Machine Discipline and Technological Change: Rediscovering Veblen’s Evolutionary Theory

John Latsis* Balliol College, Oxford University [email protected]

Abstract Recently, social scientists have focused considerable attention on technology, often funded through governments that perceive a link to growth and increased prosperity. In spite of his prolific contributions on the subject of technology, the work of Thorstein Veblen has not featured prominently in this new technology research. At the same time, modern Veblen scholars have tended to focus on historical and philosophical aspects of his work at the expense of developing his evolutionary research programme. This situation presents a puzzle to historians of economic thought: why did Veblen’s theory fail to generate a significant research programme in the social sciences? In this article, I present an outline of Veblen’s evolutionary theory, its historical and theoretical context, and Veblen’s motivations for attempting to revolutionise the social sciences. I go on to describe two problems that have plagued the Veblenian approach from its inception. The final part of the article suggests a possible route that would lead to the rediscovery of Veblen’s theory and its redeployment outside of economics in the field of technology studies.

Keywords: Thorstein Veblen, social construction of technology, history of economic thought, economic methodology, machine discipline.

EAEPE Research Area: Ontological Foundations of Evolutionary Economics

1 Introduction

Thorstein Veblen was the founder of American Institutional Economics, or what has been called Old Institutionalism more recently1. At the turn of the twentieth century he proposed a substantially new theory of social change outlined in his three major theoretical books The Theory of the Leisure Class (1899), The Theory of Business Enterprise (1904) and The Instinct of Workmanship (1914). At the heart of Veblen’s Evolutionary Theory (VET) is a rejection of the optimistic picture of market co- ordination painted by classical economists and its replacement by an evolutionary account that emphasises the adaptation of economic institutions to a changing technological environment. Recently, the social sciences have begun to focus their attention on technology, often funded through governments that perceive a link to growth and increased prosperity. Yet VET has not featured prominently in new technology research2. Instead, Veblen’s successors have tended to focus on the historical and philosophical aspects of his work. This has presented a puzzle to historians of economic thought: why did Veblen’s theory fail to generate a significant research programme in the social sciences? In this paper, I will first present an outline of VET, its historical and theoretical context, and Veblen’s motivations for attempting to revolutionise the social sciences. In Section 2 I shall go on to describe two problems that have plagued the Veblenian approach from the start. The final two sections suggest a possible route that would lead to the rediscovery of VET and its redeployment outside of economics in the field of technology studies.

* The author would like to thank Malcolm Rutherford and Nuno Martins for valuable comments on an earlier draft of this paper. 1 As distinguished from the New Institutionalism of recent years (North, 1990; Williamson, 1985). 2 Another economist who wrote about technological change, Joseph Schumpeter, has received increased attention in modern economics. There is now an entire research programme of ‘Evolutionary Economics’ based on his ideas (Nelson & Winter, 1982; Freeman & Soete, 1997). The Schumpeterian evolutionary economists have been quick to delve into theoretical and empirical problems relating to the development, exploitation and transfer of technology.

2 1. Veblen’s Evolutionary Theory

Veblen’s evolutionary theory is founded on two basic elements that are tightly woven together throughout his contributions. On the one hand, Veblen was a methodologist and critic of the economic mainstream of his time, which he saw as genetically linked to a tradition that lasted from Adam Smith and David Ricardo through to the Utilitarians and Marginalists of the nineteenth century and the Classical economists of the twentieth. On the other, Veblen proposed a specific research programme for social studies based on the most up to date biological and anthropological theories of his day. This evolutionary theory was developed at length in his three most important books (Veblen, 1899; 1904; 1914). In the following two sections I will offer a brief survey of these ideas as a context to the more detailed discussion offered below.

1.1 The Critique of Classical Economics Veblen’s assessment of the bulk of traditional economic theory of his time was scathing. In economic theory he found a ‘premodern’ approach to science characterised by the reliance on natural law preconceptions, representing the social world through inappropriate Newtonian metaphors (Hamilton, 1991). More specifically, he emphasised three features of economics that effectively condemned it to irrelevance:

1. Economists’ theoretical focus on the ‘normal’ sequence of events is ‘animistic’. It relies on an assumption of spiritual or teleological tendencies to enforce an imagined order that is never attained in practice. 2. Thus, by its very nature, economic science is ‘taxonomic’, concerned purely with how disturbing factors can affect the aforementioned normal process of social progress. 3. Finally, economics is founded on a false and outdated assumption of hedonistic psychology inherited from the utilitarian philosophers of the nineteenth century.

In ‘The Preconceptions of Economic Science – Part II’ (1899b), Veblen describes Adam Smith, the founder of modern economics, as having an ‘animistic bent’ – a predisposition towards an otherworldly principle of organisation that pre-

3 regulates the social system. Smith is offered as a contrast to Veblen’s own evolutionary approach to economics. By ‘animism’ Veblen means the ascription of goal-orientated or teleological characteristics to systems and institutions that do not possess the first person perspective. This is contrasted with an evolutionary approach that foregoes teleology for the sake of studying causal chains connecting past and future events, interpreting social life as the outcome of cumulative causal processes. The idea that supply and demand automatically equilibrate markets at a level that is consistent with the general welfare is Veblen’s favourite target. By describing Smith and the classics as animists he accused them of removing economics from the causal network of real world events. He argued that the notion of a self-equilibrating system cannot be the product of causal processes in the real world. Citing the famous discussion of natural prices in which Smith speaks of ‘accidents’ diverting prices from their natural level, Veblen shows that disturbances cannot shift a system away from its true course. In the evolutionary framework there can be no hypothetically ‘true path’ that runs counter to the actual course of events (Veblen,1899b: 116). Accordingly, Smith could not possibly mean ‘natural’ in the same sense as it is used in the natural sciences when he described price movements. Natural prices must have a different element other than the fact that they are causally determined by antecedent conditions3. To explain this, Veblen paints a picture of classical economics in which the state of perfect liberty, and the pure exercise of market forces without intervention, is an end state which societies should aim to emulate. The removal of the various constraints upon the operation of social laws will bring society one step closer to the achievement of a natural state to which it should gravitate. Veblen’s analysis places Smith’s theory firmly in the political and theological context of post-Enlightenment Scotland.

