Veblen

An Introduction to Thorstein Veblen

Academic and unemployed

Thorstein Bunde Veblen

Veblen began his academic career as a philosophy major, focusing on economics as his minor study. He attended Carleton College, Johns Hopkins University, then completed a doctorate in philosophy at Yale (1884). After completing his doctorate, Veblen retreated to Minnesota for six or seven years. There he wrote, read, and occasionally worked, but was otherwise intellectually isolated from the rest of the world. During this period, Veblen became detached from "conventional viewpoints" (Horowitz 2002, 42) and from American mainstream society, allowing him the ability to observe the American economic system as an outsider, looking in.

Veblen entered Cornell as a graduate student in 1891. Veblen wrote his first real economics paper there, in which he analyzed "Some Neglected Points" of socialist theory. (Horowitz 2002, 43) This paper attracted the attention of Professor J. Laurence Laughlin. Laughlin, while at Cornell, was asked to head the newly formed Economics department at the University of Chicago. Laughlin decided to bring Veblen along with, providing him with his first of few jobs in formal academia.

Veblen published his most famous essay, The Theory Of The Leisure Class (1899) , while in Chicago. He left Chicago for Stanford in 1906. Effectively fired Stanford - for 'amoral' behavior - soon after arriving, he held his last formal academic position at the University of Missouri from 1911-1918. Veblen moved to New York and helped found The New School. He published a number of books and papers while in New York, but died in relative anonymity in 1929.

Economic thought - a primer

“No substantial agreement upon a point of knowledge or conviction is possible between persons who proceed from disparate preconceptions.” – Thorstein Veblen

• Dichotic antagonism: Veblen saw the progression of history as a struggle between the invidious or selfish human traits and the non-invidious or economical.
• Conspicuous consumption: the wasteful act of consumption based on emulation or perceived necessity.
• He saw “systems as volitional rather than deterministic in character, formed by human beings rather than by actors playing out preordained scripts.” (ix, Horowitz)
• The closest 20th century America came to producing a “freewheeling intellectual” -ix, Horowitz)
• Not defined by a specific college or university or system or departmental orthodoxy.
• “For all his faith in socialism as a system, it was individualism that clearly made him stand apart as a man.” (-ix, Horowitz)
• Veblen appealed directly to Darwinism, understanding that in post-evolutionary science there was "no definitive equilibrium." "Any evolutionary science, on the other hand, is a close knit body of theory. It is a theory of a process, of an unfolding sequence . . . The analysis does not run back to the same ground, or appeal to the same standard of finality or adequacy, in the one case as in the other." -WIENAES, Veblen 1989
• Up to 1989, there had been no adequate and comprehensive assessment of Veblen's primary intellectual antecedents. (Edgell and Tilman, 1989)

Stephen Edgell and Rick Tilman

In The Intellectual Antecedent of Thorstein Veblen: A Reappraisal, Stephen Edgell and Rick Tilman provide a comprehensive analysis of Veblen's intellectual roots. Furthermore, they attempt to explain why, exactly, it has been so difficult for scholars to determine those roots.

They begin their article with a quote by John Diggins: "... his ambiguous thought and writings remain a challenge to the student of intellectual history." This can be exemplified by nothing better than the sheer amount of intellectual schools to which scholars have attributed Veblen's ideas. The full list, as found by Edgell and Tilman, is the following twelve schools of thought:

1. German philosophy (Immanuel Kant)
2. British Empiricism (David Hume)
3. American Pragmatism (C.S. Peirce and John Dewey)
4. European Socialism (Marx, Marxism)
5. Anglo-American Evolutionary Thought (Charles Darwin, Herbert Spencer, W.G. Sumner)
   1. Sumner was Veblen’s professor at Yale
6. American Socialism (Edward Bellamy)
7. British Socialism (John Hobson)
8. French Utopian Socialism (Charles Fourier, Henri St. Simon)
9. Scottish Political Economy (John Rae)
10. Norwegian Lutheranism
11. Psychology (Jacques Loeb, William James)
12. Anthropology (Franz Boas, Edward Tylor)

Despite these competing views on Veblen's intellectual antecedents, Edgell and Tilman claim that the true origins were Darwin's evolutionary thought and Bellamy's socialism, not Marx's socialism. Edgell and Tilman present an undeniably convincing argument for Veblen's Darwinian roots, and claim that this is, in fact, the most important intellectual source for Veblen. His further thoughts on Bellamy and Marx are a result of this influence.

