Veblen's Theory Research Articles

Evolutionary Game Theory and Thorstein Veblen’s Evolutionary Economics: Is EGT Veblenian?

This essay provides an approach to the analysis of the link between Thorstein Veblen's evolutionary approach and evolutionary game theory (EGT). We shed some light on the potential contribution of Veblen's theory of socioeconomic evolution to the discussion on the application of EGT to social environments. We also investigate to what extent elements of EGT can be used to formalize some of the basic evolutionary principles proposed by Veblen. The methodological imperatives laid down by Veblen, defining an evolutionary approach, are presented. We provide an analytical framework that allows the evaluation of EGT in terms of Veblen's evolutionary approach. To better understand the main principles and rationale behind EGT and how it can be applied as a tool for analyzing issues on the diversity, interaction, and evolution of social systems, we discuss this nontraditional approach and its basic concepts. Finally, the main characteristics of EGT are contrasted with Veblen's principles.

The Stem Cell Debate: A Veblenian Perspective

This paper considers both the developing body of technology that surrounds the use of human stem cells and the cultural reaction to this technology. The purpose of this study is to examine and test Thorstein Veblen's theory of technology transference using stem cell research as a case study. This application gives us the following thesis: Stem cell research, having originally been developed in the United States, will become encumbered by institutional constraints in that country. This will lead to the technology being further developed in nations with alternative social frameworks. There can be little question that the debate over stem cell research is rooted in conventional ideas of morality. Despite the debate, most authorities agree that stem cell research offers the potential for significant medical breakthroughs. If the scientific predictions prove to be true, then nations that have developed a technological advantage in stem cell research are likely to receive significant economic benefits. The methods of the research are, in some cases, in conflict with the conventional morality of the American population. This conflict between technological development and morality has resulted-in the United States-in the restriction of funding for stem cell research. If the predictions of the scientific community prove true, the United States, having hindered development in this area, will likely lose out on the economic and medical benefits. This situation appears to fit with Veblen's description of the imbecile institutions that hinder technological and hence instrumental economic and social progress. This paper proposes to use the stem cell debate to analyze Veblen's theories of institutional change and technology transference in three sections. The first section reviews Veblen's theory of technology transference, in particular Veblen's explanation of technological development, the cost disadvantages that accrue to nation's that take the technological lead, and the conditions under which borrowing nations gain. The second

Veblen’s Theory of Finance Capitalism and Contemporary Corporate America

One of the myths of U.S. capitalism is that major economic organizations (corporations) exist principally to develop and produce products and services for the benefit and use of consumers and other businesses. This is how they are alleged to earn their keep. When they do a good job they are supposed to be rewarded by sales and repeat sales to loyal customers, who value both the quality of the goods and the services received. If the businesses fail to do this faithfully, they are expected to lose sales and money. Eventually, if they do not improve, they are supposed to go out of business. Thorstein Veblen's theories of business enterprise are especially pertinent in the present day economic context for they illuminate what lies behind the current economic debacle in the United States. Allegations of financial mismanagement, corporate book cooking, and insider trading currently rage in the United States. 'What was originally proclaimed to be one or two rogue corporations, and their executives, enriching themselves and their friends and minions now has become a flood of reported ill-gotten gains and financial irregularities. The fingers of greed and fraud even point to the nation's CEO and his deputy CEO and possibly to other members of his cabinet, many of whom are former corporate executives (Rich 2002; Bush Defends 2002; Mike Allen, Bush Urges 'New Ethic' for Execs, Arlington Star-Telegram, July 10, 2002, and

Thorstein Veblen’s Theory of Business Competition

Although almost all dimensions of Thorstein Veblen's analysis of modern capitalism have attracted adequate attention, his theory of business or market competition that lies in heart of his understanding of modern capitalism has not received interest it deserves. Even though there are attempts here and there, they do not provide us with a full picture of his conceptualization of business competition. This paper aims to elaborate on Veblen's theory of business or market competition. It is argued that he, in fact, developed a very sophisticated theory of dynamic business competition based on idea that economy is more than market and as such it should be studied dynamically, holistically, and historically by primarily considering empirical phenomena instead of solely by focusing on a priori deductive mental exercises. The first section of paper elaborates on foundations of Veblen's vision of capitalist market economy. In second section, his notion of the state of industrial arts, which is starting point in dissecting his two visions of competition, is explored. While third and fourth sections elucidate his distinction between two ideas of competition, fifth section illustrates working logic of competition in contemporary capitalism. His theory of competition is assessed in final section by comparing it with other theories of competition to show innovations he introduced. The overall conclusion is that he developed a very sophisticated theory of competition essential for analyzing contemporary capitalism.

