Any evolutionary science … is a close knit body of theory. It is a theory of a process, of an unfolding sequence. … The difference between the evolutionary and the pre-evolutionary sciences lies not in the insistence on facts. There was a great and fruitful activity in the natural sciences in collecting and collating facts before these sciences took on the character which marks them as evolutionary.
The difference … is a difference in the basis of valuation of the facts for the scientific purpose, …. The modern scientist … wants to reduce his solution of all problems to terms of the conservation of energy or the persistence of quantity. This is his last recourse. And this last recourse has in our time been made available for the handling of schemes of development and theories of a comprehensive process by the notion of a cumulative causation.
[The pre-evolutionary economist is] enabled, without misgivings, to construct a theory of such an institution as money or wages or land-ownership without descending to a consideration of the living items concerned, except for convenient corroboration of his normalized scheme of symptoms. By this method the theory of an institution or a phase of life may be stated in conventionalised terms of the apparatus whereby life is carried on, the apparatus being invested with a tendency to an equilibrium at the normal, and the theory being a formulation of the conditions under which this putative equilibrium supervenes.
What has been done in the way of inquiry into this economic life process? … The ways and means of turning material objects and circumstances to account lie before the investigator at any given point of time in the form of mechanical contrivances and arrangements for compassing certain mechanical ends. It has therefore been easy to accept these ways and means as items of inert matter having a given mechanical structure and thereby serving the material ends of man. As such, they have been scheduled and graded by the economists under the head of capital, ... these productive goods are facts of human knowledge, skill, and predilection; that is to say, they are, substantially, prevalent habits of thought, and it is as such that they enter into the process of industrial development.
The reason for the Austrian failure seems to lie in a faulty conception of human nature, -- … . The hedonistic conception of man is that of a lightning calculator of pleasures and pains who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact. …
Spiritually, the hedonistic man is not a prime mover. He is not the seat of a process of living, ….
The later psychology, re-enforced by modern anthropological research, gives a different conception of human nature. According to this conception, it is the characteristic of man to do something, not simply to suffer pleasures and pains through the impact of suitable forces. He is … a coherent structure of propensities and habits which seeks realisation and expression in an unfolding activity. … They are the products of his hereditary traits and his past experience, cumulatively wrought out under a given body of traditions conventionalities, and material circumstances; and they afford the point of departure for the next step in the process. The economic life history of the individual is a cumulative process of adaptation of means to ends that cumulatively change as the process goes on, both the agent and his environment being at any point the outcome of the last process.
What is true of the individual in this respect is true of the group in which he lives. All economic change is a change in the economic community, -- a change in the community's methods of turning material things to account. The change is always in the last resort a change in habits of thought.
What remains as a hard and fast residue is the fact of activity directed to an objective end. Economic action is teleological, in the sense that men always and everywhere seek to do something. … It may or may not be a teleological process in the sense that it tends or should tend to any end that is conceived to be worthy or adequate by the inquirer or by the consensus of inquirers. … The evolutionary point of view, therefore, leaves no place for a formulation of natural laws in terms of definitive normality, whether in economics or in any other branch of inquiry. Neither does it leave room for that other question of normality, What should be the end of the developmental process under discussion?
… economic interest has counted for much in shaping the cultural growth of all communities. Primarily and most obviously, it has guided the formation, the cumulative growth, of that range of conventionalities and methods of life that are currently recognized as economic institutions; but the same interest has also pervaded the community's life and its cultural growth at points where the resulting structural features are not chiefly and most immediately of an economic bearing. … All institutions may be said to be in some measure economic institutions.
From what has been said it appears that an evolutionary economics must be the theory of a process of cultural growth as determined by the economic interest, a theory of a cumulative sequence of economic institutions stated in terms of the process itself.
Provided the practical exigencies of modern industrial life continue of the same character as they now are, and so continue to enforce the impersonal method of knowledge, it is only a question of time when that (substantially animistic) habit of mind which proceeds on the notion of a definitive normality shall be displaced in the field of economic inquiry by that (substantially materialistic) habit of mind which seeks a comprehension of facts in terms of a cumulative sequence.
The institution of a leisure class is found in its best development at the higher stages of the barbarian culture; as, for instance, in feudal Europe or feudal Japan. In such communities the distinction between classes is very rigorously observed; and the feature of most striking economic significance in these class differences is the distinction maintained between the employments proper to the several classes. The upper classes are by custom exempt or excluded from industrial occupations, and are reserved for certain employments to which a degree of honour attaches. Chief among the honourable employments in any feudal community is warfare; … These non-industrial upper-class occupations may be roughly comprised under government, warfare, religious observances, and sports.
