VESTED INTERESTS VERSUS HUMANITY
(The New York Times, October 5, 1919)
Section: The New York Times Book Review, Page 100.

THE VESTED INTERESTS. By Thorstein Veblen. New York: B. W. Huebsch.
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PROFESSOR VEBLEN is from Missouri, but he does not wish to be shown. On the contrary, 
he is the chief of a little group of serious thinkers who are dissatisfied with the world as it is, 
and seek themselves to show it how much better its affairs might be managed. The text of 
this book is the one-sided development of the progress from the feudal to the industrial age. 
The industrial revolution which followed the Napoleonic downfall was not accompanied by a 
similar development in the law. In that respect we are two centuries behind our own times, 
and our great need is the disestablishment of industrial vested interests which take the place 
of the old feudal barons. They protected their vassals, but our modern industrial barons 
fatten their fortunes by exploiting the workers who earn them, but who do not receive the 
fruits of their labor. The mediaeval point of view has been carried over into modern times, 
and needs to be brought up to date.

In Adam Smith’s time the unit of labor was the man. In our times the unit is “the plant,” the 
machine which runs the machines, the hands being less important than the tools with which 
they work. That is as true of distribution as of production, and includes transportation as part 
of distribution. Master and man have disappeared. Instead there are mechanisms, and 
mechanical methods of thought. Workmen often do not know their employers even by sight, 
and human relations no longer survive in industry. Yet the modern point of view is that 
industrial relations are still those of the man to man contract for work and pay which 
succeeded feudalism and preceded modern industry. The corporation is the employer, and 
the owners of the shares are the vested interests entitled to the earnings, with scant regard 
to the welfare of the workers. Hence the distinction between incomes earned by productive 
work and unearned incomes arising from ownership of shares in corporate enterprises. No 
one is more generous than Professor Veblen in recognizing that there has been a great 
increase – he says “inordinate” increase – in the value of product over the human cost of it. 
The question is over the distribution of it. Should it go to the workers or to the owners of the 
shares? And in what proportion of division?

Thus far there is little novel in Professor Veblen’s view. But he goes on to contend that the 
real producer’ is not the corporation, but the community. No corporation can be a producer in 
isolation from the entire community. “The total product is the product of the total community’s 
work.” More than enough is produced to support both the producers and the wasters. It is the 
function of investors to “see that no unconsumed residue is left over to cumber the market 
and produce a glut.” The evil of this is that the potential surplus production is neither 
produced nor consumed, but is restricted in the manner best adapted to increase profits by 
artificial scarcity, instead of “inordinate” production and distribution. So great is the capacity 
of machinery that there is only sometimes a necessity to employ all workers or the entire 
mechanical plant. If that were done customarily production would be so great as to be 
destructive of profits through the fall of prices. This restriction of output is the community’s 
loss, and the Professor loosely calculates that “the habitual net production is fairly to be rated 
at something like on-fourth of the industrial community’s productive capacity.” That is our 
existing labor and plant should quadruple, or at least could quadruple, our output of goods in 
normal times, except for that regard for vested interests which result from the survival of the 
mediaeval frame of mind, which it is the Professor’s object to modernize. By a different route 
the professor arrives at Karl Marx’s indictment of capitalism – that its object is the production 
of profits rather than goods.

But the indictment of capitalism on that ground must also include labor. Labor is thoroughly 
up to date, and regards the object of industry as the production of wages rather than of 
goods. If labor were to work as the professor thinks that capital should work, he easily could 
double his calculation of potential surplus, which it would be more accurate to consider an 
assumption of what good things might be distributed regardless of either cost or price. That is 
a reduction to absurdity. The community could not consume or even waste goods in such 
quantity. It is easier to assume, in the professor’s manner, that capital earns its profits and 
that capitalists are not “kept classes” who practice sabotage, in the manner of the classes 
which the professor would prefer to see “kept.” The difference in the cases is that labor 
always gets its wages. Capital often works for less than nothing, even sometimes losing its 
advances in hope of profit. It is easy to see between the lines of the professor’s indictment of 
capital what capital does for the community. It stands ready to serve even while idle, and 
readiness to serve in emergency is worth money. It supplies the plant which is so 
“inordinately” productive, and which labor seeks to reduce in efficiency, sharing what the 
professor imputes to capital for a fault. Capital willingly works piecework, which labor regards 
as slavery. Capital works with its brain as well as with dollars, and labor regards muscle as 
worth more than both together. Imagine muscle alone either conceiving or wishing to 
produce what capital enables it to produce, with less rather than more effort. There are errors 
in the professor’s account of the legal support of capital, but they are venial compared with 
the principles which he advances. The time has come to denounce the false humanity which 
is proclaimed as progress, and alleged justice to labor, which more truly is destructive 
privilege for labor. If capitalism is not defended by its friends as valiantly as it is attacked, the 
community is in danger of losing by default the “inordinate” production of consumable goods 
which the world needs more than it needs to turn labor into a “kept” class.

The professor carries his argument into the relations of nations as well as of workers and 
employers. In its origin and its prosecution it has been an industrial war, growing out of that 
same spirit of pushing to excess the principle of vested interests and right to seek profit in 
any manner. The result of the war is a peace which asserts the right of vested interests of the 
world to restrain in the insufferably extortionate vested interests of nations individually. 
“Demagogues” are as much agitated over the threat to national sovereignty as the vested 
interests are over the invasion of the sacred rights of property. The purpose of the League of 
Nations is to preserve the influences which caused the war, and only “insufferable superfluity 
of naughtiness is to be disallowed.” The experience of the war has shown that no nation can 
stand alone among nations any more than single plants or industries can stand alone in any 
community, and that tariffs hereafter will be aids to keeping prices up by keeping supply 
down, by hindering competition and checking production, thus crippling industry for the sake 
of business. The professor is as much in favor of disallowing the vested interests of nations 
as of capital, and contemplates that “reconstruction will be likely materially to revise 
outstanding credit obligations, including corporation securities, or perhaps even bluntly to 
disallow claims on grounds of current tangible performance.” This would be a mere 
disallowance of ownership, not a destruction of useful goods. It would merely relieve the 
industries of fixed charges, and promote production. In short, the destruction of vested 
interests is the one great boon which the world has yet to hope for. Those who like that idea 
will like the book. It is well written from that point of view, which is held by so many that it is 
time to make a stand against the defiance of experience.
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