Thorstein Veblen

Norwegian-American economist and sociologist Thorstein Veblen

Thorstein Bunde Veblen (born Tosten Bunde Veblen on July 30, 1857 – died August 3, 1929) was an American sociologist and economist, most famous for his application of evolutionary approach to the study of economic institutions, and his book The Theory of the Leisure Class (1899).

Life

Thorstein Veblen was born in Cato, Wisconsin, into a family of Norwegian immigrants. His nephew, Oswald Veblen became a famous mathematician. Veblens spoke only Norwegian at home and Thorstein did not learn English until he was a teenager. The family moved to Wheeling, Minnesota in 1865, and Vablens received his elementary education there.

He obtained his B.A. at Carleton College, Minnesota in 1880. He studied under one of the leading neoclassical economist of the time, John Bates Clark, but rejected his ideas. Later he did his graduate work at Johns Hopkins University, under Charles Sanders Peirce, the founder of the pragmatist school in philosophy. He graduated in 1882 and transferred to Yale University to the doctoral program. He received his Ph.D. in 1884, having studied under famous laissez-faire proponent William Graham Sumner. Vablen repudiated his views as well. At Yale University, Veblen took Moral Philosophy as his Ph.D. major and wrote his doctoral thesis on Immanuel Kant, under the name The Ethical Grounds of a Doctrine of Retribution.

Next six years, from 1884 to 1890, Veblen was unemployed, living on the farm of his parents. Unable to find work as a teacher, he spent time in reading, writing, and translating. In April 1888 he married Ellen May Rolfe, and moved to live with her parents. He worked shortly as a tutor at Cedar Valley Seminary, Osage, Iowa.

In 1892 Veblen decided to resume graduate school studies, now in economics, at Cornell University, Ithaca, New York. With help from James Laurence Laughlin, professor of economics, he received some scholarship. When Laughlin became a head of the Department of Economics in the newly founded University of Chicago, he invited Vablen to teach there. Vablen became a member of the staff of the University of Chicago in 1892.

At first Veblen served as a reader in political economy (1893-1894), but quickly moved up as the Associate Professor (1894-1896), the Instructor (1896-1900), and the Assistant Professor of Political Economy (1900-1906). At the same time Veblen worked as managing editor of the Journal of Political Economy (1896-1905). In 1899 he published his first and most famous book, The Theory of the Leisure Class (1899), which established him as a renowned scholar.

In 1906 Veblen had to resign his position at the University of Chicago due to a scandal he was involved in. He already had a reputation of a womanizer, whose numerous affairs created problems not only in his private life, but also at his work. The administration of the university finally in 1906 decided to force him out, for his “flagrant marital infidelities”. His wife divorced his few years later.

In 1906 Veblen moved to California and received an appointment at Stanford University, as Associate Professor of Economics. However, due to the new affairs and scandals, that again involved his personal life, he resigned the post in 1910.

In 1911, he received a position at the University of Missouri-Columbia, due at least in part to support from Horace Davenport, the head of the economics department. Veblen was not fond of Columbia, Missouri, never fully adapting to the atmosphere of a “small” university. He however stayed there until 1918. In 1914 he married his second wife, Ann Bradley, with whom he had relationship since 1904.

In 1919, Veblen, along with Charles Beard, James Harvey Robinson and John Dewey, helped found the New School for Social Research (known today as The New School). Veblen and his family moved to New York City, and Veblen became a lecturer at the New School. He published several works in this period, among others Higher Learning in America (1918), The Vested Interests and the Common Man (1919), and The Engineers and the Price System (1921). His second wife Ann had a nervous breakdown and died in 1920.

Veblen retired in 1926 from the New School, and moved back to California. He died in 1929 from heart disease. .

Work

Veblen was one of the first economists who studied the relationship between consumption and wealth in society. He did not simply accept laissez-faire theory of economy, based on Darwinian assumptions of dog-eat-dog society. He did not believe that economy is based on people who are just trying to satisfy their hedonistic desires. As the result, he rejected the classical theory of economic behavior. Instead, Veblen argued for a new economics that is dynamic and evolutionary. He claimed:

"It is the characteristic of man to do something.... He is not simply a bundle of desires that are to be saturated . . . but rather a coherent structure of propensities and habits which seek realization and expression in an unfolding activity."

Both individuals and societies are govern by economic goals, and are adopting accordingly to reach those goals. Because goals and means to reach goals are constantly changing, Veblen saw his theory as “evolutionary” or dynamic.

"Evolutionary economics must be the theory of a process of cultural growth as determined by the economic interest, a theory, of a cumulative sequence of economic institutions stated in terms of the process itself."

The key in human evolution is the invention of new, more effective technologies. Society progresses through learning how to deal with the material means of life. The goal of economy thus is simply to more effectively adapt man to his natural environment, and technology and industry play key role in that process. Social and economical institutions play important role here, as they carry the evolutional progress. Natural selection, said Veblen, is happening between institutions, as they adapt to the new circumstances in the environment. The old institutions have to die in order for new ones to take over.

