Clark participated actively in the creation of a "new" economics, becoming the third president of the young reformers' American Economic Association. He was professor of history and political economy at Carleton College until 1882. He then taught at Smith College, Amherst, and Johns Hopkins University. From 1895 until his retirement as professor emeritus in 1923, Clark was part of the influential faculty of political science at Columbia University, where he edited the Political Science Quarterly (1895-1911). During that time, his views gradually shifted from a critic to a supporter of capitalism and he later became known as a leading advocate of the capitalist system.
John Bates Clark developed a distinctive form of marginal utility – marginal productivity theory, which he presented not as a completed system, but as a first approximation and an approach to further analysis. Near the turn of the century, rapid industrial development and serious discontent, especially with the anomalous distribution of wealth, prompted Clark to examine problems of production and distribution. The indisputable influence which he exercised upon at least a generation of economists lay more in his development of analytical tools than in the conclusions he drew from them. Through his marginal utility principle, developed independently of Léon Walras, Carl Menger, and W. S. Jevons, Clark became the leading theorist of a marginal productivity theory of distribution which idealized the relationship between income and an individual's contribution to goods or services.
Clark's first important work, "The Philosophy of Wealth" (1885), attacking the hedonistic and atomistic assumptions of classical economics, attempted to tie economics to social ethics. Clark's major contribution, "The Distribution of Wealth" (1899), discarded his early reformist tendencies to present a deductive system of economic harmony based upon the competition of rational, self-interested men inevitably progressing. Clark began by assuming that society was a biological organism subject to collective moral judgment. Then he divided economics into "static" and "dynamic" analysis, a distinction which continues to characterize American economics. Clark's own analysis was a static description of economic laws in an unchanging society where perfect competition led to economic equilibrium. Static phenomena were not analytical abstractions but real economic forces isolated from dynamic laws of social change so that the mechanics of distribution were revealed. Dynamic laws, to be discovered by future generations using refined empirical techniques, were formulated tentatively by Clark in the last chapters of "Distribution" and in his later "Essentials of Economic Theory" (1907) on the basis of static economics and an optimistic justification of the status quo. To Clark, population growth, improvement in tastes, capital accumulation, technological innovation, and industrial organization were dynamic, necessarily progressive forces. The foundation of Clark's further work was competition: "If nothing suppresses competition, progress will continue forever". Clark: "The science adapted … is economic Darwinism. … Though the process was savage, the outlook which it afforded was not wholly evil. The survival of crude strength was, in the long run, desirable". This was the fundament to develop the theory which made him famous: Given competition and homogeneous factors of production labor and capital, the repartition of the social product will be according to the productivity of the last physical input of units of labor and capital. This theorem is a cornerstone of neoclassical micro-economics. Clark stated it in 1881 and more elaborated 1899 in The Distribution of Wealth. The same theorem was formulated later independently by John Atkinson Hobson (1891) and Philip Wicksteed (1894). The political message of this theorem is: "What a social class gets is, under natural law, what it contributes to the general output of industry."