Norwegian-American Sociologist and Economist, Leader of the Institutional Economics Movement
Thorstein Veblen, fully Thorstein Bunde Veblen, born Torsten Bunde Veblen
Norwegian-American Sociologist and Economist, Leader of the Institutional Economics Movement
There is a great and pressing need of such a construction of these principles, which would greatly facilitate the work of corporation finance; but it is to be admitted that some slight cloud still rests on this manner of disposing of ownership. It involves abdication or delegation of that discretionary exercise of property rights which has been held to be of the essence of ownership.
This eighteenth-century order of nature, in the magic name of which Adam Smith was in the habit of speaking, was conceived on lines of personal initiative and activity. It is an order of things in which men were conceived to be effectually equal in all those respects that are of any decided consequence, -- in intelligence, working capacity, initiative, opportunity, and personal worth; in which the creative factor engaged in industry was the workman, with his personal skill, dexterity and judgment; in which, it was believed, the employer ("master") served his own ends and sought his own gain by consistently serving the needs of creative labor, and thereby serving the common good; in which the traders ("middle-men") made an honest living by supplying goods to consumers at a price determined by labor cost, and so serving the common good.
Under this common-sense barbarian appreciation of worth or honor, the taking of life?the killing of formidable competitors, whether brute or human?is honorable in the highest degree. And this high office of slaughter... casts a glamor of worth over every act of slaughter and over all the tools and accessories of the act. Arms are honorable, and the use of them... becomes a honorific employment. At the same time, employment in industry becomes correspondingly odious, and, in the common-sense apprehension, the handling of the tools and implements of industry falls beneath the dignity of able-bodied men. Labor becomes irksome.
Wherever the circumstances or traditions of life lead to an habitual comparison of one person with another in point of efficiency, the instinct of workmanship works out in an emulative or invidious comparison of persons...In any community where such an invidious comparison of persons is habitually made, visible success becomes an end sought for its own utility as a basis of esteem. Esteem is gained and dispraise is avoided by putting one's efficiency in evidence. The result is that the instinct of workmanship works out in an emulative demonstration of force.
There is another curious question that will also have to be left as a moot question, in the absence of more specific information than that which is yet available; more a question of idle curiosity, perhaps, than of substantial consequence. How nearly is it likely that the total gains which accrue to these prosperous business concerns and their investors from their conscientious withdrawal of efficiency will equal the total loss suffered by the community as a whole from the incidental reduction of the output? The resulting question is, therefore, not whether the rest of the community loses as much as the business men gain, -- that goes without saying, since the gains of the business men in the case are paid over to them by the rest of the community in the enhanced (or maintained) price of the products, but rather it is a question whether the rest of the community, the common man, loses twice as much as the business concerns and their investors gain.
this free income which the community allows its kept classes in the way of returns on these vested rights and intangible assets is the price which the community is paying to the owners of this imponderable wealth for material damage greatly exceeding that amount. But it should be kept in mind and should be duly credited to the good intentions of these businesslike managers, that the ulterior object sought by all this management is not the 100 per cent of mischief to the community but only the 10 per cent of private gain for themselves and their clients.
Unrestricted ownership of property, with inheritance, free contract, and self-help, is believed to have been highly expedient as well as eminently equitable under the circumstances which conditioned civilized life at the period when the civilized world made up its mind to that effect. And the discrepancy which has come in evidence in this later time is traceable to the fact that other things have not remained the same. The odious outcome has been made by disturbing causes, not by these enlightened principles of honest living. Security and unlimited discretion in the rights of ownership were once rightly made much of as a simple and obvious safeguard of self-direction and self-help for the common man; whereas, in the event, under a new order of circumstances, it all promises to be nothing better than a means of assured defeat and vexation for the common man.
While the proximate ground of discrimination may be of another kind, still the pervading principle and abiding test of good breeding is the requirement of a substantial and patent waste of time. There may be some considerable range of variation in detail within the scope of this principle, but they are variations of form and expression, not of substance.
There is circumstantial evidence that very material gains in economy and expedition commonly resulted from these successive moves of consolidation in the steel business.
This... outline of the development and nature of domestic service comes nearest being true for that cultural stage which has here been named the "quasi-peaceable" stage of industry...the quasi-peaceable stage follows the predatory stage proper, the two being successive phases of barbarian life...life at this stage still has too much of coercion and class antagonism to be called peaceable in the full sense of the word...it might as well be named the stage of status...But as a descriptive term to characterize the prevailing methods of industry, as well as... the trend of industrial development... the term "quasi-peaceable" seems preferable.