Bellamy as Veblen's Economic Predecessor

Looking Backward, published in 1888, was, according to Veblen's wife, responsible for the shift in Veblen's focus from philosophy to economics. She called him reading the book, "the turning-point in our lives." The story of a man who goes to sleep in an American, capitalist 1887 only to wake up in a socialist utopia in 2000, Looking Backward was Edward Bellamy's critique on the state of American society. He criticized 19th century America for its excessive individualism, and praised the fictional socialist utopia for its citizens' pursuit of, "the true self-interest of a rational unselfishness." It is important to note that in the novel, the transition from capitalism to socialism is accomplished peacefully, a distinctly non-Marxian idea.

Furthermore, Edgell and Tilman point to the extremely similar terminology used by Bellamy and Veblen in their writings as evidence of his impact. They suggest that the prevalence of identical phrases, like the "labor of irksomeness," could not be coincidental.

The capitalist society of 1887 in Bellamy's novel faces issues that Bellamy calls the four "great leaks," and one additional source of waste, as follows:

1. "the waste by mistaken undertakings"
2. "the waste from competition and mutual hostility of those engaged in industry"
3. "the waste by periodical gluts and crises, with the consequent interruptions of industry"
4. "the waste from idle capital and labor, at all times"
5. The waste from competitive advertising and retailing

In one of Veblen's books on economic theory, The Engineers and the Price System, he outlines his four sources of "lag, leak, and friction," and in a later piece he discusses a fifth source of waste, as follows:

1. "Unemployment of material resources, equipment and manpower"
2. "Salesmanship (includes, for example, needless multiplication of merchants and shops... advertising and bill-boards"
3. "Production (and sales-cost) of superfluities and spurious goods"
4. "Systematic dislocation, sabotage and duplication"
5. The waste from the business cycle

Edgell and Tilman suggest that the five sources of waste that each cites are too similar to be coincidental; that each has its counterpart in the other man's ideas.

Although Veblen clearly agrees with Bellamy on the failings of the capitalist state, his thoughts diverge from Bellamy's on the nature of socialism. Bellamy believed that socialism was an inevitable consequence, that humanity would have no choice but to adopt it eventually. Due to his Darwinian beliefs, Veblen disagreed. He felt that socialism was merely a possibility; one which would only be realized if society evolved in that way. Bellamy also believed that once the socialist utopia was achieved, it would stay that way permanently. Again, Veblen's belief in Darwinism made him think otherwise, that even a socialist utopia would evolve as society demanded it to.

Marx as Veblen's Economic Predecessor

Edgell and Tilman point out that one of the fundamental issues in understand the relationship between Veblen's and Marx's ideas is the constant reinterpretation and re-translation of Marx's works. Therefore, they attempt to understand Marx's influence on Veblen utilizing only direct evidence: Veblen's responses to Marx.

Fortunately, Veblen's (published) thoughts on Marx's work are documented in both his lectures and The Quarterly Journal of Economics. In fact, at the beginning of one of his lectures, Veblen said, "There is no system of economic theory more logical than that of Marx."

However, Veblen had problems with what Edgell and Tilman call Marx's two main "preconceptions." As with most objections Veblen raised, they were Darwinian in nature. Veblen rejects these two tenets of Marx:

1. Marx's belief that a proletariat revolution was inevitable. (English system of Natural Rights)
2. Marx's belief that socialism would inevitably replace capitalism. (German Hegelianism)

Hence, Veblen refused to accept either "the Marxian notion of a conscious class struggle as the one necessary method of social progress" or the assertion that this class struggle will inevitably end with "the classless economic structure of the socialist final term."

