A New Sense of Value: Literary Modernism and Economics
Ronald Schleifer
A mere fifty years after [Jane Austen’s] death, [her] world was altered beyond recognition. […] The notion that man was a creature of his circumstance, and that those circumstances were not predetermined, immutable, or utterly impervious to human intervention is one of the most radical discoveries of all time. It called into question the existential truth that humanity was subject to the dictates of God and nature. It implied that, given new tools, humanity was ready to take charge of its own destiny. […] Before 1870 economics was mostly about what you couldn’t do. After 1870, it was mostly about what you could do.
– Sylvia Nasar, Grand Pursuit: The Story of Economic Genius (Nasar, 2011, xiii–ix)
All types of societies are limited by economic factors. Nineteenth-century civilization alone was economic in a different and distinctive sense, for it chose to base itself on a motive only rarely acknowledged as valid in the history of human societies, and certainly never before raised to the level of a justification of action and behavior in everyday life, namely, gain. The self-regulating market system was uniquely derived from this principle.
– Karl Polanyi, The Great Transformation: The Political and Economic Origins of Our Time (Polanyi, 2001, 31)
The Argument1
In this chapter, I examine our received ideas associated with twentieth-century modernism in relation to the transformations in economic practices and understanding in the late nineteenth and early twentieth centuries. My overall argument is that as well as situating post-classical economics – both neoclassical and institutional economics in the late nineteenth century – within the cultural formations of modernism, we can also rethink what we mean by modernism in relation to the re-evaluation of ‘value’ instituted by economics. In this, I am assuming that one can arguably define aesthetic modernism (1) in its engagement with the ‘new’ world of the nascent twentieth century and (2) in its challenge to the Enlightenment project in rethinking the autonomous and essentially conscious self-knowing individual subject of experience, the sovereignty of reason, the sense of (secular) truth transcending worldly experience, and the hegemonic assumption that the West and its cultural formations, including Western art, are the full realization of humanity (see Schleifer and Levy, 2016). In addition, economic concepts focused on intangible assets, institutional facts, ownership and the very notion of value itself allow us to see the workings of cultural modernism in new and historically determined ways. Many modernist artists – Yeats, Messiaen, Woolf, de Chirico, Schoenberg, Williams, Proust, Picasso, Stein – can be understood in new ways in the light of the reassessment of ownership, intangibility and value undertaken by modernist economics. At the beginning of his influential study, The Struggle of the Modern, Stephen Spender sets forth what has been a recurrent definition of the modern and modernism:
The moderns are therefore those who start off by thinking that human nature has changed: or, if not human nature, then the relationship of the individual to the environment, forever being metamorphosized by science, which has altered so completely that there is an effective illusion of change which in fact causes human beings to behave as though they were different. This change, recorded by the seismographic senses of the artist, has also to change all the relations within arrangements of words or marks on canvas which make a poem or novel, or a painting. (Spender, 1963, xiii)
In 1924 Virginia Woolf, remembering the first Post-Impressionist exhibition organized by her friend Roger Fry, noticed the same thing in proclaiming that ‘on or about December 1910 human character changed’. She goes on to note that ‘all human relations have shifted – those between masters and servants, husbands and wives, parents and children. And when human relations change there is at the same time a change in religion, conduct, politics, and literature. Let us agree to place one of these changes about the year 1910’ (Woolf, 1984, 194). While such experiences of change and ‘newness’ might be recorded by artists as sensitive to earth-changing events as a seismograph, economists studying value, human relations, conduct – and politics under the categories of political economy and economics – both recorded and shaped the unprecedented changes of human understanding and experience in the new twentieth century.
