As we all know, ODE exists to honor students. This year's Commons award winner has arguably had more influence on students during the past fifty years than any other economist. We all became acquainted with him when we were undergraduates--via a book simply titled Economics. When we first started graduate school we met him again with a book known as Foundations. And when we started course work in our fields, in field after field we encountered seminal papers he had written. For example: in Public Finance "The Pure Theory of Public Expenditure"; in International Economics "International Trade and the Equalization of Factor Prices." The list goes on and on and on--but I won't.
It is my distinct privilege to be able to introduce this year's John R. Commons award winner: Prof. Paul Samuelson.
Never look a gift horse in the mouth. That is the counsel of folk wisdom. Still there is a certain irony in my receiving today's John R. Commons Award. He and I were of a different generation. But more than that, Commons and I make an odd couple as scholars. Viva la diversite, as the French say.
However, this is not a vanity trip. It is an occasion to recollect on and commemorate an important chapter in the evolution of economic thought, of American economic thought. I refer, of course, to Institutional Economics. And that takes us to the University of Wisconsin around the time of World War I. "L'etat, c'est moi," Louis XIV could say. "Monetarism, c'est me," Milton Friedman could say. Had Commons been a less diffident personality, he might have said, "Aw shucks. But its true."
History is more than a solo or a concerto's dialogue. It is a committee, like the Darwinian one that somehow generated the King James version of the Bible. Along with Commons, we list as institutionalists the names of Thorstein Veblen, Wesley Mitchell, Clarence Ayres, and with a stretch John Kenneth Galbraith.
What did such a heterogeneous set have in common? For one thing, like siblings in every family, they enjoyed the unity of a common enemy. Anglo-Saxon neoclassicism, imported to late nineteenth century America via New England, was the ruling orthodoxy even up to the time when I began Chicago economics virtually three-quarters of a century ago.
Its first challenge had come from those Americans who went to Germany in the late 19th century for their graduate training. The Historical School--the two Historical schools--ruled the non-Austrian German literature. Brought back from the Continent was the subversive message that the State had a positive function to perform in the well-running society.
But let me stay on Commons himself. When you read the first pages of Roy Harrod's biography of Keynes, like me you may initially be put off by Harrod's contrast between Maynard Keynes' childhood in the shadows of Cambridge University and the culture prevailing in America. "Pshaw," I thought. "William James's children in suburban Boston were then living a very similar life to that of the Keynes-Darwin clans."
However, when I came to read Commons's own 1934 autobiography, Myself, I had to concede that Harrod did have a point. Commons, like me, was a Hoosier. He came not so much from Norman Rockwell's Santa Claus America, or Thornton Wilder's nostalgic Our Town, but rather from the realistic substructure that supported this dream world. It was a rural, tobacco-chewing scene (of the sort that I found still persisted in Porter County, Indiana, during the early 1920s when the horse population was committing suicide). Commons made his first living as an itinerant printer. By his own account he could never pass an exam either at Oberlin or later at Hopkins. When Commons discovered he could not meet a conventional Wisconsin lecture class he settled on something better: his legendary Friday night informal seminar at home, during which generations of idealistic disciples heard war stories about efforts to promote unionism, arbitration, workmen's compensation and social insurance. Always close to either side of a nervous breakdown, Commons worked all his life for meager pay and accomplished thousands of pages of reports and publications. He could wheedle pittances from philanthropists and legislatures, subdividing them among various good causes. Some of his student collaborators worked with him for all their lives. It could be a hard-scrabble career.
Under the LaFollette Progressive Republicans, the University of Wisconsin department of economics engaged in multifarious experimental public programs. FDR's ultimate social security program owed much to the early Wisconsin spadework. (To me, the history of local and state responsibility for governmental functions has been no triumph for grassroots efficiency, human responsiveness, experimental ingenuity or colorful regionalism. Instead the 48, or later 50, states vied with each other in fecklessness, graft, county-seat cronyism cum lobbying and beggar-my-neighbor promotional interstate rivalries. Even Wisconsin itself went through ups and downs in algebraic benevolence, including certain clashes between Old Bob LaFollette and Commons; and in the late 1930s some nasty under currents of anti-semitism and fascist cult movements appeared in the state. Perhaps Senator Joseph McCarthy's post-war career in the Congress was not wholly an aberration.)
I do not come today to bury institutionalism nor to dispraise it. I believe it lives on as a lively element inside today's mainstream economics. U.S. economics has always been more empirical--more "econometric" if you will--than the German Historical School ever was. Labor economics and the many evolving sectors of applied economics operate today light years away from the a priorisms of Ricardian and Austrian dogmatics.
At the University of Wisconsin for decades the productive Institute for Poverty has in our time been utilizing all the tools of economics--inductive, deductive and stochastic--to illuminate the terrain of inequality for opportunity and outcomes. Illustrious alumni from Wisconsin--Selig Perlman, John D. Black, Alvin Hansen, Sumner Slichter, Edwin Emil Witte, Elizabeth Brandeis, Harold Groves, James Early, Walter Heller, Joseph Pechman, Arthur Goldberger, Guy Orcutt, Robert Lampman,--decorate the honor roll of political economy, alongside of and undistinguishable from John R. Commons's co-workers and their intellectual grandchildren.
I take pride in being given even so peripheral a connection with American institutional economics, a force that will endure and flower in the new century to come.
