Commons, Collective Action, and Corruption

Abstract:

John R. Commons tried to save capitalism by making it good. His career was characterized by a sustained attempt to reduce social inequality by promoting collective action. Thanks to his proximity to the terrain, Commons often found himself close to authentic examples of corruption. Indeed, in his published works, corruption was treated exclusively from this perspective. His analysis reveals that collective action is not only the cause, but also the consequence of corruption, and that, in addition, the struggle against corruption is dependent on collective action for its success. I argue that Commons’s position is diametrically opposed to the theses developed later by Nathaniel Leff and Samuel Huntington. For Commons, the main issue is not that there is too much control over individual actions, but that there is too little.

Keywords::

• collective action
• Commons
• corruption
• Huntington
• Leff

JEL Classification Codes::

• B15
• D73
• H10

Notes

¹ More precisely, their models function without presupposing the existence of corruption (Marx ([1867] 1982, 352; Veblen [1904] 1988, 281).

² This is also the definition of the International Monetary Fund (IMF).

³ One of his most concrete suggestions on this occasion was that the government should introduce “Courts of Arbitration” in order to protect the “right to employment” that he advocated so strongly (Commons [1893] 1965, 82).

⁴ The Industrial Commission introduced by President William McKinley in 1898 provides an example. It was set up to examine the impact of industrial concentration. It was also tasked with analyzing the impact of immigration on the labor market. As I show, the analysis of this subject was Commons’s contribution to the Commission.

⁵ Commons viewed certain practices as examples of local folklore. This attitude is exemplified in an anecdote in his autobiography about an article written by his wife: “She saw many things that I had taken for granted as belonging to the Natural Order … Her story dealt with the most familiar thing I knew in Indiana: the auctioneering of voters to the Republican and Democratic parties; if auctioneering did not work then the voters who had sold themselves to the opposite party were made drunk and were locked up during election day” (Commons [1934] 1964, 49-50). In the passage quoted, he also establishes a link between this tradition and his concept of “custom,” which plays a significant role in institutional economics ([1934] 1990).

⁶ A vestige of this period is Commons’s idea that what distinguishes people from the animals is “selfconsciousness” (Commons [1899–1900] 1967, 11).

⁷ Contemporary research associates economic development in a given country with the solidity of that country’s political institutions (Acemoglu and Robinson 2012). For Commons, the purpose of political reform is not to unleash economic forces — in spite of the Panic of 1893, the United States was enjoying phenomenal economic growth — but to facilitate wealth distribution among the country’s citizens.

⁸ For a comparative view of Commons’s position, see Maurice Isserman (1976).

⁹ On demands for restrictions on immigration, see Maldwyn Jones ([1960] 1992, 212-238).

¹⁰ Commons’s (1904b) preference was very much for mediation and conciliation. In his view, arbitration was not part of the logic of the NCF ([1934] 1964, 84).

¹¹ As one of the leading figures in the NCF, Ralph M. Easley defended the idea that the organization should be more ambitious. Its aim, in his view, should be to achieve “industrial peace” by identifying the “underlying causes” of social conflicts (in Cyphers 2002, 33). This is why the presence of people like Commons, affiliated with the academic world and able to keep a certain distance, was highly beneficial to the NCF’s reputation (Cyphers 2002, 9, 36). But the opposite was also true. It was thanks to the NCF that Commons acquired the status of expert in labor economics that gained him a post at the University of Wisconsin in 1904 – a symptom of his former status as a non-specialist was that, when he first joined the NCF, he was put to work on the question of taxation (Commons [1934] 1964, 82, 92).

¹² In Myself, Commons is more allusive about Parks’s practices, especially when he tells the story of Parks’s rival and his two bodyguards ([1934] 1964, 90). It seems that Commons’s main criticism of Parks was that he was a maverick who failed to take the big picture into account.

¹³ For an example of social conflict resolution causing problems at the local level, see Commons ([1934] 1964, 84-85).

¹⁴ Commons admitted that he did not know what to do when he was offered the bribe by a leading capitalist. Should he tell the president of the union? He asked Easley for advice ([1934] 1964, 91).

