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Veblen and
Veblen and globalization: globalization
a comment on Wellington and
Zandvakili
529
Ken McCormick
Department of Economics, University of Northern Iowa, Cedar Falls, Iowa, USA

Abstract
Purpose – The purpose of the paper is to examine the claim made by Wellington and Zandvakili that
Thorstein Veblen would be opposed to globalization.
Design/methodology/approach – The approach of the paper is to examine what Veblen actually
said in order to provide evidence from Veblen’s own pen.
Findings – Veblen forcefully argued that trade barriers are another form of business sabotage. Trade
barriers increase business profits but harm the community as a whole. That is because trade barriers
inhibit specialization, and specialization is required for technological progress. Trade barriers
therefore impede progress from the standpoint of humanity as a whole.
Practical implications – National boundaries impede technological development because they
reduce specialization. Trade barriers make the problem worse, and therefore are harmful. Trade
barriers help business at the expense of the general public.
Originality/value – The paper offers an argument for reducing trade barriers that is not derived
from neoclassical economics. It should be of interest to anyone interested in the debate about
globalization as well as those interested in Thorstein Veblen.
Keywords Globalization, Trade barriers, Economic theory
Paper type Research paper

Readers of Wellington and Zandvakili’s paper, “Globalization and Inequality


According to Veblen (2004)” might come away with the idea that Veblen was
adamantly opposed to the process of globalization. That is because the authors chose
to emphasize that “globalization is one of the ways in which the prime movers open up
opportunities for the predators” (Wellington and Zandvakili, 2004, p. 1067).
There can be doubt that Veblen viewed business enterprise as a predatory
institution. He nevertheless consistently and repeatedly argued against trade barriers.
That was because trade barriers have two harmful effects. The first is that trade
barriers shrink the relevant technological community, which retards technological
development. The second is that trade barriers increase the profits of business
interests at the expense of the rest of the population. As Veblen (1923, p. 73) put it,
“business considerations may call for obstruction of trade; technological
considerations do not.”
To understand Veblen’s argument, one must recognize that for Veblen, the core
element in every economy is its technology. Veblen (1923, p. 62) wrote that:
International Journal of Social
. . .the prime creative factor in human industry is the state of the industrial arts; that is to say, Economics
Vol. 33 No. 7, 2006
the determining fact which enables human work to turn out a useful product is the pp. 529-532
accumulated knowledge, skill and judgment that goes into the work, – also called technology q Emerald Group Publishing Limited
0306-8293
or workmanship. DOI 10.1108/03068290610673243
IJSE Without technology, labor and “capital” are empty concepts. Raw materials have no
33,7 value unless one knows how to use them. As Veblen (1919, pp. 347-8) put it:
What there is involved in the material equipment, which is not of this immaterial, spiritual
nature, and so what is not an immaterial residue of the community’s experience, is the raw
material out of which the industrial appliances are constructed, with the stress falling wholly
on the “raw.”
530
The state of the industrial arts, so critical to every economy, is a possession and a
product of the community as a whole. Individuals know only fragments of the total
stock of knowledge. Consider, for example, something as simple as an ordinary pencil.
No single individual could possibly know how to make one from scratch. To make a
pencil one must know many things, including how to make paint, mine and process
metal, manufacture the eraser, mix graphite and clay in the proper proportions, and
how to make the tools needed to do all of these things. In reality, making a pencil is a
social process. Individuals know only small pieces of the total knowledge needed to
make a pencil.
The process of technological change is also a social process. It is true that
individuals are responsible for specific advances in the state of the industrial arts. But
the knowledge used by these individuals is drawn from the knowledge of the group.
Veblen (1914, pp. 103-4) put it this way:
Each successive move in advance, every new wrinkle of novelty, improvement, invention,
adaptation, every further detail of workmanlike innovation, is of course made by individuals
and comes out of individual experience and initiative, since the generations of mankind live
only in individuals. But each move so made is necessarily made by individuals immersed in
the community and exposed to the discipline of group life as it runs in the community, since
all life is necessarily group life. The phenomena of human life occur only in this form. It is
only as an outcome of this discipline that comes with the routine of group life, and by help of
the commonplace knowledge diffused through the community, that any of its members are
enabled to make any new move that may in this way be traceable to their individual initiative.
Any new technological departure necessarily takes its rise in the workmanlike endeavors of
given individuals, but it can do so only by force of their familiarity with the body of
knowledge which the group already has in hand.
The fact that individuals can know only bits and pieces of the total stock of knowledge
means that they must specialize. The phenomenon is observed in both advanced and
primitive economies. Veblen (1914, p. 106) wrote that while everyone has access to the
common stock of knowledge, “in all known cultures there is also found some degree of
special training and some appreciable specialisation of knowledge and occupations.”
Increasing specialization makes individuals more dependent on the community for
most of their needs. But specialization also makes it more likely that someone will find
improved methods. Moreover, in an argument reminiscent of Adam Smith, Veblen