The evolution of preferences and competition: a rationalization of Veblen's theory of invidious comparisons

Abstract. We examine how preferences evolve by natural selection in a competitive environment similar to that characterizing much of our evolutionary past. We find that the evolutionarily stable preferences in this context exhibit a concern not only for absolute payoffs but also for relative payoffs, and that this intensifies the degree of competition relative to what obtains when players consider only absolute payoffs. We argue that this has consequences for the equilibrium population size. We argue that the premise of this analysis is consistent with the available anthropological evidence, and that the prediction is broadly consistent with the findings of experimental game theory. JEL Classification: C70Evolution des préférences et concurrence: une rationalisation de la théorie des comparaisons désobligeantes de Veblen. Les auteurs examinent comment les préférences évoluent par sélection naturelle dans un environnement concurrentiel qui ressemble à celui qui a caractérisé notre passéévolutionnaire, c’est‐à‐dire, un environnement de chasseurs et de cueilleurs. On découvre que les préférences évolutionnairement stables dans ce contexte révèlent un intérêt non seulement pour les résultats en termes absolus mais aussi pour les résultats en termes relatifs, et que cela intensifie le degré de concurrence par rapport à ce qui se passerait si les joueurs prenaient en compte seulement les résultats en termes absolus. En travaillant contre l’espèce si l’on peut dire, la sélection naturelle des préférences réduit les niveaux d’équilibre des populations en deçà de ce qui aurait prévalu si les préférences n’avaient pas évolué. Le postulat de base sur lequel cette analyse se fonde est compatible avec les résultats des travaux anthropologiques et les prédictions sont compatibles avec les résultats des travaux en théorie des jeux expérimentale.

Thorstein Veblen's theory of institutional change: beyond technological determinism

The article presents a reappraisal of Veblen's theory of institutional change challenging the thesis of technological determinism, supported by some commentators of Veblen. According to this latter interpretation, Veblen would consider institutional change as stemming from an exogenous transformation of the material and technical environment. But such a thesis disregards the significance of cultural determinism in Veblen's system. Taking this into account leads to argue that Veblen analyses institutional change as an emergent effect of the dynamics of interactions between instincts, institutions and the infrastructural conditions. Finally, Veblen's theory of institutional change proves consistent with his research programme, aiming at producing a cumulative and on-teleological theory of institutional evolution, a theory in which behavioural determinants of human beings would be the main explicative variables.

The Veblenian Credit Economy and the Corporatization of American Meatpacking

Since the 1970s, American agriculture has experienced both horizontal and vertical integration. Elements of this reorganization are apparent in the rapid growth of large industrialized livestock facilities and in the use of tying contracts to backward integrate processors, wholesalers, and primary producers. William Heffernan (1999) and Mary Hendrickson (2001) have described the recent emergence of conglomerate businesses that integrate all stages of the food system from production inputs to the grocery shelf. This general trend is evident in the meatpacking sector, with substantial consolidation and changes in the methods of producing and processing poultry, beef, and pork. In their quest to expand, many beef meatpackers are controlling input prices for labor and cattle while extending their influence over the retail end of business. In this paper, we argue that Veblen's understanding of industrialization and corporatization can be fruitfully applied to the current reorganization of the meatpacking industry. Through innovation meatpackers have more fully integrated production and increased the earning potential of their physical assets. These changes have created increasingly complex (and valuable) networks of ownership, contracts, and influence, as evidenced by the growing significance of goodwill and other intangibles in their corporate balance sheets. A case study of IBP, the world's largest producer of fresh beef, pork, and related products, reviews the company's history of expansion and acquisition. As suggested by Veblen's theory, the value of its intangible assets increased relative to all other assets as

