Friday, July 1, 2011

Coase as a Proto-Dehomogenizer?

"Quite apart from the malallocations which are the result of political pressures, an administrative agency which attempts to perform the function normally carried out by the pricing mechanism operates under two handicaps. First of all, it lacks the precise monetary measure of benefit and cost provided by the market. Second, it cannot, by the nature of things, be in possession of all the relevant information possessed by the managers of every business which uses or might use radio frequencies, to say nothing of the preferences of consumers for the various goods and services in the production of which radio frequencies could be used." - R. H. Coase, The Federal Communications Commission, 2 J LAW & ECON 1 (1959), p. 18.

The title of this post is of course tongue-in-cheek, but it is still interesting to come across what seems to be a prominent Chicagoan's appreciation of the fact that Mises's and Hayek's arguments against central planning are complementary, but different (not to mention the fact that they are both clearly distinguished from the public-choice-style agency problems).


  1. I remember thinking exactly the same thing while reading that paper some time ago... It's actually something, that I'd like Peter Boettke to comment on - him disagreeing with all the dehomogenisation on the one hand, and being a big Coase fan on the over. That's not to say, that this supports dehomogenisation, you could still argue, that Hayek made both arguments (e.g. "Two pages of fiction"), but then you have to concede, that there actually ARE two distinct arguments to be made...

  2. Whoa! Thanks for this quote. It fits perfectly in my first dissertation essay!