Charles Camic

 

On his book Veblen: The Making of an Economist Who Unmade Economics

Cover Interview of June 23, 2021

Lastly

In addition to examining the social origin of Veblen’s ideas, my book analyzes their vital substance.

Here too Veblen departs from conventional wisdom, which portrays Veblen primarily as an iconoclastic satirist of America’s wealthy in The Theory of the Leisure Class. An iconoclast Veblen was, but mainly because he was also a professional economist involved in debates with classical and neoclassical economists over the distribution of wealth among different social classes.

Then, as now, the issue of wealth distribution was an explosive and divisive one on the national stage, where battles raged between Capital and Labor and their spokespersons. Whether Veblen would have written about the leisure class outside of this context is unlikely; for, as he knew, satires of the leisure class were by then commonplace. Veblen did not think he needed to add another one unless it had something more to offer.

And The Theory of the Leisure Class did just that. Here (and elsewhere) Veblen maintained that most academic economists, as well as many journalists and political commentators, thought about economic life in the wrong way. They viewed economies in static terms, presenting economic life as essentially the same in all times and places. Moreover, they viewed economies as made up of separate individuals, all of them acting out of self-interest. Today, we find many economists and pundits who still hold to these notions in updated forms.

But Veblen relentlessly criticized these views. He insisted that economic life is constantly changing, and that economies are structured differently in different places and times. Not only this, but in economic life there are no standalone individuals. Economic activities, such as production and consumption, are always shaped, said Veblen, by the evolving institutions that people are embedded in.

From this critical perspective, Veblen attacked prevailing theories of wealth distribution that posited that people with wealth earned it through their individual contributions to improving the process of economic production. To the contrary averred Veblen—where there is wealth, there is robbery: predatory behavior by powerful parasitic groups that contrive to get “something for nothing” via social institutions, which evolve to adjust to historical change by devising ever-new mechanisms for thievery.

Observing his own society, Veblen saw economic institutions as enabling the accumulation of vast fortunes for the predatory class as its members pursued private profit. But he then pivoted to groups with other motives. Writing, in despair, about the beleagured men and women who served the interests of community at large by devoting themselves to the design and functioning of the “machine process,” Veblen posed the paradox: “Why are large and increasing portions of the community penniless… Why do we … have hard times and unemployment in the midst of excellent resources, high efficiency and plenty of unmet wants?”

More than a century after Veblen penned this question, the paradox remains, giving alarming pertinence to his forceful analysis of the predatory stratagems of modern economic institutions.