautionary principle, price stability, profit motive, public intellectual, Ralph Nader, RAND corporation, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Bork, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, Simon Kuznets, starchitect, Steve Bannon, Steve Jobs, supply-chain management, The Chicago School, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, trickle-down economics, ultimatum game, Unsafe at Any Speed, urban renewal, War on Poverty, Washington Consensus, We are all Keynesians now

Stigler liked to argue that the work of academic economists had little impact on public policy and that Friedman was wasting his time by trying to teach economics to the general public. “Milton wants to change the world; I only want to understand it,” Stigler said.23 But those who knew Stigler marked the scope of his ambition. “He thought he was going to change the world,” said his longtime colleague Ronald Coase.24 The real difference was that Stigler focused on winning over his fellow economists. He continued to produce significant work, and to battle academic opponents with gusto, long after Friedman had turned to a life as a public intellectual. “A scholar is an evangelist seeking to convert his learned brethren to the new enlightenment he is preaching,” Stigler wrote in his memoirs.

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“Aaron Director would tell us that everything that Levi had told us the preceding four days was nonsense,” recalled one student. For some it was a religious experience. “We became Janissaries,” said Robert Bork, an early student who was one of the most influential popularizers of Director’s ideas.* Ronald Coase, a colleague who later won the Nobel Prize in economics for his work integrating economics into legal theory, also counted himself a disciple of Director, saying, “I regarded my role as that of Saint Paul to Aaron Director’s Christ. He got the doctrine going and what I had to do was bring it to the gentiles.”36 Director’s trademark was his skepticism that corporate behavior was anticompetitive.

Order Without Design: How Markets Shape Cities by Alain Bertaud

autonomous vehicles, call centre, colonial rule, congestion charging, congestion pricing, creative destruction, cross-subsidies, Deng Xiaoping, discounted cash flows, Donald Trump, Edward Glaeser, en.wikipedia.org, extreme commuting, garden city movement, gentrification, Google Earth, Great Leap Forward, Jane Jacobs, job satisfaction, Joseph Schumpeter, land tenure, manufacturing employment, market design, market fragmentation, megacity, microapartment, new economy, New Urbanism, openstreetmap, Pearl River Delta, price mechanism, rent control, Right to Buy, Ronald Coase, self-driving car, Shenzhen special economic zone , Silicon Valley, special economic zone, the built environment, trade route, transaction costs, transit-oriented development, trickle-down economics, urban planning, urban sprawl, zero-sum game

Some Russian cities have real land market; in others the system of land allocation is less clear. Under Deng Xiaoping, China chose a different path. It gradually reformed its system until it made a progressive, orderly transition from a command to a market economy. However, the shift of the system in China was not due to an ideological conversion. As Ronald Coase and Ning Wang explained in their book on China’s reform, “China became capitalist while it was trying to modernize socialism.”5 Indeed, the Chinese government allowed cities to experiment with small-scale labor and land market liberalization before expanding successful experiments to the entire country.

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Kombinats in the Soviet Union and Eastern Europe were large vertical monopolies that usually spanned one industrial sector. For instance, the kombinat in this story operated sand quarries, cement factories, concrete panel factories, and housing construction for a region. Sometimes the kombinat also extended horizontally, operating farms to provide food to its workers. 5. Ronald Coase and Ning Wang, How China Became Capitalist (London: Palgrave Macmillan, 2012), 154. 6. China Daily (Beijing), November 16, 2013, “Decisions on Major Issues Concerning Comprehensively Deepening Reforms,” adopted during the Third Plenary Session of the eighteenth meeting of the Communist Party of China Central Committee on November 12, 2013. 2 Cities as Labor Markets The Efficiency of Large Labor Markets Is the Main Cause of Ever-Growing Cities Cities Are Primarily Labor Markets Cities are primarily labor markets.

