Take It From
Thorstein Veblen...
...the hard times, they are a-coming. The tip-off is that the
minimum wage is edging up by a few niggardly pennies.
Professor Veblen published The Theory of Business Enterprise
in 1904, during a period of business consolidation similar to
our own. The consolidators of the day were known as “Lords of
Creation,” but not because they created anything. They merely
absorbed one another amoeba-fashion, as Time-Warner and
America Online have just done. The principal object of the
Lords was not to create anything new and useful, but rather
to siphon money out of already existing corporations and into
the pockets of those who controlled them. This resulted, then
as now, in a peculiar form of surface prosperity that never
seems to get down to the men and women who actually do the
nation’s work.
Here is how Professor Veblen viewed the rising
tide which in his day was lifting all yachts.*
“To the workmen
engaged in industry, particularly, substantial benefits
accrue from an era of prosperity. These benefits come, not in
the way of larger returns for a given amount of work, but more
work, fuller employment, at about the earlier rate of pay. To
the workmen it often means a very substantial gain if they can
get a fuller livelihood by working harder or longer, and an
era of prosperity gives them a chance of this kind.
“Gradually, however, as prosperity--that is to say, the
advancing price level--rises and spreads, the increased cost
of living neutralizes the gain due to fuller employment, and
after the era of prosperity has been under way for some time
the gain in the amount of work obtainable is likely to be
fairly offset by the increased cost of living.
“As noted
above, much of the business advantage gained in an era of
prosperity is due to the fact that wages advance more tardily
than the prices of goods. An era of prosperity does not
commonly bring an increase of wages until the era is about to
close. (Emphasis added.)
“The advance of wages in such a case
is not only a symptom indicating that the season of
prosperity is passing, but it is a business factor which must
by its own proper effect close the season of prosperity as
soon as the advance in wages becomes somewhat general.
Increasing wages cut away the securest ground of that
differential price advantage on which an era of prosperity
runs.”
