Veblen’s quadripartite response to the First World War

Veblen’s pre-war writings

Veblen’s intellectual trajectory began with a top-notch graduate-school education that carried him from Johns Hopkins University, to Yale University, to Cornell University, during which time he studied with the “classical” economist J. Laurence Laughlin and the pioneering historian of Prussian militarism Herbert Tuttle, in addition to other major American economists, historians, and sociologists from the 1880s and 1890s.

Following the Cornell segment of this journey, Veblen joined the Department of Political Economy at the University of Chicago in 1893, where he remained a valued member of the faculty until 1906, when he joined the faculty of the Department of Economics and Sociology at Stanford University until his dismissal (for personal indiscretions) 3 years later. From 1911 to 1918, he then taught (as an untenured lecturer employed on a renewable-contract basis) in the Business School at the University of Missouri. During his years at Chicago and Stanford and his early years at Missouri, he published the writings for which he was best known at his time and which would eventually secure his place in the canon of major social theorists. ²

This body of work included his first and most famous book, The Theory of the Leisure Class (1899), a companion study, The Theory of Business Enterprise (1904), and his most synthetic book The Instinct of Workmanship and the State of the Industrial Arts (1914). He also published many essays and reviews that he wrote for specialized academic journals, notably the Journal of Political Economy (which he edited for several years) and the Quarterly Journal of Economics, where he published his seminal articles “Why Is Economics not an Evolutionary Science” (1898c) and the three-part “The Preconceptions of Economic Science” (1899–1900).

Explicitly in these articles and more implicitly in his early books, Veblen attacked the mainstream economic doctrines of his time for their theoretical and empirical defects. Whereas the theories of mainstream economists were, in his view, static and ahistorical in their approach (they assumed that economic life is the same in all times and places), Veblen argued for a dynamic, evolutionary approach which traces changes in economic activity from its beginnings in “savage” societies, to its transformation in “barbarian” societies, to its organization in modern “industrial” societies—the “machine age.” Criticizing mainstream economic theories, in addition, for their atomistic premises, which flew in the face of contemporaneous work in psychology (instinct and habit psychology), ethnology (soon to be called “anthropology”), and sociology, Veblen urged economists to recognize that economic actors are psychologically complex members of social groups and shaped by ever-changing “economic institutions” —which he defined as “habitual methods of carrying on the life process of the community in contact with the material environment in which it lives” (1899b: 193). ³

Applying these ideas empirically, Veblen homed in on questions about the distribution of wealth, which were then the focus of the emerging (and soon mainstream) “neoclassical” school of economics—which economists of the time began calling “marginalism.” ⁴ In particular, Veblen lacerated the “marginal productivity theory of distribution” for maintaining that wealth is a legitimate “reward” for economic productivity and that economic actors who receive the largest shares of a nation’s wealth do so because they make the greatest productive contributions. In The Theory of the Leisure Class, Veblen argued, to the contrary, that the wealthy indulge in socially wasteful practices of consumption that are conspicuously unproductive. In his next book, The Theory of Business Enterprise, Veblen developed his fundamental distinction between productive “industrial” activities, performed by the majority of people in society for the benefit of the “community at large,” and unproductive “pecuniary” activities, pursued by a small elite of owners of private property — “vested interests” or “parasites” as Veblen called them—in order to get “something for nothing that is, to generate profits for their “business enterprises” and for themselves, by making use not only of “predatory” financial stratagems, but also of ancillary institutions such as political institutions, shared cultural values and sentiments, and storehouses of knowledge. This distinction between “industrial” and “pecuniary” butted up against contemporaneous public policy debates (about government regulation, tariffs, taxation, etc.); but Veblen (as elaborated below) kept those debates at arms’ length, insisting that the purpose of the social sciences, like that of the natural sciences, is “the pursuit of knowledge for its own idle sake.”

In Veblen’s pre-war writings, the subjects of war and peace, as well as the broader topics of political and cultural institutions, held a relatively minor place as compared with fundamental economic institutions (Edgell, 2011: 244–245; Plotkin and Tilman, 2011: 12). War and peace appeared as a matter of course in Veblen’s evolutionary comparisons of peaceful “savage” societies versus bellicose “barbarian” and modern industrial societies (see 1898a; 1898b; 1899a). Likewise, these phenomena surfaced in his famous course “Economic Factors in Civilization,” as well as in his translation of the medieval Icelandic saga, The Laxdaela Saga (eventually published in 1925; Camic, 2020).