In such a predatory group of hunters it comes to be the able-bodied men's office to fight and hunt. The women do what other work there is to do -- other members who are unfit for man's work being for this purpose classed with women. But the men's hunting and fighting are both of the same general character. Both are of a predatory nature; the warrior and the hunter alike reap where they have not strewn. Their aggressive assertion of force and sagacity differs obviously from the women's assiduous and uneventful shaping of materials; it is not to be accounted productive labour but rather an acquisition of substance by seizure.
As a matter of selective necessity, man is an agent. He is, in his own apprehension, a centre of unfolding impulsive activity -- "teleological" activity. He is an agent seeking in every act the accomplishment of some concrete, objective, impersonal end. By force of his being such an agent he is possessed of a taste for effective work, and a distaste for futile effort. He has a sense of the merit of serviceability or efficiency and of the demerit of futility, waste, or incapacity. This aptitude or propensity may be called the instinct of workmanship. Wherever the circumstances or traditions of life lead to an habitual comparison of one person with another in point of efficiency, the instinct of workmanship works out in an emulative or invidious comparison of persons.
In the sequence of cultural evolution the emergence of a leisure class coincides with the beginning of ownership. This is necessarily the case, for these two institutions result from the same set of economic forces. In the inchoate phase of their development they are but different aspects of the same general facts of social structure.
The early differentiation out of which the distinction between a leisure and a working class arises is a division maintained between men's and women's work in the lower stages of barbarism. Likewise the earliest form of ownership is an ownership of the women by the able bodied men of the community. The facts may be expressed in more general terms. and truer to the import of the barbarian theory of life, by saying that it is an ownership of the woman by the man.
But it is only when taken in a sense far removed from its naive meaning that consumption of goods can be said to afford the incentive from which accumulation invariably proceeds. The motive that lies at the root of ownership is emulation; and the same motive of emulation continues active in the further development of the institution to which it has given rise and in the development of all those features of the social structure which this institution of ownership touches. The possession of wealth confers honour; it is an invidious distinction.
In making use of the term "invidious", it may perhaps be unnecessary to remark, there is no intention to extol or depreciate, or to commend or deplore any of the phenomena which the word is used to characterise. The term is used in a technical sense as describing a comparison of persons with a view to rating and grading them in respect of relative worth or value -- in an aesthetic or moral sense -- and so awarding and defining the relative degrees of complacency with which they may legitimately be contemplated by themselves and by others. An invidious comparison is a process of valuation of persons in respect of worth.
In order to gain and to hold the esteem of men it is not sufficient merely to possess wealth or power. The wealth or power must be put in evidence, for esteem is awarded only on evidence. … Abstention from labour is not only a honorific or meritorious act, but it presently comes to be a requisite of decency. The insistence on property as the basis of reputability is very naive and very imperious during the early stages of the accumulation of wealth. Abstention from labour is the convenient evidence of wealth and is therefore the conventional mark of social standing; … Conspicuous consumption of valuable goods is a means of reputability to the gentleman of leisure. As wealth accumulates on his hands, his own unaided effort will not avail to sufficiently put his opulence in evidence by this method. The aid of friends and competitors is therefore brought in by resorting to the giving of valuable presents and expensive feasts and entertainments. Presents and feasts had probably another origin than that of naive ostentation, but they required their utility for this purpose very early, and they have retained that character to the present; so that their utility in this respect has now long been the substantial ground on which these usages rest. Costly entertainments, such as the potlatch or the ball, are peculiarly adapted to serve this end.
The basis on which good repute in any highly organized industrial community ultimately rests is pecuniary strength; and the means of showing pecuniary strength, and so of gaining or retaining a good name, are leisure and a conspicuous consumption of goods. Accordingly, both of these methods are in vogue as far down the scale as it remains possible; and in the lower strata in which the two methods are employed, both offices are in great part delegated to the wife and children of the household.
[An] alien factor is the instinct of workmanship. Other circumstances permitting, that instinct disposes men to look with favor upon productive efficiency and on whatever is of human use. It disposes them to deprecate waste of substance or effort. The instinct of workmanship is present in all men, and asserts itself even under very adverse circumstances. So that however wasteful a given expenditure may be in reality, it must at least have some colorable excuse in the way of an ostensible purpose.
In strict accuracy nothing should be included under the head of conspicuous waste but such expenditure as is incurred on the ground of an invidious pecuniary comparison. But in order to bring any given item or element in under this head it is not necessary that it should be recognized as waste in this sense by the person incurring the expenditure. It frequently happens that an element of the standard of living which set out with being primarily wasteful, ends with becoming, in the apprehension of the consumer, a necessary of life; ….
With the exception of the instinct of self-preservation, the propensity for emulation is probably the strongest and most alert and persistent of the economic motives proper.
