BusinessWeek on Coase's Proposed New Journal

Urging Economists to Step Away From the Blackboard
Brendan Greeley
Businessweek.com
November 29, 2012

Ronald Coase published his career-making paper, “The Nature of the Firm,” 75 years ago. He won the Nobel prize for economics in 1991. In a lecture in 2002, he argued that physics has moved beyond the assumptions of Isaac Newton, and biology beyond Darwin. (Not that he knew them.) But economics, he said, had failed to advance past the efficient-market assumptions of Adam Smith. This year Coase, a professor emeritus at the University of Chicago Law School, is attempting to start a new academic journal ambitiously titled Man and the Economy. The premise: Economics is broken. Coase’s journal is still just a plan, but his frustration with orthodox economics has energized his followers.

The financial crisis forced economists to confront the limitations of their profession. Former Federal Reserve Chairman Alan Greenspan admitted as much when he told Congress in October 2008 that markets might not regulate themselves after all. Coase says the problem runs deeper: Economists study abstractions and numbers, instead of firms and people. He doesn’t believe this can be fixed by tweaking models. An entire generation of economists must be encouraged to think differently.

The idea for the journal stems from his collaboration with Ning Wang, an assistant professor at the School of Politics and Global Studies at Arizona State University who grew up in a rice- and fish-farming village in the Hubei province of China. Coase, 101, began working with Wang in the 1990s at the University of Chicago. Neither has a degree in economics; the two understood each other. “We’re not constrained by a mainstream, orthodox view,” says Wang. “A lot of people would see this as a weakness.” Coase declined to be interviewed.

Comments

Kudos Prof Coase for telling economists to reflect ground truth

Professor Coase

Rich complements for telling economists to reflect 'ground truth'. The 'ground truth' accordingly has to  be seen by several social science windows, and not just micro or macro mathematical / econometric models. I give you examples for instance how cultures play a dominant role in contributing to welfare and incomes. The culture of looking after aged parents reduces the burden of insurance and social security; the culture of being together in family making compromises and mutual recognition of interdependence, reduces divorce rates and brings family ambience among chldren; the culture of maintaining sexual sanity among youngsters increases respect for women in society and reduces costs of policing.; the culture of rituals / festivities created demand