Economics as a Tool for the State, Rather than a Window to Enlightenment

|Peter Boettke|

Ronald Coase -- even at 102 years of age --  still has that rare gift -- simple and clear argument in economic thinking.  In bemoaning the drift of economics away from hands-on engagement with the economy, Coase in his recent essay in HBR argues that "Economics thus becomes a convenient instrument the state uses to manage the economy, rather than a tool the public turns to for enlightenment about how the economy operates."

Coase's essay "Saving Economics from the Economists" concludes with the encouraging appeal for those who study the entrepreneurial market process and the institutions that either hinder or thwart the process of economic development:

It is time to reengage the severely impoverished field of economics with the economy. Market economies springing up in China, India, Africa, and elsewhere herald a new era of entrepreneurship, and with it unprecedented opportunities for economists to study how the market economy gains its resilience in societies with cultural, institutional, and organizational diversities. But knowledge will come only if economics can be reoriented to the study of man as he is and the economic system as it actually exists.

 

Comments

[Mario Rizzo]

"He is launching a new journal, Man and the Economy, with Ning Wang of Arizona State University, who contributed to this column."

This is also good news. Even if it is competition for the Review of Austrian Economics.

[Jerry O'Driscoll]

I zero in on his assessment that economists now work in the service of the state. That is all too true.

Coase offers a radical political economic indictment of the profession. As economists, we must ask how do we change the incentives?

[Matt R.]

Coase must know this better than most at this point. What I love about this problem is it is rooted in economics itself. As to say we can explain the "Economic" shift toward the state with economics and incentives. I shouldn't say fun, but ironic I suppose.