The title sounds strange. Most people would think that profit means efficiency. You have to be efficient to make a profit. That all sounds nice, but lets suppose everybody buys an ice cream on a cone a day for $1.00. Now all of a sudden there is enough ice cream for people to buy two cones per day. For them to be able to sell you more they have to lower the price. You'll buy one a day for $1.00, at 70 cents a cone you'll buy two. So sometimes the greater the output, the lower your price is per unit of that output, and therefore the lower your profit sometimes. To this issue Veblen explained all the other factors relevant to this scenario. Sometimes an exaltation will happen. This means people will buy more from a particular business and will pay higher prices.
Because people are willing to pay higher prices, the business is later willing to pay higher wages and other higher costs. Then all of a sudden the business' competitors start to increase output of that particular good, the price goes back down, but the business has locked itself into paying higher wages by contract, even though prices are back to where they were. This squeeze in profit puts them out of business. Other factors include the credit economy. Businesses need to borrow, and some businesses have investors and creditors. With a profit squeeze, these people may decide its not worth keeping the business going. Veblen explained that businesses go through an exaltation, where things go well, more volume higher prices. With competitors, that exaltation turns into a depression, where prices go back down, but costs have risen, and these costs are written in contract.
And then of course if the profit squeeze is big enough, and long enough, people may decide to liquidate the business. On this point investors are more patient, they know that liquidation costs will affect their investment negatively. These points are all explained in his first 7 chapters. Let's not forget Veblen put anthropology into economics. He saw the handicraft era and the industrial era. In the handicraft era you had your own land, and you were self made. You could make pottery or farm goods. And that is where private property had value. However in the machine era, you are one of many people working for an organisation. You have a defined role, and a specific set of tasks. In the machine era their was a place for trade unions. However, the right to contract and the right to private property, is the thing standing in the way of progress. Veblen therefore saw private property as obsolete in the way of evolutionary process. In fact Veblen agreed with Marx about private property, religion and the traditional family. However he saw this change coming about in a different way. That as people worked in the factory, their social norms would change, and they would see the old social norms as obsolete and irrelevant, therefore there is no need for a violent revolution.
I'm not of the view that the family or religion is obsolete, however this is his view, and sometimes we can learn something by seeing things from the other person's point of view. Finally, he did say a few things similiar to Keynes, before Keynes became well known. He borrowed some ideas from JA Hobson who explained it is possible for a business to overproduce, where the consumption isn't high enough, and sometimes government spending is necessary to keep a business going. Also going back to Marx, Marx saw things from the point of view of the Hegelian dialectic, whereas Veblen saw the evolutionary process as reality.
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