John R. Commons' Modern Monopoly Theory

Abstract

OHN R. COMMONS' book, Distribution of Wealth, was a failure when it was first published in 1893.' Now Augustus Kelley has reprinted it including an introductory essay by Joseph Dorfman on The Foundations of Commons' Economics.2 It is well that Kelley and Dorfman have made this effort, because the book contains material not adequately appreciated up to now.3 Commons' treatment of monopoly theory deserves at least a more prominent footnote in the history of economic thought. Commons displayed his early interest in the subject of monopoly during the 1892 conference of the American Economic Association. During one of the sessions, J. B. Clark read a paper explaining part of his distribution theory.4 When the discussion period began, Commons asked him how monopoly fitted into his theory. Richard T. Ely, Commons' teacher, was not satisfied with Clark's answer and said so. Commons himself did not enter into the discussions but offered, in effect, a rejoinder in his book, Distribution of Wealth, published in the following year. Economic theory which did not allow adequately for monopoly offended Commons' sense of realism. Because the subject of monopoly was too much in the public mind during the nineties for economists to ignore, he devoted much of his book to discussing it. Parts of his theory sound quite modern.