Horse running through field

Finley vs. Veblen

Advanced industrial society has long since held as a matter of common sense that, to put it bluntly, all that is not business is trash. This view underlies Bill Finley’s July 10 TDN op ed, in which, on business-survival grounds, he persuasively argues that the quantity of racing “product” should be cut in half; and I mention it, not to derrogate his point of view, but, on the contrary, to establish that it conforms perfectly with what passes in our age for common sense.

The business premise of Finley’s piece caught my attention because, ever since the demise of the Deep Water Horizon and the incineration of its crew, I’ve been collecting, insofar as possible, and reading the works of Thorstein Veblen. It’s the least I could do. He’s the renegade American economist who’s most notable for writing The Theory of the Leisure Class, published in 1899, and for coining the term “conspicuous consumption.”

Eschewing more straightforward and morally laden terms like envy, pride, venality, and profligacy to characterize Gilded Age excesses, Veblen preferred the more academically distant “invidious comparison,” “emulation,” and “honorific waste.” None of them quite captures the mood at Keeneland on those summer evenings during the early 1980s than his term “pecuniary complacency.” But that was all for satire.

His sense of humor all but exhausted after the Great War, Veblen thought it too late to don his satiric mask when he wrote The Engineers and the Price System, published in 1921. In that book he excoriates the investment bankers, which by then had superceded entrepreneurs as the “Guardians” of the price system. His argument goes something like this.

As industry by “machine process” becomes increasingly complex and increasingly dependent on management by the engineers, financial control by the captains of industry, which Veblen lumps into the category “absentee owners,” becomes increasingly untenable. The reason is that the absentee owners, ignorant of the machine process, have a strictly business interest in the production of consumable goods; and, insofar as their interest is vested entirely in profit, it runs at cross-purposes with competent production and distribution. Eventually, Veblen thought, the absentee owners, in their pursuit of profit, would so thoroughly sabotage the system of production that they would be forced to abdicate their role in the price system and leave it all, by default, to the engineers.

Veblen didn’t live to be proven wrong about that, but only because he died in 1929. Yes, the absentee owners did indeed thoroughly wreck the system of production, even sooner than he thought, but clawed their way back from the Great Depression; and here we are in the Great Recession of 2008 with crude spewing up through a hole in the bottom of the Gulf, leased by a corporation that’s essentially an investment bank, all the engineers saying, “I told you so.”

Now, pedigree and horsemanship constitute the machine process in the production of racehorses, and breeders and horsemen are the engineers. As a practical matter, to talk about the system of racing as “the product” misses the point that the product is actually the horse, along with its inherent capacities. That’s the end-in-view of the machine process. The system of racing has nothing whatever to do with the product other than to package it and sell it, which, in Veblen’s analysis, are business functions alien to and contingent upon the productive elements. Put another way, raceplayers bet horses, not races.

It’s a matter of course that any perturbation in the system of racing, especially of the scale suggested by Finley, is bound to derange the machine process. One can only hope that, when it’s decided which 50% will be cut in the interest of economizing the system of racing, it doesn’t sabotage the breeding industry.

5 comments to “Finley vs. Veblen”

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  • john greathouse writes:

    As Slim Pickens said in Blazing Saddles
    “you got a tongue prettier than a two dollar whore”
    Realistically speaking Roger, the economies of the article says it all. The Bob Evans’ of this world see only their profit and not the wage earner or the worker bees. I never thought of myself as a Union person and still don’t but the Bankers of this world (as Jefferson said) can’t be trusted.
    Well said

  • Tinky writes:

    This is obviously a rather complicated topic, but I have a couple of thoughts and quibbles.

    When (most) people refer to what you call the “system of racing” as “the product”, they are doing so because Thoroughbred racehorses would not exist – at least not in their currently recognizable form – were it not for that system. And within the context of that system, purse structures, how racing is presented, what forms of gambling are allowed, etc., are the key variables contributing to the overall success (or failure) of the industry. Long gone are the days when the aristocracy would race for the sheer pleasure of seeing their runners perform.

