Thorstein Veblen
The Modern Point of View and the New Order.
II. THE STABILITY OF LAW AND CUSTOM

The Dial. A Fortnightly (New York)
Vol. LXV (June 20 to December 28, 1918)

No. 776, Nov., 2, 1918, pp. 349-354.
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[349]
The Modern Point of View and the New Order

II. THE STABILITY OF LAW AND CUSTOM

IN so FAR as concerns the present question, that is to say, as regards those 
standards and principles which underlie the established system of law and 
custom, the modern point of view was stabilized and given a definitive 
formulation in the eighteenth century; and in so far as concerns the subsequent 
conduct of practical affairs, its constituent principles have stood over without 
material change or revision since that time. So that for practical purposes it 
is fair to say that the modern point of view is now some one hundred and fifty 
years old. It will not do to say that it is that much behind the times, because 
its timeworn standards of truth and validity are a very material factor in the 
make-up of that established scheme of things which is commonly spoken of as "our 
time." That such is the case is due in great part to the fact that this body of 
principles was stabilized at that time and has therefore stood over intact, in 
spite of other changes that have taken place. It is only that the principles 
which had been proved and found good under the conditions of life in the modern 
era up to that time were at that time held fast, canvassed, defined, approved, 
and stabilized by being reduced to documentary form. In some sense they became 
the written constitution of civilized society from that time forth, and so 
became inflexible, after the fashion of written constitutions. In the sight of 
those generations who so achieved the definite acceptance of these enlightened 
modern principles, and who finally made good their formal installation as self-
balanced canons of human conduct, the principles which they so arrived at had 
all the sanction of Natural Law impersonal, dispassionate, indefeasible, and 
immutable; fundamentally and eternally right and good. That generation of men 
held "these truths to be self-evident"; and they have continued so to be held 
since that epoch by all those people who make up the effectual body of modern 
civilization. And the backward peoples, those others who have since then been 
coming into line and making their claim to a place in the scheme of modern life, 
have also successively been accepting and (passably) assimilating the same 
enlightened principles of clean and honest living. Christendom, as a going 
concern of civilized peoples, has continued to regulate its affairs by the help 
of these principles, as being a competent formulation of the aspirations of 
civilized mankind. So that these modern principles of the eighteenth century, 
stabilized in documentary form, have stood over in immutable perfection until 
our time a monument more enduring than brass.

These principles are of the nature of habits of thought; and it is the nature of 
habits of thought forever to shift and change in response to the changing impact 
of experience, since they are creatures of habituation. But inasmuch as they 
have once been stabilized in a thoroughly competent fashion in the eighteenth 
century, and have been drafted into finished documentary form, they have been 
enabled to stand over unimpaired into the present with all that stability that a 
well devised documentary formulation will give. It is true, so far as regards 
the conditions of civilized life during the interval that has passed since these 
modern principles of law and custom took on their settled shape in the 
eighteenth century, it has been a period of unexampled change swift, varied, 
profound, and extensive, beyond example. And it follows of necessity that the 
principles of conduct which were approved and stabilized in the eighteenth 
century, under the driving exigencies of that age, have not altogether escaped 
the complications of changing circumstances. They have at least come in for some 
shrewd interpretation in the course of the nineteenth century. There have been 
refinements of definition, extensions of application, scrutiny and exposition of 
implications, as new exigencies have arisen and the established canons have been 
required to cover unforeseen contingencies; but it has all been done with the 
explicit reservation that no material innovation shall be allowed to touch the 
legacy of modern principles handed down from the eighteenth century, and that 
the vital system of Natural Rights installed in the eighteenth century must not 
be deranged at any point or at any cost.