Rentier Capitalism: Who Owns the Economy, and Who Pays for It? by Brett Christophers

"World Economic Forum" Davos, accounting loophole / creative accounting, Airbnb, Amazon Web Services, barriers to entry, Big bang: deregulation of the City of London, Big Tech, book value, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, business process, business process outsourcing, Buy land – they’re not making it any more, call centre, Cambridge Analytica, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, cloud computing, collective bargaining, congestion charging, corporate governance, data is not the new oil, David Graeber, DeepMind, deindustrialization, Diane Coyle, digital capitalism, disintermediation, diversification, diversified portfolio, Donald Trump, Downton Abbey, electricity market, Etonian, European colonialism, financial deregulation, financial innovation, financial intermediation, G4S, gig economy, Gini coefficient, Goldman Sachs: Vampire Squid, greed is good, green new deal, haute couture, high net worth, housing crisis, income inequality, independent contractor, intangible asset, Internet of things, Jeff Bezos, Jeremy Corbyn, Joseph Schumpeter, Kickstarter, land bank, land reform, land value tax, light touch regulation, low interest rates, Lyft, manufacturing employment, market clearing, Martin Wolf, means of production, moral hazard, mortgage debt, Network effects, new economy, North Sea oil, offshore financial centre, oil shale / tar sands, oil shock, patent troll, pattern recognition, peak oil, Piper Alpha, post-Fordism, post-war consensus, precariat, price discrimination, price mechanism, profit maximization, proprietary trading, quantitative easing, race to the bottom, remunicipalization, rent control, rent gap, rent-seeking, ride hailing / ride sharing, Right to Buy, risk free rate, Ronald Coase, Rutger Bregman, sharing economy, short selling, Silicon Valley, software patent, subscription business, surveillance capitalism, TaskRabbit, tech bro, The Nature of the Firm, transaction costs, Uber for X, uber lyft, vertical integration, very high income, wage slave, We are all Keynesians now, wealth creators, winner-take-all economy, working-age population, yield curve, you are the product

Ford and Plimmer, ‘Pioneering Britain’. 59. Ford, ‘Lax Regulation’. 60. Ibid. 61. House of Commons Culture, Media and Sport Committee, Spectrum, p. 6. 62. T. W. Hazlett, D. Porter and V. Smith, ‘Radio Spectrum and the Disruptive Clarity of Ronald Coase’, Journal of Law and Economics 54: S4 (2011), pp. S124–S165, at p. 137. 63. House of Commons Culture, Media and Sport Committee, Spectrum, p. 6. 64. T. W. Hazlett, ‘Ronald Coase and the Radio Spectrum’, Financial Times, 16 December 2009. 65. Infrastructure and Projects Authority, ‘National Infrastructure Delivery Plan 2016– 2021’, 23 March 2016, p. 20 – pdf available at assets.publishing.service.gov.uk. 66.

The Wisdom of Finance: Discovering Humanity in the World of Risk and Return by Mihir Desai

activist fund / activist shareholder / activist investor, Albert Einstein, Andrei Shleifer, AOL-Time Warner, assortative mating, Benoit Mandelbrot, book value, Brownian motion, capital asset pricing model, Carl Icahn, carried interest, Charles Lindbergh, collective bargaining, corporate governance, corporate raider, discounted cash flows, diversified portfolio, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, follow your passion, George Akerlof, Gordon Gekko, greed is good, housing crisis, income inequality, information asymmetry, Isaac Newton, Jony Ive, Kenneth Rogoff, longitudinal study, Louis Bachelier, low interest rates, Monty Hall problem, moral hazard, Myron Scholes, new economy, out of africa, Paul Samuelson, Pierre-Simon Laplace, principal–agent problem, Ralph Waldo Emerson, random walk, risk/return, Robert Shiller, Ronald Coase, short squeeze, Silicon Valley, Steve Jobs, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, tontine, transaction costs, vertical integration, zero-sum game

While there are innumerable variants, there are two primary interpretations of this romance that progresses from spot market transaction to long-term contractual arrangements and then all the way to merger. Each of these interpretations—the transaction cost approach and the property rights approach—is associated with a Nobel Prize (Ronald Coase in 1991 and Oliver Hart and Bengt Holmström in 2016), so, by academic standards, this is a prize fight. The considerably less romantic interpretation is that GM merged with Fisher in 1926 because the ongoing costs of contracting with each other just became too high. Yes, they could have stayed separate and just kept contracting and renegotiating contracts, but it’s so costly to write these contracts, and if they merged, they wouldn’t have to keep writing new contracts all the time.

