How does John Commons explain socioeconomic relationships?

John Rogers Commons (1862-1945) was one of the early major representatives of the institutional school and the founder of the socio-legal school. Commons was born in Hollandsburg, Ohio, USA in 1862. He studied at Oberlin College in his early years and received a Bachelor of Arts degree (1888). In 1888, he entered Johns Hopkins University and was taught by Erie, and began to be exposed to the relationship between law and economics. In 1889, he studied immigration issues for the American Industrial Council and traveled to all trade union leadership agencies in the United States. This created conditions for him to study the restrictions on output imposed by capitalists and labor organizations. From 1890 to 1932, he taught at Hopkins, Indiana, Oberlin, Wesley, Wisconsin and other universities. Since 1905, he has been mainly engaged in legislative practice and related investigations and research. In addition, Commons has served as president of the American Economic Association and the American Finance Association.

Commons's main works include: "The Distribution of Wealth" (1893), "Historical Records of American Industrial Society" (10 volumes, 1910-1911), "Principles of Labor Legislation" (1916), "American Labor History" (4 volumes, 1918-1943), "The Legal Basis of Capitalism" (1924), "Institutional Economics" (1934), "The Economics of Collective Action" (1940).

The system that Commons refers to refers to collective actions that constrain individual actions, and in collective actions, the most important thing is the legal system. He believed that the legal system not only existed before the economic system, but also played a decisive role in the evolution of the economic system. In his view, the disintegration of the feudal system and the emergence of the capitalist system were the result of the formulation and establishment of the bourgeois legal system, and the development of capitalism was also due to the formulation of a new legal system.

Commons explains socioeconomic relations from a legal perspective. He believed that the essence of economic relations is transaction, and the entire society is an organic organization composed of countless types of transactions. Since each party participating in the transaction has its own interests, there will be conflicts of interest between the two parties during the transaction, which can only be resolved by relying on the legal system. Commons further theoretically reduced economic categories to the legal relationships of these categories. He did not analyze the form of ownership as an economic relationship, but examined the category of "ownership" as a legal form, and declared that "ownership" is the basis of institutional economics. Therefore, he paid special attention to the role of the state and the law, and proposed that the state and legal institutions serve as notarized arbitrators of all transaction contracts and rely on the law to manage the economy. As the founder and most important representative of the socio-legal school, Commons proposed a "theory about the role of collective action in controlling individual actions", which is Commons' institutional economics. Commons developed theories of the evolution of capitalism as mitigating forces that weakened the major drawbacks of capitalism. He recognized and emphasized individual economic behavior that occurred within the system, calling this behavior collective action in controlling, liberating, and expanding individual actions. According to Commons, from a methodological point of view, traditional individualism focuses its research on personal buying and selling, and it is impossible to break through the various forces, work rules and systems that dominate the structural characteristics of the economic system, where individuals flow within the system. Key to the development and movement of economic systems is government, which is the primary vehicle for collective action and change. Commons carefully studies institutions, unions and governments, especially the judicial system. The institutional economics it represents has a rigorous system, mainly:

Scarcity - the starting point of the theory

Commons takes scarcity as the starting point for all his theories. In his view, scarcity is not only the source of conflict, but also the basis of cooperation, sympathy, justice and private property - if everything is infinitely abundant, there will be no selfishness, no injustice, and no There would be no property rights and no ethics.

He even believed that if we were familiar with the modern ethics of trade unions and the business ethics of industry, commerce and banking, we would see that it is entirely due to what Hume calls the scarcity of opportunities and the resulting conflicts of interest that arise from conflicts. All economic virtues, such as honesty, fair dealing, fair competition, reasonable use of economic capabilities, equal opportunities, living one's own life while others live, goodwill and reasonable value, these are all putting one's own vital interests first. You two, you should first share the limited opportunities with others, so that you can engage in transactions safely and keep the entire organization running. Commons emphasizes the artificial order caused by scarcity, that is, collective action.

Conflict, dependence and order - continuation of analysis

Since things in the world are limited and scarce relative to human needs, therefore, how much does a certain person have? Using some resources reduces the resources used by others, and vice versa. This means that people have conflicting interests. Commons believes that previous economics took the elimination of conflicts as its goal and only studied idealized coordination in the future, rather than conducting scientific research on existing conflicts and how order emerges from conflicts. His own work is to study how to create order from conflict. The conclusion is that collective action should be taken to establish order rather than to eliminate conflict through other means. In his view, there can continue to be conflict within an order, and not only mutual conflict but also interdependence. He attributed conflict and dependence to basic social relations, which can only exist in the order generated by collective action.

Transaction - the basic unit of economic research

In Commons' view, as the basic unit of economic research, it must include the three components of conflict, dependence and order. After years of research, he found that only in a "transaction" formula can the three of them be combined together. Therefore, he regarded "transaction" as the basic unit of economic research. The so-called "transaction", Commons defines it as a unit of transfer of legal control. Therefore, ownership becomes the basis of institutional economics. When Commons analyzed transactions, he divided them into three categories: (1) buy and sell transactions; (2) managed transactions; (3) limit transactions. He believed that these functions were interdependent and together constituted the entire organization, which we likened to a "running organization." The participants in the transaction are individuals; in management transactions, the superior is a person or a privileged organization. When giving orders, subordinates must obey; however, in quota transactions, the superior is a collective superior or its subordinates. Official representative. The general principle of transactions of buying and selling is scarcity, but the general principle of transactions of management is efficiency.

Intangible property - reasonable value

Intangible property refers to the right to hold and set prices for things that others need but do not own. It is crucial to institutional economics. Commons believes that Marx, Proudhon, Carlyle, Bastiat and others vaguely realized that ownership is not the same thing as material, and institutional economics has some sprouts. Veblen adopted the concept of intangible property. Known as institutional economists, the concept of intangible property is what Marx calls the concept of reasonable value in exploitation and customary law, and it only appears in transactions.