第1章

PrefaceInrespecttoitspointofdeparture，thefollowinginquiryintothenature，causes，utility，andfurtherdriftofbusinessenterprisediffersfromotherdiscussionsofthesamegeneralrangeoffacts。Anyunfamiliarconclusionsareduetothischoiceofapointofview，ratherthantoanypeculiarityinthefacts，articlesoftheory，ormethodofargumentemployed。Thepointofviewisthatgivenbythebusinessman’swork，——theaims，motives，andmeansthatconditioncurrentbusinesstraffic。Thischoiceofapointofviewisitselfgivenbythecurrenteconomicsituation，inthatthesituationplainlyisprimarilyabusinesssituation。 Amuchmoreextendedanddetailedexaminationoftheramificationsandconsequencesofbusinessenterpriseandbusinessprincipleswouldfeasible，andshouldgiveinterestingresults。Itmightconceivablyleadtosomethingofarevision(modernization)ofmorethanonepointinthecurrentbodyofeconomicdoctrines。Butitshouldapparentlyprovemoreparticularyinterestingifitwerefollowedupatlargeinthebearingofthismodernforceuponculturalgrowth，apartfromwhatisofimmediateeconomicinterest。Thisculturalbearingofbusinessenterprise，however，belongsratherinthefieldofthesociologistthaninthatoftheprofessedeconomist；sothatthepresentinquiry，initslaterchapters，sinsratherbyexceedingthelegitimateboundsofeconomicdiscussiononthisheadthanbyfallingshortofthem。Inextenuationofthisfaultitissaidthatthefeaturesofgeneralculturetoucheduponinthesechaptersbeartoointimatelyontheeconomicsituationpropertoadmittheirbeingleftentirelyononeside。 Ofthechaptersincludedinthevolume，thefifth，onLoanCredit，istakenwithoutsubstantialchange，fromVolumeIVoftheDecennialPublicationsoftheUniversityofChicago，whereitappearsasamonograph。 TheTheoryofBusinessEnterprisebyThorsteinVeblen ChapterOneIntroductoryThematerialframeworkofmoderncivilizationistheindustrialsystem，andthedirectingforcewhichanimatesthisframeworkisbusinessenterprise。Toagreaterextentthananyotherknownphaseofculture，modernChristendomtakesitscomplexionfromitseconomicorganization。Thismoderneconomicorganizationisthe“CapitalisticSystem“or“ModernIndustrialSystem，“socalled。Itscharacteristicfeatures，andatthesametimetheforcesbyvirtueofwhichitdominatesmodernculture，arethemachineprocessandinvestmentforaprofit。 Thescopeandmethodofmodernindustryaregivenbythemachine。Thismaynotseemtoholdtrueforallindustries，perhapsnotforthegreaterpartofindustryasratedbythebulkoftheoutputorbytheaggregatevolumeoflaborexpended。Butitholdstruetosuchanextentandinsuchapervasivemannerthatamodernindustrialcommunitycannotgoonexceptbythehelpoftheacceptedmechanicalappliancesandprocesses。Themachineindustries——thoseportionsoftheindustrialsysteminwhichthemachineprocessisparamount——areinadominantposition；theysetthepacefortherestoftheindustrialsystem。Inthissensethepresentistheageofthemachineprocess。Thisdominanceofthemachineprocessinindustrymarksoffthepresentindustrialsituationfromallelseofitskind。 Inalikesensethepresentistheageofbusinessenterprise。Notthatallindustrialactivityiscarriedonbytheruleofinvestmentforprofits，butaneffectivemajorityoftheindustrialforcesareorganizedonthatbasis。Therearemanyitemsofgreatvolumeandconsequencethatdonotfallwithintheimmediatescoreofthesebusinessprinciples。Thehousewife’swork，e。g。，aswellassomeappreciableportionoftheworkonfarmsandinsomehandicrafts，canscarcelybeclassedasbusinessenterprise。Butthoseelementsintheindustrialworldthattaketheinitiativeandexertafar-reachingcoerciveguidanceinmattersofindustrygototheirworkwithaviewtoprofitsoninvestment，andareguidedbytheprinciplesandexigenciesofbusiness。Thebusinessman，especiallythebusinessmanofwideandauthoritativediscretion，hasbecomeacontrollingforceinindustry，because，throughthemechanismofinvestmentsandmarkets，hecontrolstheplantsandprocesses，andthesesetthepaceanddeterminethedirectionofmovementfortherest。