Thorstein Veblen Theory Of The Leisure Class

Veblen Theory Leisure Class

The ceremonial-industrial dichotomy was also applied to what Veblen called the leisure class. In 1899 Veblen published what proved to be his most widely read book, The Theory of the Leisure Class; it became the favorite of many intellectuals of his time. Here he used his basic dichotomy to discuss conspicuous consump­tion, conspicuous leisure, conspicuous waste, pecuniary emulation, and dress as an expression of the pecuniary culture. Veblen reasoned that in less developed cultures, the predatory powers of a man or tribe were held in high esteem, giving honorific status to their holders. In the modern industrial economy, these predatory powers manifest themselves in employments that result in high incomes for a few members of the society. However, the large incomes are of little value if they cannot be recognized, so our culture supplies a number of mechanisms to permit them to be displayed. Because emulation is a powerful motive, these wealth-displaying activities quickly spread throughout the society. Conspicuous consumption in the articles we buy is a most efficient means of displaying our predatory abilities. Our automobiles, our housing, and especially our clothes give a clear indication of our place in the predatory order. If the male of the household is too busily involved in his predatory activities, his wife is expected to carry the burden of displaying the family wealth. She does this in dress and the display of other articles as well as by carefully avoiding any sort of work—the number of servants employed is a good index of economic capacity. Moreover, because the leisure class is the high-income class, what work is done should be in strictly pecuniary employments; absentee ownership is preferred, but if some actual work must be done, high management, finance, and banking are ceremonially acceptable. Law is a good profession because "the lawyer is exclusively occupied with the details of predatory fraud."7 Our leisure activities, too, reflect this desire for honorific status in the culture, said Veblen. Higher education, which makes a person unfit for honest work, is of great value. The leisure class has also cultivated a great interest in sporting activities and rational­izes this on the grounds that they promote physical well-being and manly qualities. Veblen remarked that "It has been said, not inaptly, that the relation of football to physical culture is much the same as that of the bull-fight to agriculture."

Whereas individuals associated with technological employments, such as inventors and engineers, are bold and resourceful, Veblen contended, American businesspeople exhibit a spirit of quietism, "compromise, caution, collusion, and chicane."9 But the businesspeople reap the benefits of the technological society in unearned income. He remarked that "There is a homely but well-accepted American colloquialism which says that 'The silent hog eats the swill.'" It was Veblen's view that scholarly and scientific training makes an individual unsuited for business and that business experience is incompatible with the pursuit of knowledge.

Moving from the governing boards to academic administration, he called university presidents "captains of erudition." Though they are often former scholars, he said, they become caught up in the pecuniary values of our culture and misdirect the efforts of the university; like their counterparts in business, they become confused between means and ends. Universities compete with each other in a waste of resources comparable to that of their counterparts in business; the president and board become more interested in buildings, grounds, and real estate than in educational programs and policies; resources are wasted on athletics, law and business schools, ceremonies, and pageants that are neither of value to the university nor of service to the society. Veblen did not spare "the professoriate," who think "their salaries are not of the nature of wages," have no collective bargaining rights, and aspire to be "country gentlemen." To control the faculty, the presidents appoint deans and others who have "a ready versatility of convictions and a staunch loyalty to their bread."11 The major program of action that Veblen recommended to return the university to the pursuit of knowledge was the elimination of the president and the board of governors. It is difficult to tell how serious Veblen was about this satirical proposal, but at least he recognized that it would be highly unlikely to take place.

The Stability and Long-Run Tendencies of Capitalism

Veblen applied his distinction between pecuniary and industrial employments to the development of a business cycle theory and to speculation on the tendencies of capitalism in the very long run. During the prosperity phase of the cycle, the pecuniary activities of the businesspeople lead to an expansion of credit, and higher values are placed on the intangible ability of corporations to earn profits. The increased value of capital serves as collateral for additional credit. This process is self-reinforcing for a while, as the quantity of credit and the collateral value of capital goods keep expanding with the increase in the prices of capital goods. But it soon becomes apparent that a wide gap exists between the earning power of capital goods and their values as manifested in security prices, and a period of liquidation and retrenchment begins.

