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The Theory of Business Enterprise
by Thorstein Veblen

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Editorial Review

Editorial Review

Thorstein Veblen was once described by Fortune magazine as "America's most brilliant and influential critic of modern business and the values of a business civilization," and his wisdom and often dry, satiric wit continues to be obvious today.

In The Theory of Business Enterprise, first published in 1904, he ravages corporate malfeasance and the greed that was spurring the robber barons of his day. If it all sounds familiar a century later, it's a testament to the timelessness of Veblen's criticisms of the corporate world, the wrongdoings of which today he would readily recognize.

Modern readers will appreciate this reintroduction to one of the great economic thinkers.

Product Details

Publisher: Cosimo Classics
ISBN-10: 1-59605-239-2
ISBN-13: 978-1-59605-239-0
Amazon.com Sales Rank #562332
Published on: November 01, 2005
Number of items: 1
Binding: Paperback
228 pages

Customer Review

not a natural: Veblen's best

As with numerous other social theorists who have made a lasting impression on contemporary thought, Veblen was born in the latter part of the 19th Century and died in the early decades of the 20th Century. In fact, he died in 1929, not long before the stock market's pre-depression crash, something he had foreseen, though he never put it in just those terms.

Veblen is best known for his bitingly satirical account The Theory of the Leisure Class, a book that did a great job of describing the consumption-driven 1990's and foresaw the elevation of the CEO to the status of a hard-nosed hero and repository of esoteric knowledge shared only by MBA's.

The Theory of Business Enterprise, however, made a compelling case that, as with the 1990's, the mal-distributed wealth of the early 1900's was largely an under-capitalized fiction, fostered by people who bid the prices of pieces of paper higher and higher until the purported value of stocks bore no resemblance to the productive wealth upon which they ostensibly rested.

Veblen had read Marx, and found his work useful. He objected, though, to the central place Marx gave to the labor theory of value, rejecting it as unduly metaphysical.

Nevertheless, as with Marx, Veblen saw rapidly industrializing American society as organized around two classes, those imbued with the instinct of workmanship and interested in production, and those whose only concern was pecuniary gain. The latter group, of course, called the shots. Marx, however, saw the development of capitalism (which Veblen commonly called the price system), as an essential prerequisite to a socialist society. Veblen, by contrast, was convinced that the development of a technocratic social system, one that placed a premium on production of things that made people's lives genuinely better, was long overdue.

Having read The Theory of Business Enterprise, one is left asking why the 1929 stock market crash and the Great Depression were foreseen only by a few obscure institutional economists, and completely missed by high-level policy makers. Similar questions, however, are just as strikingly pertinent today. The system, it seems, is basically the same, as is the free market ideology that lends it legitimacy. What now?

Richard K. Woodward: Interesting as a historical work

While I couldn't say this book is a must-read for contemporary social scientists, it is extremely impressive how much of later developments in economics Veblen anticipated in this book, written in 1904. Moreover, this came as a surprise to me, which leads me to suspect that there is less awareness of his contributions than there should be. We know, of course, that we are standing on the shoulders of the giants of the past, and Veblen is clearly one of those giants. In this book we can find the seeds of ideas like the transaction cost analysis developed later by Coase and Williamson, the separation of ownership and control in the modern corporation (associated in most people's minds with the names of Berle and Means), and much of what Keynes wrote about the animal spirits of investors in his General Theory. Veblen also anticipated an important element of Keynesian macroeconomic theory in writing about the role of contracts as a source of price rigidities, and I had to wonder whether his speculations on how policy measures to reduce competition might ameliorate business downturns inspired some aspects of Roosevelt's National Recovery Act. Moreover, from the very first page, on which he discusses the centrality of the machine and the "machine process," we can see how Veblen, along with other classics like Adam Smith and Karl Marx, anticipated the concern of neo-Schumpeterian evolutionary economic theory with the role of technology in economic processes. The concluding chapters deal with Veblen's concerns about how the "machine process" is transforming culture and civilization. I feel that a more insightful treatment of this subject can be found in Jacques Ellul's Technological Society, but again Veblen was breaking new ground here, and one has to recognize and admire his role as a pioneer.