Hiscontrolinthoseportionsofthefieldthatarenotimmediatelyunderhishandis，nodoubt，somewhatlooseanduncertain；butinthelongrunhisdiscretionisingreatmeasuredecisiveevenfortheseoutlyingportionsofthefield，forheistheonlylargeself-directingeconomicfactor。Hiscontrolofthemotionsofothermenisnotstrict，fortheyarenotundercoercionfromhimexceptthroughthecoercionexercisedbytheexigenciesofthesituationinwhichtheirlivesarecast；butasnearasitmaybesaidofanyhumanpowerinmoderntimes，thelargebusinessmancontrolstheexigenciesoflifeunderwhichthecommunitylives。Hence，uponhimandhisfortunescentrestheabidinginterestofcivilizedmankind。 Foratheoreticalinquiryintothecourseofcivilizedlifeasitrunsintheimmediatepresent，therefore，audasitisrunningintotheproximatefuture，nosinglefactorintheculturalsituationhasanimportanceequaltothatofthebusinessmanandhiswork。 Thisofcourseapplieswithpeculiarforcetoaninquiryintotheeconomiclifeofamodemcommunity。Insofarasthetheoristaimstoexplainthespecificallymoderneconomicphenomena，hislineofapproachmustbefromthebusinessman’sstandpoint，sinceitisfromthatstandpointthatthecourseofthesephenomenaisdirected。Atheoryofthemoderneconomicsituationmustbeprimarilyatheoryofbusinesstraffic，withitsmotives，aims，methods，andeffects。 TheTheoryofBusinessEnterprisebyThorsteinVeblen1904 ChapterTwoTheMachineProcessInitsbearingonmodernlifeandmodernbusiness，the“machineprocess“meanssomethingmorecomprehensiveandlessexternalthanamereaggregateofmechanicalappliancesforthemediationofhumanlabor。Itmeansthat，butitmeanssomethingmorethanthat。Thecivilengineer，themechanicalengineer，thenavigator，theminingexpert，theindustrialchemistandmineralogist，theelectrician，——theworkofallthesefallswithinthelinesofthemodernmachineprocess，aswellastheworkoftheinventorwhodevisestheappliancesoftheprocessandthatofthemechanicianwhoputstheinventionsintoeffectandoverseestheirworking。Thescopeoftheprocessislargerthanthemachine。(1*)Inthosebranchesofindustryinwhichmachinemethodshavebeenintroduced，manyagencieswhicharenottobeclassedasmechanicalappliances，simply，havebeendrawnintotheprocess，andhavebecomeintegralfactorsinit。 Chemicalpropertiesofminerals，e。g。，arecountedoninthecarryingoutofmetallurgicalprocesseswithmuchthesamecertaintyandcalculableeffectasarethemotionsofthosemechanicalappliancesbywhoseusethemineralsarehandled。Thesequenceoftheprocessinvolvesboththeoneandtheother，boththeapparatusandthematerials，insuchintimateinteractionthattheprocesscannotbespokenofsimplyasanactionoftheapparatusuponthematerials。Itisnotsimplythattheapparatusreshapesthematerials；thematerialsreshapethemselvesbythehelpoftheapparatus。Similarlyinsuchotherprocessesastherefiningofpetroleum，oil，orsugar；intheworkoftheindustrialchemicallaboratories；intheuseofwind，water，orelectricity，etc。 Wherevermanualdexterity，theruleofthumb，andthefortuitousconjuncturesoftheseasonshavebeensupplantedbyareasonedprocedureonthebasisofasystematicknowledgeoftheforcesemployed，therethemechanicalindustryistobefound，evenintheabsenceofintricatemechanicalcontrivances。Itisaquestionofthecharacteroftheprocessraterthanaquestionofthecomplexityofthecontrivancesemployed。Chemical，agricultural，andanimalindustries，ascarriedonbythecharacteristicallymodernmethodsandinduetouchwiththemarket，aretobeincludedinthemoderncomplexofmechanicalindustry。(2*) Nooneofthemechanicalprocessescarriedonbytheuseofagivenoutfitofappliancesisindependentofotherprocessesgoingonelsewhere。Eachdrawsuponandpresupposestheproperworkingofmanyotherprocessesofasimilarlymechanicalcharacter。Noneoftheprocessesinthemechanicalindustriesisself-sufficing。