Thorstein Veblen
The Modern Point of View and the New Order.
V. THE VESTED INTERESTS

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

No. 779, Dec., 14, 1918, pp. 543-549.
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[543]
The Modern Point of View and the New Order

V. THE VESTED INTERESTS

ARE certain saving clauses in common use among persons who speak for that well-
known order of pecuniary rights and obligations which the modern point of view 
assumes as "the natural state of man." Among them are these: "given the state of 
the industrial arts"; "other things remaining the same"; "in the long run"; "in 
the absence of disturbing causes." It has been the praiseworthy endeavor of the 
votaries of established law and custom to hold fast the good old plan on a 
strategic line of interpretation resting on these provisos. There have been 
painstaking elucidations of what is fundamental and intrinsic in the way of 
human institutions, of what essentially ought to be, and of what must eventually 
come to pass in the natural course of time and change, as it is believed to run 
along under the guidance of those indefeasible principles that make up the 
modern point of view. And the disquieting incursions of the new order have been 
disallowed as not being of the essence of Nature's contract with mankind, within 
the constituent principles of the modern point of view.

Now, as has already been remarked in an earlier paper, the state of the 
industrial arts has at no time continued unchanged during the modern era; 
consequently other things have never remained the same; and in the long run the 
outcome has always been shaped by the disturbing causes. All this reflects no 
discredit on the economists and publicists who so have sketched out the natural 
run of the present and future, since their reservations have not been observed. 
The arguments have been as good as the premises on which they proceed, and the 
premises have once been good enough to command unquestioning assent, although 
that is now some time ago. The fault appears to lie in the unexampled shifty 
behavior of the latter-day facts. But however shifty, these facts, too, are as 
stubborn as others of their kind.

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. It has of course always been recognized 
that the country's industry makes up something of a connected system, so that 
there would necessarily be some degree of mutual adjustment and accommodation 
among the many self-sufficient working units which together would make up such 
an industrial community; but these working units have been conceived to be so 
nearly independent of one another that the slight measure of running adjustment 
[544] needed could be sufficiently taken care of by free competition in the 
market. This assumption has of course never been altogether sound, at any stage 
in the industrial advance; but it has at least been within speaking distance of 
facts so late as the eighteenth century. It was a possible method of keeping the 
balance in the industrial system before the coming of the machine industry. 
Quite evidently it commended itself to the enlightened common sense of that time 
as a sufficiently workable ideal so much so that it then appeared to be the most 
practical solution of the industrial and social difficulties which beset that 
generation. It is fairly to be presumed that the plan would have been 
sufficiently workable if the conditions which then prevailed had continued 
unchanged, if other things had remained the same. That was, in effect, before 
the coming of the machine technology and the later growth of population.

But as it runs today, according to the new industrial order set afoot by the 
machine technology, the carrying-on of the community's industry is not well 
taken care of by the loose corrective control that is exercised by a competitive 
market. That method is too slow, at the best, and too disjointed; besides which, 
it does not work. The industrial system is now a wide-reaching organization of 
mechanical processes which work together on a comprehensive interlocking plan of 
give and take, in which no one section, group, or individual unit is free to 
work out its own industrial salvation except in active co-partnership with the 
rest, and the whole of which runs on as a moving equilibrium of forces in 
action. This system of interlocking processes and mutually dependent working 
units is a more or less delicately balanced affair. Evidently the system has to 
be taken as a whole, and evidently it will work at its full productive capacity 
only on condition that the coordination of its interlocking processes be 
maintained at a faultless equilibrium, and only when its constituent working 
units are allowed to run full and smooth. But a moderate derangement will not 
put it out of commission. It will work at a lower efficiency, and continue 
running, in spite of a very considerable amount of dislocation as is habitually 
the case today.

At the same time any reasonably good working efficiency of the industrial system 
is conditioned on a reasonably good coordination of these working forces, such 
as will allow each and several of the working units to carry on at the fullest 
working capacity that will comport with the unhampered working of the system as 
a balanced whole. But evidently, too, any dislocation, derangement, or 
retardation of the work at any critical point which comes near saying at any 
point in this balanced system of work will cause a disproportionately large 
derangement of the whole. The working units of the industrial system are no 
longer independent of one another under the new order.