Status honor and the valuing of cultural and material capital

Status claims are made with statements, behaviors, or symbols that indicate to others one's membership in a particular status group. Having one's status claims accepted by others confers status honor, which is critically important not only for dignity but also for one's life chances. Our main argument is that people's felt need to make status claims increases when their status honor is threatened. We focus on specific non-dominant or relatively-deprived circumstances which entail threats to status honor — minority status, lower income or education, age group, and inconsistency between education and income or education and occupational prestige. We also explore the effects of gender and city size. Data are from the 1993 General Social Survey of American adults. Using theories of Veblen and Bourdieu, we posit that status claims are made using displays of cultural or material capital. We use multinomial logit regression models to predict the likelihood of valuing cultural capital (‘being cultured’), material capital (‘having nice things’), both or neither. Our results support the ‘status threat’ hypothesis. The strongest effect is for minority status. We also find significant effects for age group, education, income, and for education/income and education/prestige status inconsistency.

Veblen, Bourdieu, and Conspicuous Consumption

Written just one hundred years ago, Thorstein Veblen's Theory of the Leisure Class ([1899] 1994) still represents a powerful critique of the neoclassical theory of consumption. In contrast to the individual's static maximization of utility according to exogenous preferences, as posited by the neoclassical approach, Veblen develops an evolutionary framework in which preferences are determined socially in relation to the positions of individuals in the social hierarchy. According to Veblen's theory of conspicuous consumption, individuals emulate the consumption patterns of other individuals situated at higher points in the hierarchy. The social norms that govern such emulation change as the economy and its social fabric evolve over time. Alongside a continuing, though limited, role in mainstream economics (Bagwell and Bernheim 1996; Basmann et al. 1988), the theory of conspicuous consumption has in recent years also been subjected to considerable criticism from outside of this mainstream. Three main issues have been raised. First, it has been argued that Veblen's approach is too restrictive in relying on the trickle down of consumption patterns from the top of the social hierarchy. The pacesetters for consumption may also be those at the bottom of the hierarchy (Fine and Leopold 1993; Lears 1993). It follows from this position that conspicuous consumption lacks generality as a theory of consumption since it applies only to luxury goods. Second, since Veblen's day it has been argued that consumers no longer display their wealth conspicuously. Status is conveyed in more sophisticated and subtle ways (Canterbery 1998; Mason 1998). And third, for those writing in the postmodern tradition, consumer behavior is no longer shaped by positions of s ocial class but by lifestyles that cut across the social hierarchy (Featherstone 1991; McIntyre 1992). In this paper we show that to some extent these arguments misrepresent Veblen's original conception of conspicuous consumption and take it out of context in relation to his overall framework. In addition, in order to develop a contemporary response to these arguments we examine the possible contribution that can be made using the work of Pierre Bourdieu, the sociologist and anthropologist who has been described as France's leading living social theorist (Shusterman 1999, 1).

Sociology of “Nobility”

The purpose of this essay is to demonstrate the principle characteristics of the “nobility” theories of Bourdieu and Veblen through comparison with signal theory. Analysis shows that Veblen's theory shares the same premises and conclusions with Grafen' s signal (-handicap) theory. On the other hand, the basic concepts of Bourdieu' s theory, such as strategy or capital, only share the same premises with signal theory, but not conclusions. This means that there is incongruity in his basic concepts. We can find a solution for this problem by focusing on other premises hidden in his theory, which do not go along with his basic concepts. The first is the introduction of different basic needs, and the second is the introduction of economic determinism of action. The former means effectively the renunciation of the social-structural determinism of value and thus follows the Veblenian theory, whereas the latter means the abandonment of the strategy concept. In the process of analysis, it is also found that Bourdieu' s theory of “nobility” is economic-reductionist in a broad sense, and that Veblen's concept of “emulation” does not always imply a subject's direct intention. The latter counters Bourdieu and Elster's criticisms against Veblen.

