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The Theoretical Connection Between John R. Commons and Regulation and Convention Theories

Part of the Evolutionary Economics and Social Complexity Science book series (EESCS,volume 5)

Abstract

After discussing the uniqueness of Dewey’s philosophy in relation to (1) the world’s plurality and multiplicity, (2) the primary significance of multifarious interactions, and (3) the interrelation between habit and intelligence, we clarify the uniqueness of Commons’s institutional economics: (1) value theory based on multiple causation; (2) transactions as the ultimate unit of analysis; and (3) the interrelation between habitual assumption and collective action. We examine the theoretical connection between Commons and regulation and convention theories. The former partly shares and develops the first characteristic listed above, multiple causation, while the latter shares and develops the third characteristic, the interrelation between habitual assumption and collective action. In Institutional Economics (Commons, J.R., Institutional economics: Its place in political economy. Macmillan, New York, 1934), applying the idea of “multiple causation,” Commons approached macrodynamics based on the expansion of some key concepts and studies on income distribution and demand growth. This was a prototype of growth analysis based on the cumulative causation model with various forms of coordination, later formulated as regulation theory. Commons, following and developing Dewey’s theory of habit and intelligence, created the concept of “habitual and customary assumptions” and discussed a collective process for achieving “reasonable values,” such as the common-law method. Two-layered coordination in convention theory attempted to explain the psychological means and social mechanisms involved in the persistence of customs and institutions, which Commons briefly mentioned. Using Commons’s theory as a medium, it may be possible to articulate the macrodynamics developed by regulation theory and the micro theory of human interaction developed by convention theory.

Keywords

  • John R. Commons
  • John Dewey
  • Collective action
  • Cumulative causation
  • Regulation theory
  • Convention theory

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Fig. 1
Fig. 2

Notes

  1. 1.

    Starting from these interactions, Dewey (1927) derived the term “public” and discussed democracy. It is interesting that he called an action with external effects a “transaction.” Moreover, focusing on the spread of the consequences of an action, he distinguished two kinds of consequences: “those which affect the persons directly engaged in a transaction, and those which affect others beyond those immediately concerned.” He found in this distinction “the germ of the distinction between the private and the public” (Dewey 1927, pp.12–13).

  2. 2.

    As 1–(1/1.75) = 0.4286, the passage “the prices of clothing been reduced 33 per cent” should be replaced by “the prices of clothing been reduced 43 per cent.”

  3. 3.

    Boyer’s model is based in the ideas of Myrdal (1957) and Kaldor (1966). According to Kapp (2011), the principle of cumulative causation is at the core of institutional economics and sets it apart from earlier and contemporary noninstitutional approaches, in particular the mechanistic equilibrium approach.

  4. 4.

    The original text is in French, so all quoted sentences hereafter are author translations.

  5. 5.

    Kitagawa (2016) refuted the criticism by Hodgson (2003) from the perspective of instrumental pragmatism.

  6. 6.

    Almost identical explanations are found in the 1927 manuscript (Commons 1927, Chapter 4, s.23). Compared with Chapter 4 in the 1927 manuscript, the major revisions in Chapter 4 in Institutional Economics are as follows. The text emphasizing the difference between habit and custom in Institutional Economics (Commons, 1934, pp.152–153) did not exist in the 1927 manuscript. The title of Section 2 of Chapter 4 in Institutional Economics is “From Habit to Custom,” but in the 1927 manuscript, it is “Custom.” The text referring to the habitual assumption (Commons 1934, p.156) did not exist in the 1927 manuscript, and Sect. 4 did not exist in the 1927 manuscript.

  7. 7.

    Based on the first sentence of this quotation, we infer that “institutional idea of reason” is a typographical error.

  8. 8.

    The following should be noted: the convention, as it is defined by conventionists, is a kind of structure that formalizes the individual comportments in collective action. Batifoulier and De Larquier state that “the main point is that there is no predetermined or conventional formation of convention. This comes from the fact that rules work as a convention because the rules have lost their origin” (Batifoulier and De Larquier 2001, pp.11–12). For that matter, the term “convention” appears only twice in Commons’s Institutional Economics (Commons 1934, p.26 and p.249) and is used to explain the work of other scholars. However, the understanding by convention theory that conventions are rules that have lost their origin is similar to the understanding by Commons of habitual assumptions, as noted in Sect. 4.1.

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Acknowledgments

This work was supported by the Japan Society for the Promotion of Science (JSPS), the KAKENHI Grant-in-Aid for Scientific Research (B) (grant number 26285048).

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Uni, H., Nakahara, T. (2017). The Theoretical Connection Between John R. Commons and Regulation and Convention Theories. In: Uni, H. (eds) Contemporary Meanings of John R. Commons’s Institutional Economics. Evolutionary Economics and Social Complexity Science, vol 5. Springer, Singapore. https://doi.org/10.1007/978-981-10-3202-8_7

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