Thorstein Veblen: Economics for an Age of Crises

Thorstein Veblen: Economics for an Age of Crises


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After his death Thorstein Veblen was hailed as ‘America’s Darwin and Marx’ and is normally portrayed as the perennial iconoclast. He severely criticised traditional economics and attempted to create an alternative approach based on a much more complex view of human beings. He is one of the most celebrated economists of our age and has been the inspiration for many books; the predatory version of capitalism we now again experience, the phenomenon of studying cultures of consumption and the darker sides of gilded ages can be traced back to Veblen. A conference in Veblen’s ancestral Norway marked the 150th anniversary of his birth. The aim of the conference was to consolidate Veblen scholarship and evaluate his relevance for the problems of today. This collection offers the results of that endeavour; it is a milestone of Vebleniana which assesses all the most salient aspects of his life and influence. Many of its contributors also push into uncharted territory, examining the man and his work from new and necessary perspectives hitherto ignored by scholarship.

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Product Details

ISBN-13: 9781783083206
Publisher: Anthem Press
Publication date: 10/01/2014
Series: Anthem Other Canon Economics,Economic Ideas that Built America
Edition description: Reprint
Pages: 392
Product dimensions: 5.90(w) x 8.90(h) x 1.10(d)

About the Author

Erik S. Reinert is President of The Other Canon Foundation, Norway, and Professor of Technology and Development Strategies at Tallinn University of Technology, Estonia.

Francesca Lidia Viano is a Graduate Research Associate at the Center for History and Economics at Harvard University.

Read an Excerpt

Thorstein Veblen

Economics for an Age of Crises

By Erik S. Reinert, Franceska Lidia Viano

Wimbledon Publishing Company

Copyright © 2012 Erik S. Reinert and Francesca Lidia Viano
All rights reserved.
ISBN: 978-0-85728-922-3



Erik S. Reinert and Francesca Lidia Viano

Thorstein Bunde Veblen (1857–1929) may no longer feature on the curricula of most economics students, but in terms of editions of his books published and doctoral work dedicated to his work and legacy he remains America's most famous economist. Veblen is the intellectual father of the two most influential economic schools to offer an alternative to today's mainstream economics: evolutionary economics and institutional economics. He vivisected modern capitalism and redrew the very framework of social science, and his renown goes well beyond the Ivory Tower. His name, alongside his signature concepts such as 'conspicuous consumption' and 'vested interests', appears in scholarly studies as well as novels and popular media, from the works of novelist John Dos Passos to Fortune Magazine. Other great economists may be cited in academic articles, but theatrical plays are rarely dedicated to their persons and their names are seldom invoked in comedy films as is Veblen's. His international reach extended far beyond the Atlantic communities: six of Veblen's books have been translated into Japanese, and at least two into Chinese. But who was he?

In a 1924 letter – written on the stationary of the New School for Social Research where he was employed at the time – Veblen describes himself to a certain 'Mr. Pritchard' as 'an average person with few and slight ties of family or country, being born of Norwegian parents in America and educated at various American schools, and having never been hard at work or very busy'. The present volume, the proceedings of an international conference held in Valdres, Norway, to commemorate the 150th anniversary of his birth, can fruitfully be seen as a meditation upon these words. It is obvious from the response that Mr Pritchard had wished to learn who Veblen was, where he came from and what had made him such a penetrating observer of the modern world; he had wished, in short, to get under Veblen's skin. Veblen disappointed his hopes, but we hope that this volume will go some way towards satisfying the curiosity of a Pritchard, shedding light on Veblen's simultaneously evasive and revealing reply.

Veblen's reply to Mr Pritchard gives some indication of the tenor of this volume. While far from average and often (if quietly) overworked, Veblen was indeed born to Norwegian parents and educated at various American universities, and a cipher for deciphering his enigma lies precisely in the interplay of these distinctive elements of his personal history, ever obscured by his penchant for irony and understatement, or even by his playfulness. Tellingly enough, his two stepdaughters gave him the nickname toyse, rendered as toyse, which means 'kidding' or 'playing games' in Norwegian.

