Wednesday, April 27, 2011

Burke, Veblen, and the New Feudalism: Part III-i -- Veblen the Economic Historian and Sociologist

Introductory Note:  Normally, I enjoy material that challenges my deepest assumptions and makes me question the way I look at the world.  Reading Veblen has certainly done that for me.

Normally this kind of exercise leaves me in a sort of mildly elated state, having stretched myself with ideas that have left me feeling that I really understand things better, or have at least imagined big things which turned out false, which is one of the reasons I continue on doing it.  I was exhilarated when I began digging into the Austrian school's take on economics, and the way it finally explained things I had struggled with for years.  This material, I think, is of that same order.

But I must confess to being a bit overwhelmed this time.  I am confronting ideas that I find very difficult to handle.  Many of the isolated points Veblen makes, I have known for some time -- that the extremely rich become so almost exclusively by skillful maneuvering of a broken monetary and legal system, that the markets are rigged and artificial, easily milked by people who know how, that something very wrong has happened to the West beginning in about the late 19th century and progressively eats away at it today, near to the point of destruction.  But he puts everything together in a way that has hit me very hard.  He has answered my hard questions with much harder answers.

This time, I'm not feeling so good.  I considered terminating this series, and never bringing it up again.  I hadn't yet gotten into the really dark stuff, and I thought that I could turn back like it never happened.  But then I realized that I would have a difficult time continuing on with blogging.  I've already read the material.  It's been incorporated into my gray matter and there's nothing I can do about it.  I couldn't honestly analyze things the way I have before.  So, I must either continue, or quit.

I feel like one of those Loony Tunes characters that has had a piano dropped on his head. 

I don't want to drop a piano on your head if that's not what you want.  So far, you've only seen some different twists and perspectives on things I've already talked about.  That's about all.  If you've put up with me to this point, that probably didn't roil you much.  But from here on out, you may really not like what you find.  It probably won't be too bad if you reject what Veblen has to say.  You'll just think I wasted your time by introducing you to an idiot.  But if you find that you must accept even half of it, you may find yourself a changed person, and in a way you don't necessarily like.  You may start questioning very basic, very dear things.

Read on at your own risk.


Like his views on economics proper, Veblen had an almost completely different view of the sociological structure and situation of the West from anything most people have ever encountered.  But his ideas flow from a fundamental assumption regarding the basis of social order which is pretty straightforward -- that people form their ideas about how the world works on the basis of everyday experience.  Just living life produces habits of thought, which, if they manage to survive the reality test, move on to become commonly accepted conventions, rules, and codes of conduct, and eventually even legal institutions.  Once in place, they can prove quite difficult to modify or dislodge in directing the behaviors of people and ordering society. 

However, these conventions of thought are limited to common experience.  They must be.  "Men do not pass appraisal on matters which lie beyond the realm of their knowledge and belief, nor do they formulate rules to govern the game of life beyond that limit."  It isn't possible to 'know what is not known,' enough to form a substantial 'appraisal,' anyway.  It takes some kind of experiential manifestation. 

Large changes may come to pass that the existing thought-structure had never contemplated and have difficulty accommodating.  With time, these changes alter habit and experience and create conflicts between the old customs and the new, apparent reality. Eventually, necessity demands that they be addressed by law and custom.  As the conflict roils, residues of the old habits will serve to guide society in the interim, and some residue that does not much conflict may persist and survive long after the conflict has been settled, well into the new order and even beyond.  But at some point the new way of things must prevail in producing a new social order where it collides with old customs.

All of this should be both familiar and obvious.

Veblen thought the West was at such a point at the time of his writing, and had been stuck in it for quite a long time.  Veblen's idea of the basic nature of this conflict and how he thought the West had arrived to that point is the subject of this essay.  To begin to understand it, it is probably best to go back to the formation of the order which dominated Western thought in Veblen's day and to a great extent still does today -- the Enlightenment.

Beginnings of the Enlightenment -- The Artisan Economy

Edmund Burke's discussion of the differences between the French and English Revolutions painted a pretty good picture of the transition of political thought that was occuring during that the period between the Medieval Period and the Modern, as well as the basic contentions between basic Medieval philosophy and the Enlightenment philosophy that dominates the Modern Age.  But what he did not much discuss was exactly why that transition was taking place then, what caused it, and some of the more important economic aspects of it.  Burke did cover the issue of ownership and property, but Veblen takes it leaps and bounds further.  Understanding that transition will help to better understand how the West arrived at its present state, and the new transition that Veblen thought the Western social order is presently struggling with.

