Review of Veblen’s "The Theory of Business Enterprise",
by Winthrop More Daniels (Significant Books on Politics and Economics)

The Atlantic Monthly (Boston, New York: 1905).
Vol. 95 No. 4, Apr. 1905, pp. 558-559
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The social prophet, like the poor, is with us always, and possibly the most 
striking Jeremiad of the year comes in the guise of an estimate of our 
industrial system.
The Theory of Business Enterprise*, by Professor Veblen, is a singular 
instance of how economic philosophy is sometimes infected by tendencies rife 
in widely separated fields of thought. Through the transparent veil of this 
sociological essay one gets many a glimpse of the cosmic irony of Ibsen and 
the nihilistic doctrine of Nietzsche. A very readable quality is thus 
imparted to the speculation by the author, but at the cost of a most 
unenviable frame of mind. Professor Veblen has a preternaturally vivid 
insight into the pathological side of business and society; and he follows 
remorselessly the poisoned tract which his critical scalpel has discovered. 
But his exploratory incision suggests nothing for "the healing of the 
nations," and from his lips there falls only the thinly disguised irony which 
mocks the misery of them that perish. The morbid element in economic life has 
for him so great a fascination that it blinds him to the normal and healthful 
aspects of industry, and the business world in his apprehension becomes but a 
congeries of "embossed sores and headed evils."

And yet, despite the fact that the author's attitude renders the highest 
approval from either the scientific or the ethical standpoint impossible, the 
book is an uncommonly suggestive one. The penetrating glance into certain 
broad and seamy aspects of our industrial life prompts to a reflective 
testing of one's social beliefs and ideals.

The heart of the book centres in the analysis of modern business enterprise. 
The author contends that it is no longer the making of a livelihood, but the 
accumulation of profits, which motives the direction of modern enterprise. 
Industry is carried on for "business," not "business" for industry. Pecuniary 
gain is, on the whole, frequently associated with industrial disturbance, not 
with industrial welfare. The old-fashioned Captain of Industry has therefore 
become a wrecker of trade. The business man of to-day directs his attention, 
not to the surveillance of processes, but to the "alert redistribution of 
investments." Only rarely does the entrepreneur cumber himself with "the 
coördinating of industrial processes with a view to economics (sic) of 
production and heightened serviceability." The loan market is a sphere of 
pecuniary legerdemain, for "funds of whatever character are a pecuniary fact, 
not an industrial one;" nor do they "increase the aggregate industrial 
equipment." The remuneration of business services bears "no determinable 
relation to the services which the work in question may render the 
community," but represents only "parasitic income." Hence the "traffic in 
vendible capital (that is, securities) is the pivotal and dominant factor in 
the modern situation of business and industry." Business depression is to-day 
primarily "a malady of the affections" of the business man, not a dearth in 
the output of consumable goods "except as measured in price." "The persistent 
defection" in hoped-for profits must become a "chronic depression ... under 
the fully developed régime of machine industry." For this "persistent 
defection" of profits there are but two remedies: "an increase in 
unproductive consumption," or a curtailed output. "Wasteful expenditure" on 
war and armaments by governments in their "policy of emulative exhaustion" 
may help; but, "barring providential intervention (sic) the only refuge from 
chronic depression is thorough-going coalition" of industry (that is, 
trusts). But even this in the [559]

course of the Great Year is unavailing, for the "cultural incidence of the 
machine process" has eradicated from the wage-earning class all reverence for 
"natural rights " and all belief in the philosophy of private property, in 
both of which modern capitalism is rooted. This cultural growth of the 
machine-tender is necessarily "of a skeptical, matter-of-fact complexion, 
materialistic, immoral, unpatriotic, undevout." While "business discipline" 
therefore tends to conserve "the bourgeois virtues of solvency, thrift, and 
dissimulation," and tends to maintain among wage-earners the useful sense of 
"status or fealty involved in the concept of sin," it stands to lose at the 
last, although for a time, by playing on "the happy knack of clannish fancy," 
called patriotism, it may prolong its dominion by using the military power of 
governments to open wider markets in lands now "pecuniarily unregenerate."

The sting of this indictment of the industrial world lies not in its novelty 
nor in its finality, but in its partial truth. The doctrine that the pursuit 
of business affords the frequent opportunity of undeserved gain, and that, 
among a society where mutual service is the rule, a clever scamp may live by 
his wits, is as old as Aristotle. Retail trade, it may be remembered, was 
condemned by that philosopher, as an unnatural art of money-making. Professor 
Veblen would exonerate the retailer, but fears for the social welfare when 
entrusted to the corporate directorate.

Professor Veblen's wholesale cheapening of the operations of the workaday 
world, veiled though it be by frequent protestation of conformity to the 
conventional industrial creed, is bound after all to prove a boomerang. Its 
paradoxes may awake the reader from dogmatic slumbers, its epigrams may 
tickle his ears with their mordant cynicism, but neither his heart nor head 
will respond to its skepticism or its pessimism. "A conscientious person," 
says Burke, "would rather doubt his own judgment, than condemn his species. 
... He will grow wise, not malignant, by his acquaintance with the world. But 
he that accuses all mankind of corruption, ought to remember that he is sure 
to convict only one."

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*) The Theory of Business Enterprise. By THORSTEIN VEBLEN. New York: Charles 
Scribner's Sons. 1904.
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