It is scarcely necessary to describe this modern system of principles that still 
continues to govern human intercourse among the civilized peoples, or to attempt 
an exposition of its constituent articles. It is all to be had in exemplary 
form, ably incorporated in such familiar documents as the American Declaration 
of Independence, the French Declaration of the Rights of Man, and the American 
Constitution; and it is all to be found set forth with all the circumstance of 
philosophical and juristic scholarship in the best work of such writers as John 
Locke, Montesquieu, Adam Smith, or Blackstone. It has [350] all been 
sufficiently canvassed, through all its dips, spurs, and angles, by the most 
competent authorities, who have brought their best will and their best abilities 
to bear on its elucidation at every point, with full documentation. Besides 
which, there is no need of recondite exposition for the present purpose, since 
all that is required by the present argument is such a degree of information on 
these matters as is familiar to English-speaking persons by common notoriety.

At the same time it may be to the purpose to call to mind that this secular 
profession of faith enters creatively into that established order of things 
which has now fallen into a state of havoc because it does not meet the 
requirements of the new order. This modern plan specifically makes place for 
certain untoward rights, perquisites, and disabilities which have in the course 
of time and shifting circumstance become incompatible with continued peace on 
earth and good-will among men.

There are two main counts included in this modern eighteenth century plan which 
appear unremittingly to make for discomfort and dissension under the conditions 
offered by the New Order of things: national ambition, and the vested interests 
of ownership. Neither of the two need be condemned as being intrinsically 
mischievous. Indeed, it may be true, as has often been argued, that both have 
served a good purpose in their due time and place; at least there is no need of 
arguing the contrary. Both belong in the settled order of civilized life; and 
both alike are countenanced by those principles of truth, equity, and validity 
that go to make up the modern point of view. It is only that now, as things have 
been turning during the later one hundred years, both of these have come to 
yield a net return of hardship and ill-will for all those peoples who have bound 
up their fortunes with that kind of enterprise. The case might be stated to this 
effect, that the fault lies not in the nature of these untoward institutions, 
nor in those principles of selfhelp which underlie them, but in those latter-day 
facts which stubbornly refuse to fall into such lines as these forms of human 
enterprise require for their perfect and beneficent working. The facts, 
particularly the facts of industry and science, have outrun the 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 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 
Occidental 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 now run 
counter to one another and work mischief to the common good. Any impartial 
survey of the past one hundred and fifty years will show that the constituent 
principles of this modern point of view governing the mutual rights and 
obligations of men within the civilized nations have held their ground, on the 
whole, without material net gain or net loss. It is the ground of Natural 
Rights, of self-help and free bargaining. Civil rights and the perquisites and 
obligations of ownership have remained substantially intact over this interval 
of a hundred and fifty years, but with some slight advance in the way of Live 
and Let Live at certain points, and some slight retrenchment at other points. So 
far as regards the formal stipulations in law and custom, the balance of class 
interests within these countries has on the whole not been seriously disturbed. 
In this system of Natural Rights, as it has worked out in practice, the rights 
of ownership are paramount; largely because the other personal rights in the 
case have come to be a matter of course and so have ceased to hold men's 
attention.

So, in the matter of the franchise, for instance, the legal provisions more 
nearly meet the popular ideals of the modern point of view today than ever 
before. On the other hand the guiding principles in the case 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 abridgment 
of the freedom of combination and concerted action at any point where an 
unguarded exercise of such freedom would [351] 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 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 in 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 such a marked 
feature of the nineteenth century, was not foreseen and 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. The system of Natural Rights is a 
system of personal rights, among which the rights of ownership are paramount; 
and among the rights of ownership is the right of free disposal and security of 
ownership and of credit obligations.