The reader has to search hard to find war (and its correlatives) mentioned in The Theory of the Leisure Class. When the subject does appear, it typically does so as one item in a more extended treatment of economic institutions (e.g. see 1899b: 40). Not until The Theory of Business Enterprise in 1904 do the phenomena of war and peace begin to receive greater attention. We see this as Veblen speaks (briefly) —particularly in reference to contemporary Germany—of “dynastic politics,” which he views as a powerful force, rooted in warlike habits of exploit and “patriotic solidarity” inherited from the barbarian past, and continues to fuel intersocietal conflicts (1904: 394, 290). Even so, The Theory of Business Enterprise continues to give economic factors pride of place, with Veblen observing, for instance, how the “business men of one nation are pitted”—as a result of their “quest for profit”—“against those of another and swing the forces of the state, legislative, diplomatic, and military, against one other in [a] strategic game of pecuniary advantage,” which produces a “warlike, . . . aggressive national policy” (1904: 293, 398, 391). Significantly, however, Veblen follows The Theory of Business Enterprise not with further analysis of war, peace, and political institutions, but by returning topic-wise, in the main, to the intricacies of economic theory and to defending the broader cause of the new institutional-evolutionary economics that he first advocated in the late 1890s.

Aside from a substantial bloc of articles on economic theory, Veblen also published in this period a pair of articles on the nature of scientific knowledge (1906; 1908). In these articles, he brings to the fore a conviction that runs through all his work up to this point. This is his firm belief that natural-scientific and social-scientific inquiry is—and should always remain— “disinterested,” in that its aim is the dispassionate (value-neutral) search for knowledge of empirical facts and for the casual theories those facts give rise to. While such knowledge may at some points turn out to have practical implications and policy consequences, actually drawing those consequences is not the province of the scientist, nor what should drive his (or her) research. In Veblen’s words: “useful purposes lie outside the scientist’s interest,” [which, properly understood, is] “idle”” from any practical point of view (1906 [1919]: 17).

The subjects of war, peace, and political institutions do not reappear for a full decade after The Theory of Business Enterprise. Their return, relatively fleeting as it is, occurs in The Instinct of Workmanship and the State of the Industrial Arts [hereafter abbreviated, The Instinct of Workmanship], which Veblen finishes drafting in early 1913 and publishes in early 1914. Describing this book as “a small volume of theoretical speculations” on the centrality in economic life of one particular social-psychological instinct (quoted in Dorfman, 1973: 101), Veblen gives his theory empirical weight by placing the instinct of workmanship in an evolutionary light and relating it to the history of economic institutions in “Western Civilization.” For this purpose, he constructs a historical narrative in which peace (“the arts of peace”) and various political factors play a visible role—albeit a role secondary to that of the intertwined economic factors of pecuniary self-interest and various “technologies” of economic production

Beginning his narrative with “savage” societies, where “peace [rather] than war” prevails, Veblen traces the emergence of warlike habits—and “dynastic politics” —in “barbarian’ and early modern societies. He argues that these bellicose characteristics impeded the economic advance of the industrial arts, except in England, whose geographical isolation and eventual adoption of democratic institutions helped to pave the way for peace and for the Industrial Revolution. Even so, says Veblen, “the facts of technological use” —and the economic interests guiding them – “are fundamental and definitive, in the sense that they underlie and condition the scope and method of civilization in other than the technological respect” (1914: li, 100, 171, 247, 253). Of note: German/Germany makes virtually no appearance in this account.

Veblen’s wartime writings

Prior to 1914, when WWI broke out in Europe (where, by coincidence, he was then honeymooning with his second wife), Veblen stood aligned (tacitly) with American pacificists who opposed war with Germany and the prospect of their country’s involvement in it. As late as The Instinct of Workmanship, we find Veblen speaking skeptically of his contemporaries who were “advocates of war and armaments” (1914: 170). As the conflict intensified, however, Veblen became sharply critical of President Woodrow Wilson’s official policy of neutrality between the Allied and Central Powers; he denounced the militaristic tendencies of “Imperial Germany” and the impediments they posed to peace, and he openly urged America’s entry into the war and full-out support of the Allied cause. “The peace of the world,” wrote Veblen in advance of America’s own entry into the war in April 1917, can “be accounted secure only in the virtual elimination of the [German] Imperial State as a national Power,” since “the German frame of mind admits of no neutrality; the quest of domination is not compatible with neutrality” (1917a: 93, 86). Subsequently, Veblen went further, expressing (in early 1918) the hope that “the German Empire will go down to irretrievable defeat [and be] taken off the map,” and maintaining (in the face of the slow-acting Wilson administration) that “the reason why the war is not yet finished is, very simply, that the American people have not yet gone to work to finish it”: “to make good and win the Great War [by immediately mobilizing] all available resources—raw material, equipment, and man power” (1918b: 279, 283, 292).

