Hi,
Warren Samuels asked me to send this message to the SHOE list because
the list doesn't accept attachments and the Word doc had to be
converted and put into the body of the email. The endnote numbers are
not superscripted in this plain text version, but the notes are indeed
available at the end of the message. I hope that it is readable in
this fashion.
If you wish to reply privately to Warren, his email is
<[log in to unmask]> or you can reply to the list (he reads SHOE
email).
Humberto Barreto
Warren Samuels said:
>
> I woulld very much like to publish the demomstrated name of the author of
> the work summarized by Commons [below] and would greatly praise whoever could
> identify the source. That would include joint authorship. Several
> historians of economic thought have tried but failed to run it down.
>
> I would appreciate if the document, with introduction and the gist of the
> foregoing could be included on the list.
>
> Thanjks again for your considerate help.
>
> Warren
>
NOTES BY JOHN R. COMMONS ON PROPERTY
Edited and Interpreted by Warren J. Samuels
The manuscript published below, like numerous documents in this
series, including the accompanying manuscript by Richard T. Ely, was
given to me by Edwin E. Witte in May or June of 1957. The 6”x9” paper
is, as it was then, brittle, and some original material has been lost
along the sides.
The text is in Commons’ longhand. Editing has been kept to a
minimum. Only slight effort has been exerted to tease out the words
completely or largely missing due to loss of brittle paper. “***” is
used to indicate missing words In instances such as the word
“cultures” in the first sentence after the initial listing of the
three types of theory, only “cult” remains after flaking; either
“culture” or “cultures” seems useful. Some alterations have been made
to provide stylistic consistency, being careful not to thereby
introduce substantive change of meaning.
The document consists of notes from a work apparently attributed
to “Treitschke,” presumably Heinrich von Treitschke (1834-1896).
Treitschke was a German professor and politician. As an historian, he
took a very strong pro-Prussian position. He was accused of being
anti-Semite, perhaps because he argued in favor of assimilation. He
was a very influential teacher of civil servants. He started as a
liberal and became increasingly conservative.1 No indication of the
work’s title or date of publication or of date or purpose of the notes
is to be found.
I have been unable, even with the assistance of several other
scholars, to identify the specific book by Treitschke which Commons
summarized in the notes. The original publication on which the notes
were made may have been published in German, with Commons translating
the material into English; or Treitschke may have published it in
English. Should a reader of this archival piece correctly identify
the author—Treitschke or someone else—and the title of the source of
the notes, I will happily so indicate in a future volume of this
annual.
The document consists of ten sheets. The only sheets with page
numbers run from 3 to 9. But these are on the 4th through the 10th
sheets. The first sheet in the group, which surely is the first, or
title page, is unnumbered, as are the next two sheets. The numbering
commences on the fourth sheet, but with the number 3 and concludes
with the number 8 on the 9th sheet, the document as a whole concluding
two-thirds down the unnumbered 10th sheet.
A possible means of solution to the problem of identifying the
source may unwittingly have been provided by Commons himself. The
notes apparently include the page number(s) in Treitschke’s work from
which the argument and points were taken. If the sequence of cited
pages was in arithmetical order, it would suggest a means of
determining the sequence of sheets. The sequence of cited pages is as
follows:
Unnumbered sheet 1: pp. 55, 61
Unnumbered sheet 2: pp. 18-19, 20-23, 24, 24
Unnumbered sheet 3: pp. 8-9, 10, 14ff.
Sheet numbered 3: pp. 25, 28, 29-30
Sheet numbered 4: pp. 31, 32
Sheet numbered 5: pp. 35
Sheet numbered 6: pp. 35-36, 37-38
Sheet numbered 7: no page cites
Sheet numbered 8: pp. 40-41, 47ff., 48-49
Unnumbered sheet 4+: no page cites ***[ck for use of “+”]
The sequence is broken by the first three sheets. It seems to be the
case also that, by subjective judgment reached through considering the
elements of the argument alone, the sequence as such is not important.
If the sequence of elements comprising the argument is of little
significance by itself, the substance of the argument is, however,
very deep and very important.
