FacebookTwitterGoogle+RedditEmail

The Legacy of Veblen in the Age of Post-Industrial Capitalism

An important book has just been published from a 2012 conference in Istanbul on Thorstein Veblen: Absentee Ownership and its Discontents, edited by Michael Hudson and Ahmet Öncü. It is published by ISLET and is available on Amazon. 

The book contains articles by us, Michael Perelman,  and others, with a forward by William M. Dugger. It is available for $35

The Global Financial Crisis since 2008 has left in its wake the most severe economic downturn since the Great Depression. Governments and entire national economies have been sacrificed to save the financial sector and its major clients. Bailing out banks, bondholders and Wall Street brokerage houses – the institutions whose mismanagement, over-lending and outright fraud led to the crash – has widened economic polarization and caused fiscal strains.

This has led many countries to reconsider the character of macroeconomic management – and behind it, the body of economic and political theory guiding today’s societies. What seemed at first glance to be a systemic policy failure of mainstream economics is coming to be seen as not so much a failure as part of an orchestrated class to protect financial wealth and its allied rentier sectors. Economic policy has passed out of the hands of elected democratic government to central banks and other government agencies controlled by financial planners and the rentier class behind them. Their post-crisis management has enabled these interests to gain control of a large swath of the pubic domain of debtor countries, along with industries and real estate in the creditor nations themselves.

The Communist Manifesto’s classic dictum that “the executive of the modern state is nothing but a committee for managing the common affairs of the whole bourgeoisie” no longer seems to be an exaggeration, but it may be updated to describe modern governments above all as committees to subsidize and rescue the banking and financial sector, which has become the manager and central planner of today’s global economy.

The effect is to post-industrialize society, subordinating the forces of industrial veblen-cover-frontcapitalism to an extractive (and increasingly concentrated) financial superstructure consolidating its power by bank loans, bond and stock ownership – turning the rest of society into debtors, renters and buyers of monopolized goods and services.

What remains in dispute is just who comprises the today’s managerial class and where its policy program is leading. The present collection of essays trace how Thorstein Veblen described the way in which the mid-19th century’s industrial capitalism was becoming centered on what today is called the Finance, Insurance and Real Estate (FIRE) sector. Each author in this volume discusses the character of today’s capitalism, and how and why the capitalist class remains politically dominant despite the fact that it repeatedly fails to fulfill the requirements of economic leadership it claims to fulfill. Together, these papers contribute to a better understanding of “capital in the twenty first century,” to use the phrase that has become popular following Thomas Piketty’s best seller.

Veblen made numerous contributions to a diverse set of fields. Not surprisingly, he has been considered by some to be an economist, and by others a sociologist. To others he seemed broadly to be an anthropologist, political or cultural theorist. The authors of the current collection view him as a critic of “the established order of business,” continuing in the tradition of classical political economy to analyze the often dysfunctional modern world that, in his mind, required a restructuring.

Unlike today’s neoclassical economics, classical political economists distinguished between earned and unearned income, that is, the types of income accruing to productive and unproductive labor and investment respectively. The labor theory of value found its counterpart in the “rent theory” of prices. This distinction between intrinsic cost-value and market price (with economic rent reflecting the margin of price over value) provided a basis for analyzing the ownership of wealth and other special privileges to extract income without creating real value by producing goods and services.

The policy conclusion of this classical approach was that material wealth adding to overall well-being could be augmented only by productive investment. By the same token, a subset of unproductive rentier property and financial claims was extractive rather than productive – and hence, was a form of economic overhead, not real wealth. This was the essential theme of classical rent theory, which Veblen continued at a time when the economics mainstream was denying the distinction between rent extractors and industrial investors.

Pursuing the logic of classical rent theory, Veblen investigated the consequences of concentrating ownership in the hands of an evolving capitalist class. He described “absentee ownership” as the “latest stage of capitalism” and “the new order of business” at the outset of the twentieth century. “It may be said, of course, and perhaps truthfully, that the absentee owners of the country’s industrial equipment,” he wrote, “come in for a disproportionate share of the ‘national dividend,’ and that they and their folks habitually consume their share in superfluities; but no urgent moral indignation appears to be aroused by all that.”

This class of absentee owners comprised a new aristocracy. Like their feudal counterparts, they did not directly manage the means of production or other assets, which took on the form mainly of corporate bonds and stock. Real estate investment was largely for speculative purposes to obtain price gains, while the stock market likewise aimed increasingly at making purely financial gains.

For Veblen, absentee ownership as the latest stage of capitalism consisted of three pillars: “the mechanical system of industry, the price system, and the national establishment.” This tripartite social organization was centered on the financial sector, whose major business concern was to create industrial monopolies while gaining control of national politics. Veblen called these monopolists and political deep state the “vested interests.” The credit system was the core of the financial sector, which was employed to gain unearned income on behalf of these vested interests.