    It is also a fact that people are most attracted to the highest quality in any sport. That can easily be deduced by looking the depth and quality of the players on teams that perform in well-run leagues (i.e. those which restrict the number of teams), or the amounts of money gambled on various events.

    Thoroughbred racing in the U.S., for reasons that I don’t need to review here, has chosen over the decades during which other sports developed far more successful and powerful leagues, to retain a model which is diluted to a degree that is otherwise unheard of. It would be as if the NBA decided to have 300 teams, with one good player on each team.

    This has been a predictable recipe for disaster, and while there are other relevant variables to consider, it is no surprise that racing in Hong Kong, for example, attracts per-race levels of betting that dwarf that of racing in the U.S.

    There is no doubt that a contraction of racing will impact the breeding industry, but, if handled properly (a BIG if, admittedly), it will also help to rejuvenate the industry. A higher concentration of quality horses competing for bigger purses in larger fields would go a long way to halting, and reversing the rapid decline of the sport.

    As to the potential “sabotage” of the breeding industry, I can’t help but to react cynically. The U.S. breeding industry has, in large part, been responsible for its current (and any near-future) woes. For the past 25 years (or so) the selfish, short-sighted trend followed by most breeders has been to breed to sell, rather than breeding to race. So is it any surprise that the sport is now inundated with intrinsically unsound, often hot-tempered animals that rarely stay a step beyond nine furlongs?

    Sadly, as further illustration of the deeply insidious, fractured nature of the U.S. racing and breeding industries, little thought is given to how the emphasis on breeding particular types of animals might impact the broader business in the longer term, nor is serious thought given to how eliminating “distance” races and catering to cheap horses might be degrading the game.

    Unfortunately, I could go on, and on, and on…

  • Roger Lyons writes:

    John, Thorstein Veblen couldn’t have agreed with you more. He had no faith whatever in the games that were played by labor and management because they were both interested in only one thing in the final analysis–a piece of the action. Unlike the Marxists, who had a lot more traction in his time than in our time, he didn’t think anything of value could arise out of that conflict. Only the engineers had a personal intellectual and passionate engagement in the productive process–the “machine process”–for its own sake. That’s why Veblen foused instead on the broader conflict between industry and the banks–all in the interest of efficient production and adequate distribution of serviceable goods. It seems to me the time has come to give Veblen another hearing. And, by the way, I appreciated your comments in–was it the July 11 or 12? issue–of TDN because you dealt with the question in concrete terms of what it would mean to the engineers of this game, and I would invite readers to go to the TDN archive and review your comments in case they missed the piece you wrote.

  • Roger Lyons writes:

    Tinky, I thank you on behalf of our readers for taking the trouble to go as far as you have here. Perhaps, instead of saying “as a practical matter,” I should have said “as a formal matter” when referring to the distinction between breeding, as a productive process, and racing as packaging, merchandising, and salesmanship. I’m not sure. Anyway, I drew the distinction because it seemed the appropriate way to apply Veblen’s analysis. Nevertheless, if it’s fair to say that racing has too much effect on the goods that are produced by the breeding industry, then it’s at least eqully fair to say that the breeding industry has too much to do with business, as you point out with respect to the effects of the direct commercial market.

    As long as we’re going back to the time when aristocrats raced for “the sheer pleasure of seeing their runners perform,” let’s go back further to the time when breeding and racing were wrapped inseparably in a folk tradition sustained by yoeman farmers. I’d argue that the aristocratic period, from the late18th- through the 19th century, was a stage in the industrial organization of breeding and racing and that its main thrust was to appropriate that all but forgotten folk tradition to the business-industrial model. We call it an “aristocratic tradition,” but it couldn’t reproduce itself. It could only evolve with the broader economic environment. That process drove asunder the businesses of breeding and racing, resulting in, as you aptly put it, “the deeply insidious, fractured nature of the U.S. racing and breeding industries.” But that was Veblen’s point exactly.

    I’d add that in the background of this post were my thoughts about a post Sid Fernando wrote at his website on the Suburban H., which was run at 9 furlongs this year instead of 10 furlongs. No doubt, immediate pressures conspired to make this happen, and no doubt there is blame enough to be divided between both sides of the industrial-business model for its long-term effects.

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