The Theory of Business Enterprise by Thorstein Veblen - HTML preview

Chapter 10

The Natural Decay of Business Enterprise

Broadly, the machine discipline acts to disintegrate the institutional heritage, of all degrees of antiquity and authenticity − whether it be the institutions that embody the principles of natural liberty or those that comprise the residue of more archaic principles of conduct still current in civilized life. It thereby cuts away that ground of law and order on which business enterprise is founded. The further cultural bearing of this disintegration of the received order is no doubt sufficiently serious and far−reaching, but it does not directly concern the present inquiry. It comes in question here only in so far as such a deterioration of the general cultural tissues involves a setback to the continued vigor of business enterprise. But the future of business enterprise is bound up with the future of civilization, since the cultural scheme is, after all, a single one, comprising many interlocking elements, no one of which can be greatly disturbed without disturbing the working of all the rest.

In its bearing on the question in hand, the "social problem" at large presents this singular situation.

The growth of business enterprise rests on the machine technology as its material foundation. The machine industry is indispensable to it; it cannot get along without the machine process, But the discipline of the machine process cuts away the spiritual, institutional foundations of business enterprise; the machine industry is incompatible with its continued growth; it cannot, in the long run, get along with the machine process. In their struggle against the cultural effects of the machine process, therefore, business principles cannot win in the long run; since an effectual mutilation or inhibition of the machine system would gradually push business enterprise to the wall; whereas with a free growth of the machine system business principles would presently fall into abeyance.

The institutional basis of business enterprise the system of natural rights − appears to be a peculiarly instable affair. There is no way of retaining it under changing circumstances, and there is no way of returning to it after circumstances have changed. It is a hybrid growth, a blend of personal freedom and  equality on the one hand and of prescriptive rights on the other hand. The institutions and points of law under the natural−rights scheme appear to be of an essentially provisional character. There is relatively great flexibility and possibility of growth and change; natural rights are singularly insecure under any change of circumstances. The maxim is well approved that eternal vigilance is the price of (natural) liberty. When, as now, this system is endangered by socialistic or anarchistic disaffection there is no recourse that will carry the institutional apparatus back to a secure natural−rights basis. The system of natural liberty was the product of a peaceful regime of handicraft and petty trade; but continued peace and industry presently carried the cultural growth beyond the phase of natural rights by giving rise to the machine process and the large business; and these are breaking down the structure of natural rights by making these rights nugatory on the one hand and by cutting away the spiritual foundations of them on the other hand. Natural rights being a by−product of peaceful industry, they cannot be reinstated by a recourse to warlike habits and a coercive government, since warlike habits and coercion are alien to the natural−rights spirit. Nor can they be reinstated by a recourse to settled peace and freedom, since an era of settled peace and freedom would push on the dominance of the machine process and the large business, which break down the system of natural liberty.

When the question is cast up as to what will come of this conflict of institutional forces − called the Social Problem − it is commonly made a question of remedies: What can be done to save civilized mankind from the vulgarization and disintegration wrought by the machine industry?

Now, business enterprise and the machine process are the two prime movers in modern culture; and the only recourse that holds a promise of being effective, therefore, is a recourse to the workings of business traffic. And this is a question, not of what is conceivably, ideally, idyllically possible for the business community to do if they will take thought and act advisedly and concertedly toward a chosen cultural outcome, but of what is the probable cultural outcome to be achieved through business traffic carried on for business ends, not for cultural ends. It is a question not of what ought to be done, but of what is to take place.

Persons who are solicitous for the cultural future commonly turn to speculative advice as to what ought to be done toward holding fast that which is good in the cultural heritage, and what ought further to be done to increase the talent that has been intrusted to this generation. The practical remedy offered is commonly some proposal for palliative measures, some appeal to philanthropic, aesthetic, or religious sentiment, some endeavor to conjure with the name of one or another of the epiphenomena of modern culture.