Veblen's economic theory: A radical analysis

Veblen is a systematic economic theorist whose economic views run in parallel with those of his contemporaries. Also, his economic analysis is important for Marx's system. Veblen's economic theory as analyzed here consists of four basic components: reserve capacity, markup pricing, productivity, and aggregate demand; these elements constitute a coherent structure of economic analysis containing both microeconomics and macroeconomics used not only to analyze capitalism but to replace it. It is also argued that Veblen's economic theory is radical, because it utilizes social conflict as the driving force for social evolution.

Veblen's Economic Theory: A Radical Analysis

Veblen is a systematic economic theorist whose economic views run in parallel with those of his contemporaries. Also, his economic analysis is important for Marx's system. Veblen's economic theory as analyzed here consists of four basic components: reserve capacity, markup pricing, productivity, and aggregate demand; these elements constitute a coherent structure of economic analysis containing both microeconomics and macroeconomics used not only to analyze capitalism but to replace it. It is also argued that Veblen's economic theory is radical, because it utilizes social conflict as the driving force for social evolution.

Bounded Rationality, Institutionalism and the Diversity of Economic Institutions

In many respects Veblen's theory and New Institutional Economics lie at different poles. While the Veblenian theory can be considered as an early strong version of the theory of bounded rationality, New Institutional Economics mild version of bounded rationality extends economising behaviour to bounded rationality itself. Moreover, while New Institutional Analysis emphasises efficiency explanations based on the assumption of given preferences, the Veblenian explanation considers the role of inefficient path-dependent behaviour due to the endogenous formation and resilience to change of the preferences of individuals. However the two approaches share an undesirable feature: the idea of a unilinear unfolding of history does not allow an adequate understanding of the diversity of paths taken by different societies. In this respect the comparative analysis of institutions must go beyond both the New Institutional and the Veblenian approaches.

Chipping Away at the Status Quo: Dreiser, Veblen, and Cultural Criticism*

Most college professors of economics and sociology infrequently make pedagogical use of the social analysis of Thorstein Veblen. Those of us who do, struggle to motivate our students to read and reflect seriously on his theories and their relevance to modern social life. Not surprisingly, efforts to make Veblen's writings palatable are frequently met with some thing less than enthusiasm on the part of students. His writing style, admit tedly tedious and oftentimes verbose, deters even the best intentioned reader. Several years ago, in an attempt to thwart some of the most tenacious student resistance, I began using selected works of fiction in my classes in an effort to explicate some of Veblen's social analyses and illustrate his central theoretical constructs. Although this approach has been moderately effective as a technique to "teach" Veblenian analysis, it is safe to conclude that Veblen's theories go largely unappreciated by most students of the humanities and the social sciences. Consequently you can imagine my plea sure to learn that Dr. Clare Eby, a professor of American literature at the University of Connecticut, had experienced a similar problem and had sought a similar solution. There was, however, one interesting difference. Where I was attempting to use fiction to illustrate and provide a human context for Veblen's social theory, Professor Eby was using Veblen's social theory to establish the theoretical context for the fiction she was using. So

Veblen and Keynes

Most economists trained in the history of economic analysis are aware of the fundamental concepts furnished by Thorstein Veblen, concepts such as the leasure class, the absentee ownership, the conspicuous consumption, the vested interests, etc. This paper, however, is not directed to analyze these concepts. Very specifically, the purpose of this study is to outline some of the significant economic contributions made by Veblen and to compare them to the ones made by John M. Keynes, contributions such as the aggregate demand, the determination of output and employment, the determination of price level and inflation, the monetary theory of production, the business cycle, and uncertanity and the future of capitalism. Essentially, Veblen's contributions are congruent to those furnished by Lord Keynes. This is not to argue that Keynes had nothing to say, nor is to claim that Keynes read Veblen. In fact, Keynes never cited Veblen as a reference, although Veblen reviewed one of Lord Keynes's books, as we shall see below; but Keynes, despite some major differences with Veblen, modifies and enriches most of the significant components of Veblen's eco nomic theory. Accordingly, Veblen can be considered one of the main contributors to what has been termed the Keynesian Revolution, a conclu sion indicating a strong association between Keynes's economics and Ve blen's economics.

