J. R. Commons’ Business Cycle Theory

Shingo Takahashi

Journal of Economic Issues, 2020, vol. 54, issue 4, 907-917

Abstract: In Institutional Economics (1934), John R. Commons argued that insufficient profits and expectations based on the “profit‐margin” theory, not the “profit‐share” theory, were the primary causes of economic depressions. He also posited a business cycle theory to analyze historical global depressions and explained a pricing theory within the context of capitalism's historical development. Based on this discourse, Commons evaluated the economic actor that would receive the benefits of increased efficiency under different circumstances and determined that lowering the price from the buyer‐consumer's standpoint deprived producers of gains, while raising the price from the producer‐seller's standpoint deprived consumers of benefits. Thus, Commons concluded that prices should be stabilized, since they affect expected profits on which future production will be based, and the effects of supply and demand should be controlled using state power for a period of time to protect intangible properties. This makes macro‐economic policy an important tool in stabilizing the business cycle. According to Commons, we should safeguard public interest by stabilizing prices through macro monetary policy and protection of efficient producers’ profits.

Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/00213624.2020.1816121 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mes:jeciss:v:54:y:2020:i:4:p:907-917

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/MJEI20

DOI: 10.1080/00213624.2020.1816121

Access Statistics for this article

More articles in Journal of Economic Issues from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().