(1914, pp. 107-8) wrote that the degree of specialization is limited by the size of the
community:
This necessary specialisation and detail training has large consequences for the growth of
technology as well as for its custody and transmission. It follows that a large and widely
diversified industrial scheme is impossible except in a community of some size, – large
enough to support a number and variety of special occupations. In effect, substantial gains in
industrial insight and proficiency can apparently be worked out only through such close and
sustained attention to a given line of work as can be given only within the lines of a Veblen and
specialised occupation. At the same time the industrial community must comprise a full
complement of such specialised occupations, and must also be bound together in a system of globalization
communication sufficiently close and facile to allow the technological contents of all these
occupations to be readily assimilated into a systematic whole . . .If the degree of isolation is
pronounced, so that traffic and communication do not run freely between groups, the size of
the local group will limit the state of the industrial arts somewhat rigidly.
531
What is even more important for our purposes is the fact that the size of the community
need not be limited by the size of the nation as long as there are no artificial barriers
between nations. Veblen (1914, p. 109n) was quite clear about this:
These considerations may of course imply nothing, directly, as to the size of the political
organisation or of the national territory or population. . . A community may be small, relative
to the industrial system in and by which it lives, and may yet, if conditions of peace permit it,
stand in such a relation of complement or supplement to a larger complex of industrial groups
as to make it in effect an integral part of a larger community, so far as regards its technology.
The problem, as Veblen saw it, is that vested interests turn national borders into
artificial barricades. Veblen (1914, p. 109) wrote that “national boundaries have a very
considerable obstructive effect in industrial affairs and in the growth of technology.”
Limiting the size of the technological community limits the potential degree of
specialization which in turn retards the pace of technological change. Veblen made the
point over and over in a variety of contexts. For example, anticipating the outbreak of
World War One, Veblen (1914, p. 109n) expected a “curtailment or retardation of
. . .technological advance” due to “the efforts of those patriotic and dynastic statesmen
who are endeavouring to set these peoples asunder in an armed estrangement and
neutrality.”
But the danger was not just from war. During peacetime, the problem was the desire
of absentee owners to increase their unearned income. Veblen (1923, p. 127n) noted that
“absentee owners have been greatly helped out from time to time by a protective tariff
designed to safeguard and augment the free income of vested interests of this class”.
Veblen (1934, p. 387) hammered the point home repeatedly. He wrote that “the national
frontiers are a means of capitalistic sabotage; and indeed that is all they are good for in
this connection”. Veblen (1934, p. 337) also wrote that:
The modern state of the industrial arts has got its growth and holds its footing by force of an
effectual disregard of national demarcations. Not only is it true that this body of knowledge,
which makes the material foundation of modern civilization, is of an international character
and that it has been brought into bearing, and continues to be held as a common stock,
common to all civilized nations; but it is also to be kept in mind that this modern technology
always and necessarily draws on the world’s resources at large for the means and materials of
its work, regardless of national frontiers – in so far as the politicians do not deliberately put
obstacles in the way of a free movement of these means and materials. In the realm of
industry it is obvious that national frontiers serve no better purpose than a more or less
effectual hindrance to the efficient working of the industrial system.
In his discussion of the creation of the modern German state, Veblen (1915, p. 177)
wrote that:
So patent is the inhibitory effect of circumspection, whether on grounds of personal or class
prerogative or on grounds of national segregation, that even the statesmen of these
IJSE German principalities, whose segregation appears to have been the sole end of their existence,
were reluctantly brought to realise the futility of trying to live in and by the modern economic
33,7 system as industrially and commercially segregated communities.
The point is that Veblen viewed national barriers as unequivocally bad. They inhibit
technological development and they exist only to benefit the vested interests. In
particular, business interests may find that trade barriers increase their pecuniary
532 gain, but the cost is paid by everyone else. National boundaries and the trade
restrictions that go with them are institutional barriers to technological development.
Despite his deep suspicion of business, it is clear that Veblen opposed the
segregation of the globe on the basis of nations. Modern globalization would provide
much for Veblen’s acid pen to critique, but there can be no doubt that he would have
seen the overall trend as positive. Artificial barriers to trade and to technology-flows
benefit the few and harm the many. Such barriers are opposed to generically human
progress.

References
Veblen, T. (1914), The Instinct of Workmanship, B.W. Huebsch, New York, NY.
Veblen, T. (1915), Imperial Germany, A.M. Kelley, New York, NY.
Veblen, T. (1919), The Place of Science in Modern Civilization, B.W. Huebsch, New York, NY.
Veblen, T. (1923), Absentee Ownership, A.M. Kelley, New York, NY.
Veblen, T. (1934), Essays in Our Changing Order, A.M. Kelley, New York, NY.
Wellington, D.C. and Zandvakili, S. (2004), “Globalization and inequality according to Veblen”,
International Journal of Social Economics, Vol. 31 Nos 11/12, pp. 1061-70.

Corresponding author
Ken McCormick can be contacted at: mccormick@uni.edu

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