Veblenian Concept of Habit and Its Relevance to the Analysis of Captured Transition

Abstract

The paper explores the Veblenian concept of habit and shows how Veblen’s recognition of a significant degree of permanence of informal but economically justified habitual constraints coupled with conditions of institutional instability helps clarify the emergence and persistence of oligarchic influence in captured transition. The paper suggests using Veblen’s understanding of habits as propensities in modelling the path of transforming clannish transition economies to democratic markets since only profound changes in formal institutions will lead to a change in informal behavioral constraints to the desired degree. Two-tier pay-off diffusion — Gintis-Bowles (1998) — cultural transmission model is used to illustrate conclusions.