The Engineers and the Price System

Thorstein Veblen

• Publisher: Routledge
• Year: 2017
• eBook ISBN: 9781351304184
• Topic: Economia
• Subtopic: Teoria economica

In his The Engineers and the Price System, originally published in 1921, Veblen observes that World War One demanded industrial innovations, and he was among the first to predict the need for changes in managerial struc-ture. Veblen saw that industrial output was more dependent upon techno-crats managers and capital innova-tors than financiers.

In The Engineers and the Price System, Veblen applies economic theory to modern industrial society. He demon-strates that revolutionary change can be advanced by managers and engi-neers upon whose "brains and skills" the state of industrial arts depends.

In his uniquely comprehensive in-troduction, Daniel Bell discusses the associations and attitudes which mark Veblen as the prophetic outsider he remained most of his life.

Introduction

DANIEL BELL

Periodically, there is a renewed wave of interest in Thorstein Veblen’s The Engineers and the Price System. The sudden vogue of technocracy in 1932 led to the reissue of the book, and for a while it became a best seller, with an average sale of 150 copies a week. In recent years, the rapid expansion of the technical class of employees (in 1900, there was one engineer for every 225 factory workers; in 1950, one for every 62; and in 1960, one for every 20), the rise of computer technology and automation, the engineering exploration of space, and the new prestige of the scientist have all focused attention on the strategic importance of the technologists, and these speculations recall the excitement that greeted Veblen’s book when it was first published as a series of essays in 1919 in The Dial and then published in 1921 as a book.

The reasons for this excitement are not hard to find. The Engineers and the Price System is one of Veblen’s few prophetic books. The tantalizing “Memorandum on a Practicable Soviet of Technicians,” the concluding essay, is not, as the blurb writer proclaimed on the jacket of the 1932 re-issued volume, “to the engineers what the Communist Manifesto purported to be for the proletariat,” for Veblen opens and closes that chapter with the ironic statement that “under existing circumstances there need be no fear, and no hope of an effectual revolutionary overturn in America” that could “flutter the sensibilities” of the Guardians of the Vested Interests. But the context of the book does seek to establish a drift of history and an agenda for the future.

Revolutions in the eighteenth century [Veblen wrote] were military and political; and the Elder Statesmen who now believe themselves to be making history still believe that revolutions can be made and unmade by the same ways and means in the twentieth century. But any substantial or effectual overturn in the twentieth century will necessarily be an industrial overturn; and by the same token, any twentieth century revolution can be combatted or neutralized only by industrial ways and means.

In this respect, The Engineers and the Price System is squarely in the center of the preoccupation that has attended the rise of sociology since its beginnings in the nineteenth century: namely, the scanning of the historical skies for portents of “the new class” which will overturn the existing social order. Henri de Saint-Simon, the master of Auguste Comte and one of the fathers of modern sociology, initiated this quest in 1816, when he began publishing an irregular periodical, U Industrie (though he did not actually coin it, he popularized the term industrialism), which sought to de-scribe the society of the future. Past society, Saint-Simon said, had been military society, in which the chief figures were priests, warriors, and feudal lords—"the parasites” and consumers of wealth. The new industrial society, he said, would be ruled by the producers—the engineers and the entrepreneurs, the “coming men” of the times.¹ Karl Marx, of course, made the confrontation of capitalist and worker the central figure of his drama of modern history, but already in his time, some of Marx’s opponents, such as Mikhail Bakunin and Alexander Herzen, were warning the workers that the victory of socialism would lead not to a classless society but to the emergence of a new class, the intellectuals ruling in the name of the workers.² The identity of this new class has been central to the elitist sociology of Mosca, Michels, and Pareto. James Burnham achieved a flash of notoriety in the early 1940’s with his theme (a vulgarization of the work of two European syndicalists, Wacław Machajski and Bruno Rizzi) of “the managerial revolution” as the coming stage of collectivist society. In American sociology, Harold Lasswell has written (most notably in his World Politics and Personal Insecurity) of the “skill groups” that must inevitably dominate any future society.

And in this regard Veblen, too, must be ranked on the side of the elitists. If a revolution were to come about in the United States—as a practiced skeptic, he was highly dubious of that prospect—it would not be led by a minority political party, as in Soviet Russia, which was a loose-knit and backward industrial region, nor would it come from the trade-union “votaries of the dinner pail,” who, as a vested interest themselves, simply sought to keep prices up and labor supply down. It would occur, he said, along the lines “already laid down by the material conditions of its productive industry.” And, turning this Marxist prism to his own perceptions, Veblen continued: “These main lines of revolutionary strategy are lines of technical organization and industrial management; essentially lines of industrial engineering; such as will fit the organization to take care of the highly technical industrial system that constitutes the indispensable material foundation of any modern civilized community.”