Something must be done, it is conceived, and this something takes the shape of charity organizations, clubs and societies for social "purity", for amusement, education, and manual training of the indigent classes, for colonization of the poor, for popularization of churches, for clean politics, for cultural missionary work by social settlements, and the like. These remedial measures whereby it is proposed to save or to rehabilitate certain praiseworthy but obsolescent habits of life and of thought are, all and several, beside the point so far as touches the question in hand. Not that it is hereby intended to cast a slur on these meritorious endeavors to save mankind by treating symptoms. The symptoms treated are no doubt evil, as they are said to be; or if they are not evil, the merits of that particular question do not concern the present inquiry. The endeavors in question are beside the point in that they do not fall into the shape of a business proposition. They are, on the whole, not so profitable a line of investment as certain other ventures that are open to modern enterprise.

Hence, if they traverse the course of business enterprise and of industrial exigencies, they are nugatory, being in the same class with the labor of Sisyphus; whereas if they coincide in effect with the line along which business and industrial exigencies move, they are a work of supererogation, except so far as they may be conceived to accelerate a change that is already under way. Nothing can deflect the sweep of business enterprise, unless it be an outgrowth of this enterprise itself or of the industrial means by which business enterprise works.

Nothing can serve as a corrective of the cultural trend given by the machine discipline except what can be put in the form of a business proposition. The question of neutralizing the untoward effects of the  machine discipline resolves itself into a question as to the cultural work and consequences of business enterprise, and of the cultural value of business principles in so far as they guide such human endeavor as lies outside the range of business enterprise proper. It is not a question of what ought to be done, but of what is the course laid out by business principles; the discretion rests with the business men, not with the moralists, and the business men's discretion is bounded by the exigencies of business enterprise. Even the business men cannot allow themselves to play fast and loose with business principles in response to a call from humanitarian motives. The question, therefore, remains, on the whole, a question of what the business men may be expected to do for cultural growth on the motive of profits.

Something they are doing, as others are, from motives of benevolence, with a well−advised endeavor to maintain the cultural gains of the past and to make the way of life smoother for mankind in the future. But the more secure and substantial results to be looked for in this direction are those that follow incidentally, as byproducts of business enterprise, because these are not dependent on the vagaries of personal preference, tastes, and prejudices, but rest on a broad institutional basis.

The effects of business enterprise upon the habits and temper of the people, and so upon institutional growth, are chiefly of the nature of sequelae, It has already been noted that the discipline of business employments is of a conservative nature, tending to sustain the conventions that rest on natural−rights dogma, because these employments train the men engaged in them to think in terms of natural rights. It is unnecessary to return to this topic here, except to notice that, in its severer, more unmitigated form, this discipline in pecuniary habits of thought falls on a gradually lessening proportion of the population.

The absolute number of business men, counting principals and subordinates, is, of course, not decreasing, The number of men in business pursuits, in proportion to the population, is also apparently not decreasing; but within the business employments a larger proportion are occupied with office routine, and so are withdrawn from the more effectual training given by business management proper. If such a decrease occurs in any country, it is almost certainly not to be found in any other country than America.

This business discipline is somewhat closely limited both in scope and range. (1) It acts to conserve, or to rehabilitate, a certain restricted line of institutional habits of thought, viz. those preconceptions of natural rights which have to do with property. What it conserves, therefore, is the bourgeois virtues of solvency, thrift, and dissimulation. The nobler and more spectacular aristocratic virtues, with their correlative institutional furniture, are not in any sensible degree fortified by the habits of business life. Business life does not further the growth of manner and breeding, pride of Caste, punctilios of "honor,"  or even religious fervor. (2) The salutary discipline of business life touches the bulk of the population, the working classes, in a progressively less intimate and less exacting manner. It can, therefore, not serve to correct or even greatly to mitigate the matter−of−fact bias given these classes by the discipline of the machine process.

