Ronald H. Coase’s 1960 article, “The Problem of Social Cost,” has misled more free market economists than any scholarly article ever published. It has been cited in footnotes more than any other law review article.
I published my refutation in 1990. I also refuted Coase’s disciple, Gary Becker.
Coase won the Nobel Prize in 1991. Becker won in 1992. This indicates my degree of influence with the Nobel committee.
Coase died at the age of 102 in 2013.
Coase’s article rests on a specious ethical neutrality. It also invokes a world of zero transaction costs: human omnisciece. He made the assumption that it does not matter who owns a resource; it will be distributed by market forces in the same way, no matter who owns it, if the courts enforce liability laws. He assumed that resource owners place zero price on maintaining their ownership. None of these assumptions is true. The thesis is known as the Coase theorem.
With these arguments, Coase converted the entire economics department of the University of Chicago in one evening in 1960. They took an informal vote when he presented his thesis: 20 to 1 opposed. Coase was the lone supporter. By the end of the evening, he had convinced them all — including Milton Friedman. Nobel Prize winner George Stigler relates this story in his autobiography, Memoirs of an Unregulated Economist.
My summary article on the Coase theorem appeared in The Journal of Libertarian Studies in 2002. You can read it here.
The full book is here.