The conspicuous consumption, and the consequent increased expense, required in the reputable maintenance of a child is very considerable and acts as a powerful deterrent. It is probably the most effectual of the Malthusian prudential checks. The effect of this factor of the standard of living, both in the way of retrenchment in the obscurer elements of consumption that go to physical comfort and maintenance, and also in the paucity or absence of children, is perhaps seen at its best among the classes given to scholarly pursuits. … as a consequence there is no class of the community that spends a larger proportion of its substance in conspicuous waste than these.
Everyday life affords many curious illustrations of the way in which the code of pecuniary beauty in articles of use varies from class to class, as well as of the way in which the conventional sense of beauty departs in its deliverances from the sense untutored by the requirements of pecuniary repute. Such a fact is the lawn, or the close-cropped yard or park, which appeals so unaffectedly to the taste of the Western peoples. It appears especially to appeal to the tastes of the well-to-do classes in those communities in which the dolicho-blond element predominates in an appreciable degree.
Institutions must change with changing circumstances, since they are of the nature of an habitual method of responding to the stimuli which these changing circumstances afford. The development of these institutions is the development of society. The institutions are, in substance, prevalent habits of thought with respect to particular relations and particular functions of the individual and of the community; …
The situation of today shapes the institutions of tomorrow through a selective, coercive process, by acting upon men's habitual view of things, and so altering or fortifying a point of view or a mental attitude banded down from the past. … Institutions are products of the past process, are adapted to past circumstances, and are therefore never in full accord with the requirements of the present. In the nature of the case, this process of selective adaptation can never catch up with the progressively changing situation in which the community finds itself at any given time; for the environment, the situation, the exigencies of life which enforce the adaptation and exercise the selection, change from day to day; and each successive situation of the community in its turn tends to obsolescence as soon as it has been established. When a step in the development has been taken, this step itself constitutes a change of situation which requires a new adaptation; it becomes the point of departure for a new step in the adjustment, and so on interminably.
Any community may be viewed as an industrial or economic mechanism, the structure of which is made up of what is called its economic institutions. These institutions are habitual methods of carrying on the life process of the community in contact with the material environment in which it lives.
But apart from all deprecation, … the leisure class, in the nature of things, consistently acts to retard that adjustment to the environment which is called social advance or development. The characteristic attitude of the class may be summed up in the maxim: "Whatever is, is right" whereas the law of natural selection, as applied to human institutions, gives the axiom: "Whatever is, is wrong."
These institutions -- the economic structure -- may be roughly distinguished into two classes or categories, according as they serve one or the other of two divergent purposes of economic life. … they are institutions of acquisition or of production; or to revert to terms already employed in a different connection in earlier chapters, they are pecuniary or industrial institutions; or in still other terms, they are institutions serving either the invidious or the non-invidious economic interest.
As fast as pecuniary transactions are reduced to routine, the captain of industry can be dispensed with. This consummation, it is needless to say, lies yet in the indefinite future. The ameliorations wrought in favor of the pecuniary interest in modern institutions tend, in another field, to substitute the "soulless" joint-stock corporation for the captain, and so they make also for the dispensability, of the great leisure-class function of ownership.
Cap and gown have been adopted as learned insignia by many colleges of this section within the last few years; … . This particular item of learned ritual, it may be noted, would not only commend itself to the leisure-class sense of the fitness of things, as appealing to the archaic propensity for spectacular effect and the predilection for antique symbolism; but it at the same time fits into the leisure-class scheme of life as involving a notable element of conspicuous waste.
As felicitous an instance of futile classicism as can well be found, outside of the Far East, is the conventional spelling of the English language.
It has been usual, and indeed it still is not unusual, to speak of three coordinate “factors of production” : land, labor, and capital. The reason for this threefold scheme of factors in production is that there have been three recognized classes of income: rent, wages, and profits; and it has been assumed that whatever yields an income is a productive factor.
Seen in the light of later events this threefold plan of coordinate factors in production is notable for what it omits. It assigns no productive effect to the industrial arts, for example,
Another omission from the scheme of factors, as it was originally drawn, was the business man. So a fourth factor of production has provisionally been added to the threefold scheme, in the person of the “entrepreneur,” whose wages of management are considered to measure his creative share in the production of goods, although there still is some question as to the precise part of the entrepreneur in productive industry.
In more than one respect the industrial system of today … is eminently a … a system of interlocking mechanical processes, rather than of skilful manipulation. It is mechanical rather than manual. For all these reasons it lends itself to systematic control under the direction of industrial experts, skilled technologists, who may be called “production engineers,” for want of a better term.
The technology — the state of the industrial-arts — which takes effect in this mechanical industry is in an eminent sense a joint stock of knowledge and experience held in common by the civilized peoples. It requires the use of trained and instructed workmen — born, bred, trained, and instructed at the cost of the people at large. So also it requires, with a continually more exacting insistence, a corps of highly trained and specially gifted experts, of divers and various kinds.
