Veblen Analysis Of Capitalism

Veblen's Analysis of Capitalism

Veblen insisted that the subject matter of economics should be something quite different from that of the prevailing economic theory. Orthodox theory in Veblen's time was largely interested in how society allocates its scarce resources among alternative uses. Veblen contended that economics should be a study of the evolving institutional structure, defining institutions as habits of thought that are accepted at any particular time. In this definition of the subject matter of economics, Veblen accorded to some extent with Marx; both were attempting to explain the forces that shape society and the economy. What orthodox economic theory assumed as given, the particular institutions of a culture, Veblen tried to explain. An explanation of the prevailing culture required an evolution­ary approach, he held, for any culture can be understood only by its antecedents:

The growth of culture is a cumulative sequence of habituation, and the way and means of it are the habitual response of human nature to exigencies that vary incontinently, cumulatively, but with something of a consistent sequence in the cumulative variations that so go forward—incontinently, because each new move creates a new situation which induces a further new variation in the habitual manner of response; cumulatively, because each new situation is a variation of what has gone before it and embodies as causal factors all that has been expected by what went before; consistently, because the underlying traits of human nature (propen­sities, aptitudes, and what not) by force of which the response takes place... remain substantially unchanged.

To understand the development and present functioning of the industrial society, we must understand the complex set of interrelationships that exist between traits of human nature and the culture:
Not only is the individual's conduct hedged about and directed by his habitual relations to his fellows in the group, but these relations, being of an institutional character, vary as the institutional scheme varies. The wants and desires, the end and aim, the ways and means, the amplitude and drift of the individual's conduct are functions of an institutional variable that is of a highly complex and wholly unstable character.

As individuals emerge within the culture, they find themselves acting in accordance with established patterns of behavior that are a legacy of past interaction between individuals and culture, and that have taken on an institu­tional character and force. These relatively fixed underlying traits of human behavior Veblen called instincts. He was much influenced by the contemporary development in psychology that emphasized the role of instincts in guiding human behavior. Veblen felt that the most important instincts that shape human economic activities are the parental instinct, workmanship, idle curiosity, and acquisitiveness. The parental instinct is originally a concern for family, tribe, class, nation, and humankind. The instinct of workmanship makes us desire to produce goods of high quality, to be proud of and to admire workmanship, and to be concerned with efficiency and economy in our work. Idle curiosity leads us to ask questions and seek explanations for the world around us. It is an important element in accounting for the development of scientific knowledge. The acquisitive instinct is the opposite of the parental in that it leads the individual to regard his or her own welfare rather than that of others.