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Veblen's point of departure was a critical dissection of the doctrines of the classic economists in the light of evolutionary and sociological reasoning. He objected to the notion that the "laws" they had constructed were timeless generalizations and contended instead that the economic behavior of men, like any other human activity, had to be analyzed in terms of the social context in which it was imbedded. He further objected to the deriving of economic behavior from alleged utilitarian and hedonistic propensities generic to mankind. The categories of the classical economists, he argued, could be applied only to special historical circumstances and in very restricted contexts. Thus, primitive economic behavior could not be understood in terms of Ricardian notions. "A gang of Aleutian Islanders,' Veblen wrote derisively, "slashing about in the wrack and surf with rakes and magical incantations for the capture of shell-fish are held, in point of taxonomic reality, to be engaged in a feat of hedonistic equilibration in rent, wages, and interest."
"The hedonistic conception of man," Veblen argued bitingly, "is that of a lightning calculator of pleasures and pains, who oscillates like a homogenous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. He has neither antecedent nor consequence. He is an isolated, definitive human datum.... Self-imposed in elemental space, he spins symmetrically about his own spiritual axis.... The hedonistic man is not a prime mover. He is not the seat of a process of living."
In contrast to an obsolete economics that centers attention upon alleged transhistorical laws and utilitarian or hedonistic calculations, Veblen urged a new economics that is historical, or, to use his own terminology, evolutionary, and that is based on an activistic conception of man. "It is the characteristic of man to do something.... He is not simply a bundle of desires that are to be saturated ... but rather a coherent structure of propensities and habits which seek realization and expression in an unfolding activity." The economic life history of the individual "is a cumulative process of adaptations of means to ends." What is true of the individual is true of the community. It too is continually engaged in an active process of adaptation of economic means to economic ends. "Evolutionary economics must be the theory of a process of cultural growth as determined by the economic interest, a theory, of a cumulative sequence of economic institutions stated in terms of the process itself."
Veblen conceived of the evolution of mankind in Spencerian or Darwinian fashion as a process of selective adaptation to the environment. According, to him, there was no goal to historical evolution as the Hegelians and Marxists had claimed, but rather "a scheme of blindly cumulative causation, in which there is no trend, no final term, no consummation."
Human evolution, Veblen argued, involved above all the invention and use of ever more effective technologies. "The process of cumulative change that is to be accounted for is the sequence of change in the methods of doing things - the methods of dealing with the material means of life." Hence, "the state of the industrial arts" ultimately determined the state of adaptation of man to his natural environment. Technology, moreover, likewise determined man's adjustment to his social environment.
A man's position in the technological and economic sphere, Veblen argued, determines his outlook and his habits of thought. Similarly, habits and customs, ways of acting and ways of thinking grow within communities as they are engaged in their struggle to wrest a livelihood from nature. Such habits and customs in their turn crystallize over time into institutional molds into which communities attempt to press their component members. Institutions are clusters of habits and customs that are sanctioned by the community. An institution "is of the nature of a usage which has become axiomatic and indispensable by habituation and general acceptance." The evolution of human societies, contended Veblen, must be seen as "a process of natural selection of institutions." "Institutions are not only themselves the result of a selective and adaptive process which shapes the prevailing or dominant types of spiritual attitude and aptitudes; they are at the same time special methods of life and human relations."
Hence, the scheme of man's social evolution is to Veblen essentially a pattern of institutional change rooted in the development of the industrial arts. Four main stages of evolution are distinguished: the peaceful savage economy of neolithic times; the predatory barbarian economy in which the institutions of warfare, property, masculine prowess and the leisure class originated; the premodern period of handicraft economy; and finally the modern era dominated by the machine. Much of this, especially the distinction between savagery and barbarism, was based on conjectural history. But Veblen accepted it, despite his often caustic remarks about such history. When a student once asked him what he considered the difference between real and conjectural history, he answered that the relation was about the same as that between a real horse and a sawhorse.
