The Theory of Business Enterprise by Thorstein Veblen

Author:Thorstein Veblen [Veblen, Thorstein]
Language: eng
Format: epub, pdf
ISBN: 9781411464681
Publisher: Barnes and Noble, Inc.

A further consideration bearing on the later phases of the business situation may be added. The great coalitions and the business manœuvres connected with them have the effect of adding to the fortunes of the greater business men; which adds to the large incomes that cannot be spent in consumptive expenditures; which accelerates the increase of investments; which brings competition if there is a chance for it; which tends to bring on depression, in the manner already indicated. The great coalitions, therefore, seem to carry the seed of this malady of competition, and this evil consequence can accordingly be avoided only on the basis of so comprehensive and rigorous a coalition of business concerns as shall wholly exclude competition, even in the face of any conceivable amount of new capital seeking investment.

What has made chronic depression the normal course of things in modern industrial business is the higher development of the machine process,—given, of course, the traits of human nature as it manifests itself in business traffic. The machine process works this effect by virtue, chiefly if not altogether, of these two characteristics: (1) a relatively rapid rate of increasing efficiency; and (2) the close interdependence of the several lines of industrial activity in a comprehensive system, which is growing more comprehensive and close-knit as improvement and specialization of industrial processes go on. The last-named factor counts for more in proportion as the interdependence grows closer and more comprehensive. Disturbances are progressively transmitted with greater facility and effect throughout the system, and each line of industrial business comes to stand in relatively intimate relations to an ever increasing range of other lines with which it carries on a traffic of purchase or sale. A consequence of this state of things is that any business coalition, in order effectually to serve its purpose of maintaining earnings and capitalization, is required to be of larger scope and closer texture. As the exigencies which enforce the resort to coalition uninterruptedly gain in scope and urgency, the "trust" must take the same course of growth to meet these exigencies; until, with some slight further advance along the accustomed lines, the trust which shall serve the modern business situation must comprehend in one close business coalition virtually the whole field of industry within which the machine process is the dominant industrial factor.156

To this there is a broad exception, given by the circumstances of the industrial organization. This organization rests on the distinction between business management and ownership. The workmen do not and cannot own or direct the industrial equipment and processes, so long as ownership prevails and industry is to be managed on business principles. The labor supply, or the working population, can therefore not be included in the ideally complete business coalition suggested above, however consummate the machine system and the business organization built upon it may become. So that when the last step in business coalition has been taken, there remains the competitive friction between the combined business capital and the combined workmen.

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