We see Veblen begin to move in this critical direction in the first book he published after the outbreak of the war, Imperial Germany and the Industrial Revolution (1915) [hereafter Imperial Germany], which he did not originally plan as a statement about the War. As he explained to readers, the book “was projected before the current war came.” (1915: v). Its primary purpose, initially, was to offer an evolutionary-historical sequel to the story Veblen told in The Instinct of Workmanship about the successful course of the Industrial Revolution in England, as he now takes up the comparative question of why England was the first European country to industrialize, whereas Germany was an extreme latecomer, with its “industrial system [standing] some two-and-a-half or three centuries in arrears” of the English as late as the mid-19th century—a latecomer just beginning to catch up (1915: 63).

As we might expect, Veblen’s answer points to a nexus of institutional differences between the two nations. However, while retaining his emphasis on economic institutions, Veblen now stresses (to a greater degree than he had previously done) the fundamental role of political and cultural institutions—wavering sometimes as to whether the latter factors or economic factors command the greater historical influence. In some passages in the book, economic factors have priority, as when Veblen writes that “economic circumstances . . . have shaped the outcome in either case” —the German and the English—and defining “economic circumstances” with reference to “industry and trade” by predatory business interests (1915: v, 269). In other passages, however, he speaks, in regard to Germany, of how “all other interests must bend just so far as may be expedient for the purposes of the State” (1915: 204).

Despite these occasional differences in accent, however, Veblen’s focus, when treating the late development of German industrialization, falls most frequently on the role of political factors, particularly the centuries-old “warlike animus” of Prussian princes, along with officials in the Imperial state bureaucracy, and their persistent resource-draining efforts to build up and preserve the ruling dynasty and to achieve, by all means necessary, their ambitions for territorial “domination” —despite the fact that those actions have significantly stymied the advance of technology and industrial growth. Veblen contrasts the negative economic impact of the “militant statecraft” of Prussia with the positive impact of the more peaceful, democratically organized political institutions of England (1915: 57, 251, 205). In addition, he underscores the effects on economic development of differences in cultural attitudes and values that historically separated the two countries: the “inbred notions of popular autonomy and private initiative” that have inspired the English, versus the aggressive character of the “Prussian spirt,” imbued with a “spirit of ‘duty’” and “obedience” to State authorities – factors that have “contributed appreciably to that patriotic solidarity of prowess in the German people on which the warlike policy of the Imperial government leans” (1915: 206, 65, 156, 205, 249).

This analysis of the obstacles to industrialization in Imperial Germany provides Veblen’s taking-off point for four (broadly distinguishable) lines of work that occupied him in the period from 1915 to the early months of 1919.

The first of these is a comparative-historical theory of war and peace. In laying this out, Veblen himself did not use the word “theory,” because he would have regarded it as superfluous in this context. For Veblen, to offer a “theory” was to provide a causal explanation of the (evolutionary-historical) development of a social (or natural) phenomenon—and providing this with respect to the phenomena of war and peace was one of the main objectives of his writings between late 1916 and mid-1918. We see this clearly in the first book he publishes following Imperial Germany, a short (and extremely dense) treatise titled The Nature of Peace and the Terms of Its Perpetuation [hereafter The Nature of Peace], which he began writing shortly after Wilson’s reelection to the presidency in November 1916 and which he completed by March 1917, a month before the United States entered WWI.

Inspired by Immanuel Kant’s Perpetual Peace (1795) and describing itself (tongue-in-cheek) as a “disinterested inquiry” (1917a: 12), The Nature of Peace enlarges the time and space boundaries of Imperial Germany to analyze the nations of modern Europe (and, secondarily, the U.S. and Japan) in the post-feudal era when aggressive territorial rulers build dynastic states to serve their imperial interests in power and prestige.

