Veblen, Thorstein Bonde

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VEBLEN, THORSTEIN BONDE

Thorstein Veblen (1857–1929) had become widely known in the United States as the author of a book, The Theory of the Leisure Class, published in 1899. The book was an unexpected sensation. It remains as one of the most pungently written analyses of modern economics; it may be read as a satire on the ways of the aristocratic class, the follies and foibles of the robber barons and the rich. Veblen's analysis of modern commerce and economics did not include the traditional interplay of rationally calculated "self-interest." Instead Veblen wrote of U.S. economic life as would an anthropologist. He regarded most economic activity, and specifically the accumulation of money, as a lavish modern-day counterpart of scalps hanging on a tribal tree. Veblen believed that the accumulation of wealth, well beyond the point of rational wants and needs, was evidence of deep-buried irrationalities. Veblen's second book, The Theory of Business Enterprise, published in 1904, was even more devastating than the first one, declaring that businessmen were needless saboteurs of any reasonable modern economic system. He made a credible case for the abolition of most businesses and of most government bureaucrats. He also made the first serious examination of the possibilities of using technology on all levels to establish within an economic system the conditions of freedom, security, and dignity for society as a whole.

Thorstein Bonde Veblen was born on July 30, 1857 in Manitowoc, Wisconsin. He was the sixth of 12 children born to Thomas and Kari Veblen, Norwegian immigrants who had settled in Minnesota, purchased a farm, and developed the farm with minimal contact with the outside community. Veblen's talent was already apparent in his early age, and his behavior was rather eccentric. His father enrolled him at a local college, Carleton College, hoping he might become a minister. Veblen graduated from Carleton in 1880 and went east to Yale University, where he studied philosophy. In three years he had his doctorate in philosophy, but his reputation as an eccentric inhibited his employment opportunities at universities where he applied for work. He ended up back at his parent's residence in Minnesota, where he eventually married. Veblen left Minnesota to live with his wealthy wife in Iowa for a time; he did little but reading until deciding to study economics at Cornell University in 1891.

A year after his study at Cornell, he was hired on to the staff at the University of Chicago. Veblen was a tutor and instructor at Chicago from 1892 to 1906. It was during this time that he published his books, The Theory of the Leisure Class and The Theory of Business Enterprise, which brought him much personal fame as an economic analyst. In his writing, Veblen put his finger on a central process of change that had been strangely overlooked by the investigations of other economists. The process was the emergence of technology and science as the major force of historic change. Veblen saw clearly, and uniquely, that the machine was the primary fact of economic life in the twentieth century.

Two major elements emerged out of Veblen's analysis and criticism: First, the importance of technology as the backbone of all commerce in the twentieth century. Second, that "economic man" can best be understood not by so-called economic laws but by looking at the irrational, untutored, and ritualistic behaviors of human beings while engaged in economic activity.

Veblen's view of businessmen in the twentieth century was like no other economist's. He saw the typical businessman as a predator draped in weird luxuries. Veblen introduced his famous phrase, "conspicuous consumption," to argue that the rich were not happy being rich and comfortable, but rather felt the urge to spend their lives buying wildly expensive and (frequently) bizarre things in order to indirectly brag to others about how wealthy they were. Their "consumption," Veblen contended, was irrationally raised to the level of being "conspicuous" to others: the purchase of 50 automobiles, for instance, or ten homes, and the conspicuous wearing of large items of gold and diamond jewelry.

Veblen was neither a socialist nor a capitalist; he seemed without economic ideology. He instead saw most economic behavior as psychological, often psychopathological. He concluded that businessmen were parasites and therefore unnecessary in a technological world which was capable of making consumer goods. He concluded that a class of engineers could take over the chaos of the business system and distribute to society the wealth created by machines and technology. It was an astonishing world-view for the first decade of the twentieth century, and his thinking along these lines has continued to resonate in economic thought.

Veblen lived to the age of 73. He died in 1929, just before the Great Depression (1929–1939) began. Veblen had a quiet, alienated, and profound vision for economists. He raised crucial questions related to the behavior of the economic man. In running down the robber barons of his era, as well as other businessmen, and in seeing the impact of technology as the major source of economic change in the modern era, Veblen arguably presented to his peers and to the public some of the most revolutionary modern thinking on the subject of business and commerce activities. Though his work was often idolized, his personal life was a lonely one. He lived his last years in an isolated cabin in California.