This collective work is most welcome because it demonstrates the vitality of the research in American institutionalism and its contributions to the field of labor and employment economics. In this respect, the volume deserves to be largely diffused in Europe where the tradition of American institutionalism is little known and often limited to a critique of the neoclassical paradigm.
The book underlines three fundamental points:
- 1.
The American institutionalist tradition offers, as is well known, an essential critique of neoclassical assumptions and preconceptions as applied to labor, whether in the basic model (price theory) or in some modern form (choice theory), following Kaufman's distinction in this book. The chapters by Jennings (on the naturalization of phenomena and the depoliticization of discourse) and LaJeunesse (on the simplistic views of labor, workers and their behaviours), as well as the editors' conclusion (on the actual negative effects of the “neoclassical misrepresentations of labor markets”) are especially written in this spirit.
- 2.
However, this tradition also offers an alternative framework of analysis and relevant concepts for the investigation of the wage‐labor relationship (that the French call le rapport salarial), of its institutions and their evolution. The first two parts of the book are thus concerned with the presentation of the theoretical insights of institutional economists, both from the first generation of Commons, Veblen and Clark and from the following generations of Reinolds, Dunlop, Kerr and Piore.
- 3.
Based on these foundations, the institutionalist tradition has produced a set of historical and empirical studies of labor and employment issues. The third and fourth parts of the book emphasize the institutionalist point of view in analyzing several contemporary problems, namely: discrimination; income and wealth inequalities; non‐standard forms of labor; outsourcing; retirement; trade unionism's crisis; employment policy; social justice; and so on.
In our view, this book demonstrates the twofold relevance of the works of past and present institutionalists.
First is the theoretical relevance of the institutionalist framework of analysis (see especially chapters by Kaufman, Atkinson, Chasse, Champlin and Knoedler, LaJeunesse, Prasch). The book clearly highlights how the analytical system of J.R. Commons, as well as those of T. Veblen and J.M. Clark, are unavoidable for an institutionalist theory of the wage‐labor relationship and its dynamics. These authors are fundamental not only on account of the general framework that they developed (see their views on method, on economic activity and its institutional foundations, on individual behaviour). Of particular importance are the specific concepts that they produced, such as: wage‐labor relationship specificities; bargaining power; competitive menace linked to the expansion of markets; social costs of economic activity; public interest view of the economy; economic and industrial democracy; and so forth. It is also showed that the next generations of American heterodox labor economists – which, according to Kaufman, can be included in the institutionalist tradition – developed detailed and relevant concepts for the analysis of labor market processes (notably wage setting and wage differentials, and the segmentation of labor markets). The authors tackle all these critical concepts in view of their importance and relevance for the analysis of real socio‐economic processes. They further hold the view that it is time to dig deeper and integrate these concepts into a unified system of thought based on the articulation of the contributions of different generations and economists of the institutionalist tradition. With this considerable task in mind, the volume points in a few directions. In this spirit, Commons' framework appears foundational. Indeed, a powerful analytical tool contained in Commons' thought is his typology of transactions (bargaining, managerial and rationing transactions). Unfortunately, this is not discussed in the book. Yet this typology is, in fact, a framework for the analysis of all the institutions of the wage‐labor relationship (and not only of the labor market). It is also crucial for the analysis of the links between economics and law on which these institutions are based, as well as between them and the modes of private and public governance (see Commons' notion of going concern). Thus, it is easy to support the proposal made by Kaufman in this volume – namely, that the modern contribution of institutionalism should be based on the theoretical developments of the concept of transaction – as long as the concept is not limited to its Williamsonian interpretation and is based on the larger and richer perspective of Commons.
Second is the relevance of the analysis of capitalism at the turn of the twentieth century for the understanding of contemporary capitalism. Throughout several chapters in this volume (notably chapters by Atkinson, McIntyre and Ramstad, Zalewski, Toruno), we come to appreciate how much the socio‐economic processes studied by the institutionalists of the past are at work today. For example, globalization can be seen as a new competitive menace which induces a downward pressure on wages and working conditions; the development of outsourcing and labor contracting can be seen as new versions of the sweating system by creating a transactional gap between workers and the entity capturing the results of their labor power. More generally, there is today a resurgence of the tendency to the reduction of the durability of the links between employers and employees, as well as a reaffirmation of the conflict between private and public interest through the predominance of a (individualistic and one‐sided) business view of social welfare. The historically‐informed framework of institutionalism thus nourishes our understanding of contemporary problems. This framework especially shows that the recurrent and structural nature of economic problems is linked with power inequalities. These inequalities reveal the deficiencies of economic democracy in the governance of firms – deficiencies, that, as shown by Commons or Clark, prevent certain social categories from fully exercising their economic freedom without economic coercion and underline the increase in economic and social insecurity for workers.
Overall, the volume defends a thesis: that by its concepts and methods, and by its historical analysis of capitalism, the institutionalist economics approach developed in the USA is particularly relevant for the understanding of contemporary issues. This relevance is notably powerful regarding two related themes: first, the stakes and conditions of regulation of destructive competition; second, the necessity of a new definition of social welfare and of social justice. In respect to these two themes, we see a strong convergence, beyond some possible differences in specific theoretical constructions, between American institutionalists and European institutionalists.