As a direct disciplinary factor the machine process holds over the business employments, in that it touches larger classes of the community and inculcates its characteristic habits of thought more unremittingly, And any return to more archaic methods of industry, such as is sometimes advocated on artistic grounds, seems hopeless, since business interests do not countenance a discontinuance of machine methods, The machine methods that are corrupting the hearts and manners of the workmen are profitable to the business men, and that fact seems to be decisive on the point. A direct, advised return to handicraft, or any similar discontinuance of the machine industry, is out of the question; although something in the way of a partial return to more primitive methods of industry need not be impracticable as a remote and indirect consequence of the working of business enterprise.

The indirect or incidental cultural bearing of business principles and business practice is wide−reaching and forceful. Business principles have a peculiar hold upon the affections of the people as something intrinsically right and good. They are therefore drawn on for guidance and conviction even in  concerns that are not conceived to be primarily business concerns. So, e.g., they have permeated the educational system, thoroughly and intimately. Their presence, as an element of common sense, in the counsels of the "educators" shows itself in a naive insistence on the "practical" whenever the scheme of instruction is under advisement. "Practical" means useful for private gain. Any new departure in public instruction, whether in the public schools or in private endowed establishments, is scrutinized with this test in mind; which results in a progressive, though not wholly consistent, narrowing of instruction to such learning as is designed to give a ready application of results rather than a systematic organization of knowledge. The primary test is usefulness for getting an income. The secondary test, practically applied where latitude is allowed in the way of "culture" studies, is the aptness of the instruction in question to fit the learners for spending income in a decorous manner. Hence quasi−scholarly accomplishments. Much of the current controversy as to the inclusion or exclusion of one thing and another from the current curriculum of secondary and higher schools might be reduced to terms of one or the other of these two purposes without doing violence to the arguments put forth and with a great gain in conciseness and lucidity.

There is also a large resort to business methods in the conduct of the schools; with the result that a system of scholastic accountancy is enforced both as regards the work of the teachers and the progress of the pupils; whence follows a mechanical routine, with mechanical tests of competency in all directions. This lowers the value of the instruction for purposes of intellectual initiative and a reasoned grasp of the subject−matter. This class of erudition is rather a hindrance than a help to habits of thinking. It conduces to conviction rather than to inquiry, and is therefore a conservative factor.

In the endowed schools there is, moreover, an increasing introduction of business men and business methods into the personnel and the administrative work. This is necessarily so since these schools are competitors for students and endowments. The policy of these schools necessarily takes on some thing of the complexion of competitive business; which throws the emphasis on those features of school life that will best attract students and donors. The features which count most directly in these directions are not the same as would count most effectively toward the avowed ends of these schools. The standards which it is found Operative to live up to are not the highest standards of scholarly work. Courtesy as well as expediency inclines these schools to cultivate such appearances and such opinions as may be expected to find favor with men of wealth. These men of wealth are business men, for the most part elderly men, who are, as is well known, prevailingly of a conservative temper in all cultural matters, and more especially as touches those institutions that bear on business affairs.

A more far−reaching department of the educational system, though not technically rated as such, is the periodical press, both newspapers and magazines. This is a field of business enterprise, and business principles may be expected to work more consistently and to a more unqualified result in this field than in the school system, where these principles come in incidentally.

The current periodical press, whether ephemeral or other, is a vehicle for advertisements. This is its raison d'etre, as a business proposition, and this decides the lines of its management without material qualification. Exceptions to the rule are official and minor propagandist periodicals, and, in an uncertain measure, scientific journals. The profits of publication come from the sale of advertising space. The direct returns from sales and subscriptions are now a matter of wholly secondary consequence. Publishers of periodicals, of all grades of transiency, aim to make their product as salable as may he, in order to pass their advertising pages under the eyes of as many readers as may be. The larger the circulation the greater, other things equal, the market value of the advertising space. The highest product of this development is the class of American newspapers called "independent." These in particular − and they are followed at no great interval by the rest edit all items of news, comment, or gossip with a view to what the news ought to be and what opinions ought to be expressed on passing events.(1*)

