To kind of summarize Coase's tragic arc, he was made famous for an idealized account under which negotiations among private actors *would* lead to outcomes respecting social costs and benefits, but to Coase the whole point was that the idealization was unrealistic. 1/

The "transaction costs" you have to assume away are literally what Coase made his career as describing as fully the basis of real-world institutions. 2/

The very shape of the social world, the fact that it does not reduce to atoms transacting horizontally in a market, is to Coase down to transaction costs. 3/

Transaction costs may sound like constraints, but they become the bricks by which all the institutions of society are formed, just like bones constrain the blubber our bodies otherwise would be, but also give us their functional forms. 4/

An ancient trick of neoliberals, slyly made into a kind of philosophy of science by Milton Friedman, is to find ways of suggesting the unreality of assumptions don't matter, you can treat the model as evidence its assumptions are approximately true if the model seems to work in practice. 5/

The neoliberals basically inverted Coase's whole framework this way, suggesting it was approximately enough true that transaction costs don't matter, so Coase's suggestion social optimality could be achieved by markets alone under unrealistic circumstances was actually realistic. 6/

It's like a physicist pointing out that if it weren't for air resistance, a person without a parachute would land just as gently as a person with, then a group of "engineers" whipping their arms around and saying, "there's very little resistance, screw the chute, go ahead and jump!" 7/

Coase was made a kind of ironic celebrity on the back of this misuse of his work, which has only been dialed back since 2008 chastened the neoliberals. But as you can see from the piece you quoted, the idea we can eliminate air resistance and so jump without chutes is still with us. /fin