The emergence of Veblen's distinction between industrial and pecuniary employments
Date
1933
Authors
Hodges, John R., 1908-1986
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Thorstein Veblen's system has come to exercise a peculiar fascination for present-day economists which was almost totally lacking a generation ago. Perhaps it is indicative of the spirit of the age that whereas Veblen's general viewpoint attracted scant attention a quarter of a century ago it has now become the center of spirited discussion. My own inquiry into Veblenian economics has lead me to think that the gist of his analysis lies in the distinction between machine industry and business, and in the hostility which exists between them. The crucial distinction between institutional and classical economics appears to be that while the former is disposed to take cognizance of these industrial and pecuniary phenomena, the latter has quite consistently ignored them. The World War and the present world-wide economic depression have brought forth with new intensity this conflict between world industrial processes and the institutional arrangements which have thrown up obstructions to their efficient operation. A comparison of Veblen's system with that of classical economics would entail an inquiry as to the degree of awareness which each of these two systems showed to the industrial realities of the time. The results of the survey indicated an almost complete disregard, even indifference, on the part of the classicists to the industrial realities which surrounded them. This is surprising if we consider that the people of the past century must have been as impressed by the changes which were going on as we are today. It is not possible to appreciate fully the charming insouciance of classical economists to machine technology without taking time to consider just how great were the industrial changes which have taken place within the past one hundred and fifty years. With this idea in view I have sketched the chief outlines of the nineteenth century industrial scene. It does not purport to be a history of industry, nor is it the result of a first-hand survey of industry. Its purpose is that of illustrating the rapidity and extent of technological progress, and for this design I have chosen the case of America