第3章

E。g。，lumber，coal，paper，woolandcotton，grain，leather，cattleforthepackinghouses。Alltheseandmanyothersaretoanincreasingextentspokenfor，delivered，anddisposedofunderwell-definedstaplegradesastoqualityanddimensions，weightandefficiency。

Wellshowninthecaseofwheatandflour；butthelikeistrueasregardsthestocksofothercommoditiescarriedbyproducers，jobbers，retailers，andconsumers。

Wellillustratedbytheinterdependenceofthevariousbranchesofironandsteelproduction。

Asseen，e。g。，inthedependenceofoilproductionoroilrefiningonthepipelinesandtheirmanagement，orinthedependenceoftheprairiefarmersontherailwaylines，etc。

tmaybenotedinthisconnection，ontheonehand，thatapopulationwhichisinnodegreehabituatedtothemodernindustrialprocessisunabletoadaptitsmodeoflifetotherequirementsofthismethodofsupplyinghumanwants，andsocanderivebutlittlebenefit，andpossiblygreatdiscomfort，fromaforcibleintrusionofthemachineindustry；as，forinstance，manyoftheoutlyingbarbarianpeopleswithwhomtheWesternindustrialcultureisnowenforcingaclosecontact。Ontheotherhand，itisalsotruethateventhemostadequatelytrainedmoderncommunity，amongwhomthemachineindustryisbestathome，doesnotrespondwithfruitlessalacritytothedemandsandopportunitieswhichthissystemholdsout。Theadaptationofhabitsoflifeandofidealsandaspirationstotheexigenciesofthemachineprocessisnotnearlycomplete，nordoestheuntrainedmaninstinctivelyfallintolinewithit。Eventhebest-trained，severelydisciplinedmanoftheindustrialtownshashisseasonsofrecalcitrancy。

10。Thedependenceofoneprocessupontheworkingoftheothersissometimesverystrict，as，forinstance，inthevariousindustriesoccupiedwithiron，includingtheextractionandhandlingoftheoreandotherrawmaterials。Inothercasesthecorrelationislessstrict，orevenveryslight，as，e。g。，thatbetweenthenewspaperindustryandlumbering，throughthewood-pulpindustry，thechiefcomponentofthemodernnewspaperbeingwood-pulp。

TheTheoryofBusinessEnterprisebyThorsteinVeblen1904

ChapterThreeBusinessEnterpriseThemotiveofbusinessispecuniarygain，themethodisessentiallypurchaseandsale。Theaimandusualoutcomeisanaccumulationofwealth。(1*)Menwhoseaimisnotincreaseofpossessionsdonotgointobusiness，particularlynotonanindependentfooting。

Howthesemotivesandmethodsofbusinessworkoutinthetrafficofcommercialenterpriseproper-inmercantileandbankingbusinessdoesnotconcernthepresentinquiry，exceptsofarasthesebranchesofbusinessaffectthecourseofindustrialbusinessinthestrictersenseoftheterm。Norisitnecessaryweretodescribethedetailsofbusinessroutine，whetherinthemercantilepursuitsorintheconductofanindustrialconcern。

Thepointoftheinquiryisthatcharacteristicallymodernbusinessthatiscoextensivewiththemachineprocessdescribedaboveandisoccupiedwiththelargemechanicalindustry。Theaimisatheoryofsuchbusinessenterpriseinoutlinesufficientlyfulltoshowinwhatmannerbusinessmethodsandbusinessprinciples，inconjunctionwiththemechanicalindustry，influencethemodernculturalsituation。Tosavespaceandtedium，therefore，featuresofbusinesstrafficthatarenotofabroadcharacterandnotpeculiartothismodernsituationareleftononeside，asbeingalreadysufficientlyfamiliarforthepurposeinhand。

Inearlymoderntimes，beforetheregimeofthemachineindustrysetin，businessenterpriseonanyappreciablescalecommonlytooktheformofcommercialbusiness-someformofmerchandisingorbanking。Shippingwastheonlyconsiderablelineofbusinesswhichinvolvedaninvestmentinormanagementofextensivemechanicalappliancesandprocesses，comparablewiththefactsofthemodernmechanicalindustry。(2*)Andshippingwascommonlycombinedwithmerchandising。Buteventheshippingtradeofearliertimeshadmuchofafortuitouscharacter，inthisrespectresemblingagricultureoranyotherindustryinwhichwindand，weathergreatlyaffecttheoutcome。Thefortunesofmeninshippingwereonamoreprecariousfootingthanto-day，andthesuccessfuloutcomeoftheirventureswaslessamatterofshrewdforesightanddailypecuniarystrategythanaretheaffairsofthemodernlargebusinessconcernsintransportationortheforeigntrade。Underthesecircumstancestheworkofthebusinessmanwasrathertotakeadvantageoftheconjuncturesofferedbythecourseoftheseasonsandthefluctuationsofdemandandsupplythantoadaptthecourseofaffairstohisownends。Thelargebusinessmanwasmoreofaspeculativebuyerandsellerandlessofafinancieringstrategistthanhehassincebecome。

