Thorstein Veblen Conspicuous Consumption

Veblen's Positive Analysis: The Interaction of Ceremony and Technology, Thorstein Veblen Conspicuous Consumption

Veblen featured these methodological concepts and his instinct-habit psychology in the core of a positive theory of economic change. While his analysis may be applied to specific institutions, as we shall see, the overall design of his theory incorporated a grand view of economy wide institutional change. Figure 1 will be helpful in describing Veblen's concept of economic change.

Veblen developed an evolutionary "science" of economics based upon ever-changing institutions. Roughly, he identified two groups of institutions, both shown in Figure 1: "technological" and "ceremonial." The existence and characteristics of these dichotomized sets of institutions rest upon so-called unchangeable charac­teristics of human nature and the anthropological and historical processes these char­acteristics have produced.


What prime factors have been central in shaping these institutions through time? Veblen thought that human instincts were a root of human institutions, and he specif­ically identified what he called the instincts of workmanship and humans' innate "idle curiosity" as the source of dynamic technological institutions. Crucial to this con­ception is the "machine process," or technology, which gives rise to a characteristic set of property rights, social and economic structures, certain habits of thought, and so on. The machine process is the dynamic force in society, whereas the companion set of ceremonial institutions tends to be the relatively static result of a given state of the machine process. Thus the social and economic institutions characteristic of a "long primitive stage" of society are inextricably bound to the nature (and growth) of technology over that period. Feudal social and economic institutions were as es­sentially characteristic of the technology extant over the Middle Ages as contempo­rary "ceremonial" institutions were characteristic of the more advanced production methods of the nineteenth and twentieth centuries.

Two aspects of the institutional process described in Figure 1 must be ex­panded. Specifically, (1) the relations between the two "types" of institutions are not quite as simple as described above, and (2) certain forms of social and economic be­havior, as well as mental "preconceptions" associated with them, were associated with humans throughout their development but were amplified under a given "ma­chine process." In the first place, ceremonial institutions, including property rights, not only were the product of the machine process of any given time but also impinged upon technology, thwarting or encouraging it as the case may be. This interrelation could last only over a "short" period of time (perhaps several hundred years), how­ever, since in the long run a technology based upon the human ability to invent and upon human idle curiosity was dynamic. Stated differently, ceremonial institutions could constrain the machine process, but only temporarily. Technological institutions, in the long run, would shape social and economic relations.

A second point concerns the interrelations between instincts and preconceptions. Certain preconceptions or behavioral characteristics may be common to humans throughout their entire development but may be emphasized by a particular state of technology. Thus, as we shall see, conspicuous consumption and leisure, while very much in evidence over a certain stage in development, rest upon certain general be­havioral characteristics of humans typical to them since the beginning of time. Hu­mans are born with certain instincts and with a set of preconceptions about the way in which the world works. For example, emulation is a behavioral characteristic of humans, and such activity is most in evidence in societies dominated by a pecuniary culture. Likewise, a pecuniary culture is the product of a technology that permits and even fosters the divorce between ownership and management, between proprietary accumulation and the actual productive process, between "business" and enterprise.

How did Veblen view this process at the beginning of the twentieth century? As we shall see below, the process he envisioned generated an indigenous business cycle within capitalist economies, but the institutional framework itself was always the product of past and present interactions of ceremonial and technological institutions. Ceremonial institutions surrounding private property, like economic science itself, were increasingly characterized by a love of money. Advancing technology permit­ted a separation of production from finance. "Making goods" became very different from "making money." In this well-known distinction Veblen noted that, after the industrial revolution, the functions of owner-producers and managers became in­creasingly separated. Businessmen and captains of finance attempted to subvert the progress of technology, reducing output and increasing pecuniary returns through monopoly contrivances. Making money, not goods, became the object of the game. According to Veblen, acquisition of money through subversion and "warlike traits" were characteristic of businessmen. (Veblen's infamous attacks on the role of busi­nessmen in commerce were pitiless.) At the same time workers and engineers—those close to the machine process—were rejecting old technology and developing new (and presumably cheaper) means of production. The outcome of the dynamic process of technological change and the cyclical forces produced by it will be considered later in this chapter. An important aspect of the social process must be considered first— Veblen's famous teachings on conspicuous consumption.