First unnumbered sheet
PROPERTY AND THE PRINCIPLE OF DISTRIBUTIVE JUSTICE
John R. Commons
Three theories of property, or groups of theories:
1. Hugo Grotius—social contract
2. Hobbes, Montesquieu—legal
3. Locke—labor
The latter had more basis in primitive culture, because it lay
at the bottom. But in our comp[etitive] productive “property is based
on the existence of [the] individual as such;” “it is the necessary
physical and moral extension of the individual. But this idea of
property is only justifiable insofar as it takes into account the fact
whether (1) each individual is an industrious member of the community,
(2) that the idea can be realized only by the State through legal
duties and restrictions upon property, and these must be imposed in
the interest of the whole community. The new Political Economy pays
attention to the ethical and legal duties of Property and
property-owners, the old Political Economy to duties of the
propertyless and to the rights of property (p. 55).2
The rights of property are not independent of law, and law has
justice and equality (i.e., ethical ideas) for its aim.
Even those who deny ethical ideals never[theless] indirectly
assume them—they do not aim at [equa]ity but at aristocracy of wealth
or birth (p. 61).
Second unnumbered sheet
Treitschke, while advocating critical methods in science and
religion, opposes them in ethics and economics—such questions as fair
price, labor’s share in distribution (pp.18-19). He bases his
arguments in economics on certain fundamental dogmas:
1. Natural inequality of mankind. Answer: while there may be
inequalities in the endowments of children of the same family due to
natural causes, yet differences in social classes are due to
historical-social causes, e.g., (1) deterioration of negroes in U.S.
owing to methods of breeding; (2) deterioration of working classes in
Germany and England who, for three centuries, have been oppressed and
consigned to stunting kinds of work (pp. 20-23).
If these results are due to nature then there can be no human
progress, and men are like brutes. But in human society there is a
progressive conquest of nature by means of civilization and moral
principles (p. 24). Men resist the powers of nature through (1) the
reforming spirit, (2) intelligent contrivances, (3) labor unions, (4)
adherence to a standard of life (p. 24).
2. Treitschke holds that in the everlasting ***things there are
constant unchanging ***of marriage, property and social
org[anization]. The autocratic structure of society and *** has been
the framework ***
Third unnumbered sheet
[1] Treitschke accuses them of holding that all men are created
by nature equ[ally]. On the contrary Sch[moller] holds that
differences are due both to nature and to civilization (pp. 8-9).3
2. Treitschke accuses them of demanding the enjoyment of all
products of civilization for all men, i.e., communism. On the
contrary they set up an ideal towards which they wish society
gradually to develop, although recognizing that the ideal may be
unattainable (p. 10).
3. Treitschke accuses Schmoller (1) of communism, i.e., ***
[and] (2) of the *** of a distribution according to merit. These are
inconsistent, and come from misrepresentation of Schmoller’s actual
position.
4. Treitschke accuses them of pessimism (pp. 14ff.). But they
hold that there has been an immense bettering of social conditions
extending even to the lowest classes. This however does not make them
blind to the injustice and inequalities that actually exist.
Sheet numbered 3
*** all history has moved and in which future history will move
(p. 25)—that a democratic organization is only an exception, wherever
it can be proved to have existed—that the present democratizing
process will never reach its ideal.
Answer: He gives an extreme interpretation to the idea of
equality.—It is only held that this idea can be reached in gross and
in general. The state can do something to bring about such ideals,
contrary to the dictum of Treitschke.
3. Treitschke holds the dogma of freedom of exchange to be
inviolable. This dogma is as utopian as the hope of abolishing the
State, or of healing social evils by doing away with ***, or by
extending rights of electi[ve] franchise (p. 28).
4. The ethical element of monogamy, property and right of
succession does not lie in the fact that they been common in other
times, i.e., in their abstract idea, but in the fact that the laws
respecting these institutions are adequate, in a definite time and a
definite people, to maintain a just and ethical order, and an ethical
education of society (pp. 29-30).
Sheet numbered 4
It is usually asserted that the difference between the old and
new schools of Political Economy is in the importance given by the
latter to the functions of the State. But the difference is deeper.
