Thorstein Veblen has written previous books. In these other books he brought a different flavor into economics. Adam Smith said little government means the free market will be able to work well on its own. Ricardo and Malthus brought up complications to the market system. John Stuart Mill, explained that the market can work well, but their is a need for institutions like charities, and certain laws to protect the vulnerable. Thorstein Veblen disagreed with Mill explained that institutions on the whole only harm people. On the factory floor you have people able to do the work, able to produce things. What do you need an institution for, when its the machine and the human that create wealth? Veblen saw religion as myth, and a way of getting money out of people. He saw the traditional family as domineering and oppressing women. He was also against private property.
In this book here, he takes things further in regards to showing his true colors and what he calls the absentee owners. These are people who have money, to start up businesses and are not on the factory floor, no they are telling others what they can and cannot do. Veblen says they sabotage factory output! Here's how it works: Suppose you and your community buy one tub of ice cream per family per week for say $3. If Ice cream output goes up, you will only buy more ice cream if the price goes down, to say $2. By them increasing the output they must lower prices.
So the business person must keep output at a level which will maximise his/her profits. This means potential employees are unemployed, it means materials are underutilized. To this Thorstein Veblen blames finance on everything. Output being controlled creating unemployment is caused by those who have the finance to control business decisions. He also says that if their was no advertising costs, the price of goods could be cut by 50%. The cost of just billboards was $600,000,000 in the 1919, and that was when an ounce of gold was worth $20 an ounce, prices were much cheaper.
Veblen saw absentee owners with advertisers as a big source of the problem. His solution, to strip absentee owners of their property. Of course he saw this as an eventual solution, because people had too much respect for the business people. He did see that one day, if the technicians on the factory floor got together with other factories they could start up a revolution. He called them a soviet of engineers.
So Veblen spoke out against institutions and now we see that his solutions were very similiar to Karl Marx's. One of the differences is that Marx was more militant and aggressive, whereas Veblen was more mellow about it. This also may explain Roosevelt's new deal. The new deal required people to limit their business output, as part of the recovery. Maybe, this is how Veblen's ideas influenced society. Also Veblen saw military spending as helping business people, not too different than Keynes.
Finally one last thought. Going back to the ice cream example. Maybe the solution would be to produce other goods. If producing more means lower prices and lower profits, why not just create new things, so a soviet of technicians may not be the solution.
ISBN-13: 978-1596058927
ISBN-10: 1596058927
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