John R. Commons and the Moral Foundations of American Labor Law

John R. Commons’ Legal Foundations of Capitalism (1924) is relevant for American labor law because it represented in some ways the pinnacle of the Progressive Movement at the beginning of the twentieth century. Commons believed that markets were not automatically self-correcting so that workers would not necessarily be treated fairly. This view explains why he was a founder of institutional economics, as opposed to a supporter of neoclassical economics. Commons also discussed the limitations of the American legal system in favoring big business rather than labor unions. In this essay, I discuss Commons’ criticisms, supplemented by contemporary scholars’ work. In modern society, procedures are often understood better than the goals that they are meant to facilitate. This means that many writers in the Law and Economics field are no longer comfortable in conceptualizing how quantitative measures of value can be usefully combined with qualitative measures of value, resulting in justice. The ideas of John R. Commons as a founder of institutional economics are discussed as a remedy for this.