John Commons's organizational theory of institutions: a discussion

Abstract

Abstract:The paper discusses John R. Commons's original theory of institutions, where the latter are defined as going concerns and their working rules, or collective action restraining and expanding individual action. Such organizational approach of institutions makes important contributions to institutional economics in general, through its notion of a hierarchy of collective action, its threefold typology of transactions, and its holindividualist stance. Commons's genuine advances are counterbalanced by theoretical limits, which illustrate the unfinished character of his attempt to make a contribution to a ‘rounded-out theory of Political economy’, e.g. the ambiguous place of markets in his theory, the state understood as a model for other going concerns and, distinctly, the restricted definition of institutions as organizations. In some important respects, his theory complements or goes further than other currents of institutional economics; its weak points are sometimes the reverse side of his very contributions.