The result was bifurcation between the super rich absentee owners and the underlying population, whose survival has increasingly come to depend on credit, i.e., debt on the liabilities side of the balance sheet. In Veblen’s words, capitalism in the form of absentee ownership works in such a way that “the country’s assets should, at a progressively accelerated rate, gravitate into the ownership, or at least into the control, of the banking community at large.”

In view of Veblen’s argument that engineers would play a major or even the most progressive role in society, this book is significant largely because it is the product of an international conference on Veblen’s legacy organized by the Chamber of Electrical Engineers of Turkey in 2014. It is hard to imagine such an attempt by an engineering association in any other country. We therefore are grateful to Chairman Cengiz Göltaş of the 43th Board of Governors of the Chamber of Electrical Engineers of Turkey, and to all other members of the 43th Board for their support of the conference. Our thanks also go to Chairman Hüseyin Yeşil of the 44th Board of Governors and all other members of the 44th Board and Chairman Orhan Örücü of the Center for Continuing Education of the Chamber of Electrical Engineers for their support and interest in our project. And for their continued assistance throughout the project we would like to thank the Chamber members Oylum Yıldır and Emre Metin.

 

Weekend Edition
August 17, 2018
Friday - Sunday
Daniel Wolff
The Aretha Dialogue
Nick Pemberton
Donald Trump and the Rise of Patriotism 
Joseph Natoli
First Amendment Rights and the Court of Popular Opinion
Andrew Levine
Midterms 2018: What’s There to Hope For?
Jeffrey St. Clair
Roaming Charges: Running Out of Fools
Ajamu Baraka
Opposing Bipartisan Warmongering is Defending Human Rights of the Poor and Working Class
Paul Street
Corporate Media: the Enemy of the People
David Macaray
Trump and the Sex Tape
CJ Hopkins
Where Have All the Nazis Gone?
Daniel Falcone
The Future of NATO: an Interview With Richard Falk
Robert Hunziker
Hothouse Earth
Cesar Chelala
The Historic Responsibility of the Catholic Church
Ron Jacobs
The Barbarism of US Immigration Policy
Kenneth Surin
In Shanghai
William Camacaro - Frederick B. Mills
The Military Option Against Venezuela in the “Year of the Americas”
Nancy Kurshan
The Whole World Was Watching: Chicago ’68, Revisited
Robert Fantina
Yemeni and Palestinian Children
Alexandra Isfahani-Hammond
Orcas and Other-Than-Human Grief
Shoshana Fine – Thomas Lindemann
Migrants Deaths: European Democracies and the Right to Not Protect?
Paul Edwards
Totally Irrusianal
Thomas Knapp
Murphy’s Law: Big Tech Must Serve as Censorship Subcontractors
Mark Ashwill
More Demons Unleashed After Fulbright University Vietnam Official Drops Rhetorical Bombshells
Ralph Nader
Going Fundamental Eludes Congressional Progressives
Hans-Armin Ohlmann
My Longest Day: How World War II Ended for My Family
Matthew Funke
The Nordic Countries Aren’t Socialist
Daniel Warner
Tiger Woods, Donald Trump and Crime and Punishment
Dave Lindorff
Mainstream Media Hypocrisy on Display
Jeff Cohen
Democrats Gather in Chicago: Elite Party or Party of the People?
Victor Grossman
Stand Up With New Hope in Germany?
Christopher Brauchli
A Family Affair
Jill Richardson
Profiting From Poison
Patrick Bobilin
Moving the Margins
Alison Barros
Dear White American
Celia Bottger
If Ireland Can Reject Fossil Fuels, Your Town Can Too
Ian Scott Horst
Less Voting, More Revolution
Peter Certo
Trump Snubbed McCain, Then the Media Snubbed the Rest of Us
Dan Ritzman
Drilling ANWR: One of Our Last Links to the Wild World is in Danger
Brandon Do
The World and Palestine, Palestine and the World
Chris Wright
An Updated and Improved Marxism
Daryan Rezazad
Iran and the Doomsday Machine
Patrick Bond
Africa’s Pioneering Marxist Political Economist, Samir Amin (1931-2018)
Louis Proyect
Memoir From the Underground
Binoy Kampmark
Meaningless Titles and Liveable Cities: Melbourne Loses to Vienna
Andrew Stewart
Blackkklansman: Spike Lee Delivers a Masterpiece
Elizabeth Lennard
Alan Chadwick in the Budding Grove: Story Summary for a Documentary Film
FacebookTwitterGoogle+RedditEmail