Misunderstood

Diary Entry: December 20, 2024

I am so confused.

After that disastrous JSD seminar, I decided I have to figure this out for the Cornell paper. I can’t just repeat the “reciprocal causation” and “spinning blade” arguments. I need to know what’s really going on.

So, I’ve spent the last couple of days buried in the library and on every online database, reading about Coase. And what I’m finding is just... baffling.

I kept coming across articles and book chapters claiming that The Problem of Social Cost is widely “misunderstood.” I just brushed it off at first. Academics always say that to sound smart, like they’re the only ones who really get it. One commentator even arrogantly claimed that “something like a dozen people in the world understand that the ‘Coase’ theorem is not the Coase theorem”. But then I found it. I found Coase, in his own words, saying the exact same thing. He flat-out complained that “My point of view has not in general commanded assent, nor has my argument, for the most part, been understood”.

I had to read that sentence three times. The man who wrote the most cited law review article in history says that nobody understood his argument.

What?!

And it gets even crazier. He seems to have completely dismissed the “Coase Theorem” — the one thing everyone knows him for! The thing we spent the entire seminar on. He wrote that “the discussion has largely been devoted to sections III and IV of the article... neglecting other aspects of the analysis”. Sections III and IV! That’s it! That’s the whole “zero transaction costs” hypothetical.

This is where my brain just... breaks.

I am really, really, really confused. How can a paper be the “most widely cited” in the world if the author himself says everyone is misunderstanding it?

What are people citing?

Are they all just citing the two chapters that Coase says aren’t the main point? Did all those Nobel laureates at that famous Chicago dinner just build an entire field of “Law and Economics” on a fragment of a paper they didn’t even understand?

How can the “most cited” also be the “most misunderstood”?

None of this makes any sense. It’s a complete paradox. What is in those other eight chapters?