Fisher and Veblen: Two Paths for American Economics

In the early years of the twentieth century, two outspoken and brilliant American economists, Thorstein Veblen and Irving Fisher, offered sharply-contrasting visions of how the discipline of economics should be transformed. Each taught at a leading university and had added prominence as a journal editor, but pursued economic inquiry in ways alien to senior colleagues at his university and in the profession at large. Despite the gulf separating their approaches to economics, they had been doctoral students of the same mentor, William Graham Sumner of Yale, and had each been deeply influenced by Sumner. This paper uses the exchange on neoclassical capital theory between Veblen and Fisher in the Political Science Quarterly in 1908 and 1909 to illuminate their approaches to economics and to question why the American economics profession came to follow Fisher's path–even though Veblen, unlike Fisher, attracted devoted disciples and was considered in American social thought (excepting academic economists) as the standard-bearer of “the New Economics.” Despite Veblen's antipathy to those aspects of Fisher's work that became dominant in mainstream economics, there was a close affinity between Veblen's Theory of Business Enterprise (1904) and Fisher's debt-deflation theory of depressions, which remained (until very recently) outside the mainstream and has been taken up by such heterodox economists as Hyman Minsky.

The Aesthetics of Thorstein Veblen Revisited

The aesthetics of Thorstein Veblen (1857-1929) have been evaluated by aestheticians and social scientists of various ideological persuasions. Because of Veblen's stature as an American critical theorist and the debate which has ensued over the nature of his aesthetics, further efforts to both clarify and extrapolate from them are self-justificatory. The focus here is on (1) Veblen's view of aesthetic experience, (2) the nature of the non-invidiously beautiful in his aesthetics, (3) his distinction between pure and applied art forms and its importance to the common person and (4) the social basis and artistic consequences of the non-invidious as exemplified in the painting of the American artist Winslow Homer (1836-1910). Problematic areas in Veblen's social theory and aesthetics are addressed and a non-invidious aesthetic of countervailence articulated using Homer's work.

Veblen's evolutionary programme: a promise unfulfilled

This article examines in detail the way in which Veblen attempted to give theoretical expression to the programme for an evolutionary economics that he outlined in methodological terms in his 1898 essay ‘Why is Economics Not an Evolutionary Science?’ Veblen's conception of ‘Darwinian’ methodological principles led him to attempt to develop a theory of institutional evolution that was purely ‘causal’ in nature. This theory was never satisfactorily developed by Veblen. At base, his theory was one of new technology changing economic conditions, and new economic conditions leading to new ways of thinking and to new institutions through a (non-intentional) process of ‘habituation’. Those who attempted to follow Veblen, such as Hoxie and Mitchell, found difficulties with the key aspects of this theory, and both men came to abandon it. Institutionalism in the interwar period is devoid of attempts to develop Veblen's theory, and Veblen's programme remained a promise unfulfilled.

Veblen's Theory of Institutional Change: An Explanation of the Deregulation of Japanese Financial Markets

Abstract In his 1915 essay “The Opportunity of Japan,”Thorstein Veblen theorized that traditionai Japanese institutions would undergo evolutionary change as Japan exploited borrowed industrial technology and became integrated into the global business enterprise system. This article explains the recent liberalization of Japanese financial markets which followed Japan's rise to economic prominence within the context of Veblen's theory of institutional development of the enterprise system. The Japanese process of financial deregulation is reviewed, Veblen's predictions Japan are presented and an explanation provided for the liberalization of Japanese financial markets.

Veblen, leisure and human need

Although Veblen's theory of leisure is widely referenced today it is rarely discussed at length. This paper explores the continuing relevance of the theory. In particular it concentrates on the relation of the theory to consumer culture and the concept of leisure as a basic human need. The evolutionary aspects of Veblen's discussion, which are often neglected in secondary accounts, are given prominence. Veblen's theory is described as a contribution to the productivist tradition in leisure studies. The main features of this tradition and Veblen's place in it are examined. The productivist case is compared and contrasted with Huizinga's theory of play. Veblen's theory emerges as a flawed but vital instrument in exploring contemporary leisure forms.