With Adam Smith the ultimate ground of economic reality is the design of God, the teleological order; and his utilitarian generalisations, as well as the hedonistic character of his economic man, are but methods of the

3 According to Veblen, the confusion of actual causal relations and imputed metaphysical ends is characteristic of the enlightenment project in general. In a footnote to his discussion he says the following: “The discrepancy between the actual, causally determined situation and the divinely intended consummation is the metaphysical ground of all that inculcation of morality and enlightened policy that makes up so large a part of Adam Smith’s work. The like, of course, holds true for all moralists and reformers who proceed on the assumption of a providential order” (Veblen, 1899: 116n).

4 working-out of this natural order, not the substantial and self-legitimating ground. (1899: 131)

This theological interpretation of Smith as well as the charge of animism puts the two approaches (classical economics and VET) into stark contrast: a system pre-ordained and constructed in order to fulfil the goals of a utopian society, and a system that is the product of ongoing and non law-governed negotiation.

1.2 A theory of social change through technological innovation As should be clear from this brief example, Veblen believed that the failings of classical economics were so great that an entirely new theoretical edifice had to be built to replace it. In his theoretical works, this is exactly what he set out to do. Veblen never trained specifically as an economist and read very widely in Comment [JL1]: check this out, several languages throughout his academic career. As a result he was very familiar especially if it gets sent to Malcolm Rutherford with the philosophical, biological and anthropological writings of his contemporaries in America and Europe at the turn of the 20th century. This has important implications for the interpretation of his works today. As some commentators (Murphey, 1990: xxiv-xxviii) have already pointed out, Veblen accepted a notion of social evolution developed by the anthropologist Lewis Henry Morgan (1923). This conception of evolution divided human history into three stages: “Savagery’, ‘Barbarism’ and ‘Civilization’, the latter two being subdivided into a further three parts each4. In philosophy and psychology, Veblen was familiar with and influenced by the psychological theories of John Dewey (1922) and William James (1910). Particularly important in this regard was his usage of the concepts of instinct and habit, both of which had common currency in contemporary psychological theory, and both of which were crucial to his analysis of society. Veblen was also committed to the notion of Darwinian evolution and determined to apply some form of evolutionary analysis to the social world. His understanding of biological theories was detailed and he took positions on significant scientific controversies of his day 5 . Veblen’s

4 This contextual point will have little significance for my interpretation of Veblen, but rather will avoid terminological and linguistic confusion. 5 To best understand his theory of instinct, for example, it is important to see it as dependent on his prior acceptance of the Mendelian theory of stable types (Veblen, 1913). Against traditional Darwinian ideas of random mutation, Mendelian theories suggested that stable types existed in populations of organisms, and only under extreme environmental pressure would similar mutations occur in a number of individuals in the group, thereby allowing the possibility of adaptation and change in that group.

5 understanding of these leading scientific and philosophical approaches played an important role in the theory that he eventually proposed. What did Veblen actually propose to replace what he saw as the failing enterprise of classical economics? The depth and complexity of Veblen’s account will only allow a brief exposé of his main ideas here. However, the literature on Veblen’s economics is vast and much of what I shall relate is considered straightforward in institutionalist circles. At the base of VET is a relatively static view of human nature. Humans (with minor differentiation accorded to different racial groupings) have a relatively stable set of ‘instincts’6. These were developed in the last Ice Age, a period during which sufficient environmental pressure was brought to bear on existing human communities such that (according to the biological theories that Veblen accepted) large numbers of mutations would have appeared. This period of significant adaptation and change coincided with the longest historical period in Veblen’s evolutionary model, the period of savagery. Veblen did not believe that significant changes had affected human instincts since this period. Thus, human instincts were ‘best suited’ to the rigours of life in the ‘savage’ society of the last Ice Age. A similar view has received renewed interest in recent years and has common currency amongst modern evolutionary psychologists (see for example Barkow et al., 1992)7. Veblen does not provide, nor attempt to provide, a comprehensive taxonomy of instincts to underpin his theory8. Instead he proposes an analysis of what he regards to be the three most important instincts: ‘the parental bent’, ‘idle curiosity’ and ‘the instinct of workmanship’. All three are essential to understanding society

6 Instincts are best seen as basic drives, impulses towards immediate ends that are inherited from the evolutionary past. Veblen’s usage of the term is confusing and imprecise and has led to some criticism from commentators (Schneider, 1948). However there is evidence that he was aware of the vagueness of the concept and attempted to use it with caution, so that his own contribution might be sensitive to subsequent developments in anthropology, biology and psychology (Diggins, 1977: 123-127). 7 The latter view is not derived from the same theoretical or empirical insights as Veblen’s approach. Thus, criticisms directed against the plausibility and validity of evolutionary psychology (Rose & Rose, 2000; Dupré, 2001) are not necessarily damaging to Veblen’s economics. 8 Indeed, he gives different accounts of which instincts are most important depending on the theoretical problems he is attempting to resolve. The instinct of self-preservation, for example, plays a crucial role in his examination of economic phenomena and motives presented in The Theory of the Leisure Class, particularly in relation to the development of pecuniary institutions and the rise of emulative behaviour (Veblen, 1899: 68).