The Ethical Algorithm: The Science of Socially Aware Algorithm Design by Michael Kearns, Aaron Roth

23andMe, affirmative action, algorithmic bias, algorithmic trading, Alignment Problem, Alvin Roth, backpropagation, Bayesian statistics, bitcoin, cloud computing, computer vision, crowdsourcing, data science, deep learning, DeepMind, Dr. Strangelove, Edward Snowden, Elon Musk, fake news, Filter Bubble, general-purpose programming language, Geoffrey Hinton, Google Chrome, ImageNet competition, Lyft, medical residency, Nash equilibrium, Netflix Prize, p-value, Pareto efficiency, performance metric, personalized medicine, pre–internet, profit motive, quantitative trading / quantitative finance, RAND corporation, recommendation engine, replication crisis, ride hailing / ride sharing, Robert Bork, Ronald Coase, self-driving car, short selling, sorting algorithm, sparse data, speech recognition, statistical model, Stephen Hawking, superintelligent machines, TED Talk, telemarketer, Turing machine, two-sided market, Vilfredo Pareto

After these practices were revealed, intense scrutiny of Wansink’s research led to retractions of seventeen published papers, another fifteen “corrections,” and a Cornell investigation that found scientific misconduct. He resigned from the university effective June 2019. But these cases are really just an acceleration of an old phenomenon. As Ronald Coase, a Nobel Prize‒winning British economist, put it in the 1960s, “If you torture the data for long enough, it will confess to anything.” Tending the Garden of the Forking Paths Andrew Gelman and Eric Loken, statisticians who have studied the proliferation of published but false findings in the social sciences, have a colorful name for the phenomenon of adaptivity: the “garden of the forking paths.”

Confessions of a Crypto Millionaire: My Unlikely Escape From Corporate America by Dan Conway

Affordable Care Act / Obamacare, Airbnb, bank run, basic income, Bear Stearns, Big Tech, bitcoin, blockchain, buy and hold, cloud computing, cognitive dissonance, corporate governance, crowdsourcing, cryptocurrency, disruptive innovation, distributed ledger, double entry bookkeeping, Ethereum, ethereum blockchain, fault tolerance, financial independence, gig economy, Gordon Gekko, Haight Ashbury, high net worth, holacracy, imposter syndrome, independent contractor, initial coin offering, job satisfaction, litecoin, Marc Andreessen, Mitch Kapor, obamacare, offshore financial centre, Ponzi scheme, prediction markets, rent control, reserve currency, Ronald Coase, Satoshi Nakamoto, Silicon Valley, Silicon Valley billionaire, smart contracts, Steve Jobs, supercomputer in your pocket, tech billionaire, tech bro, Tragedy of the Commons, Turing complete, Uber for X, universal basic income, upwardly mobile, Vitalik Buterin

I honestly didn’t give it too much thought other than constantly thinking, What a hassle. If I was ever going to escape, I first needed to survive and ultimately climb this ladder, no matter how badly it was shaking. Chapter Six Ethereum, a New Kind of Machine In his famous 1937 book The Modern Firm, economist Ronald Coase Noah explains why corporations have run the world economy for so long. They allow contracts to be settled, and they make it possible for people to work together to get things done. By and large, people have been working under this template for generations. The litany of complaints at your local watering hole are the bedrock of the corporation: chains of command, bureaucracy, and a culture that values polished professionals with similar temperaments and few rough edges.

Work in the Future The Automation Revolution-Palgrave MacMillan (2019) by Robert Skidelsky Nan Craig

3D printing, Airbnb, algorithmic trading, AlphaGo, Alvin Toffler, Amazon Web Services, anti-work, antiwork, artificial general intelligence, asset light, autonomous vehicles, basic income, behavioural economics, business cycle, cloud computing, collective bargaining, Computing Machinery and Intelligence, correlation does not imply causation, creative destruction, data is the new oil, data science, David Graeber, David Ricardo: comparative advantage, deep learning, DeepMind, deindustrialization, Demis Hassabis, deskilling, disintermediation, do what you love, Donald Trump, driverless car, Erik Brynjolfsson, fake news, feminist movement, Ford Model T, Frederick Winslow Taylor, future of work, Future Shock, general purpose technology, gig economy, global supply chain, income inequality, independent contractor, informal economy, Internet of things, Jarndyce and Jarndyce, Jarndyce and Jarndyce, job automation, job polarisation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, John von Neumann, Joseph Schumpeter, knowledge economy, Loebner Prize, low skilled workers, Lyft, Mark Zuckerberg, means of production, moral panic, Network effects, new economy, Nick Bostrom, off grid, pattern recognition, post-work, Ronald Coase, scientific management, Second Machine Age, self-driving car, sharing economy, SoftBank, Steve Jobs, strong AI, tacit knowledge, technological determinism, technoutopianism, TED Talk, The Chicago School, The Future of Employment, the market place, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, Turing test, Uber for X, uber lyft, universal basic income, wealth creators, working poor

