User:Laurn
Introduction[edit]
Defined, it is "a pecuniary approach to economic processes in which the dominant interests are acquisition, money, and profitability rather than production and the interests of the larger community" (Ritzer, 2003: 52). Economist Thorstein Veblen is noted for developing Business Interests as a concept. Basically, Business Interests is a concept used to illustrate business decisions in general; both political and governmental, which when made, are made to benefit the business man himself, rather than industry or business as a whole (Leathers, 1989: 293). Veblen found fault in this; in fact, the majority of his career was focused on the conflict between business and industry (Ritzer, 2003). Veblen's concentration was with a political market that could make the best of the economy for the ordinary person (Leathers, 1989: 294). Veblen believed modern day is guided by this type of approach; primarily, to serve business interests (Leathers, 1989: 295). In other words, business men rationalize their business decisions as being both good for business and good for the business man's own interests; when, in essence, they are not. It boils down to people in government, politics, or business pursuing their own self interests in quite a groundless manner. Business Interests is also commonly referred to as The Theory of Business Enterprise. Both concepts are closely linked to other theories of Veblen's: Governmental Failure and the Theory of the Leisure Class. Veblen coined the Theory of Governmental Failure, to illustrate that government often fails because of the business man's misguided interests (Leathers, 1989: 295). Veblen asserted that government officials often execute plans which unfavorably influence the monetary well being of those who don't have enough assets to have it matter; the majority of the population (Leathers, 1989: 294). The Theory of the Leisure Class is a theory that suggests that individuals' quest for wealth and status attainment through the ownership of assets, decides the path of the industrial society (Levy, 1994:5). The interests of the leisure class were termed by business (Ritzer, 2003: 52). This idea also relates to Veblen's concepts of Conspicuous Consumption and Conspicuous leisure. Conspicuous Leisure was a way of higher classes demonstrating their wealth: wasting time, acting in a leisurely manner. Modern times sent higher classes to Conspicuous Consumption, which suggests that those in the leisure class exhibit their status by conspicuously consuming and purchasing the more expensive products when cheaper ones would do the same job. It is more obvious than conspicuous leisure and this is why it has been so widely adapted. It is simply a method of demonstrating one's wealth and it leads to enormous amounts of waste (Ritzer, 2003). "Conspicuous Consumption affects everyone in the stratification system by deciding what goods to consume, people in every other social class ultimately emulate the behavior of the leisure class" (Ritzer, 2003: 53). This type of "normal" business behavior does not add to the social well being of our society. Social well being to Veblen meant maximizing production with the fair allocation of goods (Leathers, 1989: 294). Veblen's main focus was that business decisions and people concerned with these types of decisions are only concerned with turning a profit. They are not concerned with innovating the industry. Innovating the industry is what is more important in the long run; according to Veblen (Leathers, 1989: 293). His theories tie into the concept of Financial Capitalism and how it relates to Entrepreneurial Capitalism. Financial Capitalism is a term for people consumed with making money rather than making the industry better with production. The NYSE is a good example of this; only concerned with turning a profit not innovating the industry. Veblen pointed out that things concerned with Financial Capitalism are becoming more important to individuals and society as a whole, while things associated with Entrepreneurial Capitalism are becoming less and less important. Entrepreneurial Capitalism is the opposite where people are more concerned with production than they are with making a profit. Veblen prided the entrepreneur in that "they were more likely to have earned their income because, at least in part, it was derived from their direct contribution to production"; where today's business leaders are only interested in financial matters which make no contribution to industry (Ritzer, 2003: 52).