6 along Veblenian lines, but the last is most important in the analysis of its so-called ‘economic’ aspects9. The first two instincts discussed would have been familiar to contemporary social scientists as similar classifications had been made by others (MacDougall, 1908). The parental bent is taken to cover a specific range of human characteristics: parental care for offspring, the reproductive urge and sentimental attachments to kin, amongst other things. Yet it is in its most general terms that Veblen defines it: he sees the parental bent as the human instinct that underlies all altruistic feelings for the community at large. In stressing this, Veblen was referring specifically to caring for the material aspects of the welfare of others. In referring to the community he stressed that it included all people with whom any given individual is involved in networks of economic dependency. The second instinct, ‘idle curiosity’, is seen as the instinct underlying all apprehension of causal sequence. It is responsible for the development of pre- scientific myths, religious beliefs and superstitions, but is also the ultimate source of scientific endeavour. The human ability to posit and explore causal chains that have been rejected by the intuition is the crucial idea underlying the connection between idle curiosity and science. The fact that curiosity is idle is emphasised precisely because Veblen believed in the importance of non-teleological processes in the human apprehension of causes. He continually sought to undermine the idea that teleological, theoretical, and reason-based thought were appropriate vehicles for the discovery of causes. Instead, these methods lead to the construction of animistic theories such as those proposed by Adam Smith and the Classical economists.

9 It is important on the one hand to see instincts as having a teleological character, yet not to equate them directly with the conscious beliefs and desires of individual agents. For Veblen, instincts were general tendencies, emergent out of the complex of psychological and physiological elements that constitute human organisms. For the purposes of the social sciences, instincts are not reducible to the psychology of representative individuals. Thus, Veblen could maintain the view that different individuals may diverge very significantly from the overall tendency represented by a specific instinct. Nevertheless, instincts are crucially important from an explanatory perspective: ‘The expression [the instinct of workmanship] may as well be taken to signify a concurrence of several instinctive aptitudes, each of which might or might not prove simple or irreducible when subjected to psychological or physiological analysis. For the present inquiry it is enough to note that in human behaviour this disposition is effective in such consistent, ubiquitous and resilient fashion that students of human culture will have to count with it as one of the integral hereditary traits of mankind.’ (Veblen, 1914: 27-28) For Veblen, instincts arise out of the mechanical processes that regulate the existence and survival of organisms. They represent a stable tendency in human beings to develop and pursue certain goals in certain ways, and they are essential to an understanding of society.

7 The third and most important instinct is “the instinct of workmanship”. This instinct encompasses the human proclivities that promote efficiency in the pursuit of some end. It is at the basis of human innovation and ingenuity in the creation and production of tools and artefacts and the driving force behind technological innovation. It is more pervasive than the other two instincts by dint of its ‘ends- blindness’: a group or an individual could, through the instinct of workmanship, pursue ends that had been determined by another instinct or complex thereof. Thus the instinct of workmanship is constantly contaminated by the range of other human instincts and can even be subject to self-contamination10. Against his hedonist opponents within economics, Veblen did not believe that all things social flow directly from a detailed account of human nature. Indeed, the disjunction between evolved human nature on the one hand and the evolved institutional environment on the other played an important role in shaping his theoretical point of view. Moreover, instincts (as they are described by Veblen) do not have a direct role in determining social structures. The countless ways in which instincts combine with each other and are shaped by the cultural environment means that almost any pattern of behaviour could be sanctioned by them11. Unlike his relatively static view of human nature, Veblen held a dynamic and adaptive view of social institutions. He saw these principally as the prevalent habits of thought and action of human collectives under the direction of cumulative causal processes stretching back into history. Change at the institutional level could be affected with much greater speed and radicalism than was generally the case in biological evolution. Thus the institutional environment did not correspond in any simple or direct way to the instincts of a given race or population. Veblen regarded institutions as fundamental to social life and its explanation in the social sciences and referred repeatedly to them in diverse contexts. Which definition of institutions Veblen actually accepted is a matter of lively debate in the history of economic thought and methodology literatures. One interpretation receives the bulk of the textual support and has traditionally been the dominant point of view. According to this view, institutions are, in Veblen’s words:

10 This latter point serves to highlight the explanatory power accorded to the instinct of workmanship in VET. Indeed, when ‘self-contaminated’ the instinct of workmanship can lead to emulation, a key type of predatory behaviour. 11 See Veblen’s discussion of the limitations of marginal utility economics for his clearest disavowal of the reductionist project in economics (Veblen 1909: 242-243).

