Towards the Culturalization of Macroeconomics: A Veblenian Contribution

Abstract

Conventional macroeconomics cannot be the basis for a pragmatic understanding of the behavior of the financial model of capitalism in which we live and for drawing practical economic policies. Its most important problem is the relegation of key monetary and financial institutions, which entrap the analysis into a self-regulated markets illusion. This article argues that Thorstein Veblen’s post-Darwinian cultural and processual analysis of the business enterprise system provides ideas, principles and foundations that can leverage a contribution to an evolutionary recontextualization of macroeconomics. The analysis focuses attention only on the role that the evolution of pecuniary habits of mind and routines have in episodes of unsustainable balance sheets, liquidity crunches and debt-deflation processes and marks out the cultural foundations of financial fragility and instability and of the principle of effective demand.