If Thorstein Veblen is to be believed, the categories of activity considered by economists were determined by who gets paid (rent, wages or profit). In other words, activity is judged according to the effect, rather than the cause. In other words, economic analysis is fixated on results and numerically quantifiable results at that. Veblen says technological innovation has been left out because there is nobody claiming rewards. And he claims that “entrepreneurs” have been added because they make increasingly large claims, which are validated by increasing profits. It is all ass-backwards.

Veblen writes in his chapter on Captains of Industry:

The efficient enlargement of industrial capacity has, of course, been due to a continued advance in technology, to a continued increase in the available material resources, and to a continued increase of population. But the business community have also had a part in bringing all this to pass; they have always been in a position to hinder this growth, and it is only by their consent and advice that things have been enabled to go forward so far as they have gone.

That is mind-boggling. Businessmen are credited with promoting industry because they did not obstruct? However, this leads me to the suggestion that, in addition to the externalities or costs that have been overlooked in traditional economic analysis, we also need to consider the value of contributions (such as increasing population thanks to females), which have been overlooked. Externalities simply tell us that economists have been dealing with not a full deck.

Veblen is fully consistent with the assumption that money (investments, funds, credits) is the invention of and under the control of the financiers or captains of industry. And while he does seem to amend the “leisure class” to the “kept class,” there is no hint that real or monetary assets are initially derived from governmental grants. Veblen’s family was given a farm which then sustained the rearing of 12 children to the point that they could be spared for education. And then, when Veblen failed to be hired as a teacher, despite his degrees from universities, that farm sustained him for nine years. In his last years he was cared for by a step-daughter and modest income from his writings. So, he was a member of the “kept class.”

In going along with the official story, Veblem presumed that workers are dependent on wages from employers/industries. That they might be supported directly from the U.S. Treasury did not occur to him. It took COVID to reveal that possibility. How will workers react?