The same line of evasion is not available in the same degree for concerted 
action between persons who own nothing. Still in neither case, neither as 
regards the owners of the country's wealth nor as regards the common man, can 
these restrictions on personal freedom of action be said to be a serious burden. 
And any slight mutilation or abridgment of the rule of self-help in their 
economic relations has been offset by an increasingly broad and liberal 
construction of the principles of self-direction and equality among men in their 
civil capacity and their personal relations. Indeed the increasingly exacting 
temper of the common man in these countries during this period has made such an 
outcome unavoidable. By and large, in its formal vindication of personal liberty 
and equality before the law, the modern point of view has with singular 
consistency remained intact in the shape in which its principles were stabilized 
in the eighteenth century, in spite of changing circumstances. In point of 
formal compliance with their demands, the enlightened ideals of the eighteenth 
century are, no doubt, more commonly realized in practice today than at any 
earlier period. So that the modern civilized countries are now, in point of 
legal form and perhaps also in practical effect, more nearly a body of ungraded 
and masterless men than any earlier generation has known how to be.

In this modern era, as well as elsewhere and in other times, the circumstances 
that make for change and reconstruction have been chiefly the material 
circumstances of everyday life circumstances affecting the ordinary state of 
industry. These have changed notably during the modern era. There has been a 
progressive change in the state of the industrial arts, which has materially 
altered the scope and method of industry and the conditions under which men live 
in all the civilized countries. Accordingly, as a point of comparison, it will 
be to the purpose to call to mind what were the material circumstances, and more 
particularly the state of the industrial arts, which underlay and gave character 
to the modern point of view at the period when its constituent principles were 
found good and worked out as a stable and articulate system, in the shape in 
which they have continued to be held since then.

The material conditions of industry, trade, and daily life during the period of 
transition and approach to this modern ground created that frame of mind which 
we call the modern point of view, and dictated that reconstruction of 
institutional arrangements which has been worked out under its guidance. 
Therefore the economic situation which so underlay and conditioned this modern 
point of view at the period when it was given its stable form becomes the 
necessary point of departure for any argument bearing on the changes that have 
been going forward since then, or on any prospective reconstruction that may be 
due to follow from these changed conditions in the calculable future. On this 
head, the students of history are in a singularly fortunate position. The whole 
case is set forth in the works of Adam Smith, with a comprehension and lucidity 
which no longer calls for praise. Beyond all other men Adam Smith is the 
approved and faithful spokesman of this modern point of view in all that 
concerns the economic situation which it assumes as its material ground; and his 
description of the state of civilized society, trade, and industry, as he saw it 
in his time and as he wished it to stand over into the future, is to be taken 
without abatement as a competent exposition of those material conditions which 
were then conceived to underlie civilized society and to dictate the only sound 
reconstruction of civil and economic institutions according to the modern plan.

But like other men, Adam Smith was a creature of his own time, and what he has 
to say applies to the state of things as he saw them. What he [352] describes 
and inquires into is that state of things which was to him the "historical 
present"; which always signifies the recent past, that is to say, the past as it 
had come under his observation.

As it is conventionally dated, the Industrial Revolution took effect within Adam 
Smith's active lifetime, and some of its more significant beginnings passed 
immediately under his eyes; indeed it is related that he took an active personal 
interest in at least one of the epoch-making mechanical inventions from which 
the era of the machine industry takes its date. Yet the Industrial Revolution 
does not lie within Adam Smith's "historical present," nor does his system of 
economic doctrines make provision for any of its peculiar issues. What he has to 
say on the mechanics of industry is conceived in terms derived from an older 
order of things than that machine industry which was beginning to get under way 
in his own lifetime; and all his illustrative instances and arguments on trade 
and industry are also such as would apply to the state of things that was 
passing, but they are not drawn with any view to that new order which was then 
coming on in the world of business enterprise.