Modernism and the Second Industrial Revolution
The passage from Sylvia Nasar with which I begin illustrates the impulse in cultural modernism, as Ezra Pound notes, to ‘make it new’. In fact, in the years around 1870 all kinds of newnesses were occurring: in the second half of the nineteenth century in Western Europe and the United States one of the greatest transformations of human life – in terms of knowledge, social relations, individual and collective experience, and the consumption of life-sustaining and life-fulfilling goods – took place. This transformation, as David Landes has argued, was comparable to the ‘Neolithic […] shift away from hunting and gathering [that] made possible towns and cities, with all that they yielded in cultural and technical exchange and enrichment’ (Landes, 1999, 41). The phenomena of this period are sometimes described as ‘the Second Industrial Revolution’, a period, as I argue in Modernism and Time (2000) and A Political Economy of Modernism (2018), that in many ways conditioned and participated in what we call cultural modernism. During this historical moment, economists argue, a transformation from industrial to finance capitalism took place. In a remarkably titled book, The Long Twentieth Century – remarkable because it traces the twentieth century back to the fifteenth century – Giovanni Arrighi argues that ‘the maturity of every major development of the capitalist world-economy is heralded by a particular switch from trade in commodities to trade in money’ (Arrighi, 1994, 109). In the late nineteenth century, he notes, such a transformation took place in Britain and the United States, when there was a ‘switch’ of ‘capital in increasing quantities from trade and production to financial intermediation and speculation [which redirected capital from reinvestment] in the material expansion of the world-economy […] [to] a greater specialization in high finance’ (215).2 Moreover, the utilization of capital for financial power, rather than for the production –‘the material expansion’ – of goods is one of the impulses towards intangible assets, meanings and values in this period. The switch from trade in commodities to trade in finance coincided with the rise of impersonal corporations and trusts, particularly in the United States and Britain. Moreover, it gave rise to a new class of workers in the late nineteenth century, the lower middle class of ‘information’ workers (e.g. teachers, clerks, canvassers like Leopold Bloom), which had a signal effect on cultural modernism, both in terms of stimulating ‘elitist’ disdain in the arts and sciences towards this new, ‘half-educated, self-educated’ class (see Woolf 2015, 75) and in terms of making worldly pleasure as well as transcendental truth the goal of art (see Schleifer, 2011). The lower middle class, like corporations, is in an important way ‘intangible’: it is, as Arno Mayer says, ‘a classless class or half-class of quasi workers and quasi bourgeois’ (Mayer, 1975, 422). Finally, the emphasis on money – and really credit as opposed to tangible species – rather than commodities is consonant with a powerful strain in modernism that replaces things with forces, patterns and almost impalpable suggestions, what W. B. Yeats described in 1893 as the ‘subtlety, obscurity, and intricate utterance […] of our moods and feelings [which] are too fine, too subjective, too impalpable to find any clear expression in action or in speech tending towards action’ (Yeats, 1970, 271). Thus, in his study of Yeats in Quantum Poetics, Daniel Albright notes that:
most of us, when we read Yeats’s poetry, pay close attention to the ravishing images – the Japanese sword, the bird made of gold, the old Norman tower. But in some ways the true subject of the poems consists not of these formal particulars, but of a hovering formlessness behind them: Yeats was less concerned with images than with the imagination itself, a shapeless matrix of shapes, a retina that could be knuckled into emanating waves of sparks and fields of intenser darkness. […] Though critics once described Yeats’s poems as perfected artifacts, urns of words, no poems are less iconic than Yeats’s: they are histories of heaving imaginative processes, standing waves. (Albright, 1997, 31)
It is just this kind of intangible value – many years ago, Hugh Kenner (1971) described Ezra Pound and the writers of his ‘era’ in very similar terms to those of Albright – that infuses both aesthetic modernism and modernist economics at the very time, in Western Europe and in the United States that the sheer quantity of commodities produced and consumed created a culture of abundance. This seeming contradiction – the appearance of ‘intangible assets’ in art and economics and enormous quantities of tangible consumer goods in everyday life – is a contradiction that, in many ways, conditioned cultural and aesthetic modernism.
Modernism as a cultural movement itself can be understood in relation to the ‘immediate history’ of the turn of the twentieth century and especially to corporate economics I am describing here, and also in relation to the ‘long history’ of European culture from the ‘early modern’ Enlightenment of the seventeenth and eighteenth centuries. Karl Polanyi describes this long history of the ‘great’ European social transformation begun in the Enlightenment resulting in a self-regulating money/credit system that came to fruition in the late nineteenth century. In the coincidence of these historical engagements, the bourgeois culture of the nineteenth century can be understood as the culmination and fulfilment of Enlightenment secularization and, at the same time, as itself facing the crisis in world view and value in the arts, in the sciences, and in experience that we call ‘modernism’. In this chapter, then, I study the phenomenon of re-evaluating the nature of wealth and value in the time of twentieth-century modernism in relation to intangible phenomena, such as Albright notices in Yeats and that I touch upon in Virginia Woolf, Ezra Pound and Edith Wharton. But examples of literary modernism could, with space, be neatly broadened: to the discourse of Henry James, constantly portending meanings that do not fully materialize; to the dark comedy of James Joyce; or to the probing questioning of the foundations of human experience in Samuel Beckett or Wallace Stevens.
‘Modernist’ Post-Classical Economics
In 1776 Adam Smith published The Wealth of Nations, a precise articulation of classical economics that encompasses and instantiates many of the assumptions of the European Enlightenment. It assumes that (1) there is a discoverable ‘logic’ within phenomena that can explain events; (2) this logic is recoverable by means of human reason (as opposed to divine revelation); (3) the active agent in historical events is the human individual (again, as opposed to divine intervention); (4) the world is essentially ‘good’ and compatible with human needs and well-being; and (5) progress and growth are natural and reasonably expected in human affairs, while regression is accidental and aberrant. One additional assumption at the centre of Smith’s analysis is that (6) one can and should divorce wealth from other aspects of human and social life: that economics is a field of study that naturally distinguishes itself from wider senses of individual and social human existence. This last is a remarkable assumption, even though it seems so thoroughly self-evident for thinkers living in the nineteenth and twentieth centuries; it is an assumption that creates the situation in which a vast number of decisions made in the context of the market system of capitalism readily confine themselves to the narrow field of cost–benefit analysis. (The great articulator of such analysis is Jeremy Bentham, who, I shall note, laid the foundations for neoclassical economics.)
