In 1926 John Maurice Clark published a seminal text in institutionalist economics, Social Control of Business, surveying the ways in which business was subject to control by a variety of formal and informal constraints. 1 The text rejected mainstream ideas in neoclassical political economy by explaining how individual self-interest and competition could be manipulated not only through legal rules but also by custom, habit, codes of ethics, and morals. Representative of the institutionalist movement, Clark discarded presumptions of an individualistic economy based on market competition. Instead, he posited that long-term public goals of prosperity and equity could be achieved through the public and private study of “industry itself,” which existed “on the frontier where new policies are being worked out.”2 The book fused the development of the regulatory state, giving particular attention to administrative law, with self-regulation by businesses and trade associations. Both public and private regulations, he argued, advanced codes of conduct to standardize business activities and control competitive practices. Building on the work of Richard Ely, John Commons, and Dean Roscoe Pound, Clark’s Social Control of Business extended progressive liberals’ initiatives for regulatory state expansion through administrative agencies and it advanced private rulemaking by trade associations as a complement to the development of mandatory public regulation.
Laura Phillips Sawyer,
Between Economic Planning and Market Competition: Institutional Law and Economics in the US
Available at: https://digitalcommons.law.uga.edu/fac_artchop/1367