Engineers thwarted by business men.


I’ve been rereading Thorstein Veblen. What a character he was. He came from a family of Norwegian immigrants living in Minnesota. He refused to say when he was born but we know he died in California in 1929. He studied at various American universities including Cornell and Yale and settled first at the University of Chicago to teach economics, economic history and related fields in the late 19th century. I’m not writing a biographical note here so if you want more details on the life of this amazingly intelligent but difficult man, just google his name.

The book that secured Veblen’s public notoriety and reputation is The Theory of the Leisure Class. It’s a compendium of commentary on the mores and institutions of the United States in the late 19th and early 20th centuries. It’s available free online. Once you become familiar with his unusual use of language, he makes for a very entertaining and enlightening read. His chapters Pecuniary Emulation, Conspicuous Consumption, Conspicuous Leisure, and Dress as an Expression of the Pecuniary Culture are a classic dissection of the institutions that affect us all daily. He lays bare where our wants, needs, desires, and dreams come from. His conclusion is that they come from our ‘pecuniary’ culture. Pecuniary means relating to or consisting of money. For Veblen, our money culture and it’s predominant ruling class of ‘captains of finance’ determine how we see and act in the world. They are the preeminent institutions of our world.*

Now, and finally addressing the title of this post, Veblen was particularly interested in parsing out the various components of the economic institutions that dominate our lives. In his book The Engineers and the Price System, available as a Kindle book, he argues that business men, particularly investment bankers and financiers in general, not your run-of-the-mill corner store operator, farmer, or forestry contractor, are constantly at odds with the engineers that actually run industry. For Veblen and most economists  business and industry are two separate things. We often conflate them today. In our world business dominates industry but it doesn’t have to be that way and, of course, it wasn’t always that way. In feudal Europe, the manorial lord drove industry, not the incipient mercantile class.

Industry, for Veblen, does not mean only the factory system and machine production, it means all the physical activities in which humans engage to produce what they need and want as well as the knowledge needed to do so. He concludes that in our world business finance curtails industrial production (particularly commodity production) as a means of increasing or maintaining profit levels. This is easily observable, but it seems strange to think this is true for some people.

For Veblen, profit making often requires the curtailment of supply. Producing as much and as fast as possible, efficiently and effectively, is the aim of engineering. This imperative constantly goes against the business need to make profit where curtailment of production can ensure prices remain high. These ideas, of course, are not revolutionary, and they are behind Canada’s supply management policies regarding poultry, eggs, milk, doctors, and lawyers.

For a good example of how engineers are thwarted by financial interests, one just has to look at how urban infrastructures are built and maintained. Let’s take Courtenay for example. It’s a smallish city on the east coast of Vancouver island, typical in every way. It has the requisite shopping malls, hospital, schools, service businesses and residential neighbourhoods. Now, the municipal government is made up of elected officials, management staff and workers. The elected officials represent pecuniary interests although they claim to represent all city residents. The management staff includes civil engineers, urban planners and the like. If decisions about where to build streets, what they would look like, the materials used in their construction, etc., were left to the engineers, the city would look entirely different than it does. The monetary interests constantly impose cost restrictions on the engineers with the result that street design, urban planning and related activities, are a hodgepodge of compromise including irritating merge lanes and intersections, inadequate bridge structures and neglected maintenance that leaves many roads a hazard to drive on. However we think about it, engineers are systematically constrained by the vested interests represented by elected officials. Of course, not all elected officials see themselves as representing the vested financial interests, but if they didn’t follow the policies imposed on them by the provincial government with regard to fiscal ‘responsibility’, they would soon be removed from office. And, of course, there must be some oversight of the work of the engineers. The point Veblen makes is that the oversight is the prerogative of business interests in the name of maximizing profit, and not for creating the greatest good for the greatest number of people, in this case, the residents of Courtenay.

By the way, Veblen is off the mark when it comes to the role of engineers in a potential overthrow of the ‘kept classes’, but he wasn’t beyond speculating on the way the pecuniary culture would come to an end. I have to reread his book Imperial Germany to determine what his views are on globalization, but that’s my next Veblen read. Karl Marx was very conscious of globalization and, for him, the end of the capitalist domination of industry and production was predicated on the advanced globalization of capital accumulation. Veblen wrote extensively about Marx and admired his materialist historical method. He did have reservations about Marx’s work, but that will be for another blog post.

 

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For Veblen institution means a ‘crystallized’ habit of thought or life, crystallized meaning that they are spread throughout society so as to be essentially unquestioned by most people.

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