33 Invaluable Ronald Coase Quotes

Ronald Coase was a British economist and author, best known for his contributions in economics. With a vast array of publications written during his lifetime, Coase was known for his writings on social cost where he used the basis of his famous Coase theorem to construct his biggest arguments from. Here is a look at some of the most memorable Ronald Coase quotes.

“A firm consist of the system of relationships which comes into existence when the direction of resources is dependent on an entrepreneur. As a firm gets larger, there may be decreasing returns to the entrepreneur function, that is, the costs of organizing additional transactions within the firm may rise.”

“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.”

“But a theory is not like an airline or bus timetable. We are not interested simply in the accuracy of its predictions. A theory also serves as a base for thinking.”

“Changes like the telephone and telegraphy, which tend to reduce the cost of organizing spatially, will tend to increase the size of the firm.”

“Data can’t speak for itself; it’s up to you to give it a voice. Try to speak truthfully.”

“Despite all the efforts of art dealers, the number of Rembrandts existing at a given time is limited; yet such paintings are commonly disposed of by auction.”

“Economics as currently presented in textbooks and taught in the classroom does not have much to do with business management, and still less with entrepreneurship.”

“Economics, over the years, has become more and more abstract and divorced from events in the real world. Economists, by and large, do not study the workings of the actual economic system. They theorize about it.”

“Existing economics is a theoretical system which floats in the air and which bears little relation to what happens in the real world.”

“I can’t remember [of a good regulation]. Regulation of transport, regulation of agriculture — agriculture is a, zoning is z. You know, you go from a to z, they are all bad. There were so many studies, and the result was quite universal: The effects were bad.”

“I hate when people ask me to:”Massage the data”.”

“I tend to regard the Coase theorem as a stepping stone on the way to an analysis of an economy with positive transaction costs.”

“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?’”

“If you torture the data long enough, it will confess.”

“I’m no enthusiast for the Coase Theorem. I don’t like it, but it’s widely used.”

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“In fact, a large part of what we think of as economic activity is designed to accomplish what high transaction costs would otherwise prevent or to reduce transaction costs so that individuals can negotiate freely and we can take advantage of that diffused knowledge of which Friedrich Hayek has told us.”

“In my long life, I have known some great economists, but I have never counted myself among their number nor walked in their company.”

“In my youth it was said that what was too silly to be said may be sung. In modern economics it may be put into mathematics.”

“It is clear that these are alternative methods of co-ordinating production. Yet, having regard to the fact that, if production is regulated by price movements, production could be carried on without any organization at all might we ask, why is there any organization?”

“I’ve been wrong so often, I don’t find it extraordinary at all.”

“People have used my views for purposes which are very different from mine.”

“Ronnie had it right calling it Torture. That is a much more accurate description the way I see it.”

“Roughly speaking, when you are dealing with business firms operating in a competitive system, you can assume that they’re going to act rationally.”

“Technology is at a point where we should allow multiple parties to occupy the same spectral space.”

“The law of property determines who owns something, but the market determines how it will be used.”

“The main reason why it is profitable to establish a firm would seem to be that there is a cost of using the price mechanism.”

“The pollution problem is always seen as someone who was doing something bad that has to be stopped.”

“The tools used by economists to analyze business firms are too abstract and speculative to offer any guidance to entrepreneurs and managers in their constant struggle to bring novel products to consumers at low cost.”

“There is no doubt that the recognition by economists of the importance of the role of the firm in the functioning of the economy will prompt them to investigate its activities more closely.”

“We must first note that economic factors are taken into account in a world in which ignorance, prejudice, and mental confusion, encouraged rather than dispelled by the political organization, exert a strong influence on policy making.”

“What I have done is to show the importance for the working of the economic system of what may be termed the institutional structure of production.”

“You get more irrationality within the family and in consumer behavior than you get, say, in the behavior of firms in their purchases.”

“You wouldn’t think there was a need for a Coase Theorem, really.”

Here is an interview with Ronald Coase on the topic of Economics. Having received the noble prize in 1991, Coase reviews some of his unique perspectives and approaches.