Sincetheadventofthemachineagethesituationhaschanged。Themethodsofbusinesshave，ofcourse，notchangedfundamentally，whatevermaybetrueofthemethodsofindustry；

fortheyare，astheyhadbeen，conditionedbythefactsofownership。Butinsteadofinvestinginthegoodsastheypassbetweenproducerandconsumer，asthemerchantdoes，thebusinessmannowinvestsintheprocessesofindustry；andinsteadofstakinghisvaluesonthedimlyforeseenconjuncturesoftheseasonsandtheactofGod，heturnstotheconjuncturesarisingfromtheinterplayoftheindustrialprocesses，whichareingreatmeasureunderthecontrolofbusinessmen。

Solongasthemachineprocesseswerebutslightlydeveloped，scattered，relativelyisolated，andindependentofoneanotherindustrially，andsolongastheywerecarriedononasmallscaleforarelativelynarrowmarket，solongthemanagementofthemwasconditionedbycircumstancesinmanyrespectssimilartothosewhichconditionedtheEnglishdomesticindustryoftheeighteenthcentury。Itwasundertheconditionsofthisinchoatephaseofthemachineagethattheearliergenerationofeconomistsworkedouttheirtheoryofthebusinessman’spartinindustry。Itwasthenstilltrue，ingreatmeasure，thattheundertakerwastheowneroftheindustrialequipment，andthathekeptanimmediateoversightofthemechanicalprocessesaswellasofthepecuniarytransactionsinwhichhisenterprisewasengaged；anditwasalsotrue，withrelativelyinfrequentexceptions，thatanunsophisticatedproductiveefficiencywastheprimeelementofbusinesssuccess。(3*)Afurtherfeatureofthatprecapitalisticbusinesssituationisthatbusiness，whetherhandicraftortrade，wascustomarilymanagedwithaviewtoearningalivelihoodratherthanwithaviewtoprofitsoninvestment。(4*)

Inproportionasthemachineindustrygainedground，andasthemodernconcatenationofindustrialprocessesandofmarketsdeveloped，theconjuncturesofbusinessgrewmorevariedandoflargerscopeatthesametimethattheybecamemoreamenabletoshrewdmanipulation。Thepecuniarysideoftheenterprisecametorequiremoreunremittingattention，asthechancesforgainorlossthroughbusinessrelatIonssimply，asidefrommereindustrialefficiency，grewgreaterinnumberandmagnitude。Thesamecircumstancesalsoprovokedaspiritofbusinessenterprise，andbroughtonasystematicinvestmentforgain。WithafullerdevelopmentofthemoderncloseknitandcomprehensiveindustrIalsystem，thepointofchiefattentionforthebusinessmanhasshiftedfromtheold-fashionedsurveillanceandregulationofagivenindustrialprocess，withwhichhislivelihoodwasonceboundup，toanalertredistributionofinvestmentsfromlesstomoregainfulventures，(5*)andtoastrategiccontroloftheconjuncturesofbusinessthroughshrewdinvestmentsandcoalitionswithotherbusinessmen。

Asshownabove，themodernindustrialsystemisaconcatenationofprocesseswhichhasmuchofthecharacterofasingle，comprehensive，balancedmechanicalprocess。Adisturbanceofthebalanceatanypointmeansadifferentialadvantage(ordisadvantage)tooneormoreoftheownersofthesub-processesbetweenwhichthedisturbancefalls；anditmayalsofrequentlymeangainorlosstomanyremotermembersintheconcatenationofprocesses，forthebalancethroughoutthesequenceisadelicateone，andthetransmissionofadisturbanceoftengoesfar。Itmayeventakeonacumulativecharacter，andmaytherebyseriouslycrippleoracceleratebranchesofindustrythatareoutofdirecttouchwiththosemembersoftheconcatenationuponwhichtheinitialdisturbancefalls。Suchisthecase，forinstance，inanindustrialcrisis，whenanapparentlyslIghtinitialdisturbancemaybecometheoccasionofawidespreadderangement。Andsuch，ontheotherhand，isalsothecasewhensomefavorableconditionabruptlysupervenesinagivenindustry，as，e。g。，whenasuddendemandforwarstoresstartsawaveofprosperitybyforceofalargeandlucrativedemandfortheproductsofcertainindustries，andtheseinturndrawontheirneighborsinthesequence，andsotransmitawaveofbusinessactivity。