Jon Thomas: A Classic Text

I read a fair amount of Veblen on the side as an undergraduate over 35 years ago. I did this during a very anti-War and anti-establishment time that meshed neatly with my own attitudes during that period. Recently, I thought I would go back and re-read some of his works--including this one. I was surprised. His descriptions of the financial foibles of Wall Street and American industry of the early 20th and late 19th century are startlingly similar to what we see today. The same tendency towards excessive leveraging existed back then (1904 publication) as it does today. It would truly seem that the old adage that those who refuse to learn from history are doomed to repeat it. This homely insight could also be applied to good effect concerning military adventures by future US administrations. For some reason, I doubt that it will be the present one....

Veblen is his most wickedly funny and insightful as a critic. His views of captains of industry and the politicians who are effectively bought by them are as pertinent today as they were back them. He was a superb economic and social diagnostician.

The area that he seems to be weakest in, in retrospective, is his prescription for the ill patient. He romanticized the "machine process" and the "engineer", only to be eventually disappointed. Technocracy was a movement that he flirted with for awhile, but given the fact that engineers and technical people are every bit as flawed as the rest of humanity, was bound to fail him as well.

I wonder what he would have thought of FDR if he had lived another 10 years. I like to think that he would have embraced the type of social democracy that Roosevelt represented. But then again, he enjoyed playing the iconoclastic outsider. The brilliant wit who loved nothing more than tearing into the pretensions and frauds of those that have come to rule. ... He was one of a kind and hopefully will not be forgotten for a very long time. It's unfortunate that he is not studied more in schools. He has much of value to offer. Not the least of which is to question the established authority as opposed to bowing down and kissing its ring.

Phutatorius: Veblen as Democritus Junior

I admit I've only made it to page 103 (that's a little over half way through) as I write this review. My excuse is that I've reading it concurrently with my second reading of Wm. Gaddis' novel, "JR," a long and challenging read, even the second time. But the two books fit together wonderfully well, I think. Veblen could have been writing about Enron, Tyco or MCI, he's so up to date -- even one hundred years later. But I've also wondered whether Veblen purposely mimicked the prose style of "Democritus Junior" the putative author of the 17th century "Anatomy of Melancholy." That said, I want to mention that the Cosimo Classics edition of "The Theory of Business Enterprise" seems to be an exact facsimile of my 1958 Mentor mass-market format paperback, which bears a cover price of 50 cents. Although the margins are a little wider in the Cosimo Classics edition, the text is the same exact size, the pagination is identical and at least one printer's error (an omission of the word "the" on page 71, about halfway down) has persisted. But it's well worth the effort to read it and I'm looking forward to finding the patience to finish the last 90 pages.

Craig L. Howe: The Roots of Corporate Excess

I recently reread Thorstein Veblen's The Theory of Business Enterprise. To my amazement, the book is more relevant today than when I first read during my college days

Published in 1904, the book expands the author's view that business organization was incompatible with making money. The industrial system, he argues, requires men to be diligent, efficient, and cooperative. On the other hand, those who rule it are overly concerned with making and spending money.

Personally, I have grown tired of hearing today's executives call for a renewal of a corporate entrepreneurial spirit. Meanwhile, their employment contracts guarantee bonuses keyed to meaningless metrics, access to one or more corporate jets, gross-ups and "uber"-luxury car leases. Their rhetoric sounds as short-sighted as Marie Antoinette's "Let them eat cake."

Coining the phrase "conspicuous consumer," Veblen revealed the roots of these excesses more than a century ago. Writing about the robber barons of his day, he ravaged the greed and corporate malfeasance in his books.

Educated at Carleton College, Johns Hopkins University and Yale University had a short teaching career as a lecturer at the University of Missouri and a subsidized position at the New School for Social Research.

Veblen's reputation reached its pinnacle during The Great Depression. Often viewed as a political radical or socialist, Veblen committed himself to any form of political action.

Eerily relevant today, "The Theory of Business Enterprise" earned him a deserved reputation as a social critic that extends far beyond his limited academic roots.