The Complexities of Modern Capitalism
Thorstein Veblen was the first economist to emphasize the independent development of the industrial productive system from capitalist business and financial activity. 1 He pointed out that the early industrial entrepreneurs were both inventors and capitalists. They innovated factory organization and adapted machines to assembly-line production, while engaging in business activity of a high- flying nature. However, Veblen correctly showed that once machine technology became complex, highly trained specialized engineers and scientists began to take over the industrial productive end of the economic spectrum. The entrepreneurs became confined to the financial end of the business spectrum. The "captains of industry" became "captains of finance,'" while the industries they had founded grew and improved on the basis of the technological knowledge of the engineers and scientists. Veblen went so far as to suggest that groups of engineers should run the factories, and that the capitalists should keep out of the process entirely, confining their actions to the financial end of the process exclusively.
Veblen certainly had a point, and there is no doubt that without the scientifically trained "technocrats," modern machine factory production would be impossible. However, Veblen, in his earlier work, The Theory of Business Enterprise, 2 had highlighted the problem of overproduction and the way in which this unbalanced the market processes of supply and demand. If supply was limitless, how could demand operate to stimulate or retard production? Veblen explained quite incisively that to counteract the fact of overproduction, businessmen invented the advertising blitz in order to artificially create demand. The market was still the market, but it was now an industrial capitalist market, manipulated in both the