Thorstein Veblen

Thorstein Veblen

Thorstein Bunde Veblen, born Torsten Bunde Veblen (July 30, 1857 – August 3, 1929), was an American economist and sociologist, and a leader of the institutional economics movement. Besides his technical work he was a popular and witty critic of capitalism, as shown by his best known book The Theory of the Leisure Class (1899).

Veblen is famous in the history of economic thought for combining a Darwinian evolutionary perspective with his new institutionalist approach to economic analysis. He combined sociology with economics in his masterpiece The Theory of the Leisure Class (1899) where he argued that there was a basic distinction between the productiveness of "industry", run by engineers manufacturing goods, vis-a-vis the parasitism of "business" that exists only to make profits for a leisure class. The chief activity of the leisure class was "conspicuous consumption", and their economic contribution is "waste," activity that contributes nothing to productivity. The American economy was thereby made inefficient and corrupt by the businessmen, though Veblen never made that claim explicit. He believed that technological advances were the driving force behind cultural change, but, unlike many contemporaries, refused to connect change with progress.

Although Veblen was sympathetic to state ownership of industry, he had a low opinion of workers and the labor movement and there is disagreement about the extent to which his views are compatible with Marxism, socialism or anarchism. As a leading intellectual of the Progressive Era, he made sweeping attacks on production for profit, and his stress on the wasteful role of consumption for status greatly influenced socialist thinkers and engineers who sought a non-Marxist critique of capitalism. Fine (1994) writes that economists at the time complained that his ideas, while brilliantly presented, were crude, gross, fuzzy, and imprecise; others complained that he was a wacky eccentric. Scholars continue to debate what exactly he meant in his convoluted, ironic and satiric essays; he made heavy use of examples of primitive societies, but many examples were pure invention.