Absentee Ownership

Business Enterprise in Recent Times - The Case of America

Thorstein Veblen

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351534215
• Edition: 1
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

Absentee Ownership is an inquiry into the economic situation as it has taken shape in the twentieth century, particularly as exemplified in the case of America. According to Thorstein Veblen, absentee ownership is the main and immediate controlling interest in the life of civilized men. It is the paramount issue between the civilized nations, and guides the conduct of their affairs at home and abroad. World War I, says Veblen, arose out of a conflict of absentee interests and the peace was negotiated with a view to stabilize them. Part I of the book is occupied with a summary description of that range of economic circumstances and that sequence of economic growth and change that led up through the nineteenth century and have come to a head in the twentieth century. Part II is an objective, theoretical analysis of those economic circumstances described in the first part of the book. Marion Levy writes in his introduction about the phrase "absentee ownership" and how it has a definite connotation, representing a dark figure in the economic system, a frustration of desired levels of self-sufficiency. In the early days, the giants of business enterprise had faces--Rockefeller, Vanderbilt, Ford, Edison--but they all turned into faceless bureaucracies, says Levy. The giants may not have been nice, but they had faces and human traits. Absentee ownership wiped that out for the common man. Veblen's book continues to be of vital importance to the studies of economics, political theory, and sociology.

I Absentee Ownership and Business Enterprise in Recent Times

CHAPTER I
Introductory

IN recent times absentee ownership has come to be the main and immediate controlling interest in the life of civilised men. It is the paramount issue between the civilised nations, and guides the conduct of their affairs at home and abroad. The Great War arose out of a conflict of absentee interests and the Peace was negotiated with a view to stabilise them.

This state of things is not precisely new, nor has it come on suddenly. It is a growth out of the past, but it has reached something like a culmination during these opening decades of the century ; and it is an outcome of cumulative changes which have been directed to no such end. The years of the Great War and the Armistice have brought many things to a head, and among other things they have also thrown this factor into the foreground of the situation. And the experience of the War and after has stirred men to a crude and uneasy realisation of this state of things. Under one form of words or another, issues which arise out of the sovereign rights of absentee ownership are stirring the popular sentiment and engaging the attention of the officials with an ever increasing urgency. These issues are the substance of all those desperate perplexities that beset the constituted authorities and they underlie all those dissensions that continually trouble the nation’s industry and business. With the result that popular attention and sentiment are gathering about the issues of absentee ownership more and more directly and consciously with each further move,—questions of its aims and uses, its necessary limitations, its continued security, its rightful claims, and its possible eventual abridgment or disallowance.

It is true, this particular form of words—”Absentee Ownership”—has not been commonly employed to describe this peculiar institution which now engrosses public policy and about which controversy is beginning to gather. But that only marks a deficiency of speech. It is only within the last few decades, and only by degrees, that the facts in the case have been changing in such a way as to call for the habitual use of such a phrase as “absentee ownership.” It is only within the last few decades, and only by degrees, that absentee ownership has visibly come to be the main controlling factor in the established order of things. Yet it is no less true that this peculiar institution which this form of words is fit to describe has now plainly come to be the prime institutional factor that underlies and governs the established order of society. At the same time and in the same degree it has, as a matter of course, become the chief concern of the constituted authorities in all the civilised nations to safeguard the security and gainfulness of absentee ownership. This state of things is now plain to be seen, and it is therefore beginning to cloud the sentiments of the underlying population at whose cost this security and gainfulness are maintained.

So, by degrees the drift of changing conditions has been heading up in a new alignment of economic forces and of economic classes. So that the dominant considerations which now govern the material fortunes of the community are no longer the same as they have been in the recent past ; nor indeed such as they are alleged to be in the present. These matters are still spoken of in terms handed down from the past, and law and custom still run in terms that are fit to describe a past situation and conform to the logic of a bygone alignment of forces. As always, the language employed and the principles acted on lag behind the facts. But when, as now, the facts have been changing at an unexampled rate the language and the principles will lag behind the facts by an unexampled interval. Yet under the urgent pressure of new material conditions some degree of adjustment or derangement of these ancient principles is due to follow. Continued “lag, leak and friction” is bound to count for something in the outcome. Continued irritation and defeat begot of a system of law and custom that no longer fits the material conditions of life will necessarily be an agency of unrest, particularly as touches the frame of mind of that fraction of the community on whom the irritation and defeat continue chiefly to fall.

