Veblen The Dichotomy Definition Theory

Veblen - The Dichotomy, Dichotomy Definition, Dichotomy Theory

The instinctive drives of human beings create certain tensions. The instincts of parenthood, workmanship, and idle curiosity would lead humans to produce with great efficiency high-quality products that would be of benefit to their fellow humans. The acquisitive instinct, however, because it is self-regarding, leads to behavior that benefits the individual, even though it might have deleterious consequences for the rest of society. An analysis of the economy, Veblen said, discloses this fundamental tension and antagonism, which is basic in human nature. Every culture can be analyzed by observing two aspects of human behavior: one that promotes the economic life process, and another that inhibits the full development of the productive powers of the society and has negative effects on the welfare of humankind.

Veblen called the activities that flow largely from the instincts of parenthood, workmanship, and idle curiosity industrial (or technological) employments. They involve matter-of-fact, cause-and-effect relationships. He engaged in conjectural history—although he had severely criticized orthodox theory for this practice— and explained that in the distant past humans had attempted to explain the unknown by appealing to supernatural forces to bring about effects by casting spells, to grow corn by dancing around the stalk. Veblen called this noninstru-mental, nontechnological, prescientific manner of approaching the unknown and seeking explanations or effects ceremonial behavior. Ceremonial behavior is static and past-binding. It manifests itself in totem and taboo, in an appeal to authority or emotion, and it has undesirable consequences for the welfare of humankind. Industrial or technological employments are, however, dynamic, and the more we approach problem-solving with a scientific, matter-of-fact point of view, the more our tools, technology, and problem-solving capacities increase. Technology does not look back, but ceremonial behavior is rooted in the past.

Veblen's analysis of the culture and economy of his time is founded upon this dichotomy. Nearly all his papers and books set forth this theme again and again. He contended that this framework and its application involved no normative judgments but constituted a matter-of-fact, positive analysis of the development and current structure of the culture and society. The purely economic applica­tions of the dichotomy are most clearly seen in his essay "Industrial and Pecuniary Employments" and in what is possibly his best single book of economic analysis, The Theory of Business Enterprise (1904). Ceremonial behavior in the modern culture manifests itself in what Veblen called pecuniary (or business) employ­ments. In the handicraft period, which preceded the emergence of the industrial economy, the craftsman owned his tools and materials, used his own labor, and produced commodities that gave expression to his instincts for workmanship and parenthood. The income derived from these activities was a fair measure of the effort exerted. As the economy developed, much changed. The worker no longer owned the tools of production or the materials, and the owner of the firm now became more interested in making money than in making goods; the acquisitive instinct overrode the instincts of workmanship and parenthood. Moneylending developed, absentee ownership became more common, and individuals now had "prescriptive rights to get something for nothing." The captains of industry emerged, and a period of intense competition followed. The captains of industry soon recognized that competition was undesirable, and so holding companies, trusts, and interlocking directorates were formed through the instrumentality of the investment bankers. The One Big Union of the vested interests and absentee owners was formed. All these developments resulted in different habits of thought, both for the workers and engineers and for the captains of industry and absentee owners. The workers and engineers are involved on a daily basis in industrial employments—the making of goods. This leads them to think in terms of cause and effect and gives expression to their instincts of workmanship and parenthood. But the captains of industry and the absentee owners are concerned with profits, and it is Veblen's view that quite often, making profits conflicts with making goods.

The major thrust of Veblen's analysis of the industrial society of his time is that orthodox theory is incorrect in holding that an economy directed by businesspeople will promote the social good. He pointed relentlessly to the "illfare" caused by business. Firms with monopoly power practice "advised idleness" in order to make larger profits. This reduction in output, which enhances profits, leads to a "capitalization of inefficiency." "Industry is carried on for the sake of business, and not conversely."6 A good deal of activity is misdirected into producing goods of no service to humankind and into marketing and advertising. The businessperson is not the benefactor of society, but its saboteur.