The new school might be consistent with their principles and advocate
even a lessening of state interference. The difference lies in the
new conception of the relations of ethics and law to Political Economy
(p. 31).4
The older economists held that there was no national economy,
national capital, or national income; but only a sum of individual
economies. But the economies of individuals of the same nation stand
in different relations to each other than they do to the economies of
individuals of other nations. The economic life of a people is
influenced not merely by being under the same government, but by a
community of speech, of history, or remembrances, of morals, of ideas
(p. 32).5
Sheet numbered 5
It is held that economic activities do not fall under the
ethical standpoint, but a technical, [three-quarters of an inch or so
of blank space on this line, suggestive of an intention to add
something]. But the simplest technical operation is undertaken with
an end in view, and as part of a system, not with superfluous means.
Pure force of nature and want necessitates only a passing exertion,
undertaken on the spur on account of lawyer, etc. But our idea of
labor contains a moral element. “Labor is that rational self activity
which strives by continuous exertion to bring about something in the
system of human objects which is recognized as right; it has become in
a certain sense an object in itself, so that it stands for us as the
school of all virtues, as the preserver of all possessions, as the
basis of our social organization.” In Political Economy we
investigate the relations of individual economies to one another and
to the whole, and so with operations in which the technical side
receives a coloring, a form or direction from ethics and law.
Economic life begins as the mere natural instinct urging [individuals]
to the supply of natural needs. But ethical feelings, aesthetic needs
and the intellect gradually shape a frame in which they operate, and
this frame, by transmission, comes to be a sacred religious order into
which the individual is born (p. 35).6
Sheet numbered 6
Not only do the larger economic institutions depend upon custom, being
sustained by law, such as slavery, serfdom, feudalism, guild system,
freedom of industry, [and] organization of agriculture, but all minor
questions, such as markets,7 the flourishing of a trade, the
subordinate questions of cash or credit payments which influences the
prosperity of different classes, the question of home or factory
industry—[that] supply and demand do not affect price and consumption
directly but through the customs of the particular people. In one
place, with established customs of trade, an over-supply will lead to
increased speculation, in another, with different customs, to a long
depression of prices, e.g., a fall in sugar leads to increased
consumption in England but not so in Germany. The whole question is a
matter of the moral history of a given time and people (pp. 35-6).
Individualism as a starting point in economic affairs is an
unlimited superfluity. It is the essential basis for all economic
systems, that out of which they are made. But it explains the
phenomena no more than the statement that a machine is made of iron
explains the nature of the machine.8 There must be, besides, a
knowledge of the psychological evolution and character of the given
people (pp. 37-8),
Sheet numbered 7
Connected with the idea of individualism are two false ideas.
1. That through all social history there is a constant normal
form of organization towards which society is progressing, and that
the State can interfere with this advance only to the detriment of
society.9 This is opposed by List, Roscher, Knies, Hildebrand.
2. That every form of natural environment, every climate every
period of capital formation, and of population, every period of
technical progress, determine an absolutely necessary order of
economic life. These are important, but not the only elements.
There are also the ideas of civilization of the period, moral and
aesthetic ideas. Every economic organization is not merely for the
production of material goods, but for the production of moral factors;
e.g., the education of the coming generations of laborers, the
securing of such industry, leisure, responsibility, honor and family
life, for individuals, that the progress on which future well being
depends, may be secured.10 These are not questions of natural order,
but of spiritual, ethical, psychological causes. The object of
economic organization should be to obtain the highest technical
excellence, always subordinated, however, to morals and law, so as to
lessen evil results.11
Sheet numbered 8
The present technical operations and great machinery are
indispensable. But they do not impose women and child labor, the
distribution of product, the distribution of losses—these depend on
morals and law, the civilized ideas of the time. Great undertakings
are imposed by the present state of industry, but whether these should
be undertaken by individuals, companies, corporations, communities or
the State, is a question of the psychological factors, i.e., of ethics
and custom, of ideas of civilization and law (pp. 40-41).12
The distribution of product, depending upon inheritance, is
regulated by custom and law, not by natural law, which is only the war
of all against all, or robbery and murder (p. 41).
