Thorstein Veblen's Theories of Governmental Failure: The Critic of Capitalism and Democracy Neglected Some Useful Insights, Hindsight Shows

Abstract

Abstract. In The Theory of Business Enterprise, Thorstein Veblen introduced a general theory of governmental failure in constitutional democracies based on the common man's delusion that policies benefiting businessmen also benefited him. This general theory runs consistently through Veblen's later works and was developed more fully in The Vested Interests and the Common Man. But other elements of an economic theory of government introduced in The Theory of Business Enterprise were less durable. A briefly sketched economic theory of political parties was never mentioned again in any of Veblen's subsequent writings. A concept of governmental officials pursuing their own self interest did reappear in Veblen's wartime works, but was completely missing in Absentee Ownership. The concept of a Leviathan‐type government which pursued policies detrimental to the interests of both the common man and businessmen was repudiated in The Nature of Peace. The conditions for its existence had been eroded by the influence of modern industrial technology on military operations