This was written back when production cost dominated. The notes on scale don't really apply today, now that marketing cost and mind share dominate scaling.

Coase quotes Sir Arthur Salter: "The normal economic system works itself. For its current operation it is under no central control, it needs no central survey. Over the whole range of human activity and human need, supply is adjusted to demand, and production to consumption, by a process that is automatic, elastic and responsive." He's quoting Salter out of context. Salter was perhaps the first international central planner - he was in charge of Allied shipping during WWI.

Salter goes on to write, in his "Allied Shipping Control"[1], "By the exacting criteria of war conditions, this system proved to be, at least for those conditions, seriously inadequate and defective. By the new standards, it was blind and it was wasteful. It produced too little, it produced the wrong things, and it distributed them to the wrong people."

This is the fundamental critique of capitalism. The US produces about 4,000 Kcal of food per capita and still has hungry people. Even with huge productive capacity, the system doesn't deliver for the little guy.

Salter is describing economic socialism. Bertrand Russell once contrasted "Allied Shipping Control" with Marx's "Capital" as guides to the achievement of international socialism. Salter represents the bureaucrat's approach, as opposed to the politician's. Salter set things up so that the coal commission had to agree on coal policy across national boundaries, and the steel commission had to agree on steel policy, and then they'd go argue over shipping allocation. Arguments were by field, rather than by country. Marx is all about power - "Who tells whom what to do?", as Lenin put it.

Salter was one of the architects of the European Union, which started as the European Coal and Steel Commission, and a friend of Jean Monnet. He was influential in the design of the machinery of the Common Market. That's worked well; the EU's problems today are over immigration.

Coase and Salter were writing in an era when people considered these questions seriously. The Great Depression made it clear that unbridled capitalism could break down. All the productive capacity was still there, the workers still had their skills, yet people were starving. Something was fundamentally wrong with the system.

The Communists argued that their system was fundamentally better. (The failure mode of communism was that it centralized power so much that it encouraged tyranny. In retrospect, one can ask whether the problem was communism or just Russia. Since 1900, Russia has had a Czar with absolute power, a brief period of liberal communism that collapsed, dictatorial communism, bureaucratic communism, a brief period of liberal capitalism that collapsed, oligarchy, and now capitalist dictatorship. Russia without a strongman doesn't work. But that's another subject.)

The US coped with the Depression by trying to get capitalism under control, moving away from "greed is good, greed works". There was a lot of business opposition at the time. But not enough to stop it, for two reasons. One was that the Depression wasn't good for business, either. But the other was fear of communism as a competing economic system. It looked like communism was working - they weren't having a great depression. Capitalism had real ideological competition. This kept it honest.

This worked for a long time, from the 1930s to the 1970s. But by 1980, communism, as an economic system, wasn't working well. Nobody took it seriously any more. This freed up capitalism to go to its default "greed is good, greed works" mode, which is where we are today.

Now we have "secular stagnation" - plenty of excess productive capacity, but we can't deliver a good standard of living to everybody. The new thing is that we need far fewer people to make production go. For most of history, the problem was making enough stuff. Coase wrote in an era when making enough stuff was still a big problem. We're past that now. And we have no clue how to organize an economic system that deals with it.

[1] https://archive.org/details/alliedshippingco00saltuoft