Mark Harrison 15 January 2014
Democracy often seems bureaucratic with high ‘transaction costs’, while autocracies seem to get things done at lower cost. This column discusses historical research that refutes this. It finds empirical support from Soviet archives for a political security/usability tradeoff. Regimes that are secure from public scrutiny tend to be more costly to operate.
From public finance to climate change, democracy looks to be in trouble. In many Western countries, political decisions are gridlocked while economic, social, and environmental imbalances accumulate. Our leaders juggle public opinion, private lobbies, and expert advice while trying to live within past promises and present legal obligations. The costs of reaching decisions are often high and sometimes prohibitive, leading us into democracy’s ‘do nothing zone’, where bargaining fails and the outcome is procrastination (Wintrobe 2000: 247-279).
Economic history Politics and economics
democracy, dictatorship, Soviet Union, autocracy, transaction costs, secrecy
Finding his own way: Ronald Coase (1910-2013)
Steven Medema 18 September 2013
Ronald Coase’s contributions to economics were much broader than most economists recognise. His work was characterised by a rejection of ‘blackboard economics’ in favour of detailed case studies and a comparative analysis of real-world institutions. This column argues that the ‘Coase theorem’ as commonly understood is in fact antithetical to Coase’s approach to economics.
Ronald Coase, who passed away last week at the age of 102, left an indelible mark on both economics and law. In 1991 he was awarded the Nobel Memorial Prize in Economic Sciences in recognition of his work on transaction costs and property rights. Best known for the ‘theorem’ that bears his name, the depth and breadth of Coase’s contributions are decidedly under-appreciated by the economics community – in no small part because his methodological approach and the subjects to which it led him differed from those that dominated the profession after WWII.
Institutions and economics
institutions, history of economic thought, methodology, case studies, transaction costs