Secondary Literature

Veblen as a Marxist / offering an updated Marxism

Arthur K. Davis

• Given a broad conception of Marxism, “many if not most of Veblen’s apparent departures from Marxism (such as his criticism of Marx’s overemphasis on rational class conciousness in history) become either corrections of particular Marxian propositions or original contributions to that tradition.” -282, Radicals • Veblen’s ‘conspicuous consumption,’ Davis argues, was “a point Marx mentions but nowhere develops.” -282, Radicals • “The biographical evidence is overwhelming that Veblen became permanently and intensely interested in Marxism early in his career.” -282, Radicals • “The Marxian concept of change tended to overemphasize the rational change stemming from class-concious interest. Veblen’s correction of Marx on this point is one of his more important contributions to the Marxian tradition.” -283, Radicals

E.K. Hunt

• “While Veblen cannot properly be considered a disciple of Marx, the parallels between the two great thinkers are striking.” 325, hunt’s book o “insisted on a historical approach to the study of capitalism; both saw capitalism as a historically unique and historically transient society based on the exploitation of the direct producers by a numerically small ruling class of parasitic owners.” 325, hunt’s book

Harvey Goldberg

• “The core of Veblen's social theory is largely Marxian.” 280

Veblen's departure from Marxism / as a critic

Julie Townshend and John Edgell

Marx and Veblen's Social Theories

Despite clear points of similarity, there are fundmental differences that persist between Marx and Veblen's social analysis. Differentiating between these two analysis of aspects of society, most notably of Capitalism, is only possible once their "dissimilar theoretical foundations" have been understood.

Emerging Orthodoxy

A popular focus on comparing Veblen and Marx's analysis of Capitalism "obscures the irresolvable differences with respect to their methodological and substantive approaches to human nature." Townshend and Edgell attack an orthodoxy growing in the late 1980s and early 1990s, emerging in opposition to the prevailing popular analysis distancing Veblen intellectually from Marx.

John Patrick Diggins (1999)

• “Half a century separated Marx from Veblen. Thus when Marx studied the ideas and theoretical assumptions of capitalism, his economic analysis took its point of departure from the modern natural rights traditions... When Veblen studied economics toward the end of the nineteenth century, the discipline was in a state of ferment and confusion.” 43, Diggins • “A chief source of controversy was the theory of labor expounded by Marx himelf. “ -43, Diggins • Veblen on marx -45, Diggins

Michael G. Smith

"Ultimately, Marx sought to achieve efficient order in society by way of democratization of both the workplace and technical knowledge. Veblen wanted to make a better product; Marx a better man."

Joseph Dorfman (1934)

Joseph Dorfman lends an early analytical context of how Darwinian evolution factored into Veblen's economic thought. He discusses how Darwin's watershed in social sciences places Veblen and Marx's most basic ideologies at "irreconcilable" odds.

Distinguishing Themes

Different Social and Historical Contexts

Marx worked "within the Enlightenment" and in a revolutionary and socially squirming Europe.

Veblen emerged from Darwin's era of evolutionary science and an individualistic, self-confident America.

Theory of Capitalist Economic Crises

Conflicting analysis of the causes of crises: Marx - theory of exploitation... Veblen - attributes the inherent economic crises of capitalism to antagonistic conflicting forces of predatory institutions and workmanship institutions - respectively, profit oriented vs. production oriented.

Conflicting significance placed on the roles of crises: Veblen - his account of capitalist crises are intended to be "illustrative of his theory of history and human nature." (Edgell and T 1993, 732) Marx - the process of capitalist development and conflict was Marx's primary impetus for social revolution. As Marx wrote: a "casting-off [of the capitalist means of production] itself is the result of the mode of production corresponding to capital; the material and mental conditions of the negation of wage labour and of capital...are themselves results of its production process."

Theory of Labor Value

differentiation between marx and veblen

Evolutionary vs. Pre-Evolutionary preconceptions

"No substantial agreement upon a point of knowledge or conviction is possible between persons who proceed from disparate preconceptions." -Veblen

Capitalist Development

Marx and Veblen had superficially similar, though after some analysis - very different views of capitalist development, influenced by evolutionary (Veblen) vs. teleological (Marx) approaches to social theory.

