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This paper deals with the process of construction of the first act establishing an unemployment compensation scheme in the United States (1932 Wisconsin Unemployment Compensation Act). It focuses on the contributions made by J.R. Commons and Wisconsin institutionalism to the Act. A very large part of the 1932 law can be explained by its rooting in pragmatist social philosophy. It encompasses precise and original propositions aiming to infuse capitalism with reasonability, promote corporate social responsibility, and strengthen democratic requirements in the economy. The paper underlines how this first Act, associated with Institutional Economics, and the debates that it has raised have influenced the American system of unemployment insurance instituted in 1935.