Partially because Veblen himself, however indirectly and ambiguously, had suggested the relevance of his personal experiences for his intellectual development, scholars have often given biographical emphases to the study of his ideas. This book shares this emphasis, but is based on a broader conception of Veblen's 'persona', comprehensive of his family background as well as academic experiences and the institutions that shaped both, and aims at opening up new avenues for interpreting the relation between Veblen's person and his ideas. It is divided into four main sections, containing essays on different aspects of Veblen's personal and intellectual story: his cultural origins and personal life; his education and intellectual formation; his politics; and his economics. Some of the contributions focus on Veblen's writings, and others purely on his biography, but our hope is that the sum of this commemoration, like a literary diorama, will end up giving a holistic view of Veblen's intellectual background and development, from the moment his family left Norway to sail to the United States, to Veblen's Cassandra-like premonitions of the Wall Street Crash of 1929.

Part of Veblen's enduring appeal lies in his evocative analysis of the 'modern' condition, which he depicted as characterised by two major sacrifices: the sacrifice of technological concerns to the worlds of speculation, advertising and sabotage of technological change, and that of savings and investments to financial capitalism and a widespread frenzy of conspicuous consumption. Even if posterity has not appreciated Veblen's prophetic vocation with the same enthusiasm it has those of Alexis de Tocqueville and Max Weber, the contemporary resonance of Veblen's ideas has increasingly been recognised, much like the similarities between our era and the 'Gilded Age' that inspired his criticisms. 'History does not repeat itself', Mark Twain is supposed to have said, 'it rhymes'. The precise context and epic crises faced by Veblen are crises of the past; yet their consonance with our present predicaments is food for thought. Though the present endeavour seeks to contextualise Veblen's life and writings to a greater extent than has been done before, it also includes contributions that draw explicitly on his insights and develop them in light of current concerns. After all, as was remarked at the 100th anniversary of his birth, Veblen formulated 'a theory of becoming, not a theory of being', a theory meant to dialogue with future interlocutors. In the same spirit, this collection of essays represents a waypoint, at which one can pause to contemplate the varied terrain that has been covered and chart future courses for scholarship on this remarkable man and his remarkable ideas.

Erik Reinert's preliminary essay, following this introduction, argues for the interdependence of the different sections of the book as seen from a variety of Veblenian contexts: Valdres, the original home of the Veblens; Veblen's work in relation to contemporary Norwegian culture and its idealistic zeitgeist; his type of economics in the setting of a contextual – rather than whiggish – understanding of the history of economic thought; and Veblen in relation to industrial sabotage and financial crises as they recur again today.

Norwegian Origins and Personal Life

The question of Veblen's heritage, and how this influenced his personality and his work, has always played a curious role in Veblen scholarship. It is true that, in the wake of the Great Depression, he was allowed into the hallowed club of dead white prophets of social science, but his role in the canon was never free from ambiguity. From the 1950s onwards, economics and sociology underwent an epistemological revolution favouring specialisation over the interdisciplinarity so characteristic of Veblen's work. At the same time, mathematics became the dominant language of economics and brought the discipline away from Veblen's evolutionary approach. Finally, growing opposition to communism made Veblen's critiques of 'vested interests' and 'absentee ownership' politically suspect. In hindsight, it is indeed striking that the same period which witnessed the nadir of Veblen's fame as an individual, when David Riesman drew on second-hand sources to describe him as 'put off and alienated from his parents' parochial culture but without the ability fully to assimilate and accept the available forms of Americanism', coincided with that in which his ideas, though often divorced from his name, enjoyed the greatest currency. In fact, Veblen's supposedly 'outsider' criticisms of advertising, the hegemony of the leisure class, conspicuous consumption and big business ethics, like his analysis of the relation between management and ownership, gave birth to a central current of quintessentially American criticism, which included such luminaries as David Chandler, Charles Wright Mills and John Kenneth Galbraith, who often developed largely independently of Veblen's name. Galbraith himself hinted at this when, in private correspondence, he admitted that 'while I am a great admirer of Veblen, I am not that much of a scholar of his works'.