The challenge is to escape the curse of high employment rates, as well as the pitfalls of the working poor, entrepreneurs or self-employed. Instead of adjusting the existing tools to a rapidly shifting technological and globally competitive environment, one could design a totally new scenario. New? Maybe not that much. Remember that Ronald Coase, a very long time ago, asked why not nexuses of bilateral contract work negotiations instead of firms (Coase 1937)? What would a flexible welfare state look like? It could be based on so-­ called social drawing rights (Supiot et al. 2001). The drawing rights framework might build on various existing social rights: assistance for the unemployed in creating or taking over businesses, training leave, training vouchers, special leave, time save accounts, universal basic income, in order to extend them and, more importantly, better manage their allocation, combination and interaction.

The AI-First Company by Ash Fontana

23andMe, Amazon Mechanical Turk, Amazon Web Services, autonomous vehicles, barriers to entry, blockchain, business intelligence, business process, business process outsourcing, call centre, Charles Babbage, chief data officer, Clayton Christensen, cloud computing, combinatorial explosion, computer vision, crowdsourcing, data acquisition, data science, deep learning, DevOps, en.wikipedia.org, Geoffrey Hinton, independent contractor, industrial robot, inventory management, John Conway, knowledge economy, Kubernetes, Lean Startup, machine readable, minimum viable product, natural language processing, Network effects, optical character recognition, Pareto efficiency, performance metric, price discrimination, recommendation engine, Ronald Coase, Salesforce, single source of truth, software as a service, source of truth, speech recognition, the scientific method, transaction costs, vertical integration, yield management

Otherwise, AI-First companies might aggregate government-granted advantages such as exclusive licenses to work with government data, patents on their models, or subsidies for providing predictions that allow society to plan well and function better. VERTICAL INTEGRATION The best products in the world are made by vertically integrated businesses: Apple’s hardware to software; Amazon’s warehouses to websites; and, back in the nineteenth century, industrialist Andrew Carnegie’s mines to mills. Famous economists such as Ronald Coase and entrepreneurs like Michael Dell, founder of Dell Technologies, espoused the benefits of vertical integration. Providing everything a customer needs in one package allows for quality control, deep relationships, and better pricing. There is another, major benefit for AI-First companies: capturing more data from customers using the products on site, every day.

An Economic History of the Twentieth Century by J. Bradford Delong

affirmative action, Alan Greenspan, Andrei Shleifer, ASML, asset-backed security, Ayatollah Khomeini, banking crisis, Bear Stearns, Bretton Woods, British Empire, business cycle, buy and hold, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, centre right, collapse of Lehman Brothers, collective bargaining, colonial rule, coronavirus, cotton gin, COVID-19, creative destruction, crowdsourcing, cryptocurrency, cuban missile crisis, deindustrialization, demographic transition, Deng Xiaoping, Donald Trump, en.wikipedia.org, ending welfare as we know it, endogenous growth, Fairchild Semiconductor, fake news, financial deregulation, financial engineering, financial repression, flying shuttle, Ford Model T, Ford paid five dollars a day, Francis Fukuyama: the end of history, full employment, general purpose technology, George Gilder, German hyperinflation, global value chain, Great Leap Forward, Gunnar Myrdal, Haber-Bosch Process, Hans Rosling, hedonic treadmill, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, housing crisis, Hyman Minsky, income inequality, income per capita, industrial research laboratory, interchangeable parts, Internet Archive, invention of agriculture, invention of the steam engine, It's morning again in America, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, labor-force participation, land reform, late capitalism, Les Trente Glorieuses, liberal capitalism, liquidity trap, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, means of production, megacity, Menlo Park, Mikhail Gorbachev, mortgage debt, mutually assured destruction, Neal Stephenson, occupational segregation, oil shock, open borders, open economy, Paul Samuelson, Pearl River Delta, Phillips curve, plutocrats, price stability, Productivity paradox, profit maximization, public intellectual, quantitative easing, Ralph Waldo Emerson, restrictive zoning, rising living standards, road to serfdom, Robert Gordon, Robert Solow, rolodex, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Silicon Valley, Simon Kuznets, social intelligence, Stanislav Petrov, strikebreaker, structural adjustment programs, Suez canal 1869, surveillance capitalism, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Great Moderation, The Nature of the Firm, The Rise and Fall of American Growth, too big to fail, transaction costs, transatlantic slave trade, transcontinental railway, TSMC, union organizing, vertical integration, W. E. B. Du Bois, Wayback Machine, Yom Kippur War