¹⁵ On Commons’s analysis of propaganda, see Commons ([1934] 1990, 91, 724-748).

¹⁶ In his research on the Teamsters, David Witwer (2000; 2003, 10, 18, 23, 24) refers to Commons on numerous occasions, but never to Commons’s comments about corruption itself.

¹⁷ A distinction must be drawn between the official and true publication of that book: Commons specified that the addendum had been written in 1907.

¹⁸ It was La Follette’s stubbornness and unwillingness to compromise that lost him most of his friends, including Commons, when he refused to support the U.S. government during WWI (Harter, Jr. 1962, 64-65; Unger 2008, 239-262).

¹⁹ One of the notable pieces of legislation of the period was the Pendleton Civil Service Reform Act of 1883, a federal law that asserted the principle that government jobs should be distributed based on merit.

²⁰ La Follette was accused of appointing members from his own Republican party to posts in the administration (Harter, Jr. 1962, 47; Unger 2008, 120). However, Commons explained that Governor La Follette had insisted that, with the exception of heads of departments and elected officials, all civil servants took an examination, including those who were already employed at the time of the reform and those whom he had personally appointed (Commons [1934] 1964, 102-103).

²¹ For Susan Rose-Ackerman (1999, 69-71), civil service reform is a central theme in the struggle against corruption. This is especially true in that her analysis of corruption is based on agency relationship theory. But this model can only have any meaning if there is a divergence of interests between the principal and the agent (Persson, Rothstein and Teorell 2013, 452). In the spoils system, however, there is agreement between the two parties.

²² The reform does not mention the proportion of civil servants in the economy. It is thus not surprising that William Foulke, who had not understood that one could oppose such a reform, noted that the boundary between Republicans and Democrats was porous (Foulke 1919, 3, 10-11).

²³ When he was teaching at the University of Wisconsin in 1905 and 1906, Commons carried out research that would have proven useful in the elaboration of the law on public utilities (for a contextualization of the elements of the NCF debate, see Cyphers 2002, 127-152).

²⁴ The typology developed by Vito Tanzi (1998, 10) also makes a distinction between corruption involving monetary payment (here, the case of the private ownership of public utilities) and corruption associated with other kinds of services (public ownership). Of course, the distinction is not as clear-cut as it might appear. A private company could accept to offer jobs as a payment, but as Commons ([1894] 2009, 50) pointed out early in his career, private companies put profit first and were likely to recruit qualified personnel.

²⁵ In conformity with this vision, companies compete with one another to corrupt the public administration, and the firms that win are the ones able to pay the biggest bribes (Leff 1964, 9).

²⁶ This absence of data gave rise to a substantial amount of empirical research, inaugurated by Paolo Mauro (1995), the objective of which was to either validate or discredit the economic efficiency of corruption.

²⁷ Actually, Commons held that many social groups have authentic claims. For example, workers want better working conditions. In the current electoral system, they will not get them without collective action. The groups that succeed in organizing themselves will be able to defend their interests, while the others will not (Chasse 1986, 777).

²⁸ For many economists, the solution to the problem of coercive power monopolies enjoyed by group representatives — a factor of central importance in corruption — is based on competition between various group representatives. Why not, for example, introduce a number of services from which citizens can demand government documents (Bardhan 1997, 1337; Shleifer and Vishny 1993, 610-611)? Commons, for his part, opted for sharing coercive power by including several members of a group in the decision-making process. This is another example of the fact that, for Commons, the economic aspect was not the most important one.

²⁹ Success is never guaranteed. The Wisconsin Industrial Commission, to which Commons contributed, was able to serve as a model for collective action largely because it had been almost entirely abandoned by politicians, who displayed little interest in it. The Commission was instead run by specialists in their respective fields (Commons [1934] 1964, 157). If this had not been the case, the Commission would probably have shot down anything resembling genuine social progress.

Additional information

Notes on contributors

Philippe Broda

Philippe Broda is an associate professor of economics in the Department of Economics at Novancia Business School in Paris (France).