Instead, however, Coase chooses a very different approach, in which the market’s resource allocation, in accordance with Salter’s and Plant’s teachings, is efficient but in which it appears costly to use the price mechanism. Doing this, Coase formulates an argument that seems intended to undermine Mises’s case for free-market resource allocation by showing that the cost of using the price mechanism makes it imperfect (costly) for coordinating production. While the allocative result of the price mechanism may be superior (even with transaction costs), this is insufficient, since the assumption often made in economic theory—that prices are known—“is clearly not true of the real world.” This identification is well in line with Coase’s lifelong contribution to economic research, which has been dedicated to “the study of the working of the real world economic system.”
The ‘costly market’ approach plays well into the market socialists’ argumentation for the possibility of socialism, as discussed above, and their proposed schemes to overcome Mises’s calculation problem by providing socialism with centrally regulated, advertised (therefore easily known) list prices. Coase's transaction-cost theory of the firm can, in this sense, be interpreted as attempting to undermine the theory of capitalism and, at the same time, strengthen the argument for market socialism.
Really, Coase’s argument essentially echoes that of Taylor (1929): socialism (or the firm) can be as efficient as capitalism, yet have the benefit of being less costly. Coase’s concurrent work on accounting appears to strengthen this interpretation.
—Per L. Bylund, “Ronald Coase’s ‘Nature of the Firm’ and the Argument for Economic Planning,” Journal of the History of Economic Thought 36, no. 3 (September 2014): 320-321.
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