Josh McCabe (The Sociological Imagination)

Williamson’s work on the firm follows that of his teacher (and previous Nobel Laureate) Ronald Coase. Before these guys, the firm was basically the black hole of economics. For starters, no one could explain why they existed in the first place if markets are sooo efficient. Secondly, after just “assuming” them into existence, they were treated as magically devices where inputs went in and outputs came out. This is what the neoclassical firm looks like. Economists couldn’t explain the simply idea of what firms do. Williamson argued sometimes market transaction costs were too high and it was more efficient to use firms were an authority could avoid haggling and holdouts. Another important concept was asset specificity where sometimes there’s just not a market for every product or services, so it’s easier to do it in-house. Steel can sell easily on the open market while steel frames for Honda Accords don’t have much use except for making Honda Accords.

Ostrom’s work is even cooler (and more sociological) in my opinion. Elinor (along with her husband) is the founder of what is called the Bloomington School of political economy. Prior to their work, economists responded in two ways to the tragedy of the commons. You could either privatize that resources or use a whole lot of top-down government regulation. Ostrom challenged both views and found a third meso-level solution. Using ethnographic case studies (!), she found that complex rules often arose among small groups to regulate use and upkeep of the commons.