The first duty of an editor is to gauge the sentiments of his readers, and then tell them what they like to believe. By this means he maintains or increases the circulation. His second duty is to see that nothing is said in the news items or editorials which may discountenance any claims or announcements made by his advertisers, discredit their standing or good faith, or expose any weakness or deception in any business venture that is or may become a valuable advertiser. By this means he increases the advertising value of his circulation.(2*) The net result is that both the news columns and the editorial columns are commonly meretricious in a high degree.

Systematic insincerity on the part of the ostensible purveyors of information and leaders of opinion may be deplored by persons who stickle for truth and pin their hopes of social salvation on the spread of accurate information. But the ulterior cultural effect of the insincerity which is in this way required by the business situation may, of course, as well be salutary as the reverse. Indeed, the effect is quite as likely to be salutary, if "salutary" be taken to mean favorable to the maintenance of the established order, since the insincerity is guided by a wish to avoid any lesion of the received preconceptions and prejudices. The insincerity of the newspapers and magazines seems, on the whole, to be of a conservative trend.

The periodical press is not only a purveyor of news, opinions, and admonitions; it also supplies the greater part of the literature currently read. And in this part of its work the same underlying business principles are in force. The endeavor is to increase the circulation at any cost that will result in an increased net return from the sale of the advertising space. The literary output of the magazines is of use for carrying the advertising pages, and as a matter of business, as seen from the standpoint of the business man's interest, that is its only use.

The standards of excellence that govern this periodical literature seem fairly to be formulated as follows: (1) In each given case it must conform to the tastes and the most ready comprehension of the social strata which the particular periodical is designed to reach; (2) it should conduce to a quickened interest in the various lines of services and commodities offered in the advertising pages, and should direct the attention of readers along such lines of investment and expenditure as may benefit the large advertisers particularly. At least it must in no way hamper the purposes of the advertisers. Nothing should go in a popular magazine which would cast a sinister shadow over any form of business venture that advertises or might be induced to advertise.(3*)

Taken in the aggregate, the literary output is desired to meet the tastes of that large body of people who are in the habit of buying freely. The successful magazine writers are those who follow the taste of the class to whom they speak, in any aberration (fad, mannerism, or misapprehension) and in any shortcoming of insight or force which may beset that class. They must also conform to the fancies and prejudices of this class as regards the ideals − artistic, moral, religious, or social − for which they speak. The class to which the successful periodicals turn, and which gives tone to periodical literature, is that great body of people who are in moderately easy circumstances. Culturally this means the respectable middle class (largely the dependent business class) of various shades of conservatism, affectation, and snobbery. (4*) On the whole, the literature provided in this way and to this end seems to run on a line of slightly more pronounced conservatism and affectation than the average sentiment of the readers appealed to. This is true for the following reason. Readers who are less conservative and less patient of affectations, snobbery, and illiberality than the average are in the position of doubters and dissentients. They are less confident in their convictions of what is right and good in all matters, and are also not unwilling to make condescending allowances for those who are less "advanced," and who must be humored since they know no better; whereas those who rest undoubting in the more conservative views and a more intolerant affectation of gentility are readier, because more naive, in their rejection of whatever does not fully conform to their habits of thought.

So it comes about that the periodical literature is, on the whole, somewhat more scrupulously devout in tone, somewhat more given to laud and dilate upon the traffic of the upper leisure class and to carry on the discussion in the terms and tone imputed to that class, somewhat more prone to speak deprecatingly of the vulgar innovations of modern culture, than the average of the readers to whom it is addressed. The trend of its teaching, therefore, is, on the whole, conservative and conciliatory. It is also under the necessity of adapting itself to a moderately low average of intelligence and information; since on this head, again, it is those who possess intelligence and information that are readiest to make allowances; they are, indeed, mildly flattered to do so, besides being the only ones who can. It is a prime requisite to conciliate a large body of readers.

