This is a link to a lecture by Coase filmed in 2003. Riveting stuff and very funny especially the bits about Abba Lerner (he tried to convince Trotsky of the virtue of marginal cost pricing- as opposed to machine gunning peasants).
Like Coase, but with a time lag of plus or minus 50 years, I too attended a Grammar School in North London before moving on to the L.S.E and, like him, I too did not follow any of the Econ courses taught there- in his case, this was because that wasn't his subject, in mine it was because I was drunk- but since then our paths in life have much diverged.
Coase fell under the influence of Sir Arnold Plant- born, entre nous, in the Borough of Hoxton- and, hoping perhaps to mitigate the ignominy of so declasse a connection, rather than despairing of slaying the dragon represented by Lord Reith- Coase ultimately emigrated to the Colonies- not the good ones, but those flagrantly and contumaciously defiant of the authority of our Gracious Queen.
An honorable impulse we might think, but it was in vain that Coase crossed the Atlantic's black and bitter waters, the impertinent attentions of the Nobel Prize Committee chivvied him out of his wigmam and broadcast his shame- thus bringing him to my notice.
In the video linked to above- Coase, remarks on Chicago's difficulty in understanding the traditional Wicksteed & L.S.E concept of opportunity cost- it appears they thought the cost of something one possessed was lower than something one paid for, not grasping that anything owned might be sold (absent transaction costs) at the same price as that at which it was bought.
Wicksteed hammered home the London School's insight regarding opportunity cost by making the housewife the paradigm of the economist. The Edwardian household, more happily than my own, was founded upon the essential fungibility and gross substitutability of the housewife's various functions whereas perhaps the patriarchal meat-packers of Chicago could stomach no similarly chilling a reflection on their own place in the scheme of things.
Borrowing one or two of the hackneyed hueristics of socio-biology, one might argue that this is a weakness of Coase's 'theorem'. Men think more about stuff they own and less about stuff they don't. This changes not some Platonic opportunity cost, but the sort of opportunity cost profiles actually accessible to living human beings.
A different point relates to mimesis as a motive for action and a method of control, but that is to introduce a de Maistrean, a Girardian, note, in what is otherwise Wicksteed's Unitarian Kingdom where Guelph and Ghibelline are reconciled.
If anyone deserves to enter that Kingdom, it is Coase- if for nothing else then for his splendidly cavalier dismissal of the theorem that disgraces his name.
To see why- this is a link to Steven Landsburg saying Coase's theorem means Econ theory can't say in advance whether BP should pay for the recent oil spill. Alternatively, here is Walter Block ranting on about how Coase is worse than Communism because he abolishes property rights- Judges should let O.J kill his wife coz he can pay more for the transgression than she (Block sniggers and says she had low self-esteem) would have paid not to be killed.
This is nonsense. Coase said, and says, no such thing. Following Sir Arnold Plant, Coase saw the dangers in endless Govt. regulations, that's all. For British law, the corollary is that it is a good idea to vest rights to potential economic income streams from goods and services in the existing title holder. It's just that the potential income stream of some other title holder may conflict at which point there is a bargaining problem which lawyers and and arbitrators and. for test cases, judges can facillitate with a view to minimizing transaction costs.
Clearly, transactions costs rise if
a) there is uncertainty as to who owns what or where the burden for compensation rests.
b) the threat of a nuisance, or strategic usage of nuisances, becomes a factor.
This is common sense. However, in neither case does Govt. intervention not worsen things because
1) under (a) the Govt may have a perverse incentive to increase rather than mitigate Economy wide uncertainty (though reducing it in the specific case where it gives a ruling)- for example, by retrospectively legalizing illegal structures or the reverse- simply so as to extort bribes or garner political support.
2) If preferences are too diverse there may be no common-sense meaning to 'nuisance'. I may claim that my loud rock music is to me as the Muezzin's call to prayer and, in consequence, to mitigate the nuisance I cause my neighbors is to imperil my hope of Satanic salvation. My neighbors may consider stabbing me regularly to be an essential complement to the ceremony. To call in the Govt. to resolve the issue however- far from allowing a relative harmonization of preferences- may lead to nuisances burgeoning into cults and ideologies. (Surely the correct explanation for their origin).
A common sense view, and Coase is a common sense guy, is that nuisances and catastrophic consequences are the responsibility of the producer- assuming he has agency and capacity to curtail them (lack of either can be compensated for- as with children, lunatics, Belgians, etc- and generally is done so in some bilateral or multilateral manner. The fundamental premise here is that Society always wants less of bad things and more of good things- so there is a certain amount of give and take, a certain notion of civility and the common good underlies everything..
Libertarians invoke the homely metaphor of 'homesteading' quite abstract property rights, though that notion never extended to things the homesteader could not develop just as well as anybody else. Courts have tended to quash 'cybersquatters' who buy domain names only of real use to some other party. The notion that 'a Coasian Judge' is doing this for some Benthamite reason is nonsense. Leo Strauss's discussion of property rights absent scarcity makes this clear. Coase is a common-sense, solid values, empirically driven kind of guy and that's why he is revered in the 'Law and Economics' field.
Coase points out that the proper function of lawyers is reducing transaction costs not padding their bills. Well, that's worth a Nobel Prize in my book.