Veblen in Perspective: His Life and Thought

Published by EH.NET (January 2002)

Stephen Edgell, Veblen in Perspective: His Life and Thought. Armonk, NY:

M.E. Sharpe, 2001. xiii + 209 pp. $22.95 (paper), ISBN: 1-56324-117-x.

Reviewed for EH.NET by Donald Stabile, Department of Economics, St. Mary’s

College of Maryland.

Does Thorstein Veblen still deserve consideration from economists? After all,

his most famous book, The Theory of the Leisure Class, appeared over a

century ago. Edgell’s book on Veblen makes the case that he does. A professor

of sociology at Salford University in England, Edgell stresses Veblen’s

linkages with his own discipline. Much of his book’s content will be of

interest only to Veblen scholars. Still, economists can profit from reading it.

To support his contention that Veblen’s ideas have enduring value, Edgell first

removes some of the mystery that surrounds Veblen’s personality and ideas. That

mystery has existed ever since. Joseph Dorfman published an extensive biography

of Veblen, Thorstein Veblen and His America, in 1934. In it, he

portrayed Veblen as a detached, lonesome loser, who viewed the U.S. as if he

were from another planet. Edgell argues that by slanting his data, Dorfman

misinterpreted Veblen’s personality by focusing on his immigrant parents from

Norway whose poverty and “Norskie” ways gave him a feeling of inferiority. That

feeling, in turn, contributed to Veblen’s failed life. He had a spectacularly

unsuccessful academic career and few friends, according to Dorfman, and found

revenge with his attacks on the world around them.

Drawing on new sources and on sources Dorfman had but did not use, Edgell

offers a different story. For example, he turns around the issue of Veblen’s

family background, to argue, persuasively, that Veblen benefited from it. His

parents were affluent farmers who sent all their children to college. Even the

family’s Norwegian background was a positive influence on Veblen. Even though

he became fluent in English and appreciated Anglo-Saxon culture at an early

age, Veblen, Edgell tells us, drew upon Scandinavian cultural values as a

source of strength and an anchor for his ideas. Edgell maintains that he

especially learned the value of workmanship and cooperation from his ethnic

background. He also credits the works of Henrik Ibsen as having a great deal of

influence on Veblen’s ideas and his writing style.

His multicultural life made Veblen more cosmopolitan than his contemporaries.

He became fluent in all the major European languages and finely attuned to the

latest thinking in Europe. Earning a doctorate in philosophy at Yale with a

dissertation on Kant added to Veblen’s broad interests.

Edgell draws three important lessons from Veblen’s experiences. First, he had

no difficulties being a successful student due to his cultural background; his

professors took an interest in him and he got on well with them. This pattern

continued throughout his academic career. He had many friends from among his

colleagues and students, and they all stood by him with loyalty and devotion.

Second, when he began to study economics, Veblen became a global thinker whose

research knew no disciplinary boundaries. Third, neither his ethnic background

nor his personality quirks can explain his lack of success as an academic. His

failure to attain tenure at a major university was the result of his

unconventional ideas.

Edgell provides a very readable summary of those ideas. Veblen was never

satisfied with the rationalist approach to economics set forth by the

neoclassical school that was beginning to dominate economics at the end of the

nineteenth century. In place of their version of the rational utility

maximizing human as the prime mover in economics, Veblen applied the results

then emerging from anthropology and psychology to develop a more complex theory

of human behavior in economic affairs. More important, to Veblen, any science

had to be based on a Darwinian approach. Edgell establishes that Veblen was a

thorough reader of Darwin’s books and finds parallels in their ideas about

society.

As a Darwinian, Veblen was interested in explaining how the economic system

evolved over time. To him, the capitalist system of his day was neither final

nor the finest point of economic development. Rather, the economic system would

continue to develop and there was no reason to believe that its development

would lead to a better world. Darwin had no idea where biological evolution

would lead, and Veblen took the same stance with economic evolution. This

perspective, Edgell points out, placed Veblen at odds with the ideas of

American economic progress. It was also contrary to the neoclassical paradigm

with its methodology of equilibrium.

Underlying Veblen’s economics was an approach based on the interplay of human

nature and social institutions. Human nature gave human beings clusters of

behavior that he labeled instincts. Veblen identified two major instincts,

workmanship and predation. These instincts, however, were highly adaptable. The

social institutions under which humans functioned influenced which instinct

took precedence in human behavior. In a capitalist society, these two instincts

translated into two types of work, pecuniary and industrial. Pecuniary work

stressed making money through financial dealing, while industrial work required

efficient economic production. Pecuniary work was predominantly predatory,

while industrial work emphasized workmanship. The problem was that the

predatory group was in charge and made decisions based on what was good for

their pecuniary gain, not on what was good for society.

As long as predatory values dominated capitalism, the chances for a better

society were slim. Veblen’s study of the leisure class, moreover, showed how

the pecuniary values of the leisure class created a “capitalist hegemony,” to

use Edgell’s term, by influencing the values of all other members of society.

Contrary to Marxist theory, Veblen found that the pecuniary values of

capitalism were so influential that they led to institutional stability.

Although he was a socialist, as Edgell describes, Veblen could not accept the

inevitability of socialism, due to his Darwinian perspective. Only changes in

technology, the driving force of economic evolution, could erode the power and

influence of the pecuniary elite who were in charge of economic decisions.

Veblen always argued that the persons with industrial values who understood the

technology of production should be in charge of the economy. Late in his life,

he wrote a book, The Engineers and the Price System, that set forth the

proposal that engineers had the right industrial values to run the economy.

Interpreters of Veblen have struggled with whether or not he meant what he

said. Edgell reviews their interpretations (including my own) very capably. He

offers his own view that in this book Veblen became a utopian in a very special

sense. However fanciful, utopias have a very practical purpose of setting a

standard of what ought to be for comparison with what is. In this case, Veblen

used a utopian vision of engineers planning the smooth functioning of an

industrial machine to point out the chaotic nature of an economic system that

mixed markets with an unstable financial system.

Edgell has helped put Veblen in his rightful place as an enduring thinker whose

perception that a market system has costs as well as benefits has salience for

today. Economists who read this book will learn how Veblen argued that

“conspicuous consumption” created waste in the form of negative externalities.

They will also find that his ideas contain elements of behavioral economics,

feminist economics, the new institutional school, and the theory of “social

capital.” Even in the twenty-first century, Veblen has things to teach us, and

Edgell deserves credit for teaching us more about Veblen.

References: Joseph Dorfman, 1934. Thorstein Veblen and His America (New

York: Viking Press). Thorstein Veblen, 1953 (1899). The Theory of the

Leisure Class (New York: Mentor Books). Thorstein Veblen, 1944 (1921).

The Engineers and the Price System (New York: Viking Press).

Donald Stabile’s most recent books are Community Associations: The

Emergence and Acceptance of a Quiet Innovation in Housing (Greenwood Press,

2000) and The Origins of American Public Finance: Debates over Money, Debt,

and Taxes in the Constitutional Era, 1776-1836 (Greenwood Press, 1998).