ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

Oliver Williamson

The Man Who Reduced the Transaction Cost of Economics

On 21 May 2020, one of the most cited economists of all time and a key contributor to organisational studies, Oliver E Williamson passed away. His intellectual apparatus of transaction cost economics is a powerful tool to explain a range of real-life phenomena across a variety of disciplines with impeccable practical implications.

On 10 December 2009, Professor Tore Ellingsen read out from the podium of Concert Hall in Stockholm, .in its 271st year, the Royal Swedish Academy of Sciences could not have awarded a more timely prize, and called upon Professors Elinor Ostrom and Oliver Williamson to receive the Nobel in economics. What was so timely about this annual ritual? It was also the year of the great economic downturn that saw big banks and hedge funds fail, and a time when the faith in model wielding, invincible economists was shaken. Paul Krugman, the 2008 prize winner, had recently remarked in the New York Times that ...the economics profession went astray because economists as a group, mistook beauty, clad in impressive-looking mathematics, for truth (Krugman 2009).

Silently, yet with unwavering persistence, a group of scholars had continued to challenge this dominance. They made it impossible to ignore that institutions and organisations (structures) shape economies (constructs), and not vice versa. Both Ostrom and Williamson were champions and leaders of this group. Ostrom (a political scientist by training) contributed through painstaking analysis of the role of institutions in natural resource management, puncturing the age-old doctrine of the tragedy of commons and exposing the myopia of looking at humans as selfish Homo economicus. Williamson, on the other hand, showed how assumptions of perfect rationality in economic models blinded analysts to the plurality of organisational forms that existedfrom small business, family firms and farms, to franchisees, to alliances, to big corporations to natural monopoliesand how these structures have an impact on the society and the economy. Without analytically understanding why certain organisational forms exist, the economists idea of deregulated efficiency could, simply, be a mirage.

Dear Reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here


To gain instant access to this article (download).

INR 59

(Readers in India)

$ 6

(Readers outside India)

Published On : 13th Jan, 2024

Support Us

Your Support will ensure EPW’s financial viability and sustainability.

The EPW produces independent and public-spirited scholarship and analyses of contemporary affairs every week. EPW is one of the few publications that keep alive the spirit of intellectual inquiry in the Indian media.

Often described as a publication with a “social conscience,” EPW has never shied away from taking strong editorial positions. Our publication is free from political pressure, or commercial interests. Our editorial independence is our pride.

We rely on your support to continue the endeavour of highlighting the challenges faced by the disadvantaged, writings from the margins, and scholarship on the most pertinent issues that concern contemporary Indian society.

Every contribution is valuable for our future.