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It is difficult to provide a concise and accurate summary of Veblen's views of
"inefficiency" because he did not begin with a simple, static definition of efficiency. In
_The Theory of Business Enterprise_, in many ways his best and most thoroughly reasoned
book, he argued that by taking advantage, through financial enterprise, of critical
junctions ("interstices" as he described them)  between firms that had assumed great
importance with the advent of industrial production, firms were able to garner advantage
for themselves.   This might be accomplished by restricting output (as with the
neoclassically conceived monopolist), but not necessarily so. Veblen did not compare
output and price under the conditions described by the neoclassical model of competitive
markets with output and price under monopoly or oligopoly. He was comparing different
periods of business and industrial organization in the U.S. economy in the late 19th and
early 20th centuries. In doing this he wrote a lot more about "waste" than about
"inefficiency," and used the word "waste" in the same way as it was used by engineers from
the 1880s through the post-WWI studies of waste organized by Herbert Hoover and the
engineers. It is hard to translate this engineering concept of waste into neoclassically-
defined inefficiency.
 
Ann Mayhew 
 
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