This curious divorce between Veblen – the 'misfit' or the assumed crypto-Marxist – and his ideas produced paradoxical results: Veblen's marginality in many ways supplanted his ideas as the primary object of scholarly attention. Curiously enough, Veblen himself was responsible for this development. In a once famous article on the 'Intellectual Pre-eminence of Jews in Modern Europe', Veblen offered an image of himself in the guise of a sceptical Humean and wandering Jew, 'a disturber of the intellectual peace', a 'wanderer in the intellectual no-man's-land, seeking another place to rest, farther along the road, somewhere over the horizon'. This poetic self-portrait, which almost sounds like an epitaph, profoundly influenced the earliest accounts of Veblen's work and life, beginning with Joseph Dorfman's epic 1934 biography. Not only, however, did Dorfman fail to appreciate the idealism of Veblen's self-representation, he did not distinguish carefully enough between Veblen's pride in intellectual marginality and his supposed social alienation. This is why he traced both back to Veblen's solitary youth in a transplanted Norwegian environment – a sort of "Scandinavian ghetto" in Manitowoc County, Wisconsin – where ostensibly not a word of English was spoken. Since then, with a few exceptions (such as C. Wright Mills's attempt to Americanise Veblen by presenting him as 'the best critic of America that America ever produced'), scholarship revelled in Veblen's supposed social dysfunctionality, his lecherousness and his complete contextual alienation until Sylvia Yoneda, Russell Bartley and Rick Tilman inaugurated a new, revisionist trend in Vebleniana in the 1980s. Yoneda and other revisionist scholars have highlighted Veblen's sociability and re-evaluated the importance of the Manitowoc neighbourhood as a multilingual community of immigrants, in which Veblen familiarised himself with English, learned German and assimilated to the American way of life. Most importantly, they have demonstrated that Dorfman greatly exaggerated the Veblens' poverty, instead unveiling an enterprising family of above average means who were willing and able to send their children to a progressive co-educational institution like Carleton College.

Indeed, Veblen's self-assimilation to the Judaic diaspora disclosed aspects of his intellectual and 'spiritual' life, not of his social uneasiness. It is a fact that Veblen presented as a universal prerequisite of intellectual perspicacity the scepticism induced by the wandering along and across 'frontiers', a fruitful but exhausting process that caused the Jew to lose 'his secure place in the scheme of conventions into which he has been born' while 'finding no similarly secure place in that scheme of gentile conventions into which he is thrown'. But intellectual alienation did not correspond, in Veblen's eyes, to spiritual alienation. Like the idealised Jew, who refused both his old and new cultures, yet was homesick and spiritually attached to his ancestry, Veblen saw himself as an intellectual wanderer who, spiritually, remained a Norwegian 'chauvinist', as his former student Isador Lubin once defined him. For 'the heart-strings of affection and consuetude', Veblen noted, 'are tied early, and they are not readily retied in after life'.

The first section of this book traces Veblen's travels across and along American and Norwegian frontiers. It shows the complex process he underwent of intellectual estrangement from, and attachment to, Norwegian and American cultures, and explores his hidden spiritual links with his parents' homeland. There can be no doubt, as many of the contributors to this volume emphasise, that an important key to understanding Veblen lies in a better understanding of his Norwegian-American background, seen not as a vague catch-all category for immigrant alienation and the odd Ibsen reference but as a conflux of specific cultural, institutional and intellectual traditions and conditions which influenced his formation. As Odd S. Lovoll has demonstrated, 'Norwegian-American culture' was uniquely resilient, characterised by 'interaction rather than assimilation with American society'. As the founder of the influential nationwide association of bygdelag – organisations comprised of the descendants of emigrants from rural Norway to North America – Thorstein's elder brother Andrew Veblen was one of many Norwegian-Americans to nurture his multi-ethnic background carefully. That Andrew Veblen became a professor of science and physics at Johns Hopkins University, but retired to own and operate a farm in Minnesota, indicates the ease with which the family conciliated rural and academic life. Although Thorstein was less vocal than his brother Andrew in nurturing his multi-ethnic background, one of the strengths of this volume is to bring his cultural mediation to light without falling back on Dorfman's tired account of estrangement.

In his contribution to this volume, Kåre Lunden, one of Norway's leading economic historians, begins to chart this terrain by providing us with a synthetic account of Norwegian cultural and economic history over the past millennium. Against this background, he places particular emphasis on the unique role played, and status enjoyed, by peasants and freeholders such as Veblen's family in the country's longue durée. Norway, like Switzerland, was one of very few areas of Europe to escape the yoke of feudalism, a salient characteristic which would influence institutional structures and popular culture there for centuries. In a comparative European perspective, Lunden concludes, Norwegian peasant society was characterised by a penchant for insubordination and industriousness, traces of which Lunden detects at the core of Veblen's life and thought.

There are many different ways to explain the origins of Veblen's ideas, and the ambition of this book is to gather and compare a variety of them. Although free from feudal hierarchies, Norway knew other forms of discrimination at the time, particularly from a non-democratic regime vesting disproportionate power in civil servants appointed by the King (embetsmannsveldei). It was because of a strict observance of the rights of primogeniture (odel), as Terje Mikael Hasle Joranger argues, probably united with some form of religious dissent, as Knut Odner suggests in a path-breaking essay, that Veblen's parents were deprived of their land and forced to emigrate to the United States. In this context, Joranger and Odner offer new, more concrete sociological accounts of the neighbourhood community at Hore, in Valdres, where Veblen's parents grew up and from where they emigrated ten years before Thorstein was born.