The heart of Veblen’s assessment of the revolutionary class is thus summed up in his identification of the “production engineers” as the indispensable “General Staff of the industrial system.”

Without their immediate and unremitting guidance and correction the industrial system will not work. It is a mechanically organized structure of the technical processes designed, installed and conducted by the production engineers. Without them and their constant attention the industrial equipment, the mechanical appliances of industry, will foot up to just so much junk.

Thus the intellectual commitment was made: “The chances of anything like a Soviet in America, therefore, are the chances of a Soviet of technicians . . .” although, as was his wont, Veblen immediately backs off by remarking that “anything like a Soviet of Technicians is at the most a remote contingency in America.” Given his style of exaggerated circumlocution and deliberate indirection, this is, at best, what we can pin Veblen down to saying: If a revolution ever could come about in the United States, a revolution that would break the power of the vested interests, it would come from the engineers, who have a true motive for revolution—since the requirements of profit-making must traduce their calling—and who have the strategic position and the means to carry through a revolution.

In a curious way, all of this represented a radical departure for Veblen. Before 1919 he had paid little attention to the engineers, though one of the persistent themes of his major work, The Theory of Business Enterprise, is the inherent conflict between “business,” the financial interests who are concerned primarily with profit, and “industry,” those forces which are geared to production. His fundamental concept, the idea of the “machine process,” implied that because of the rationality of the machine a new race of men was being bred who replaced rule-of-thumb methods or intuitive skills with reasoned procedures based on the discipline of science. Yet he had never before tied these themes to the engineer. Typically, Veblen always left his concepts magnificently abstract, or he skillfully played the game of personification (e.g., “the captains of industry"), in which the social role rather than the person was manifest. Now, in 1919, Veblen seemingly made a basic sociological commitment—the identification of a concrete social group as the force that could, and possibly would, reshape society.

The postwar period was a critical one in Veblen’s life, and the books he wrote at this time, The Vested Interests and the State of the Industrial Arts and The Engineers and the Price System, bear a somewhat different relation to his pur-poses than does the rest of his work. It would be too much to say that Veblen in this period had hopes of becoming a revolutionary leader; this was out of keeping with his dour personality and the heavy personal armor with which he kept most of the world, and even his friends, at a distance. But it does seem to be the case that at this time Veblen suddenly felt that he might become a prophet (he had always been an oracle, and his writings were suitably Delphic) who would rouse the latent forces of change in America. And among these forces—or so he was led to believe by some of his disciples—were the engineers.

The Academic Floater

In 1919, at the age of sixty-two, Veblen had begun a new life, although two years earlier it had seemed that his career was at an end.³ Less than twenty years before, he had written his first book, The Theory of the Leisure Class (having had to guarantee almost all the costs of publication him-self), and this book, largely through the efforts of William Dean Howells, had gained him widespread attention. His second book, The Theory of Business Enterprise, published in 1904, won him the even more intense admiration of an eager group of young economists. But “professionally” this farm-boy son of Norwegian immigrants was a “failure.”

Throughout his life, Veblen was unable to find a permanent niche in the academic hierarchy. Although he had completed his Ph. D. at Yale at the age of twenty-seven (itself a remarkable achievement, considering the fact that he spoke almost no English until he entered the preparatory division of Carleton College, when he was seventeen), Veblen did not get his first academic job until he was thirty-five, when J. Lawrence Laughlin, with whom he had studied economics at Cornell, took him along to the nascent University of Chicago as a Fellow. Veblen stayed at the University of Chicago for fourteen years, but the administration regarded him with a cold eye (as much for his amatory difficulties as for his economic heresies), and he never rose higher than an assistant professorship, despite his publishing the aforementioned books, editing the Journal of Political Economy, and writing half a dozen major essays, including those on Karl Marx and socialist economics, reprinted in The Place of Science in Modern Civilization.

In 1906, Veblen was offered a post as associate professor of economics at Stanford University by David Starr Jordan, who was trying to strengthen the school’s academic reputation. For the first time, Veblen had an opportunity to move up the academic ladder, but his stay at Stanford University was dismal. Veblen was indifferent about his courses and uninterested in his students, and, to cap it all, he got involved in an adulterous episode that became a campus scandal. In December of 1909 he was forced to resign his post.⁴ For a year Veblen was unable to find another job, and then, through the intervention of a former student, H. J. Davenport, he was invited to the University of Missouri as a lecturer.