This latter characteristic is particularly evident in the didactic portion of the periodical literature.

This didactic literature, running on discussions of a quasi−artistic and quasi−scientific character, is, by force of the business exigencies of the case, de signed to favor the sensibilities of the weaker among its readers by adroitly suggesting that the readers are already possessed of the substance of what purports to be taught and need only be fortified with certain general results. There follows a great spread of quasi−technical terms and fanciful conceits. The sophisticated animal stories and the half−mythical narratives of industrial processes which now have the vogue illustrate the results achieved in this direction.

The literary output issued under the surveillance of the advertising office is excellent in workmanship and deficient in intelligence and substantial originality. What is encouraged and cultivated is adroitness of style and a piquant presentation of commonplaces. Harmlessness, not to say pointlessness, and an edifying, gossipy optimism are the substantial characteristics, which persist through all ephemeral mutations of style, manner, and subject−matter.

Business enterprise, therefore, it is believed, gives a salutary bent to periodical literature. It conduces mildly to the maintenance of archaic ideals and philistine affectations, and inculcates the crasser forms of patriotic, sportsmanlike, and spendthrift aspirations.

The largest and most promising factor of cultural discipline − most promising as a corrective of iconoclastic vagaries − over which business principles rule is national politics. The purposes and the material effects of business politics have already been spoken of above, but in the present connection their incidental, disciplinary effects are no less important. Business interests urge an aggressive national policy and business men direct it. Such a policy is warlike as well as patriotic. The direct cultural value of a warlike business policy is unequivocal. It makes for a conservative animus on the part of the populace. During war time, and within the military organization at all times, under martial law, civil rights are in abeyance; and the more warfare and armament the more abeyance. Military training is a training in ceremonial precedence, arbitrary command, and unquestioning obedience. A military organization is essentially a servile organization.

Insubordination is the deadly sin. The more consistent and the more comprehensive this military training, the more effectually will the members of the community be trained into habits of subordination and away from that growing propensity to make light of personal authority that is the chief infirmity of democracy. This applies first and most decidedly, of course, to the soldiery, but it applies only in a less degree to the rest of the population. They learn to think in warlike terms of rank, authority, and subordination, and so grow progressively more patient of encroachments upon their civil rights. Witness the change that has latterly been going on in the temper of the German people.(5*)

The modern warlike policies are entered upon for the sake of peace, with a view to the orderly pursuit of business. In their initial motive they differ from the warlike dynastic politics of the sixteenth, seventeenth, and eighteenth centuries. But the disciplinary effects of warlike pursuits and of warlike preoccupations are much the same what ever may be their initial motive or ulterior aim. The end sought in the one case was warlike mastery and high repute in the matter of ceremonial precedence; in the other, the modern case, it is pecuniary mastery and high repute in the matter of commercial solvency. But in both cases  alike the pomp and circumstance of war and armaments, and the sensational appeals to patriotic pride and animosity made by victories, defeats, or comparisons of military and naval strength, act to rehabilitate lost ideals and weakened convictions of the chauvinistic or dynastic order. At the same stroke they direct the popular interest to other, nobler, institutionally less hazardous matters than the unequal distribution of wealth or of creature comforts. Warlike and patriotic preoccupations fortify the barbarian virtues of subordination and prescriptive authority. Habituation to a warlike, predatory scheme of life is the strongest disciplinary factor that can be brought to counteract the vulgarization of modern life wrought by peaceful industry and the machine process, and to rehabilitate the decaying sense of status and differential dignity. Warfare, with the stress on subordination and mastery and the insistence on gradations of dignity and honor incident to a militant organization, has always proved an effective school in barbarian methods of thought.