Thekeepingoftheindustrialbalance，therefore，andadjustingtheseveralindustrialprocessestooneanother’sworkandneeds，isamatterofgraveandfar-reachingconsequenceinanymoderncommunity，ashasalreadybeenshown。Now，themeansbywhichthisbalanceiskeptisbusinesstransactions，andthemeninwhosekeepingitliesarethebusinessmen。Thechannelbywhichdisturbancesaretransmittedfrommembertomemberofthecomprehensiveindustrialsystemisthebusinessrelationsbetweentheseveralmembersofthesystem；and，underthemodernconditionsofownership，disturbances，favorableorunfavorable，inthefieldofindustryaretransmittedbynothingbutthesebusinessrelations。Hardtimesorprosperityspreadthroughthesystembymeansofbusinessrelations，andareintheirprimaryexpressionphenomenaofthebusinesssituationsimply。Itisonlysecondarilythatthedisturbancesinquestionshowthemselvesasalterationsinthecharacterormagnitudeofthemechanicalprocessesinvolved。Industryiscarriedonforthesakeofbusiness，andnotconversely；andtheprogressandactivityofindustryareconditionedbytheoutlookofthemarket，whichmeansthepresumptivechanceofbusinessprofits。

Allthisisamatterofcoursewhichitmayseemsimplytedioustorecite。(6*)Butitsconsequencesforthetheoryofbusinessmakeitnecessarytokeepthenatureofthisconnectionbetweenbusinessandindustryinmind。Theadjustmentsofindustrytakeplacethroughthemediationofpecuniarytransactions，andthesetransactionstakeplaceatthehandsofthebusinessmenandarecarriedonbythemforbusinessends，notforindustrialendsinthenarrowermeaningofthephrase。

Theeconomicwelfareofthecommunityatlargeisbestservedbyafacileanduninterruptedinterplayofthevariousprocesseswhichmakeuptheindustrialsystematlarge；butthepecuniaryinterestsofthebusinessmeninwhosehandsliesthediscretioninthematterarenotnecessarilybestservedbyanunbrokenmaintenanceoftheindustrialbalance。Especiallyisthistrueasregardsthosegreaterbusinessmenwhoseinterestsareveryextensive。Thepecuniaryoperationsoftheselatterareoflargescope，andtheirfortunescommonlyarenotpermanentlyboundupwiththesmoothworkingofagivenSub-processintheindustrialsystem。Theirfortunesareratherrelatedtothelargerconjuncturesoftheindustrialsystemasawhole，theinterstitialadjustments，Ortoconjuncturesaffectinglargeramificationsofthesystem。Norisitatalluniformlytotheirinteresttoenhancethesmoothworkingoftheindustrialsystematlargeinsofarastheyarerelatedtoit。Gainmaycometothemfromagivendisturbanceofthesystemwhetherthedisturbancemakesforheightenedfacilityorforwidespreadhardship，verymuchasaspeculatoringrainfuturesmaybeeitherabullorabear。Tothebusinessmanwhoaimsatadifferentialgainarisingoutofinterstitialadjustmentsordisturbancesoftheindustrialsystem，itisnotamaterialquestionwhetherhisoperationshaveanimmediatefurtheringorhinderingeffectuponthesystematlarge。Theendispecuniarygain，themeansisdisturbanceoftheindustrialsystem，-exceptsofarasthegainissoughtbytheold-fashionedmethodofpermanentinvestmentinsomeoneindustrialorcommercialplant，acasewhichisforthepresentleftononesideasnotbearingonthepointimmediatelyinhand。(7*)Thepointimmediatelyinquestionisthepartwhichthebusinessmanplaysinwhatareherecalledtheinterstitialadjustmentsoftheindustrialsystem；andsofarastoucheshistransactionsinthisfielditis，byandlarge，amatterofindifferencetohimwhetherhistrafficaffectsthesystemadvantageouslyordisastrously。Hisgains(orlosses)arerelatedtothemagnitudeofthedisturbancesthattakeplace，ratherthantotheir。bearinguponthewelfareofthecommunity。