Veblen - Productivity of Labor

The Psychological Approach to Labor: Veblen

Not until late in the 19th century did an economist appear who shared Smith's idea as set forth in The Theory of Moral Sentiments. It was an American, Thorstein Veblen, who hit upon the same idea—that of vanity as the motivating force be­hind labor. With this interpretation, Veblen gave new life to the search for the psychological basis of human action, and at the same time undermined the abstract methods of classical and neo­classical economic theory. In defense of the classical position Alfred Marshall and his followers turned from the psychological aspects of economic behavior altogether, contending that their only legitimate interest was in the objective facts of the market place. Such a retreat was unsatisfactory to Veblen and the grow­ing school of institutional economists. The underlying theory of their school was that by research into the economic behavior of people, throughout the ages, valid conclusions might be drawn as to the persistent psychological factors which motivate human behavior. They not only believed it possible to make valid as­sumptions about these psycho-social drives, but also that it was impossible for economics to exist without making these assump­tions. Herein lies the significance of Veblen's work.

By investigations of the behavior of primitive people and mod­erns, Veblen concluded that in the simple life of early man the basic drive was the production of things which were useful to the common good. Men got social approval and satisfaction through, the exercise of their skill. The advancement of civilization brought a division of labor into warlike pursuits and peaceful industrial pursuits. Success in the former gradually made the latter secondary. Prestige and power resulting from personal ex­ploit became wholly desirable. The symbols of success were the trophies of forceful acquisition.

Instinctively conscientious labor, even the most skilled, brought little commendation; only through predatory occupations was social approval secured. The change to a commercial, money-making society changed standards of achievement. The predatory behavior was now transferred to the great industrial undertakings; ordinary labor remained un­dignified; symbols of success were now possession of property, opportunity for leisure, and the ability to consume conspicuously vast quantities of wealth. A characteristic of every age is the spirit of emulation. Those things which bring the respect and approval of one's fellows are sought after with all the energy one can muster. Usually this means imitation of those who are al­ready respected and honored. The positions they hold and the things they do are honorable. The spirit of imitation is not always a pleasant competitive attitude; it becomes in modern society a bitter, envious thing, called by Veblen "invidious comparison." Consequently since wealth and leisure and conspicuous consump­tion are the marks of success in our commercial-industrial civili­zation, the pursuit of these things becomes the dominant motive of human behavior. But what has happened to the instinct of workmanship? Temporarily at least it is buried beneath the acquired characteristics of our time. But it shows itself in the dissatisfaction and restlessness which mark even the most success­ful persons according to the world's present standards.

To the problems raised by this examination of incentives to labor there are as yet no final answers. One thing seems clear. We know very little about the motivating forces which compel men to work. Although the concept of an economic man whose chief aim in life is to acquire the greatest amount of wealth with the least possible effort now seems woefully narrow and inadequate, •we have no other concept which permits an analytical approach to economic activity. Perhaps in the future research of psychol­ogy and institutional economics, new tools of analysis will be devised.