Thorstein Bunde Veblen Institutionalism

Thorstein Bunde Veblen and American Institutionalism

Conditions within the economics profession in late-nineteenth-century America were markedly different from those in Europe. Eclecticism had always been the hallmark of American economists. From Thomas Jefferson and Alexander Hamilton to Henry Carey and Henry George, English and continental ideas were filtered through the uniquely American experience and institutions. Pragmatism permeated both philos­ophy and economics well into the twentieth century. Classical and neoclassical the­oretical analysis consequently never had the hold upon American economists that it did on English economists.' American economists, such as Henry Carey and Fran­cis A. Walker, turned classical theoretical ideas on their heads in order to fit them, they believed, to the situation in the United States. In such a freewheeling intellec­tual environment, the ideas of historicists were able to take root. Richard T. Ely and E. R. A. Seligman, who were (along with the more orthodox Walker) the organiz­ers of the American Economic Association in 1886, were sympathetic to the his­toricist cause (Ely was educated in Germany under the aegis of historicists). In many respects, these writers represented a left wing of the AEA and its professional econ­omists. J. K. Ingram himself, in the preface to Ely's Introduction to Political Econ­omy, suggested a growing acceptance of historicist views, declaring that "A more humane and genial spirit has taken the place of the old dryness and hardness which once repelled so many of the best minds from the study of economics" (Ely, Intro­duction to Political Economy, pp. 5-6). Into this very receptive milieu stepped a for­midable American critic of received economic orthodoxy, Thorstein Veblen. Al­though influenced by myriad philosophical and intellectual forces (including those of the historicists), Veblen's ideas on economics may nevertheless be clearly stamped "Made in U.S.A."

Veblen: The Critic's Life and Preconceptions, Veblen Biography

Thorstein Bunde Veblen was born in Wisconsin of Norwegian ancestry (his first name means "son of Thor") and at the age of eight moved to a large farm in Min­nesota. In 1874 he entered Carleton College, a religious training school, where he quickly demonstrated his brilliance along with a calculatingly critical attitude toward everything (including religion). Veblen also studied at Johns Hopkins University, where he was greatly influenced by J. B. Clark, and at Yale University, where he re­ceived his Ph.D. in philosophy in 1884. Unable to secure an academic position, he returned to his father's farm, where for seven years he was a voracious and eclectic reader of social science literature, including economics. In 1890 Veblen entered Cor­nell University as a graduate student, but he soon joined the faculty of the Univer­sity of Chicago, where he became editor of the Journal of Political Economy.

During his twelve-year tenure at Chicago and afterward (he was dismissed in 1904 for sexual indiscretions with female undergraduates), Veblen became the most vis­ible and highly regarded social and economic critic of his time. In numerous jour­nal contributions and books, including the exceedingly popular Theory of the Leisure Class (1899), he assessed problems in then-existing social institutions and scathingly criticized classical and neoclassical economic analysis. Veblen's prestige as a thinker and academician (he was, by all accounts, an awful teacher) was not sufficient to overcome his flagrant and frequent violations of social mores and his biting attacks on businessmen supporting the university. He was asked to leave.
After leaving Chicago, he took positions at Stanford University, at the University of Missouri, and at the New School for Social Research, never rising above the rank of assistant professor. In 1927 he returned to California, where he died on August 3, 1929, a few months before the great stock market crash (which in a sense he had pre­dicted and probably would have enjoyed a great deal). In the ultimate epitaph, his student Wesley C. Mitchell summed up Veblen's life:

A heretic needs a high heart, though sustained by faith that he is everlastingly right and sure of his reward hereafter. The heretic who views his own ideas as but tomorrow's fashion in thought needs still firmer courage. Such courage Veblen had. All his uneasy life, he faced outer hostility and inner doubt with a quizzical smile. Uncertain what the future had in store, he did the day's work as best he might, getting a philosopher's pleasures from playing with ideas and exercising "his swift wit and his slow irony" upon his fellows. However matters went with him, and often they went ill, he made no intellectual compromises ("Thorstein Veblen," in What Veblen Taught, p. xlix).

While the facts of Veblen's life are relatively simple, Veblen's mind and "pre­conceptions" were not. Throughout his very productive life Veblen was uncannily able to view the real world and the world of ideas (circa turn-of-the- century Amer­ica) from the "outside." He once attributed the intellectual and scientific predomi­nance of European Jews to their lack of contemporary preconceptions and to their initial immersal in a culture stamped "B.C." Like them, and perhaps because of the essentially Nordic cultural background of his youth, Veblen was able to view soci­ety in much the manner of a pathologist approaching an autopsy. He was insatiably curious about what makes social and economic processes "tick" and especially about the mode and method of how societies—as the totality of cultural and technological institutions—change.

The formative forces of Veblen's own preconceptions were numerous. His views on human nature were shaped by behaviorism and, specifically, by theories of in­stincts and habits. His view of human nature, as we shall see, was in strong contrast to the rationalistic and utilitarian conceptions of the classical and neoclassical writ­ers. The Spencer-Darwin view of social and biological evolutionary change had a primary impact upon Veblen's "world view," as did the instrumentalist philosophy of William James. Veblen also much distrusted mathematics and statistics as tools of science, sarcastically labeling those who resorted to such calculations as "animated slide-rules." (The term most frequently heard today is "computer jockeys.")

Veblen's thoughts on particular subjects are often hard to decipher. Scattered and piecemeal statements, often contradictory, are dispersed throughout his many pub­lications. An appreciation of his "system" is not rendered easier by the fact that polemical speculation, personal prejudices, gratuitously normative statements, cyn­icism, and outright jokes pepper his writings. His brilliant control of the English lan­guage has sent more than a few of his readers running to the dictionary. At base, the study of Veblen is akin to a Ferris wheel ride. It matters not where one gets on, for the rider always returns to the same spot. The essentials of Veblen's theory were formed early and remained virtually unchanged throughout his life's work. Indeed, one might say that his later works were merely extensions and elaborations of a cen­tral thesis set forth earlier. We now turn to that thesis, beginning with Veblen's views on human nature and his ideas on the method of economics.