Development of Custom into Law (pp. 44ff). In earliest times
there is no distinction between Law, Religion and Custom. But as
individuals break away from Custom, the people put at least a part of
their custom into the stricter form of law. There are then the two
fields divisions of social structure, (1) Custom, with public opinion
and esteem as its executive organ, and (2) Law with civil and
compulsory state processes. Beyond this are the regions of free
individual morality. Those who argue for freedom do not want absolute
unregulated freedom, but [continued on next sheet]
Sheet numbered 9
they think custom *** than law *** the better regulator. The question
is not, therefore, one between regulation [“Rule” is written above
regulation], between rule of law and rule of custom (p. 47ff.).13
The demand for freedom of the older economists has aided the
development of trade for the middle classes, but not for the welfare
of the lower classes.14 When freedom is advocated there must be taken
into consideration with it the forces that rise to power with the
removal of restrictions. If these work more evil than good they must
be restricted. Freedom is an empty room—what grows up in it depends
upon the natural and moral-intellectual forces which find a place
spring up in it (pp. 48-49).
It arose in a time of transition and similar transitions have
occurred: (1) in [the] time of [the] first Roman emperor, (2) in [the]
time of [the] 15th century in Germany, (3) in [the] 15th and 16th
centuries.
Interpretation by Warren J. Samuels
Commons’ argument:
Our conception of property serves as the necessary physical and moral
extension of the individual
It is justifiable insofar as it takes into account whether each
individual is an industrious member of the community and that the idea
can be realized only by the State through legal duties and
restrictions in the interests of the whole community
The old Political ***economy pays attention to the duties of the
propertyless and to the rights of property, the new Political Economy
to the ethical and legal duties of property and property-owners
May be said to constitute that treatment of any individual, in respect
of right or restriction, must accord with the interests of the whole
community; insofar as the State, in identifying rights and duties,
must choose between conflicting claims of interest and right, must
base its decisions not on the identity of the respective individuals
but on the interests of the whole community.
This is in principle no different from a certain important (but poorly
understood and frequently recklessly and ideologically applied part of
Adam Smith’s argument (in which he invokes the “invisible hand”
without it adding to his argument, that “As every individual,
therefore, endeavors as much as he can both to employ his capital in
the support of domestic industry, and so to direct that industry that
its produce may be of the greatest value; every individual necessarily
labours to render the annual revenue of the society as great as he
can. … By preferring the support of domestic to that of foreign
industry, he intends only his own security; and … his own gain …, and
he is in this, as in many other cases, led by an invisible hand to
[frequently] promote an end … of the society … the public good”
(Smith 1976: IV.ii.9).
Commons affirms the role of considering the whole community in working
out the system of rights and restrictions, e.g., in choosing between
conflicting claims of interest and right. Smith does likewise by
assuming that “render[ing] the annual revenue of the society as great
as” can be is the criterion constituting, as Commons puts it, “the
interests of the whole community,” or as Smith does , “the public
interest” or “the public good.”
Both Smith and Commons, at this point of their respective arguments
and language, contemplate that there is in “the interests of the whole
community” a “public interest” or “public good” which must, or should
be, applied in law making. In the case of Smith, this is evident in
his reasoning in both the Wealth of Nations (1976) and his lectures on
Jurisprudence (1978).
There is a difference between the ordinary conception of property and
that of Smith and of Commons. It is expressed by Commons’ statement
of the ordinary conception, in which he notes that **productive
property is based on the existence of [the] individual as such,” “it
is the necessary physical and moral extension of the individual,”
whereas to both Smith and to Commons the necessary conception is that
of public purpose. That is to say that the deciding body—the
legislature and/or the courts—is not choosing between the concepts of
property advanced by parties to the conflict but choosing the public
good, public interest, social welfare, etc., which the decision
shouid promote. That this is the situation is obfuscated by the fact
that each party to the conflict thinks largely only in terms of what
they think will enhance their position. The privateness of property
thus postulates that the law of property should promote private and
not public purpose.
1 I am indebted to Ingo Pies (Halle-Wurtemburg and Daniel W. Bromley
(Wisconsin) for assistance.
2These lines establish that for Commons, first, law is neither natural
nor somehow given but is a human construct and, second, law can
create, enforce, change and/or give effect to different groups
differently. Similarly, Political Economy can assume either the rights
of the propertied and the concomitant duties of those without
property, or the rights and duties of both groups. The following
lines reiterate that law is not independent of the state and that law
gives effect to one or another concept of justice and equality; hence
law is inevitably a normative, or an ethical, phenomenon. Here and
throughout the notes Commons distinguishes law as a general category
from the actual law and the choices institutionalized in law that
identify and protect or leave exposed different interests differently;
similarly with ethical ideas. Those who prefer to avoid the
conflictual nature of society, law and economy can readily assume
institutions out of analytical bounds or outside the scope of
economics. One important facet of these ideas is a distinction between
sentiment (say, which affirms or denies the effectiveness of ethics or
law), i.e., wishful thinking, and fact (say, which recognizes the
operative significance of law and ethics).