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[these principles of marginal-utility economics]… are principles of action which underlie the current, business-like scheme of economic life, and as such, as practical grounds of conduct, they are not to be called in question without questioning the existing law and order. As a matter of course, men order their lives by these principles and, practically, entertain no question of their stability and finality. That is what is meant by calling them institutions; they are settled habits of thought common to the generality of men. (Veblen, 1909: 239)

This view of institutions as habits12 of thought is held by institutionalists such as Rutherford (1984: 333), Hodgson (1998a: 179) or Murphey, (1990: xxxiii), who otherwise disagree on important interpretative issues. It is not universally accepted however. Some economic methodologists interested in the development and consistency of Veblen’s ideas have suggested that the institutions-as-habits-of-thought view is too simplistic to account for his theoretical contributions (O’Hara, 2002: 83-84; Lawson, 2003). They have suggested that the idea of institution needs to be extended. Indeed, Lawson has proposed an alternative reading that emphasises Veblen’s later writings on institutions (Lawson, 2003: 212-213). The later Veblen (for example in The Instinct of Workmanship) – according to Lawson – is an advocate of a more general conception of institutions that encompasses structured processes of interactions including habits, but also including rules, relations, positions and other practices. It is not my purpose to settle this interesting dispute here, but, as we shall see below, Veblen’s conception of institutions is crucial to his discussion of technology and I cannot remain agnostic. What is clear is that, in speaking of institutions, Veblen means to emphasise the non-individual, non-reflective elements of social organisation (Veblen, 1914: 7). In VET, individuals are seen as the carriers of institutions; those

12 Habits are generally understood in the institutionalist literature to be repeated patterns of action. Veblen usually refers to the habits of social groups and communities, not the idiosyncracies of individuals. Habits of thought can be seen as patterns of mental association (ways of thinking that do not rely on conscious deliberation) that arise from habitual action and as such they should not be identified with rationalistic cogitation. According to Veblen’s approach, humans become embedded in networks of habitual actions through education and custom. It is from these habitual actions that habits of thought are generated. See Waller (1988) for a discussion of habit in Veblen, and Camic (1986) for a further analysis of habit in the broader context of social theory.

9 who implement institutional change through their actions. It seems that in order to faithfully account for his own wide usage of the term, Veblen would have to either hold an all-inclusive conception of habits of thought, or accept something along the lines suggested by modern interpreters such as Lawson and O’Hara. What of change in this theoretical framework? For Veblen the two biggest failings of the classical and neoclassical schools were their advocacy of static or ‘premodern’ analysis and their failure to adopt evolutionary approaches to the social sciences. His own theoretical contributions were designed to redress this problem and provide dynamic accounts of how societies and economies changed. But in the above picture of institutions, there is no mention of the forces that govern change in social institutions. Given that Veblen rejects the idea of universal social laws and yet embraces the thesis that society changes frequently and radically, one would expect him to provide an account of the mechanism by which changes take place. In two of his major theoretical works (Veblen, 1904; 1914), Veblen set out to show that the motor of social change is technology. Consistent with his biological beliefs and against his philosophical contemporaries13, Veblen did not give much credence to the idea that humans’ most essential needs were dictated by religion or morality. Instead he held that the primary concern of any community was to ensure its survival and reproduction through provision for individuals basic physiological and material needs. This meant that the modes of production and distribution of material goods were central to the process of social change, but that they were (in turn) dependent on the development of ‘the industrial arts’. The ‘industrial arts’ was Veblen’s term for human expertise and knowledge embodied in technological artefacts. Technology understood as the driving force of social change in any community was thus central to Veblen’s view of the development of the economy14.

13 Veblen’s philosophical contemporaries and usually his opponents were intensely conservative and religious ‘common sense’ philosophers, intent on upholding the American status quo (Dorfman, 1934). 14 This emphasis on the industrial arts also reveals a circular logic in Veblen’s economic theory: habits of thought derive from practices (habits of action), and these in turn are a function of the mode of production and distribution (the economic institutions of the community), which are then determined by the state of technological knowledge (the industrial arts). Technological knowledge is nothing more than a complex of habits of thought shared by those who are responsible for solving the technical problems of any given community, so the circle is completed. However, there is no reason why this circularity should be viewed as a threat to Veblen’s theory. Instead, it introduces two major theoretical advantages over its traditional rivals: first, it posits a mechanism by which existing expertise and knowledge feeds into and changes social institutions; and second, it allows for the possibility of cumulative causation in the evolutionary sense, where every new step is the contingent outcome of the process up to that moment in time.

10 For the first time, an economist introduced technology into social scientific study as something other than an exogeneous shock. Surprisingly, this original element of VET has received little detailed attention.

2. The Decline of VET

In an important recent contribution to the analysis of Veblen’s economics, Malcolm Rutherford has suggested a diagnosis of the decline of VET. Rutherford emphasises two fundamental problems facing Veblen’s evolutionary theory. The first of these is methodological. It is exemplified by the work of Wesley C. Mitchell. A student and acolyte of Veblen’s, Mitchell attempted to apply the Veblenian theory of evolutionary cultural change to empirical analyses. His most ambitious attempt was the ‘money economy project’, which focussed on the development of monetary institutions in Europe between the eleventh and seventeenth centuries (Rutherford, 1998: 472). In conducting his research Mitchell became disillusioned with VET citing fundamental weaknesses in Veblen’s theoretical framework. According to Mitchell, large scale historical studies using statistical data could not be translated into adequate narratives of the ‘life process’ along Veblenian lines because crucial moments of institutional change were unique events that resulted from a complex web of causal factors. Veblen did not provide tools that would allow subsequent institutionalists to model social evolution. This difficulty led Mitchell into an applied analysis of business cycles that included the institutional elements taken as explicitly defined and given at the beginning of the analysis. The job of describing the stabilisation and transformation of specific institutions could therefore be left to economic historians. Many commentators have interpreted this as an implicit repudiation of VET as a social theory, a conclusion that Mitchell himself admitted. The second problem presented by Veblen’s theory of institutional change was exemplified by the work of Robert Hoxie. A colleague of Veblen’s at the University of Chicago, Hoxie became convinced by Veblen’s methodological writings at the turn of twentieth century before embarking on a long term study of American trade unions that was motivated by Veblen’s predictions. Hoxie’s case studies of the structure,

