John Rogers Commons - John R. Commons: Selected Essays

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JOHN R.COMMONS: SELECTED ESSAYS

John R.Commons is one of the most significant figures in the development of American economics. One of the founders of the institutional school, Commons developed theories of the evolution of capitalism and of institutional change which continue to influence modern economics. These volumes collect, for the first time, his major essays and articles.

Malcolm Rutherford is a Professor of Economics at the University of Victoria, British Columbia, Canada. His research has focused on the major contributors to the American institutionalist tradition in economics, including Veblen, Commons, Mitchell and Ayres, and on the comparison of the old and new institutional economics. He is the author of Institutions in Economics: The Old and the New Institutionalism.

Warren J.Samuels is Professor of Economics at Michigan State University, East Lansing. He specializes in the history of economic thought, methodology, and law and economics. He is past president of the History of Economics Society and the Association for Social Economics, and the recipient of the Veblen-Commons Award of the Association for Evolutionary Economics. He is the author of The Classical Theory of Economic Policy and Pareto on Policy.

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Edited by

Malcolm Rutherford and Warren J.Samuels

VOLUME TWO

London and New York

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First published 1996
by Routledge
11 New Fetter Lane, London EC4P 4EE

Simultaneously published in the USA and Canada
by Routledge
29 West 35th Street, New York, NY 10001

Routledge is an International Thomson Publishing company

This edition published in the Taylor & Francis e-Library, 2002.

1996 Malcolm Rutherford and Warren J.Samuels

All rights reserved. No part of this book may be reprinted or
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A catalogue record for this book is available from the British Library

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ISBN 0-203-01151-1 Master e-book ISBN

ISBN 0-203-28486-0 (OEB Format)

ISBN 0-415-13733-0 (Print Edition) [set]

ISBN 0-415-14438-8 (Print Edition) vol. I

ISBN 0-415-14439-6 (Print Edition) vol. II

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Page 307

American Economic Review 13 (December 1923):638647.

Economic theories may be placed in four groups according to the remedies proposed for unemployment and business depression, as follows: (1) reduction of wages, (2) reduction of profits, rent and interest, (3) free banking, and (4) bank regulation. Each of these proposed remedies goes back to one of four factors in the modern economic process which the particular group sets forth as its most important factor, though all of them are essential to the process. These factors are, in the order of the remedies mentioned: (1) the production and consumption of goods, (2) inequality of private ownership of the goods, (3) exchange and alienation of titles to the goods, and (4) the promises of banks and business men to deliver goods or pay an equivalent value in the future. Starting out with one of these factors as the most important, each group develops the implications of that factor and thus arrives at one of the four types of remedies.

The production and consumption group, with its remedy of wage reduction, begins with Ricardo, followed by the assemblage of those who find their explanations of business depressions in the natural or unavoidable operations of demand and supply under the influence of costs of production, and may be known as the classical, neo-classical, laissez-faire, or business economists.

The inequality-of-ownership group of theorists, with their remedy of reduction or elimination of the rents, profits, and interest that arise from inequalities of private property, have, as their outstanding economist, Karl Marx, followed by the entire socialistic school, the leading modern representative of which, from the standpoint of economic theory, is J.A.Hobson.

The exchange and alienation theories, with their remedy of free banking or paper money, based on a concept of money as a kind of transferable title to property like a warehouse certificate, start with Proudhon and the anarchists and find their recent representatives in Major Douglas,2 Henry Ford and Thomas Edison, who adhere to private property with its inequalities,