Thorstein Veblen

Thorstein Veblen (1857-1929) - American economist and sociologist. He is the intellectual father of the American branch of heterodoxy, which commonly is referred to as institutionalism. Views of Veblen had an enormous impact on the development of thought in the United States. They were connected mainly with its origin. Veblen was the son of Norwegian immigrants. He was educated in the agricultural States of Wisconsin and Minnesota.

After obtaining the title of doctor of philosophy, Veblen for a long time could not find a job. It was only at the age of thirty-five years, when he received a special scholarship in Cornell University. At the result of difficulties in finding employment, he moved to study in University of Chicago, where he got a job as a teacher of economics and became editor of "Journal of Political Economy". Veblen have not achieved academic success, because of the openly proclaimed criticism of American capitalism. He argued that the orthodox theory incorrectly assumed that the economy is headed by businessmen favors the interests of society.

Analysis of capitalism

According to Veblen the subject of economics should not be a division of scarce resources between alternative uses, but study of the evolving institutional structure (he treated institutions as complex of conventional habits of thought and behavior). In order to understand the development and functioning of industrial society, it is necessary to understand the relationship between human nature and culture. The most important instincts shaping the economic activity of people were, according to the economist: parental instinct, the instinct of good work, and disinterested curiosity and greed.

Leisure class

In 1899 Veblen published The Theory of the Leisure Class The economist argued that the culture of money contributed to the contemporary conspicuous consumption, idleness and cash competition. While scientists were characterized by ingenuity and audacity, businessmen were imbued with the spirit of quietism. Therefore, according to Veblen, Scientific education made man unfit for business.

Contribution in economic theory

Veblen is by many historians and theorists of economics treated as sociologist. He tried to understand the development of the institutional structure, shaped by habits of thought, directing human activities. His contribution to the science of economics is complementary to the orthodox theory. Veblen stressed that economics should follow an evolutionary approach. At the same time, the economy should be integrated with other social teachings, in order to get rid of the unrealistic assumptions of competitive markets and hedonistic households.

Publications

• Theory of the Leisure Class - 1899,
• The Theory of Business Enterprise - 1904,
• The Place of Science in Modern Civilization - Why is Economics Not an Evolutionary Science - 1919,
• The Engineers and the Price System - 1921.

Thorstein Veblen — recommended articles

John Stuart Mill — John Maynard Keynes — Feminist economics — Vilfredo Pareto — Milton Friedman — Closed economy — Full employment — Jean Baptiste Say — John Richard Hicks

References

• Veblen, T. (2007). The theory of the leisure class. OUP Oxford.
• Thorstein Veblen @ Wikipedia.