New Coase Interview

13 January 2011 at 10:36 am 5 comments

| Peter Klein |

In conjunction with Ronald Coase’s new book on China, he’s given a new interview to his co-author Ning Wang. (HT: Paul Walker via Mike Giberson.) Excerpt:

WN: You mentioned many times that you do not like the term, “Coasean economics,” and prefer to call it simply the “right economics” or “good economics.” What separates the good from bad, the right from wrong?

RC: The bad or wrong economics is what I called the “blackboard economics.” It does not study the real world economy. Instead, its efforts are on an imaginary world that exists only in the mind of economists, for example, the zero-transaction cost world.

Ideas and imaginations are terribly important in economic research or any pursuit of science. But the subject of study has to be real.

I’m sympathetic to this, but with some methodological reservations, expressed at the end of this post. Anyway, the interview focuses on China, its future economic prospects and likely influence, and the newly formed Coase China Society. Coase is bullish on China: “In the past, economics was once mainly a British subject. Now it is a subject dominated by the Americans. It will be a Chinese subject if the Chinese economists adopt the right attitude.” He also offers some interesting remarks about his philosophy as journal editor:

RC: One way for the Society to advance the right kind of economics to China, and encourage Chinese economists to do the right kind of work, is to have a journal of its own. When I was editor of the Journal of Law and Economics, I was very active. I would attend seminars and conferences and talk to people to see what kind of research they were doing. I would solicit their articles if I thought they were good ones. And frequently, I would talk to people and encourage them to conduct certain studies with the promise to publish their article.

WN: This is indeed very different from the way journals are run now.

RC: I do not believe any other journal was run the same way then. Most journal editors wait for submitted articles and use external reviewers to select the articles for publication. This was not the way I worked. I knew what kind of articles I would like to publish, and I went around to find people to write them.

He offers as examples Bernard Siegen’s paper on zoning, Steve Cheung’s “Fable of the Bees,” and Richard Sandor’s paper on the difficultly of writing futures contracts — all considered classics. I personally find considerable merit in Coase’s approach.

All in all, a very interesting interview!

Entry filed under: - Klein -, Institutions, Law and Economics, Methods/Methodology/Theory of Science, New Institutional Economics, People, Theory of the Firm.

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5 Comments Add your own

  • […] the creation of the Coase China Society.  Its an excellent interview (HT: Knowledge Problem).  Peter Klein offers some observations on the interview as well.  One part that caught my attention was […]

  • 2. Michael E. Marotta  |  13 January 2011 at 4:14 pm

    Most journal editors wait for submitted articles and use external reviewers to select the articles for publication.

    I was surprised to learn how books are selected for review. Publishers send them to editors and editors send them to assigned reviewers. Two years ago, I read Newton and the Counterfeiter by Thomas Levenson. Most people do not know that Sir Isaac Newton was warden and master of the British Royal Mint for 30 years. Moreover, he had himself sworn as a justice of the peace in order to pursue counterfeiters. I never did get that into a criminology journal.

    Last year, I read Astronomical Symbols on Ancient and Medieval Coins by Marshall Faintich. It is a thorough and detailed study, based on the premise that rulers used current sky events – comets, conjunctions, eclipses – to show divine favor. The publisher followed the format, and not a single journal picked it up. By the time I read about the book on an email list, too much time had gone by, almost three years. Fortunately, I found the Society for the History of Astronomy and they accepted the proposal and the review.

    An innovative editor can make an impact, certainly.

  • 3. Peter Klein  |  13 January 2011 at 4:19 pm

    O&M is happy to publish your review of the Levenson book!

    I recently completed Neal Stephenson’s Baroque Cycle trilogy. Newton’s activity as Master of the Mint, and his pursuit of (fictional) counterfeiter “Jack the Coiner,” is a major plotline of volume three.

  • 4. srp  |  13 January 2011 at 10:05 pm

    Odd interview. Coase’s advice to look at special Chinese phenomena is completely against his own track record as a scholar and editor–he was looking for generalizable lessons, not country-specifc theories, even though the data were situation-specific.

    I am in the process of reading Yasheng Huang’s Capitalism With Chinese Characteristics, which immediately struck me as being very “Coasean” in its style of busting myths by looking at the factual details. Instead of relying on misleading stylized facts that fit into interesting models, as he catches Stiglitz and others doing, he spends a lot of time going over the data and what it really means.

    Huang’s conclusion, based on extensive archival research into the details of Chinese policy, is that Coase and others are completely wrong in supposing that there is some unique Chinese form of property rights that works under unique Chinese conditions. Simple mistakes by Western scholars, such as falsely assuming that the descriptor “Town and Village Enterprises” referred to ownership rather than location, led to a huge underestimation of the importance of private ownership and entrepreneurship in creating the Chinese “miracle” in the 1980s. There are many other surprises turned up in the book–must reading, I think, for anyone interested in China.

  • 5. Gary Shiu  |  13 January 2011 at 10:14 pm

    Coase is optimistic about China’s prospect of becoming a huge market for Coasean economics (realizing that Coase does not like this term) is this: Steven Cheung has planned to write 5 volumes of “text-book” like treaties on his way of doing economics, collectively grouped under the title “Economic Explanation”. The first volume of which is already published in China (on the topic of demand) and the second one covering supply side issues shall due out very soon. In the second volume, Steven Cheung has proposed a totally new way of conceptualizing capital as a “warehouse for value”. And he has also written about how one can operationlize the concept of rent.

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