Check out this extensive interview with Professor Ronald Coase conducted by Wang Ning on December 28 and 29, 2010 at Chicago. [Source: University of Chicago Law School] The following are excerpts that I found particularly insightful to me from the interview (with emphasis added). Read the full interview yourself. Highly recommended.
WN (Wang Ning): First of all, happy birthday, professor Coase. As you know, Chinese economists are now holding a Conference in Beijing, “Coase and China”, to celebrate your 100th birthday. To my knowledge, no other western economist, probably with the exception of Karl Marx, has ever been so honored in China. The reason is twofold. It first has to do with the powerful influence of your ideas. Second, you clearly have a special feeling toward China. In Chinese culture, reciprocity is a high virtue. The first question many Chinese people have in mind is, what got you interested in China?
RC (Ronald Coase): I don’t know why I am interested in China. I have been interested for a long time, too long for me to remember. I read Marco Polo many years ago, probably as a schoolboy. It was an impressive book. I don’t think anyone can read the book without being impressed by the Chinese civilization. It went back many centuries. It made great achievements long before the rise of the West. That impression stayed with me forever.
RC: That wouldn’t happen. I was able to do my work at Chicago just as freely as I was at Buffalo.
WN: I think you were right. Given Steve‘s character, I don’t think anyone could stop him from developing his own thought.
RC: I am glad that I later strongly urged Steve to go to Hong Kong. I did not know how much good it would do. But given Steve’s influence in China, I think it was a good move.
WN: Steve certainly played a critical role in developing and explaining your ideas in China. From that point of view, his move to Seattle also helped to influence people like Doug North and Yoram Barzel. I remember North said many times that he learned transaction cost economics from Steve, and Steve learned from you.
RC: I never doubted that Steve would do great work no matter where he was. And good economics will attract good economists. But if he stayed in Chicago, he could have done much more.
WN: You are probably right. If Steve stayed, the Coase-Cheung team would last for more than a decade at Chicago even before Steve went back to Hong Kong. Given your character, you would not be aggressive enough to push your vision of economics at Chicago. But if you were teamed up with Steve, what you called good economics probably would have prevailed in Chicago.
RC: That’s right.
WN: You mentioned many times that you do not like the term, “Coasean economics”, and prefer to call it simply the “right economics” or “good economics”. What separates the good from bad, the right from wrong?
RC: The bad or wrong economics is what I called the “blackboard economics”. It does not study the real world economy. Instead, its efforts are on an imaginary world that exists only in the mind of economists, for example, the zero-transaction cost world.
Ideas and imaginations are terribly important in economic research or any pursuit of science. But the subject of study has to be real.
WN: You have said many times that the Chinese economic reform was extraordinary and unexpected. The third question is what you think was mainly responsible for this unexpected transformation?
RC: We explain this in our book (How China Became Capitalist). [Kempton note: this is one book that I am highly anticipating.] The events were unexpected and could not be stated in advance. It must have something to do with certain personalities. If Deng never existed, the story would be quite different. Those developments, or what we called marginal revolutions in the book, such as the household responsibility system and the Special Economic Zones, might be expected. [Kempton note: Hmm interesting, “Marginal Revolution” also happens to be the name of a long existing economics blog! :) ] But when they happened, we were surprised.
RC: […] In the past, economics was once mainly a British subject. Now it is a subject dominated by the Americans. It will be a Chinese subject if the Chinese economists adopt the right attitude.
WN: I am deeply moved by what you just said. That will give Chinese economists a strong motivation and confidence to develop their own way of thinking.
RC: That’s exactly what they ought to do. That’s another reason that I do not like the term Coasean economics. If the right kind of economics that I have in mind is first developed in China, it will be rightly called the Chinese school of economics by future historians.
WN: This I believe is a very, very important point. You are saying that Coasean economics or what you call the right economics is not developed yet. It is an open subject. And you believe that the Chinese economists have a great chance to develop the subject.
RC: Exactly. I think deference to authority is a bad trait of the Chinese. What Chinese economists should do is to develop their own thinking based on a careful and systematic investigation of the working of the Chinese market economy. My work, “The Nature of the Firm” or “The Problem of Social Cost”, does not provide an answer to questions that the Chinese economists should tackle. The most my work or the work of anyone else can do is to suggest possible directions to tackle the problems.
RC: The main function of the Coase China Society, in my view, is to facilitate the development of independent thinking among Chinese economists. The Society will not be run as a big organization, but a network of many clusters of scholars. Each scholar will pursue what he thinks is the most important question. Each cluster of scholars will form a small community, working on some aspect or some region of the Chinese economy. We shall encourage all kinds of research, historical, statistical, or analytical as long as it sheds light on how the Chinese economy works or changes. This is the only way to get a well-rounded view.
Again, I highly recommend you check out the original full-length interview.