It is my great pleasure to add professors Ronald H. Coase and Steven N. S. Cheung to my Great Minds of Our Time series. And I am excited to add them both in the same blog entry (a first for me to add two people in one entry). note: This is my subjective list and, in case you disagree, feel free to create your own list and write about them.

Prof. Coase was the Nobel Prize winner in Economics in 1991 and is a well respected and insightful economist. He clearly belongs to the group of “Great Minds”. And I will try to write more about Prof. Coase later as he is one Nobel Prize winner that I started reading his ideas few years before he won his prize. [K: Excuse me for a bit of pride and vanity.]

Now, to introduce you to Professor Steven Cheung, let me say he is one of the most influential economists in the world who knows, probably, the most about the Chinese economy. To me, the “China experts” who have not yet read Prof. Cheung’s English and Chinese articles are missing a lot of insight (and fun).

I am going to do the “lazy thing” (smile) by quoting Prof. Coase’s foreword in Prof. Cheung’s 800+ pages selected papers “ECONOMIC EXPLANATION–SELECTED PAPERS OF STEVEN N.S CHEUNG” [K: emphasis, links, and comments added by me].

Foreword by Ronale Ronald H. Coase The purpose of a Foreword to a book is to tell the prospective reader what he (or she) will gain by reading it. In the case of this collection of Steven Cheung’s articles, it is both an easy and an enjoyable task. Steven Cheung’s articles make clear what is wrong with so much of current writing on economics and what should be done to put it right. He does this by example, showing through his own work how economics should be done. Steven Cheung was fortunate that he went to UCLA, where he studied under Armen Alchian and Jack Hirshleifer. His doctoral thesis, The Theory of Share Tenancy, was the work of an assured and original economist. This work was regarded so highly that he was awarded the prestigious Postdoctoral Fellowship in Political Economy at the University of Chicago in 1967, and was appointed assistant professor the following year. The University of Chicago Press published his thesis as a book in 1969. While at Chicago he studied the approaches to economic questions of Milton Friedman, George Stigler, Aaron Director, Harry Johnson, Arnold Harberger, Theodore Schultz, Gale Johnson and others, including me. But Steven Cheung was no mere imitator. He absorbed their ideas and made them part of his own. [K: Very important and high praise indeed.] The work that he has done since then, much of which is included in this volume, has more than fulfilled the promise of his first work. [K: My definition of “work” is much broader as I include all of Cheung’s Chinese articles as well. And a collection without some of his key Chinese articles and analysis are seriously lacking in completeness.] As always, he has concentrated on understanding why the economic system behaves as it does, rather than taking as his first aim, how the economic system ought to behave and how to bring this about. In his analysis of how the system operates, he uses a keen observation of the facts to support his argument. [K: This is much harder than it seems as many economists use extensive equations but had *no clue* of how things are in the “real world”.] His writing is detailed, perceptive and illuminates the questions he discusses. He examines many questions in this book, seeing them, in the main, through the lens provided by the concepts of property rights and transaction costs. He demonstrates their usefulness by discussing, among others, price controls, intellectual property rights, the structure of contracts, and, a favorite of mine, the contracting of the service of bees for pollination. [K: See this 2007 Oct. 60 minutes story “What’s Wrong With The Bees?” decades after Cheung’s research.] What is particularly interesting is that he uses these same concepts in examining the extraordinarily interesting events which are now under way in China. Included in this volume is a paper Steven Cheung wrote in 1981 (in was published in 1982) with the title, “Will China Go Capitalist ?” His answer, which at the time was regarded as wildly improbable, was that it would. Subsequent events, however, have vindicated Cheung’s prediction. As Steven Cheung says, in a later paper, “Whatever the future holds, Deng Xiaoping’s Great Transformation must be regarded as one of the most remarkable chapters in economic history.”I regard what is going on in China as not only remarkable but of the greatest importance. The struggle for China is, in my view, the struggle for the world. The “Great Transformation,”if not interrupted, will have the most profound and beneficial effect on economic thought, not simply in Asia but also in Europe and the Americas. Readers of this book, by following these events with the aid of the concepts of property rights and transaction costs, will better understand what is going on. I gained immensely from discussions with Steven Cheung some forty years ago. This book will enable the reader to participate in a similar intellectual adventure.

R. H. Coase, August 2005

And here are some words about Prof. Cheung in the book,

About the Author A calligraphic artist created contract theory, which led to path-breaking developments in neo-institutional economics. A photographer [K: Cheung took the book cover photo of Milton and Rose’s Two Lucky People], though grounded in the foundations and respectful of tradition, championed a new and esoteric way of depiction light and things. A prose writer introduced millions of brethren to the ideas of property rights and transaction costs, and in the process opening up a new style for economic writing in China. [K: In my humble opinion, Cheung’s impact in China may eventually overshadow his writing in Economics. ]

Years ago “Tallboy-Sheong”was king of fishing around Saiwanho. He was also expelled twice from school, taught Rong Guo Tuan (later world champion) table tennis, was Shu Xiang Cheng’s poetry soundingboard, but lost to Yang Guan Lin (later China champion)in Chinese chess. Steve studied inside the chambers of Alchian and Hirshleifer, and then became the anointed high priest of Coasian economics. Friedman officiated his wedding. Steve spoke on Coase’s behalf at a dinner party the evening before the latter received the Nobel Prize, by some accounts making a mess of things in his enthusiasm. Displaying equal enthusiasm, however, he shone at UCLA as the first Harberger Lecturer. In economics, Professor Cheung is only interested in the interpretation of observations. Eschewing mathematics of he favours a bare-fisted approach, by the inspired practice of which he has roamed far and wide. The selected papers in this volume trace the development of the economic thinking of Steven N. S. Cheung.

P.S. As an aside, it hasn’t escaped my attention that Prof. Coase’s ground breaking paper “The Federal Communications Commission” was discussed by Prof. Lawerence Lessig‘s insightful Feb 2007 blog posting “Internet Policy: Deregulating Spectrum” (with video and full technical paper). Highly recommended.