Ronald H. Coase quote: “What is studied is a system which lives in the minds of economists but not on earth. I have called the result “blackboa…”

“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.”

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

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

“Economists have uncovered the conditions necessary if Adam Smith’s results are to be achieved and where, in the real world, such conditions do not appear to be found, they have proposed changes which are designed to bring them about. It is what one finds in the textbooks. Harold Demsetz has said rightly that what this theory analyses is a system of extreme decentralisation. It has been a great intellectual achievement and it throws light on many aspects of the economic system. But it has not been by any means all gain.”

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

1990s and later, "The Institutional Structure of Production" (1992)

“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...)

“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

“Alongside their work on pure economic theory, the classical political economists engaged in a parallel project: to promote the forcible reconstruction of society into a purely market-oriented system.”

Michael Perelman (1939) American economist

Source: The Invention of Capitalism: Classical Political Economy and the Secret History of Primitive Accumulation (2000), p. 2

“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

“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.”

Armen Alchian (1914–2013) American economist

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

“There is much evidence that people are not rational, in the economist’s sense; nor do they take into account expectation, in the precise interpretation of that word. As a result economic theory often does not correspond with what happens in the market. Some would argue that we need descriptive economics. I would argue that all should be taught about probability, utility, and MEU (maximization of expected utility) and act accordingly.”

Dennis Lindley (1923–2013) British statistician

2. Stylistic Questions. p. 22.
Understanding Uncertainty (2006)

“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.
Quotes 2000s, 2000

“The corporatist-economic model of society appears to be governing us. Economists, often in the pay of transnationals, are deciding, for us, what democracy is, and will be.”

B. W. Powe (1955) Canadian writer

Letter To Those In power, p. 83
Towards a Canada of Light (2006)

“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.””

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