The Theory of Business Enterprise. Thorstein Veblen
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of goods means that the interdependence of industrial processes is reduced to more definite terms than before the mechanical standardization came to its present degree of elaborateness and rigor. The margin of admissible variation, in time, place, form, and amount, is narrowed. Materials, to answer the needs of standardized industry, must be drawn from certain standard sources at a definite rate of supply. Hence any given detail industry depends closely on receiving its supplies from certain, relatively few, industrial establishments whose work belongs earlier in the process of elaboration. And it ma similarly depend on certain other, closely defined, industrial establishments for a vent of its own specialization and standardization product.7 It may likewise depend in a strict manner on special means of transportation.8
Machine production leads to a standardization of services as well as of goods. So, for instance, the modern means of communication and the system into which these means are organized are also of the nature of a mechanical process, and in this mechanical process of service and intercourse the life of all civilized men is more or less intimately involved. To make effective use of the modern system of communication in any way or all of its ramifications (streets, railways, steamship lines, telephone, telegraph, postal service, etc.), men are required to adapt their needs and their motions to the exigencies of the process whereby this civilized method of intercourse is carried into effect. The service is standardized, and therefore the use of it is standardized also. Schedules of time, place, and circumstance rule throughout. The scheme of everyday life must be arranged with a strict regard to the exigencies of the process whereby this range of human needs is served, if full advantage is to be taken of this system of intercourse, which means that, in so far, one's plans and projects must be conceived and worked out in terms of those standard units which the system imposes.
For the population of the towns and cities, at least, much the same rule holds true of the distribution of consumable goods. So, also, amusements and diversions, much of the current amenities of life, are organized into a more or less sweeping process to which those who would benefit by the advantages offered must adapt their schedule of wants and the disposition of their time and effort. The frequency, duration, intensity, grade, and sequence are not, in the main, matters for the free discretion of the individuals who participate. Throughout the scheme of life of that portion of mankind that clusters about the centres of modern culture the industrial process makes itself felt and enforces a degree of conformity to the canon of accurate quantitative measurement. There comes to prevail a degree of standardization and precise mechanical adjustment of the details of everyday life, which presumes a facile and unbroken working of all those processes that minister to these standardized human wants.
As a result of this superinduced mechanical regularity of life, the livelihood of individuals is, over large areas, affected in an approximately uniform manner by any incident which at all seriously affects the industrial process at any point.9
As was noted above, each industrial unit, represented by a given industrial "plant", stands in close relations of interdependence with other industrial processes going forward elsewhere, near or far away, from which it receives supplies -- materials, apparatus, and the like -- and to which it turns over its output of products and waste, or on which it depends for auxiliary work, such as transportation. The resulting concatenation of industries has been noticed by most modern writers. It is commonly discussed under the head of the division of labor. Evidently the prevalent standardization of industrial means, methods, and products greatly increases the reach of this concatenation of industries, at the same time that it enforces a close conformity in point of time, volume and character of the product, whether the product is goods or services.10
By virtue of this concatenation of processes the modern industrial system at large bears the character of a comprehensive, balanced mechanical process. In order to an efficient working of this industrial process at large, the various constituent sub-processes must work in due coordination throughout the whole. Any degree of maladjustment in the interstitial coordination of this industrial process at large in some degree hinders its working. Similarity, any given detail process or any industrial plant will do its work to full advantage only when due adjustment is had between its work and the work done by the rest. The higher the degree of development reached by a given industrial community, the more comprehensive and urgent becomes this requirement of interstitial adjustment. And the more fully a given industry has taken on the character of a mechanical process, and the more extensively and closely it is correlated in its work with other industries that precede or follow it in the sequence of elaboration, the more urgent, other things equal, is the need of maintaining the proper working relations with these other industries, the greater is the industrial detriment suffered from any derangement of the accustomed working relations, and the greater is the industrial gain to be derived from a closer adaptation and a more facile method of readjustment in the event of a disturbance, -- the greater is also the chance for an effectual disturbance of industry at the particular point. This mechanical concatenation of industrial processes makes for solidarity in the administration of any group of related industries, and more remotely it makes for solidarity in the management of the entire industrial traffic of the community.
A disturbance at any point, whereby any given branch of industry fails to do its share in the work of the system at large, immediately affects the neighbouring or related branches which come before or after it in the sequence, and 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