America's Greatest Economist On Sabotage As Business Enterprise (was Re: novel argument against taxing rents)

"It was then still true, in great measure, that the undertaker
was the owner of the industrial equipment, and that he kept an
immediate oversight of the mechanical processes as well as of
the pecuniary transactions in which his enterprise was engaged;
and it was also true, with relatively infrequent exceptions,
that an unsophisticated productive efficiency was the prime
element of business success. A further feature of that
precapitalistic business situation is that business, whether
handicraft or trade, was customarily managed with a view to
earning a livelihood rather than with a view to profits on
investment...

...The economic welfare of the community at large is best
served by a facile and uninterrupted interplay of the various
processes which make up the industrial system at large; but the
pecuniary interests of the business men in whose hands lies the
discretion in the matter are not necessarily best served by an
unbroken maintenance of the industrial balance. Especially is
this true as regards those greater business men whose interests
are very extensive. The pecuniary operations of these latter are
of large scope, and their fortunes commonly are not permanently
bound up with the smooth working of a given Sub-process in the
industrial system. Their fortunes are rather related to the
larger conjunctures of the industrial  system as a whole, the
interstitial adjustments, or to conjunctures affecting large
ramifications of the system. Nor is it at all uniformly to
their interest to enhance the smooth working of the industrial
system at large in so far as they are related to it. Gain may come
to them from a given disturbance of the system whether the
disturbance makes for heightened facility or for widespread
hardship, very much as a speculator in grain futures may be either
a bull or a bear. To the business man who aims at a differential
gain arising out of interstitial adjustments or disturbances of
the industrial system, it is not a material question whether his
operations have an immediate furthering or hindering effect upon
the system at large. The end is pecuniary gain, the means is
disturbance of the industrial system, - except so far as the gain
is sought by the old-fashioned method of permanent investment in
some one industrial or commercial plant, a case which is for the
present left on one side as not bearing on the point immediately
in hand. The point immediately in question is the part which the
business man plays in what are here called the interstitial
adjustments of the industrial system; and so far as touches his
transactions in this field it is, by and large, a matter of
indifference to him whether his traffic affects the system
advantageously or disastrously. His gains (or losses) are related
to the magnitude of the disturbances that take place, rather than
to their bearing upon the welfare of the community.
 
The outcome of this management of industrial affairs through
pecuniary transactions, therefore, has been to dissociate the
interests of those men who exercise the discretion from the
interests of the community. This is true in a peculiar degree
and increasingly since the fuller development of the machine
industry has brought about a close-knit and wide-reaching
articulation of industrial processes, and has at the same time
given rise to a class of pecuniary experts whose business is
the strategic management of the interstitial relations of the
system. Broadly, this class of business men, in so far as they
have no ulterior strategic ends to serve, have an interest in
making the disturbances of the system large and frequent, since
it is in the conjunctures of change that their gain emerges.
Qualifications of this proposition may be needed, and it will
be necessary to return to this point presently.

It is, as a business proposition, a matter of indifference to the
man of large affairs whether the disturbances which his
transactions set up in the industrial system help or hinder the
system at large, except in so far as he has ulterior strategic
ends to serve. But most of the modern captains of industry have
such ulterior ends, and of the greater ones among them this is
peculiarly true. Indeed, it is this work of far-reaching business
strategy that gives them full title to the designation, 'Captains
of Industry.' This large business strategy is the most admirable
trait of the great business men who with force and insight swing
the fortunes of civilized mankind. And due qualification is
accordingly to be entered in the broad statement made above. The
captain's strategy is commonly directed to gaining control of
some large portion of the industrial system. When such control has
been achieved, it may be to his interest to make and maintain
business conditions which shall facilitate the smooth and
efficient working of what has come under his control, in case he
continues to hold a large interest in it as an investor; for, other
things equal, the gains from what has come under his hands
permanently in the way of industrial plant are greater the higher
and more uninterrupted its industrial efficiency.

