Friday, April 29, 2011

Burke, Veblen, and the New Feudalism: Part III-ii -- Veblen the Economic Historian and Sociologist, cont.

The previous section focused mainly on the historical lead up to the modern social order and the conflict it has with the modern economic order.  This section will focus on the state of the nature of that conflict as it stood at the turn of the 20th century.


The Modern Enlightenment Legal Order

According to Veblen, at the center of the Enlightenment legal order that eventually prevailed over the West are two nearly inviolable legal principles -- the absolute right of property, with the implicit absolute right of usage, and secondly, the right to freedom of contract. Rarely are residues of the Medieval order allowed to impinge on these two absolute rights, at least in Veblen's opinion of his day. Almost all other legal conventions are the logical corollaries of these two rights. Like the absolute right of property, the absolute right to freedom of contract conflicted with Medieval practices. This discussion is not particularly noteworthy except in one or two regards as to its practical effects on the pursuit of business.

The first is that the right to absolute freedom of contract creates a very restrictive legal climate towards injunctions attempting to enforce fair dealing in the marketplace. Apart from the prohibitions against force and fraud, freedom of contract and injunctions to 'play fair' are almost completely incompatible. The second is that competition against one's business rivals is strictly limited to what may be accomplished through the use of contracts and property, for example, lawsuits or other applications of the legal system, fooling your customers or suppliers with tricky contracts, uses of property which interfere with a rival's operations, like buying a plot of land and leaving it idle simply because it would be useful to a competitor.  That would, of course, be in addition to the normal modes of economic competition -- the pursuit of higher efficiency and better meeting of consumer demand.

These two legal absolutes form the bedrock of the modern business environment which Veblen calls the 'pecuniary norm.' Other important assumptions of this norm are that the value of money is effectively stable, and that all property and claims are inherently able to be liquidated to a cash value. Instability in the value of money would implicitly violate the notion of the inviolability of money contracts. The assumption of the 'universal ability of liquidation' is what allows the legal order to settle practically any dispute in a pecuniary fashion no matter how seemingly unrelated to property, such as a fine of restitution for assault or even wrongful death.  That kind of thing would have resulted in a contest of arms in medieval times.  (And somehow, the medieval way actually strikes me as more appropriate.)

Machine Processes and Machine People

According to Veblen, the advent of the machine process created a powerful social bifurcation that is a major source of its antagonism towards the Enlightenment order. Under the artisan economy, the tradesman was both the businessman and the laborer. The two aspects of business -- the physical act of production and the negotiation of the markets -- were united in one actor. But with the coming of the machine process there came a split between these two responsibilities as part of the new division of labor. Some tended to markets and the issues of property, ownership, and business transactions. This was Veblen's 'pecuniary class.'  The others focused solely on the mechanical aspects of production -- the machine class.

The intensive use of machinery in the industrial process created a class of workers whose lives, and therefore habits of thought, revolved around the service and manipulation of machines. The focus and attention necessary to operate complex mechanical equipment led to habits of thinking that diverged from what had predominated for centuries. Certain skills and abilities became heavily emphasized while others were allowed to languish. Mechanical cause and effect became the nearly exclusive acceptable grounds of reasoning for a large fraction of the population, and particular gifts and skill in this area became highly prized.

The focus of academic inquiry, and scientific investigation in particular, shifted from mere causal and effectual relationships to the actual mechanical process by which cause produced effect. This is the period that produced Charles Darwin and his famous theory, and who can even guess whether his ideas would have caused such a stir if they had been articulated a century before, or if he even would have been able to articulate them for lack of background. The transition to the machine economy also marks the rise of the modern pursuit of science and the beginnings of its perceived dominance over the other academic disciplines.

In addition, the changes in production led to changes in lifestyle. For the artisan, tools and modes of production revolved around him and his life. His tools aided him and supplemented his output as he undertook production for the marketplace. But for the modern machine worker, his life revolves around the machines he serves. He is a supplementary factor of their production, not the other way around. Eventually, industrial production began to involve things like intensive shift work and urbanization, in many ways a radical and unnatural departure from the human norm. The industrial worker's labor is often repetitive, he does not see the process of production through from beginning to end (and therefore has little invested in the Enlightenment notion of ownership in it), and he has very reduced human contact and minimal communication throughout the workday.

