Thornstein Bunde Veblen

(1857-1929)

Main topics to be discussed upon•The life and times of Veblen –How could

he survive among “savages”?•His main contributions in economics and

beyond•Understanding the sensational “Theory of

the Leisure class”•Relevance of Veblen’s ideas in today’s

world—how farfetched his vision was?

WHO WAS THORNSTEIN VEBLEN? Born in Minnesota (1857-1929) from a Norwegian

family—strongly influenced his vision and later his work the view from an “outsider” appreciation of the natural habitat Alienated from society—influenced his personality as well

PROFFESIONAL BACKGROUND Studied at Carleton College Academy The faculty recognized his genius, but was a bit afraid of

him! Graduated from Yale in 1884 Could not found a job; Isolated for 7 years only reading Professor at Chicago University A “rebel” economist (sociologist) of the left.

Fact: He gave all his students the same grade regardless of their work! He gave A’s to students who wanted to qualify for scholarship!

HIS SAVAGE WORLD 19th century America- brutal capitalism, the

time of Rockefeller-a time to be looked upon with blush

Money---the stepping stone to social recognition in America, the ticket for entering the high class

Morality (and law) had no place among the “savages”—Social Darwinism

Industrialization was in full throttle.

HOW COULD AN ISOLATED MAN GET “INVOLVED” IN THE BUSINESS SYSTEM? Interested not with economic play, but with

the players. Not interested with the plot, but with a whole

set of customs around that system. His examination of society through

observation.

Founding father of American Institutionalism school of thought

Economics as an evolutionary science

NEW PATHS TO INSTITUTIONALISM EVOLUTIONARY ECONOMICS.

Why an institutionalist?-the attempt to analyze human behavior within an institution with certain rules & norms (in this case economic institution).

Evolutionary (applied Darwinian's methodology).

He considered to have no real “followers” due to ever changing contexts (institutional level)

Wesley Mitchell—his student—distinguished economist on business cycles

THEORY OF THE LEISURE CLASS-HIS SENSATIONAL WORK (1899) A criticism to the leisure class of 19th century

America. Status= an elevator to social position (instead

of class). Emulation-deep-seated motive that drove

individuals to seek invidious comparisons with other.

Insight into the origins of social stratification.

What motivated people to behave as such? Rationality ?(as classics would have suggested)

Veblen trusted more the irrationality of people to play a bigger role given the times he lived

ADVERTISING OF THE SOCIAL POSITION Status not directly linked with wealth, but

how well was put on display. Conspicuous Leisure-non productive consumption of

time, to show they are exempt from undignified work. Conspicuous Consumption- purchase of excessive and

expensive goods as a mark of prowess and perquisite of human dignity People’s tastes and definitions of beauty are a

product of the “expensiveness of the articles” Needs or wants?—standard of living turned into

habits

Status in the community will be judged increasingly by appearances and not by the skills obtained during leisure time.

WERE IS VEBLEN NOW THAT WE NEED HIM? Veblen—pioneer in

environmental sociology Ecological aspects of

capitalism Sustainable

development ?? Social & Environmental

cost of capitalism Relevance nowadays:

environmental crisis

“THE ENGINEERS AND THE PRICE SYSTEM”—THE PROVOCATIVE, ALMOST HERETIC, WORK The businessman is no longer the engine

of economic progress (Adam Smith’s idea), but a saboteur of the system (Veblen’s idea).

Fascinated with technology and machine, economic progress=mechanical.(contrary to Marx who was fascinated with the value of labor)

The need for technicians and engineers (Marx-the capital belong to the labor).

Engineers admired the leisure class, wanted to emulate them, hence, no revolution contrary to Marx.

THE “MISFIT” OF THE BUSINESSMAN Businessman-interested in money-making. Engineers-interested in making goods using

machinery.

Businessman had no function to perform, thus he belonged to the leisure class=the need to accumulate and consume.

How did the businessman fit into this scheme?- Credit, loans, and capitalization=opportunities for profits.

Businessman=predators=still admired==hence social stability

WHY THE CAPITALISTS ARE STILL PRESENT? Where did Veblen go wrong?

Underestimated the capacity of a democratic system to correct its own excesses

Social accountability of the businessmen for his act

Creative workmanship (due to changing business climate) instead of cold, machine-attached workmanship

WHAT WOULD VEBLEN SAY IF HE WAS STILL ALIVE? Women’s clothes-still more focused on

fashion rather than functionality.

People forcing themselves to like fancy things(distortion of preferences).

Decorative books

Animal Fur Clothes for embellishment.

Xhensila’s pen, :P

CONCLUDING REMARK

Who is that much rich to buy expensive, fancy and luxurious goods? MANY

Who is that much rich to buy valuable time spent with their beloved? FEW

We can all live gentler and simpler if we read and understand Veblen.