This theory maintains that, given their barbaric, “predatory origins” (1917a: 25), these states were inherently “warlike establishments.” (1917a: 23) To maintain them, however, rulers needed from their subjects a wider and more solid base of support, support that those rulers forged both on the “ground of material interests” and on the “spiritual ground of the moral sentiments” (1917a: 36). Surprisingly, in light of his tendency in his earlier work to concentrate on economic factors more than on cultural factors, Veblen now counts the latter source of support as more important than the former, because the “material interests for which modern nations [take] to arms” were the interests exclusively of their economic elites; they inflicted costs that were “borne almost wholly by the common man who gets no gain” from the accomplishment of these interests (1917a: 36) What proved more decisive, historically, than material interests was “the moral sanction of the community”(1917a: 34), a sanction rooted in solidaristic sentiments such as dynastic loyalty, national honor, and patriotism.

Beginning in the later 17th century, however, these particular moral sentiments, according to Veblen, began to wane, as French and then English-speaking people—“led by the force or circumstances”—made “the shift [in the substance of their loyalties] from the dynastic State to a national commonwealth,” that is, to a “conception [of themselves] as a community of men with . . . mutual interests apart from any superimposed dependence on a . . . feudal superior” or territorial ruler. This cultural shift “made the obsolescence of the dynastic State a forgone conclusion” in those nations and ushered in democratically-constituted governments although they too stood ready to fight when provoked by an aggressive state (1917a: 83–84). This last qualifier notwithstanding though, Veblen judges these nations as possessing a “cultural maturity” that was still lacking in Germany, which remained “a dynastic State [in the form of an] irresponsible autocracy, . . . whose people is imbued with that spirit of abnegation and devotion that is involved in the enthusiastically supporting [their] government” (1917a: 84). As such, writes Veblen in reference to international peace agreements then being proposed to end WWI, “the German people runs no chance of keeping the peace, except on terms of the unconditional surrender of all those whom it may concern. No . . . pious resolution has any weight in the balance against a cultural fatality of this magnitude” (1917a: 84).

Veblen allows that, with time, the German state might catch up culturally to its neighbors, but with peace remaining still a large uncertainty. For, with the growth of science and technology, many European nations inclined toward amassing powerful armaments (nominally for defensive purposes), while, in tandem with this institutional development, these nations continued to be tied to destabilizing economic forces, especially the predatory actions, national and international, pursued by business elites and other property owners who were on a collision course with the common-men and -women who did not own property (1917a: 213, 220). These arguments brought Veblen to his conclusion in The Nature of Peace:

In the present case, the decision, or the choice, lies between two alternatives: either the. . .business enterprise will yield and pass out; or the pacific [i.e., peaceful] nations will conserve their pecuniary scheme . . . at the cost of returning to a war footing and letting their owners preserve the fight of ownership by the force of arms. (1917a: 253)

This choice was one that would be made by institutional entities (nations, governments, and social classes) that were on an evolutionary trajectory whose destination was as yet unknown.

The second line of work that Veblen pursued during this period grew from his short-lived affiliation with the government-sponsored “Inquiry on Peace,” for which he wrote two important memoranda (1917b; 1917c) on plans to promote world peace once WWI ended. The brainchild of President Wilson and his close advisor, Colonel Edward House, the New York-based “House Inquiry” (as it was called) was an extra-governmental planning organization made up of a consortium of academic social scientists and public intellectuals tasked with gathering information, preparing proposals for, and devising means to build and maintain international peace when the post-War era arrived. Consisting at its height in 1918 of more than a hundred experts, some of them permanent and salaried, others on leave from their regular academic positions and/or participating in the project on a temporary basis, the Inquiry sought to amass knowledge of political, economic, and social conditions across the globe, in hopes of preventing future world wars. ⁵

Veblen’s memos again pose an institutional choice for warring European nations between two alternative paths to peace. One was a “diplomatic compromise” between the Allied and Central Powers, the other “a federation . . . of pacific [i.e. peace-seeking] Peoples . . . to include primarily the democratic peoples of the Entente” (i.e. the Allied Powers), but eventually extending to other counties insofar as they too adopted democratic principles (1917c: 355). The first alternative would be “primarily an arrangement between the European Powers,” in which “America’s part [was] that of an interested outsider,” whereas, under the second arrangement “America will necessarily come in as an integral factor, perhaps the central and decisive factor” in organizing and steering the federation with the goal of promoting a lasting world peace (1917c: 356). Anticipating that the former course would be little more than an official pause during which the countries involved—driven by “vested interests” of nation-based, profit-seeking business enterprises and dynastic ambitions—would prepare for the “eventually ensuing [next] war,” Veblen argues strongly in favor of the creation of a democratic federation (1917c: 358, 356).

