ABSTRACT
In his youth, like many students of his generation, Ronald Coase was favorably disposed toward socialism (Coase, 1988b, p. 5). This ideological predisposition, in fact, was one reason why he decided to study economics.1 This attraction to socialism would eventually be dispelled by his understanding of economic processes he learned from Arnold Plant at the London School of Economics. From Plant, Coase learned to appreciate the “invisible hand” of the market economy. Though he was persuaded of the power of the market economy to coordinate the plans of diverse individuals in society, the proposition left Coase with a new question which ate away at him. If the market is so efficient and powerful in organizing our affairs, then why were there business organizations?