For Smith, the market system in which rational agents freely exchange items of value with strangers is the site where all of these assumptions about human life, work and well-being can be seen operating. For Smith, the market is the locus of self-interest which, almost miraculously, is transformed into social benefit. He articulates this under the metaphor of an ‘invisible hand’ that regulates the market: every agent within a system of political economy ‘neither intends to promote the public interest, nor knows how much he is promoting it’. Nevertheless, ‘by directing [his] industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was not part of his intention’ (Smith, 1994, 485). In this statement – which Mark Blaug calls ‘the central theme that inspires the Wealth of Nations’ (Blaug, 1985, 60) – Smith is enacting one of the essential procedures of secular analysis as it developed in the Enlightenment, namely the combination of individual particulars and a general system. Such a combination is readily apprehensible in the Enlightenment negotiation of content and form, fact and law; and it is surely apprehensible in Smith’s combination of individual intention and a general beneficial result.
The values of classical economics culminate in the high bourgeois society – replete with self-evident smugness – against which cultural modernism responded at the turn of the twentieth century (see Rainey, 1998; Lantham, 2003). Among the results of Enlightenment thinking are certain conceptions of knowledge, including that of the scientific revolution stemming from an understanding that careful observation of particulars can lead to ‘laws’ of nature that are at once simple and general; certain understandings of social life, including that of the democratic revolutions since the eighteenth century stemming from an understanding that individual men are ‘equal’; and certain conceptions of well-being, including that of the industrial revolution stemming from an understanding that well-being is best measured in terms of material wealth. ‘The Industrial Revolution [of eighteenth- and nineteenth-century England]’, Polanyi argues, ‘was merely the beginning of a revolution as extreme and radical as ever inflamed the minds of sectarians, but the new creed was utterly materialistic and believed that all human problems could be resolved given an unlimited amount of material commodities’ (Polanyi, 2001, 42).
The key term here is ‘commodity’, which is central to Smith, Karl Marx and neoclassical economics as well as Polanyi. A commodity is a marketable item that is produced to satisfy a want or a need. (This is Marx’s definition, but itself is derived from the work of Adam Smith and David Ricardo.) The commodification of all goods – including two categories of marketable items that Polanyi argues were not ‘produced to satisfy a want or a need’ (not produced to be sold), namely human labor and natural land – created the ‘great transformation’ of human life, as he entitled his study. At the heart of this transformation, he argues, was the institution of ‘gain’ rather than ‘subsistence’ as the motive of action, which in turn transformed all human transactions ‘into money transactions’ based upon ‘a self-regulating system of markets’ (Polanyi, 2001, 43–4). Such self-regulation is what Smith meant by an ‘invisible hand’, and with this, we have an understanding of how economics works – how value itself manifests itself in human life – that is at once human in a worldly sense and impersonally based upon transcendental laws, like those of physics, that are universal, immutable and – it turns out in the work of ‘scientific’ economics – powerfully simple.
The multiplication of both commodities and intangible assets in the Second Industrial Revolution of the late nineteenth century both fulfilled and transformed classical economics. The mass production of commodities transformed the seller’s market of entrepreneurial capitalism into the buyer’s market of corporate capitalism (Mills, 2001), while corporate capitalism instituted a host of intangible assets: trusts, economic good will, absentee ownership and common stocks, all kinds of financial ‘instruments’, the very abstractions of marginal economics itself. These intangible assets can be correlated with cultural impulses manifest in French symbolism, abstract (non-perspectival) painting, non-tonal music, fragmented narrative, psychoanalysis, post-Newtonian physics, and so on so that even ‘realist’ fiction writers like Theodore Dreiser or George Moore are caught up in fantastical digressions and a rarefication of substantiality (see Ermarth, 1983; Schleifer, 2000a, 155–78). Take, for instance, Virginia Woolf’s Mrs. Dalloway, in which the novel makes the seeming ‘experience’ of intangibility a theme: ‘But [Clarissa Dalloway] said, sitting on the bus going up Shaftesbury Avenue, she felt herself everywhere; not “here, here, here”; and she tapped the back of the seat; but everywhere […] [In this way, she goes on to think] that since our apparitions, the part of us which appears, are so momentary compared with the other, the unseen part of us, which spreads wide, the unseen might survive, be recovered somehow attached to this person or that, or even haunting certain places, after death’ (Woolf, 2015, 136–7). Like the technical economic category of ‘good will’, which as I note later, makes the simple reputation for wealth and power an economic asset, so Clarissa’s experience of herself, spreading wide to airy thinness, even ‘haunting certain places’ (136), begins to feel almost ‘intangible’.