“The advance of capitalist production develops a working class which by education, tradition and habit looks upon the requirement of that mode of production as self-evident natural laws. The organization of the capitalist process of production, once it is fully developed, breaks down all resistance.” –Marx, Capital, vol. 1, 899.

Veblen's view of capitalist development results from his antagonistic dichotomy, a conflict between the "predatory" owners of means of production and the "workmanship" of those who seek to sell their labor. These two "instincts" have become consolidated, socially accepted and self-fulfilling through "habits of thought, institutions, and whole cultures." (Edgell and T 1993, 729)

References

THORSTEIN VEBLEN: THEORIST OF THE LEISURE CLASS • John Patrick Diggins o 1999 o pages 42-51 • German “historicism,” pragmatism, Darwinism (specifically the evolutionary side), and Marxism – identified as the primary basis of Veblen’s economic ideas.

AMERICAN RADICALS: SOME PROBLEMS AND PERSONALITIES • Edited: Harvey Goldberg • 1957 • Section by Arthur K. Davis • Chapter 15, pp. 279-293

THORSTEIN VEBLEN AND HIS AMERICA • Joseph Dorfman o 1934 o pp. 240-286 • pre-Darwinian character of Marxism, directly contrasts with Veblen’s post-Darwinism. (pp. 243, 264-268) • offers extensive biographical history of Veblen and his intellectual development, but does not help in identifying the strongest of these precedents in his economic theories.

THORSTEIN VEBLEN AND HIS CRITICS: 1891-1963 • Rick Tilman • 1991 • Outline criticism of Veblen from conservatives to radicals and devotes two chapters discussing ideological use/abuse of Veblen’s work throughout more recent economic thought.

HISTORY OF ECONOMIC THOUGHT: A CRITICAL PERSPECTIVE • E.K. Hunt, 1979 • “His analysis, like Marx’s, was historically oriented in every aspect.” (300) • “Human history was, for Veblen, the history of the evolution of social institutions.” (301) • “In many of his writings Veblen referred to these common patterns of human behavior as ‘instincts’ “. (301) • “ ‘In economic life, as in other lines of human conduct, habitual modes of activity and relations have grown up and have by convention settled into a fabric of institutions. These institutions...have a prescriptive, habitual force of their own.’ “ 301 --[Veblen, “Fisher’s Rate of Interest,” in Essays in Our Changing Order]

VEBLEN’S CENTURY • Irving Louis Horowitz, ed. , 2002 • Intro is of value, highlights importance of Veblen and lends interesting insight into his character.

Marx and Veblen on Human Nature, History, and Capitalism: Vive la Difference! • 1993, Stephen Edgell and Jules Townshend • http://www.jstor.org/stable/4226715

Marx, Technocracy and the Corporatist Ethos • 1988, Michael G. Smith • http://www.jstor.org/stable/20100377 • ”Ultimately, Marx sought to achieve efficient order in society by way of democratization of both the workplace and technical knowledge. Veblen wanted to make a better product; Marx a better man.” -235

Varieties of Capitalism from the Perspectives of Veblen and Marx • 1995, Geoffrey M. Hodgson • http://www.jstor.org/stable/4226972

Veblen, Weber and Marx on Political Economy • 1993, Michael W. Hughey and Arthur J. Vidich • http://www.jstor.org/stable/20007108

Intellectual Antecedents of Thorstein Veblen: A Reappraisal • Edgell and Tilman, 1989 • http://www.jstor.org/stable/4226207 • “To date, there is no adequate comprehensive assessment of Veblen’s primary intellectual antecedents. Consequently, the purpose of this article paper is to establish the main parameters of such an endeavor.” pp. 1004

Varieties of capitalism and varieties of economic theory • G.M. Hodgson, 1996 • http://www.jstor.org/stable/4224780 • Refer to Hodgson 1995 work for a more extensive discussion. This, however, is a more concise and updated version of Hudson’s arguments.

The Socialist Economics of Karl Marx and his Followers • 1906, Thorstein Veblen • http://www.jstor.org/stable/1882722