Thorstein Bunde Veblen Consumption

Thorstein Bunde Veblen (1857-1929), Conspicuos Consumption

Thorstein Veblen saw the economic and social transformations during the late 19 century. His main analysis for these transformations was based on the increasing development of institutions. In his analysis, Veblen redefined the relations within the society. In other words, he diagnosed and presented the structure of the capitalist system from a perspective of social theory rather than an economic one. Like Marx, he was also influenced by the Darwinian evolutionary theory. Veblen emphasized that the consequences of the evolution of institutions were the internalization of capital and the change in structure of the capitalist class. Veblen indicated that most capitalists became part of the rentier class during this social and economic transformation period.

For Veblen, production was always a social and cultural issue. Production was a social process in which human beings shared knowledge and skills, passed them on from generation to generation, and cooperated socially in a process of transforming nature to suit human needs. Also, he accepted the class struggle among the workers and capitalists.


Veblen's main concern was to analyze and understand capitalism. Veblen analyzed the development of capitalism in the United States, just like Marx did for England. Interestingly, since he apparently really liked to use and create new terms and show his intellectual ability to his readers, Veblen gave different names to the two social classes and the struggles among them. For instance, in his analysis the terms "absentee owners" and "leisure class" referred to capitalists. Similarly, engineers, workmen, and the common man were all lumped together in the category of "workers." He labeled the capitalist society as a "predatory" society. For Veblen, social classes literally divided up society into factions that were dominated by the capitalists. Unfortunately, this sort of domination led to increased idleness among the capitalist class where the capitalist class became the rulers over workmen and women. For Veblen, only until the "instinct of workmanship" reemerged over "predatory instincts" could the subjugation of women and workers finally end in a capitalist society.

Veblen criticized neoclassical economics for several reasons: (1) it took a non-historical approach, (2) it took a simplistic view of human nature and social institutions (Veblen, "Evolutionary," 1961), (3) neo-classicalism existed to obscure the conflict between owners and workers (Veblen, "Absentee," 1964) and held that harmony was natural and the normal state of affairs (Veblen, "Fisher's," 1964), and (4) neoclassical dogma assumed that all human behavior was based on utility maximization. Veblen criticized capitalism because the separation of the social processes of production into factors of land, labor, and capital and their corresponding distributions of wages, rents, and interest was a phenomenon peculiar to capitalism. He also criticized it because, according to his analysis, a money economy emerged only with the institution of property where capitalists monopolized the ownership of the means of production.

Regarding the issue of private property, Veblen rejected the "natural rights" approach of neoclassical economists and asserted that production was a cooperative, social process, and not an individual one. To have private and individual laws of property determine distribution and production when production was a social process was highly socially antagonistic. To him, private property originated in and was perpetuated by brute force leading to class division.

For Veblen, government was clearly controlled by the pecuniary or business class and existed for the purpose of protecting the status quo or existing order and class structure by enforcing laws of private property and protecting the privileges associated with ownership (Veblen, "Business Enterprise," 1965). In other words, capitalists were viewed by Veblen as being the literal owners of government and representative government simply meant a representation of business interests. The government preserved the existing order, especially the powers and privileges of the capitalist class including their private ownership of means of production. For Veblen, although the American society was free to vote for the party of their choice, capitalists always controlled politics and any of the supposedly corrupt politicians that came along with them.

The competitive requirements of capitalism resulted in predatory and exploitationary tactics where values of prowess supplanted older instincts of workmanship. In fact, the concept of "emulative consumption" or the struggle to possess and outdo your neighbor became an inseparable and undesirable effect of the institution of private property.

According to Veblen, capitalism was merely a regime of absentee ownership where hired labor that included forces of workmanship conflicted with capitalists and their corresponding forces of predatory exploit. As such, business, which was comprised of the pecuniary or leisure capitalist class, dominated industry, which consisted of those of the working, productive, and inferior realm. Furthermore, the pecuniary class continually countered the excessive growth of the ideals of workmanship and subordinated it to business for the purpose of aggrandizing the wealth of the absentee owners.

For Veblen, workmanship was dangerous for absentee ownership because workmanship stressed cooperation rather than competition and also individual equality and independence rather than pervasive relations of subordination. Because of this threat, absentee ownership sought a means to counteract these so-called adverse influences of workmanship. Imperialism, according to Veblen, was one of the ways relied upon to counteract the workmanship instinct and was necessary to gain traffic in foreign parts in the quest of profit. Cognizant of vast fields of profit just waiting to be reaped in other parts of the world, capitalists relied on the government to help cultivate new markets and capture these profits.

According to Veblen, patriotism was merely another tool used by capitalists or absentee owners to counteract the subversive influences of natural workmanship instincts. Patriotism was also used as a national sentiment or a conditioning tactic to get the general populace to believe that everyone's interests were identical to the corporation's interest and to resultantly gain support for the government's aggressive imperialistic policies.

Veblen indicated that free income, privileges, and powers of capitalism derived themselves directly from the laws of property ownership, and the concentration of property ownership became increasingly in the hands of the absentee ownership or wealthy class. Capitalists' power to rule over society depended on their ability to control the emotions, ideas, and ideological dispositions of the majority of workers. Hence, if the majority of workers realized that capitalists contributed nothing to production process and that capitalists were the cause of depressions and other malfunctions of the economy, then they would rise up and free themselves from the system and change it. In other words, if the common man would just become cognizant or aware of this very perverse social relationship (i.e. the fact that the pecuniary class or capitalist class was virtually idle and absent from all production processes), then workers would try to overcome it so that they would no longer be in bondage to the incessant drive for emulative consumption and suffer the illnesses and chronic dissatisfactions and miseries resulting from these unfortunate social divisions. According to Veblen, the ultimate happiness of workers, then, depended on the eventual triumph of the values of workmanship over the predatory values of business. As it were, though, freedom for the common man merely meant being able to buy and sell.