Business.
A Political Economist’s View of Modern Methods of Money Making.*
(New York: The New York Times, Nov. 26, 1904, p. BR820)

* The Theory of Business Enterprise. By Thorstein Veblen, Assistant Professor of Political 
Economy in the University of Chicago. Pp. vii.-400. Cloth. 8vo. New York: Charles Scribner’s 
Sons. $1.50.
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“No SINGLE factor in the present cultural situation,” in the opinion of Prof. Veblen, “has an 
importance equal to the business man and his work.” And he has discussed the theory of 
business enterprise to the extent of 400 pages so intensely as to stimulate if he does not 
gratify or convince his reader. No doubt is left in the reader’s mind about the purpose of the 
modern business man. He is primarily a seeker for gains. By his development of the 
“machine process” he has contrived to dominate the world. Sovereigns, dynasties, 
legislatures, the aristocrats, and the vulgar are controlled by him in his search for profits. Not 
all business men are aware how profoundly their changing customs are modifying the habits 
of thought of the world. To many who are governed by the principles discussed by Prof. 
Veblen this book may come as an interesting expression of opinions held but not hitherto 
formulated by them.

“The Machine Process”, meaning all mechanical methods, the whole concert of industrial 
operations, with weights, measures, goods and labor standardized, has become so 
controlling that any departure from its rule may have far-reaching and important 
consequences. The business man now invests in the processes of industry, and instead of 
staking values in dimly seen conjunctures of the season and the act of God, he turns to the 
conjunctures arising from the interplay of the industrial processes, which are in great 
measure under the control of business men. Pecuniary manipulation plays a more and more 
important part, coalition and competition are invoked to maintain or disturb the industrial 
balance. Business is a strife without sentiment for the acquisition of wealth. Industry is 
carried on for the sake of business, and not conversely. In all things the man of business is 
very practical, seeking ever to “turn” an opponent, to secure more efficient organization and 
further profits. Mere question if serviceability and aesthetic aspirations are to be controlled:

In common with other men, the business man is moved by ideals of serviceability, and an 
aspiration to make the way of life easier for his fellows. Like other men, he has something of 
the instinct of workmanship. No doubt such aspirations move the great business man less 
urgently than many others, who are on that account less successful in business affairs. 
Motives of this kind detract from business efficiency, and an undue yielding to them on the 
part of business men is to be deprecated as an infirmity.

Business is largely strategy, governed by exigencies calling for the exercise of keen 
judgment and common sense. While the adage that “Honesty is the best policy” seems on 
the whole to have been accepted, the author cites the case, under modern circumstances, 
where the discretionary head of a large enterprise is removed from personal contact with the 
customers for whom the industrial process under his control purveys goods or services. 
Transactions take on an impersonal character.

One can with an easier conscience and with less of a sense of meanness take advantage of 
the necessities of people whom one knows of only as an indiscriminate aggregate of 
consumers. Particularly is this true when, as frequently happens in the modern situation, this 
body of consumers belongs in the main to another, inferior, class, so that personal contact 
and cognizance of them is not only not contemplated, but is in a sense impossible. Equity, in 
excess of the formal modicum specified by law, does not so readily assert its claims where 
the relations between the parties are remote and impersonal as where one is dealing with 
one’s necessitous neighbors who live on the same social plane. Under these circumstances 
the adage cited above loses much of its axiomatic force. Business management has a 
chance to proceed on a temperate and sagacious calculation of profit and loss, untroubled by 
sentimental considerations of human kindness or irritation or of honesty.

Following a most interesting chapter on “Business Enterprise” as it looks to the author is one 
on “The Use of Loan Credit,” which has already received wide consideration by many 
students of finance. The traffic in vendible capital is regarded as something different from 
common speculation on the stock market, as it calls for knowledge of business principles. Its 
rewards are the richest prizes of business:

The traffic in vendible capital is not without its speculative risks, but the risks which it creates 
fall with relatively greater weight upon the business men who are not immediately concerned 
in this traffic. Indeed, so secure and lucrative is this class of business that it is chiefly out of 
gains accruing, directly and indirectly, from such traffic in vendible capital that the great 
modern fortunes are being accumulated; and both the rate and the magnitude of these 
accumulations, whether taken absolutely or relatively to the total increase of wealth, surpass 
all recorded phenomena of their kind.

The author’s theorizing about crises, depressions, hard times, dull times, brisk times, periods 
of speculative advance, eras of prosperity, all phenomena of price disturbance, is interesting: 
Depression is a malady of the affections, caused by a discrepancy between the nominal 
capitalization which business men have set their hearts upon and that actual capitalizable 
value of their property which is current earning capacity will warrant. Whatever its cause, it 
has been a chronic condition, we are told, since the seventies, and business men earnestly 
seek a remedy for it. One of the results of the development of modern business methods is 
the growth of Socialism. Trusts are discussed as a development of the business effort to 
check depression by regulation “cut-throat” competition – not always with benefit to 
consumers.

Law and politics feel the effects of the new methods of business. Governments side with 
business men. The “machine process” is daily leading business men and those engaged in 
industrial occupations to constantly diverging points of view, with increasing difficulty in 
understanding each other. The desire to render industrial labor more mobile for the purposes 
of the “machine process” is discouraging thrift and the desire of the workingman to own his 
home. Trades-unionism as a development of modern business methods is considered at 
length and with reference to the changed attitude of the industrial classes in relation to the 
old beliefs about natural rights and freedom of contract. The future as forecast by Prof. 
Veblen does not look bright, but troubled. Charity organizations, clubs, and societies for 
social purity, for amusement, education, and manual training of indigent classes, for 
colonization of the poor, for popularization of churches, for clean politics, for cultural 
missionary work by social settlements and the like, are characterized as bound to be futile to 
correct the cultural trend of the “machine” discipline. Nothing can serve as that corrective that 
cannot be put in the form of a business proposition:

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.

The author admits that the full dominion of business enterprise is necessarily a transitory 
dominion. How it has come to its present estate, why it must follow its present trend and why 
it stands to lose in the end, must be left to readers of the book.
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