No abstract

Following Coase’s fundamental concern with planning, in this paper we highlight strategic decision‐making as important for distinguishing the essence of the modern large corporation. It is consistent with industrial organization analysis of industries yet provides a novel starting point for the theory of the firm. We suggest different boundaries to the organization compared with those identified elsewhere, and whereas others peering into the black box of Walrasian theory merely see more of what is on the outside, we see transactions within and without the firm as fundamentally different. The analysis recognizes Pareto inefficiencies but concludes with an optimistic vision for economic policy.

Debates between economists are not just technical arguments amongst practitioners but often reflect philosophical and ideological positions which are not always made explicit. Discontent grew with the prevailing economic orthodoxy as the long period of economic expansion in the advanced capitalist economies came to an end in the 1970s; disenchantment was expressed in open discussion about the 'crisis' in economics and in the rise of various kinds of radical economic theory, often using the general title of 'political economy'.

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