In this direction, evidently, lies the hope of a corrective for "social unrest" and similar disorders of civilized life. There can, indeed, be no serious question but that a consistent return to the ancient virtues of allegiance, piety, servility, graded dignity, class prerogative, and prescriptive authority would greatly conduce to popular content and to the facie management of affairs. Such is the promise held out by a strenuous national policy.

The reversional trend given by warlike experience and warlike preoccupations, it is plain, does not set backward to the regime of natural liberty. Modern business principles and the modern scheme of civil rights and constitutional government rest on natural−rights ground. But the system of natural rights is a halfway house. The warlike culture takes back to a more archaic situation that preceded the scheme of natural rights, viz. the system of absolute government, dynastic politics, devolution of rights and honors, ecclesiastical authority, and popular submission and squalor. It makes not for a reinstatement of the Natural Rights of Man but for a reversion to the Grace of God.

The barbarian virtues of fealty and patriotism run on national or dynastic exploit and aggrandizement, and these archaic virtues are not dead. In those modern communities whose hearts beat with the pulsations of the world−market they find expression in an enthusiasm for the commercial aggrandizement of the nation's business men, But when once the policy of warlike enterprise has been entered upon for business ends, these loyal affections gradually shift from the business interests to the warlike and dynastic interests, as witness the history of imperialism in Germany and England. The eventual outcome should be a rehabilitation of the ancient patriotic animosity and dynastic loyalty, to the relative neglect of business interests. This may easily be carried so far as to sacrifice the profits of the business men to the exigencies of the higher politics.(6*)

The disciplinary effect of war and armaments and imperialist politics is complicated with a selective effect. War not only affords a salutary training, but it also acts to eliminate certain elements of the population. The work of campaigning and military tenure, such as is carried on by England, America, or the other civilizing powers, lies, in large part, in the low latitudes, where the European races do not find a favorable habitat. The low latitudes are particularly unwholesome for that dolicho−blond racial stock that seems to be the chief bearer of the machine industry. It results that the viability and the natural increase of the soldiery is perceptibly lowered. The service in the low latitudes, as contrasted with Europe, for instance, is an extrahazardous occupation. The death rate, indeed, exceeds the birth rate. But in the more advanced industrial communities, of which the English and American are typical, the service is a volunteer service; which means that those who go to the wars seek this employment by their own choice. That is to say, the human material so drawn off is automatically selected on the basis of a peculiar spiritual fitness for this predatory employment; they are, on the whole, of a more malevolent and vagabond temper, have more of the ancient barbarian animus, than those who are left at home to carry on the work of the home community and propagate the home population. And since the troops and ships are officered by the younger sons of the conservative leisure class and by the buccaneering scions of the class of professional politicians, a natural election of the same character takes effect also as regards the officers. There results a gradual selective  elimination of that old−fashioned element of the population that is by temperament best suited for the old−fashioned institutional system of status and servile organization.(7*) This selective elimination of conservative elements would in the long run leave each succeeding generation of the community less predatory and less emulative in temper, less well endowed for carrying on its life under the servile institutions proper to a militant regime. But, for the present and the nearer future, there can be little doubt but that this selective shaping of the community's animus is greatly outweighed by the contrary trend given by the discipline of warlike preoccupations. What helps to keep the balance in favor of the reversional trend is the cultural leaven carried back into the home community by the veterans. These presumptive past masters in the archaic virtues keep themselves well in the public eye and serve as exemplars to the impressionable members of the community, particularly to the less mature.(8*) The net outcome of the latter−day return to warlike enterprise is, no doubt, securely to be rated as fostering a reversion to national ideals of servile status and to institutions of a despotic character. On the whole and for the present, it makes for conservatism, ultimately for reversion.

The quest of profits leads to a predatory national policy. The resulting large fortunes call for a massive government apparatus to secure the accumulations, on the one hand, and for large and conspicuous opportunities to spend the resulting income, on the other hand; which means a militant, coercive home administration and something in the way of an imperial court life