Veblen, Thorstein

Thorstein Veblen (1857–1929), along with Max Weber, Vilfredo Pareto, and Werner Sombart, worked at the intersection of economics and sociology. Veblen's memorable concept of “conspicuous consumption” formed a lasting link between economics and sociology by focusing attention on status seeking, which motivates a great deal of economic behavior but must be understood in sociological rather than in purely economic terms. Veblen is also remembered as one of the founding figures of the “institutional economics' tradition in economics, with its focus on legal forms and developments in governance. Finally, Veblen was an insightful social critic who helped shape the thinking of subsequent generations of analysts like C. Wright (“the power elite”) Mills.

Thorstein Veblen was an economist who, in the process of trying to understand the economy, underwent a transformation that carried him clearly into sociology. Veblen's departure from conventional economics began with his rejection of the idea that most behavior is guided by rational calculation aimed at maximizing material well-being. A key to understanding Veblen is his awareness of human beings as status seekers. Veblen viewed society as a giant arena in which people struggle to acquire social approval. His enduringcontribution unfolds from the recognition that what often appears as materialism is actually status seeking in disguise.

Veblen maintained that the specific steps people take to pursue recognition will be constrained by the character of the property system, the nature of banking, and other institutional forms. Informed economic analysis must consequently pay considerable attention to organizational and legal forms as they have evolved over time in different countries. Although he was indebted to the German “historical” economists in this regard, Veblen is nevertheless remembered for having provided some of the intellectual inspiration and energy for the subdiscipline of “institutional” economics.

Thorstein Veblen's parents were Norwegian immigrants farming in Wisconsin when Thorstein Veblen was born in 1857, the sixth of 12 children. The family moved to a larger farm in Minnesota in 1865, where Veblen grew up speaking Norwegian in a rural, religiously conservative setting. Smart and acerbic, Veblen didn't fit in very well when he was sent to newly established Carleton College to train for the Lutheran ministry. Veblen generally disliked Carleton when he was there (1874–1880), but he did grow close to one faculty member, and this proved to be very important. The faculty member was John Bates Clark (1847–1938), who had just completed his graduate studies in Germany, where he had studied economics with Wilhelm Roscher and Karl Knies of the historical school of economics.

After graduating from Carleton, Veblen taught at a local school for a year. He began graduate studies at Johns Hopkins in 1881 and rather quickly transferred to Yale where he completed a doctorate in philosophy in 1884. Veblen's mentor at Yale was Yale's president, the Reverend Noah Porter, and Veblen was also very close to William Graham Sumner. But Veblen was unable to find a faculty position on completion of his program of study, so he returned to Minnesota where he married former Carleton classmate Ellen Rolfe in 1888. They moved to one of her father's farms in Iowa, where they shared a life of hard work but also studious reflection about the state of America's farm economy. Beginning in the late 1880s, there was a serious drought in the upper plains states, lastingfive years. Farm foreclosures reached record proportions in some areas. Within a short time Veblen enrolled in graduate school at Cornell University to study economics (1890–1892). Upon leaving Cornell in 1892, Veblen accepted an entry-level position as a teaching fellow in [Page 864]economics at the University of Chicago. He remained at the University of Chicago until 1906, producing his bestknown work, The Theory of the Leisure Class (1899), editingthe Journal of Political Economy for a time, and enjoying lively collegial exchange with some of the best minds of his time but never feeling fully appreciated.

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