Veblen's Theory Research Articles

Thorstein Veblen: The Last Viking

kind of patron saint. He was a home-grown social theorist whose ironic thrusts at American capitalism seemed to grow more and more relevant in the chaos of depression. Every shade of leftist opinion could find something to admire in Veblen. To a radical individualist like the Dos Passos of U.S.A., Veblen was a spiritual father. To the technocrats, his vision of an aristocracy of engineers provided the basis of a new programme. To orthodox Marxists, his analysis seemed close enough to Marxism to be generally acceptable. Perhaps few of these young radicals read the prolific writings of Veblen with great care; it was not necessary; many of his insights were common currency. Everybody was talking about conspicuous consumption, captains of industry, robber barons and even pecuniary canons of taste. Veblen's odd but striking terminology provided many battle cries for the age. Today, however, reading Veblen is necessarily a different experience. The dust of battle has settled, and Veblen's theories can be regarded for their own sake. David Riesman, hardly a radical, has taken some of Veblen's most original and perceptive ideas and applied them with great success to contemporary society. He has been particularly interested in Veblen's belief that a great transformation has taken place in capitalism: the change in emphasis from production to consumption and the replacement of the captain of industry by the captain of finance. This was a part of Veblen's doctrine that did not greatly interest the 1930's. In his study of Veblen's ideas (Thorstein Veblen, New York: Charles Scribner's Sons, 1953), David Riesman has recognized the unique qualities of Veblen's thought. He has recognized implicitly that Veblen's ideas are substantially different from other theorists of his time to whom superficial similarities might be drawn-men like Ely, Ward, Dewey or Beard. Ries-

Equality of Income Distribution and Consumption Expenditures

rrHE economic evaluation of public policy 1 must be based to a considerable extent upon the way it influences the distribution of income. This is especially true for such matters as labor legislation, agricultural subsidy payments, the tax structure, the tariff structure, and public works programs. Accordingly, a systematic examination of the effects of changing income distribution seems greatly to be desired. One aspect of this problem is considered in the following analysis: the effects of the equality of income distribution upon consumption expenditures. More specifically, our concern is with the effects of income distribution upon (a) the percentage of disposable personal income spent, and (b) the allocation of the expenditures which are made. Review of theories. Thus far two theories have been advanced regarding the effects of equality of income distribution upon consumption expenditures: the comparative propensity to consume theory and the emulation theory. The comparative propensity to consume theory holds that the effect of a change in equality of income distribution may be analyzed by comparing the relative marginal propensities to consume of those incurring the income decrease and of those receiving the corresponding income increase. Thus, a reasonably symmetrical equalizing of income distribution presumably would tend to raise the aggregate consumption function for the economy as a whole, since the nch are believed to have a lower marginal propensity to consume than the poor -and vice versa.' Furthermore, it should cause the allocation of what expenditures are made to change as follows: food to increase. clothing and transportation to decrease, and shelter to remain nearly constantand vice versa.2 Veblen's emulation theory holds that people in any given socio-economic class tend to have as their material standard of living the goods and services actually consumed by the next higher socio-economic class.3 For this reason, it is argued, the spread between the standard and plane4 of living for consumers in the aggregate (hence, the pressure on them to spend) is a function of the income differences between the various socio-economic classes in the economy. From this it follows that a reasonably symmetrical equalizing of income distribution should tend to reduce the income disparity between the various socio-economic classes, thus reducing the spread between their standards and planes of living (reduce the pressure on them to spend), and consequently cause the consumption function for the economy as a whole to fall.5 The opposite reaction logically should occur as incomes become less equally distributed, but only for moderate decreases in income equality. Too great an income disparity between the various socio-economic classes presumably would cause them to lose

