as these days i cant very tell
and Martin peeing on whale
the organizes into this conference decided
that they would make a recording
which could be played as the conference
and this is what I'm going to do
the problem I headed cause was they didn't tell me
what I should talk about and I had to decide
what my subject should be I finally decided
that the title given to the conference
gave me all the information I needed
the conference his own market
firmness and property rights
and that covers everything and I would want to say
me start with talking about markets
wanna things that people don't understand
is the market's our creations
they're not something which
we can find a market has to be created
in the nineteen the general rule on economics
one India the issues I published an article
a on
the plywood contract to be
Sharon by the Chicago Board of Trade
he was a very complicated said negotiations
the blade to the emergence in the contract
and then having tried it
he'd play and this
this here very much upset the organizer miss to Richard
sendo but it didn't upset me at all
because her he showed just how difficult it was
to form a contract we cheer
them people wanted to use
in sufficient quantity has to cover the costs
more recently which is sendo
has worked armistead wishing a
climate exchange in China
and that took passed a man onto
Diego CA shin and in that case
were successful and the
can't counter this is
to republish in need
book which or view
will be able to read today I thought just died
talk about the the subject
of the conference markets firms
and property rights now as I've said
in the case in all markets
they are creations a hint he kisses
they are the result all
people deciding to make a contract
and making all the negotiations necessary
to bring it about firms
are a little different
perm I usually based
initially on the family and they exist
in net foam to a large extent
today prime
firmness on
not to be analyzed
in the way I did in the nature that for them
nature the firm was a
and an article
although published in 1937
which contained my ideas
the dye developed as an undergraduate
and as I know
from a letter which I wrote to
run valor the ideas were
all their by the time
I graduated in 1932
I didn't poppy sheet until 1937
but that's understandable as I would
went into teaching
in 1932 I knew
virtually nothing and had to give
3 call shoes so I was
pain motion my time preparing
full my my neck choose
but I did publish his shock this
article in 1937 the nature the firm
and deepen has been
my shoe heard two much ninety
although in fact is little more then I
than an undergraduate is a
heat
in is also very
poor article although it's been much
referred to he talked about the firm
as if you could talk about it as an entity
in economic theory I said as the firm
grew bigger
there was Jim diminishing returns to management
with this is
treaty ages if it was
for fiddler fertilizer mean bean
yeah applied to land a new mation the outcome
idea was to prove fertilizer on land
and first will you get and
picture product the new promo running a more product and so on
then you put in more on any such killing
and so you have diminishing returns
to the fertilizer well firm's online
and firms are organizations
in which the different parts for the firm have
and then to change with other parts in the firm
he teach her the
sociological problem rather than economic
problem and I learned a great deal about the
hell large organizations operate
do my world war work
when I was seen the
think Cabinet Office
and I'd made various studies
which which had no influence at all
and it was interesting because
they weren't they didn't not use it because the ideas were in good
but because it wasn't in the interests in the PT
here partner the organization to do the work
hi made into a
is demand for example of what the importance
we're going to be in and
a certain year and they were going to be
much lower then
they had been I'm I would work today out by
taking Nina ships will be
be lost ships that will be constructed
turnaround time close shipman's own
and I is to make you wear sweeney imported
importing say $36 million tonnes
we could any import $25 million tonnes
the cell the approximate figures as a
remember them so on I went around
to the various departments we with the
someone from the economic section who
really who'd had similar views and me said to the
the firms you've got a plan Paul
a much smaller quantity in the importance
what a day to be and
all the department said home
we can give their opinion polls between you ni
can t do what we doing and so
no plans were made
the ship's picked up whatever was on the wall of
chicken feed all were doing was and didn't bring in
the things that were more important
however since my
predictions were pretty accurate by not cutting
and they made eight changes
for next year say you had a whole year
loss I remember now the calculation I made
more specifically dealing with the
subject and I I was main concern
and tanks comes
rifles ammunition and sunshine
well height took
the number people who were in the various theatres have more
and said
what they should have in new Wales equipment
an ammunition and so on
and I found of course some here is a war will well-stocked
and some were badly stop
and what should happen one was
the we should rectified this
and make sure that
everyone got the proper amount
in this report hi Cory the balance sheet
miss produce sure about three months
after which he was stopped and the reasonably stopped
was the showed where the deficiencies were
and no one wanted deficiency shown
and so no one knew
that they were deficiencies and that yeah
has been my experience and
doing the statistics
the people we're always pleased
to get a good result publish they never wanted a bad usual
publish who is so it is that the people who were
running things always got a very wrong idea
to what the situation actually was
well had
what happened in in for in firms
also I discovered a cause they were
friendships and antagonisms within firms
you know one partner firm
would would feel that another par
is always going to mess up what they were doing
and me detail operated
in a different way from the way
dozen economic theory where you have a
