Saturday, January 12, 2008

Bilious Bainbridge

S. Bainbridge is well-known as (to quote his own website), the author of "one of the most widely read political and legal weblogs on the Internet."

So I suppose I should be flattered. He looks down from his Olympian heights to discuss my little "Boss Doesn't Wear Bunny Slippers" article, a light and airy confection no one could possibly mistake for an academic article.

He dismisses it as containing "nothing new." This is a rather remarkable claim. I can add some other things. It is not written in Russian! It is not a secret code leading to pirate treasure! (Garrr!)

I could go on. But why? No one THOUGHT the piece was written in Russian, or contains a secret code. And no one thought it contained anything new. It is clearly an exposition, and a simplistic one, of Coase's 1937 paper. It is "published," if you can call it that, on a web site that contains a monthly essay that is to be used for (WAIT FOR IT!) teaching basic principles to high school students, and others with no background in economics.

The good Bainbridge suggests that readers should read, instead, a piece written by...the good Bainbridge!

And, he is quite right that his article is earlier, deeper, wider-ranging, and more insightful than mine. But two thing struck me, in this regard.

1. There is nothing new in his paper, either. The theory of the firm, developed
between the 1930s and early 1970s, completely anticipates everything he says. (He is correct, let me emphasize, that his piece is much more interesting in the connections it makes. But it is NOT new.)

2. My article was "published" on a web site dedicated to illustrating basic principles. His article, written in 1997, was published....NOT! What sort of person castigates someone else for failing to cite a ten year old, UNPUBLISHED working paper? Answer: S. Bainbridge!

Now, to be fair, our Bainbridge is clearly reacting with annoyance to the (in his view) overly enthusiastic review from THE ECONOMIST. He is not primarily interested in my piece at all, and it is disingenuous of me to interpret his remarks the way I have above. He just wants FREE EXCHANGE to cite HIM, instead of me.

But why be fair?


Prison Rodeo said...


Is Harold Spaeth writing for the Economist now?


Robert S. Porter said...

You'd be upset too if you had to live in California and work at a law school.

Tom said...

All work to the out-house! It's my new slogan after reading the Bunny Slippers piece.

Seriously, the question raised there is the most interesting one I've seen in a while:

What determines the margin where the firm stops organizing additional transactions internally, and buys goods or services instead through the market?

The single word answer, "profits," isn't much help. The individual manager still has examine each candidate function carefully and then do some guessing. But it's not him that I'm worried about. I'd want to know how to change things so as to move that margin inware, making more things good candidates for out sourcing. One obvious way is to invent the internet. Well, it's obvious now; twenty years ago, an economist who suggested that easy flow of information through computer would change the structure of business -- he would have been a very prescient fellow.

Perhaps our economists can tell us what kinds of changes to public policy or law can encourage this trend. (If you're a socialist, then the question is how to DIScourage it.) Perhaps the trend is inevitable? Then the firm will wither away -- it's about time something did.