Veblen asserts that the Enlightenment philosophy arose as a result of the slow ascendancy of a new economic way of life.  During most of the Medieval period, economic life was dominated by manoral production, which Veblen and others call the 'natural economy.'  It consisted of near self-sufficiency of individual homesteads and manors, with trade in goods of secondary importance.  The Medieval mindset was based on habits of thought formed under this way of life.  These habits were challenged by the rise of the shopkeeper-proprieter and petty tradesman of the Artisan Economy.

The Artisan Economy is marked by specialization in production and an economic life dominated by trade in a marketplace.  The centrality of the 'goods marketplace' is the sign of this transition.  In many ways, Burke's England was not actually the best example of a truly Medieval frame of mind.  As Veblen points out, England was mostly isolated from the wars and conflicts of the Continent of the Medieval period, and tended to develop relatively more peacefully than the rest of Europe.  Life was therefore more concerned with industry than war, and England passed into this transition long before the rest of the West.  It was surely in the midst of it long before the Glorious Revolution. 

What Burke was describing was largely the Medieval 'residue,' as Veblen might say, which was apparently still quite strong in that day.  And if one really takes a hard look, and knows what to look for, I think he will see that it in many areas it is still strong even today.

Property in the Artisan Economy

As the Artisan economy established itself, it naturally changed the economic relationships among people, their habits of thought and their norms, especially as relates to the ownership and disposal of property.  A shopkeeper-tradesman makes many property transactions in a single day.  His ownership over property is more transient and far less personal than a medieval lord or peasant, butt is no less critical a factor in his mode of life than it was for them.  Possibly it was even more important to him.

Veblen regards the writings of John Locke to be a convenient starting point for the establishment of the Enlightenment as the guiding principle for the West, and in particular relevance to this topic, Locke articulated the idea that a man acquired ownership over property by 'mixing his labor' with materials in the act of creating it.  Thus, the artisan's act of creation was seen as the source of his authority over property, which flowed very naturally from the way he viewed normal life and modes of business.  The artisan created his own wares and sold them as a businessmen, the labor in his act of creation granting him the right to profit from the transaction.  Through trade, to him a very common and normal disposal of his right of ownership, he could acquire goods similarly disposed by others.

God the Artisan

The notion of authority flowing from creation also acquired an important theological bent.  Veblen notes that in the literature of the early phase of the Enlightenment, there is an increasing 'frequency and intensity' of expressions relating to God as Creator, and His authority over Creation flowing from that fact.  Thus we find in our own Declaration of Independence our rights deriving from our Creator, who chose to endow us with them.

Note that as natural as this may seem to us, it is a large departure from medieval modes of life, notions of property, and their relationship to God.  To the medieval mind, ownership was a very different proposition.  Today, we probably would not even call such a relationship ownership.  It would be more like stewardship.  In the medieval period, all authority, including property, was considered to derive from 'usage and prowess,' in Veblen's terms.  A man's authority over what was his was devolved to him by right of higher levels of authority, and had been passed to him from his ancestors.  All trains of inheritance and authority eventually reached back and up to God Himself, whose original authority was not derived from his status as Creator, but as Suzerain (Veblen's term), King of kings, Authority of authorities, Power of powers, all authority his right by sheer prowess and might.  It was the Enlightenment that turned Him from mighty King back into mere Carpenter.

To medieval society, inheritance was a very, very big deal, well described by Burke.  Property was not to be disposed of lightly.  It was connected to generations of acestors, to antiquity, and to God.  The disposal of property was governed by 'prescriptions of usage.'  One could only treat things in certain allowed ways.  This directly conflicted with the Enlightenment notion of property rights as being absolute, including the ultimate right of disposal.  Today, our society might argue about, for example, the burning of Bibles, Korans, and flags.  The libertarian opinion that 'the right of disposal of property is absolute, thus as long as he owns the thing, he has the right and ought to be able to burn it' is the Enlightenment opinion. 