Harvard economist Martin Weitzman liked to point out that there was no deep theoretical reason why providing the information that firms needed via a price target—produce if you can make it for a fully amortized unit cost of less than $X—should be more efficient than via a quantity target—produce Y units.3 But Hayek’s colleague Ronald Coase, at the University of Chicago, pointed out that one of the market economy’s great strengths was that it allowed firms to decide whether to use a bureaucratic command-and-control-style system or a system based on transaction costs (of buying and selling) to make decisions: the fact that firms could choose was key.4 Plus the fact that firms were always subject to the discipline of the marketplace, with those that lost money shrinking and vanishing in a way that state-run bureaucracies that lost money did not.5 But before Friedrich von Hayek’s word could become flesh, and dwell among us, there were three prerequisites.

…

Antonio Gramsci, “Americanism and Fordism,” in Selections from the Prison Notebooks of Antonio Gramsci, London: Lawrence and Wishart, 1971 [1934], 277–320; Charles S. Maier, “Between Taylorism and Technocracy: European Ideologies and the Vision of Industrial Productivity in the 1920s,” Journal of Contemporary History 5, no. 2 (1970): 27–61. 3. Martin Weitzman, “Prices Versus Quantities,” Review of Economic Studies 41, no. 4 (October 1974): 477–491. 4. Ronald Coase, “The Nature of the Firm,” Economica 4, no. 16 (1937): 386–405. 5. Janos Kornai, The Economics of Shortage, Amsterdam: North-Holland, 1979. 6. Consider Chicago School of Economics cofounder Henry Simons, with his belief that the trust-busting Federal Trade Commission ought to be the most important and most activist arm of the government.

Whiplash: How to Survive Our Faster Future by Joi Ito, Jeff Howe

3D printing, air gap, Albert Michelson, AlphaGo, Amazon Web Services, artificial general intelligence, basic income, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Black Swan, Bletchley Park, blockchain, Burning Man, business logic, buy low sell high, Claude Shannon: information theory, cloud computing, commons-based peer production, Computer Numeric Control, conceptual framework, CRISPR, crowdsourcing, cryptocurrency, data acquisition, deep learning, DeepMind, Demis Hassabis, digital rights, disruptive innovation, Donald Trump, double helix, Edward Snowden, Elon Musk, Ferguson, Missouri, fiat currency, financial innovation, Flash crash, Ford Model T, frictionless, game design, Gerolamo Cardano, informal economy, information security, interchangeable parts, Internet Archive, Internet of things, Isaac Newton, Jeff Bezos, John Harrison: Longitude, Joi Ito, Khan Academy, Kickstarter, Mark Zuckerberg, microbiome, move 37, Nate Silver, Network effects, neurotypical, Oculus Rift, off-the-grid, One Laptop per Child (OLPC), PalmPilot, pattern recognition, peer-to-peer, pirate software, power law, pre–internet, prisoner's dilemma, Productivity paradox, quantum cryptography, race to the bottom, RAND corporation, random walk, Ray Kurzweil, Ronald Coase, Ross Ulbricht, Satoshi Nakamoto, self-driving car, SETI@home, side project, Silicon Valley, Silicon Valley startup, Simon Singh, Singularitarianism, Skype, slashdot, smart contracts, Steve Ballmer, Steve Jobs, Steven Levy, Stewart Brand, Stuxnet, supply-chain management, synthetic biology, technological singularity, technoutopianism, TED Talk, The Nature of the Firm, the scientific method, The Signal and the Noise by Nate Silver, the strength of weak ties, There's no reason for any individual to have a computer in his home - Ken Olsen, Thomas Kuhn: the structure of scientific revolutions, Two Sigma, universal basic income, unpaid internship, uranium enrichment, urban planning, warehouse automation, warehouse robotics, Wayback Machine, WikiLeaks, Yochai Benkler