Hitherto these men who so make up the general staff of the industrial system have not drawn together into anything like a self-directing working force;
And it can do no harm to take stock of the situation and recognize that, by force of circumstance, it is now open to the Council of Technological Workers' and Soldiers' Deputies to make the next move, in their own way and in their own good time. … But so much seems clear, that the industrial dictatorship of the captain of finance is now held on sufferance of the engineers and is liable at any time to be discontinued at their discretion, as a matter of convenience.
In short, by force of circumstances, Bolshevism is not a present menace to the Vested Interests in America; provided always that the Guardians of these Vested Interests do not go out of their way to precipitate trouble by such measures as will make Bolshevism of any complexion seem the lesser evil, — which is perhaps not a safe proviso, in view of the hysterically Red state of mind of the Guardians.
Wherever the mechanical industry has taken decisive effect, as in America and in the two or three industrialized regions of Europe, the community lives from hand to mouth in such a way that its livelihood depends on the effectual working of its industrial system from day to day. In such a case a serious disturbance and derangement of the balanced process of production is always easily brought on, and it always brings immediate hardship on large sections of the community.
It has been argued, and it seems not unreasonable to believe, that the established order of business enterprise, vested rights, and commercialized nationalism, is due presently to go under in a muddle of shame and confusion, because it is no longer a practicable system of industrial management under the conditions created by the later state of the industrial arts.
From this businesslike requirement of meeting these fixed overhead charges on the capitalization there result certain customary lines of waste and obstruction, which are unavoidable so long as industry is managed by businesslike methods and for businesslike ends. These ordinary lines of waste and obstruction are necessarily (and blamelessly) included in the businesslike conduct of production. They are many and various in detail, but they may for convenience be classed under four heads: (a) Unemployment of material resources, equipment and manpower, in whole or in part, deliberately or through ignorance; (b) Salesmanship (includes, e.g., needless multiplication of merchants and shops, wholesale and retail, newspaper advertising and bill-boards, sales-exhibits, sales-agents, fancy packages and labels, adulteration, multiplication of brands and proprietary articles); (c) Production (and sales-cost) of superfluities and spurious goods; (d) Systematic dislocation, sabotage and duplication, due in part to businesslike strategy, in part to businesslike ignorance of industrial requirements (includes, e.g., such things as cross-freights, monopolization of resources, withholding of facilties and information from business rivals whom it is thought wise to hinder or defeat).
The chances of anything like a Soviet in America [are very slight, and so], therefore, are the chances of a Soviet of technicians. … anything like a Soviet of Technicians is not a present menace to the Vested Interests in America.
Therefore, to show conclusively and in an objective way how remote any contingency of this nature still is, it is here proposed to set out in a summary fashion the main lines which any such concerted plan of action would have to follow, and what will of necessity be the manner of organization which alone can hope to take over the industrial system, following the eventual abdication or dispossession of the Vested Interests and their absentee owners.
… the central directorate will apparently take the shape of a loosely tripartite executive council, with power to act in matters of industrial administration; the council to include technicians whose qualifications enable them to be called Resource Engineers, together with similarly competent spokesmen of the transportation system and of the distributive traffic in finished products and services.
But it is also evident that in its continued work of planning and advisement the directorate will require the services of an appreciable number of consulting economists; men who are qualified to be called Production Economists. The profession now includes men with the requisite qualifications, although it cannot be said that the gild of economists is made up of such men in the main. Quite blamelessly, the economists have, by tradition and by force of commercial pressure, habitually gone in for a theoretical inquiry into the ways and means of salesmanship, financial traffic, and the distribution of income and property, rather than a study of the industrial system considered as a ways and means of producing goods and services. Yet there now are, after all, especially among the younger generation, an appreciable number, perhaps an adequate number, of economists who have learned that “business” is not “industry” and that investment is not production. And, here as always, the best is good enough, perforce. “Consulting economists” of this order are a necessary
it will be necessary to exclude from all positions of trust and executive responsibility all persons who have been trained for business or who have had experience in business undertakings of the larger sort.
By absentee ownership, as the term applies in this connection, is here to be understood the ownership of an industrially useful article by any person or persons who are not habitually employed in the industrial use of it.
An owner who is employed in the industrial use of a given parcel of property owned by him, will still be an “absentee owner,” within the meaning of the term, in case he is not the only person habitually employed in its use.
As to the formalities, of a legal complexion, that would be involved in such a disallowance of absentee ownership, they need also be neither large nor intricate; at least not in their main incidence. It will in all probability take the shape of a cancelment of all corporation securities, as an initial move. Articles of partnership, evidences of debt, and other legal instruments which now give title to property not in hand or not in use by the owner, will be voided by the same act. In all probability this will be sufficient for the purpose.
There is nothing in the situation that should reasonably flutter the sensibilities of the Guardians or of that massive body of well-to-do citizens who make up the rank and file of absentee owners, just yet.