“In mainstream economic theory, the firm and the market are, for the most part, assumed to exist and are not themselves the subject of investigation. One result has been that the crucial role of the law in determining the activities carried out by the firm and in the market has been largely ignored.”

1960s-1980s, "The Firm, the Market, and the Law" (1988)

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Ronald H. Coase19

British economist and author 1910–2013

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“What is studied is a system which lives in the minds of economists but not on earth. I have called the result “blackboard economics.” The firm and the market appear by name but they lack any substance. The firm in mainstream economic theory has often been described as a “black box.””

Ronald H. Coase (1910–2013) British economist and author

And so it is.
1990s and later, "The Institutional Structure of Production" (1992)

“The limit to the size of the firm is set where its costs of organizing a transaction become equal to the cost of carrying it out through the market. This determines what the firm buys, produces, and sells. As the concept of transaction costs is not usually used by economists, it is not surprising that an approach which incorporates it will find some difficulty in getting itself accepted. We can best understand this attitude if we consider not the firm but the market.”

Ronald H. Coase (1910–2013) British economist and author

1960s-1980s, "The Firm, the Market, and the Law" (1988)

“Remember, every business firm, like even a mom and pop grocery store, is a market imperfection. A firm is defined in economic theory as a market imperfection introduced to deal with transaction costs. And the sort of theory is that the imperfections, the firms, are kinda like little islands in a free market sea. But the problem with that is that the sea doesn't remotely resemble a free market, and the islands are bigger than the sea; so that raises some questions about the picture. But these market imperfections, like a firm, or a transnational corporation, or a strategic alliance among them, this is a form of administering interchanges. And there's a real question about whether we want to accept that. Why, for example, should the international socioeconomic system, or for that matter our own society, be in the hands of unaccountable private tyrannies? That's a decision, it's not a law of nature.”

Noam Chomsky (1928) american linguist, philosopher and activist

Talk titled "U.S. Foreign Policy in a Globalized World" at Johns Hopkins University, Maryland, March 13, 2000 https://web.archive.org/web/20021220030406/http://www.gseis.ucla.edu/faculty/kellner/ed270/multimedia.html. <br class="br">Quotes 2000s, 2000

“Writers after Coase have referred to the authority structure of the firm as a "visible hand" that works in combination with Smith's invisible hand. The everyday fact that employers exercise power over their employees — not news to most employees — had been a central theme in Marx's economics, but it was (and generally continues to be) overlooked by most neoclassical economists. Early in his studies Coase noted the similarity between the hierarchical organization of capitalist firms, with their reliance on command relations, and the then-existing system of centralized economic planning in the Communist countries, where production was carried out in accordance with orders from higher authorities and where market competition played little role.”

Samuel Bowles (1939) American economist

Source: Understanding Capitalism: Competition, Command, and Change, 2005, p. 85

“The mark of a capitalistic society is that resources are owned and allocated by such nongovernmental organizations as firms, households, and markets. Resource owners increase productivity through cooperative specialization and this leads to the demand for economic organizations which facilitate cooperation. When a lumber mill employs a cabinetmaker, cooperation between specialists is achieved within a firm, and when a cabinetmaker purchases wood from a lumberman, the cooperation takes place across markets (or between firms). Two important problems face a theory of economic organization—to explain the conditions that determine whether the gains from specialization and cooperative production can better be obtained within an organization like the firm, or across markets, and to explain the structure of the organization.”

Harold Demsetz (1930–2019) American economist

Source: Production, information costs, and economic organization. 1972, p. 777, Lead paragraph

Armen Alchian (1914–2013) American economist

Source: Production, information costs, and economic organization. 1972, p. 777, Lead paragraph

“The second part of the New Right's policy package has been the belief that free-market solutions are always best. It is this latter view which is profoundly mistaken. Markets and profits are crucial, but the pure free-market model itself is deeply flawed.”

Paul Ormerod book The Death of Economics

Part I, Chapter 3, The Roots of Economic Orthodoxy, p. 65
The Death of Economics (1994)

“Economic theory is the most prestigious subject of instruction and study. Agricultural economics, labor economics and marketing are lower caste fields of study.”

John Kenneth Galbraith book The New Industrial State

Source: The New Industrial State (1967), Chapter X, Section 5, p. 122 (Mr. Galbraith was originally an agricultural economist...)

“In the early 1970s,… economists began to embrace the Rational Expectations Hypothesis (REH), according to which market participants’ expectations are “essentially the same as the predictions of the relevant economic theory” (Muth 1961: 316). What has been largely overlooked is that, … REH theorists presume that the role of market participants’ expectations in driving outcomes is not autonomous from the other components of the model. … Because REH models, by design, rule out an autonomous role for expectations, they are best viewed as derailing, rather than developing, the microfoundations approach.”

Roman Frydman (1948) American economist

"Which Way Forward for Macroeconomics and Policy Analysis?" 2013

“Property rights, governance structures and rules of exchange are arenas in which modern states establish rules for economic actors. States provide stable and reliable conditions under which firms organize, compete, cooperate and exchange. The enforcement of the laws affects what conceptions of control can produce stable markets. There are political contests over the content of laws, their applicability to given firms and markets, and the extent and direction of state intervention into economy. Such laws are never neutral. They favor certain groups of firms.”

Neil Fligstein (1951) American sociologist

Source: Markets as politics: A political-cultural approach to market institutions, 1996, p. 657

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Ronald H. Coase19

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