Thenatureofthefirm英文原版完美重排版.docx

1、Thenatureofthefirm英文原版完美重排版The nature of the firmR. H. CoaseEconomic theory has suffered in the past from a failure to state clearly its assumptions . Economists in building up a theory have often omitted to examine the foundation on which it was erected. This examination is, however, essential not

2、only to prevent the misunderstanding and needless controversy which arise from a lack of knowledge of the assumptions on which a theory is based, but also because of the extreme importance for economics of good judgment in choosing between rival sets of assumptions. For instance, it is suggested tha

3、t the use of the word firm” in economics may be different from the use of the term by the plain man”. Since there is apparently a trend in economic theory towards starting analysis with the individual firm and not with the industry , it is all the more necessary not only that a clear definition of t

4、he word firm should be given but that its difference from a firm in the real world, if it exist，should be made clear. Mrs. Robinson has said that the two questions to be asked of a set of assumptions in economics are: Are they tractable? And: Do they correspond with the real world? “. Though, as Mrs

5、. Robinson points out, “more often one set will be manageable and the other realistic”， yet there may well be branches of theory where assumptions may he both manageable and realistic. It is hoped to show in the following paper that a definition of a firm may be obtained which is not only realistic

6、in that it corresponds to what is meant by a firm in the real world, but is tractable by two of the most powerful instruments of economic analysis developed by Marshall, the idea of the margin and that of substitution, together giving the idea of substitution at the margin . Our definition must, of

7、course, relate to formal relations which are capable of being conceived exactly. It is convenient if, in searching for a definition of a firm, we first consider the economic system as it is normally treated by the economists. Let us consider the description of the economic system given by Sir Arthur

8、 Salter. The normal economic system works itself. For its current operation it is under no central control, it needs no central survey. Over the whole range of human activity and human need, supply is adjusted to demand, and production to consumption, by a process that is automatic, elastic and resp

9、onsive. An economist thinks of the economic system as being coordinated by the price mechanism and society becomes not an organization but an organism. The economic system works itself. This does not mean that there is no planning by individuals. These exercise foresight and choose between alternati

10、ves. This is necessarily so if there is to be order in the system. But this theory assumes that the direction of resources is dependent directly on the price mechanism. Indeed, it is often considered to be an objection to economic planning that it merely tries to do what is already done by the price

11、 mechanism. Sir Arthur Salters description, however, gives a very incomplete picture of our economic system . Within a firm， the description does not fit at all. For instance, in economic theory we find that the allocation of factors of production between different Uses is determined by the price me

12、chanism. The price of factor A becomes higher in X than in Y. As a result，A moves from Y to X until the difference between the prices in X and Y , except in so far as it compensates for other differential advantages, disappears. Yet in the real world , we find that there are many areas where this do

13、es not apply. If a workman moves from department Y to department X , he does not go because of a change In relative prices，but because he is ordered to do so. Those who object to economic planning on the grounds that the problem is solved by price movements can be answered by pointing out that there

14、 is planning within our economic system which is quite different from the individual planning mentioned above and which is akin to what is normally called economic planning. The example given above is typical of a large sphere in our modern economic System. Of course, this fact has not been ignored

15、by economists. Marshall introduce organization as a fourth factor of production; J B. Clark give the co-ordinating function to the entrepreneur; Professor Knight introduces managers who co-ordinate. As. D. H. Robertson points out, we find islands of conscious power in this ocean of unconscious co-op

16、eration like lumps of butter coagulating in a pail of butter milk. But in view of the fact that it is usually argued that co-ordination will be done by the price mechanism，why is such organization necessary? Why are there the islands of conscious power? Outside the firm, price movements direct produ

17、ction, which is co-ordinated through a series of exchange transactions on the market. Within a firm, the market transactions are eliminated and in place of the complicated market structure with exchange transactions is substituted the entrepreneur-co-ordinator ，who directs production. It is clear th

18、at these are alternative methods of co-ordination production. Yet, having regard to the fact that if production is regulated by price movements, production could be carried on without any organization at all, well might we ask, why is there any organization? Of course, the degree to which the price

19、mechanism is superseded varies greatly. In a department store, the allocation of the different sections to the various locations in the building may be done by the controlling authority or it may be the result of competitive price bidding for space. In the Lancashire cotton industry, a weaver can re

20、nt power and shop-room and can obtain looms and yarn on credit. This co-ordination of the various factors of production is, however，normally carried out without the intervention of the price mechanism. As is evident， the amount of vertical integration, involving as it does the supersession of the pr

21、ice mechanism, varies greatly from industry to industry and from firm to firm. It can, I think, be assumed that the distinguishing mark of the firm is the supersession of the price mechanism. It is of course, as Professor Robbins points out, related to an outside network of relative price and costs,

22、 but it is important to discover the exact nature of this relationship. T his distinction between the allocation of resources in a firm and the allocation in the economic system has been very vividly described by Mr. Maurice Dobb when discussing Adam Smiths conception of the capitalist: it began to

23、be seen that there was something more important than the relations inside each factory or unit captained by an undertaker; there were the relations of the undertaker with the rest of the economic world outside his immediate sphere . . . . The undertaker busies himself with the division of labor insi

24、de each firm and he plans and organizes consciously, but he is related to the much larger economic specialization, of which he himself is merely one specialized unit. Here, he plays his part as a single cell in a larger organism, mainly unconscious of the wider role he fills. In view of the fact tha

25、t while economists treat the price mechanism as a co-ordinating instrument, they also admit the co-coordinating function of the entrepreneur, it is surely important to enquire why co-ordination is the work of the price mechanism in one case and of the entrepreneur in another. The purpose of this pap

26、er is to bridge what appears to be a gap in economic theory between the assumption (made for some purposes) that resources are allocated by means of the price mechanism and the assumption (made for other purposes) that this allocation is dependent on the entrepreneur-co-ordinator. We have to explain

27、 the basis on which in practice, this choice between alternatives is effected. Our task is to attempt to discover why a firm emerges at all in a specialized exchange economy. The price mechanism (considered purely from the side of the direction of resource) might be superseded if the relationship wh

28、ich replaced it was desired for its own sake. This would be the case, for example, if some people preferred to work under the direction of some other person. Such individuals would accept less in order to work under someone, and firms would arise naturally from this. But it would appear that this ca

29、nnot be a very important reason , for it would rather seem that the opposite tendency is operating if one judges from the stress normally laid on the advantage of being ones own master. Of course, if the desire was not to be controlled but to control, to exercise power over others, then people might

30、 be willing to give up something in order to direct others; that is，they would be willing to pay others more than they could get under the price mechanism in order to be able to direct them. But this implies that those who direct pay in order to be able to do this and are not paid to direct, which i

31、s clearly not true in the majority of cases. Firms might also exist if purchasers preferred commodities which are produced by firms to those not so produced; but even in spheres where one would expect such preferences (if they exist) to be of negligible importance, firms are to be found in the real

32、world. Therefore t here must be other elements involved. The main reason why it is profitable to establish a firm would seem to be that there is a cost of using the price mechanism. The most obvious cost of organizing production through the price mechanism is that of discovering what the relevant pr

33、ices are. This cost may be reduced but it will not be eliminated by the emergence of specialists who will sell this information. The costs of negotiating and concluding a separate contract for each exchange transaction which takes place on a market must also be taken into account. Again, in certain markets， e. g.，produce exch