Coase’s choice of methodology

This paper examines the nature of Ronald H. Coase’s realism by considering the relationship between theories and facts in his methodology. I focus especially on Coase’s criticisms of Friedman’s 1953 essay, as set out in a lecture published in 1982. It is shown that in developing his argument, Coase applies his institutional economics to address the question of how economists, operating within a regulated market for ideas, choose their theories. He calls for realism in methodology and carries out an empirical study of economists’ choices. He explores how the profession is regulated and highlights how discourse impacts on the functioning of science. A key question addressed within this paper is: how can Coase maintain a sociological and rhetorical view of science without falling into relativism? I identify the different motives for theory choice that Coase considers and show that his answer is both institutional and epistemic. This helps to clarify the status of the empirical basis in Coase’s methodology and sheds new light on the nature of his realism. I conclude by carrying out a reflexive analysis of Coase’s text as a text that attempts to justify the methodology on which it is itself based.