11 motives and habits of thought of American trade unions yielded results that contradicted Veblen’s predictions. Rejecting Veblen’s thesis that machine discipline led to socialistic habits of thought in the modern unions, Hoxie proposed a typology of unions that suggested diversity and contradicted Veblen’s predictions. He went further. According to Hoxie, the average unionised worker was no less committed to, nor less accustomed to thinking in terms of, personal pecuniary gain than a businessman or sales person. The idea that interaction with machine technology undermined the received doctrines of natural rights, freedom of contract and private property was therefore undermined. In the long run, neither Mitchell’s methodological nor Hoxie’s empirical challenges to VET have been overcome by Veblenians. No general account of institutional transformation that could be applied within a dynamic evolutionary theory has been developed. Can it be said, therefore, that Veblen’s evolutionary theory failed? In order to respond to this question we must first understand the gravity of these two challenges. Hoxie’s empirical challenge was powerful and potentially destructive at the time of writing. It presents Veblen’s theoretical framework with a empirical counter-example, a failed prediction. Furthermore, the empirical challenge raises a more fundamental question: how exactly does the economic environment ‘discipline’ individual actors and condition them to produce broader institutional change (Hoxie, 1917: 366-367)? Could it be that Veblen was wrong in his predictions because he provided an insufficient or false account of the mechanics of social transformation? Mitchell’s methodological challenge is potentially just as devastating. An evolutionary theory of social change needs tools for dynamic analysis. Mitchell could not find these tools in Veblen’s writings. His solution was to depict institutions as static, represent them statistically and introduce them at the beginning of his analysis. Thus Mitchell’s project became taxonomic and was absorbed into the neoclassical research programme. It is my contention that Veblen’s writings do contain a preliminary response to both these challenges. Unfortunately, this element of his work was not sufficiently developed after his death by subsequent generations of institutionalist economists. I turn to this in the part 3.

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3. Machine Discipline and the Possibility of VET

In Veblen’s evolutionary theory social change involves continuous conflict. There is a systematic disjunction between human institutions, technological development, and the relative stability of human nature. This is due to the fact that institutions are by their nature vestigial: they are not rationally designed in order to meet the actual needs of human beings, rather, they are the outgrowth of a set of beliefs and cultural practices that are attuned to a prior period of technological development and different material needs. Yet institutions become part of common sense, they are enshrined in law as well as moral and religious dogma, and are difficult to overthrow. According to Veblen, this leads to a difficulty in reconciling the mundane activities of everyday productive activity with the legal and economic institutions that govern it. The Theory of the Leisure Class gives numerous examples of the emulative and predatory underpinnings of typical behaviour surrounding consumption and property ownership. In the opening chapter of the Theory of the Leisure Class, Veblen traces the origins of property ownership to the institution of marriage and ultimately female slavery (1899: 15-22). The bread and butter of the capitalist economy – consumption above the basic minimum required for survival – becomes, in Veblen’s eyes ‘conspicuous consumption’. Consumption is a form of ‘pecuniary emulation’ that replaces the warlike habits of earlier periods with ostentatious displays of wealth (Veblen, 1899: 43-62). The Theory of Business Enterprise does the same for the ‘supply side’ of the economy. Business management of production is derided as ‘the conscientious withdrawal of efficiency’, nothing more than a form of industrial sabotage. According to Veblen, as long as the whole community’s basic material needs are not met (something which was clearly the case in his time) there can be no such thing as ‘overproduction’. He has similarly harsh words concerning financial innovations such as the emergence of loan credit. Veblen claims that the raft of complex financial instruments already developed at the turn of the twentieth century made not one jot of a difference to industrial productivity as a whole, merely to the relative bargaining power of the owners of industrial capital (Veblen, 1904: 49-54). In both of these cases, the pecuniary institutions of the business world have more to do with the

13 ‘barbarian’ inclination to vicarious emulation and warlike competition than the desire to improve the industrial process itself. But if humans beings, as Veblen so often claims, are essentially the product of their institutional environment then how does society change? Must we forever remain trapped in institutions no longer suited to us? In this case, Mitchell’s static analysis of institutions would surely be appropriate. Deleted: ever Veblen was not an optimist. He saw no transcendental compulsion for institutions to come to reflect the material needs of the community. Nevertheless, in the Instinct of Workmanship, he traces radical institutional changes in the West to changes in technology and concludes that if institutional change is to occur it will do so through technological innovation. For Veblen, as well as many of his contemporaries in anthropology and biology, the distinction between action and thought was not as strict as modern social theory would suggest. Institutions were described as habits of thought and individuals were seen as the carriers of institutions. This perspective implicitly rejects a pillar of recent philosophy of mind and many projects within the social sciences: the distinction between rational calculation and purposeful action. In contrast, action and thought are collapsed into one another so that repetitive patterns of thought, sensations and physical motions are continuously influencing and contaminating each other. With this assumption in mind we can see how interaction with the material environment and the artefacts of everyday life appeared so crucial to Veblen. As human artefacts change (sometimes through unintentional or accidental events and processes) so the practical requirements of everyday action (thought) change. Veblen’s main examples were drawn from the rampant mechanisation of the workplace that was occurring at the turn of the twentieth century. In short, the introduction of machine tools and production lines at the turn of the 20th century radically changed the physical and psychological environment of the workplace. This is what Veblen called machine discipline. It is the analysis of machine discipline that offers the most promising strategy to respond to both the methodological and the empirical challenges raised by Rutherford. According to the methodological challenge VET lacks theoretical tools for dynamic analysis. In his discussions of machine discipline however, Veblen provides numerous illustrations of how a dynamic evolutionary theory can be explanatory. In