For seven years Veblen suffered the small-town oppressiveness of Columbia, Missouri. He tried desperately to leave, going so far as to apply to the Library of Congress for a routine bibliographical position—he was turned down as being too bright for the job. During the dispirited years at Missouri, Veblen’s output slackened. He wrote The Instinct of Workmanship, an uneven book that reflects more sharply than any of his others the evolutionary anthropology that guided his viewpoint, and (after a summer in Europe in 1914) Imperial Germany and the Industrial Revolution, a brilliant account of the way German feudal culture had grafted a highly advanced technology on the society in order to promote dynastic ends.

In 1917, by “mutual consent,” Veblen took a leave of absence from the University of Missouri to go to Washington; he never returned to formal academic life. A year later he celebrated his departure by publishing The Higher Learning in America, whose subtitle, “A Memorandum on the Conduct of the Universities by Businessmen,” only hints at its savage indictment of higher education. (The manuscript, written a few years before he left Missouri, had been withheld from publication at the suggestion of the University’s president; its original subtitle had been “A Study in Total Depravity.”)

The war itself engaged all of Veblen’s attention and energy. His stay in Germany and his tolerance of Woodrow Wilson (not his faith in Wilson, since Veblen was incapable of any such commitment) led him to support the Allied cause. He believed, moreover, that the war not only would demonstrate the requirements of rational planning, because of the need to mobilize total capacity, but would allow the victorious Allied nations to make an attempt at social reconstruction. In 1916, working at feverish speed, Veblen had written An Inquiry into the Nature of Peace and the Terms of Its Perpetuation (published largely at his own expense), which expounded these ideas. Making a distinction between democratic and dynastic governments, Veblen noted that in the latter the survival of “barbarian” impulses made them consistently more aggressive and warlike; “perpetual peace,” he concluded, could be maintained not only by finally dis-posing of all monarchic regimes, but by eliminating everywhere “the price-system and its attendant business enterprise” —Veblen’s euphemism for capitalism.

The book came out at a propitious psychological moment. By the spring of 1917, when The Nature of the Peace was published, virtually the entire intelligentsia of the progressive movement (Herbert Croly, Walter Lippmann, John Dewey) as well as the intellectual leaders of the Socialist party (William English Walling, John Spargo, A. M. Simons, Jack London, Upton Sinclair) were supporting America’s entry into the war and repudiating their earlier anti-war stands.⁵ The Nature of the Peace allowed the intelligentsia both to justify their attitude against German militarism and to hope for the emergence of a new rational society after the war. The book was an immediate success, and was praised in all the liberal magazines. Francis Hackett, an editor of the New Republic, which was the organ of the progressive intelligentsia, called it “the most momentous work in English on the encompassment of lasting peace/’ and the Carnegie Endowment for International Peace purchased five hundred copies for distribution in colleges and universities. Veblen quickly became an international figure, and letters were written to him from all parts of the world. “Now,” he said, “they are beginning to pay some attention to me.”

It was in this mood that, in October 1917, Veblen went to Washington. As his biographer, Joseph Dorfman, remarks, “He wanted to be at the centre of things, and he hoped that he could be made use of on the paramount questions of the plans for peace.” He saw Newton D. Baker, the Secretary of War, and Supreme Court Justice Louis D. Brandeis, but no one in a high position was interested in Veblen’s ideas. He was invited to submit some memoranda to a group (whose secretary was Walter Lippmann, then of the New Republic) that had been set up by Wilson’s confidant, Colonel Edward M. House, to prepare material on the terms of a possible peace settlement. One of Veblen’s two memoranda discussed the problem of creating a “League of Pacific Peoples"; the other, on the “Economic Penetration of Backward Countries and of Foreign Investments,” proposed the regulation of investment by the “Pacific League.” Both were duly filed, but Veblen, discouraged, took a job with the statistical division of the Food Administration, where, with the aid of Isadore Lubin, he prepared a study of price control on foodstuffs.

Meanwhile Veblen’s books, with their cool, sardonic tone, were getting its author into trouble. Although the Committee on Information, an official propaganda agency, praised his Imperial Germany, the Post Office Department, which was in charge of censorship, declared the book non-mailable under the Espionage Act. The American Defense Society and other jingoist groups complained to the Department of Justice about Veblen’s attitude in The Nature of the Peace and Imperial Germany (complained, that is, ...

Table of contents

• Cover Page
• The Engineers and the Price System
• copy
• Contents
• INTRODUCTION
• I. On the Nature and Uses of Sabotage
• II. The Industrial System and the Captains of Industry
• III. The Captains of Finance and the Engineers
• IV. On the Danger of a Revolutionary Overturn
• V. On the Circumstances Which Make for a Change
• VI. A Memorandum on a Practicable Soviet of Technicians