Published in 1904, Veblen's The Theory of Business Enterprise established his concept of business at the turn of the century. The book shocked readers, but it failed to make the splash of his earlier work on the leisure class. This time, there was no mistaking the book as satire; consequently, only economists and scholars read it.
Rejecting earlier theories that the capitalist is the driving force behind economic progress, Veblen charged that the businessperson is the saboteur of business. As he explains, machines dominate society, but machines care nothing for profit. Therefore, business people are no longer needed. Eliminated by the machine, they are replaced by technicians and engineers.
Entrepreneurs, however, as members of the leisure class, are still acutely interested in the accumulation of profit. Their only opportunity of gaining profit is to cause breakdowns in production so that values fluctuate. Being on the inside, businesspeople then make a profit during the resulting confusion. Thus, the entrepreneur cunningly builds up credits, loans, and artificially high capitalizations. Unfortunately, in the process, the efficiency of production remains continually off-balance.
Looking to the future, Veblen predicted the end of the capitalist — not through the action of Marx's proletariat, but by a tougher force: the machine. The recurring business crisis brought about by the entrepreneur would show to all the inability of the system to remain in balance. As the alternative, Veblen hoped for the day when a corps of engineers would take over the running of the economy, along the lines of a huge, well-ordered production machine. And if this didn't come to pass, then eventually the plundering spirit of Big Business would increase until the system gave way to fascism.
Veblen believed that the robber barons were interested in producing profits for themselves rather than in producing goods. An example of artificially high capitalization is the founding of U.S. Steel in 1901.
