Imperial Germany & the Industrial Revolution. Thorstein Veblen
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having long been subjects of homiletical iteration. And since this growth of what may be called secular, as contrasted with magical or religious, institutional inhibitions on efficiency, has much to do with latterday economic affairs, as well as with the material fortunes of our prehistoric forebears, a more detailed exposition of their place in economic life will be in place.
On the adoption of new industrial ways and means, whether in the way of specific devices and expedients or of comprehensive changes in methods and processes, there follows a growth of conventional usages governing the utilisation of the new ways and means. This applies equally whether the new expedients are homebred innovations or technological improvements borrowed from outside; and in any case such a growth of conventions takes time, being of the nature of adaptive habituation. A new expedient, in the way of material appliances or of improved processes, comes into the industrial system and is adapted to the requirements of the state of things into which it is introduced. Certain habitual ways of utilising the new device come to be accepted; as, would happen, e.g., on the introduction of domestic animals among a people previously living by tillage alone and having no acquaintance with the use of such animals under other conditions than those prevailing among purely pastoral peoples. So, again, the gradual improvement of boat-building and navigation, such as took place among the prehistoric Baltic peoples, would induce a progressive change in the conventional scheme of life and bring on a specialisation of occupations, with some division of economic and social classes. Or, again, in such a large systematic shift as is involved in the coming of the handicraft industry and its spread and maturing; class distinctions, occupational divisions, standardisation of methods and products, together with trade relations and settled markets and trade routes) came gradually into effect. In part these conventional features resulting from and answering to the new industrial factors continued to have the force of common-sense conventional arrangement only; in part they also acquired the added stability given by set agreement, authoritative control and statutory enactment.
So, in the case of the handicraft system such matters as trade routes, methods of package, transportation and consignment, credit relations, and the like, continued very largely, though not wholly nor throughout the vogue of the system, to be regulated by conventional vogue rather than by authoritative formulation; while on the other hand the demarkation between crafts and classes of craftsmen, as well as the standardisation of methods and output, were presently, in the common run, brought under rigorous surveillance by authorities vested with specific powers and acting under carefully formulated rules.
But whether this standardisation and conventionalisation takes the set form of authoritative agreement and enactment or is allowed to rest on the looser ground of settled use and wont, it is always of the nature of a precipitate of past habituation, and is designed to meet exigencies that have come into effect in past experience; it always embodies something of the principle of the dead hand; and along with all the salutary effects of stability and harmonious working that may be credited to such systematisation, it follows also that these standing conventions out of the past unavoidably act to retard, deflect or defeat adaptation to new exigencies that arise in the further course.
Conventions that are in some degree effete continue to cumber the ground.
All this apparatus of conventions and standard usage, whether it takes the simpler form of use and wont or the settled character of legally competent enactment and common-law rule, necessarily has something of this effect of retardation in any given state of the industrial arts, and so necessarily acts in some degree to lower the net efficiency of the industrial system which it pervades. But this work of retardation is also backed by the like character attaching to the material equipment by use of which the technological proficiency of the community takes effect. The equipment is also out of the past, and it too lies under the dead hand. In a general way, any minor innovation in processes or in the extension of available resources, or in the scale of organisation, is taken care of as far as may be by a patchwork improvement and amplification of the items of equipment already in hand; the fashion of plant and appliances already in use is adhered to, with concessions in new installations, but it is adhered to more decisively so in any endeavor to bring the equipment in hand up to scale and grade. Changes so made are in part of a concessive nature, in sufficiently large part, indeed, to tell materially on the aggregate; and the fact of such changes being habitually made in a concessive spirit so lessens the thrust in the direction of innovation that even the concessions do not carry as far as might be.9 It is in the relatively advanced stages of the industrial arts that this retardation due to use and wont, as distinguished from magical and religious waste and inhibitions on innovation, become of grave consequence. There appears, indeed, to be in some sort a systematic symmetry or balance to be observed in the way in which the one of these lines of technological inhibition comes into effectual bearing as fast as the other declines. At the same time, as fast as commercial considerations, considerations of investment, come to rule industry, the investor’s interest comes also to exercise an inhibitory surveillance over technological efficiency, both by the well-known channel of limiting the output and holding up the price to what the traffic will bear, - that is to say what it will bear in the pecuniary sense of yielding the largest net gain to the business men in interest, - and also by the less notorious reluctance of investors and business concerns to replace obsolete methods and plant with new and more efficient equipment.
Beyond these simple and immediate inhibitory convolutions within the industrial system itself, there lies a fertile domain of conventions and institutional arrangements induced as secondary consequences of the growth of industrial efficiency and contrived to keep its net serviceability in bounds, by diverting its energies to industrially unproductive uses and its output to unproductive consumption.10
With any considerable advance in the industrial arts business enterprise presently takes over the control of the industrial process; with the consequence that the net pe-cuniary gain to the business man in control becomes the test of industrial efficiency. This may result in a speeding up of the processes of industry, as is commonly noted by economists. But it also results in “unemployment” whenever a sustained working of the forces engaged does not, or is not believed to, conduce to the employer’s largest net gain, as may notoriously happen in production for a market. Also, it follows that industry is controlled and directed with a view to sales, and a wise expenditure of industrial efficiency, in the business sense, comes to mean such expenditure as contributes to sales; which may often mean that the larger share of costs, as the goods reach their users, is the industrially wasteful cost of advertising and other expedients of salesmanship.
The normal result of business control in industry - normal in the sense of being uniformly aimed at and also in that it commonly follows - is the accumulation of wealth and income in the hands of a class. Under the well-accepted principle of “conspicuous waste” wealth so accumulated is to be put in evidence in visible consumption and visible exemption from work. So that with due, but ordinarily not a large, lapse of time, an elaborate scheme of proprieties establishes itself, bearing on this matter of conspicuous consumption, so contrived as to “take up the slack.” This system of conspicuous waste is a scheme of proprieties, decencies, and standards of living, the economic motive of which is competitive spending. It works out in a compromise between the immediate spending of income on conspicuous consumption - together with the conspicuous avoidance of industrial work - on the one side, and deferred spending - commonly called “saving” - on the other side. The deferred spending may be deferred to a later day in the lifetime of the saver, or to a later generation; its effects are substantially the same in either case. There is the further reservation to be noted, that in so far as property rights, tenures and the conjunctures of business gain are in any degree insecure, measures will be taken to insure against the risks of loss and eventual inability to keep up appearances according to the accepted standard of living. This insurance takes the shape of accumulation, in one form or another, - provision for future revenue.
Like other conventions and institutional regulations, the scheme of spending rests on current, i.e., immediately past, experience, and as was noted above it is so contrived as to take up the calculable slack, - the margin between production and productive consumption. It is perhaps needless to enter the caution that such a scheme of conspicuous waste does not always, perhaps not in the common run of cases, go to the full limit of what the traffic will bear; but it is also to be