John Rodgers Commons was one of the leading institutional American   economists. Even though his works are not widely known, Commons   gave a sobering insight into it how discrepancies in capitalistic economies can be handled.

To Commons, the economic system is basically a system of relationships .As such he observed that the rights of one person in a capitalistic society may infringe or disadvantage the interests of another. The ultimate result is that there must be a way in which the consequences, intended or not, of any anyone’s action should be curbed.

Government had to intervene in the Labour market where there are lots of injustices. The market forces have neither the willingness not the capacity to alleviate these injustices. As a result, there is need to maintain the inherent structure of capitalism, but within it, reforms led by the government, have to be carried out.

The courts should also take a key role in resolving conflicts which come out of transactions .Commons observed that due to scarcity of resources, conflicts will always come up, and in such instances, the courts should be able to mediate so as to restore harmony in the market (Ferrari-Filho & Concecao, 2005).

Another addition to the body of economics was his theory of reasonable values. Commons argued that the malaise in the capitalistic system can partially be cured by ensuring that the price charged for goods and services does not make the owners of capital richer at the expense of workers.

Commons believed that the welfare of the whole community could be improved by first having legislation in place regarding the relationships between buyers and sellers. Given than the smallest production unit in Commons theory was labour, if employers were fair to employees, then capitalism will be nice to everyone.

Reference

Ferrari-Filho F. & Concecao A. O.(2005). The Concept of Uncertainty in Post Keynesian Theory

and in Institutional Economics. Journal of Economics, 39(3), 579-594.