In Valdres, a silent and scantly habited place, where each farmstead was surrounded by large tracts of green land, Veblen's parents experienced two personal tragedies: they were not only deprived of their land, but lost their first child just before embarking on the voyage to America, and they were being deprived of their land due to a strict observance of the rights of primogeniture (odel). Joranger places their migration from Norway in the wider context of Norwegian–American immigration and reconstructs the networks of friendship and kinship which helped them cross the Atlantic and resettle on the shores of Lake Michigan, first in Sheboygan and then in Manitowoc County in Wisconsin, where Thorstein Veblen was born. Scandinavians, Odner explains in his chapter, had the tendency to socialise among themselves while abroad, and Veblen was no exception. By drawing on new archival evidence, Odner differentiates between Norway's official and dissenting currents of thought, and reconstructs some of the American links through which the latter might have reached Veblen and his family According to Odner, Veblen was not only influenced by Marcus Thrane's socialist movement, but he developed this and other Norwegian traditions of progressive politics within the liberal framework of a Quaker education. The latter hypothesis could help explain a wide range of surprising choices made by the Veblen family, like that of educating women – quite radical in light of paternalist traditions of the time – and of assisting Indians in the Midwest, a group habitually looked down upon by settlers. Although Odner doubts that Veblen endorsed Quakerism as a faith, he further suggests that its ethics might have nurtured his hostility to conspicuous consumption.


Excerpted from Thorstein Veblen by Erik S. Reinert, Franceska Lidia Viano. Copyright © 2012 Erik S. Reinert and Francesca Lidia Viano. Excerpted by permission of Wimbledon Publishing Company.
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Table of Contents

Acknowledgements; List of Contributors; 1. Introduction – Erik S. Reinert and Francesca Lidia Viano; 2. Veblen’s Contexts: Valdres, Norway and Europe; Filiations of Economics; and Economics for an Age of Crises – Erik S. Reinert; PART ONE: NORWEGIAN ORIGINS AND PERSONAL LIFE: 3. Explaining Veblen by his Norwegian Background: A Sketch – Kåre Lunden; 4. Valdres to the Upper Midwest: The Norwegian Background of the Veblen Family and their Migration to the United States – Terje Mikael Hasle Joranger; 5. New Perspectives on Thorstein Veblen, the Norwegian – Knut Odner; 6. The Physical World of Thorstein Veblen: Washington Island and Other Intimate Spaces – Russell H. Bartley and Sylvia Erickson Bartley; PART TWO: AMERICAN EDUCATION: 7. Ithaca Transfer: Veblen and the Historical Profession – Francesca Lidia Viano; 8. Schooling for Heterodoxy: On the Foundations of Thorstein Veblen’s Institutional Economics – Charles Camic; PART THREE: VEBLEN’S POLITICS: 9. Thorstein Veblen and the Politics of Predatory Power – Sidney Plotkin; 10. Veblen, War and Peace – Stephen Edgell; 11. Veblen’s ‘Higher Learning’: The Scientist as Sisyphus in the Iron Cage of a University – Eyüp Özveren; PART FOUR: VEBLEN’S ECONOMICS: 12. Thorstein Veblen: The Father of Evolutionary and Institutional Economics – Geoffrey M. Hodgson; 13. Veblen’s Words Weighed – Paul Burkander; 14. The Great Crash of 2007 Viewed through the Perspective of Veblen’s ‘Theory of Business Enterprise’, Keynes’s Monetary Theory of Production and Minsky’s Financial Instability Hypothesis – L. Randall Wray; 15. Predation from Veblen until Now: Remarks to the Veblen Sesquicentennial Conference – James K. Galbraith; 16. Capitalising Expectations: Veblen on Consumption, Crises and the Utility of Waste – Sophus A. Reinert and Francesca Lidia Viano; 17. Thorstein Veblen: Still Misunderstood, but More Important Now than Ever – Robert H. Frank; Name Index; Subject Index 

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‘An important book for all social scientists. The contributors both situate Veblen historically and bring his work alive for discussion of contemporary issues – and his work is very helpful indeed.’ —Craig Calhoun, Director, London School of Economics and Political Science (LSE)

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