Therefore these time-worn principles of ownership and control, which are now coming to a head in a system of absentee ownership and control, are beginning to come in for an uneasy and reluctant reconsideration; particularly at the hands of that underlying population who have no absentee ownership to safeguard. Their questioning of these matters habitually takes the shape of personal recrimination and special pleading, but the drift of it all is no less evident. Those traditions that underlie the established order and that guide legal and administrative policy, proceed on an assumed community of class interests, a national solidarity of interests, and an international conflict of interests; none of which is borne out by material facts. Therefore these traditional policies that still govern the conduct of affairs, civil and political, legal and administrative, are also falling under suspicion of being incompetent, irrelevant and impertinent, if not downright mischievous. The losers under these rules of the game are beginning to see that law and politics, too, serve the needs of the absentee owners at the cost of the underlying population.

So, popular interest and sentiment no longer cluster about these respectable heirlooms of civil liberty and national rivalry with the same enthusiastic bigotry as in the recent past. Among these unblest classes who have to pay its cost, patriotic animosity is no longer so unreflectingly self-sufficient as it once was, and as perhaps it always should be. Among these classes of the underlying population the new alignment of material interests is beginning to threaten the continued life of the patriotic spirit. The effectual division of interest and sentiment is beginning visibly to run on class lines, between the absentee owners and the underlying population. In material effect, the national frontiers no longer divide anything but national groups of special interests, and these special interests are quite uniformly interests of absentee owners. National rivalries are useful to these special interests; hence the feverish urgency with which the constituted authorities and the substantial citizens are concerned to foment national animosity and to penalise backsliders.

Of course these matters are not currently spoken of in these terms. The new alignment of interest and sentiment is not formally recognised, not yet. A decent respect for the obsolete amenities of Natural Liberty forbids it, and there is always the human propensity to hold fast that which once was good. And more particularly, the bygone issues of national ambition still continue to hold the affections of the substantial citizens, and the spirit of national rivalry still continues to serve the needs of the special interests. Therefore national ambitions must and shall be preserved and all conflict of class interests must and shall be ignored.

But all the while the drift of circumstances goes forward and cuts the lines of the new cleavage of interest and sentiment no less deep and with no less intractable ill-will on both sides, for all their being decently covered over with patriotic invective and authentic verbiage about the common good. And all the while, under one form of words or another, men’s everyday interest and attention gathers more and more consciously about this ill-defined and shifty issue of absentee ownership, and about its place and value in the country’s industry, to the slowly increasing neglect of obsolete political ambitions. And all the while it is increasingly evident that patriotic sentiment and national ambitions are no longer of any material consequence, except as ways and means by which the statesmen are enabled to further the material interests of the substantial citizens. A “substantial citizen” is an absentee owner of much property.

This summary description of things as they are may seem overdrawn. But it is intended to describe the present drift of things, rather than the accomplished facts hitherto. It is drawn from current observation rather than from the historical records ; so that it aims to describe the current facts rather than the current talk about these facts. Of course there is no intention to intimate that the ancient and honorable habits of national conceit and patriotic intolerance have been forgotten or even that they are by way of becoming inoperative ; nor is it that the rightful claims of absentee ownership are being neglected or being formally questioned and required to show cause why. Those cardinal realities of the established order have not gone out of date or out of mind, neither the one nor the other. Nor is there an effectual resolution any-where being taken to put either of them away; not yet. But these ancient and honorable pillars of the old order are by way of becoming holdovers, both the one and the other; and the spokesmen of both are beginning to find themselves on the defensive. As witness the Treaty of Peace, which foots up to little if anything else than a plan of defense for the vested interests, concerted between the several custodians of the old order, at any cost to the world’s peace or to the underlying population. As witness also the later conferences of the Powers at Genoa, at The Hague, and at Lausanne, which have turned on little else than measures designed to stabilise the rightful claims of absentee owners as against the defection of the Russians and other recusants, together with the equitable distribution of absentee perquisites among the several groups of vested interests represented by the several governments concerned.

