Veblen’s Theory of Business Enterprise and Keynes’s Monetary Theory of Production

Abstract

It has long been recognized that Thorstein Veblen and John Maynard Keynes share a common approach to the nature of “business enterprise” or “monetary production” in the modern capitalist economy (Dillard 1948; Dowd 1964). Keynes’s most explicit treatment was in the early drafts of the General Theory, unfortunately the final version dropped some of the clearest statements. Veblen’s best known exposition was in the Theory of Business Enterprise. This paper will provide a concise summary of Veblen’s views on the “credit economy,” comparing that with Keynes’s “monetary economy.” While there are many similarities, Veblen’s version is in some important respects more complete, and still relevant for developing an understanding of modern business practice. On one hand, this is not surprising as Keynes had let many of the monetary details “fall into the background.” However, as Matthew Wilson (2006) argues, it is surprising that most followers of Keynes have not mined the Theory of Business Enterprise for arguments that nicely complement and extend Keynes’s better known approach. Veblen and the Distinction between the Money Economy and the Credit Economy