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commons and theories of the business enterprise from Tae Hee Jo of SUNY Buffalo

Tae Hee Jo, from SUNY Buffalolo, just published a working paper on the institutionalist theory of business enterprises. It can be found at:

https://mpra.ub.uni-muenchen.de/84036/1/MPRA_paper_84036.pdf.

In the paper Jo covers some thoughts on Common's contributions.  Starting on page 4, Jo discusses Commons idea of a going concern.  According to Jo, Commons view is of a business as an ongoing concern facing the conflicting needs between employers and employees and the working rules and  addressing of these conflicts over time.  The good will value of the business occurs as long as the working rules intermediate between conflicts and ensure the ongoing operation of the concern.

An important point of commonality between Commons and Veblen is that the business is a social enterprise and not simply a single production function as Jo writes. Jo also writes that, "ITBE pioneered by Commons and Veblen should never remain fixed because capitalism and its master institution have always been in motion" (pg. 5, Jo).   I would agree with these important distinctions.  The production function metaphor used in neoclassical economists and something heavily used by agricultural economists in production economics, can be a useful metaphor at times.  It does give clear predictions regarding changes in input or output prices and firm or farm output.  At the same time, this production function mode fails in other cases to cover what is important and may be misleading.  It also fails to account for issues of power across the various stakeholders of the production function.

Commons is mentioned in a few other places but this is the bulk of what is discussed. This is a nice piece that places Commons in context with other institutional thinkers across the 20th century. It reinforces two important concepts.  One is that Commons understood we need to look inside the corporate structure and understand inner dynamics of what makes it work and secondly that Commons would have recognized the dynamic structure of capitalism and the need for our ideas and theories to evolve from the writers discussed in this piece.


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