An appreciable portion of the larger transactions in railway and
'industrial' properties, e.g., are carried out with a view to the
permanent ownership of the properties by the business men into
whose hands they pass. But also in a large proportion of these
transactions the business men's endeavors are directed to a
temporary control of the properties in order to close out at an
advance or to gain some indirect advantage; that is to say, the
transactions have a strategic purpose. The business man aims to
gain control of a given block of industrial equipment - as, e.g.,
given railway lines or iron mills that are strategically important -
as a basis for further transactions out of which gain is expected.
In such a case his efforts are directed, not to maintaining the
permanent efficiency of the industrial equipment, but to influencing
the tone of the market for the time being, the apprehensions of
other large operators, or the transient faith of investors. His
interest in the particular block of industrial equipment is, then,
altogether transient, and while it lasts it is of a factitious
character.

The exigencies of this business of interstitial disturbance decide
that in the common run of cases the proximate aim of the business
man is to upset or block the industrial process at some one or
more points. His strategy is commonly directed against other
business interests and his ends are commonly accomplished by the
help of some form of pecuniary coercion. This is not uniformly
true, but it seems to be true in appreciably more than half of
the transactions in question. In general, transactions which aim
to bring a coalition of industrial plants or processes under the
control of a given business man are directed to making it difficult
for the plants or processes in question to be carried on in
severalty by their previous owners or managers. It is commonly a
struggle between rival business men, and more often than not the
outcome of the struggle depends on which side can inflict or
endure the greater pecuniary damage. And pecuniary damage in such
a case not uncommonly involves a setback to the industrial plants
concerned and a derangement, more or less extensive, of the
industrial system at large.
 
The work of the greater modern business men, in so far as they have
to do with the ordering of the scheme of industrial life, is of this
strategic character. The dispositions which they make are business
transactions, 'deals,' as they are called in the business jargon
borrowed from gaming slang. These do not always involve coercion of
the opposing interests; it is not always necessary to 'put a man in
a hole' before he is willing to 'come in on' a 'deal.' It may often
be that the several parties whose business interests touch one
another will each see his interest in reaching an amicable and
speedy arrangement; but the interval that elapses between the time
when a given 'deal' is seen to be advantageous to one of the parties
concerned and the time when the terms are finally arranged is
commonly occupied with business manoeuvres on both or all sides,
intended to 'bring the others to terms.' In so playing for position
and endeavoring to secure the largest advantage possible, the
manager of such a campaign of reorganization not infrequently aims
to 'freeze out' a rival or to put a rival's industrial enterprise
under suspicion of insolvency and 'unsound methods,' at the same
time that he 'puts up a bluff' and manages his own concern with a
view to a transient effect on the opinions of the business community.
Where these endeavors occur, directed to a transient derangement of
a rival's business or to a transient, perhaps specious, exhibition of
industrial capacity and earning power on the part of one's own
concern, they are commonly detrimental to the industrial system at
large; they act temporarily to lower the aggregate serviceability of
the comprehensive industrial process within which their effects run,
and to make the livelihood and the peace of mind of those involved
in these industries more precarious than they would be in the absence
of such disturbances. If one is to believe any appreciable proportion
of what passes current as information on this head, in print and by
word of mouth, business men whose work is not simply routine
constantly give some attention to manoeuvring of this kind and to
the discovery of new opportunities for putting their competitors at
a disadvantage. This seems to apply in a peculiar degree, if not
chiefly, to those classes of business men whose operations have to
do with railways and the class of securities called 'industrials.'
Taking the industrial process as a whole, it is safe to say that at
no time is it free from derangements of this character in any of the
main branches of modern industry. This chronic state of perturbation
is incident to the management of industry by business methods and is
unavoidable under existing conditions. So soon as the machine industry
had developed to large proportions, it became unavoidable, in the
nature of the case, that the business men in whose hands lies the
conduct of affairs should play at cross-purposes and endeavor to
derange industry. But chronic perturbation is so much a matter of
course and prevails with so  rare interruptions, that, being the
normal state of affairs, it does not attract particular notice."
-- Thorstein Veblen (1904). The Theory of Business Enterprise,
Chapter 3.

--
Mostly economics: <http://www.dreamscape.com/rvien/#PublicationsForFun>
r c
v s a Whether strength of body or of mind, or wisdom, or
i m p virtue, are found in proportion to the power or wealth
e a e of a man is a question fit perhaps to be discussed by
n e . slaves in the hearing of their masters, but highly
@ r c m unbecoming to reasonable and free men in search of
d o the truth. -- Rousseau
.