THE VESTED INTERESTS & THE NATURE OF PEACE. Thorstein Veblen

use of an extensive equipment of mechanical apparatus, progressively more and more extensive as the change to the machine technology went on; and at the same time the disposable margin of product above cost also progressively went on increasing with each further increase of the community's joint stock of technological knowledge.

      This body of technological knowledge, the state of the industrial arts, of course has always continued to be held as a joint stock. Indeed this joint stock of technology is the substance of the community's civilisation on the industrial side, and therefore it constitutes the substantial core of that civilisation. Like any other phase or element of the cultural heritage, it is a joint possession of the community, so far as concerns its custody, exercise, increase and transmission; but it has turned out, under the peculiar circumstances that condition the use of this technology among these civilised peoples, that its ownership or usufruct has come to be effectually vested in a relatively small number of persons. Unforeseen and undesigned, the mechanical circumstances of the new order in industry have reversed the practical effects of the common law in respect of self-help, equal opportunity and free bargaining. The mechanics of the case has worked out this result by cutting away the ground on which those principles were based at the time of their acceptance and installation.

      The machine technology requires for its working a large and specialised mechanical apparatus, an ever increasingly large and increasingly elaborate material equipment. So also it requires a large and diversified supply of material resources, both in raw materials and in the way of motive power. It is only on condition that these requirements are met in some passable fashion that this industrial system will work at all, and it is only as these requirements are freely met that the machine industry will work at a high efficiency. At the same time the settled principles of law and usage and public policy handed down from the eighteenth century have in effect decided, and continue to decide, that all material wealth is, rightly, to be held in private ownership, and is to be made use of only subject to the unhampered discretion of the legally rightful owner. Meantime the highly productive state of the industrial arts embodied in the technological knowledge of the new order can be turned to account only by use of this material equipment and these natural resources which continue to be held in private ownership. From which it follows that these material means of industry, and the state of the industrial arts which these material means are to serve, can be turned to productive use only so far and on such conditions as the rightful owners of the material equipment and resources may choose to impose; which enables the owners of this indispensable material wealth, in effect, to take over the use of these industrial arts for their own sole profit. So that the usufruct of the community's technological knowledge has come to vest in the owners of such material wealth as is held in sufficiently large blocks for the purpose.

      Therefore, by award of the settled principles of equity and self-help embodied in the modern point of view, as stabilised in the eighteenth century, the owners of the community's material resources -- that is to say the investors in industrial business -- have in effect become "seized and possessed of" the community's joint stock of technological knowledge and efficiency. Not that this accumulated knowledge of industrial forces and processes has passed into the intellectual keeping of the investors and been assimilated into their mentality, even to the extent of a reasonably scanty modicum. It remains true, of course, that the investors, owners, kept classes, or whatever designation is preferred, are quite exceptionally ignorant of all that mechanics of industry whose usufruct is vested in them; they are, in effect, fully occupied with other things, and their knowledge of industry ordinarily does not, and need not, extend to any rudiments of technology or industrial process. It is not as intelligent persons, but only as owners of material ways and means, as vested interests, that they come into the case. The exceptions to this rule are only sufficiently numerous to call attention to themselves as exceptions.

      As an intellectual achievement and as a working force the state of the industrial arts continues, of course, to be held jointly in and by the community at large; but equitable title to its usufruct has, in effect, passed to the owners of the indispensable material means of industry. Though not hitherto by formal specification and legal provision, their assets include, in effect, the state of the industrial arts as well as the mechanical appliances and the materials without which these industrial arts are of no effect. It is true, a little something, and indeed more than a little, has been done toward the due legal recognition of the investor's usufruct of the community's technological efficiency, in the recognition of vested interests and intangible assets as articles of private property defensible at law. But on the whole, and until a relatively recent date, the investors' tenure of this usufruct has been allowed to rest informally on their control of the community's material assets.

      Still, the outlook now appears to be that something further may presently be done toward a more secure and unambiguous tenure of this usufruct, by suitable legal decisions bearing on the inviolability of vested interests and intangible assets. The outcome is, in effect, that these owners have equitably become the sole legitimate beneficiaries of the possible margin of product above cost.

      These are also simple facts and patent, and should seem sufficiently obvious without argument. They have also been explained at some length elsewhere. But this recital of what should already be commonplace information seems necessary here for the sake of a more perspicuous continuity in the present argument. To many persons, perhaps to the greater proportion of those unpropertied persons that are often spoken of collectively as "the common man," the state of things which has just been outlined may seem untoward. And further reflection on the character and prospective consequences of this arrangement is likely to add something more to the common man's apprehension of hardship and insecurity to come. Therefore it may be well to recall that this state of things has been brought to pass not by the failure of those principles of equity and self-help that lie at the root of it all, but rather by the eminently unyielding stability and sufficiency of these principles under new conditions. It is not due to any inherent weakness or shiftiness in these principles of law and custom; which have faithfully remained the same as ever, and which all men admit were good and sound at the period of their installation. But it is beginning to appear now, after the event, that the inclusion of unrestricted ownership among those rights and perquisites which were allowed to stand over when the transition was made to the modern point of view is likely to prove inexpedient in the further course of growth and change.

      Unrestricted ownership of property, with inheritance, free contract, and self-help, is believed to have been highly expedient as well as eminently equitable under the circumstances which conditioned civilised life at the period when the civilised world made up its mind to that effect. And the discrepancy which has come in evidence in this later time is traceable to the fact that other things have not remained the same. The odious outcome has been made by disturbing causes, not by these enlightened principles of honest living. Security and unlimited discretion in the rights of ownership were once rightly made much of as a simple and obvious safeguard of self-direction and self-help for the common man; whereas, in the event, under a new order of circumstances, it all promises to be nothing better than a means of assured defeat and vexation for the common man.

IV. Free Income

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      Industry of the modern sort -- mechanical, specialised, standardised, drawn on a large scale -- is highly productive.

      When this industrial system of the new order is not hindered by outside control it will yield a very large net return of output over cost, -- counting cost in terms of man power and necessary consumption; so large, indeed, that the cost of what is necessarily consumed in productive work, in the way of materials, mechanical appliances, and subsistence of the workmen, is inconsiderable by comparison. The same thing may be described by saying that the necessary consumption of subsistence and industrial plant amounts to but an inconsiderable deduction from the gross output of industry at any time. So inordinately productive is this familiar new order of industry that in ordinary times it is forever in danger of running into excesses and turning out an output in excess of what the market -- that is to say the business situation -- will tolerate. There is constant danger of "overproduction," So that there is commonly a large volume of man power unemployed and an appreciable