Thorstein Veblen Economics Theory Method

Human Nature and Economic Method, Thorstein Veblen Economics

The classical writers, placed people in the role of the rational calculators of pleasures and pains. The "invisible hand" or the so-called natural law kept people on course and in general promoted the greatest good for the greatest number in society. Veblen railed against this belief as superficial non­sense. Humans, in Veblen's view, are significantly more complex creatures led by particular instincts and characterized by instinctive behavior and habits.2 People aren't "lightening fast calculators" of pleasures and pains but rather are curious be­ings who, by nature, hit upon new ways of doing things. In sum, people are creatively curious and are creatures of propensities and habits.

In an anthropological study of human culture, Veblen concluded that certain in­stincts, such as the "instinct of workmanship" (the title of one of his most interest­ing books) applied to all humans in all societies. Veblen found that the material cir­cumstances surrounding humans composed the most significant factor in determining their propensities and preconceptions about the world. We may view the matter in the following sequence. The foundation of a world view, whether of an individual or of society (the accurate reflection of the mass of individuals), rests primarily upon the particular material (and thus technological) circumstances in which humans find themselves. These, in turn, give rise to relations between humans and property, hu­mans and philosophy, humans and religion, humans and the legal-political system, and so on. A world view is thus premised upon the material conditions of any par­ticular age. Institutions—ways of doing things, thinking about things, and distribut­ing the rewards for work, etc.—arise to support a set of material circumstances. Most beings are indelibly stamped with a set of preconceptions unique to their particular time and place, and most particularly, these preconceptions rest upon a given tech­nological system. Veblen's posited interactions between technological institutions, on the one hand, and ceremonial institutions, on the other, constitute the mainsprings of change in his system.

All this should sound somewhat familiar to readers of Marx. Marx's view of human nature and the impact of technology upon culture was in part analogous to Veblen's, but with an essential difference—Marx's view was pre-Darwinian, deterministic and teleological (purposive), leading to an ultimate trans­formation of society into the socialist state. Veblen's theory of cultural and institu­tional change follows the Darwinian theory of biological evolution in which "ends" are not exactly predictable. The application of evolutionary principles to human cul­ture was, in Veblen's view, even more critical since human biological evolution and mental capacity had been essentially fixed for thousands of years, while cultural evo­lution has progressed at a much more rapid pace. The impress of evolution is almost exclusively cultural, in other words. Thus the principal underlying difference between Marx and Veblen is the theory of change each advanced. This is an essential differ­ence between Veblen and practically all other economic writers as well, including the classical writers. In order to get a fuller appreciation of this important concept of economic and cultural change, we must examine the critical differences that Ve­blen drew between the "proper" method of economic study and the one adopted by practically everyone else.