Veblen's theory of evolutionary stages may well be relegated to the museum of antiquities, but his more general theory of technological determination, though often blended with one or another form of Marxism, has continued to exert influence among contemporary social scientists. Much current work in anthropology is still informed by his view - for example, that "A study of ... primitive cultures ... shows a close correlation between the material (industrial and pecuniary) life of any given people and their civic, domestic, and religious scheme of life; the myths and the religious cult reflect the character of these other - especially the economic and domestic - institutions in a peculiarly naive and truthful manner." The main thrust of Veblen's work, however, does not come in his anthropological studies but rather in his discussion of contemporary or near-contemporary society. Here his distinction between industrial and pecuniary types of employment is crucial.
Veblen's central idea in regard to the modern capitalist world is that it is based on an irremediable opposition between business and industry, ownership and technology, pecuniary and industrial employment - between those who make goods and those who make money, between workmanship and salesmanship. This distinction served Veblen as a major weapon in his attack against the prevailing scheme of things in America, and against prevailing evolutionary doctrine. His fellow evolutionists, men like his former teacher Sumner, argued that the leading industrialists and men of finance, having shown in the competitive struggle that they were "the fittest," had to be regarded as the flowers of modern civilization. Veblen argued that, far from being the fittest agents of evolutionary advancement, men engaged in pecuniary activities were parasites growing fat on the technological leadership and innovation of other men. "The leisure class lives by the industrial community rather than in it." The "captains of industry" made no industrial contribution and therefore had no progressive function in the evolutionary process; rather, they retarded and distorted it.
Veblen adapted the Spencerian distinction between
militant and industrial societies to his own uses. Whereas Spencer had
argued that businessmen were engaged in a peaceful way of life, which stood
in opposition to that of the militant warrior, Veblen insisted that the
"captains of industry" were only pursuing the predatory ways of their militant
forebears under new circumstances. American robber barons were as eager
to exploit the underlying population as had been their medieval ancestors.
The price system in which businessmen and speculators were involved only
hampered and impeded the system of industrial arts and so delayed the forward
course of mankind's evolutionary advancement. The differential income businessmen
derive from their position in the price system is far from a reward for
creative entrepreneurship but rather a ransom exacted from the underlying
productive population. The institution of absentee ownership, the foundation
of the modern price system, creates perpetual crises and competitive anarchy
leading to the "sabotage" rather than the advancement of production.
In tune with his overall theory of technological determinants of thought, Veblen argued that positions in the spheres of industrial or of pecuniary employment respectively fostered radically different casts of mind or habits of thought. Those in pecuniary employment were inclined toward an "animistic bent," that is, they thought in magical categories. Those involved in industrial employment, on the other hand, were impelled to think in rational, matter-of-fact terms. Magical and animistic types of reasoning are at variance with the requirements of modern industrial societies; such reasoning is partly a survival from earlier barbaric conditions of life and partly a response to the existential conditions of those who continue to depend on luck in their speculative manipulations. Modern industry depends on rationality and, in turn, fosters it. "In the modern industrial communities, industry is, to a constantly increasing extent, being organized in a comprehensive system of organs and functions mutually conditioning one another; and therefore freedom from all bias in the causal apprehension of phenomena grows constantly more requisite to efficiency on the part of men concerned in industry."
Veblen believed that the major disciplining agent in the modern world was the machine process of production. "The machine technology," he reasoned, "rests on a knowledge of impersonal, material cause and effect.... Within the range of this machine-guided work, and within the range of modern life so far as it is guided by the machine process, the cause of things is given mechanically, impersonally, and the resultant discipline is a discipline in the handling of impersonal facts for mechanical effect. It inculcates thinking in terms of opaque, impersonal cause and effect, to the neglect of those norms of validity that rest on usage and on the conventional standards handed down by usage." This being the case, Veblen argued further, the future evolution of mankind depended on those whose minds had been disciplined by involvement in the industrial arts and in the machine process. Further evolutionary advances could be expected only if the habits inculcated by the disciplinary effects of the machine prevailed over the predatory life-styles and the magical and animistic casts of thought of those involved in pecuniary employment.
Coser, 1977: pp. 264-268.