Falling prices, output, and employment, and reduced credit lead to a recapi­talization of firms on a more realistic basis. During the depression phase of the cycle, weaker firms are forced out or acquired by larger, stronger firms, and the concentration of the ownership and control of American industry into fewer hands proceeds. The depression phase of the cycle contains self-correcting forces, because real wages fall and profit margins increase. Finally, the excess credit is wrung out of the economy and the pecuniary value of business as expressed in balance sheets reflects a more reasonable evaluation of industrial Although all of Veblen's writings speculate about the long-run tendencies of the system, he dealt with these issues most explicitly in The Theory of the Leisure Class, The Theory of Business Enterprise, and an essay, "Some Neglected Points in the Theory of Socialism." Veblen was as critical of the Marxian analysis of capitalism as he was of orthodox theory. In one sentence he disposed of the Marxian law of the increasing misery of the proletariat:

The claim that the system of competition has proved itself an engine for making the rich richer and the poor poorer has the fascination of epigram; but if its meaning is that the lot of the average, of the masses of humanity in civilized life, is worse to-day, as measured in the means of livelihood, than it was twenty, or fifty, or a hundred years ago, then it is farcical.
Veblen's speculations about the future are in terms of the conflicts and tensions created by the clash of pecuniary and industrial employments. His analysis in The Theory of the Leisure Class suggests that emulation, adulation, and the making of invidious comparisons in the consumption of goods will lead to an economy devoted to conspicuous consumption, conspicuous waste, and increased advertising and marketing costs. As long as industry is controlled by businesspeople in search of profits, we can expect an increased flow of goods that impede the progress of humanity. However, if the working population and engineers, through their daily association with the matter-of-fact, cause-and-effect relationships engendered by industrial employments, should gain control of the system, the industrial economy might fulfill its promise.
Although Marx was wrong, according to Veblen, in his prediction that capitalism would fall through revolutions brought about because the poor had grown poorer, capitalism might end because the working classes will have a feeling of being relatively poorer as the system grows. Veblen believed that the emulation in consumption patterns generated under capitalism is such a strong force that it may create tensions in the system and discontent on the part of the working classes and lead to the end of private property. No amount of increase in the absolute real income of individuals can relieve these tensions, for individu­als want more than others, not just more:

Human nature being what it is, the struggle of each to possess more than his neighbor is inseparable from the institution of private property. .. . The inference seems to be that... there can be no peace from this—it must be admitted—ignoble form of emulation, or from the discontent that goes with it, this side of the abolition of private property.

The suggestion that capitalism may end because of individuals' concern about their own relative well-being is another example of the paradoxical quality of Veblen's analysis. Here Veblen is suggesting, in contrast to Marx, that capitalism will cease not because of its failure but because of its success.

Veblen refused, however, to commit himself completely and suggested that all of this may not actually come about. The future of capitalism and private property is uncertain. One possibility is that the growing scientific and techno­logical attitudes generated among the working classes and engineers will lead to a replacement of the businessperson, so that control of the economy will pass into the hands of technocrats. If these developments occur, said Veblen, it will mean an end to absentee ownership, financial manipulation, and the search for profits, and industry will be so directed as to produce goods that are serviceable to humankind.

It is also possible that a genuine socialist revolution may take place, ending class discrepancies, dynastic politics, and international animosities. Still another possibility is an economic and political movement to the right as the working class and engineers lend themselves to nationalist ambitions and warlike aims and democracy subsides into a police state. Being deeply rooted in the Darwinian theory of evolution, Veblen would not make the error of Marx and predict the future with certainty. The only inevitability in Veblen's view of the future is change. Whether imbecile institutions will triumph over matter-of-fact technol­ogy remains to be seen:

Which of the two antagonistic factors may prove the stronger in the long run is something of a blind guess; but the calculable future seems to belong to one or the other. It seems possible to say this much, that the full dominion of business enterprise is necessarily a transitory dominion.