This state of things would reasonably suggest that the control of the industrial 
system had best be entrusted to men skilled in these matters. The industrial 
system does its work in terms of mechanical efficiency, not in terms of price. 
It should accordingly seem reasonable to expect that its control would be 
entrusted to men experienced in the ways and means of technology, men who are in 
the habit of thinking about these matters in such terms as are intelligible to 
the engineers.

However, by historical necessity the discretionary control in all that concerns 
this highly technological system of industry has come to vest in those persons 
who are highly skilled in the higgling of the market. And so great is the 
stability of that system of law and custom by grace of which these persons claim 
this power, that any disallowance of their control over the material fortunes of 
the community is now scarcely within reason. All the while the progressive, 
shifting of ground in the direction of a more thoroughly mechanistic 
organization of industry goes on and works out into a more and more searching 
standardization of works and methods and a more exacting correlation of 
industries, in an ever increasingly large and increasingly sensitive industrial 
system. All the while the whole of it grows less and less manageable by business 
methods; and with every successive move the control exercised by the business 
men in charge grows wider, more arbitrary, and more inconsistent with the common 
good.

The businesslike manager's attention is continually more taken up with "the 
financial end" of the concern's interests, so that by enforced neglect he is 
necessarily leaving more of the details of shop management and supervision of 
the works to subordinates, largely to subordinates who have some knowledge of 
technological matters and no immediate interest in the run of the market. But 
the larger and final discretion, which affects the working of the industrial 
system as a whole, or the orderly management of any considerable group of 
industries within the general system all that is still under the immediate 
control of the businesslike managers, each of whom works for his own concern's 
gain, without much afterthought. The final discretion still rests with the 
businesslike directorate of each concern the owner or the board even in all 
[545] questions of physical organization and technical management, although this 
businesslike control of the details of production necessarily comes to little 
else than acceptance, rejection, or revision of measures proposed by the men 
immediately in charge of the works, together with a constant check on the rate 
and the volume of output with a view to the market.

Hence in the large mechanical industries, which set the pace for the rest and 
which are organized on a standardized and more or less automatic plan, the 
current oversight of production by their businesslike directorate does not 
effectually extend much beyond the regulation of the output with a view to what 
the traffic will bear; and in this connection there is very little that the 
business men in charge can do except to keep the output short of productive 
capacity by so much as the state of the market seems to require; it does not lie 
within their competency to increase the output beyond that point, or to increase 
the productive capacity of their works, except by way of giving the technical 
men permission to go ahead and do it.

The business man's place in the economy of nature is to "make money," not to 
produce goods. The production of goods is a mechanical process, incidental to 
the making of money, whereas the making of money is a pecuniary operation, 
carried on by bargain and sale, not by mechanical appliances and powers. The 
business men make use of the mechanical appliances and powers of the industrial 
system, but they make a pecuniary use of them. And in point of fact the less use 
a business man can make of the mechanical appliances and powers under his 
charge, and the smaller a product he can contrive to turn out for a given return 
in terms of price, the better it suits his purpose. The highest achievement in 
business is the nearest approach to getting something for nothing. What any 
given business concern gains must come out of the total output of productive 
industry, of course; and to that extent any given business concern has an 
interest in the continued production of goods. But the less any given business 
concern can contrive to give for what it gets, the more profitable its own 
traffic will be. Business success means "getting the best of the bargain."

The common good, so far as it is a question of material welfare, is evidently 
best served by an unhampered working of the industrial system at its full 
capacity, without interruption or dislocation. But it is equally evident that 
the owner or manager of any given concern or section of this industrial system 
may be in a position to gain something for himself at the cost of the rest by 
obstructing, retarding, or dislocating this working system at some critical 
point in such a way as will enable him to get the best of the bargain in his 
dealings with the rest. This appears constantly in the altogether usual, and 
altogether legitimate, practice of holding out for a better price. So also in 
the scarcely less usual, and no less "legitimate, practice of withholding needed 
ground or right of way, or needed materials or information, from a business 
rival. All these things are usual and a matter of course, because business 
management under the conditions created by the new order of industry is in great 
part made up of just these things. Indeed, sabotage of this kind is 
indispensable to any large success in industrial business.