Vicarious consumption practiced by the household of the middle and lower classes cannot be counted as a direct expression of the leisure-class scheme of life... The leisure class stands at the head of the social structure in point of reputability; and its manner of life and its standards of worth therefore afford the norm of reputability for the community.
With many qualifications?with more qualifications as the patriarchal tradition has gradually weakened?the general rule is felt to be right and binding that women should consume only for the benefit of their masters.
There is in all barbarian communities a profound sense of the disparity between man's and woman's work. His work may conduce to the maintenance of the group, but it is felt that it does so through an excellence and an efficacy of a kind that cannot without derogation be compared with the uneventful diligence of the women.
Those persons (adult) are but a vanishing minority today who harbor no inclination to the accomplishment of some end, or who are not impelled of their own motion to shape some object or fact or relation for human use. The propensity may in large measure be overborne by the more immediately constraining incentive to a reputable leisure and an avoidance of indecorous usefulness, and it may therefore work itself out in make-believe only; as for instance in "social duties," and in quasi-artistic or quasi-scholarly accomplishments, in the care and decoration of the house, in sewing-circle activity or dress reform, in proficiency at dress, cards, yachting, golf, and various sports.
Virtually the whole range of industrial employments is an outgrowth of what is classed as woman's work in the primitive barbarian community.
With the exception of the instinct of self-preservation, the propensity for emulation is probably the strongest and most alert and persistent of the economic motives proper...as regards the Western civilized communities ...it expresses itself in some form of conspicuous waste.
There is probably no cult in which ideals of pecuniary merit have not been called in to supplement the ideals of ceremonial adequacy that guide men's conception of what is right in the matter of sacred apparatus.
Throughout the entire evolution of conspicuous expenditure, whether of goods or of services or human life, runs the obvious implication that in order to effectually mend the consumer's good fame it must be an expenditure of superfluities. In order to be reputable it must be wasteful. No merit would accrue from the consumption of the bare necessaries of life, except by comparison with the abjectly poor who fall short even of the subsistence minimum.
We are yet so little removed from a state of effective slavery as still to be fully sensitive to the sting of any imputation of servility. This antipathy asserts itself even in the case of the liveries or uniforms which some corporations prescribe as the distinctive dress of their employees. In this country the aversion even goes the length of discrediting?in a mild and uncertain way?those government employments, military and civil, which require the wearing of a livery or uniform.
With the growth of settled industry... the possession of wealth gains in relative importance and effectiveness as a customary basis of repute and esteem...not that successful predatory aggression or warlike exploit ceases to call out the approval and admiration of the crowd ...but the opportunities for gaining distinction by means of this direct manifestation of superior force grow less available.
There is... a variation due to adaptation in detail within the range of the type, and to selection between specific habitual views regarding any given social relation or group of relations.
To come to an understanding of the source and origin of this margin of disposable revenue that goes to the earnings of corporate capital, it is necessary to come to an understanding of the industrial system out of which the disposable margin of revenue arises. Productive industry yields a margin of net product over cost, counting cost in terms of man power and material resources; and under the established rule of self-help and free bargaining as it works out in corporation finance, this margin of net product has come to rest upon productive industry as an overhead charge payable to anonymous outsiders who own the corporation securities.
We have, as the great and dominant norm of dress, the broad principle of conspicuous waste. Subsidiary to this principle, and as a corollary under it, we get as a second norm the principle of conspicuous leisure...Beyond these two principles there is a third of scarcely less constraining force...Dress must not only be conspicuously expensive and inconvenient, it must at the same time be up to date...This principle of novelty is another corollary under the law of conspicuous waste...If none of last season's apparel is carried over and made further use of during the present season, the wasteful expenditure on dress is greatly increased...any change in the fashions must conform to the requirement of wastefulness.
With the primitive barbarian... "honorable" seems to connote nothing else than assertion of superior force...The naive, archaic habit of construing all manifestations of force in terms of personality or "will power" greatly fortifies this conventional exaltation of the strong hand...This holds true to an extent also in the more civilized communities of the present day.
There is... relatively little incentive to the exclusive possession and use of these beautiful things, except on the ground of their honorific character as items of conspicuous waste.