The Theory of Business Enterprise. Thorstein Veblen

discretion of a secular lord, more remotely under the discretion of the divine Overlord. And the question then pressing for an answer when a point of competency or legitimacy was raised in respect of any given human arrangement or institution was not, What hath God wrought? but, What hath God ordained?

      This medieval range of conceptions first began to break down and give place to modern notions in Italy, in the Renaissance. But it was in the English-speaking communities that the range of ideas upon which rests the modern concept of natural rights first gathered form and reached a competent expression. This holds true with respect to the modern doctrines of natural rights as contrasted with the corresponding ancient doctrines. The characteristically modern traits of the doctrine of natural rights are of English derivation. This is peculiarly true as regards the natural right of ownership. The material, historical basis of this English right of ownership, considered as a habit of thought, is given by the modern economic factors of handicraft and trade, in contrast with the medieval institutions of status and prowess. England, as contrasted with the Continent, during modern times rapidly substituted the occupation of the merchant and the ubiquitous free artisan as the tone-giving factors of her everyday life, in place of the prince, the soldier, and the priest. With this change in the dominant interests of everyday life came a corresponding change in the discipline given by the habits of everyday life, which shows itself in the growth of a new range of ideas as to the meaning of human life and a new ground of finality for human institutions. New axioms of right and truth supplant the old as new habits of thought supersede the old.

      This process of substitution, as a struggle between rival concepts of finality in political theory, reached a dramatic climax in the revolution of 1688. As a battle of axioms the transition comes to a head in the controversy between John Locke and Sir Robert Filmer. Filmer was the last effective spokesman of the medieval axiom of devolution. Locke's tracing of natural rights, the right of property among the rest, back to the workmanlike performance of the Creator, marks the form in which, at the point of transition, the modern view pays its respects to the superseded axiom of devolution and takes leave of it.

      The scope given to the right of ownership in later modern times is an outgrowth of the exigencies of mercantile traffic, of the prevalence of purchase and sale in a "money economy." The habits of thought enforced by these exigencies and by the ubiquitous and ever recurring resort to purchase and sale decide that ownership must naturally, normally, be absolute ownership, with free and unqualified discretion in the use and disposal of the things owned. Social expediency may require particular limitations of this full discretion, but such limitations are felt to be exceptional derogations from the "natural" scope of the owner's discretion.

      On the other hand, the metaphysical ground of this right of ownership, the ultimate fact by virtue of which such a discretionary right vests in the owner, is his assumed creative efficiency as a workman; he embodies the work of his brain and hand in a useful object, - primarily, it is held, for his own personal use, and, by further derivation, for the use of any other person to whose use he sees fit to transfer it. The workman's force, ingenuity, and dexterity was the ultimate economic factor, - ultimate in a manner patent to the common sense of a generation habituated to the system of handicraft, how ever doubtful such a view may appear in the eyes of a generation in whose apprehension the workman is no longer the prime mover nor the sole, or even chief, efficient factor in the industrial process. The free workman, master of his own motions and with discretion as to what he would turn his efforts to, if to anything, had by Locke's time become an habitual fact in the life of the English community to such a degree that free labor, of the character of handicraft, was accepted uncritically as the fundamental factor in all human economy, and as the presumptive original fact in industry and in the struggle for wealth. So settled did this habit of thought become that no question was entertained as to the truth of the assumption.

      It became a principle of the natural order of things that free labor is the original source of wealth and the basis of ownership. In point of historical fact, no doubt, such was not the pedigree of modern industry or modern ownership; but the serene, undoubting assumption of Locke and his generation only stands out the more strongly and unequivocally for this its discrepancy with fact. It is all the more evidently a competent expression of the trend which English common sense was following at this time, since this doctrine of a "natural" right of property based on productive labor carries all before it, in the face of the facts. In this matter English thought, or rather English common sense, has led; and the advanced Continental peoples have followed the English lead as the form of economic organization exemplified by the English-speaking communities has come to prevail among these Continental peoples.

      Such a concept belongs to the regime of handicraft and petty trade, and it is from, or through, the era of handicraft that it has come down to the present.⁴³ It fits into the scheme of handicraft, and it is less fully in consonance with the facts of life in any other situation than that of handicraft. Associated with the system of handicraft, as its correlate, was the system of petty trade; and as the differentiation of occupations was carried to a high degree, purchase and sale came to prevail very generally, and the community acquired a commercial complexion and commercial habits of thought. Under these circumstances the natural right of ownership came to comprise an extreme freedom and facility in the disposal of property. The whole sequence of growth of this natural right is, of course, to be taken in connection with the general growth of individual rights that culminated in the eighteenth-century system of Natural Liberty. How far the English economic development is to be accounted the chief or fundamental factor in the general growth of natural rights is a question that cannot be taken up here. The outcome, so far as it immediately touches the present topic, was that by the time of the industrial revolution a fairly consistent standardization of economic life had been reached in terms of workmanship and price. The writings of Adam Smith and his contemporaries bear witness to this. And this eighteenth-century standardization stands over as the dominant economic institution of later times.⁴⁴ Such, in outline, seem to be the historical antecedents and the spiritual basis of the modern institution of property, and therefore of business enterprise as it prevails in the present.⁴⁵

      This sketch of the genesis of the modern institution of property and of modern business principles may seem dubious to those who are inclined to give it a more substantial character than that of a habit of thought, - that is to say, those who still adhere to the doctrine of natural rights with something of the eighteenth-century naivete. But whatever may be accepted as the ulterior grounds of that cultural movement which culminated in the system of Natural Liberty, it is plain that the industrial and commercial experience of western Europe, and primarily of England, from the fifteenth to the eighteenth century, had much to do with the outcome of the movement in so far as natural liberty touches economic matters. It is as an outcome of this recently past phase of economic development that we have incorporated in the law, equity, and common sense of to-day, these peculiarly free and final property rights and obligations, that is to say, those peculiar principles that control current business and industry. We owe to the eighteenth century a very full discretIon and free swing in all pecunIary matters. It has given freedom of contract, together with security and ease of credit engagements, whereby the competitive order of business has been definitively installed.⁴⁶

      The subject-matter about which this modern pecuniary discretion turns, with all its freedom and inviolability of contract, is money values. Accordingly there underlies all pecuniary contracts. an assumption that the unIt of money value does not vary. Inviolability of contracts involves this assumption. It is accepted unquestioningly as a point of departure in all business transactions. In the making and enforcement of contracts it is a fundamental point of law and usage that money does not vary.⁴⁷ Capitalization as well as contracts are made in its terms, and the plans of the business men who control industry look to the money unit as the stable ground of all their transactions. Notoriously, business men are jealous of any attempt to change the value or lessen the stability of the money unit, which goes to show how essential a principle in business traffic is the putative invariability of the money unit.⁴⁸

      Usage fortified by law decides that when prices vary the variation is held to occur in the value of the vendible commodities, not in the value of the money unit, since money is the standard of value. There is, of course, no intention here to question the position, familiar to all economists, that fluctuations in the