However, it is well to call to mind that the community will still be able to get 
along, perhaps even to get along very tolerably, in spite of a very appreciable 
volume of sabotage of this kind even though it does reduce the net productive 
capacity to a fraction of what it would be in the absence of all this 
interference and retardation; for the current state of the industrial arts is 
highly productive. So much so that in spite of all this deliberate waste and 
confusion that is set afoot in this way for private gain, there still is left 
over an absolutely large residue of net production over cost. The community 
still has something to go on. The available margin of free income that is to 
say, the margin of production over cost is still wide, so that it allows a large 
latitude for playing fast and loose with the community's livelihood.

Now these businesslike maneuvers of deviation and delay are by no means to be 
denounced as being iniquitous or unfair, although they may have an unfortunate 
effect on the conditions of life for the common man. That is his misfortune, 
which law and custom count on his bearing with becoming fortitude. These are the 
ordinary and approved means of carrying on business according to the liberal 
principles of free bargain and self-help; and they are in the main still looked 
on as a meritorious exercise of thrift and sagacity duly so looked on, it is to 
be presumed. At least such is the prevailing view among the substantial 
citizens, who are in a position to speak from first-hand knowledge. It is only 
that the exercise of these homely virtues on the large scale on which Business 
is now conducted, and when dealing with the wide-reaching articulations of the 
industrial system under the new order of technology under these uncalled-for 
circumstances the unguarded exercise of these virtues entails business 
disturbances which are necessarily large, and [546] which bring on mischievous 
consequences in industry which are disproportionately larger still. In case 
these maneuvers of businesslike deviation and defeat are successful and fall 
into an orderly system whose operation may be continued at will, or in so far as 
this management creates an assured strategic advantage for any given business 
concern, the result is a vested interest. This may then eventually be 
capitalized in due form, as a body of intangible assets. As such it goes to 
augment the business community's accumulated wealth. And the country is richer 
per capita.

A vested interest is a marketable right to get something for nothing. This does 
not mean that the vested interests cost nothing. They may even come high. 
Particularly may their cost seem high if the cost to the community is taken into 
account, as well as the expenditure incurred by their owners for their 
production and upkeep. Vested interests are immaterial wealth, intangible 
assets. As regards their nature and origin, they are the outgrowth of three main 
lines of businesslike management: (a) limitation of supply, with a view to 
profitable sales; (b) obstruction of traffic, with a view to profitable sales; 
and (c) meretricious publicity, with a view to profitable sales. It will be 
remarked that these are matters of business, in the strict sense. They are 
devices of salesmanship, not of workmanship; they are ways and means of driving 
a bargain, not ways and means of producing goods or services. The residue which 
stands over as a product of these endeavors is in the nature of an intangible 
asset, an article of immaterial wealth, not an increase of the tangible 
equipment or the material resources in hand. The enterprising owners of the 
concern may be richer by that much, and so perhaps may the business community as 
a whole though that is a precariously dubious point but the community at large 
is certainly no better off in any material respect.

This account of course assumes that all this business is conducted strictly 
within the lines of commercial honesty. It would only be tedious and misleading 
to follow up and take account of that scattering recourse to force or fraud, 
that will never wholly be got rid of in the pursuit of gain, whether by way of 
business traffic or by more direct methods. Commercial honesty, of course, is 
the honesty of self-help, or caveat emptor, which is Latin for the same thing.

Roughly, any business concern which so comes in for a habitual run of free 
income comes to have a vested right in this "income stream," and this preferred 
standing of the concern in this respect is recognized by calling such a concern 
a "vested interest" or a "special interest." Free income of this kind, not 
otherwise accounted for, may be capitalized if it promises to continue, and it 
can then be entered on the books as an item of immaterial wealth, a prospective 
source of gain. So long as it has not been embodied in a marketable legal 
instrument, any such item of intangible assets will be nothing more than a 
method of notation, a bookkeepers' expedient. But it can readily be covered with 
some form of corporation security, as, for instance, preferred stock or bonds, 
and it then becomes an asset in due standing and a vested interest endowed with 
legal tenure.