14 particular, he spells out the ways in which the changing patterns of tool use contribute to the transformation of wider social practices. The impact on industrial employment is perhaps most obvious and hence is one of his favourite examples. Veblen observed the introduction of standard weights and measures within increasingly large and homogenised industrial communities. As the size and interconnections linking various parts of the industrial system increased, so these conventional forms of measurement would become requirements for anyone involved in day-to-day management (Veblen, 1904: 10-11). This pattern would be mirrored in the standardisation of manufactured inputs into the production process such as tools, gauges and other mechanical instruments. The latter, being everyday objects for industrial workers, would begin to literally shape their actions. Processes of adaptation and adjustment that were part and parcel of work practices when craftsmanship was important would disappear. The speed and mechanical efficiency of work would increase dramatically whilst the sources and complexity of potential breakdowns would change completely (Veblen, 1904: 11-12). Veblen also anticipated that regular engagement in industrial work was likely to have broader consequences. The introduction of precise quantitative methods of production and control into the working environment (Taylorian management), would change the social psychology of the workplace and alter individual workers permanently (Veblen, 1904: 146-149). Some of these alterations would change individuals’ perception of the functioning of the world. Veblen suggests three possible shifts in The Theory of Business Enterprise:

1. Workers apprehend their environment in terms of cumulative processes as opposed to sequences of discreet events. 2. This leads them to abandon the ‘workmanlike’ view of causation that casts the first event in a sequence as the ‘originator’ or ‘producer’ of the next one. 3. There is a corresponding decline in the anthropomorphic perception of the production process. Rather than seeing work as craft, adapted to the specific skills and interests of the artisan, the workman instead sees production as an impersonal process of mechanical adjustments. He adapts himself to the requirements of his job.

15 These are changes in habits of thought engendered by a new technological environment. Moreover, these new habits of thought run against the prevailing institutional context of early twentieth century America. A new way of acting and thinking is generated by the appearance and use of new artefacts. In his account of machine discipline at least, Veblen does seem to provide an outline of how evolutionary theory works. The mechanism of institutional change is quite clear in this case: changes in the technology of the workplace shape and condition perceptions, habits and practices that go well beyond it15. Unlike Mitchell, Veblen does not resort to static descriptions of rigid institutions in order to explore their unchanging effects. Instead he provides a descriptively rich account of how interaction with new tools transforms the perceptions of workers bringing new contradictions to light and stimulating changing habits. The blurring of thought and action is crucial to this move. Veblen’s workers do not possess well thought out theories that are applied then refuted and revised when environmental conditions change. If action and thought are conceived as continuous, then changes in the practical requirements of simple everyday behaviours can have far-reaching consequences. In Veblen’s later writings, he speculates about how the impact of industrial production and Taylorian scientific management will affect the socio-economic status quo more generally. It is here that we can begin to formulate a response to Hoxie’s empirical challenge. Since the incumbent institutions of private property, individual rights and the distribution of goods through markets, are all based on pecuniary emulation and suited to the material conditions and technology of the period of handicraft, Veblen had reason to expect them to come under pressure16. The period of handicraft had come to an end with the advent of mass production. At the macroscopic level, changes in

15 This view should not be read as a form of crude economic determinism where man is determined by productive forces. Rather, it seems that the emphasis on machine discipline is specific to the period when Veblen was writing. The prevalence of salaried work in large unionised businesses explains his interest in this aspect of society at the expense of others. 16 To the modern reader, Veblen's’argument is counter-intuitive: capitalistic business practices are attacked in the name of efficiency. However, detailed historical analyses of the period can account for this peculiar opposition. Veblen and the Taylorian engineers were pursuing a different type of efficiency than the traditional cost-based notion advocated by classical economists. Technical efficiency was instead a concept borrowed from engineering, a description of the relationship between quantities of inputs and quantity of outputs geared towards maximum production (Knoedler, 1997:1011-1022). This conception of efficiency mirrors the aforementioned changes in habits of thought triggered by the introduction of machine technology.

16 work practices and the accompanying changes in workers’ perceptions of their productive activity should, according to his theoretical framework, threaten business institutions. Engagement in industrial work having opened their eyes to the cumulative and collaborative nature of modern production, the pillars of the capitalist system would become questionable to modern industrial workers. As the sanctity of private ownership is questioned, the assumption that business men and the owners of capital contribute to the production process is also threatened. According to Veblen this shift in opinion is best exemplified by the trade unions:

Trade unionism does not fit into the natural rights scheme of right and honest living; but therein, in great part, lies its cultural significance. It is of the essence of the case that the news aims, ideals, and expedients do not fit into the received institutional structure; and that the classes who move in trade unions are, however crudely and blindly, endeavouring, under the compulsion of the machine process, to construct an institutional scheme on the lines imposed by the new exigencies given by the machine process. (Veblen, 1904: 160)

