Review of Veblen’s: 'The Vested Interests and the State of the Industrial 
Arts', by Robert L. Duffus.

"DIAL. A Fortnightly", (New York: The Dial Publishing Company, Inc.)
Vol. LXVII (Jul. 12, 1919, to Nov., 29, 1919)
Article: 'Two Iconoclasts: Veblen and Vanderlip', by Robert L. Duffus:
July 26, 1919, pp. 62-64.
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[62]
Two Iconoclasts: Veblen and Vanderlip

FOR SOME YEARS REPUTABLE scientists have been free to investigate such 
problems as the nature of the atom and the possibility of producing frogs 
with only one parent without fear of the displeasure of the Grand Lama of 
Thibet or the condemnation of the Sons and Daughters of the American 
Revolution. Darwin's battle is well won, and when the priesthood of science 
takes issue with the older orders it is not science that has to give way. 
But the dispassionate search for truth in the complicated field of human 
relations has not yet attained the same standing; there is still a holy of 
holies into which only a few students have entered, and then at their 
peril. To weigh a star is admirable; to weigh an institution exposes one to 
the slings and arrows of an outraged press and an outworn scholasticism. It 
is for this reason, no doubt, that the words of America's foremost 
economist carry less weight with the readers, let us say of the New York 
Tribune or the North American Review, than do those of Nicholas Murray 
Butler and Elihu Root. In a less dangerous field of inquiry work comparable 
with that of Thorstein Veblen would win recognition as the beginning of an 
important new school. It is only because most of us are too deeply a part 
of our own institutions to be able to consider them scientifically that the 
exquisite irony of 'The Theory of the Leisure Class', the penetrating 
analysis of 'The Theory of Business Enterprise', and the dazzling 
conceptions which underlie the somewhat formidable 'Instinct of 
Workmanship' have not won Mr. Veblen a formal place in the front rank of 
contemporary thinkers and prophets. The so-called difficulty of Veblen's 
style has nothing to do with the scant recognition that the Brahmins have 
accorded him. He is as easy to read as any man with as much to say.

A few years ago it seemed that such a diagnosis of human affairs as that in 
'The Theory of the Leisure Class' would have as little chance of altering 
the world for the better as the satires of Swift and Juvenal had of 
changing human nature. But our age has become dynamic. The world is fluid. 
The tides of proletarian revolution surge one way, the currents of reaction 
the other. The gap between the thinker and the doer has narrowed; the idle 
speculation of yesterday is the political issue of today and tomorrow. Mr. 
Veblen's latest contribution, 'The Vested Interests and the State of the 
Industrial Arts' (Huebsch), although it still belongs in the field of 
inquiry rather than of propaganda, would be the well-worn handbook of 
Plato's philosopher statesman, were there such a one in power.

"The aim of these papers," the author explains in a brief preface, "is to 
show how, and, as far as may be, why a discrepancy has arisen in the course 
of time between those accepted principles of law and custom that underlie 
business enterprise and the businesslike management of industry, on the one 
hand, and the material conditions which have now been engendered by that 
new order of industry that took its rise in the late eighteenth century, on 
the other hand; together with some speculations on the civil and political 
difficulties set afoot by this discrepancy between business and industry." 
The argument may be roughly indicated for DIAL readers not yet familiar 
with it. The modern theories of society took shape at the close of the 
period which connected the decay of feudalism with the beginning of machine 
industry. There is always a perceptible lag between "law and custom" on the 
one hand and everyday "knowledge and belief" on the other; the former never 
quite catch up, and are never quite reconciled with the demonstrable facts 
of the workday environment. In a period of rapid change there is a greater 
discrepancy than in static periods, but there is always a discrepancy. The 
more rapid the mechanical changes in the ways of living the greater the 
strain that is put upon law and custom. The last great restatement of 
accepted commonplaces was made in the generations following the Protestant 
Reformation. It reached its climax in the formulations of Adam Smith, who 
summarized a set of working principles well adapted to a society still 
largely in the handicraft stage. The French and American revolutions 
resulted in the stabilization of a handicraft economy and morality, just as 
handicraft was about to give way, by a leap more abrupt than any analogous 
one in history, to a totally different scheme of production. "The modern 
point of view," thus petrified, "is now some one hundred and fifty years 
old. 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 Rights of Ownership. ... Both of these immemorially modern 
rights of man 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."