Notably, education also became mechanized, especially towards the end of the 19th century in the US. Schools were eventually to be run like factories, regimented and impersonal, with bells to signal shifts in the day. The notion that education should be practical and efficient, 'like a business' took hold, and subject matter began to change as schools shifted to prepare workers for what were likely to be mechanical professions. The classics, foreign language, and history were pushed aside. Science, mathematics, and even, ironically, entire 'trade schools' took their place.

The Enlightenment philosophy began to have less and less meaning for this class as life and work became more and more mechanized. As noted earlier, the nature of the work tended towards standardization and homogeneity, in output, in the process of production, and the lifestyle that participating in this division of labor afforded. This effect tended to commoditize labor. Such a state must be caustic to the spirit of individualism that characterized the Enlightenment. The notions of property ownership being rooted in the act of creation are almost totally irrelevant to such a system. The commoditization of wage labor tends to undermine the notion of freedom of contract. Property rights mean little to those without much property to speak of.

According to Veblen, the further the machine process carries things, the more the Enlightenment begins to sound like so much make-believe that does not reflect the real world. The new mechanical class begins to have very little connection to the pecuniary norm that forms the atmosphere of the business world around them, and often have very little skill in negotiating it, finding contact with it troubling and irksome.

The Pecuniary Class

Meanwhile, the other half of business operations -- management, salesmen, lawyers, and generally, businessmen -- have abandoned very nearly all connection to mechanical processes of production and have become thoroughly saturated in the customs and thought processes of the pecuniary norm, the established Enlightenment legal order. This class spends its time in the assertion of property rights, the acquisition and disposal of property, strategizing the best application of pecuniary maneuvering to business advantage, and the like. Often, the businessmen in charge have little or no idea how the processes under their control actually work, though they may be experts in the world of business affairs.

This group has a great deal 'invested' in the Enlightenment notions of natural rights, natural law, property and contracts, so to speak, and little patience for attempts to modify them. Among them, there is a strong tendency to 'turn facts to account for the purposes of maintaining an accepted convention,' rather than modifying convention to account for facts. Veblen characterizes the pecuniary class as operating more in the abstract and acting on the basis of de jure reasoning, while the mechanical class tends to the de facto and has a strong matter of fact point of view. The pecuniary class is inherently conservative, and perfectly comfortable with the pecuniary customs that dominate Western society within and outside of the business world, unwilling to change them.

Veblen saw the established governments of the West as being inherently pecuniary and operated towards pecuniary ends, even at the national level, such as in the conduct of war. But he also saw the pecuniary order eroding, as the value that the Enlightenment placed on equality gave the common man and his opinions considerable influence over government and law. As the common man was decidedly mechanical in outlook, so the government would sway. He saw the tension very visibly in his own day, citing, for example, the way that juries of common folk were regularly at odds with the higher courts.

The Tension

That, in a nutshell, is the unarticulated tension that Veblen thought dominated the political landscape of his day. It was somewhat related to class, in that one observes a class segregation about the tension, but was really about how to deal with an economic product of the Enlightenment order -- the machine process -- being incompatible with that order. Where the two collided, in particular the mechanical class desired custom and law to address the new circumstances. Veblen felt that the changes in life brought about by the machine process amounted to a mechanical form of coercion that was, nevertheless, unrecognized by a law that did not tolerate coercion by one party against another. This angered the mechanical class in a way that they could not clearly articulate. To them, if life was to be mechanical and commoditized, so ought the law to reflect it.

Veblen saw the socialist movement, syndicalism, and unionism, as well as the anarchist movement, as an attempt to address this tension, in the same way that the Enlightenment was an answer to the medieval tension against the artisan economy. However, while he did sympathize with the complaints of the mechanical class, he thought that socialism was theoretically unsound and a failure. The Enlightenment really did address the new circumstances and were in harmony with them while these movements did not.

He also thought that as the machine process 'produced' socialism, it also produced many of the social-ills that are often associated with that movement. He thought that the lifestyle and mechanical outlook it produced helped destroy the family, eroding old social bonds and the authority of the father, just as the Enlightenment had also weakened those bonds with its notions of equality and nearly eradicated the medieval notion of paternalistic leadership. He thought that as the Enlightenment had demoted God from King to Artisan in the popular mind, so the machine process had made Him an irrelevant relic and pushed an atheistic outlook on those that it touched. And since the mechanical mentality is not much given to 'mythmaking,' as these 'conventions' were corroded away to nothing, they would not be replaced with new ones.

I think that if Veblen were still alive today, he would probably see the history of the 20th century as the West's continuing attempt to resolve the internal ideological inconsistencies and social tensions that were created and revealed by the machine process. I don't think that he would believe that as yet it had come up with an acceptable answer.