Eachfollowssomeandprecedesotherprocessesinanendlesssequence，intowhicheachfitsandtotherequirementsofwhicheachmustadaptitsownworking。Thewholeconcertofindustrialoperationsistobetakenasamachineprocess，madeupofinterlockingdetailprocesses，ratherthanasamultiplicityofmechanicalapplianceseachdoingitsparticularworkinseveralty。Thiscomprehensiveindustrialprocessdrawsintoitsscopeandturnstoaccountallbranchesofknowledgethathavetodowiththematerialsciences，andthewholemakesamoreorlessdelicatelybalancedcomplexofsub-processes。(3*) Lookedatinthiswaytheindustrialprocessshowstwowell-markedgeneralcharacteristics:(a)therunningmaintenanceofinterstitialadjustmentsbetweentheseveralsub-processesorbranchesofindustry，whereverintheirworkingtheytouchoneanotherinthesequenceofindustrialelaboration；and(b)anunremittingrequirementofquantitativeprecision，accuracyinpointoftimeandsequence，intheproperinclusionandexclusionofforcesaffectingtheoutcome，inthemagnitudeofthevariousphysicalcharacteristics(weight，size，density，hardness，tensilestrength，elasticity，temperature，chemicalreaction，actinicsensitiveness，etc。)ofthematerialshandledaswellasoftheappliancesemployed。Thisrequirementofmechanicalaccuracyandniceadaptationtospecificuseshasledtoagradualpervadingenforcementofuniformitytoareductiontostaplegradesandstaplecharacterinthematerialshandled，andtoathoroughstandardizingoftoolsandunitsofmeasurement。 Standardphysicalmeasurementsareoftheessenceofthemachine’sregime。(4*) Themodernindustrialcommunitiesshowanunprecedenteduniformityandpreciseequivalenceinlegallyadoptedweightsandmeasures。Somethingofthiskindwouldbebroughtaboutbytheneedsofcommerce，evenwithouttheurgencygiventothemovementforuniformitybytherequirementsofthemachineindustry。Butwithintheindustrialfieldthemovementforstandardizationhasoutruntheurgingofcommercialneeds，andhaspenetratedeverycornerofthemechanicalindustries。Thespecificallycommercialneedofuniformityinweightsandmeasuresofmerchantablegoodsandinmonetaryunitshasnotcarriedstandardizationintheseitemstotheextenttowhichthemechanicalneedoftheindustrialprocesshascarriedoutasweepingstandardizationinthemeansbywhichthemachineprocessworks，aswellasintheproductswhichitturnsout。 Asamatterofcourse，toolsandthevariousstructuralmaterialsusedaremadeofstandardsizes，shapes，andgauges。 Whenthedimensions，infractionsofaninchorinmillimetres，andtheweight，infractionsofapoundoringrammes，aregiven，theexpertforemanorworkman，confidentlyandwithoutreflection，inferstherestofwhatneedbeknownoftheusestowhichanygivenitemthatpassesunderhishandmaybeturned。 Theadjustmentandadaptationofparttopartandofprocesstoprocesshaspassedoutofthecategoryofcraftsmanlikeskillintothecategoryofmechanicalstandardization。Hence，perhaps，thegreatest，mostwide-reachinggaininproductivecelerityandefficiencythroughmodernmethods，andhencethelargestsavingoflaborinmodernindustry。 Tools，mechanicalappliancesandmovements，andstructuralmaterialsarescheduledbycertainconventionalscalesandgauges；andmodernindustryhaslittleusefor，andcanmakelittleuseof，whatdoesnotconformtothestandard。Whatisnotcompetentlystandardizedcallsfortoomuchofcraftsmanlikeskill，reflection，andindividualelaboration，andisthereforenotavailableforeconomicaluseintheprocesses。Irregularity，departurefromstandardmeasurementsinanyofthemeasurablefacts，isofitselfafaultinanyitemthatistofindauseintheindustrialprocess，foritbringsdelay，itdetractsfromitsreadyusabilityinthenicelyadjustedprocessintowhichitistogo；andadelayatanypointmeansamoreorlessfar-reachingandintolerableretardationofthecomprehensiveindustrialprocessatlarge。Irregularityinproductsintendedforindustrialusecarriesapenaltytothenonconformingproducerwhichurgeshimtofallintolineandsubmittotherequiredstandardization。