Commons was born on 13 October 1862 in Hollandsburg, Ohio, and died on 11 May 1945 in Raleigh, North Carolina. He studied at Oberlin College (BA, 1888) and Johns Hopkins University (1888–90). He taught at Wesleyan, Oberlin, Indiana, Syracuse, and Wisconsin (1904–32).

The founder of the distinctive Wisconsin tradition of institutional economics, Commons derived his theoretical insights (generalized in his Legal Foundations of Capitalism and Institutional Economics) from his practical, historical and empirical studies, particularly in the field of labour relations and in various areas of social reform. He drew insight not only from economics but also from the fields of political science, law, sociology and history. A principal adviser and architect of the Wisconsin progressive movement under Robert M. La Follette, Commons was active as an advisor to both state and federal governments. He was instrumental in drafting landmark legislation in the fields of industrial relations, civil service, public utility regulation, workmen’s compensation and unemployment insurance. He served on federal and state industrial commissions, was a founder of the American Association for Labor Legislation, was active in the National Civic Federation, National Consumers’ League (president, 1923–35), National Bureau of Economic Research (associate director, 1920–28), and the American Economic Association (president, 1917). He participated in antitrust litigation (especially the Pittsburgh Plus case) and in movements for reform of the monetary and banking system (often associated with Irving Fisher, who considered Commons one of the leading monetary economists of the period).

The critical thread uniting Commons’s diverse writings was the development of institutions, especially within capitalism. He developed theories of the evolution of capitalism and of institutional change as a modifying force alleviating the major defects of capitalism. Commons came to recognize and stress that individual economic behaviour took place within institutions, which he defined as collective action in control, liberation, and expansion of individual action. The traditional methodologically individualist focus on individual buying and selling was not capable, in his view, of penetrating the forces, working rules and institutions governing the structural features of the economic system within which individuals operated. Crucial to the evolution and operation of the economic system was government, which was a principal means through which collective action and change were undertaken.

Commons rejected both classical harmonism and radical revolutionism in favour of a conflict and negotiational view of economic process. He accepted the reality of conflicting interests and sought realistic, evolutionary modes of their attenuation and resolution. These modes focused on a negotiational psychology in the context of a pluralist structure of power. He sought to enlist the open-minded and progressive leaders of business, labour and government in arrangements through which they could identify problems and design solutions acceptable to all parties.

In other contexts, he sought to use government as an agency for working out new arrangements to solve problems, such as worker insecurity and hardship, rather than promote systemic restructuring, although to many conservatives his ventures were radical enough. To these ends Commons and small armies of associates engaged in fact finding—his look-and-see methodology—in a spirit of bringing all scientific knowledge to bear on problem solving. From these experiences, indeed already manifest in the underlying strategy, Commons developed: a theory of government as alternately a mediator of conflicting interests and an arena in which conflicting interests bargained over their differences; a theory of the complex organization—in terms of freedom, power and coercion—and evolution of the legal foundations of capitalism, which centred in part on the composing of major structural conflicts through the mutual accommodation of interests; and a theory of institutions with an affirmative view of their roles in organizing individual activity and resolving conflict.

The institutions Commons studied most closely were trade unions and government, particularly the judiciary. He developed his theory of the economic role of government in part on the basis of his study of the efforts of workers to improve their market position and in part on the use of government by both enemies and friends of labour. Commons’s was an interpretation of trade unions as a non-revolutionary development, as collective action seeking to do for workers what the organizations of business attempted to do for their owners and managers. His study of the reception given unions and reform legislation led him to recognize the critical role of the United States Supreme Court (and the courts generally), and its conception of what was reasonable in the development and application of the working rules which governed the acquisition and use of power in the market. Accordingly, Commons developed a theory of property which stressed its evolution and role in governing the structure of participation and relative withholding capacity in the market.

Commons also developed a theory of institutions which focused on their respective different mixtures of bargaining, rationing and managerial transactions, all taking place within a legal framework which was itself subject to change.

Although Commons’s institutionalism had different emphases from that of Thorstein Veblen, for example, in that Commons stressed reform of the capitalist framework, they shared a view of economics as political economy and of the economy as comprising more than the market. Unlike Veblen, Commons was not antagonistic toward businessmen, and indeed accepted capitalism, though not necessarily on the terms given or preferred by the established power structure.

Commons was one of the few American economists to found a ‘school’, a tradition that was carried forward by a corps of students, especially Selig Perlman, Edwin E. Witte, Martin Glaeser and Kenneth Parsons. Much mid-20th-century American social reform, the New Deal for example, drew on or reflected the work of Commons and his fellow workers and students.

Selected Works

  • 1893. The distribution of wealth. New York: Macmillan.

  • Commons R. John. 1905. Trade unionism and labor problems. Boston: Ginn.

  • 1910–11. (With other.) Documentary history of American Industrial Society, 10 vols. Cleveland: A.H. Clark.

  • 1916. With. Principles of labor legislation. New York: Harper.

  • 1919. Industrial goodwill. New York: McGraw-Hill.

  • 1919–1935. (With others.) History of labor in the United States, 4 vols. New York: Macmillan.

  • 1921. Industrial government. New York: Macmillan.

  • 1924. The legal foundations of capitalism. New York: Macmillan.

  • 1934. Institutional economics. New York: Macmillan.

  • 1934. Myself. New York: Macmillan.

  • 1950. The economics of collective action. Madison: University of Wisconsin Press.