Institutional Law and Economics: The Legal-Economic Nexus

  This last section ends the chapter and a discussion of the competitive system.  Veblen defines a competitive system as: Pecuniary rivalry and contention Price system Dominated by mechanic industries Standardized consumption Large scale industries Material equipment held in private hands Technological knowledge is held in a few specialized hands although it belongs to the entire community Owners of the necessary equipment control the labor force. Veblen then goes on to talk of the “captains of industry”. He asserts that these people who have in the past been technologically aware are not anymore. No longer are they aware of technology or perhaps even care to be aware of technology. The capitan does realize the need for industrial control and therefore begins to train and implement a new set of efficiency engineers. Yet, there remains an ongoing battle between workmanship and salesmanship even with these efficiency engineers. Vebeln also emphasizes here that a genetic account ...

 This post will cover pages 205-218 that make up the first half of section II - the competitive system of chapter 5. Veblen's story starts here by noting that the accumulation of goods is the prime objective of industry and how any business concern will be rated amongst its fellow firms. He also notes that business traffic and business concerns are now thought to correspond directly to the well being of the community overall. Here we turn to a key method used by Veblen.  The near past of say 100 years ago from when he was writing so late 18th and early 19th century, are the habits of thought that still guide thinking in the early 20th century.  As we will, this is a major problem for Veblen and his perception of what is in the best interest of the community's welfare. He also notes how these old patterns of thought continue to capture business interests and economists. As is typical, Veblen wants us to focus on the state of industrial arts. The handicraft phase isi what s...

We asked in the last post about the nature of change in Veblen/s system, we get a partial answer in the pages following the last section.  Veblen specifically uses the term “mutations” to talk about what has brought on this”modern technological episode”. He points to two competing habits of thought: 1) warrant of seizure by prowess and 2) prescriptive tenure. He points to the second one, prescriptive ownership as being the one that facilitates the growth of technology, trade and industry. One key point where number two dominates occurs when the interests of the “commonweal” are greater than the “fiscal interests of the crown or state”. This change will mark a substantial improvement in the mechanical arts as well. It is in this environment that the “genius” of the lower or industrial classes can excel versus those of the ruling class. He states this period can be characterized by a shift to a nearly shift to “spirit of savagery” versus the predatory barbarian culture where exploita...

  Vebeln starts this section with a discussion of those peoples of northern Europe who have apparently made the greatest advances in technological proficiency in the industrial age.  His claim is that they have not been under a filly patriarchal system and its attendant authoritative rule of government. They have been fragments in forms of local self government and have shown a  degree of skepticism towards religion for example. The important point has lees to do with the specifics of Veblen's analysis than with how he is performing a cultural analysis to understand how habits of thought or institutions are formed and altered over time that explain the economy. He writes that northern Europeans were unable for whatever reason to excel in building great artifacts or civilizations but did excel in fighting and small-scale crafts. As he writes, “their best efficiency has rather run to those bull-headed deeds of force and those mechanic arts that touch closely on the domain o...