RONALD COASE’S “NATURE OF THE FIRM” AND THE ARGUMENT FOR ECONOMIC PLANNING

Abstract

Ronald Coase was in his early twenties when he developed his groundbreaking theory of the firm. This theory represented a new approach with no obvious precursors, but from where did it arise? 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 his theory of the firm as an argument in defense of economic planning.