Ordinarily any reasonably uniform and permanent run of free income of this kind 
will be covered by an issue of corporate securities with a fixed rate of 
interest or dividends; whereupon the free income in question becomes a fixed 
overhead charge on the concern's business, to be carried as an item of ordinary 
and unavoidable outlay and included in the necessary cost of production of the 
concern's output of goods or services. But whether it is covered by an issue of 
vendible securities or carried in a less formal manner as a source of income not 
otherwise accounted for, such a vested right to get something for nothing will 
rightly be valued and defended against infraction from outside as a proprietary 
right, an item of immaterial but very substantial wealth.

There is nothing illegitimate or doubtful about this incorporation of unearned 
income into the ordinary costs of production on which "reasonable profits" are 
computed. "The law allows it and the court awards it." To indicate how utterly 
congruous it all is with the new order of business enterprise, it may be called 
to mind that not only do the captains of corporation finance habitually handle 
the matter in that way, but the same view is accepted by those public 
authorities who are called in to review and regulate the traffic of these 
business concerns. The later findings are apparently unequivocal, to the effect 
that when once a run of free income has been capitalized and docketed as an 
asset it becomes a legitimate overhead charge, and it is then justly to be 
counted among necessary costs and covered by the price which consumers should 
reasonably pay for the concern's offering of goods or services.

Such a finding has come to be a fairly well settled matter-of-course both among 
officials and among the law-abiding investors, so far as regards those 
intangible assets that are covered by vendible securities carrying a fixed rate; 
and the logic of this finding [547] is doubtless sound according to the 
principles of the modern point of view. There may still be a doubt or a question 
whether valuable perquisites of the same nature, which continue to be held 
loosely as an informal vested interest, as, for instance, merchantable good-
will, ate similarly entitled to the benefit of the common law which secures any 
owner in the usufruct of his property. To such effect have commonly been the 
findings of courts and boards of inquiry, of Public Utility Commissions, of such 
bodies as the Interstate Commerce Commission, the Federal Trade Commission, and 
latterly of divers recently installed agencies for the control of prices and 
output in behalf of the public interest so, for instance, right lately, certain 
decisions and recommendations made by the War Labor Board.

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 businesslike 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. In passing it may also be noted that there is room for a 
division of sentiment as regards this disposal of the community's net 
production, and that peremptory questions of class interest and public policy 
touching these matters may presently be due to come to a hearing.

To some, this manner of presenting the case may seem unfamiliar, and it may 
therefore be to the purpose to restate the upshot of this account in the 
briefest fashion: Capital at least under the new order of business enterprise is 
capitalized prospective gain. From this arises one of the singularities of the 
current situation in business and its control of industry, namely, that the 
total face value, or even the total market value of the vendible securities 
which cover any given block of industrial equipment and material resources, and 
which give title to their ownership, always and greatly exceeds the total market 
value of the equipment and resources to which the securities give title of 
ownership, and to which alone in the last resort they do give title. The margin 
by which the capitalized value of the going concern exceeds the value of its 
material properties is commonly quite wide. Only in the case of small and feeble 
corporations, or such concerns as are balancing along the edge of bankruptcy, 
does this margin of intangible values narrow down and tend to disappear. Any 
industrial business concern which does not enjoy such a margin of capitalized 
free earning-capacity has fallen short of ordinary business success and is 
possessed of no vested interest.

This margin of free income which is capitalized in the value of the going 
concern comes out of the net product of industry over cost. It is secured by 
successful bargaining and an advantageous position in the market, which involves 
some derangement and retardation of the industrial system so much so as greatly 
to reduce the net margin of production over cost. Approximately the whole of 
this remaining margin of free income goes to the business men in charge, or to 
the business concerns for whom this management is carried on. In case the free 
income which is gained in this way promises to continue, it presently becomes a 
vested right. It may then be formally capitalized as an immaterial asset having 
a recognized earning-capacity equal to this prospective free income. That is to 
say, the outcome is a capitalized claim to get something for nothing which 
constitutes a vested interest. The total gains which hereby accrue to the owners 
of these vested rights amount to something less than the total loss suffered by 
the community at large through that delay of production and derangement of 
industry that is involved in the due exercise of these rights. In other words, 
and as seen from the other side, 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 com-' munity 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 one 
hundred per cent of mischief to the community but only the ten per cent of 
private gain.