The simmering conflict between pecuniary institutions and modern technology would eventually be carried into the street by the unionised working class. Hoxie’s empirical studies produced evidence to the contrary. The unions turned out to be as rapacious and self-serving as the companies they negotiated with. If we were to read Veblen’s contribution as a simple deductive model, this disconfirming evidence would indeed be devastating. But it would be highly uncharitable to interpret VET in this way. Veblen was not an unsophisticated positivist and his theory did not hinge on the production of testable (predictive) hypotheses. Pre-dating Popper by decades, he certainly would not have put any faith in falsificationism either. So, from Veblen’s perspective, Hoxie’s discoveries about the nature of American unions should not be seen as a fundamental threat to VET. The evidence for this response is readily available in Veblen’s own writings. Veblen actually took many of Hoxie’s insights into account in subsequent discussions of unionisation and the future of the US economy (Rutherford, 1998: 475). He completely re-assessed the role of the working classes in triggering large-scale institutional change. He even suggested an alternative possible future in his pamphlet

17 The Engineers and the Price System (1921), in which he claimed that the opportunity for instigating radical institutional change lay with the engineers rather than ordinary workers whose habits were too strongly conditioned by prevalent social institutions and conventions. Apart from suggesting the flexibility of VET and its ability to absorb and learn from criticism, this reaction distances Veblen’s project further from the largely deductive mode of explanation favoured by the majority of economists. The idea of machine discipline is once again to the fore. If Veblen was capable of producing two different (perhaps even contradictory) future scenarios from the operation of one process (machine discipline), then the impact of technology on institutions could not be simple, predictable or deterministic. It is at this point that Veblen and subsequent Veblenian economists have failed to develop these initial insights and fulfil the promise of the research programme.

4. Veblen and the modern social sciences

In part two I followed Rutherford by arguing that VET has suffered, almost from its inception, from two serious challenges. In part three, I showed that preliminary responses to these challenges are in fact available in Veblen’s writings. In this final part of the paper I will suggest one important reason why these responses were not developed within the Veblenian tradition and give an indication of where they have been addressed. Some responsibility for the present situation is undoubtedly due to Veblen himself. The deployment of his analysis of machine discipline has been severely hampered by the limits of two of his basic conceptual categories: those of ‘technology’ and ‘institution’. Though Veblen sometimes describes technologies as ‘habits of thought’ or as ‘the joint stock of knowledge of the community’ (Veblen, 1921: 19), he too often falls into the trap of describing a conflict between the incumbent pecuniary institutions and emerging new technologies. Artefacts and machines are regularly presented as both different from social institutions and somehow independent of them. This ontological indeterminacy is difficult to resolve in the context of VET. As we have seen before, Veblen’s definition of institutions vacillates between institutions as habits of thought and a more general conception. If the institutions-as-

18 habits-of-thought interpretation is consistently adhered to, the ontological distinction between technology and institutions might be relaxed. We are instead faced with a conflict between rival types of institutions: pecuniary vs. technological. As mentioned above there is evidence for this position in Veblen’s writings and early institutionalists seem to have taken it seriously (see for example: Anderson, 1933). The problem here is that there is plenty in VET to challenge and even contradict this position. The difficulties with the conception of institutions-as-habits- of-thought have already been discussed above, but the reduction of technology to habits of thought is equally, if not more, problematic. It is difficult to see how Veblen’s analysis of machine discipline and the machine process can be made consistent with an understanding of institutions as (exclusively) habits of thought. The latter point of view would require that the physical aspects of the machine process, technical objects themselves, as well as constraints and possibilities that machines impose on workers, be excluded from the very definition of technology. Similarly, established work practices, organisational routines and the behavioural elements of technological systems would most likely have to be excluded. These realisations have perhaps encouraged a relatively widespread (though often implicit) institutionalist adherence to the view that – however poorly articulated – there is an ontological distinction between technology and institutions in VET. The ontological separation of technology and institutions has encouraged a normative opposition, usually referred to in the secondary literature as the Veblenian dichotomy (Ayres, 1978; Dugger, 1995). On this interpretation, VET turns on a fundamental dualism between technology, which is seen as good, socially instrumental and moral; and institutions, which are bad, inefficient and immoral (Mayhew, 1998: 449). Veblen was no fan of such dualisms (thinking that they were characteristic of taxonomic or premodern disciplines) but they have been prevalent in subsequent institutionalist thought since Clarence Ayres first set them out (Mayhew, 1998: 458; O’Hara, 2002: 84). The ontological insistence on separate categories with simple interactions, and the normative opposition between ‘bad’ institutions and ‘good’ technology, have hampered attempts to respond to the empirical and methodological challenges. Once these two limitations are relaxed, the prospects for VET look much better. Recent social scientific work on technology emphasises both the social dimension of technological systems and the technological elements of institutions.

19 The Social Construction of Technology (SCOT) project is a ‘constructivist’ research programme associated with the writings of Wiebe Bijker (Bijker, Hughes & Pinch, 1987; Bijker 1990). Like other sociological approaches to technology, SCOT has principally been concerned with revealing the political aspects of technological change and challenging naïve technological determinism. Bijker stresses: (a) the fact that technical artefacts and systems could have been otherwise; and (b) that they are the result of, and incorporate, social relations. SCOT is particularly relevant because it rests on the rejection of both of the oppositions outlined above. SCOT is empirically oriented and revolves around a number of case-studies of technical innovations (examples include Bakelite plastics, the bicycle, fluorescent lamps), inspired by the questions and methods of science studies. Studying specific episodes of technological change through detailed historical and sociological research has revealed the unacknowledged influence that humans have over the innovation process. A central task of the approach is to undermine the idea of linear or rational progress that dominates our folk understanding of technical development. Empirical studies have revealed that the constitution and stabilisation of technical innovations is not simply a matter of engineering.