In making his case, Veblen—in line with several other participants in the House Inquiry—conceptualized the projected league from a global geographical perspective, a perspective not otherwise evident in his work. He envisions a federation built not on “commercial aims or national pretensions,” but on a nation’s democratic “frame of mind” and “democratic institutions.” He writes:

The projected coalition would be the French and the English-speaking peoples, together with the Chinese and a more or less considerable group of like-minded accessories in Latin America and western Europe. Necessarily included in the League’s jurisdiction would also be two further categories: the backward peoples of what are now the colonial possessions [of these Allied Powers], and of what have been the colonial possessions of their opponents in the war [i.e., the Central Powers]; and the [as of yet] undemocratic peoples at present comprised in the warlike coalition of the Centrals – namely the “nationalities which are now under German, Austrian, Bulgarian, or Turkish rule” (1917b: 365–367).

To this encompassing list, Veblen also adds “those backward peoples who are nominally independent nations, [such as] Abyssinia, Mesopotamia, Persia, and Afghanistan” (1917b: 365, 374). Of all of these, Veblen shows more knowledge than many other members of the House Inquiry, although he too uses the subsequently anachronistic expression “backward peoples.”

Unifying Veblen’s analysis of this broad map is his hope for an eventual and “total obsolescence or obliteration of national demarcations” and “national frontiers” (1917b: 368). In his view, such a development would effectively subordinate the agonistic push-and-pull of vested economic and political interests to the goal of permanently “keeping the peace on a footing of good will,” while making the world safe for democracy (Veblen intentionally uses approvingly Wilson’s famous phrase; 1917b: 363–364, 375). Toward this long-term end, “the support of popular sentiment” is, Veblen holds, essential: a fundamental observation that, as applied to America in 1917, leads him to advocate that, in the short run, the House Inquiry should itself undertake a “campaign of publicity” on behalf of the League, a campaign that would include publication of “written bulletins”—by members of the Inquiry and Wilson’s State Department—explicating and discussing the mission and shape of the League (1917c: 359). Here, we see Veblen putting forth concrete public policy recommendations unimaginable from the standpoint of his pre-war insistence that social scientists keep their distance from policy debates. Too, we find him continuing the multi-factor style of institutional analysis which came prominently into the foreground in 1915 in Imperial Germany and which incorporates not only economic factors but also political and cultural factors.

The third line of work that Veblen produced during the war years had a different source and consisted of several proposals to alleviate wartime labor shortages in the American agricultural sector. Veblen came to this subject as a result of a position which he took up in February 1918 and which had again been secured for him with the help of former students and friends. The position was as a “special investigator” in the Statistical Division of the U.S. Food Administration, which was one of several new federal regulatory agencies that President Wilson created as part of the country’s wartime apparatus. From its opaque title, Veblen’s own job sounds like a cipher today, but it actually placed him briefly right on the inside of the Wilson Administration. Headed by future president Herbert Hoover (then a successful mining engineer with a background in business and international relief program administration), the Food Administration was charged with regulating, mainly through voluntary guidelines and agreements, the production, distribution, and consumption of meats, poultry, grains, vegetables, and other staples—all in the service of the war effort. ⁶

Veblen embraced this objective and, during his time in the Food Administration, he tapped into the knowledge he had built up from years of teaching economics courses on American Agriculture to write several memos that focused, in particular, on the staple he knew best from growing up on a wheat farm in Minnesota: Midwestern grain. In one of these memos, he approached the subject from the point of view of government price controls, which he saw as “the only practical means of regulating the supply of foodstuffs” to meet the needs of America’s European Allies (1918c: 347). ⁷ To effectuate such institutional controls, Veblen proposed to use the pre-war price of wheat as a baseline measure for determining the price of grains and other foodstuffs in subsequent years. Elaborating on this plan, we hear the very same economist, who 20 years earlier had criticized classical economic theory in minute detail, now writing in minute detail about an economic topic very distant from theory (see e.g. 1918c: 350). With repeated use of classical economists’ concepts like “supply and demand,” the Thorstein Veblen who formerly disdained mainstream economics seems nearly to have disappeared, even as he continues his previous interest in institutions and the dynamics of change. As well, he holds fast to his prior anti-atomistic, institutional stance: “farmers [who want to produce more food for the Allied cause] should be relieved of the risk of crop failures [by price controls that shift] such risk from the individual producer to the community at large”—to “the nation as a whole” (1918c: 352).

