Business & Economics Collection: Thorstein Veblen Edition (30+ Works in One Volume). Thorstein Veblen

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СКАЧАТЬ as to what he would turn his efforts to, if to anything, had by Locke's time become an habitual fact in the life of the English community to such a degree that free labor, of the character of handicraft, was accepted uncritically as the fundamental factor in all human economy, and as the presumptive original fact in industry and in the struggle for wealth. So settled did this habit of thought become that no question was entertained as to the truth of the assumption.

      It became a principle of the natural order of things that free labor is the original source of wealth and the basis of ownership. In point of historical fact, no doubt, such was not the pedigree of modern industry or modern ownership; but the serene, undoubting assumption of Locke and his generation only stands out the more strongly and unequivocally for this its discrepancy with fact. It is all the more evidently a competent expression of the trend which English common sense was following at this time, since this doctrine of a "natural" right of property based on productive labor carries all before it, in the face of the facts. In this matter English thought, or rather English common sense, has led; and the advanced Continental peoples have followed the English lead as the form of economic organization exemplified by the English-speaking communities has come to prevail among these Continental peoples.

      Such a concept belongs to the regime of handicraft and petty trade, and it is from, or through, the era of handicraft that it has come down to the present.⁴³ It fits into the scheme of handicraft, and it is less fully in consonance with the facts of life in any other situation than that of handicraft. Associated with the system of handicraft, as its correlate, was the system of petty trade; and as the differentiation of occupations was carried to a high degree, purchase and sale came to prevail very generally, and the community acquired a commercial complexion and commercial habits of thought. Under these circumstances the natural right of ownership came to comprise an extreme freedom and facility in the disposal of property. The whole sequence of growth of this natural right is, of course, to be taken in connection with the general growth of individual rights that culminated in the eighteenth-century system of Natural Liberty. How far the English economic development is to be accounted the chief or fundamental factor in the general growth of natural rights is a question that cannot be taken up here. The outcome, so far as it immediately touches the present topic, was that by the time of the industrial revolution a fairly consistent standardization of economic life had been reached in terms of workmanship and price. The writings of Adam Smith and his contemporaries bear witness to this. And this eighteenth-century standardization stands over as the dominant economic institution of later times.⁴⁴ Such, in outline, seem to be the historical antecedents and the spiritual basis of the modern institution of property, and therefore of business enterprise as it prevails in the present.⁴⁵

      This sketch of the genesis of the modern institution of property and of modern business principles may seem dubious to those who are inclined to give it a more substantial character than that of a habit of thought, - that is to say, those who still adhere to the doctrine of natural rights with something of the eighteenth-century naivete. But whatever may be accepted as the ulterior grounds of that cultural movement which culminated in the system of Natural Liberty, it is plain that the industrial and commercial experience of western Europe, and primarily of England, from the fifteenth to the eighteenth century, had much to do with the outcome of the movement in so far as natural liberty touches economic matters. It is as an outcome of this recently past phase of economic development that we have incorporated in the law, equity, and common sense of to-day, these peculiarly free and final property rights and obligations, that is to say, those peculiar principles that control current business and industry. We owe to the eighteenth century a very full discretIon and free swing in all pecunIary matters. It has given freedom of contract, together with security and ease of credit engagements, whereby the competitive order of business has been definitively installed.⁴⁶

      The subject-matter about which this modern pecuniary discretion turns, with all its freedom and inviolability of contract, is money values. Accordingly there underlies all pecuniary contracts. an assumption that the unIt of money value does not vary. Inviolability of contracts involves this assumption. It is accepted unquestioningly as a point of departure in all business transactions. In the making and enforcement of contracts it is a fundamental point of law and usage that money does not vary.⁴⁷ Capitalization as well as contracts are made in its terms, and the plans of the business men who control industry look to the money unit as the stable ground of all their transactions. Notoriously, business men are jealous of any attempt to change the value or lessen the stability of the money unit, which goes to show how essential a principle in business traffic is the putative invariability of the money unit.⁴⁸

      Usage fortified by law decides that when prices vary the variation is held to occur in the value of the vendible commodities, not in the value of the money unit, since money is the standard of value. There is, of course, no intention here to question the position, familiar to all economists, that fluctuations in the course of prices may as well be due to variation on the part of the money metals as to a variation on the part of the articles whose prices fluctuate. In so far as the distinction so made between variations in the one or the other member of a value ratio has a meaning - which it is not always clear that it has - it does not touch the argument. It is a matter of common notoriety, which has also had the benefit of reiterated statistical proof, that, as measured, for instance, in terms of livelihood or of labor, the value of money has varied incontinently throughout the course of history.

      But in the routine of business throughout the nineteenth century the assumed stability of the money unit has served as an axiomatic principle, in spite of facts which have from time to time shown the falsity of that assumption.⁴⁹

      The all-dominating issue in business is the question of gain and loss. Gain and loss is a question of accounting, and the accounts are kept in terms of the money unit, not in terms of livelihood, nor in terms of the serviceability of the goods, nor in terms of the mechanical efficiency of the industrial or commercial plant. For business purposes, and so far as the business man habitually looks into the matter, the last term of all transactions is their outcome in money values. The base line of every enterprise is a line of capitalization in money values. In current business practice, variations from this base line are necessarily rated as variations on the part of the other factors in the case, not as variations of the base line. The business man judges of events from the standpoint of ownership, and ownership runs in terms of money.⁵⁰

      Investments are made for profit, and industrial plants and processes are capitalized on the basis of their profit-yielding capacity. In the accepted scheme of things among business men, profits are included as intrinsic to the conduct of business. So that, in place of the presumption in favor of a simple pecuniary stability of wealth, such as prevails in the rating of possessions outside of business traffic, there prevails within the range of business traffic the presumption that there must in the natural course of things be a stable and orderly increase of the property invested. Under no economic system earlier than the advent of the machine industry does profit on investment seem to have been accounted a normal or unquestionably legitimate source of gain. Under the agrarian-manorial regime of the Middle Ages it was not felt that the wealth of the large owners must, as a matter of course, increase by virtue of the continued employment of what they already had in hand - whatever may be the historical fact as regards the increase of wealth in their hands. Particularly, it was not the sense of the men of that time that wealth so employed must increase at any stated, "ordinary" rate per time unit. Similarly as regards other traffic in those days, even as regards mercantile ventures. Gain from investment was felt to be a fortuitous СКАЧАТЬ