In the process of writing a 1,000-word essay on the life and times of the great twentieth-century economist, Ronald Coase, I was reminded of a brilliant short essay he wrote late last year.
Ronald Coase wrote of the evolution of economic thought as a unified, but increasingly mechanistic, construct, and the need to return economics to more realistic intellectual foundations. Coase was not hesitant to describe, in quite forceful terms, the significant implications of the change in economic social-science into a discipline increasingly divorced from reality:
This separation of economics from the working economy has severely damaged both the business community and the academic discipline. Since economics offers little in the way of practical insight, managers and entrepreneurs depend on their own business acumen, personal judgement, and rules of thumb in making decisions. In times of crisis, when business leaders lose their self-confidence, they often look to political power to fill the void. Government is increasingly seen as the ultimate solution to tough economic problems, from innovation to employment. 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.
If you have the time, by all means read the entire essay and ponder the kind of intellectual legacy that Coase wanted to leave behind: an economics that appreciates the fallible, yet capable, acting man as he is; an economics that marvels at how decentralised civil institutions, such as firms, help reduce the costs of navigating through spontaneously ordered manifestations of human economic action, most notably markets; and the sheer audacity of strangers coming together to achieve economic desires and resolve economic problems, for mutual benefit, and without recourse to cynical and remote political imposition of tax, regulatory or subsidy force.