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
At the other hand the guiding principles in the case at certain other points have undergone a certain refinement of interpretation with a view to greater ease and security for trade and investment; and there has, in effect, been some slight abridgement of the freedom of combination and concerted action at any point where an unguarded exercise of such freedom would hamper trade or curtail the profits of business, -- for the modern era has turned out to be an era of business enterprise, dominated by the paramount claims of trade and investment. In point of formal requirements, these restrictions imposed on concerted action "in restraint of trade" fall in equal measure on the vested interests engaged in business and on the working population engaged in industry. So that the measures taken to safeguard the natural rights of ownership apply with equal force to those who own and those who do not. "The majestic equality of the law forbids the rich as well as the poor to sleep under bridges or to beg on the street corners." But it has turned out on trial that the vested interests of business are not seriously hampered by these restrictions; inasmuch as any formal restriction on any concerted action between the owners of such vested interests can always be got around by a formal coalition of ownership in the shape of a corporation. The extensive resort to corporate combination of ownership, which is so marked a feature of the nineteenth century, was not foreseen and was not taken into account in the eighteenth century, when the constituent principles of the modern point of view found their way into the common law.
Canons of reputability have had a... more far-reaching... effect upon the popular sense of beauty or serviceability in consumable goods...Articles are ...felt to be serviceable somewhat in proportion as they are wasteful and ill adapted to their ostensible use...The utility of articles valued for their beauty depends closely upon the expensiveness of the articles.
Each successive situation of the community in its turn tends to obsolescence as soon as it has been established. When a step in the development has been taken, this step itself constitutes a change of situation which requires a new adaptation; it becomes the point of departure for a new step in the adjustment, and so on interminably.
Goods are humilific, and therefore unattractive, if they show too thrifty an adaptation to the mechanical end sought and do not include a margin of expensiveness on which to rest a complacent invidious comparison.
In a sense which has been greatly qualified in scope and rigor, but which has by no means lost its meaning even yet... tradition says that the woman, being a chattel, should consume only what is necessary to her sustenance,?except so far as her further consumption contributes to the comfort or the good repute of her master.
In point of substantial merit the law school belongs in the modern university no more than a school of fencing or dancing.
Intangible assets are the capitalized value of income not otherwise accounted for. Such income arises out of business relations rather than out of industry; it is derived from advantages of salesmanship, rather than from productive work; it represents no contribution to the output of goods and services, but only an effectual claim to a share in the "annual dividend," -- on grounds which appear to be legally honest, but which cannot be stated in terms of mechanical cause and effect, or of productive efficiency, or indeed in any terms that involve notions of physical dimensions or of mechanical action. But while intangible assets represent income which accrues out of certain immaterial relations between their owners and the industrial system, and while this income is accordingly not a return for mechanically productive work done, it still remains true, of course, that such income is drawn from the annual product of industry, and that its productive source is therefore the same as that of the returns on tangible assets. The material source of both is the same; and it is only that the basis on which the income is claimed is not the same for both. It is not a difference in respect of the ways and means by which they are created, but only in respect of the ways and means by which these two classes of income are intercepted and secured by the beneficiaries to whom they accrue. The returns on tangible assets are assumed to be a return for the productive use of the plant; returns on intangible assets are a return for the exercise of certain immaterial relations involved in the ownership and control of industry and trade.
It is not unusual to hear those persons who dispense salutary advice and admonition to the community express themselves forcibly upon the far-reaching pernicious effects which the community would suffer from such relatively slight changes as the disestablishment of the Anglican Church, an increased facility of divorce, adoption of female suffrage, prohibition of the manufacture and sale of intoxicating beverages, abolition or restriction of inheritances, etc. Any one of these innovations would, we are told, "shake the social structure to its base," "reduce society to chaos," "subvert the foundations of morality," "make life intolerable," "confound the order of nature," etc.
Meantime the new order of industry has come into bearing, with the result that any disturbance which is set afoot by any one of these self-determining nations in pursuing its own ends is sure to derange the conditions of life for all the others, just so far as these others are bound up in the same comprehensive organization of trade and industry. Full and free self-determination runs counter to the rule of Live and let live. After the same fashion the businesslike maneuvers of the vested interests within the nations, each managing its own affairs with an eye single to its own advantage, deranges the ordinary conditions of life for the common man, and violates the rule of Live and let live by that much. Self-determination, full and free, necessarily encroaches on the conditions of life for all the others.
Ownership began and grew into a human institution on grounds unrelated to the subsistence minimum. The dominant incentive was from the outsetthe invidious distinction attaching to wealth, and, save temporarily and by exception, no other motive has usurped the primacy at any later stage of the development.