So far as they bear immediately on the argument at this point the main facts are 
substantially as set forth. But to avoid any appearance of undue novelty, as 
well as to avoid the appearance of neglecting relevant facts, something more is 
to be said in the same connection. It is particularly to be noted that credit 
for certain material benefits should be given to this same business enterprise, 
whose chief aim [548] and effect is the creation of these vested rights in 
unearned income. It will be apparent to anyone who is at all familiar with the 
situation that much of the intangible assets included in the corporate capital 
of this country, for instance, does not represent derangement which is actually 
inflicted on the industrial system from day to day, but rather the price of 
delivery from derangement, which the businesslike managers of industry have 
taken measures to discontinue and disallow.

A concrete illustration will show what is intended. For some time past, and very 
noticeably during the past quarter century, the ownership of the country's 
larger industrial concerns has constantly been drawing together into larger and 
larger aggregations, with a more centralized control. The case of the steel 
industry is typical. For a considerable period, beginning in the early nineties, 
there went on a process of combination and recombination of corporations in this 
industry, resulting in larger and larger aggregations of corporate ownership. 
Commonly, though perhaps not invariably, some of the unprofitable duplication 
and work at cross-purposes that was necessarily involved in the earlier 
parcelment of ownership was got rid of in this way, gradually with each 
successive move in this concentration of ownership and control. Perhaps also, 
invariably, there was a substantial saving made in the aggregate volume of 
business dealings that would necessarily be involved in carrying on the industry 
by the methods of ownership in severally. Under the management of many concerns, 
each intent on its own pecuniary interest, the details of business transactions 
would be voluminous and intricate, in the way of contracts, orders, running 
accounts, working arrangements, as well as the necessary financial operations, 
properly so called. Much of this would be obviated by taking over the ownership 
of these concerns into the hands of a centralized control; and there would be a 
consequent lessening of that delay and uncertainty that always is to be counted 
on wherever the industrial operations have to wait on the completion of various 
business arrangements. There is circumstantial evidence that very material gains 
in economy and expedition commonly resulted from these successive moves of 
consolidation in the steel business. And this discontinuance of businesslike 
delay and calculated maladjustment was at each successive move brought to a 
secure footing and capitalized in an increased issue of the negotiable 
corporation securities.

It will also be recalled that, as a matter of routine, each successive 
consolidation of ownership involved a recapitalization of the concerns so 
brought together under a common head, and that commonly if not invariably the 
resulting recapitalization would be larger than the aggregate capital of the 
underlying corporations. Even where, as sometimes has happened, there was no 
increase made in the nominal capitalization, there would still result an 
effectual increase, in that the market value of the securities outstanding would 
be larger after the operation than the value of the aggregate capital of the 
underlying corporations had been before. There has commonly been some gain in 
aggregate capitalization, and the resulting increased capitalization has also 
commonly proved to be valid. The market value of the larger and more stable 
capitalization has presently proved to be larger and more stable than the 
capitalization of the same properties under the earlier regime of divided 
ownership and control. What so has been added to the aggregate capitalization 
has in the main been the relative absence of work at cross-purposes, which has 
resulted from the consolidation of ownership; and it is to be accounted a 
typical instance of intangible assets. The new and larger capitalization has 
commonly made good; and this is particularly true for those later, larger, and 
more conclusive recombinations of corporate ownership with which the so-called 
era of trust making in the steel business came to a provisional conclusion. The 
United States Steel Corporation has vindicated the wisdom of an unreserved 
advance on lines of consolidation and recapitalization in the financing of the 
large and technical industries.

For reasons well understood by those who are acquainted with these things, no 
one can offer a confident estimate, or even a particularly intelligent opinion, 
as to the aggregate amount of overhead burden and intangible assets which has 
been written into the corporate capital of the steel business in the course of a 
few years of consolidation. For reasons of depreciation, disuse, replacement, 
extension, renewal, changes in market conditions and in technical requirements 
the case is too intricate to admit anything like a clear-cut identification of 
the immaterial items included in the capitalization. But there is no chance to 
doubt that in the aggregate these immaterial items foot up to a very formidable 
proportion of the total capital.

