On Sat, Dec 27, 2025 at 08:25 AM, Jim Farmelant wrote: > > we got into some discussion concerning Ronald Coase
I am quite enchanted by Coase's "stepping stone" explanation for zero transaction costs. Going back before Pigou's uncompensated disservices to Marshall, the concept of " external economies " didn't have the negative connotation that " externalities " have subsequently evolved. Marshall was initially interested in how the external economies of agglomeration contributed to increasing returns to scale. His external economies explicitly included what Coase would later call transaction costs: > > External economies are constantly growing in importance relatively to > Internal in all matters of Trade-knowledge: newspapers, and trade and > technical publications of all kinds are perpetually scouting for him and > bringing him much of the knowledge he wants — knowledge which a little > while ago would have been beyond the reach of anyone who could not afford > to have well-paid agents in many distant places. > Oddly, Coase didn't mention Marshall's " internal economies" in his 1937 article "The Nature of the Firm" though the article could be seen as an extended meditation on internal economies. One stepping stone forward, two steps back! I am not sure exactly how terminology evolved from Marshall's external and internal economies and diseconomies to today's (environmental) externalities by way of Pigou's uncompensated services and disservices. It is the latter that Coase intends with his social cost. With such profusion of terminology, it is easily overlooked that "transaction cost" is a kind of "external diseconomy"! The imaginary dividing line between transaction costs and social costs would thus appear to be the difference between information and "the environment." When it is understood that a social cost can easily manifest as a transaction cost, the "stone" becomes too treacherously slippery to step on. I can't say if this is Coase's fault or Pigou's. I agree in principle with Jim's idea of a historical grounding for socialist reappropriation of algorithmic planning capabilities being developed by capital. I don't see how, though. Digital planning does not just reduce transaction costs for big corporations. It raises them for everyone else. At some point it doesn't even have to succeed at the former as long as it can do the latter. -=-=-=-=-=-=-=-=-=-=-=- Groups.io Links: You receive all messages sent to this group. View/Reply Online (#39897): https://groups.io/g/marxmail/message/39897 Mute This Topic: https://groups.io/mt/116961607/21656 -=-=- POSTING RULES & NOTES #1 YOU MUST clip all extraneous text when replying to a message. #2 This mail-list, like most, is publicly & permanently archived. #3 Subscribe and post under an alias if #2 is a concern. #4 Do not exceed five posts a day. -=-=- Group Owner: [email protected] Unsubscribe: https://groups.io/g/marxmail/leave/13617172/21656/1316126222/xyzzy [[email protected]] -=-=-=-=-=-=-=-=-=-=-=-
