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.
If developed countries' citizens want to feel slightly better about their economies' slow growth and high unemployment, they should contemplate how much worse matters could be without the institutions that they have.
What do you think a stimulus is? Itβs spending - that's the whole point! Seriously.
Economic systems are not value-free columns of numbers based on rules of reason, but ways of expressing what varying societies believe is important.
A clear lesson of history is that a 'sine qua non' for sustained economic recovery following a financial crisis is a thoroughgoing repair of the financial system.
No amount of debt restructuring, even debt forgiveness, will help the Greeks achieve real prosperity. What they need is not short-term relief but, rather, a long-term cure.
Lenders, including major credit companies as well as payday lenders, have taken over the traditional role of the street-corner loan shark, charging the poor insanely high rates of interest.
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