Ronald Coase writes in Harvard Business Review on economics and business

22 Nov

A surprise was in store when I (digitally) opened the latest HBR – a contribution from Ronald Coase on “Saving Economics from the Economists”. A surprise because I had assumed that the author of the seminal 1937 paper on “the Nature of the Firm” was no longer with us (Wikipedia tells me he’s in fact going strong at 101). Nice to see his article returns to this subject, with a plea that economics has strayed too far into theory to be useful to “business”. Although I’m not sure the article’s main thesis is right. I seem to recall that the latest Nobel prize in economics went to to professors Alvin Roth and Lloyd Shapley for their work on the best possible way to allocate non-priced resources (for example, scarce places in popular schools). That seems pretty practical to me. And of course, whilst economics may have become more rigorous, the whole field of business school education and research has opened up in ways that (I would assume) a younger Ronald Coase could not possibly have imagined.

To be sure, much of the business school writing lacks definitive guidance for businessmen – but isn’t that just a reflection of what I vaguely recall as “the oligopoly problem” – the appropriate model for many markets today?

But whatever the gripes it’s worth a read.

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