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Source link: http://archive.mises.org/4347/new-working-paper/

New Working Paper

November 17, 2005 by

The Chicago School’s Concept of Property Rights: The Coase Theorem and Antitrust Revisionism by Ivan Jankovic (Hayek Institute Belgrade)


Paul Edwards November 22, 2005 at 12:00 pm

This paper is looking really good. The coase statement:

“The question is commonly thought of as one in which A inflicts harm on B and what has
to be decided is, how we should restrain A? But, this is wrong. We are dealing with a
problem of a reciprocal nature. To avoid the harm to B would be to inflict the harm on A.
the real question that has to be decided is, should A be allowed to harm B or should B be
allowed to harm A? The problem is to avoid the more serious harm.”

always made a big impression on me from the start. This paper’s assessment of the implication of this position is presented logically here:

“Put differently, the basic economic philosophy Coase here proclaims is based on so called cost-benefit analysis concerning harm to someone’s property done by someone else. By his opinion, there are no sacrosanct property rights, the breaking of which must be punished and the property holder rectified for it. There is only the task of maximization of overall “social welfare,” regardless whether the procedure of its maximization would harm someone’s legitimate individual property or not. If I kill you, the real problem, according to Coase, is not my aggression on your right to live (“this is wrong”), but the harm I did to social welfare, by eliminating a productive citizen able to produce and enhance the prosperity of the society. If I find the way to convince the judge that you were actually an unproductive member of society, whose life brings to taxpayers more harm than benefit, he should praise the assassination I committed, because I maximized the overall social welfare that way. My failing or hesitating to kill you is harm inflicted to me by you, as well as my killing you is the harm you inflicted on me. The question, according Coase, is not whether I have the right to kill you, but rather what the probable consequences of killing you would be on social welfare, that is, whether the “social cost” of killing you would exceed cost of not killing you.”

Paul Edwards November 22, 2005 at 12:04 pm

Ooops, but i think there is a wording problem with “…as well as my killing you is the harm you inflicted on me” which should be perhaps “…as well as my killing you is the harm I inflicted on you”.

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