Commons most cited article is "Institutional Economics" from the American Economic Review of December 1931. He defines an institution as "collective action in control, liberation and expansion of individual action". Many of us imagine that collective action of any group against an individual is inherently negative or restrictive. In Commons view however, collective action can both restrict or liberate individuals. In fact, in any transaction or relationship between two individuals, the rules of the collective may liberate one party and restrict the other. This is a critical point to understand. Traditional economics views the individual as being set against nature or the market and not any other individual. Any rules are by definition restrictive in this view of the world. In the Commons view of the world, the rules that help restrict one party may provide a liberation or expansion of activity for another party. This begins to help u...
This blog has been setup to explore the ideas and philosophy of the American institutional economist John R. Commons.