Plant’s student Ronald Coase inaugurated the transaction cost approach to explain the existence of firms in his 1937 article “The Nature of the Firm.” This filled a neoclassical black box and undermined a prevailing belief in the bureaucratic efficiency of deliberate planning (“organization”) by drawing attention to problems of delegation (principal-agent relationships). The approach has given rise to the critical study of the limits of organizational efficiency and to a search for alternative ways of organizing (e.g., “simulating markets” within firms and public organizations.

Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, loc. 461