Regulation of the employment relationship: The `old' institutional perspective

Abstract

This review article examines the rationale developed by the `old' institutional economists, particularly John R. Commons and associates of the `Wisconsin School,' for the regulation of the employment relationship. Factors emphasized by the old institutionalists include the promotion of noneconomic social goals, the deleterious effects of unrestrained self-interest and competition, the highly imperfect nature of labor markets, the skewed distribution of property rights, and labor's inequality of bargaining power. The paper then describes the policy strategy and regulatory program advocated by the old institutionalists to improve the efficiency and equity of the market system. Implications of the old institutional perspective for current debates over the extent and form of employment regulation are then assessed.