John R. Commons: ideas for stabilization of prices and employment in USA, pre-1929 crisis

Abstract

The objective of this article is to present the ideas for stabilization of prices and employment of the U.S. economist and historian John R. Commons, pre-1929 crisis; in doing so, we use Commons’s articles published between the years of 1925 and 1927, with a brief introduction of John Maynard Keynes talking about Commons. We’ll see the importance that Commons gives, in his analysis, to the historical and institutional weight of the Central Bank of the United States of America, the Federal Reserve System (FED), since its recent creation in 1913, when referring to stability control of prices, credit, employment, as well as to the collective action of banks, companies and unions. For this author, the FED would play a positive and stabilizing role in the US economy because of its role as a syndicate of private banks. Commons also testifies to the importance of monetary regulation by this institution, as well as suggests a new price index to stabilize the general situation of credit, and the creation of corporate funds to protect the worker if he loses his job. Finally, he stresses the importance of maintaining a free gold standard so that the effective stabilization of the economy can occur, as well as the importance of creating an international monetary agreement to treat the debts of the European countries towards the US, thus contributing to an international stabilization of prices.