Menger subdivided all institutions into two types: of pragmatic and organic origin. Institutions of pragmatic origin are the result of a common will, directed toward theirs establishment, while others are the unintended result of human efforts aimed at attaining essentially individual goals.

Menger stressed on pragmatic institutions because he considered that individual interests are of the prior importance. He argued that the explaining of the origin of unintentionally created social institutions fully analogous to explaining the formation of market prices, interest rates, and the like.

Menger says that there is mechanism, that he called ‘the invisible-hand explanation’, that describes the origin of pragmatic institutions on example of money origin:

The process is assumed to be entirely driven by the separate and independent pursuit of individual interests, without any need to rely on deliberate co-ordination of individual efforts – an assumption which is, in fact, the central ingredient to an invisible-hand explanation. It is important to realize that this assumption gives a very specific meaning to the notion that an institution is explained as an unintended outcome of individual actions.

Unfortunately, this explanation is limited. First, many institutions have been deliberately created, and the second, there are institutions of not even of organic origin and can’t be explained in terms of the ‘invisible-hand explanation’. These are corporate structures.

Commons defined institution as ‘collective action in control, liberation, and expansion of individual action’. He stressed on the place of collective decisions. His declared purpose was to widen the scope of economics by giving ‘to collective its due place in economic theory’. Two main points of his view are that individuals always act within some framework of ‘collectively enforced’ social rules, and that organizations as units of collective action are an omnipresent element of modern social life.

In his work, Commons opposes peaceful co-operation to the conflicts of interest that result from scarcity. He says that we should work not with goods and services, but with property rights, using transactions. That is so-called Commons’ economics of property rights’.

What concerns ‘Commons’ corporate actor theory’, Commons says that orthodox economics failed to account for the role of organized collective action. Moreover, we should remember that individuals and corporations are artificial. They are nothing without a set of rights. An individual is subjected to the set of rules. First he is subjected to the rules of the society, he lives in, second, the rules of state, and third, the set of rules of organization.

Commons also points that organization cannot exist without a will of individuals it consists of. Every individual still works for himself, but first he works for the interest of organization. He is not trying to advocate some organic or collectivistic alternative, but emphasizes that in social systems individuals are unified by a system of rules.

We should note also words Menger and Commons use in their theories. Menger says that institutions originate, while Commons says that they are enforced.

Using the table, we can show Menger’s and Commons’ positions. In this terms, Menger’s point would be ‘A’ and Commons’ ‘D’. They do not deny the existence of other rules or institutions, but consider theirs to be of the greater importance.

Menger vs. Commons means ‘unintended outcome versus intentional design’.