In the new twentieth century, Thorstein Veblen in the United States called such intangible assets (i.e. trusts, good will, common stock, etc.) ‘immaterial facts’, and – unlike the contemporaneous neoclassical or ‘marginal’ economics, best represented by Alfred Marshall at Cambridge, which attempted to describe the ‘normal’ functioning of wealth in society at the time – Veblen attempted to describe the ways that ‘immaterial facts’ are ‘turned to pecuniary account’ (Veblen, 1969, 365) and thereby to social power. Nevertheless, despite their differences, both European neoclassical economics (‘marginal’ economics) and the American ‘institutional’ economics of Veblen at the turn of the twentieth century are conditioned by and responding to the same powerful transformations in human life and increases in Western wealth brought about by the market system and the Second Industrial Revolution. In fact, in the Preface to The Theory of Business Enterprise Veblen takes pains to note that he is responding to ‘the same general range of facts’ as other economists so that ‘any unfamiliar conclusions are due to [his] choice of a point of view, rather than to any peculiarity in the facts, articles of theory, or method of argument employed’ (Veblen, 1932, v). Ferdinand de Saussure’s Course in General Linguistics, offered to students at almost the exact same moment that Veblen is writing in 1904, also begins by discussing the fact that in linguistics ‘the viewpoint adopted […] creates the object [of study]’ (Saussure, 1986, 8). It is no accident, I think, that semiotic science emerged at the turn of the century in France and the United States – the very term, ‘semiotics’, was almost simultaneously coined by Saussure and Veblen’s American contemporary and one-time teacher, Charles Sanders Peirce – because semiotics, like the ‘intangible’ economic structures that arose during the Second Industrial Revolution, is a tool designed to deal with abundance rather than dearth.3
Economists on either side of the Atlantic took different approaches to this situation of abundance. These approaches are best represented in the ‘marginal’ economics of Marshall at Cambridge – the great spokesman for neoclassical economics – and in the ‘institutional economics’ of Veblen in the United States.4 Marshall’s articulation of the economics of ‘marginal utility’ embodied ways that late nineteenth-century economics transformed the focus of political economy from need into an economics of desire, from an economics purportedly focused on the production of commodities understood to have ‘value in use’ to those that have ‘value in exchange’ (Smith, 1994, 31).5 Veblen’s institutional economics also focuses on desire rather than need, but the ‘desire’ towards which he is most attentive is the desire for social power rather than for individual pleasure: use-value for him is social value that manifests itself beyond subsistence and the particular ‘uses’ of a commodity. In both neoclassical economics and institutional economics, however, the material necessities of need are, as Veblen argues, superseded by the more or less ‘intangible’ phenomena of pleasure and power.
In the first edition of his Principles of Economics – a book initially published in 1890 that went through multiple editions up until the 1920s – Marshall succinctly describes the basis of marginal economics. ‘It is an almost universal law’, he writes,
that each several want is limited, and that with every increase in the amount of a thing which a man has, the eagerness of his desire to obtain more of it diminishes; until it yields place to the desire for some other thing, of which perhaps he hardly thought, so long as his more urgent wants were still unsatisfied. There is an endless variety of wants, but there is a limit to each separate want. (Marshall, 1961, II 238; see also Gagnier, 2000)
Notable here are two things: the shift to ‘desire’ as the operative motive in economic activity and as a constant in experience, and Marshall’s recourse (repeated throughout his work) to the concept of ‘universal law’. These two gestures respond, respectively, to the ‘immediate history’ of the second Industrial Revolution that can be dated from 1870 to 1940 and to the ‘long history’ of the European Enlightenment.
In his analysis, Marshall takes up rather than challenges Enlightenment modes of understanding to offer formal (and mathematical) analyses of phenomena based upon the strict distinction between example/fact and principle/law in Enlightenment thinking.6 The formal ‘law’ of economics manifests itself in mathematical analysis that Marshall’s countryman, William Stanley Jevons, elaborated in The Theory of Political Economy, published in 1871 (which might have conditioned Nasar’s choosing 1870 as a pivotal year in the history of economics). He creates a mathematical calculus of economics based upon the distinction between pain and pleasure set forth by the (laissez-faire) moral philosopher Jeremy Bentham in the early nineteenth century. But he does so in relation to economics rather than morality, at least in part, in order to address the enormous increase in the production of consumer goods – the buyer’s market and the concomitant explosion of intangible assets – in the Second Industrial Revolution. Classical economics assumed that wealth is most accurately measured by use-value rather than exchange-value and that, because of this, the best account of wealth takes place from the point of view of production rather than consumption. Since the use-value of a pair of shoes is the general function of protecting the feet, use-value is best measured by the first pair of shoes a person has, without which she would walk barefoot. This definition assumes, with the Enlightenment, that wealth is a response to need: the first pair of shoes answers a general/universal need. But if classical political economy studies need as it is addressed in the first pair of shoes one obtains, then (‘neoclassical’) marginal economics studies desire as it is addressed in the last – or ‘marginal’ – pair of shoes one purchases.