In effect, and notoriously, it has been the chief and engrossing business of all the statesmen of the Armistice and the Treaty, on the winning and the losing side alike, to safeguard these two essential holdovers that go to make up the status quo ante. National rivalry is a necessary means of making things safe and profitable for the absentee owners, as will appear more in detail in the further argument. All this is a traditional matter of course and has consequently aroused no particular discussion. Indeed, it is so much a matter of course as to be taken for granted. But the defensive measures concerted by these statesmen, and their continued manoeuvres for the stabilisation of absentee interests, go to show which way the cleavage of interests runs. Statesmen do not resort to counsels of desperation, such as underlie the Treaty and the later negotiations concerning partition of colonies and military establishments, except to save a precarious situation. And the same defensive purpose, it must be admitted, runs through that desperate recourse to the strong arm of repression which today engages the energies of the civilised governments, all and several, with the clamorous approval of their substantial citizens whose pecuniary interests are sought to be safeguarded by these measures.

Now, this red line of cleavage, in material interest and in sentiment, runs not between those who own something and those who own nothing, as has habitually been set out in the formulas of the doctrinaires, but between those who ov/n more than they personally can use and those who have urgent use for more than they own. The issue now is turning not on a question of ownership, as such, but on absentee ownership. The standard formalities of “Socialism” and “Anti-socialism” are obsolete in face of the new alignment of economic forces. It is now not so much a question of equity in the distribution of incomes, but rather a question of expediency as regards the absentee management of productive industry, at large and in detail. It is not a matter of moral revulsion. It may be said, of course, and perhaps truthfully, that the absentee owners of the country’s industrial equipment 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. All that has long been a familiar matter of course, and no substantial question as to the merits of that arrangement has yet been seriously entertained. Efforts to capitalise such a sentiment for purposes of disturbance have uniformly failed.

What the material circumstances are bringing to men’s attention is a question of how to get the work done rather than of what to do with the output. It is a question of the effectual use of the country’s industrial resources, man-power, and equipment.¹ Investment and corporation finance have taken such a turn and reached such a growth that, between them, the absentee owners large and small have come to control the ways and means of production and distribution, at large and in detail, in what is to be done and what is to be left undone. And the business interests of these absentee owners no longer coincide in any passable degree with the material interests of the underlying population, whose livelihood is bound up with the due working of this industrial system, at large and in detail. The material interest of the underlying population is best served by a maximum output at a low cost, while the business interests of the industry’s owners may best be served by a moderate output at an enhanced price.

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1Cf., e. g., Walther Rathenau, “Die neue Wirtschaft,” Schriften, vol. V.

CHAPTER II
The Growth and Value of National Integrity

THERE is no question of the legality of absentee ownership, nor of its moral right. It is a settled institution of civilised life, embedded in law and morals, and its roots run through the foundations of European civilisation. Legality and morality are a matter of statute, precedent, and usage; and absentee ownership is quite securely grounded in the Common Law and deeply ingrained in the moral sense of civilised men. In the American commonwealth such ownership is also covered by the constitutional provision which declares that men must not be deprived of their property except by due process of law. And the legal precedents, interpretations and refinements which have been set up and worked out by jurists under this constitutional provision have in the main been concerned with fortifying and extending the security and implied rights of absentee ownership in one bearing and another; with the result that these rights are, legally and morally, more secure and more extensive today than ever before. Indirectly too, the provision for “due process of law” has greatly reënforced the dominant position of absentee ownership as against any claims of another kind or against claimants of any other class. Litigation as conducted according to the rules and precedents which govern the “due process” has in recent times become too costly to be carried to a conclusion by any litigant who is not an absentee owner of large means. This will hold true in America perhaps in a more conclusive fashion than in any other civilised nation.¹ In effect, due process of law as it concerns property has become an appliance for the regulation of relations between absentee owners.