Business Interests in Depth[edit]
Veblen related all issues concerning business interests back to barbaric times and they are all rooted in the concept of ownership (Levy, 1994:6). Veblen rooted this in prehistoric times with the ownership of women (Levy, 1994: 6). Men and women had specific duties (hunting and gathering). The men's jobs were considered more honorable and dominant than the women's were (Levy, 1994: 6). Thus, bringing us to modern times, where the more honorable and more dominant jobs imply a sense of higher status which belittle productive labor and production in general; hence, causing these individuals to behave irrationally (Levy, 1994: 7). He found that imitation is what drives the idea of ownership and is thus, then perpetuated by the obsession of ownership forcing individuals, business men in particular, to behave irrationally when making decisions (Levy, 1994: 6). Veblen found that these problems previously, had a lot to do with patriotism, in that a sense of belonging to a group, where everyone within that group shares common interests (Leathers, 1989: 296). Also, they are linked to property, both of which are derived from natural liberties assumed by the ordinary man (Leathers, 1989: 296). "Business continues to be the dominant institutional form of the economic process. Private property and private enterprise prevent the mechanical process they have bred from developing independently and fulfilling its potential" (Cangiani, 2004: 446). In a more modern sense, the "ordinary man" has been trained to believe the legal story that economic rights of the business man are defensible by standing for real donations to the overall welfare of society (Leathers, 1989). Veblen also found that taxes work to the benefit of the business interests at the cost of the ordinary man (Leathers, 1989: 296). Furthermore, business interests were being negatively affected and the personal interests of government officials can drastically influence governmental policies (Leathers, 1989: 296). Veblen's concentration was a political economy that would serve the interests of everyone; not just the business man (Leathers, 1989: 297). He pointed out a representative government is one which primarily represents business interests and is to only benefit the business man; not everyone (Leathers, 1989: 294). Veblen predicted political failures because the people voting were as absurd in their political beliefs and decisions as they were in their expenditure decisions (Leathers, 1989: 294). Veblen suggested throughout all of his works that business men have a strong hold over government and that business interests are superior to all; therefore, politicians must accept that (Leathers, 1989: 296). In Veblen's latter work, he asserted that government serves one purpose: to fulfill the interests of the business man (Leathers, 1989: 295). He found them to be in total power of government and the political economy (Leathers, 1989).
Criticisms[edit]
According to Kalantaridis, in his account of Veblen and the Entrepreneur, Veblen stopped short of research regarding entrepreneurship (Kalantaridis, 2004: 487). Questions have been asked in why the beliefs of Veblen on human activity were separated from entrepreneurship research and those findings. Kalantaridis found three reasons: (1) The failure of premature institutionalists to offer a procedural approach to financial beliefs; (2) The striking fall of the previous in the United States after the year 1930; and (3)The altering punitive foundation of industrial research(Kalantaridis, 2004: 487-488). Kalantaridis found the last reason to be the most crucial (Kalantaridis, 2004: 489). He contradicts Veblen's view that the entrepreneur just sits around resting and says that the entrepreneur actually, steers away from the strict hypothesis that limits the progress of the subject of economics (Kalantaridis, 2004: 489). Another opinion to discredit Veblen is that he assumed the entrepreneur demonstrated thinking in a structural manner in reference to the effects on behavior from an individual standpoint (Kalantaridis, 2004: 489). Veblen blamed the entrepreneur who focused more on turning a profit which hindered the progress of production. There are many others who do not see it this way.
Primary Sources[edit]
- Ritzer, Geroge. Contemporary Sociological Theory and Its Classical Roots: The Basics. 2003
- Veblen, Thorstien. The Theory of Business Enterprise. 1940
- Veblen, Thorstein. The Vested Interests and the Common Man. 1919
Secondary Sources[edit]
- Cangiani, Michele. Veblen's Critique of Political Economy. Vol. 14, No. 3, 2004.
- Kalantaridis, Christos. Veblen and the Entrepreneur. Vol. 14, No.3, 2004.
- Leathers, Charles G. Thorstein Veblen's Theories of Governmental Failure: The Critic of Capitalism and Democracy Neglected Some Useful Insights, Hindsight Shows. Vol. 48, No. 3, 1989.
- Levy, Gerald E. Thorstein Veblen and Contemporary Civilization. Vol. 8, 1994.