This definition of value transforms the study of wealth and well-being from the study of need to the study of desire. Here is how Marshall describes it:
The primitive housewife finding that she has a limited number of hanks of yarn from the year’s shearing, considers all the domestic wants for clothing and tries to distribute the yarn between them in such a way as to contribute as much as possible to the family wellbeing. She will think she has failed if, when it is done, she has reason to regret that she did not apply more to making, say, socks, and less to vests. […] But if, on the other hand, she hit on the right points to stop at, then she made just so many socks and vests that she got an equal amount of good out of the last bundle of yarn that she applied to socks, and the last she applied to vests. This illustrates a general principle, which may be expressed thus:–
If a person has a thing which he can put to several uses, he will distribute it among these uses in such a way that it has the same marginal utility in all. (Marshall, 1961, I 117)
This analysis is significant in a variety of ways. First of all, it replaces money with an actual commodity in a way that makes well-being more fully the focus of economic activity. This is important because it is precisely the reality of money – functioning intangibly as credit – as a weapon of oppression that motivated American populism, including that of Erza Pound and William Carlos Williams, at the turn of the twentieth century.7 Thus, one critic of Pound describes the central dialectical opposition in Pound’s work as that between Amor and Usura (Surette, 1993), which is to say between the ‘natural’ fecundity of life and art and the artificial – and life-destroying – creation of something out of nothing in the credit system of ‘usurious’ banking. This is perhaps most clear in ‘Canto XLV’, one of Pound’s most famous poems that rants against usury (‘usura’):
With usura hath no man a house of good stone
each block cut smooth and well fitting
that design might cover their face,
with usura
hath no man a painted paradise on his church wall
harpes et luz
or where virgin receiveth message
and halo projects from incision,
with usura
seeth no man Gonzaga his heirs and his concubines
no picture is made to endure nor to live with
but it is made to sell and sell quickly
with usura, sin against nature,
is thy bread ever more of stale rags
is thy bread dry as paper […]
(Pound, 1989, ll. 1–15)
Usury, Pound goes on to say, is ‘CONTRA NATURAM’, against nature, because it raises the value of ‘money’ and transforms the life-sustaining production of housing (‘of good stone’), of bread (turned into ‘stale rags’) and of artworks (‘painted paradise’, the music of harps and lutes, the imagined reception of the ‘received’ message of God) into things designed ‘to sell and sell quickly’, a ‘sin against nature’. The interest of usury is literally an ‘intangible’ asset that is created by a bank lending out other people’s money to accrue interest to itself. This creates what Hugh Kenner calls ‘nonexistent values’: ‘cost amortized over and over again, but still carried on the books; and all waste; and all inefficiency; and all bank charges’ (Kenner, 1971, 309). Throughout the Cantos, Pound makes the ‘unnatural’ value of money – its intangible power – visible.
In the passage from the Principles of Economics I cite above, however, Marshall does the opposite: by seemingly erasing money from his account, Marshall replaces the politics of power with the economics of utility. Second, Marshall’s account creates a narrative that, more fully than abstractions, makes the representation and fulfilment of desire the goal of activity: the alternative to ‘well-being’ in Marshall’s narrative is not destitution but inconvenience. Additionally – and notably – it makes the agent of economic activity female rather than male, erasing the opposition, embedded in classical economics and the ‘two spheres’ of nineteenth-century bourgeois life, between domestic economy and political economy. But perhaps most importantly this narrative – almost unconsciously, clearly unobtrusively – describes a world where the problem is not scarcity of yarn and the products to be produced and consumed, but where the problem is dealing with more than what is only necessary.
Marshall himself – unlike many marginalists who followed him, and some who preceded him – fully conceived the project of economics as one whose greatest purpose was to make lives better for the mass of people. He was the first to imagine that one ‘economic function of the business firm [besides profits] … was to produce higher living standards for consumers and workers’ (Nasar, 2011, 84), and throughout he clearly argues that distribution – the problem for a buyer’s market – is indistinguishable from production (see Schleifer, 2003, 168–9). Thus, he argued – unlike other marginalist economists following what they took to be the mechanical logic of their ‘science’ – that economic activity takes place within larger social organizations. That is, he saw, at times, that the basic assumption of marginal economics – namely, that individuals making economic decisions are, first and foremost, self-interested rational agents divorced from any social context in their marketing, basically, with strangers – simply is not always, and often not significantly, true.8 With this insight, Marshall situates himself within the modernist programme of questioning self-evident received truths about social relations, human well-being and value.
Institutional Economics
In 1909 Veblen published a critique of what he calls the ‘bloodless’ economics of ‘marginal utility’. In a discussion of Marshall, he argues that contemporary economics ‘postulated as immutable conditions precedent to economic life’ (Veblen, 1969, 236) are particular institutions – such as private property, ownership, capital, ‘natural rights’, the ‘primordial’ oppositions between pleasure and pain, even taste – which require historical and cultural analysis. European neoclassical economics assumes that these institutions, Veblen writes, ‘are part of the nature of things; so that there is no need of accounting for them or inquiring into them, as to how they have come to be such as they are, or how and why they have changed and are changing, or what effect all this may have on the relations of men who live by or under this cultural situation’ (Veblen, 1969, 236). (I might add in the same way the self-evident ‘truths’ of Enlightenment experience – such as tonal music, perspectival painting, realism in literary narrative, the conscious autonomous self, etc. – do not call for inquiry.)9 By making the pleasure of consumption the goal of economic activity, Veblen concludes, both classical and neoclassical economics leave out the vital issue of cultural power. ‘Business men’, he writes, ‘habitually aspire to accumulate wealth in excess of the limits of practicable consumption, and the wealth so accumulated is not intended to be converted by a final transaction of purchase into consumable goods or sensations of consumption’ (249).