For Veblen, however, the nuts and bolts of setting agricultural prices were but the tip of the larger problem of agricultural labor shortages, as he describes the problem in a lengthy memo on “Farm Labor for the Period of the War”:

The Great War has thrown an unexampled strain on the country’s labor force. All industrial undertakings are suffering from the drain on their labor supply . . . The farm industry of the grain states has its share in this hardship along with the rest. But there is the difference that grain growing is, just now [April 1918] a primary requirement, indispensable, beyond any other branch of industry. The fortunes of the Great War visibly turn on the American graingrower’s ability to feed the fighting nations. (1918b: 279).

Unfortunately, Veblen continues, grain growers’ capacity to meet this challenge was stymied, especially because “the supply of farm labor is subject to a steady drain—directly by men enlisting or being drafted; . . . and indirectly by the like demands of the other industries necessary to the prosecution of the war” (1918b: 282). This labor shortage problem was widely recognized in public debates; and Veblen had it confirmed in person when the Food Administration’s Statistical Division sent him, along with his assistant Isador Lubin, to a half-dozen Upper Midwestern states to meet with local farmers. ⁸

In his resulting memo on “Farm Labor,” Veblen proposes a dramatic institutional solution. This was “to set free a force of workmen for use on the farms in grain states: a labor force which is at present employed by merchants in the country towns” in sales and marketing, as well as in various collateral activities (banking, real estate, etc.; 1918b: 293). Veblen reminds memo readers that “the variety of these retail concerns is very considerable”; they consist of literally scores of vendors of products ranging from groceries, dry goods, and clothing to millinery, jewelry, candy, baked goods, cigars, tombstones, and hotels (1918b: 286).

As we would expect from his analysis of wasteful consumption in The Theory of the Leisure Class, Veblen deems many of these products “worse than useless so far as . . . [they have] any bearing on the net productive efficiency of the farm community” (1918b: 288). But in the memo, his main emphasis falls elsewhere: viz., on the “wasteful duplication . . . among these retail concerns.” He observes: “In such lines as groceries, coal, drygoods, banks, drugs, for example, the number of concerns actually engaged will sometimes run as high as ten or 20 times the number required to take care of the traffic” (1918b: 287). Which is to say, according to Veblen, that there was much excess capable of being cut: “the country trade can afford to set loose something like seven-ninths of the working force which it now employs, without interfering with the useful work” of marketing and distribution (1918b: 290). Yet, asserts Veblen, rather than wasteful duplication getting cut, it continues to grow thanks to a powerful entity that was an omnipresent force throughout his work: “vested interests that live on [such an] evil state of things” – in this case, vested interests like town merchants, bankers, and other businessmen, often working in collusion, with profit-making as their aim (1918b: 301).

So, Veblen’s memo proposes a sweeping set of federal-level regulatory measures which would hit these vested interests where it would most hurt them: namely, at the point of profit-making. Veblen writes:

No considerable number of employees can be set loose [from farm labor] without shutting down some of the retail establishments now engaged in the business; and the larger number of establishments which are induced to close down, the larger will be the number of workmen that will become available for use on the farms. The obvious line to take is to reduce the margin of profits in the retail trade to such a figure as to make it unprofitable for the full number of establishments to continue in business. This can be done by administrative regulation and interference, such as will reduce the total margin of profits derived from the traffic. (1918b: 294–295, emphasis added).

Veblen proceeds to lay out the contours of this “administrative regulation and interference” in granular detail, fully aware that he is suggesting an immediate and “radical shift in policy,” one intended to continue for the duration of the war (1918b: 294). In short: to address the farm labor shortages created by the emergency conditions of WWI, Veblen publicly advocates nothing less than state regulation of capitalist profit-accumulation. This plan is a far cry from Veblen’s thinking up to this point, which, as Plotkin and Tilman summarize, negatively cast “the state as an engine of warfare, as a threat to democracy, or as a resource for the advantage of business enterprise” (2011: 8).

