The law of property determines who owns something, but the market determines how it will be used.
Interpretation
Ownership defines who has rights over an asset, while the market dictates its practical application and value.
This quote by Ronald Coase emphasizes the distinction between legal ownership and economic utility. While laws of property establish the ownership of goods or resources, it is ultimately the market dynamics β influenced by supply, demand, and personal or societal preferences β that govern how those resources are utilized or valued in real-world scenarios.
In practice
In a business seminar discussing the importance of asset management and market strategies.
Roughly speaking, when you are dealing with business firms operating in a competitive system, you can assume that they're going to act rationally. Why? Because someone in a firm who buys things at $10 and sells them for $8.00 isn't going to last very long in that firm.
During the two centuries since the publication of 'The Wealth of Nations,' the main activity of economists, it seems to me, has been to fill the gaps in Adam Smith's system, to correct his errors and to make his analysis vastly more exact.
We must first note that economic factors are taken into account in a world in which ignorance, prejudice, and mental confusion, encouraged rather than dispelled by the political organization, exert a strong influence on policy making.
Policy makers should be compelled to take action given the serious costs of long-term unemployment when overall unemployment is already high. A week of unemployment is worse when it is experienced as part of a longer spell.
On the market, all is harmony. But as soon as intervention appears and is established, conflict is created, for each may participate in a scramble to be a net gainer rather than a net loser - to be part of the invading team instead of one of the victims.
Instead of abandoning competition and giving banks protected monopolies once again, the public would be better served by making it easier to close banks when they get into trouble. Instead of making banking boring, let us make it a normal industry, susceptible to destruction in the face of creativity.
That's the world we live in: when it comes to economics, people have emotions; it's not like chemistry or physics.
This long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.
Citigroup, Bank of America, and JP Morgan Chase should not be permitted to charge consumers 25- to 30-percent interest on their credit cards, especially while these banks received over $4 trillion in loans from the Federal Reserve.
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