Since the underlying principles of the established order are of this make-believe character, that is to say, since they are built up out of the range of conceptions that have habitually been doing duty as the substance of knowledge and belief in the past, it follows in the nature of the case that any reconstruction of institutions will be made only tardily, reluctantly, and sparingly; inasmuch as settled habits of thought are given up tardily, reluctantly and sparingly. And this will particularly be true when the reconstruction of unseasonable institutions runs counter to a settled and honorable code of ancient principles and a stubborn array of vested interests, as in this instance. Such is the promise of the present situation, and such is also the record of the shift that was once before made from medieval to modern times. It should be a case of break or bend.
Some fighting... would be met with at any early stage of social development...The known habits of primitive groups, as well as the habits of the anthropoid apes, argue to that effect, and the evidence from... human nature enforces the same view.
The captain of industry is an astute man rather than an ingenious one, and his captaincy is a pecuniary rather than an industrial captaincy. Such administration of industry as he exercises is commonly of a permissive kind. The mechanically effective details of production and of industrial organization are delegated to subordinates of a less "practical" turn of mind?men who are possessed of a gift for workmanship rather than administrative ability.
The decay of the ceremonial code?or as it is otherwise called, the vulgarization of life?among the industrial classes proper has become one of the chief enormities of latter-day civilization in the eyes of all persons of delicate sensibilities.
The facts, particularly the facts of industry and science, have outrun these provisions of law and custom; and so the scheme of things has got out of joint by that much, through no inherent weakness in the underlying principles of law and custom. The ancient and honorable principles of self-help are as sound as ever; it is only that the facts have quite unwarrantably not remained the same. Such, in effect, has been the view habitually spoken for by many thoughtful persons of a conservative turn, who take an interest in concerting measures for holding fast that which once was good, in the face of distasteful facts. The vested right of ownership in all kinds of property has the sanction of the time-honored principles of individual self-direction, equal opportunity, free contract, security of earnings and belongings, self-help, in the simple and honest meaning of the word. It would be quite bootless to find fault with these reasonable principles of tolerance and security. Their definitive acceptance and stabilization in the eighteenth century are among the illustrious achievements of Western civilization; and their roots lie deep in the native wisdom of mankind. They are obvious corollaries under the rule of Live and let live, -- an Accidental version of the Golden Rule. Yet in practical effect those vested rights which rest blamelessly on these reasonable canons of tolerance and good faith have today become the focus of vexation and misery in the life of the civilized peoples. Circumstances have changed to such effect that provisions which were once framed to uphold a system of neighborly good-will have now begun to run counter to one another and are working mischief to the common good.
The institution of ownership has begun with the ownership of persons, primarily women. The incentives to acquiring such property have apparently been: (1) a propensity for dominance and coercion; (2) the utility of these persons as evidence of the prowess of the owner; (3) the utility of their services.
The only remedy which the law of waste allows us is to seek relief in some new construction, equally futile and equally untenable. Hence the essential ugliness and the unceasing change of fashionable attire.
The propensity for achievement and the repugnance to futility remain the underlying economic motive.
The system of free competition, self-help, equal opportunity and free bargaining which is contemplated by the modern point of view, assumes an industrial situation in which the work and trading of any given individual or group can go on freely by itself, without materially helping or hindering the equally untrammeled working of the rest.
There are few persons of delicate tastes, in the matter of devout consumption to whom... austerely wasteful discomfort does not appeal as intrinsically right and good.
All that class of ceremonial observances which are classed under the general head of manners hold a more important place in the esteem of men during the stage of culture at which conspicuous leisure has the greatest vogue as a mark of reputability, than at later stages of the cultural development.
Any person with a taste for curiosities of human behavior might well pursue this question of capitalized free income into its further convolutions, and might find reasonable entertainment in so doing. The topic also has merits as a subject for economic theory. But for the present argument it may suffice to note that this free income and the business-like contrivances by which it is made secure and legitimate are of the essence of this new order of business enterprise; that the abiding incentive to such enterprise lies in this unearned income; and that the intangible assets which are framed to cover this line of "earnings," therefore, constitute the substantial core of corporate capital under the new order.
At this point, where the beautiful and the honorific meet and blend, that a discrimination between serviceability and wastefulness is most difficult in any concrete case. It frequently happens that an article which serves the honorific purpose of conspicuous waste is at the same time a beautiful object; and the same application of labor to which it owes its utility for the former purpose may, and often does, give beauty of form and color to the article.
Changing institutions in their turn make for a further selection of individuals endowed with the fittest temperament, and a further adaptation of individual temperament and habits to the changing environment through the formation of new institutions.
Employments fall into a hierarchical gradation of reputability. Those which have to do immediately with ownership on a large scale are the most reputable of economic employments proper. Next to these in good repute come those employments that are immediately subservient to ownership and financiering?such as banking and the law.