In my previous two posts (see here and here), we attempted to trace the intellectual origins of Ronald Coase’s reciprocal-harm axiom to Wesley Hohfeld’s theory of legal relations and to the “LSE tradition in cost theory” developed by Lionel Robbins and F. A. Hayek at the London School of Economics in the 1930s. A more likely source, however, is Arnold Plant (pictured below), Coase’s favorite professor at the London School of Economics.
Why Plant? For starters, because we have no evidence of Coase attending any lectures by Hayek or Robbins during his undergraduate years — in fact, Hayek did not join the faculty of the London School of Economics until 1931,[1] when Coase would have been studying abroad (see, e.g., Coase 1991)[2] — and furthermore, by his own admission (see, e.g., Coase 1982), it was Professor Plant who exerted the greatest influence on Coase’s intellectual development during his formative student years at the London School of Economics.[3]
By way of background, Coase had enrolled in the Bachelor of Commerce or “B.Com.” program at the London School of Economics in October 1929,[4] and Plant had begun teaching at the London School of Economics in 1930, when he was appointed to the newly‑created position as Sir Ernest Cassel Professor of Commerce with special reference to Business Administration.[5] (At the time, Plant’s teaching and research duties centered on the Industry and Trade Group in the B.Com.[6]) Here is where the paths of Ronald Coase and Arnold Plant intersect, for as part of his studies for the undergraduate B.Com. degree, the young Coase would have very likely enrolled in a course on the Elements of Commercial Law and Industrial Law,[7] a course that was most likely taught by Arnold Plant, who was the director of the Industry group at LSE at the time.[8]
As a result, Coase may have already been familiar with the case of the noisy confectioner (Sturges v. Bridgman) as well as with the many other reciprocal-harm cases in his 1960 social cost paper from his undergraduate student days at the London School of Economics, when Coase most likely attended a seminar on industrial law taught by Plant.[9] On this view, it was Plant who first taught Coase about the reciprocal nature of harms. But there is yet another possibility: what if Coase had developed his model of reciprocal harms after his undergraduate years at the LSE? (To be continued…)
[1] See Caldwell & Klausinger 2022, pp. 278-282.
[2] Coase had been awarded a travel scholarship for the 1931-32 academic year and was studying in the United States at that time.
[3] See Coase 1988a, p. 20. See also Marciano 2019, pp. 559-560.
[4] Coase had enrolled in an undergraduate commerce degree at the London School of Economics in 1929 and attended the lectures of Arnold Plant during his second year of studies. See Marciano 2019, p. 3.
[5] See Coase 1994, p. 179. See also Thomas 2016, p. 23.
[6] See Cord 2019, p. 332. In addition to the Industry Group, the B. Com. program at LSE comprised several other sections as well, including “Banking and Finance,” “General Transport,” “Shipping and Inland Transport,” “Public Utilities,” and “Art in Relation to Commerce.” See Appendix 3 in Thomas 2020.
[7] Coase himself once mentioned attending multiple law courses at the London School of Economics, where Coase studied commerce as an undergraduate from 1929 to 1931. See Coase 1988a, p. 29. See also Campbell & Klaes 2016, pp. 809–810. See also Marciano 2019, p. 557
[8] According to Jim Thomas (2020), an Emeritus Reader and Research Associate at the London School of Economics (LSE), the Bachelor of Commerce degree was a three‑year degree that was first offered by the LSE in 1919, and this undergraduate degree required three sets of exams: an Intermediate Examination at the end of the First Year as well as a Final Examination (the B.Com. Final) consisting of two parts, with Part 1 being taken at the end of the Second Year and Part 2 at the end of the Third Year. See Thomas 2020, pp. 6–7. Among the subjects that Coase would have been tested on for Part 1 of the B.Com Final was “Elements of Commercial Law (treated from the commercial rather than the legal standpoint).” See Thomas 2020, p. 19, Appendix 3(b). Likewise, for students in the Industry group, Part 2 of the B.Com Final Exam encompassed the following four subjects: (i) an “Approved Modern Foreign Language,” (ii) “Business Organization and Scientific Management,” (iii) “Works and Factory Accounting, with special reference to Cost Accounts and Depreciation,” and last but not least, (iv) “Industrial Law” or “The Law relating to Factories and Workshops, Workmen’s Compensation, Trade Unions, Employer’s Liability, Friendly Societies, National Insurance, [and] Labour conditions.” See Thomas 2020, pp. 20–21, Appendix 3(c). See also Campbell & Klaes 2016, pp. 809-810.
[9] See Marciano 2019, p. 557. See also Campbell & Klaes 2016, pp. 809-810.