Instead, as he argues throughout his career, such economic activity aims at the creation and maintenance of institutional social power. In place of what he calls the passive neoclassical ‘hedonistic conception of man’ understood as ‘a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact’ (Veblen, 1969, 73) – such ‘globules’ of desire can be seen in Dreiser’s Sister Carrie and Joyce’s Dubliners – Veblen argues that it ‘is the characteristic of man to do something, not simply to suffer pleasures and pains’. ‘All economic change’, he concludes, ‘is a change in the economic community – a change in the community’s method of turning material things to account. The change is always in the last resort a change in habits of thought’ (74–5). ‘Turning things to account’ is a ubiquitous phrase in Veblen and it is nicely contrasted with the impulse in marginal economics to create a scientific calculus of value. Thus, rather than Marshall’s abstract and mathematical formulations found in the footnotes and appendices of Principles of Economics, Veblen responds to post-Civil War wealth with semiotics analyses. This is most telling, as John Patrick Diggins has argued, in the fact that Veblen was ‘one of the first economists to perceive the implications of the emerging concept of intangible property’, a concept that focused upon ‘purely monetary estimates by businessmen of the strategic power of manipulation afforded by corporate securities, credit, monopolistic privileges, franchises, good will, advertising, [and] public relations’ (Diggins, 1999, 56).
The ‘strategic power’ Diggins describes is the use of capital for social ends rather individual consumption. Veblen describes the intangible nature of such ends most fully in a discussion of the mobility of capital. ‘The continuum’, he writes,
in which the ‘abiding entity’ of capital resides is a continuity of ownership, not a physical fact. The continuity, in fact, is of an immaterial nature, a matter of legal rights, of contract, of purchase and sale. […] [That is,] ‘capital’ is a pecuniary fact, not a mechanical one; that it is an outcome of a valuation, depending immediately on the state of mind of the valuers; and that the specific marks of capital, by which it is distinguishable from other facts, are of an immaterial character. This would, of course, lead directly, to the admission of intangible assets; and this, in turn, would upset the law of the ‘natural’ remuneration of labor and capital. […] It would also bring in the ‘unnatural’ phenomenon of monopoly as a normal outgrowth of business enterprise. (Veblen, 1969, 197)
For classical and neoclassical economics, profit-and-wages (‘remuneration’) is a natural rather than a social fact; since the market is likewise ‘natural’, monopoly (which, after all, destroys the free market) is an ‘unnatural phenomenon’. In passages such as this, however, – and they recur regularly throughout his work – Veblen is describing how what he calls ‘institutional facts’ (Veblen, 1969, 116) are naturalized and made to be seen as simply self-evident matters of fact. He does so, moreover, by historicizing economics, subjecting it to an understanding of its constant development without any ‘teleological’ goal.
In this way, the concept of intangible assets – closely connected, in Veblen, with the concept of a ‘theory of value’ (91) – is a function of process (rather than ‘taxonomy’) that construes ‘human nature’, not in ‘inert terms’ but rather ‘in terms of functioning’ (156–7). Such a functional notion of value is closely related to Saussure’s notion of ‘value’ in linguistics as a function of the operating system of language rather than its ‘inert’ elements. Moreover, such a functional notion of value conditions the pronounced conflation of the Enlightenment distinction of form and content in modernist art: as Samuel Beckett put it in his essay on Joyce’s Work in Progress, ‘Here form is content, content is form’ (Beckett, 1984, 27). Value, for Saussure, is a relational category opposed to self-evident meaning insofar as value designates signifying differences. His example is the different value of ‘mutton’ in English, as opposed to the French mouton in that the English term exists in relation to another English term, ‘sheep’ (Saussure, 1986, 114). That Saussure uses an example related to ‘taste’– ‘mutton’, after all, is sheep under the category of food, which changes the value of its meaning – is, I think, not accidental in discussing value. Veblen includes taste among ‘the institutions of society – customs, usages, traditions, conventions, canons of conduct, standards of life, of taste, or morality and religion, law and order’ (Veblen, 1969, 180) – because he sees institutions are the result of shared, historical ‘habits of thoughts’ , and in doing so he analyses the ways that ‘institutional facts’ are taken to be ‘natural’ (Veblen, 1969, 116).10 It is habits of thought – communal, more or less conscious, creative of assumptions that govern ‘attention’ (see Veblen, 1969, 152) – that determine value. Veblen borrows the term ‘habits of thought’ from his teacher, Peirce, and in this he is describing and pursuing a semiotic understanding and analysis of what is taken to be self-evident truths in no need of analysis.