... I showed how the actual designers of the intensity fluorescent lamp were managers at a business meeting rather than engineers at their drawing boards; how the ‘stuff ‘ of this invention was economics and politics, as much as electricity and fluorescence. (Bijker, 1990: 186)

The form and direction of technical innovations is up for grabs in this framework; it cannot simply be read off from engineering problems and their solutions. The implication is that the technological innovations cannot be assumed a priori to have a liberating force as suggested by the Veblenian dichotomy. At the same time, detailed studies of technological systems at work have found it difficult to sustain a strict ontological demarcation between the technical and the social. There has been a transition towards understanding both social institutions and technical artefacts as ‘socio-technical ensembles’ (Bijker, 1990: 186-189), that is, networks of relations between artefacts and people that are more or less stable over

20 time17. On this view there are no (human) institutions that do not rely on technical artefacts and systems for their stabilisation and persistence18. These two developments in the social study of technology provide the basis for responses to Hoxie’s and Mitchell’s challenges because there is no longer a theoretical chasm separating progressive technologies and regressive institutions. Instead, sociotechnical ensembles are imbued with the political and economic values of their designers, manufacturers and users. The future trajectories of these sociotechnical ensembles are indeterminate and contingent. SCOT presents ample resources to respond to the methodological challenge. The systems of sociotechnical relations that are the subject of Bijker’s case studies are in constant evolution. In the cases of plastics, bicycles and lamps cited above, technical innovations are studied as processes of stabilisation rather than fixed events (inventions) producing settled entities (Bijker, 1990: 173-174). This is not to deny the transformative power of these processes. The introduction of new artefacts often produces quasi-irreversible ‘closure’, both users and producers find it hard to imagine a world in which different artefacts fulfil the same functions (Ibid: 174). This is strongly reminiscent of Veblen’s conjectures about machine discipline, albeit within a different theoretical framework. Moreover, in response to the empirical challenge, there is a sense in which the predictive scenarios that Veblen presented in The Theory of Business Enterprise and The Engineers and the Price System were real possibilities at the turn of the 20th century. They were never realised because machine technology and Taylorian management combined with pre-existing conceptions of property ownership and the rule of law to favour the incumbent political and economic institutions of capitalism rather than socialistic ones. Nevertheless, Veblen was surely right to emphasise the wider importance of the industrial upheavals that he astutely observed. The machine discipline that pervaded the life of industrial workers had broad consequences. As Veblen predicted, these were not confined to the requirements of

17 This relaxation of the ontological and normative oppositions of VET is not exclusive to SCOT. Callon (1996) and Latour (2005) promote a similar position. Winner (1977) develops a ‘politics of technology’ that implicitly rejects the Veblenian Dichotomy by demonstrating the political force of technical innovations for good or bad. Hutchins’s (1995) work in cognitive anthropology is an example of an empirical research programme that has provided deep insights into the functioning of technical systems by challenging the strict ontological distinction between technology and institutions. 18 Latour famously argued that the only way to find institutions that are not ‘sociotechnological’ is to conduct research amongst baboons (Strum & Latour, 1985).

21 mundane action in the workplace. Studies of the influence of the machine process on early twentieth century culture demonstrate this (Banta, 1993). Machine discipline entered family life directly, for example through the home-making manual Helpful Hints and Advice to Employees that was distributed to the wives of workers at the Ford Motor Company in the Midwest in 1915. Quantification and an obsession with order and sequence are central to these manuals. They contain specific instructions on standards of cleanliness, ventilation, nutrition, and include advice on how and where the family should be accommodated (Banta, 1993: 212-245). All of this is authoritatively recounted by the ‘Ford Sociological Department’, and backed up by rafts of statistics and diagrams; it is even addressed to ‘The Ford Family Man’ and his family. Though few became socialists, the unionised workers of early twentieth century America did see their lives transformed by the formation and stabilisation of new sociotechnical systems of production.

Concluding Note

It would be wrong to suggest that modern science and technology studies as represented by SCOT has resolved the challenges to VET and thus completed Veblen’s legacy. Many issues raised in Veblen’s writings have not been resolved and SCOT is one of several frameworks that could advance the debate. SCOT is particularly useful because it avoids simplistic economic or technological determinism by sticking to detailed descriptions of technological innovations. The interpretative flexibility of artefacts is preserved. The potential cost of this interpretative flexibility is that authors like Bijker may have difficulty in accounting for the quasi-deterministic effects of settled sociotechnical ensembles on the behaviour of individuals, what Langdon Winner has aptly named ‘technological drift’. Veblen’s discussion of the machine process is replete with examples of technological drift of this sort. To some extent it is these examples that have made the dichotomy such an attractive proposition – only if technology and institutions are distinct and opposed can one (technology) have an impact on the other (institutions). This paper shows that VET in its original and modern forms lacks the meta-theoretical framework to address this issue adequately. It does not show that such a meta-theoretical framework could not be developed. Indeed, Clive Lawson (2006) has recently proposed an alternative model of

22 technological change (the transformational model of technical activity) that attempts to provide such a framework. Whether his work and the work of sociologists and historians of technology can be incorporated into VET remains to be seen.

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