The Driving Forces of Diffusion in John R. Commons’ Institutional Economics

Abstract

In this article, I reconstruct John R. Commons’ theory of institutional evolution: I draw a trajectory from where a novel principle at the micro level reached a compromise with old principles at the macro level. In the process, the uniqueness of Commons’ evolutionary theory is highlighted and a forgotten challenge for modern evolutionary and institutional economics is uncovered: the need to explore the spiritual driving forces in history in a specific time and space. In drawing the trajectory in Commons’ centerpiece work Institutional Economics (IE), the following two points are highlighted. First, “institutions” themselves (defined as “going concerns” where the collective action controls member actions), carry novel principles and evolve through their diffusion process. The novel principles discussed here are industrial democracy and safety. Second, the spiritual driving force unique to the era pushed ahead the evolution and diffusion of the institution. This force is similar to a religious devotion to industrial democracy and safety. In order to confirm these “genuine” unique aspects, I compare Commons’ theory with French modern institutionalism and with modern evolutionary economics reconsidering old institutionalism.