3 Commons, in effect, is agreeing with Frank Knight’s dictum that the
principal product of the economy is man.
4 Commons, for all practical and theoretical purposes, adopts, albeit
with relatively less attention to the market, the market plus
framework approach to the economic role of government, political
economy, and the scope of economics put forth by Lionel Robbins
(1953), and subsequently by the present editor (Samuels 1966), in
exposition of the theory of economic policy of Adam Smith and English
classical political economy. The market plus framework approach
posits a framework of both legal and non-legal social control, the
latter consisting of custom, morals, religion and education. The
approach stresses the continuing social construction of reality and
the inevitability of tensions over the substantive content of legal
and moral rules, the relations between law and morals, the relative
scope of legal and moral rules, and so on, as well as tension between
public recognition and discussion of the foregoing topics and the need
felt by some people for quiet on such topics lest the effectiveness of
absolutist legitimization be compromised (for example, it is difficult
to otherwise reconcile human construction of law and morals with, for
example, the judicial finding rather than making of law. Such
tensions account for much of the difference and much of the conflict
between analytical jurisprudence and legal realism and between
neoclassical and institutional economics.
5 Commons, in adopting the position outlined here, anticipates the
present-day view which identifies the scope of economics to include
not only morals, law, custom, religion and education, but linguistics,
historicity and historiography, and so on.
6 The language, “this frame, by transmission, comes to be a sacred
religious order into which the individual is born,” combines the
sacred as a form of absolutist formulation and Knight’s argument that
man in made through these social processes. The “sacred religious
order” need not involve a formal religion; the common characteristic
is sacerdotal treatment.
7 Designating markets to be a “minor question” can illustrate a
strategic linguistic emphasis on legal and moral (and other)
institutions in order to compensate for their neglect by mainstream
economists focused on the market or an antithesis per se to markets or
to their use both in fact and ideologically to finesse the claims of
non-business, e.g., labor and consumer, interests. Otherwise, the
preceding lines further attest to Commons’ emphasis on a broad scope
of economic inquiry, the legal foundations of the economy in general
and of capitalism in particular, and the importance of institutions.
Later in this and in the succeeding paragraphs one reads of questions
being “a matter of the moral history of a given time and place” (the
use of “moral” here is not to acclaim a particular set of moral rules
but moral rules or morality as a category, in sync with Adam Smith)
and of the necessity of “a knowledge of the psychological evolution
and character of the given people.” Needless to say, much thereof in
practice is undertaken for social control, rather than scientific,
purposes.
8 This statement exemplifies Commons’ attention, even emphasis, on
deep (thick?) explanations.
9 The emphasis on “only” makes the point the logical equivalent of the
frequent invisible-hand use of Frederick Hayek’s principle of
unintended and unforeseen consequences to identify such consequences
of government action as negative and of private economic activity as
beneficial (positive). Adam Smith, in his principal discussion of the
matter, has several different linguistic formulations, including “than
would otherwise,” “might not otherwise,” “necessarily,” “naturally,”
“as in many other cases,” and “frequently.” In externality theory,
the problem is whether an externality is to be reckoned positive or
negative, a reckoning made infinitely complicated and amenable to
ideological formulation by the reciprocal character of externalities.
10 Here again is language synonymous with the idea of making man as
the product of the economy.
11 Although the language illustrates the problem of general categories
versus particular content (see, for example, note 6), Commons’
adoption of the language, “The object of economic organization should
be to obtain the highest technical excellence, always subordinated,
however, to morals and law, so as to lessen evil results,” takes the
problem to a common but questionable level; “highest technical
results,” “morals” and “law” remain essentially primitive (undefined)
terms.
12 Here is further evidence of Commons extending the scope of institutions.
13 This is an example of the inevitable tension between law and morals
in the market plus framework approach to Robbins’ theory of economic
policy.
14 Commons felt that such was the result of business control and use
of government, evident in his Legal Foundations of Capitalism (1924)
and elsewhere.
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