John R. Commons and Government as Employer of Last Resort: Three Paths to a Progressive Right to Work

Abstract:

Today in the United States, a number of congressional Democrats endorse proposals that would establish a job guarantee for all Americans seeking work. Arguments for such a policy can be traced back at least to the work of John R. Commons, one of the first institutional economists. This article demonstrates that there are actually three arguments in Commons’s scholarship that provide a case for government to hire the unemployed by serving as employer of last resort. These arguments, each highlighted at a different point in Commons’s career, can be viewed in turn as legal, financial, and historical paths to public provision of work for the jobless—government employment that Commons considered part of “the right to work.” The article traces each path, highlighting insight that remains relevant and calling for greater attention to Common’s writings as a way to reclaim the right to work as a progressive cause.

Keywords:

• unemployment
• right to work
• job guarantee
• public employment
• public works
• business cycles

JEL Classification Codes::

• B31
• B52
• E02
• H11
• J08

Notes

1 For an example of that literature, see Tcherneva (2011).

2 For more on Common’s discussion of unemployment prevention, unemployment compensation, and public employment in his early essays, as well as a more detailed discussion of his legal path to the right to work, see Whalen (2019, 322–324).

3 The National Bureau of Economic Research (2019) identifies four contractions in that period, one of which—between January 1920 and July 1921—is widely referred to as a depression.

4 For a further discussion of Commons’s cycle theory, see Whalen (1993).

5 Writing with his former student, John B. Andrews, Commons returned to the subject of public works in the opening chapter (on unemployment) of the 1936 edition of Principles of Labor Legislation (Commons and Andrews 1936). In a section on emergency public works, they conclude that although results of such work projects “have not always been gratifying, . . . the opinion has been growing that the flaws are not inherent, . . . [and] may be largely overcome by proper administration. Against the added cost [owing to inefficiencies], which may be a serious problem, must be placed the value of the work accomplished and also the human resources which are conserved and even improved” (Commons and Andrews 1936, 27–31). Another section of the chapter stresses the importance of labor-market information (such as current data on hirings and layoffs), which “would make possible intelligent action for the prevention and relief of unemployment through the systematic distribution of public work and the pushing of necessary projects when private industry’s demand for labor is low.” They conclude: “Public work would then act as a sponge, absorbing the reserves of labor in bad years and slack seasons, and setting them free again when the demand for them increases in private business” (Commons and Andrews 1936, 27).

6 For an earlier, but less detailed, discussion of stages of history, see Commons (1925c). See also Commons (1934a, 876–903).

7 For some discussion of Commons and Andrews (1936), see note 5 above.

8 For a discussion of countercyclical job creation in the United States, see Levine (2003); Congressional Research Service (2010); and Whalen (2019, 13–28).

9 For more on the continued significance of addressing unemployment and job insecurity, see Whalen (2019). It is also worth observing that University of Chicago economist Raghuram Rajan recently warned that capitalism “is under serious threat” because it currently fails to provide opportunity for most people (BBC News 2019).

Additional information

Notes on contributors

Charles J. Whalen

Charles J. Whalen is a visiting scholar at the Baldy Center for Law and Social Policy, University at Buffalo (New York). This article is based on a paper presented at the annual meeting of the Association for Evolutionary Economics on January 4, 2020, in San Diego, California. The author thanks Hiroyuki Uni for an e-mail exchange that inspired the paper, and Linda Whalen for reviewing the manuscript.