[63] Under the new order "the first requisite of ordinary productive 
industry is no longer the workman and his manual skill, but rather the 
mechanical equipment and the standardized processes in which the mechanical 
equipment is engaged. And this latter-day industrial equipment and process 
embodies not the manual skill, dexterity, and judgment of the individual 
workman, but rather the accumulated technological wisdom of the community." 
It follows that any system of rewards based upon the assumption of 
exceptional individual "skill, dexterity, and judgment" is bound to clash 
more or less with the facts, and it is the nature of this clash to yield 
what Veblen calls "free income" to individuals who are religiously supposed 
to have exercised the virtues of self-help in a socially beneficial way 
roughly proportional to their rewards, but who actually stand rather in the 
position of obstructors of traffic. Free income is pleasantly spoken of in 
the business world as "intangible assets," and is commonly "derived from 
advantages of salesmanship rather than from productive work." Now, 
salesmanship patently aims to sell at a profitable price, and it is 
salesmanship that determines what the rate and quantity of production shall 
be. Commonly the rate is far below what the mechanical equipment would 
allow. During the late war, Veblen estimates, the American mechanical 
equipment was operated at something like fifty per cent of its technically 
possible output. "The habitual net production is fairly to be rated at 
something like one-fourth of the industrial community's productive 
capacity; presumably under that figure rather than over." From this reduced 
product "special privilege" takes its due share and it retains its grip on 
that share by an habitual, though quite lawful and even blameless, 
restriction upon output. For a concrete illustration of the author's point 
we have only to observe the current housing shortage, which has been 
brought about by the refusal of business men to build houses that is, by 
businesslike sabotage) until a sufficient amount of "free income" was 
assured. Human needs can cut no figure in these calculations.

Akin to the rights and perquisites of business men in the national field 
are those of nations in the international field, and both have the 
practical effect of preventing the full use of the gigantic productive 
apparatus and the more important body of technological skill and knowledge 
that perpetually re-creates it which have developed since those rights and 
perquisites were guaranteed. Insofar as the league of nations turns out to 
be a league of governments and not of peoples it sanctions and encourages 
this vast system of international sabotage. The net profit of competitive 
nationalism has ceased to be apparent, but there remains at least a 
"psychic income" which the conferees at Paris were extremely solicitous to 
protect. This may content the dominating classes; as far as the welfare of 
the common man goes "the most beneficent change that can conceivably 
overtake any national establishment would be to let it fall into 'innocuous 
desuetude.'"

There are some points in this explanation upon which Lenin and Veblen might 
shake hands, others concerning which they would necessarily disagree. As to 
probabilities in this country Veblen is no alarmist or, as some would say, 
no undue optimist. He sees no rapid discrediting of the old laws and 
customs in America, except among the comparatively few and outcast I.W.W., 
and perhaps among the members of the Non-Partisan League. The American 
Federation of Labor and the majority of the farmers, though hard-pressed, 
are still uncorrupted. Yet, as he has pointed out in a more recent 
discussion published in THE DIAL, there is already on foot a project for a 
coalition between the industrial workers on the one hand and the engineers 
and production managers on the other which may, peaceably and without 
social disruption, come to the same thing.

If Mr. Veblen escapes the clutches of the several leagues and committees 
which are now engaged in eliminating Bolshevism from the United States he 
will be accused of the slightly less heinous crime of preaching a variety 
of Socialism. In fact, he is as far from the dogmatism of Lenin or Marx as 
he is from that of Adam Smith or J. S. Mill. He is an observer, not a 
Utopian. To refute him his critics will be compeled to examine into certain 
neglected aspects of current production and productivity, and if economic 
discussion takes the trend he has indicated he will, whatever the outcome 
of the controversy, have done a distinguished service.

As applied to the present condition of Europe the Veblen method would 
consist in a complete rejection of the forms and pretenses of statesmanship 
and diplomacy and the giving of exclusive attention to the "state of the 
industrial arts." It is such an examination as this that Frank Vanderlip 
(perhaps the last well-known man in the United States to be suspected of 
dangerous radicalism) has made, without any doctrinal foresight, in the 
little volume which he calls What Happened to Europe (Macmillan). Before 
going abroad Mr. Vanderlip seems to have accepted without a qualm the 
conventional view of the war and of its effect upon Europe. He knew as much 
about it as a leading banker could know. But (or therefore) he found, [64] 
as he tells us, that he knew "practically nothing." On the continent he 
found industry prostrate, in the so-called victor nations as well as in 
those that were defeated. He became convinced, as the peace conferees 
unhappily seem not to have been, that "there will be security nowhere so 
long as there are, here and there, plague centers in which idleness, lack 
of production, disorganized transportation, want, and hunger make a 
breeding ground for the Bolshevik microbe." He perceived that an increase 
in national magnificence is quite consistent with a decline in the welfare 
of the common man: "The differential that England has had in the last 
generation, compared with America, has been the differential of a wage 
scale that averaged lower than the point at which the physical efficiency 
of labor could be maintained." He saw that "the disorganization of 
industry, of transportation, and of production has so thrown out of balance 
the intricate machinery of civilization that there is safety nowhere." 
Again and again he comes back to his heresy that "Europe must be treated as 
a unit." Much has been made of Mr. Vanderlip's proect for extending vast, 
long-time credits to Europe. It is essentially a sanitary measure. He 
explains:

I believe the stability of the present order of society, the maintenance of 
a society based upon the principle of property rights, is bound up with the 
way this problem is worked out in Europe. We cannot stand a world apart in 
its solution. Indeed, we cannot stand a world apart in any sense. No matter 
how self-sufficient we may believe ourselves to be, no matter how unlimited 
are the resources of natural wealth within us, we are inevitably part of 
what is coming to be a very small world, a world in which ideas travel with 
a freedom and rapidity that must force us to become internationalists in 
our views and must govern us by international considerations, whatever may 
be our natural tendencies of Chauvinism, or our disposition toward an 
insular isolation and security.

With the same sense of the necessity of preventing some dire disaster, 
roughly described as Bolshevism, Mr. Vanderlip admits the necessity of 
conceding to labor a share in the control of industry. In the past this has 
generally meant, in the minds of men subject to such an environment as that 
of Mr. Vanderlip, just such a modified feudalism as that set up (apparently 
with the best of intentions) by young Mr. Rockefeller in Colorado. The 
Rockefeller scheme is perhaps as near to economic democracy as the 
parliaments of the first three English Edwards were to representative 
government in twentieth century England. It may be a step forward, but it 
is nothing that need keep even an old-fashioned banker awake of nights. But 
Mr. Vanderlip seems convinced that the workers demand and must have some 
real power, and he sees that this is, in all countries, of more importance 
than increased wages or shortened working days. Thus:

It seems to me that the most important thing for American employers to 
grasp is the significance attached by workingmen to bettering their social 
status in industry. At home I never miss an opportunity to gain 
enlightenment on the workmen's point of view, and I have been increasingly 
impressed with their desire for a larger voice in management. They do not 
want a voice either in the management or the responsibility of the business 
office, but they do want more to say about the immediate industrial 
conditions in which they work. I am thoroughly convinced that that 
aspiration is now world-wide and that America will feel the demand as 
strongly as it is now being felt in Europe. I believe it is a demand that 
American employers should heed, and that it should be met not merely by 
forced and grudging concessions, but rather from the point of view which is 
now held by many English employers. It is declared that what the men want 
is to be treated as intelligent participators in industry, to be consulted 
and to have things explained to them. It is a reasonable and logical claim, 
and employers themselves believe they will have to concede it.

Here and in other passages Mr. Vanderlip draws a distinct line between the 
control of production and the control of distribution. In the latter he 
does not seem to think the majority of the workers demand, or are 
qualified, to exercise any degree of control. If labor in this country and 
abroad attained all that Mr. Vanderlip at present wants to offer them the 
productive machinery would still be throttled down or speeded up. by the 
necessities of the market. There would be a general improvement in the 
condition of labor and a somewhat more than corresponding increase in 
production, but the right of the owners of the industrial equipment and the 
natural resources to regulate the functions of production of their own 
interest, and against the public interest, would be in nowise impaired. But 
the distance that Mr. Vanderlip has covered is more remarkable than the 
distance that, if he is to become perfectly logical, he has yet to travel. 
He has left definitely behind him the last vestiges of the theory that the 
labor bargain is a free contract between individuals. He has stepped from 
the eighteenth century, if not into the twentieth, at least far into the 
nineteenth. The chief defect of his policy is, in fact, that he does not 
see all its implications. For one may be sure that great labor 
organizations which have had an influential voice in the making of their 
product will not patiently, and out of a respect for the boundaries between 
shop and market, see their hard work undone by a bungling system of 
distribution. Mr. Vanderlip's radicalism is more thoroughgoing than he 
himself may realize. Without disowning competitive nationalism or self-help 
indeed, reaffirming them he proposes to take some of the steps to save them 
that Mr. Veblen might take in the dry-eyed assurance that they are already 
lost.

ROBERT L. DUFFUS.
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