In addition to state regulation of commercial profit-making, Veblen also offered supplementary institutional proposals. One was to increase the labor supply by disincentivizing businessmen and other members of the leisure class from employing in the role of “menial servants” men and women whose energies might better be put to productive wartime use, not wasted in the role of “caretakers and attendants in . . . domestic and public establishments,” where their main function is to confer social prestige on their employers (1918d: 269–270). The disincentive Veblen devises is what he calls a “progressive capitation tax”: a tax that “those shameless people who [employ] unproductive domestics” would be charged, at steeply ascending rates, for each additional servant employed (1918d: 272–273). Imposing such a tax, Veblen reasons, “should set free an appreciable number of persons for use in productive occupations,” including work on farms or at other sites where these persons could free up other people, namely those better trained for agricultural labor, to do it.

Another proposal of Veblen’s involved the International Workers of the World (IWW), the large labor union that was controversial at the time for its avowedly socialist and revolutionary principles. One branch of the union, the Agricultural Workers Industrial Union, was made up of migratory members who harvested wheat on one farm and then moved onto another and then another—an arrangement helpful to productive farmers, but opposed by unproductive “vested interests” in rural towns, who feared the radicalism of the Agricultural Workers Industrial Union, doubted the Union’s patriotism, and harassed and even jailed its members when they tried to move around (1918a: 323).

This situation, in Veblen’s view, inevitably posed a severe threat to the farm labor supply. So, in another of his memos, he urges the Food Administration to take several steps on behalf of the I.W.W.

Specifically, it is suggested that as a matter of expediency the members of the I.W.W. now under indictment be dealt with as expeditiously and as leniently as the legal formalities will permit; . . . that virtually all charges of disloyalty . . . be disallowed; . . . that measures be taken to discontinue the use of force by local authorities seeking to hinder the free movement of workmen in these states; in short, . . it is desirable to take a conciliatory stand in relation to this contingent of farm workmen and to go as far as the formalities will allow in cultivating their trust and goodwill. They may not be in the right, but they are one of the factors that will have to be made use of for the production of a sorely needed supply of grain and meat, and they can be used to good effect only by way of generous treatment and fair dealing. It is a case where generosity is the best policy (1918a: 328).

By the standards of the Herbert Hoover’s staff, however, Veblen’s proposal was definitely not the best policy. As recounted by Veblen biographers Elizabeth and Henry Jorgensen: when Hoover read Veblen’s memo, “he was outraged. Veblen’s paper was returned with a note stating that the government would never deal with the I.W.W. Veblen’s answer was to leave Washington” (1999: 157) —thus ending another chapter in his wartime career.

Immediately afterward, however, another chapter opened, ushering in a fourth line of work from the war years: writings on post-war social “reconstruction.” The occasion for most of these writings was the editorial transition, in 1918, of the high-brow literary magazine, The Dial, whose new owners saw (correctly) growing signs that American society was entering a reactionary phase. Seeking to stem this tide, the owners decided to broaden the magazine to include political messaging in hopes of becoming “an organ of ‘Reconstruction,’ . . . concerned with the rebuilding of post-WWI society on a new basis” (Jorgensen and Jorgensen, 1991: 157). For this purpose, the new owners hired Veblen, along with prominent progressive intellectuals such as John Dewey, to serve as editors for what proved to be a short-lived venture.

Not by coincidence, Veblen was already in step with the magazine’s ambition. We see this in a brief article he published in April of 1918 under the title “A Policy of Reconstruction.” Here, he maintains:

In assuming or accepting the assumption that there is need of some reconstruction, it is [currently] supposed that the system of use . . . under which the community now lives . . . is more or less out of date. This also carries the further assumption that the evil to be remedied is of a systematic character, and that palliative measures will no longer serve. This involves the proposition that some realignment of the working parts is necessary . . . What is to be avoided at all costs is the status quo ante. [1918e: 391; emphasis added, except on the last three words.]

In a series of eight articles for The Dial, beginning in October 1918 (as the war was ending) and running through January 1919, Veblen elaborated this institutionalist argument. Shortly afterward, the articles appeared together as a book, The Vested Interests and the State of the Industrial Arts, which Veblen republished later in 1919 under the title The Vested Interests and the Common Man. ⁹

The dichotomy in this last version of his title (vested interests vs the common man) recasts Veblen’s earlier distinction between unproductive “pecuniary” or business activities and productive “industrial” activities, this time using terminology that was more transparent to The Dial’s popular audience. In doing so, Veblen repurposes his previous concepts in order to clarify what he means when his 1918 “Policy of Reconstruction” article asserts that the parts of modern society are “more or less out of date” and require “realignment.”

