THE COLLECTED WORKS OF THORSTEIN VEBLEN: Business Theories, Economic Articles & Essays. Thorstein Veblen
is transmitted through their derangement to the remoter portions of the system. The disturbance is rarely confined to the single plant or the single line of production first affected, but spreads in some measure to the rest. A disturbance at any given point brings more or less derangement to the industrial process at large. So that any maladjustment of the system involves a larger waste than simply the disabling of one or two members in the complex industrial structure.
So much is clear, that the keeping of the balance in the comprehensive machine process of industry is a matter of the gravest urgency if the productive mechanism is to proceed with its work in an efficient manner, so as to avoid idleness, waste, and hardship. The management of the various industrial plants and processes in due correlation with all the rest, and the supervision of the interstitial adjustments of the system, are commonly conceived to be a work of greater consequence to the community's well-being than any of the detail work involved in carrying on a given process of production. This work of interstitial adjustment, and in great part also the more immediate supervision of the various industrial processes, have become urgent only since the advent of the machine industry and in proportion as the machine industry has advanced in compass and consistency.
It is by business transactions that the balance of working relations between the several industrial units is maintained or restored, adjusted and readjusted, and it is on the same basis and by the same method that the affairs of each industrial unit are regulated. The relations in which any independent industrial concern stands to its employees, as well as to other concerns, are always reducible to pecuniary terms. It is at this point that the business man comes into the industrial process as a decisive factor. The organization of the several industries as well as the interstitial adjustments and discrepancies of the industrial process at large are of the nature of pecuniary transactions and obligations. It therefore rests with the business men to make or mar the running adjustments of industry. The larger and more close-knit and more delicately balanced the industrial system, and the larger the constituent units, the larger and more far-reaching will be the effect of each business move in the field.
Business Enterprise
The motive of business is pecuniary gain, the method is essentially purchase and sale. The aim and usual outcome is an accumulation of wealth.11 Men whose aim is not increase of possessions do not go into business, particularly not on an independent footing.
How these motives and methods of business work out in the traffic of commercial enterprise proper - in mercantile and banking business does not concern the present inquiry, except so far as these branches of business affect the course of industrial business in the stricter sense of the term. Nor is it necessary were to describe the details of business routine, whether in the mercantile pursuits or in the conduct of an industrial concern. The point of the inquiry is that characteristically modern business that is coextensive with the machine process described above and is occupied with the large mechanical industry. The aim is a theory of such business enterprise in outline sufficiently full to show in what manner business methods and business principles, in conjunction with the mechanical industry, influence the modern cultural situation. To save space and tedium, therefore, features of business traffic that are not of a broad character and not peculiar to this modern situation are left on one side, as being already sufficiently familiar for the purpose in hand.
In early modern times, before the regime of the machine industry set in, business enterprise on any appreciable scale commonly took the form of commercial business - some form of merchandising or banking. Shipping was the only considerable line of business which involved an investment in or management of extensive mechanical appliances and processes, comparable with the facts of the modern mechanical industry.12 And shipping was commonly combined with merchandising. But even the shipping trade of earlier times had much of a fortuitous character, in this respect resembling agriculture or any other industry in which wind and, weather greatly affect the outcome. The fortunes of men in shipping were on a more precarious footing than to-day, and the successful outcome of their ventures was less a matter of shrewd foresight and daily pecuniary strategy than are the affairs of the modern large business concerns in transportation or the foreign trade. Under these circumstances the work of the business man was rather to take advantage of the conjunctures offered by the course of the seasons and the fluctuations of demand and supply than to adapt the course of affairs to his own ends. The large business man was more of a speculative buyer and seller and less of a financiering strategist than he has since become.
Since the advent of the machine age the situation has changed. The methods of business have, of course, not changed fundamentally, whatever may be true of the methods of industry; for they are, as they had been, conditioned by the facts of ownership. But instead of investing in the goods as they pass between producer and consumer, as the merchant does, the business man now invests in the processes of industry; and instead of staking his values on the dimly foreseen conjunctures of the seasons 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.
So long as the machine processes were but slightly developed, scattered, relatively isolated, and independent of one another industrially, and so long as they were carried on on a small scale for a relatively narrow market, so long the management of them was conditioned by circumstances in many respects similar to those which conditioned the English domestic industry of the eighteenth century. It was under the conditions of this inchoate phase of the machine age that the earlier generation of economists worked out their theory of the business man's part in industry. It was then still true, in great measure, that the undertaker was the owner of the industrial equipment, and that he kept an immediate oversight of the mechanical processes as well as of the pecuniary transactions in which his enterprise was engaged; and it was also true, with relatively infrequent exceptions, that an unsophisticated productive efficiency was the prime element of business success.13 A further feature of that precapitalistic business situation is that business, whether handicraft or trade, was customarily managed with a view to earning a livelihood rather than with a view to profits on investment.14
In proportion as the machine industry gained ground, and as the modern concatenation of industrial processes and of markets developed, the conjunctures of business grew more varied and of larger scope at the same time that they became more amenable to shrewd manipulation. The pecuniary side of the enterprise came to require more unremitting attention, as the chances for gain or loss through business relatIons simply, aside from mere industrial efficiency, grew greater in number and magnitude. The same circumstances also provoked a spirit of business enterprise, and brought on a systematic investment for gain. With a fuller development of the modern closeknit and comprehensive industrIal system, the point of chief attention for the business man has shifted from the old-fashioned surveillance and regulation of a given industrial process, with which his livelihood was once bound up, to an alert redistribution of investments from less to more gainful ventures,15 and to a strategic control of the conjunctures of business through shrewd investments and coalitions with other business men.
As shown above, the modern industrial system is a concatenation of processes which has much of the character of a single, comprehensive, balanced mechanical process. A disturbance of the balance at any point means a differential advantage (or disadvantage) to one or more of the owners of the sub-processes between which the disturbance falls; and it may also frequently mean gain or loss to many remoter members in the concatenation of processes, for the balance throughout the sequence is a delicate one, and the transmission of a disturbance often goes far. It may even take on a cumulative character, and may thereby seriously cripple or accelerate branches of industry that are out of direct touch with those members