The rhetoric of Oliver Williamson's transaction cost economics

Abstract

Bounded rationality, opportunism, the primacy of markets and the action of economizing are building blocks of Oliver Williamson's Transaction Cost Economics (TCE). As in all intellectual exchanges, Williamson has used a range of argumentative devices to set up and negotiate his basic notions and assumptions with economists. Rhetorical analysis is applied here to study his argumentation in a certain institutional context within economics. Negotiations with the mainstream, with the competence view of the firm and within the New Institutional Economics, for instance, have had an impact on the construction of TCE and are given attention here. Difficult decisions have been made in order to forge ahead with TCE, including whether to uphold some notions (e.g. opportunism) at the cost of leaving others behind (e.g. economics of atmosphere). Rhetorical transactions like this have shaped TCE and its recognition in economics and related areas.

Metaphors of Transaction Cost Economics

“…Klaes & Sent (2005) Much of the criticism of "contractual man" targets the attention given to opportunism and bounded rationality that comes to the exclusion of other human attributes (Pessali 2006). The metaphor of "contractual man"…”

“…The works of Oliver Williamson in special have given the field a new breadth of life since the 1970s (Pessali 2006). No different to other intellectual constructions, TCE has been built on a set of key metaphors.…”

Debates in the Methodology of Economics and the Value of an Environmental Amenity

“…Adams et al, 2005;Pessali, 2006). Below I show the distinction between the two different basic economics perspectives (presentation adapted from Lawson, 1997; see also Weston, 2003).…”

The transaction costs of semi-public institutions

“…Surely it would be unfair to describe those of his beliefs that have subsequently been proven to be unfounded as "ideological", even if they represented the best economic science could do when they were written? 431 This is not a merely hypothetical question. As we shall see in the next chapter, both the initial arguments for organising the railways privately and the subsequent arguments for their consolidation and nationalisation were based at least in part on the scholarly writings of the time.…”

“…However, when the state acts both as lawmaker and as market participant, the difference may well be less clear. Moreover, since the alignment mechanisms usually operate side by side, the differ- 431 Cf. North (2005), p. viii.…”