The Fruits of Civilization (27-13) Thorstein Veblen

Thorstein Veblen

It is always sound business to take any obtainable net gain, at any cost and at any risk to the rest of the community. ~ Thorstein Veblen

American economist and sociologist Thorstein Veblen (1857–1929) viewed economics from a Darwinian perspective, including how institutions shape economic behavior; but Veblen was emphatic that “economics is not an evolutionary science.”

Veblen pioneered institutional economics: economic behavior as a product of social institutions.

The life of man in society, just like the life of other species, is a struggle for existence, and therefore it is a process of selective adaptation. The evolution of social structure has been a process of natural selection of institutions. ~ Thorstein Veblen

Eschewing the assumptions of neoclassical economics, institutional economics explains the dynamics of capitalism from a somewhat more realistic outlook: that people possess bounded rationality, and that commerce is affected by history and polity via social institutions.

Bounded rationality encapsulates the ideas that the rationality of decisions is limited by cognitive abilities and influenced by emotion, that information is limited, and that decisions are typically made quickly.

In The Theory of the Leisure Class (1899), Veblen observed a fundamental social bifurcation between those who work for a living and those who do not. The leisure class are people who live by means of inheritance or cunning: passive or active exploitation.

The leisure class lives by the industrial community rather than in it. ~ Thorstein Veblen

This distinction is ultimately rooted in the mind-set of economic materialism.

So soon as the possession of property becomes the basis of popular esteem, it becomes also a requisite to self-respect. It becomes indispensable to accumulate, to acquire property, in order to retain one’s good name. The possession of goods becomes a conventional basis of reputability. The possession of wealth becomes itself a meritorious act. Wealth is now itself intrinsically honourable and confers honour on its possessor. ~ Thorstein Veblen

Like a dog marking its spot, conspicuous consumption becomes the means for making an invidious distinction based upon pecuniary position. Veblen noted the refined snobbery of old money vis-à-vis the nouveau riche.

As wealth accumulates, the leisure class develops further in function and structure, and there arises a differentiation within the class. There is a more or less elaborate system of rank and grades. This differentiation is furthered by the inheritance of wealth and the consequent inheritance of gentility. ~ Thorstein Veblen

Veblen found materialism infecting every facet of mental life, from political preference to the conception of divinity.

Wealth is now itself intrinsically honorable and confers honor on its possessor.

Conservatism of the wealthy class is so obvious a feature that it has even come to be recognised as a mark of respectability. Since conservatism is a characteristic of the wealthier and therefore more reputable portion of the community, it has acquired a certain honorific or decorative value.

The canons of pecuniary reputability materially affect our notions of the attributes of divinity, as well as our notions of what are the fit and adequate manner and circumstances of divine communion. It is felt that the divinity must be of a peculiarly serene and leisurely habit of life. ~ Thorstein Veblen