The modern opposed opinion usually hinges on personal offense or the practical consequences of the act, but the medieval opinion would probably be something along the lines of 'a deliberate act of desecration is an improper use of an object of reverence, and is therefore wrong,' which sounds to me the more logical of the two arguments.  In any event, to the Enlightened mind, it isn't so much property that is sacred as the owner's absolute right to it.  To the medieval mind, it seems the property itself really was sacred.  A noble who abdicated his title also lost authority over 'his' lands to which the title was connected.  If he wasn't the Duke of Someplace anymore, he wasn't the Duke.  His name changed. His identity changed. His relationship to others changed.  The property owned him more than the other way around.  He could not dispose of it in the way we would think of it if he had wanted to.

That mode of 'ownership' may seem very odd today, but to me, the notion of God's authority flowing primarily from His status as Creator has never really seemed logical, either.  I never really understood the Creator language or the references to 'nature' and 'natural' as a mode of justification.  I am probably at least as enamored of the creation story as the next person, but for me, His authority always seemed to flow principally from His capacity and right as the ultimate Judge.  I had always taken the creation story to say that humans are inherently evil as a result of the fall and their natures (and nature in general) were not to be trusted.  My recent encounters with what I now see to be Enlightenment logic had left me flustered and confused, and I had been trying to make sense of them.

I do not know if I am merely unusual, incorrect, or if this sentiment is more widespread.  If so, I think it signifies that yet another major social change has taken place. 

Characteristics of the Artisan Economy

The artisan economy was principally composed of small businessmen practicing trades in which each specialized.  Each process of production was relatively isolated from others and relatively simple.   This is the economy Adam Smith described in The Wealth of Nations.  According to Veblen, the artisan economy both gave rise to the business norms of the Enlightenment and was served well by it.  Business was more personal, and a reputation for honesty and fair dealing was important to maintain.

It is important to note how similar in outward appearance the artisan economy is to the theoretical ideal shared by Veblen and the Austrian school.  It was very nearly impossible for an artisan tradesman to accumulate enough wealth to place himself head and shoulders above his peers, or to earn his keep through practically any other method than to work dilligently to produce and compete with other producers. 

Fantastic wealth through business as we know it today simply was not possible, according to Veblen, not because of any particular legal or social prohibition, but because the means of doing so were not available.  Not yet, anyway.  The system still preserved two aspects of its operation that were implicit assumptions of Enlightenment thinking -- practical independence of action, in this case the processes of production, and a stable currency with practically no 'capital market.'  Veblen notes that in at least one area of the economy of the day which did violated these two assumptions -- the shipping industry, which required a more complex coordination of activities, and was one of the first industries to actively make use of a capital market -- one sees the beginnings of modern business models and practices.

The artisan economy and the Enlightened social order that governed it gave rise to fantastic change and innovation.  Though production was specialized, the division of labor was still extremely low by modern standards with respect to the integration of processes.  Debt was considered a sort of crutch for people who were financially incompetent, and generally eschewed.  But even with these supposed handicaps (as we might view them today), the liberty and flexibility afforded by the Enlightenment allowed for flourishing growth and change, the likes of which had never before been seen.  It is a testament to the power of the ideas of this social order that it both produced and survived the changes that it touched off for as long as it did.  For two centuries, the West thrived economically and culturally under its guidance.

But eventually, complexification and 'concatenation' (linkage) of production processes eventually gave rise to what Veblen calls 'the machine process.'  It is Veblen's view that it was the emergence of this highly integrated system of production that eventually created the strains the West is struggling with today.  As noted before, it was the interdependency of processes that violated Enlightened assumptions and allowed businessmen to highjack and hold one anothers' operations for ransom and create artificial profits with contrived bottlenecks and disruptions.  Finally, it was the monetary violation of Enlightenment assumptions by capital markets which allowed businessmen to further tap into those artificial profits and generate fraudulent wealth by which to pursue lavish lifestyles and wage corporate imperialism.

Like the emergence of the artisan economy under the auspices of Medievalism, the machine process created new ways of thinking and relating to one another that conflict with the Enlightenment legal and social order.  The machine process emerged under the Enlightenment and never would have been possible without it, but was also incompatible with it.  This, finally, is the conflict -- the social changes accompanying the rise of the machine process vs. the established legal order of the Enlightenment -- that Veblen thought would change the West forever.


... to be continued next time.

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