Thorstein Veblen

Dr. Thorstein Bunde Veblen (born Tosten Bunde Veblen 30 July 1857 – 3 August 1929) was a Norwegian-American sociologist and economist and a founder, along with John R. Commons, of the Institutional economics movement. He was an impassioned critic of the performance of the American economy, and is most famous for his book The Theory of the Leisure Class (1899).

Biography
Veblen was born in Cato, Wisconsin, of Norwegian immigrant parents. While Norwegian was his first language, he learned English both from neighbours and from school, which he began at the age of 5. His family was highly successful and placed great emphasis on education and hard work, all of which undoubtedly contributed to his later scorn for what he termed “conspicuous consumption” and waste of the gilded age.

He obtained his Bachelor of Arts in Economics at Carleton College (1880), under John Bates Clark, a leading economist in the emerging body of thought now identified as neoclassical economics. He did graduate work at Johns Hopkins University under Charles Sanders Peirce, the founder of the pragmatist school in philosophy, and subsequently received his Ph.D. in 1884 at Yale University, under the direction of William Graham Sumner, a proponent of laissez-faire economic policies. Perhaps the most important intellectual influences on Veblen were Charles Darwin and Herbert Spencer, whose work in the last half of the 19th century sparked an enormous interest in the evolutionary perspective on human societies.

From 1891 to 1892, after six years spent reading voluminously at the family farm where he went to recover from malaria, Veblen continued studying as a graduate student, now in economics, at Cornell University under James Laurence Laughlin.

In 1892, he became a professor at the newly opened University of Chicago, simultaneously serving as managing editor of the Journal of Political Economy. In 1906, he received an appointment at Stanford University, where he left, it is often written, because of “womanizing.” The rumors of Veblen's womanizing probably followed him from the University of Chicago, where difficulties with his eccentric first wife had led some to see him, probably wrongly, as a roué. It is possible that these rumours were used to terminate the employment of a man who was widely regarded as a poor teacher and a radical critic.

In 1911, Veblen joined the faculty of the University of Missouri, where he had support from Herbert Davenport, the head of the economics department. Veblen was not fond of Columbia, Missouri, but remained there through 1918. In that year, he moved to New York to begin work as an editor of a magazine called The Dial, and then in 1919, along with Charles Beard, James Harvey Robinson and John Dewey, helped found the New School for Social Research (known today as The New School). He was also part of the Technical Alliance, created in 1918-19 by Howard Scott, which would later become Technocracy Incorporated. From 1919 through 1926 Veblen continued to write and to be involved in various activities at The New School. During this period, The Engineers and the Price System was written..

In 1927 Veblen returned to the property that he still owned in Palo Alto and died there in 1929. Ironically, his death came less than three months before the momentous crash of the U.S. stock market, which heralded the Great Depression.

Veblen’s writing
Veblen developed a 20th century evolutionary economics based upon the new ideas emerging from anthropology, sociology, and psychology. Unlike the neoclassical economics that was emerging at the same time, Veblen described economic behaviour as socially rather than individually determined and saw economic organization as a process of ongoing evolution. This evolution was driven by the human instincts of emulation, predation, workmanship, parental bent, and idle curiosity. Veblen wanted economists to grasp the effects of social and cultural change on economic changes. In The Theory of the Leisure Class, which is probably his best-known work, because of its satiric look at American society, the instincts of emulation and predation play a major role. People, rich and poor alike, attempt to impress others and seek to gain advantage through what Veblen coined "conspicuous consumption" and the ability to engage in “conspicuous leisure.” In this work Veblen argued that consumption is used as a way to gain and signal status. Through "conspicuous consumption" often came "conspicuous waste," which Veblen detested. Much of modern advertising is built upon a Veblenian notion of consumption.

In The Theory of Business Enterprise, which was published in 1904, at the height of American concern with the growth of business combinations and trusts, Veblen employed his evolutionary analysis to explain these new forms. He saw them as a consequence of the growth of industrial processes in a context of small business firms that had evolved earlier to organize craft production. The new industrial processes impelled integration and provided lucrative opportunities for those who managed it. What resulted, as Veblen saw it, a conflict between businessmen and engineers, with businessmen representing the older order and engineers as the innovators of new ways of doing things. In combination with the tendencies described in The Theory of the Leisure Class, this conflict resulted in waste and “predation” that served to enhance the social status of those who could benefit from predatory claims to goods and services.

Veblen generalized the conflict between businessmen and engineers by saying that human society would always involve conflict between existing norms with vested interests and new norms developed out of an innate human tendency to manipulate and learn about the physical world in which we exist. He also generalized his model to include his theory of instincts, processes of evolution as absorbed from Sumner, as enhanced by his own reading of evolutionary science, and Pragmatic philosophy first learned from Peirce. The instinct of idle curiosity led humans to manipulate nature in new ways and this led to changes in what he called the material means of life. Because, as per the Pragmatists, our ideas about the world are a human construct rather than mirrors of reality, changing ways of manipulating nature lead to changing constructs and to changing notions of truth and authority as well as patterns of behaviour (institutions). Societies and economies evolve as a consequence, but do so via a process of conflict between vested interests and older forms and the new. Veblen never wrote with any confidence that the new ways were better ways, but he was sure in the last three decades of his life that the American economy could have, in the absence of vested interests, produced more for more people. In the years just after World War I he looked to engineers to make the American economy more efficient.

In addition to The Theory of the Leisure Class and The Theory of Business Enterprise, Veblen’s monograph "Imperial Germany and the Industrial Revolution", and his many essays, including “Why Is Economics Not an Evolutionary Science,” and “The Place of Science in Modern Civilization,” remain influential.