Written in the shadow of what Veblen calls “the largest and most atrocious epoch of warfare known to history” (1919: 114), The Dial articles explain that “a discrepancy has arisen in the course time . . . between business and industry” (“Preface,” 1919 [unpaginated]). Going back two centuries, says Veblen, the two institutions more or less hung together, but since that time they have increasingly diverged. Industry made enormous productive strides inasmuch as it drew on new developments in science and technology, which made it possible to design and build better and better “industrial equipment” in order to improve material conditions (as originally supplied by nature) for the benefit of society at large—that is, for the “working population engaged in industry,” for common-men and -women who mobilize industrial equipment on behalf of this community (1919: 23).

In contrast, vested business interests, unproductive in and of themselves, have devised, as the War had demonstrated, ever more parasitic ways to convert the industrial advances of science and technology into private profits, especially through complicated financial instruments, which were only some among many corporate stratagems practiced behind the scenes and in the marketplace. Such instruments enabled business enterprises to significantly “restrict output” in order to limit the supply of their products (and thus raise demand for them, thereby boosting their profits; 1919: 73). Such institutions, argue Veblen, have had a devastating effect on America’s war efforts, for even during wartime “the great industries controlled by the vested interests [have operated at only] fifty-percent efficiency” in terms of their productive output (1919: 78).

Yet, for all intents and purposes, vested interests, in Veblen’s view, continue (as they had done for centuries) to dictate societal decisions not only about the production and distribution of goods and services, but also about national and international political questions, as evidenced again by the role of vested interests in causing WWI and in their practice of withholding, even afterward, support for a permanent peace among nations.

In short, according to Veblen, vested business interests retard material progress and peace initiatives, while people engaged in science and the development of technological knowledge represent the “main line of march for modern civilization” (1919: 12). Somewhat misleadingly, Veblen calls these forward-looking people, taken together, “engineers” —meaning above and beyond mechanical engineers, chemical engineers, mining engineers, and the like, “industrial engineers” and other experts in the design, building, enhancement, and practical application of new, productive technological inventions. It is on these people, therefore, that Veblen explicitly pins his hopes for post-war institutional reconstruction: “This state of things would reasonably suggest that the control of the industrial system had best be entrusted to men skilled in these matters of technology . . .. The material welfare of the community . . . depends on the expert knowledge, insight, and disinterested judgment with which it is administered. It should accordingly [be] expedient to entrust its administration to the industrial engineers, rather than captains of finance.” (1919: 89 [emphasis added]). Unlike members of the latter group, “experts in industrial engineering, who are in the habit of arguing in terms of material cost and material output” will not tolerate anything like the “fifty- percent efficiency” rate which vested interests demanded even when confronted wartime shortages (1919: 79).

For Veblen, the implication is clear: curbing the power of vested interests by putting post-war reconstruction primarily “into the hands of central control” by engineers—who could administer industry “as a public utility” —a step that would go a long way not only to material prosperity, but also toward peace (1919: 108; 1918e: 396). Continued dominance by business interests—the bete noire of Veblen’s theoretical and empirical work since the early 1890s—inevitably serves the opposite purpose.

Conclusion

Veblen’s activities during WWI led him increasingly to stretch beyond his earlier, professedly policy-neutral, attacks on the assumptions of mainstream economics in order to pursue in depth questions about the infrastructure of war and peace. Considered in light of the chronology of Veblen’s work, this move resulted in: a policy-laced theory of war and peace; practical plans to build an international organization that could sustain a permanent world peace; several concrete proposals to alleviate wartime food and labor shortages in the U.S.; and a sweeping plan for postwar social “reconstruction.”

Some of these ideas, when historically contextualized as specific responses to specific problems that became urgent during the war (farm labor shortages, structuring international peace organizations), subsequently faded from Veblen’s attention as those problems lost their salience on the public agenda, while pre-war themes in his oeuvre – economic, but also political and cultural – held their place, with occasional adjustments, in his post-war writings, notably The Engineers and the Price System (1921) and Absentee Ownership (1923). Yet both before, during, and (as an examination this later work would show) after the war, Veblen maintains his opposition to static and atomistic forms of analysis and his commitment to dynamic, institutional analyses, as well as his deep conviction that economic life revolves around a fundamental divide between productive men and women, on the one hand, and those unproductive vested interests that live off of them, on the other hand. These themes remain central and robust in Veblen’s thinking even as he faces the crushing enormity of WWI.