Legally, the dominant position of absentee ownership is not to be questioned or shaken. And as regards its moral foundations in current common sense, in the habits of thought of this people, the institution is in a similarly strong position. It remains true that absentee ownership is still the idol of every true American heart. Indeed, chief among the civic virtues of this people is that steadfast cupidity that drives its citizens, each and several, under pain of moral turpitude, to acquire a “competence,” and then unremittingly to augment any competence alv ready acquired. The high ideal which of moral right animates these good citizens in this pursuit of a “competence” is to get something for nothing, to get legal possession of some source of income at a less cost than its capitalisable value. Invariably a “competence” signifies the ownership of means in excess of what the owner can make use of, personally and without help ; which is also a convenient definition of “absentee ownership.” By so coming into the possession of an unearned increase of wealth a man becomes a “substantial citizen.” And according to the sturdy common sense of a population trained to this pursuit of something for nothing, failure to acquire such a competence is visited with unsparing moral reprobation. Any person who falls short in this pursuit of something for nothing, and so fails to avoid work in some useful occupation, is a shiftless ne’er-do-well; he loses self-respect as well as the respect of his neighbors and is in a fair way to be rated as an undesirable citizen. By and large, the line of moral demarka-tion runs between the substantial citizen and the undesirable citizen. These ideals of propriety and morality are not peculiarly American, of course; although the Americans may perhaps be able to claim some slight peculiar degree of certitude and moral sufficiency on this head.

The established order of law and custom which safeguards absentee ownership in recent times and among civilised nations is, in the main, a modern creation ; being, in effect, an outgrowth of usages and principles (habits of thought) which were induced by the conditions of life during early-modern times. The type-form of organised control by which this modern law and custom is upheld and enabled to function is that of the Nation—a politically self-determining body of people, legally and morally competent to make war.²

Not that this modern system of law and order embodies nothing that is of older date than early-modern times. Indeed, embedded in this early-modern system are large remnants which have stood over from antiquity and from the Middle Ages ; as how should it not, since it is in all its constituents a creature of habit and tradition? The experience of life in early-modern times and since has not broken at all points—nor indeed in the main—with. what had gone before. At the same time there have been substantial though minor changes brought into the system in the course of later experience and habituation. But apart from interpretations and refinements instituted ad hoc, and in so far as it bears directly on the security, rights and powers of absentee ownership, this current system of law and custom is grounded in the principles of law and morals that were worked up and stabilised in the course of the sixteenth, seventeenth, and eighteenth centuries.

The system as it now stands comprises elements of older date, but the scheme was rounded out and stabilised in that time and in response to the impact of the conditions which prevailed then, and the resulting structure of law and moralities has not been seriously disturbed since then. By and large, the system is a holdover out of the early-modern centuries, and its period of growth was formally closed during the later half of the eighteenth century. Later experience has fluttered against the stable framework of Natural Rights set up in the eighteenth century and has, on the whole, brought no substantial change of principles; assuredly nothing that amounts to a break with the eighteenth-century point of departure. Meanwhile an industrial revolution has passed over the European peoples and has brought on an unexampled change in the material conditions of life.

It has consistently been the pride and boast of civilised men that the laws and customs which govern their conduct and regulate their behavior in all their civic and industrial relations are grounded in a system of time-worn principles—immutable principles of immemorial antiquity which are fundamentally and eternally right and good. That is to say, in this particular instance, these principles of law and morals have been “immemorially ancient” and “eternally right and good” ever since they became ingrained by habit and presently reduced to documentary statement in modern times. As regards those principles of right conduct which specifically cover the just rights and powers of absentee ownership, their immemorial antiquity and immutable validity came on by degrees during the transition ...

Table of contents

• Cover Page
• Half title
• Title Page
• Copyright
• Contents
• Introduction to the Transaction Edition
• Preface
• PART I
• PART II