Ronald Coase was 50 years old the year that he published “The Problem of Social Cost.” The paper’s basic intuitions were already well-formed when he wrote “The Nature of the Firm” nearly 25 years earlier. That “Social Cost” came to be written at all was only happenstance, more or less the product of being required, as a precondition of an invitation to present his work at Chicago, to make more explicit some of the basic premises that had informed his paper on the Federal Communications Commission the prior year. And the invitation was only extended in the first place because Chicago-school economists believed so strongly that those premises were wrong.

It is worth remembering, too, that, according to Coase’s own lamentations in the late 1980s, the vast majority of the economics profession had misunderstood and misapplied his key point in “Social Cost,” with the tragic consequence that the idea George Stigler dubbed “the Coase Theorem” lent credibility to Chicago-school law and economics, which in turn nourished the project to radically reconstruct the state and the global economy starting in the late 1970s. Coase did not believe the Coase theorem applied to the world in practice. As for Stigler’s idealized version, Coase thought it was not only wrong, but nonsense.

Since 1990, Coase’s original agenda, to get policy makers to base their decisions on serious, careful thinking about the comparative cost consequences of various institutional arrangements, has steadily gained ground in both domestic and international policy making, albeit not always in the form he imagined. “Governance” is sometimes used as no more than a weasel word for regulation, but it has often been used to gather together projects to assign rights and decision-making powers so as to make the best use of  local constellations of interests, knowledge and capacities, rather than trying to solve problems by creating comprehensive laws. Whatever one may think of that agenda as a matter of democratic legitimacy or pragmatic policy-making, it is preferable to the naive market boosterism of Stigler’s neoliberalism 1.0. And as much as we can say that the latter project was helped along politically by misreadings of Coase’s original intent, we should also admit that without Coase’s framing of the problem there is no Williamson, and without Williamson no “governance.”

Let me say all this again: Coase developed a world-changing idea in 1937, simply by trying to think through gaps between the idealizations of economic theory and the realities of business practice; he did not publish an articulation of that idea that ‘took’ until he was 50 years old; the articulation that brought his ideas to fame was only published because a group of well-resourced academics were so convinced he was wrong; for another 30 years, his ideas were put to uses almost completely contrary to those he had intended. It is only now, 15 years after his death, over 50 years since Social Cost, and 80 years after he first developed his original insight, that we can fairly say that his ideas are being put to use in earnest.

So, let us remember in our infinite humility how little we can know about whether our ideas are good ones, what it might take for those ideas to take hold, what uses they might be applied to if they are taken up, and how those uses may ultimately shape the world. As for the idea of transaction costs: is it good news, or is it bad news? It is still too soon to say. As for our own ideas, it is unfortunately too soon to even ask.