Perhaps, the most striking example is Veblen’s discussion of the institution of ownership, a phenomenon that is simply assumed in the marginal economics of Marshall. In Marshall, ownership in the last instance is consumption, part of universal human nature; everywhere he argues ‘consumption is the end of production’ (Marshall, 1961, I 67). Veblen, on the other hand, historicizes ownership as we know it. ‘It is not’, he says, ‘something given to begin with, as an item of the isolated individual’s mental furniture. […] It is a conventional fact and has to be learned; it is a cultural fact which has grown into an institution in the past through a long course of habituation, and which is transmitted from generation to generation’ (Veblen, 1969, 42). More specifically, he argues that the greatest economic value to a community is its ‘technological proficiency’ or common-sense know-how – developed over generations, most generally maintained by women rather than men – that is available to all. That is, technological proficiency – what C. H. Douglas calls ‘cultural inheritance’11 – is like the ‘immortal moods’ in Yeats’s poetry through which individuals pass or like Schoenberg’s music, which according to Daniel Albright, citing Theodor Adorno, ‘is not a simulation of passion [in a particular person], but passion itself’ (Albright, 2000, 15). Cultural inheritance, the immortal moods and passion concomitant with art are not things to be owned but occasions for rethinking our relationship to the world and to experience itself – rethinking ownership itself. Capitalism, however, ‘engrosses’ (or appropriates) communal technological proficiency, and in his time of what he calls the ‘inchoate new phase of capitalism’ (Veblen, 1969, 384) Veblen saw the ‘pecuniary magnates’ of capital taking up this process of ‘capitalization’ to a whole new level. Just as the historical phenomenon of capitalism ‘engrosses’ the community’s tangible and intangible wealth, so the magnates of the gilded age – Carnegie, Rockefeller, Morgan – engross, intangibly, the assets of capitalism itself. The magnate, Veblen says, ‘in the measure in which he is a pecuniary magnate, and not simply a capitalist-employer, […] engrosses the capitalistic efficiency of invested wealth; he turns to his own account the capitalist-employer’s effectual engrossing of the community’s industrial efficiency’ (Veblen, 1969, 383). That is, he uses the capital of invested wealth not to create the ‘material expansion’ of consumer goods that Arrighi describes, but to assert personal control over existing and expanding wealth; by pursuing power rather than production, the magnate exists in what Veblen calls ‘a higher degree of sublimation’ (Veblen, 1932, 173).
Economic Engagements
Cultural and aesthetic modernism simultaneously results from and resists this phenomenon of corporate economic power in the new twentieth century. This phenomenon of power is, above all, intangible (as the term ‘sublimation’ suggests), and for this reason has no place in the calculations of pleasure and pain by marginal economics. Veblen describes such an intangible asset under the category of ‘good will’ in The Theory of Business Enterprise (1904). Good will is a traditional ‘intangible asset’ that was understood as far back as the sixteenth century as ‘the privilege, granted by the seller of a business to the purchaser, of trading as his recognized successor’ (OED). But in the late nineteenth century it became the underlying reality of common stocks, brand names, and the simple reputation for wealth and power of magnates like Rockefeller or Carnegie that seemed (as it did before 2008 in firms like AIG and Lehman Brothers) ‘inexhaustible’ (Veblen, 1932, 173). Such sublimation – like Freud’s contemporaneous use of the term – exists in the very semiotic process of its formation, the very repetition of processes across ‘new’ facts, recursively, as those facts continue to be transformed.
I have already suggested that such sublimation, which entails engagements with intangible phenomena, is notable in Yeats’s poetry. More generally, the crisis of the flood of commodities and the multiplication of ‘intangible assets’ participated in new and bewildering social formations and ways of experiencing the world at the turn of the twentieth century. As I have also already suggested, the transformation of need to desire accompanies the transformation of industrial capital to finance capital and the redefinition of the nature of intangible assets. Good will is no longer simply one businessman’s ratification and recommendation of his successor; it becomes what Walter Benjamin calls in a different context the ‘aura’ of a commodity. This becomes clear when we look at the first chapter on Edith Wharton’s The Age of Innocence (1921), a novel that explores the intricacies of intangible assets of personal and social life in fine detail. The Age of Innocence enacts an emphasis of the process of ‘semiotic’ depictions of intangible value within its discourse. The first chapter depicts the gathering of New York society at the opera in the late nineteenth century. Opera itself is the quintessential locus of spectacle, and from the very start of the novel, with the description of the convenience of hiring a ‘Brown coupé’ rather than one’s own ‘private broughams’ (Wharton, 1987, 3), the novel emphasizes the culture of exchange that lies, submerged, within this society of conspicuous consumption.
The novel’s main character, Newland Archer, arrives at the opera late for two reasons. One is the fact that ‘in metropolises [like New York] it was “not the thing” to arrive early at the opera’ (Wharton, 1987, 4), precisely because, as Veblen might say, the very wastefulness of consumption is a sign of power and importance. ‘The second reason for his delay’, Wharton tells us,
was a personal one. He had dawdled over his cigar because he was at heart a dilettante, and thinking over a pleasure to come often gave him a subtler satisfaction than its realisation. This was especially the case when the pleasure was a delicate one, as his pleasures mostly were; and on this occasion the moment he looked forward to was so rare and exquisite in quality that – well, if he had timed his arrival in accord with the prima donna’s stage-manager he could not have entered the Academy at a more significant moment than just as she was singing: ‘He loves me – he loves me not – he loves me! –’ and sprinkling the falling daisy petals with notes as clear as dew. (Wharton, 1987, 4)
The pleasure Archer takes in the opera has less to do with the music and story than with a quality that is so rare and exquisite that the narrative breaks down in the face of it (at the moment that the ‘quality’ becomes unspeakable, represented by a dash): it possesses a subtlety beyond the resources of language so the very enactment – the consumption – of pleasure can only be marked as a ‘significant moment’ insofar as it is interrupted by an interjection, ‘well’.