The economic situation contemplated by Adam Smith as the natural (and ultimate) 
state of industry and trade in any enlightened society, conducted on sane and 
sound lines according to the natural order of human relations, was of a simple 
structure and may be drawn in .few lines neglecting such minor extensions and 
exceptions as would properly be taken account of in any exhaustive description. 
Industry is conceived to be of the nature of handicraft; not of the nature of 
mechanical engineering, such as it has in effect and progressively come to be 
since his time. It is described as a matter of workmanlike labor, "and of the 
skill, dexterity, and judgment with which it is commonly applied." It is a 
question of the skilled workman and his use of tools. Mechanical inventions are 
"labor-saving devices," which "facilitate and abridge labor." The material 
equipment is the ways and means by manipulation of which the workman gets his 
work done. "Capital stock" is spoken of as savings parsimoniously accumulated 
out of the past industry of its owner, or out of the industry of those persons 
from whom he has legally acquired it, by inheritance or in exchange for the 
products of his own labor. Business is of the nature of "petty trade," and the 
business man is a "middle man" who is employed for a livelihood in the 
distribution of goods to the consumers. Trade is subsidiary to industry, and 
money is a vehicle designed to be used for the distribution of goods. Credit is 
an expedient of the needy; a dubious expedient. Profits (including interest) are 
justified as a reasonable remuneration for productive work done, and for the 
laborsaving use of property derived from the owner's past labor. The efforts of 
masters and workmen alike are conceived to be bent on turning out the largest 
and most serviceable output of goods; and prices are competitively determined by 
the labor-cost of the goods.

Like other men, Adam Smith did not see into the future, beyond what was 
calculable on the data given by his own historical present; and in his time that 
later and greater era of investment and financial enterprise which has made 
industry subsidiary to business was only beginning to get under way, and only 
obscurely so. So that he was still able to think of commercial enterprise as a 
middle-man's traffic in merchandise, subsidiary to a small-scale industry on the 
order of handicraft, and due to an assumed propensity in men "to truck, barter, 
and exchange one thing for another." And what he could not help seeing of the 
new order of business enterprise which was coming in was not rated by him as a 
sane outgrowth of that system of Natural Liberty for which he spoke and about 
which his best affections gathered. In all this he was at one with his 
thoughtful contemporaries.

That generation of public-spirited men went, perforce, on the scant data 
afforded by their own historical present, the economic situation as they saw it 
in the perspective and with the preconceptions of their own time; and to them it 
was accordingly plain that when all unreasonable restrictions are taken away, 
"the obvious and simple system of natural liberty establishes itself of its own 
accord." To this "natural" plan of free workmanship and trade all restraint or 
retardation by collusion among business men was wholly obnoxious, and all 
collusive control of industry or of the market was accordingly execrated as 
unnatural and subversive. It is true, there were even then some appreciable 
beginnings of coercion and retardation lowering of wages and limitation of 
output by collusion between owners and employers, who should by nature have been 
competitive producers of an unrestrained output of goods and services, according 
to the principles of that modern point of view which animated Adam Smith and his 
generation; but coercion and unearned gain by a combination of ownership, of the 
now familiar corporate type, was virtually unknown in his time. So Adam Smith 
saw and denounced the dangers of unfair combination between "masters" for the 
exploitation of their workmen, but the modern use of credit and corporation 
finance for the collective [353] control of the labor market and the goods 
market of course does not come within his horizon and does not engage his 
attention.

So - also, Adam Smith knows and denounces the use of protective tariffs for 
private gain. That means of pilfering was familiar enough in his time. But he 
spends little indignation on the equally nefarious use of the national 
establishment for safeguarding and augmenting the profits of traders, 
concessionaires, investors, and creditors in foreign parts at the cost of the 
home community. That method of taxing the common man for the benefit of the 
vested interests has also grown to more formidable proportions since his time. 
The constituent principles of the modern point of view, as accepted, advisedly 
or by oversight, by Adam Smith and his generation, supply all the legitimation 
required for this larcenous use of the national establishment; but the means of 
communication were still too scant, and the larger use of credit was too nearly 
untried, as contrasted with what has at a later date gone to make the commercial 
ground and incentive of imperialist politics. Therefore the imperialist policies 
of public enterprise for private gain also do not come greatly within the range 
of Adam Smith's vision of the future, nor does the "obvious and simple system" 
on which he and his generation of thoughtful men take their stand comprise 
anything like explicit declarations for or against this later-matured chicane of 
the gentlemen-investors who have been managing the affairs of the civilized 
nations.

