Ronald Coase's 'Nature of the Firm' and the Argument for Economic Planning

Abstract

Ronald Coase was in his early 20’s when he developed his groundbreaking theory of the firm. This theory represented a new approach with no obvious precursors, but where did it arise from? This article traces the origins of Coase’s theory of the firm and provides a context for its formation. I argue that Coase’s arguments were rooted in the exchange of ideas in the socialist calculation debate, and that in this context one could read the theory of the firm as an argument in defense of economic planning.