John R. Commons and the Welfare State

Among American economists John R. Commons is generally recognized as an exponent of institutional economics. While in some of its features Commons' institutionalism closely resembles Veblen's, it differs in fundamental respects from the theories of Veblen and the program of reform which these theories tended to support. Both Commons and Veblen were critical of the abstractdeductive method of the classical economists and thought an experimental or an evolutionary approach scientifically superior. Both considered political and economic laisser-faire ineffective in promoting general economic welfare and, therefore, favored direct intervention by a central authority and conscious or deliberate forms of economic cooperation. Veblen thought that maximum industrial efficiency and welfare required drastic reorganization of the economic system and his proposals to this end have a strongly Marxian flavor. Commons thought that the same objective could be achieved by widening the sphere of collective action of bargaining groups, such as the trade union and the business corporation, and at the same time expanding the economic powers of the state and federal legislatures. Commons spent his life promoting and drafting legislation on unemployment and accident insurance, on minimum wage and public utility regulation, studying changes in the laws as brought about by judicial decisions, and constructing economic theories to harmonize with these decisions from the standpoint of his conception of their relevance to a capitalism which he considered to be evolving from individualistic competition to collective organization and bargaining.2

THE FREUDIAN PSYCHOLOGY AND VEBLEN'S SOCIAL THEORY. By Louis Schneider. New York: King's Crown Press, 1948. 280 pp. $3.25

Journal Article The Freudian Psychology and Veblen's Social Theory. By Louis Schneider. New York: King's Crown Press, 1948. 280 pp. $3.25 Get access Arthur K. Davis Arthur K. Davis Union College Search for other works by this author on: Oxford Academic Google Scholar Social Forces, Volume 27, Issue 1, October 1948, Pages 94–95, https://doi.org/10.2307/2572470 Published: 01 October 1948

Veblen on the Decline of the Protestant Ethic

T HE sociological significance of Veblen's Theory of the Leisure Class (1899) is analytical rather than factual or descriptive. It focuses attention on the latent functions1 of wealth and consumption in a social system. It is not a comprehensive description of the consumption habits of American society, or even of the leisure classes. Economics has studied wealth in terms of the production and distribution of scarce resources. The orthodox school has assumed that men desire wealth as a proximate end, and that insofar as they behave economically they will rationally seek to maximize their economic resources. Classical economic theory has not needed, for its own purposes, to specify why wealth is desired. This question is a sociological concern, and the answer is defined by the value system of the society. For economics, ultimate ends are simply given data. Veblen, however, made them his primary interest, thus shifting the emphasis from economic to sociological or institutional phenomena. To the sociologist, then, the Theory of the Leisure Class offers some insights as to the non-economic functions of wealth in a social system. The most general contribution is showing the role of consumption as a symbol of social status and as a means of enhancing one's status in our open-class mobile society by competitive and The main shortcoming of the work is the failure to perceive the function of consumption as an expression of the basic cultural values. Veblen concentrates exclusively on the invidious aspects of wealth. He is right, for instance, in pointing to the prestige value of higher learning. But it has this attribute precisely because of the great value our society places upon education per se. It must be said that Veblen was mainly unaware of the theoretical significance of this, his first and best known work. Its appearance established its author's popular reputation as a satirist. Veblen's failure to consider the canons of consumption as expressions of the basic cultural values and sanctioned by them threw the emphasis of his study onto the invidious side of consumption. He intensely disliked certain institutional features of his society, especially that of conspicuous display. This-is shown by his epitomizing it as waste, by his selection of extreme and unusual examples as typical of contemporary standards of expenditure, and by the generally acid tone of his writing. One result of all this is that atmosphere of debunking which has delighted beyond words four decades of left-wing critics of the social order. Ethical attitudes both aid and hinder social scientists in their perception of unnoticed aspects of social phenomena.2 Veblen's antipathy toward display enabled him to dissect the latent competitive functions of expenditure.3 Hence the expose effect of this book. But the same antipathy prevented his perception of other less unfavorable aspects of consumption patterns, such as their role in expressing the group's common values.

The Unity of Veblen's Theoretical System

I. Introductory; neglect of Veblen's general theory, 598.— II. His main criticisms of economics, and the fundamental standpoint implied therein, 600.— III. Psychological postulates of Veblen's theory; the evolutionary idea, 602.— IV. Summary of the theory: the savage era, 605; the barbarian era, 607; the period of handicraft, 611; the age of the machine process, 613.— V. Analysis of the modern economy, 614; its place in the general theory, 617.— VI. Integration of Veblen's ideas, 618; this a system of theory different from the Marshallian, 620.— VII. Criticism of Veblenian psychology, 622; treatment of history, 623; and institutions, 624.— Conclusion; issue of the institutional controversy, 624.