Veblen’s quadripartite response to the First World War

Abstract

Prior to the First World War, Thorstein Veblen wrote extensively about economic theory, formulating the tenets of an evolutionary and institutional economics, and criticizing the static and atomistic premises of classical and marginalist economics, particularly the marginalist theory of distribution, which, in his view, wrongly saw wealth as a reward for productive human labor, rather than a result of the unproductive conduct of parasitic elites. In this period, Veblen devoted relatively little attention to the topics of war and peace. As well, he held that social-scientific inquiry is disinterested: a value-neutral search for knowledge of empirical facts and the theories that explain them. However, during the War, Veblen, while retaining the economic principles of his prewar writings, increasingly combined his emphasis on economics with greater attention to political and cultural factors. Simultaneously, he abandoned his prior insistence on value neutrality to become an activist critic of the War and of Germany’s role in fomenting and perpetuating it. This shift led him to develop: (1) a policy-laced theory of war and peace; (2) practical proposals for building an international organization to promote world peace; (3) specific measures to alleviate wartime food and labor shortages in the U.S.; and (4) a sweeping plan for postwar social “reconstruction.” As Veblen developed these four sets of ideas, he continued his opposition to static and atomistic forms of analysis as well as his commitment to an evolutionary and institutional approach, which saw economic life, along with war and peace, turning on a divide between productive human beings and unproductive parasitic elites.