Veblen became well known after his book The Theory of the Leisure Class (1899). The book is seemingly a satiric look at American society, an attack on the ways of the aristocratic class. But implicitly it explores the deep questions of human nature, particularly - the nature of economic man. The book came out in the time when Marxists thought became increasingly popular, and when great majority of economists incorporated Marx’s ideas into their works. Veblen’s theory of the leisure class was however different than Marx’s. Unlike Marx, who argued for the “historical struggle” of classes, where lower classes fight to overthrow the upper classes, Veblen believed that lower classes strived to climb to higher class. This is, claimed Veblen, an important motivational force in economy. He acknowledged, however, that in capitalist society there is a class struggle, but that it is not between classes, but between two processes - making money and making goods. In other words, the struggle is between businessmen (bankers, lawyers, brokers, managers) and industry (engineers, designers, technicians, and labor), between those who are solely interested to maintain the present condition in the society, and those whose goal is innovation and progress. Here lies the main conflict in the society – stagnation vs. innovation. Social change takes place when the new technologies are developed and when the society adapts to them.

Thorstein Veblen's career has to be understood in the context of his times. He worked amidst the growth of the disciplines of anthropology, sociology, and psychology. He argued that culture inevitably shaped economics and that no universal "human nature" could possibly explain the variety of norms and behaviors discovered by the new science of anthropology. Veblen was ultimately interested in economical theory, but he wanted to relate it to other social sciences. He wanted to understand the social and cultural causes of, and effects of economic changes. The questions like: “What is the social or cultural cause of the shift from hunting to farming?” are central in his theory. .

An important analytical contribution became associated with Veblen, what became later known as the "ceremonial / instrumental dichotomy". Veblen saw that although every society depends on tools and skills to support the "life process", every society also appeared to have a stratified structure of status ("invidious distinctions") that ran contrary to the imperatives of the "instrumental" (read: "technological") aspects of group life. This gave rise to the dichotomy of the "ceremonial" - related to the past, supporting the tribal legends, and the "instrumental" - oriented itself toward the technological imperative to judge value by the ability to control future consequences.

Veblen coined and introduced terms like “conspicuous consumption” and “pecuniary emulation”.

Legacy

Veblen is often regarded as an eccentric intellectual, whose unorthodox stile of life was well-known among academia. He was a tough professor, who required from his students to read both German and French, and who seldom gave grade higher than C. He was a womanizer whose affairs cost him his career of a scientist.

Before Veblen, economical theory in America was firmly rooted in the theory of laissez-faire capitalism. Veblen introduced new, fresh ideas in it, and inspired new generations of thinkers who challenged the assumptions behind laissez-faire economics. The influence of his ideas peaked in the 1930, as the Great Depression and the rise of fascism in Europe changed the face of capitalist society. Many economists of the New Deal regarded themselves followers of Veblen.

Veblen's work gave new ideas for following generations of social scientists. He influenced the Howard Scott's Technocracy movement of the 1930s, and the "instrumental theory of value" of John Dewey

Publications

• Veblen Thorstein. 1963 (original work from 1914). The Instinct of Workmanship and the State of the Industrial Arts. Augustus M Kelley Pubs. ISBN 0678000514

• Veblen Thorstein. 1971 (original work from 1923). Absentee Ownership and Business Enterprise in Recent Times. Beacon Press. ISBN 0807047996

• Veblen Thorstein. 1979 (original work from 1899). The Theory of the Leisure Class. Penguin. ISBN 0140053638

• Veblen Thorstein. 2004. The Later Marxism. Kessinger Publishing. ISBN 1419168851

• Veblen Thorstein. 2004. The Preconceptions of Economic Science. Kessinger Publishing. ISBN 1419178512

• Veblen Thorstein. 2005 (original work from 1918). The Higher Learning In America: A Memorandum On the Conduct of Universities By Business Men. Cosimo Classics. ISBN 1596052619

• Veblen Thorstein. 2005 (original work from 1919). The Vested Interests and The Common Man. Cosimo Classics. ISBN 1596051493

• Veblen Thorstein. 2006 (original work from 1921). The Engineers and the Price System. Cosimo Classics. ISBN 1596058927

• Veblen Thorstein. 2006 (original work from 1915). Imperial Germany and the Industrial Revolution. Cosimo Classics. ISBN 159605882X

• Veblen Thorstein. 2006 (original work from 1917). An Inquiry into the Nature of Peace and the Terms of Its Perpetuation. Cosimo Classics. ISBN 1596057084

• Veblen Thorstein. 2006 (original work from 1904). The Theory of Business Enterprise. Kessinger Publishing LLC. ISBN 142549658X

References

ISBN links support NWE through referral fees

• Dorfman, Joseph. 1934. Thorstein Veblen and His America. Harvard University Press. ISBN 0678000077

• Knoedler, Janet T. 1997. Veblen and Technical Efficiency. Journal of Economic Issues, 31(4), 1011-1026

• Hodgson, Geoffrey M. 1998. On the Evolution of Thorstein Veblen's Evolutionary Economics. Cambridge Journal of Economics, 22(4) 415-431

External links

• — The Veblenite – Thorstein Veblen’s webpage - works, biography, bibliography and related material

• The Theory of the Leisure Class – Full text of Veblen’s book

• An inquiry into the nature of peace and the terms of its perpetuation – Full text of Veblen’s book (Publisher: New York, B.W. Huebsch, 1919

• The place of science in modern civilization and other essays – Full text of Veblen’s book (Publisher: New York, B.W. Huebsch, 1919

• The Vested Interests and the Common Man – Full text of Veblen’s book (Publisher: New York, B.W. Huebsch, 1919)

• Schäffle, Veblen and the Biological Metaphor Shift in Economics – Text by Sophus A. Reinert - Heilbronn (2003) on Veblen’s work

• Association for Evolutionary Economics – AFEE website

• Naughty Professor – Article from Stanford Magazine on Veblen’s teaching style

• Thorstein Veblen – Biography and Work of T. Veblen

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