What I find fascinating about Commons is that he states right up front in Institutional Economics that "I set forth a record of participation. I hold that this book is not so much a theory personal to myself as it is a theory conforming to many experiments in collective action and requiring therefore a reconciliation with the individualistic and collectivistic theories of the past two hundred years" (pg. 1, Commons, 2005). Thus, we have a theorist who is explicilty stating that their theory is at least partially based on their own experiences in life and not just simply a reflection of the so called natural order that has been created with no bearing from their own life. At the same time, Commons tells us that his theory must be judged relative to the other theories of economics from the 18th, 19th and early 20th century. This is an ambitious book and at times very hard to read and yet I believe it contains an enormous amount of knowledge and wisdom that applies well to the 21st century.
Commons Futurity VII. The Margin for Profit pg 526-528 In this section, Commons turns to thinking about a specific aspect of modern banker capitalism addressing the question of profit's role in the economy. He starts with some terminology regarding profit share - the share of national income that goes to profit earners and the profit margin - the dynamic aspect that drives a going concern forward. We then move into another set of terms that are rate of profit and profit yield. The rate of profit is related to the par value of stock and yield is related to market value of stock or outstanding equity. The social question to Commons is what the role of profit in keeping the overall economy and does society or community pay too much or too little for this service. Economists have long thought about the role of profits in driving the economy up or down. Commons believes there are profit share theories and profit margin theories as two diction categories in economic thinking...
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