Abstract
In his 1904 The Theory of Business Enterprise, Thorstein Veblen advanced a theory of the then-modern corporation that fundamentally differed than that portrayed in standard economic theory. Veblen developed his argument within the stage of the “credit economy” in which the capital market dominated the goods market. Rather than production in order to “earn a livelihood,” the point of the modern business enterprise is to make “profits on investment.” As a consequence of the changes in the structure of capitalism, there arises a conflict of interest between the business enterprise and the community. In particular, “sabotage” of production, thus increasing monetary gain, is standard business practice when sufficient control of an industry has been established, and this obviously runs counter to the objectives of the community which is interested in increasing that production. To increase monetary returns, when capitalists have sufficient control over the production process, they then can control pricing. But to control pricing, output must be controlled. As the majority of the population must sell their skills for wages and salaries, it is necessary that a sufficient number of jobs be offered to allow them to do so—full employment. However, the number and types of jobs offered are based on decisions made by owners and/or managers based on decisions to produce output. While Veblen does not address any program equivalent to that of a job guarantee program, the main point, however, is that the normal functioning of a modern capitalist economy is unlikely to satisfy the requirements of the provisioning process necessary to allow a viable social organization. Beyond the issue of unemployment, a host of other concerns can at least partially be addressed with such a program.
Keywords: Veblen, New Order, Credit Economy, Sabotage, Job Guarantee
JEL Codes: A13, B15, B52, L1, J6