Adam Smith's work and lifetime falls in with the high tide of eighteenth century 
insight and understanding, and it marks an epoch of spiritual achievement and 
stabilization in civil institutions, as well as in those principles of conduct 
that have governed economic rights and relations since that date. But it marks 
also the beginning of a new order in the state of the industrial arts, as well 
as in those material sciences that come directly in touch with the industrial 
arts and which take their logical bent from the same range of tangible 
experience. So it happens that this modern point of view reached a stable and 
symmetrical finality about the same date when the New Order of experience and 
insight was beginning to bend men's habits of thought into lines that run at 
cross purposes with this same stabilized point of view. It is in the ways and 
means of industry and in the material sciences that the new order, of knowledge 
and belief first comes into evidence; because it is in this domain of workday 
facts that men's experience began about that time to take a decisive turn at 
variance with the received canons. A mechanistic conception of things began to 
displace those essentially romantic notions of untrammeled initiative and 
rationality that governed the intellectual life of the era of Enlightenment 
which was then drawing to a close.

It is logically due to follow that the same general principles of knowledge and 
validity will presently undergo a revision of the same character, where they 
have to do with those imponderable facts of human conduct and those conventions 
of law and custom that govern the duties and obligations of men in society. Here 
and now, as elsewhere and in other times, the stubborn teaching that comes of 
men's experience with the tangible facts of industry should confidently be 
counted on to make the outcome so as to bring on a corresponding revision of 
what is right and good in that world of make-believe that always underlies any 
established system of law and custom. The material exigencies of the state of 
industry are unavoidable, and in great part unbending; and the economic 
conditions which follow immediately from these exigencies imposed by the ways 
and means of industry are only less uncompromising than the mechanical facts of 
industry itself. And the men who live under the rule of these economic 
exigencies are constrained to make their peace with them, to enter into such 
working arrangements with one another as these unbending conditions of the state 
of the industrial arts will tolerate, and to cast their system of imponderables 
on lines which can be understood by the same men who understand the industrial 
arts and the system of material science which underlies the industrial arts. So 
that, in due course, the accredited schedule of legal and moral rights, 
perquisites, and obligations will also presently be brought into passable 
consistency with the ways and means whereby the community gets its living.

But is it also logically to be expected that any revision of the established 
rights, obligations, perquisites, and vested interests will trail along behind 
the change which has taken effect in the material circumstances of the community 
and in the community's knowledge and belief with regard to these material 
circumstances; since any such revision will necessarily be consequent upon and 
conditioned by that change, and since the axioms of law and custom that underlie 
any established schedule of rights and perquisites are always of the nature of 
make-believe; and the make-believe is necessarily built up out of conceptions 
derived from the accustomed range of knowledge and belief. Outworn axioms of 
this make-believe order become superstitions when the scope and method of 
workday knowledge has outgrown that particular range of preconceptions out of 
which these make-believe axioms are [354] constructed; which comes to saying 
that the underlying principles of the system of law and morals are therewith 
caught in a process of obsolescence "depreciation by supersession and disuse." 
By a figure of speech it might be said that the community's intangible assets 
embodied in this particular range of imponderables have shrunk by that much, 
through the decay of these imponderables that are no longer seasonable, and 
through their displacement by other figments of the human brain a consensus of 
brains trained into closer consonance with the latter-day material conditions of 
life. Something of this kind, something in the way of depreciation by 
displacement, appears now to be overtaking that system of imponderables that has 
been handed down into current law and custom out of that range of ideas and 
ideals that had the vogue before the coming of the machine industry and the 
material sciences.

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 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 once 
made from medieval to modern times. It should be a case of break or bend.

THORSTEIN VEBLEN.
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