Veblen, Prophet of Doom

Veblen considered how the situation might resolve itself, and in his prognostication one finds some frightening insights.

First, he notes that considering what 'should' happen is totally irrelevant to the question, as it provides no guidance as to happenings in the real world. The only realistic question was what 'would' happen. As such, he considered that the resolution, if there were to be one, would come as a 'business proposition,' as this is the source of initiative under the pecuniary order and the clearest mode of addressing the problems to the Enlightenment order created by the machine process. It was the system of business enterprise itself that was threatened most by it and thus the members of this quarter would have the most motivation to protect themselves.

The machine process was principally incompatible with business enterprise because it was corrosive to the pecuniary order that undergirded it. If a mode of business enerprise could be undertaken that was not incompatible with the machine process, such as, for example, a return to the artisan style of business, then the tension would be relieved. However, that was clearly not a solution, as any society that tried that would lose the material benefits of the machine process and quickly fall victim to the aggressions of its rivals.

The solution Veblen thought most likely was cartellization of business and militarization of society. Both were business propositions that addressed the central issues. Cartellization allowed outsize profits for businessmen in a stable fashion (assuming the cartel could be held together, of course) ensuring that there would be no 'decapitalization' threat to their abilities to squabble with each other and extract excess gains out of the economy, as is their wont. It represents a permanent institutionalization of their interests, as it were, giving them as a group more control over changes to the economic system. The militarization of society tends to stoke patriotism and a loyalist spirit to the the established social institutions, including the legal order, providing a buffer from the caustic sentiments of the mechanical class without actually addressing their concerns. It also provides another profit opportunity to the cartels who make it their business to provide armaments to government. He described the resulting system as 'aggressive dynastic politics.'

In summary, Veblen basically predicted that, as the machine process was an existential threat to business enterprise, the present order of things as they stood in the late 19th century and very early 20th could not stand. The West would likely come under the sway of entrenched interests that would militarize society and pursue an aggressive foreign policy in response to the social strains created by the ravenous advances of the machine process. He was not sure, however, that the advancing machine process itself might not in some way undermine the entire system before the described entrenchment could take place or in some other way overwhelm the attempt, and left that avenue of change open as a strong alternative possibility.

Military-industrial complex, anyone? Did I mention that this was written in 1909?


I tend to be a generous reader where I see important insight, and when I do I usually struggle with strict objectivity. I have likely presented Veblen in a better light than a more critical reader might have, simply because I found some of his observations to be especially profound. That is not to say that I didn't find anything I thought a little screwy. I just tend to overlook such blunders where I find something extraordinary. And who knows? Perhaps I am the one making the blunder. As always, and as the reader should have concluded at the outset of the first essay, anyone seeking a perfectly objective opinion is advised to read the original book himself.

Veblen's historical explanation, however odd it may seem in light of other more accepted narratives (or what one might rather like to believe), appeals to me for several reasons. First and foremost, the major assertions are consistent with what I have learned from other sources that I trust, and consistent with what I observe in everyday life. He has clearly addressed issues that I thought were poorly or unrealistically dealt with by others, usually in a begging-the-question type manner, in a way that makes sense to me. In particular, his dealing with the issue of the spreading mechanical mindset and the erosion and demeaning of other human qualities, the integration and interplay of this change with other social changes, the parallels between the medieval-to-enlightenment transition with this one, as well as his explanation of the tension between much of society and the old Enlightenment norms, seems to me very insightful. In every other form I have encountered them, they were presented as isolated, unconnected phenomena that obviously are connected.  These are all issues I think critical to the unfolding of 20th century history and of critical importance today, but are generally overlooked by modern investigators who seem to be blinded by the very effects these happenings have produced in our culture. Most people do not seem aware of them.

However, as my own understanding and mental retention of the specifics of history is less than perfect and I tend to favor the subject of economics, I acknowledge that I may have been quite too generous in this regard.  Sometimes facts and ideas I encounter in a work like this are actually widely known and obvious to people with more familiarity with the subject, but they are new to me.  Most of Burke's arguments that he considered 'obvious' I found to be his most powerful.

Just as a disclaimer, I have made some additions and subtractions to my recounting of Veblen's views where I thought it would make for more insightful or approachable reading, and I have also retained a number of ideas even where I disagreed so long as I didn't think them too outrageous or irrelevant to the topic.  Again, if you want it straight from the horse's mouth, go get it.

Next time, I'll start doing my own analysis of things.

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