J.R. Commons's Institutional Economics

Rutherford, Malcolm
September 1983
Journal of Economic Issues (Association for Evolutionary Economi;Sep83, Vol. 17 Issue 3, p721
Academic Journal
This article represents an attempt to interpret and evaluate economist John R. Commons' work in the light of some recent thinking on institutions and institutional change. The argument here supports those who would place Commons outside of the economist Thorstein Veblen/C.E. Ayres tradition within institutionalism, but, more important, Commons is found to have provided a more general, coherent, and potentially valuable theoretical contribution than has often been supposed. This contribution, however, will be seen as lying more in the area of institutional theory than in the field of law and economics as such. Commons attempted to provide an integral and logically coherent treatment of (1) the nature and function of property rights and other rules and their effect on economic transactions, (2) the behavior of private collectives and judicial and political processes of decision making, (3) institutional change, and (4) proposals for institutional reform. His work can be seen as standing between the neo-classical and Veblen/Ayres approaches. Commons rejected the psychologism of orthodoxy, and anti- individualism of the Veblen/Ayres tradition, and the treatments of knowledge in both. Because of his individualism Commons shares more with orthodox theory than do most institutionalists, but his rejection of psychologism and his instrumentalism bring him closer to other institutionalists.


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