It is evident that the businesslike management of industry under these 
conditions need not involve derangement and cross-purposes at every turn. It 
should always be likely that the business men in charge will find it to their 
profit to combine forces, eliminate wasteful traffic, allow a reasonably free 
[549] and economical working of the country's productive powers within the 
limits of a profitable price, and so come in for a larger total of free income 
to be divided amicably among themselves on a concerted plan. This can be done by 
means of a combination of ownership, such as the corporations of the present 
time. But there is a difficulty of principle involved in this use of 
incorporation as a method of combining forces. Such a consolidation of ownership 
and control on a large scale appears to be, in effect, a combination of forces 
against the rest of the community or in contravention of the principles of free 
competition. In effect it foots up to the same thing as a combination in 
restraint of trade; in form it is a concentration of ownership. Combination of 
owners in restraint of trade is obnoxious to the liberal principles of free 
bargaining and self-help; consolidation of ownership by purchase or 
incorporation appears to be a reasonable exercise of the right of free 
bargaining and self-help. There is accordingly some chance of a difference of 
opinion at this point and some risk of playing fast and loose with these liberal 
principles that disallow conspiracy in restraint of trade. This difficulty of 
principle has been sought to be got over by believing that a combination of 
ownership in restraint of trade does not amount to a conspiracy in restraint of 
trade, within the purport of these liberal principles. There is a great and 
pressing need of such a construction of 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.

The new state of things brought about by such a consolidation is capitalized as 
a permanent source of free income. And if it proves to be a sound business 
proposition the new capitalization will measure the increase of income which 
goes to its promoter or to the corporation in whose name the move has been made; 
and if the work is well and neatly done no one else will get any gain from it or 
be in any way benefited by the arrangement. It is a business proposition, not a 
fanciful project of public utility. The capitalized value of such a coalition of 
ownership is not measured by any heightened production or any retrenchment of 
waste that may come in its train, nor need the new move bring any addition to 
the community's net productive resources in any respect. Indeed, it happens not 
infrequently that such a waste-conserving coalition of ownership leads directly 
to a restriction of output, according to the familiar run of monopoly rule. So 
frequently will restriction, enhanced prices, unemployment, and hardship follow 
in such a case that it has come to be an article of popular knowledge and belief 
that this is the logical aim and outcome of any successful maneuver of the kind.

So also, though its output of marketable goods or services may be got on easier 
terms, the new and larger business concern which results from the coalition need 
be no more open-handed or humane in its dealings with its workmen. There will, 
in fact, be some provocation to the contrary. A more powerful corporation is in 
a position to make its own terms with greater freedom, which it then is for the 
workmen to take or leave, but ordinarily to take, for the universal rule of 
businesslike management to charge what the traffic will bear continues to hold 
unbroken for any business concern, irrespective of its size or its facilities. 
As has already been noted in an earlier passage, charging what the traffic will 
bear is the same as charging what will yield the largest net profit.

.There stand over two main questions touching the nature and uses of these 
vested interests: Why do not these powerful business Concerns exercise their 
autocratic powers to drive the industrial system at its full productive 
capacity, seeing that they are in a position to claim any increase of net 
production over cost? and, What use is made of the free income which goes to 
them as the perquisite of their vested interest? The answer to the former 
question is to be found in the fact that the great business concerns as well as 
the smaller ones are all bound by the limitations of the price system, which 
holds them to the pursuit of a profitable price, not to the pursuit of gain in 
terms of material goods. Their vested rights are for the most part carried as an 
overhead charge in terms of price and have to be met in those terms, which will 
not allow an increase of net production regardless of price. The latter question 
will find its answer in the well-known formula of the economists, that "human 
wants are indefinitely extensible," particularly as regards the consumption of 
superfluities. The free income which is capitalized in the intangible assets of 
the vested interests goes to support the well-to-do investors, who are for this 
reason called the kept classes, and whose keep consists in an indefinitely 
extensible consumption of superfluities.

THORSTEIN VEBLEN.

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