Pros And Cons Of Capitalism

To save capitalism and turn it into a good economic system, John R. Commons advocated several things. First, Commons recommended a government-led macroeconomic stabilization. He advocated the policies of open market operations by the Federal Reserve to ensure a stable price level, public spending on social infrastructures, unemployment insurance, the expansion of collective bargaining, and public employment exchanges (Kaufman, 1997, p. 33). Second, Commons talked about the three-pronged effort that will enhance employment practices. The first concentrates on organizational improvements including management practices in employee relations (Kaufman, 1997, p. 33). He mentioned the progressive personnel management practices of some employers that
The second prong extends collective bargaining (Kaufman, 1997, p. 33). Specifically, Commons highlighted these functions of trade unions: (1) apply industrial democracy or constitutional government in the industry to check the arbitrary exercise of management authority; (2) balance the bargaining power of labor and capital in determining wages and other employment conditions; (3) react to market failures, such as the free-rider problem, and (4) check and balance the enormous power of large capitalists and corporations (Kaufman, 1997, pp. 34-35). The third prong of Commons’ strategy is the development of legal enactments that will enhance employment conditions (Kaufman, 1997, p. 35). Finally, the third recommendation to improve the social benefits of capitalism is to enact two kinds of employment law: protective labor legislation, such as minimum wages and maximum hours, and social insurance (Kaufman, 1997, p. 36). These recommendations underscore Commons’ fate in the possibility and fruitfulness of multistakeholder collaboration under