Veblen’s intellectual legacy
In spite of difficulties of sometimes archaic language, caused in large part by Veblen’s struggles with the terminology of unilinear evolution and of biological determination of social variation that still dominated social thought when he began to write, Veblen’s work remains relevant, and not simply for the phrase “conspicuous consumption.” His evolutionary approach to the study of economic systems is once again in vogue and his model of recurring conflict between the existing order and new ways can be of great value in understanding the new global economy.

The handicap principle of evolutionary sexual selection is often compared to Veblen's "conspicuous consumption".

Veblen, as noted, is regarded as one of the co-founders (with John R. Commons, Wesley C. Mitchell, and others) of the American school of Institutional economics. Present-day practitioners who adhere to this school organise themselves in The Association for Evolutionary Economics (AFEE) and the Association for Institutional Economics (AFIT). AFEE gives an annual Veblen-Commons (see John R. Commons) award for work in Institutional Economics and publishes the Journal of Economic Issues. Some unaligned practitioners include theorists of the concept of "differential accumulation". Veblen’s legacy has also been claimed by those involved with technocracy and his work is often cited in treatments of American literature.

Family
Veblen's nephew Oswald Veblen became a famous mathematician.

Major works of Thorstein Veblen

 * "Kant's Critique of Judgement", 1884, Journal of Speculative Philosophy.
 * "Some Neglected Points in the Theory of Socialism", 1891, Annals of AAPSS.
 * "Bohm-Bawerk's Definition of Capital and the Source of Wages", 1892, QJE.
 * "The Overproduction Fallacy", 1892, QJE.
 * "The Food Supply and the Price of Wheat", 1893, JPE.
 * "The Army of the Commonweal", 1894, JPE.
 * "The Economic Theory of Women's Dress", 1894, Popular Science Monthly.
 * "Review of Karl Marx's Poverty of Philosophy", 1896, JPE.
 * "Review of Werner Sombart's Sozialismus", 1897, JPE.
 * "Review of Gustav Schmoller's Über einige Grundfragen der Sozialpolitik", 1898, JPE.
 * "Review of Turgot's Reflections", 1898, JPE.
 * "Why is Economics Not an Evolutionary Science?", 1898, QJE.
 * "The Beginnings of Ownership", 1898, American Journal of Sociology.
 * "The Instinct of Workmanship and the Irksomeness of Labor", 1898, American Journal of Sociology.
 * "The Barbarian Status of Women", 1898, American Journal of Sociology.
 * The Theory of the Leisure Class: an economic study of institutions, 1899.
 * "The Preconceptions of Economic Science", (1899,1900), QJE. Part 1, Part 2, Part 3.
 * "Industrial and Pecuniary Employments", 1901, Publications of the AEA. JSTOR
 * "Gustav Schmoller's Economics", 1901, QJE.
 * "Arts and Crafts", 1902, JPE.
 * "Review of Werner Sombart's Der moderne Kapitalismus", 1903, JPE.
 * "Review of J.A. Hobson's Imperialism", 1903, JPE.
 * "An Early Experiment in Trusts", 1904, JPE.
 * "Review of Adam Smith's Wealth of Nations", 1904, JPE.
 * Theory of Business Enterprise, 1904.
 * "Credit and Prices", 1905, JPE. JSTOR
 * "The Place of Science in Modern Civilization", 1906, American J of Sociology. JSTOR
 * "Professor Clark's Economics", 1906, QJE.
 * "The Socialist Economics of Karl Marx and His Followers", (1906,1907), QJE.
 * "Fisher's Capital and Income", 1907, Political Science Quarterly.
 * "The Evolution of the Scientific Point of View", 1908, University of California Chronicle.
 * "On the Nature of Capital", 1908, QJE. JSTOR
 * "Fisher's Rate of Interest", 1909, Political Science Quarterly.
 * "The Limitations of Marginal Utility", 1909, JPE.
 * "Christian Morals and the Competitive System", 1910, International J of Ethics. JSTOR
 * "The Mutation Theory and the Blond Race", 1913, Journal of Race Development.
 * "The Blond Race and the Aryan Culture", 1913, Univ of Missouri Bulletin
 * The Instincts of Worksmanship and the State of the Industrial Arts, 1914.
 * "The Opportunity of Japan", 1915, Journal of Race Development.
 * Imperial Germany and the Industrial Revolution, 1915.
 * , pdf
 * "On the General Principles of a Policy of Reconstruction", 1918, J of the National Institute of Social Sciences.
 * "Passing of National Frontiers", 1918, Dial.
 * "Menial Servants during the Period of War", 1918, Public.
 * "Farm Labor for the Period of War", 1918, Public.
 * "The War and Higher Learning", 1918, Dial.
 * "The Modern Point of View and the New Order", 1918, Dial.
 * The Higher Learning In America: A Memorandum On the Conduct of Universities By Business Men, 1918.
 * The Vested Interests and the Common Man, 1919., pdf
 * "The Intellectual Pre-Eminence of Jews in Modern Europe", 1919, Political Science Quarterly. JSTOR
 * "On the Nature and Uses of Sabotage", 1919, Dial.
 * "Bolshevism is a Menace to the Vested Interests", 1919, Dial.
 * "Peace", 1919, Dial.
 * "The Captains of Finance and the Engineers", 1919, Dial.
 * "The Industrial System and the Captains of Industry", 1919, Dial.
 * The Place of Science in Modern Civilization and other essays, 1919., also at Google Books
 * "Review of J.M.Keynes's Economic Consequences of the Peace, 1920, Political Science Quarterly. JSTOR
 * The Engineers and the Price System, 1921.
 * Absentee Ownership and Business Enterprise in Recent Times: the case of America, 1923.
 * "Economic theory in the Calculable Future", 1925, AER. JSTOR
 * "Introduction" in The Laxdaela Saga, 1925.
 * Essays in Our Changing Order, 1927.