Although Archer can interpret the signs around him, Wharton does not – as a matter of fact, neither does Yeats, Eliot or notably Joyce, though Dreiser is constantly struggling to make sense of signs – and she leaves their possible meanings floating freely above Archer’s discourse like the promise of some kind of intangible asset. In fact, Wharton enacts the function of such promises – the subtle satisfaction of ‘thinking over a pleasure that comes’ – by minutely describing a world of such abundance that the very delay of a gratification creates a satisfaction that is so subtle it needs no material accomplishment. Such an intangible asset is subject to semiotic science, the science of signs, so that the evidence at hand – the timing of his entrance, the words of the song, the meaning of gestures, the clarity of sound – can be taken as pointing to a meaning that is possible but not ratified by the narrator. ‘Possible unratified meaning’ is a useful working definition of desire altogether, just as ‘possible unratified value’ is a useful working definition of economic good will: these meanings are all ‘unratified’ because there is no positive fact corresponding to their meaning, no statement by the author, no absolute fulfilment. The great pleasure in reading Wharton is based on the precision of her vision and her continual hinting at the promise the image implies, just as the pleasure (and difficulty) in reading Henry James is a function of aurality, of the enormous prolixity of his convoluted sentences that also, continually, promise the fulfilment of a meaning that is subtler than its ‘realization’. Such promises abound in modernist literature, as they abound in the new world of corporate capitalism at the turn of the twentieth century.
Conclusion
In the same way that Veblen historicizes ownership, we might historicize modernism: as a function of changing understandings of the meanings of value, property, ownership and even well-being itself. William Everdell does so when, at the beginning of The First Moderns, he notes that:
the influence of structural steel on Sullivan, like that of standard time on Joyce, of the telephone on Proust, or the bicycle on Boccioni, or of electric streetlights on Delaunay, is real and not to be denied. […] It is hard to explain how Einstein could have imagined the equivalence of gravity and inertia in 1907 and come up with the general theory of relativity without an elevator [invented in 1854] to imagine himself in. As for the special theory of relativity, it was an answer to a question raised by the creation of standard time in the 1880s, and by the wireless telegraph of 1900. (Everdell, 1997, 9)
Everdell is suggesting, as I have in this chapter, that it is hard to explain aesthetic and cultural modernism without attending to the economic conditions and understandings that developed as people faced the new world of knowledge, social conditions and experience in the long turn of the twentieth century. Together these things – knowledge, social conditions, experience itself – conditioned new senses of well-being and new senses of value that imbue the institutions of modernism.
Notes
1 This chapter is based upon my recently published book, A Political Economy of Modernism: Literature, Post-Classical Economics, and the Lower Middle-Class (2018).
2 For an argument about how this turn to high finance manifests in the urban poetics of modernist novels, see Martin 2013. I want to thank Professor Martin for her careful reading of this chapter.
3 In fact, John Locke coined the term semiotics late in the seventeenth century, near the beginning of the First Industrial Revolution, though as far as I know neither Saussure nor Peirce knew about this. I examine this ‘logic of abundance’ in Modernism and Time (Schleifer, 2000).
4 Versions of marginal economics were also pursued in the United States, but for the purposes of this chapter, I distinguish between these two responses to the Second Industrial Revolution.
5 In Cultural Capital, John Guillory argues that Smith was also thinking in terms of desire, and he offers a strong argument of the relationship of The Wealth of Nations to Smith’s work on moral philosophy (see Guillory, 1993, 294–320).
6 See Mirowski (1989) for a thorough examination of the parallels between mathematical laws governing ‘energy’ in nineteenth-century physics and ‘utility’ in neoclassical economics.
7 For a thorough-going account of the relation of Pound and Williams to Jeffersonian populism and the rethinking of economics, see Marsh (1998).
8 For an anthropological critique of the impersonal logic of neoclassical (and neoliberal) economics, see Graeber, 2011.
9 Lawrence Rainey (1998) specifically focuses on institutions of patronage in studying modernism in a gesture of historicization that nicely complements Veblen’s institutional economics. For Veblen, however, as he says here, the institutions he describes are taken to be ‘natural’ rather than historical and call for the kind of semiotic analysis I describe in this chapter.
10 This is also clear in another ‘semiotic’ gesture, the way that speech-act theory describes in fine detail the nature of an ‘institutional fact’ (see Searle, 1969, 50–4).
11 Clifford Hugh Douglas, whose economic theories greatly influenced Ezra Pound and often informed Pound’s poetry, emphasizes the ways that ‘cultural inheritance’ confers value (see Kenner, 1971, 311).
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