affirm maximizing profits
knowing all the beings that that affected
and acting accordingly
he in in fact and
it's very difficult yeah
to imagine that firms act in the way
that is described in the takes proves
way you max maximize profits
by equating marginal cost and margin when you
one other reasons one can feel did
doubtful about this particular way I'm
looking at things is that firms never
have koolaid margin call us
and so cannot possibly hecht in the way described
in seen it takes both well I think
we ought to to study directly
how firms operate and
at develop a theory corning
finally cause in this ok conference I going to discuss
property rights to do this you really have to rely
on the information gathered from
know is however lawyers
remaining interested in UC economic theory
to analyze legal doctrines
my view is the gym these
salmon want to be doing studies
of hell the property rights
have picked working at the economic system
and lot this had not been done
Anna and I hope the one on the results hope this
comprends is that people would turn
to do is and then who study
markets firm and property rights
in mind I consider the right play
one the features
who've the control home mediate running
transmission has been the
use love
auctions to decide who should have
rights it happens
that I was person who introduces
to the FCC which I did
I think hearing I gave my presentation
to the commissions
and then when I finish place I wanted to question me
and the first question I received
so astonished me that I didn't know
what to say one of the commissioners
said this is all a big joke the idea
that you should actually happen auction
small and
rights to transmit
yeah
and electronic cig news who was something that they
had never even imagine they had thought their job loss
to choose the right people to use
frequencies not concern themselves
with the question what was
transmitted when I
I with large this is already
Jan niceee down there with these people about me
I didn't know what to say and I said
is his job to believe in me make an economic system
and I didn't get any further questions up to that
plan relies that was the way
Minnesotans are in fact
and they're they're usually
determined in the american economic
since he did so happens that I will not first-person
to mention this he will it had been mentioned
in a student note in the american
in now munis you should come
know a review and I Hans
whose fumes sometime how did you get this idea
and she he
say who I do
combs from happen learner
when he was teaching had me
in a in america came this
struck me as extraordinary because happened
Mizzou student of mine at the London School of Economics
and so we all said the idea came back
to the London School of Economics anyway either
directly from me or indirectly
from happen then who
I might say was the home to numerous to this
he been improved printing business the detailed
I always said it was because he put price equal to marginal cost
venture that shows to chill have relations were always very good
and hugh ultimately wrote a book
on the I think it was called economic could help control
and a very fine broke into his here is
however someone whose socialist
who believed that solution is it will be fine
the funny carried our their areas
rules and regulations that he set in motion
I was very dangerous
to see the title have a paper
that Richard post and was going to play
present canes Ankush
this is sick puzzle me
because I've never had any relationship
week aims all her
word on the topic said he worked on
I have never worked on
me monetary system
foreign exchange views
government finance handed
has these were all the topics
said that Cain's worked on I was puzzled about what on earth
Posen a good say and their
and I'm looking forward to hearing what
he will say you know in these days
England mister the class system
and and Kane
spoke in a different way from me and
had a different hate each huge
mmm Hughes he was in all the tone in
and he was one of them
not want a bus and I
i felt quite different from from him
spoke in a different way so on and
I only had one contact with him once
during the negotiations for the loan
from america after the war I was talking to
canes this is and and canes came into the room
and his assistant said
this is mister cose who's helping us with this
please take I don't think you know him
kind took my hands and said no
I don't think I do home on cul and that
his mind I freak occasions so I
my I'm very interested to know what Richard posed I'm actually said
although I never had any
particular connection
with canes or
his policies indirectly
they have any important influence on all my work
him trying to implemented Keynesian policy
meet wanted to
estimate part ca
what the expenditures firms would be
because his you know the bases are proposing
was that you estimated consumer
expenditures business expenditures
the expansion is required to produce shrine employment
and difference between
and that amount and
what was going to be spent by consumers
and businessman miss the amount the government
should spend in order to maintain full-employment
show in order to do this
Mead who is in a economic section
decided that it will be very interesting to study
long-term contracts
because they would tell one what terms
we're going to Spain and would help him
in his calculations so I was given
boss number long-term contract
which were given my by the firm's
and which of course since he has his own office
control by Winston Churchill
they were very please to do
so i cant these contracts and I don't add them
and what I discovered was that they were
want together to
imprecise to they made
wouldn't say when and
good sure to be produced where they would he be delivered
and so on and this heading
important affected all my thinking
he was quite clear that firms
dealing with one another did not depends heavily on the contract
butthead understandings about what should be done
had trust in one another's actions
and the economic system
obviously operated in a way different
from the way it would if it was all based on
on contract which was because once first deception
budgets wrong and we ought to study
the relationships between firms
has a as a way of operating
in
an economic system