Veblen, Thorstein (1857–1929)

Thorstein Bunde Veblen, the son of Norwegian immigrants, was an iconoclastic economist, sociologist, historian, and philosopher whose astute analysis and biting satire on the tide of business enterprise in the latter part of the 19th century and early 20th century has endured to this day. He coined terms such as conspicuous consumption and vested interests, which remain in the popular lexicon. His fundamental insight was that the “state of the industrial arts” (technology) was a dynamic force in societal change that was often retarded by what he termed imbecile institutions. In making this dichotomy between technology and institutions, Veblen was not merely a one-sided technological determinist. Instead, he pointed out that in modern capitalist economies, there is often a conflict between making money and making goods. Where Adam Smith described humans' propensity to truck, barter, and exchange, Veblen spoke of the instincts of workmanship and salesmanship. This dichotomy was carried through in his analysis of the “serviceablility” or intrinsically useful characteristics of goods versus the component of “waste” or merely how they were outward displays of status in society.

Veblen delighted in pointing out what he termed the barbarian origins of modern society. The Vikings conquered through war and theft, and Veblen saw elements of this in modern society. Unlike Marx, he did not see the conflict between the workers and capitalists to be the essence of capitalism; rather, a race for reputability on the basis of invidious comparison was, for him, a driving force in the evolution of a modern business economy. If there was an ultimate goal for workers, Veblen would say it was not to own the means of production but rather to achieve a level of leisure enjoyed by only a few. This conflict was played out in a society where the technological potential to produce goods was hamstrung by the demands of business enterprise that goods be sold profitably.

Veblen had a checkered academic career. After graduating from Carleton College, he began graduate school at Johns Hopkins, but then switched to Yale for a doctorate in philosophy. Failing to find an academic appointment, he enrolled at Cornell but then went with J. Laurence Laughlin to the new University of Chicago, where he became an instructor and an editor of the Journal of Political Economy. After periods at Stanford and the University of Missouri, his last job was at the New School for Social Research. He never rose above the rank of assistant professor. Veblen spent time as an editor of the liberal periodical The Dial and worked for the Food Administration during World War I. While there, he suggested that [Page 2179]prosecution of the Industrial Workers of the World, a radical labor union, cease to help with food harvesting. This suggestion was not well received by the vested interests.

Veblen's most famous work was The Theory of the Leisure Class. In this work, he discussed things such as dress as an expression of the pecuniary culture, pecuniary canons of taste, devout observances, and higher learning. His second book, The Theory of Business Enterprise, was more to the point in the analysis of modern-day capitalism. In this book, he analyzed the role of loan credit in the boom-bust cycle of the economy.

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