Coase and Church
I assigned Ronald Coase's classic The Nature of the Firm to my introductory Business Associations class, which took place a couple of weeks ago. (We'll see if any enterprising BA students turn up in the comments here. I often wonder what all the furious keyboarding in class is - could be note taking, could be Google.) I also assigned Oliver Hart's excellent An Economist's Perspective on the Theory of the Firm, 89 Columbia Law Review 1757 (1989). [Both articles are available on line, but, as far as I know, only in places where you need an ID to get in.]
As I reread these articles for class, I started wondering if they could say anything useful about why churches exist. [There are sound theological reasons for churches too; I'll leave those to the priests around here.]
Coase says that "The main reason why it is profitable to establish a firm would seem to be that there is a cost of using the price mechanism." That is, people form firms to take some transactions out of the market place. They do this until the marginal cost of the non-market alternative equals the marginal cost of the market mechanism.
How might this apply to churches? I can worship at home or in church. At home, I'm by myself or with my family. At church I'm in a larger community. If I pray by myself, it seems that I'm incurring all the costs of interaction with the divine directly. Frankly, I'm just not up to it - getting in touch with the divine is not always a comfortable experience. Worship at church brings in an intermediary - in my case, the good Fr. M. He often analogizes his role to stepping down the voltage of the divine to a level that people can handle. I need that access, but the direct application would blow out my circuits.
On the other hand, if all worship occurs at church, there's not much time for that personal interaction that is sometimes so uncomfortable. In the midst of liturgy, with the choir singing gloriously, the incense wafting up, the sunlight shining on the icons [well, sometimes - I do live in Cleveland], it's easier to avoid thinking about uncomfortable things and focus on the music or the icons.
So it seems there is considerable room for a Coasian substituting across margins to have different forms of worship. All of one or all of the other would be insufficient; gains exist from having both forms. I need to think more about this - Coase seems to apply to virtually everything if one thinks about it long enough, and to yield insights that are worth the effort. I'm not there yet on this, but I'll have to keep at it.
As I reread these articles for class, I started wondering if they could say anything useful about why churches exist. [There are sound theological reasons for churches too; I'll leave those to the priests around here.]
Coase says that "The main reason why it is profitable to establish a firm would seem to be that there is a cost of using the price mechanism." That is, people form firms to take some transactions out of the market place. They do this until the marginal cost of the non-market alternative equals the marginal cost of the market mechanism.
How might this apply to churches? I can worship at home or in church. At home, I'm by myself or with my family. At church I'm in a larger community. If I pray by myself, it seems that I'm incurring all the costs of interaction with the divine directly. Frankly, I'm just not up to it - getting in touch with the divine is not always a comfortable experience. Worship at church brings in an intermediary - in my case, the good Fr. M. He often analogizes his role to stepping down the voltage of the divine to a level that people can handle. I need that access, but the direct application would blow out my circuits.
On the other hand, if all worship occurs at church, there's not much time for that personal interaction that is sometimes so uncomfortable. In the midst of liturgy, with the choir singing gloriously, the incense wafting up, the sunlight shining on the icons [well, sometimes - I do live in Cleveland], it's easier to avoid thinking about uncomfortable things and focus on the music or the icons.
So it seems there is considerable room for a Coasian substituting across margins to have different forms of worship. All of one or all of the other would be insufficient; gains exist from having both forms. I need to think more about this - Coase seems to apply to virtually everything if one thinks about it long enough, and to yield insights that are worth the effort. I'm not there yet on this, but I'll have to keep at it.
Posted by Andy Morriss on
Thursday September 15, 2005 at 6:55am
Anyway, your (religious) argument boils down to the idea that people go to church because they want to be religious but not really religious. That doesn't say much for churchgoing, although it seems to be a pretty good characterisation of church people in general.
- Josh