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Who knows the secret of the black box?
The man who restored the pin factory to its rightful place at the heart of economic theory celebrates his 100th birthday on December 29th. The economics profession was slow to recognise Ronald Coase’s genius. He first expounded his thinking about the firm in a lecture in Dundee in 1932, when he was just 21 years old. Nobody much listened. He published “The Nature of the Firm” five years later. It went largely unread.
But Mr Coase laboured on regardless: a second seminal article on “The Problem of Social Cost” laid the intellectual foundations of the deregulation revolution of the 1980s. Eventually, Mr Coase acquired an army of followers, such as Oliver Williamson, who fleshed out his ideas. In 1991, aged 80, he was awarded a Nobel prize. Far from resting on his laurels, Mr Coase will publish a new book in 2011, with Ning Wang of Arizona State University, on “How China Became Capitalist”.
His central insight was that firms exist because going to the market all the time can impose heavy transaction costs. You need to hire workers, negotiate prices and enforce contracts, to name but three time-consuming activities. A firm is essentially a device for creating long-term contracts when short-term contracts are too bothersome. But if markets are so inefficient, why don’t firms go on getting bigger for ever? Mr Coase also pointed out that these little planned societies impose transaction costs of their own, which tend to rise as they grow bigger. The proper balance between hierarchies and markets is constantly recalibrated by the forces of competition: entrepreneurs may choose to lower transaction costs by forming firms but giant firms eventually become sluggish and uncompetitive.

A. 어휘
restored 복구하다. celebrate 경축하다.
economics profession 경제학계. profession 동업자들.
expound 詳述(상술)하다, 해설하다. laboured on 계속해서 노력하였다.
regardless 개의치 않고, ...에 관계없이. article 논문, 논설.
foundations 기초. deregulation 규제 철폐. army 무리, 떼.
fleshed out 구체화 시키다, 살을 붙이다. laurel 월계관, 月桂樹(월계수).
insight 통찰. impose 강요하다, 부과하다. transaction costs 거래비용.
enforce 집행하다, 실행하다. time-consuming 시간을 소모하는.
to name but three time-consuming activities 시간을 빼앗는 활동 세 가지만 들자면.
bothersome 성가신, 귀찮은.
these little planned societies 회사(firms)를 가리킴.
hierarchies 계급제도가 있는 조직(회사). recalibrate 재조정하다, 재측정하다.
entrepreneurs 기업가들. sluggish 동작이 느린, 懶怠(나태)한.