ABSTRACT
John R. Commons’s Legal Foundations of Capitalism (1924) was his magnum opus of legal-economic theory and history. In it, Commons developed a number of themes. The economic system is a function of government action – to wit, law – which necessarily resolved both conflicting views of what the economy (and society) should be and conflicting material and other interests. Government itself is a vehicle for both the social reconstruction of economy and society, and the advancement of interests. Both government itself and the legal foundations of the economy, and perforce the economy itself, emerged out of a process constituting a legal-economic nexus. The economy was, inter alia, a structure of rights, exposures, immunities, and duties, all constituting a structure of liberty, power and coercion. The economic system evolved through the process of the legal-economic nexus in the foregoing manner, especially through the silent accumulation of common law court cases. That capitalism reigned because capitalists had been successful in achieving legal status for their vision of society, their customs, their conceptions of public purpose, and their interests, over against those of the ancient landlord class. The modern system of rent, price and wages is what it is because of the foregoing legal developments. Lastly, inter alia, that change through law of the relative rights of the various parties to transactions was still going on, such that one could expect changes in the legal foundations of capitalism to accommodate the vision of society, the customs, the conceptions of public purpose and the interests of the 116working class, and to do so in the same manner that the institutionalization of the ideas and interests of the capitalist had taken place.
