Coase and Demsetz on Private Property Rights (original) (raw)

Coase and the Problem of Social Cost

Journal of critical realism in Socio-economics, 2023

In the view of many, Coase (Coase, 1960) overcame and supplanted Pigou (Pigou, 1932) in terms of the sophistication and accuracy of the law and economic analysis of social cost. It is the task of the present paper that the same fate should befall Coase. We have, through our paper, tried to redefine the problem, showing that social cost is the problem of violation of private property rights which in policy and judicial implementation becomes the problem of establishing the harm done and holding the damaging party responsible for the violation.

Ethics, Efficiency, Coasean Property Rights and Psychic Income: A Reply to Demsetz

The purpose of the present article is to continue my part in the debate over property rights in which I have become enmeshed with Harold Demsetz. It all began with the publication of my piece (Block 1977a), which was critical of Coase (1960) and of Demsetz (1966, 1967). The second round consisted of Demsetz (19791, in which he replied to my critique (Block 1977a).

Private Property Rights, Erroneous Interpretations, Morality and Economics: Reply to Demsetz

Professor Harold Demsetz and I have been involved in an intellectual dispute which has taken place over several years. I can hardly have a better debating partner. He is easily amongst the half dozen or so most eminent economists who has not (yet) won the Nobel Prize in this discipline. To say that his contributions to the theory of property rights, regulation, law and economics, to mention only a few of the areas on which he has focused his attention, are highly regarded within the profession would be a vast understatement. Most important of all to me, he is one of the very few eminent economists who has been willing to engage me in intellectual combat.

Property rights, the Coase Theorem and informality

Research Handbook on Austrian Law and Economics

Austrian economists have had a bivalent view of the foundational contributions of Ronald Coase to modern law and economics, particularly on what was later called the "Coase Theorem" (Coase, 1960), and a much more critical view on the following "efficiency" view of law. A benign interpretation would stress his critique of general equilibrium theorizing, the need to consider the institutional framework when transactions costs are sufficiently high to prevent bilateral negotiations and his rejection of Pigou's policy proposals of subsidies and taxes to solve problems of positive and negative externalities (Boettke, 1997). In this view, Coase is a pioneer and a main contributor to the now flourishing concern on the role of institutions and, with that, joining a long Austrian involvement on the subject, already present in Menger's work. This view also stresses the importance of voluntary solutions to problems of negative externalities, not considered in Pigou's view. A second interpretation, which may not exclude the first, rejects a view on the "reciprocal nature of harm" and, most of all, his proposal that under the presence of transaction costs "what has to be decided is whether the gain from preventing the harm is greater than the loss which would be suffered as a result of stopping the action which produces the harm" (Coase, p. 27) i , with the corresponding advice to judges, probably coming from some Coase's followers than from Coase himself, to apportion rights following a cost and benefit analysis in a way to maximize the

Coasean Theory of Property Rights and Law Revisited: A Critical Inqui

Ronald Coase's famous Theorem states that externalities — third-party effects of transactions that undermine the supposed optimality of competitive equilibrium — do not need to be corrected by active government policy, as in the classical presentation by A. C. Pigou, if there are complete markets in property rights. This Theorem, however, is inherently flawed, as revealed by “internal” or “immanent” critique of its assumptions. It thus fails, even on its own terms. Beyond this, however, a more radical critique, which foregrounds issues of social structure, social relations, power and conflict, forms the basis for a comprehensive analysis of (capitalist) property rights. This radical analysis of the Coase Theorem and the debate spawned by it has implications for the entire field of “law and economics” studies, and for its central notion that legal doctrine can be based on any set of pure efficiency criteria.

Coasean Theory of Property Rights and Law Revisited: A Critical Inquiry

Science & Society

Ronald Coase's famous Theorem states that externalities-third-party effects of transactions that undermine the supposed optimality of competitive equilibrium-do not need to be corrected by active government policy, as in the classical presentation by A. C. Pigou, if there are complete markets in property rights. This Theorem, however, is inherently flawed, as revealed by "internal" or "immanent" critique of its assumptions. It thus fails, even on its own terms. Beyond this, however, a more radical critique, which foregrounds issues of social structure, social relations, power and conflict, forms the basis for a comprehensive analysis of (capitalist) property rights. This radical analysis of the Coase Theorem and the debate spawned by it has implications for the entire field of "law and economics" studies, and for its central notion that legal doctrine can be based on any set of pure efficiency criteria.

COASE - THE PROBLEM OF SOCIAL COST

A HIS paper ìs concerned with those actions of business firms which have harmful effects on others. The standard example is that of a factory the smoke from which has harmful effects on those occupying neighbouring properties. The economie analysis of such a situation has usually proceeded in terms of a divergence between the private and social product of the factory, in which economists have largely followed the treatment of Pigou in The Economici of Welfare. The conclusions to which this kind of analyis seems to have led most economists is that it would be desirable to make the owner of the factory liable for the damage caused to those injured by the smoke, or alternatively, to place a tax on the factory owner varying with the amount of smoke produced and equivalent in money terms to the damage it would cause, or fìnally, to exclude the factory from residential distriets (and presumably from other 1 This article, although concerned with a technical problem of economie analysis, arose out of the study of the Politicai Economy of Broadcasting which I am now conducting. The argument of the present article was implicit in a previous article dealing with the problem of allocating radio and television frequencies (The Federai Communications Commission, 2 J. Law & Econ. [1959]) but comments which I have received seemed to suggest that it would be desirable to deal with the question in a more explicit way and without reference to the originai problem for the solution of which the analysis was developed.

The Economics and Ethics of Private Property

Southern Economic Journal, 1994

In writing the following studies I received help from many sides. Special thanks go to my wife Margaret, who again took on the task of de-Germanizing my English; to Llewellyn H. Rockwell, Jr., president of the Ludwig von Mises Institute, and to Burton S. Blumert, president of the Center for Libertarian Studies, for their continuing support of my work; and to my friend David Gordon, for his numerous invaluable suggestions and comments. My largest debt is to Ludwig von Mises and Murray N. Rothbard, the twentieth century's two greatest-though much neglected-economists and social philosophers. While I never met Ludwig von Mises, and indeed had not heard of his name until after his death, I am fortunate to have been closely associated with Murray Rothbard for the past six years, first in New York City, and since 1986 as colleagues at the University of Nevada, Las Vegas. Apart from the intellectual debt that I owe him, words cannot express my personal gratitude. His wisdom, insight, kindness, enthusiasm, and unflagging encouragement have been a continuous inspiration to me. It is, therefore, to him that this volume is dedicated.