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A Theory of Thorstein Veblen

A new biography challenges Veblen’s image as an academic misfit

Veblen: The Making of an Economist Who Unmade Economics by Charles Camic. Harvard University Press, 492 pages.

Unemployed for over six years and living with his in-laws, Thorstein Veblen devoted himself to a ninety-thousand-word translation of The Laxdæla Saga, an Icelandic epic set in the time of the Vikings. Completed in 1890 when Veblen was thirty-three, the translation was not published until 1925, by which time there were Veblenists and Veblen clubs across the country. The initial publishers had wanted Veblen to pay for the printing himself.   

This translated tale of medieval raiding is of course not what Veblen became famous for—and then again, in a sense, it is. The Veblenists had been drawn to his scorching analysis of the capitalist system, laid out in The Theory of the Leisure Class (1899) and The Theory of Business Enterprise (1904). Like his fellow economists, Veblen was excited by the prospect that, after Darwin, the study of human society could be placed on a scientific footing. Unlike most of his colleagues, he did not think the economic system was working. In one way or another, they maintained that an economy metes out its own rewards in proportion to the productivity of those who constitute the economy. For Veblen, it was not the fittest—that is, the most productive—who were surviving and prospering. On the contrary, the winners were a “leisure class” of unproductive parasites devoted to what he called “conspicuous consumption.” In the process, they were damaging rather than serving the interests of society as a whole. This was, to speak in rational terms, inefficient and irrational.

From this perspective, Veblen’s early translation of the Icelandic epic did foretell the visionary economics that would carry him to fame. In the introduction, added thirty-five years later, he wrote that “the Viking age was an enterprise in piracy and slave-trade” and that the Vikings thus anticipated modern “business enterprise,” which is driven “by its quest for profits” and reliant on “getting something for nothing by force and fraud.” Behind the gently waggish satire of terms like “leisure class” and “conspicuous consumption” lies a proposition that is much sterner, and more scientific. In Veblen’s view, modern capitalism, which congratulates itself on its high level of civilization, is in essence a highly organized system of barbaric plunder.

Born in 1857 to a family of Norwegian-speaking immigrants, Veblen was raised on a small, self-sufficient farm in the Upper Midwest. With that background and with his iconoclastic writings, he has often been looked upon as the consummate academic misfit or maverick. The “greed is good” direction in which the discipline of economics went later has seemed to confirm his reputation as a rough-hewn farmboy crying out prophetically in a pro-capitalist wilderness. But like capitalism itself, this reputation has a problem allocating value properly. On the one hand, Veblen didn’t get his productive alienation simply by working in the wheat fields. And on the other, as Charles Camic argues in his fascinating new biography, the first in many decades, this standard picture also fails to give sufficient credit to the world of ideas—and the institutions of higher learning—around Veblen. It was that world, Camic suggests, that instilled in him much of the quiet anti-capitalist anger. Camic puts his point polemically: Veblen was not an outsider, but an insider.

Placing Veblen’s originality into a context that makes it seem less original—that is just the sort of gambit that might be expected from a sociologist of knowledge, which is what Camic is. But the argument is still enlivening and strangely unsettling, at least for those of us who want to believe that knowledge has progressed.

Camic puts his point polemically: Veblen was not an outsider, but an insider.

To begin with, as Camic observes, education was highly valued in the Veblen family. All but one of his eight siblings (he was the sixth) had their way paid by the family through high school. (This was by no means the rule: like so many basic services today, free public high school for all was still a dream at the time.) His sister Emily was the first Norwegian-American woman to receive an American college degree; his older brother Andrew, who helped him along when he hit various academic snags, did postgraduate work in physics. Like Emily and two brothers, Thorstein attended Carleton College in nearby Northfield, Minnesota, whose one big event in those decades was the last stand of the Jesse James gang in 1876. When the bullets were flying, Veblen was apparently “threshing wheat on his parents’ farm, rather than watching the mayhem in town.”

Following the “classical” track at Carleton did not just mean studying Latin and Greek. Veblen acquired anthropological knowledge of a very different culture, which allowed him to take critical distance from his own. (In a sense, he would go on to become an anthropologist of business culture.) He was also lucky to take classes from a young professor named John Bates Clark (1847–1938)—“one of the most important economic theorists America has ever produced,” in Camic’s opinion. Though Clark exposed Veblen to the classical economics descended from Adam Smith and embodied by John Stuart Mill, he added his own “strong objections.” Like the so-called “historical” school of economics, which he had encountered during two years of study in Germany, Clark insisted that economic man was not a mere creature of self-interest, but rather a social being. Morality exerted an objectively measurable influence on economic life, and economics had to be cognizant of it. At that stage of his career, Clark identified as a “Christian socialist.” Veblen himself already had a reputation as an atheist. But in a society that still thought of itself as Christian, it makes sense that a critique of capitalism could be part of the academic mainstream.

After Carleton, Veblen’s next stop was graduate school at Johns Hopkins, where he studied philosophy and political economy. At that time, neither subject had a department of its own; there was as yet no established path to a PhD in either. Hopkins itself had just been founded five years earlier in 1876 with money from the B&O railroad. But the funding seemed to have no bearing on the curriculum. Hopkins was “openly and proudly evolutionary in bent,” and in economics, evolution often seemed to mean the survival of the fittest. Yet it was also possible for graduate students to advocate, without causing an uproar, “nationalizing landownership, taxing all income derived from speculation, [and] distributing wealth equitably across the social classes.” “In the second half of the nineteenth century,” Camic comments, “these subjects were common debate topics among American and European economic writers.”

Veblen’s doctorate in 1884, which he received after transferring to Yale, was one of the first dozen granted in philosophy at any American university. What followed, as noted above, was years of unemployment, some of it caused by ill health. Those years living in the summer home of his wife’s parents (large holders of the Atchison, Topeka, and Santa Fe railroad) allowed him to do a lot of reading. But Veblen had little to show other than the translation from the Icelandic, and no immediate prospects. In 1891, in desperation, he enrolled for a second doctorate at Cornell, where it was rumored that fellowship funds were available. The newest thing in political economy at Cornell was “the marginal utility theory,” which placed consumption (subjective utility to the consumer) at the center of economic value: that is, the value of a commodity did not derive from the labor that went into it, but from what the consumer was willing to pay for it, however crazy that might seem. Veblen disapproved, but he paid attention. When one of his professors, who happened to be extremely hostile to the marginal utility theory, accepted an offer to chair the department of political economy at the brand-new University of Chicago, Veblen was part of the package deal. His academic career was launched. It was during his fourteen years at Chicago that The Theory of the Leisure Class and The Theory of Business Enterprise were written.

The Veblen farmstead in Rice County, Minnesota. | Library of Congress

In all his many writings, Veblen distinguished between the industrial, which is about making useful things and providing useful services, and the pecuniary, which is about trying to get something for nothing. It is the pecuniary, he argued, that has become the dominant mode of the modern American economy and that recalls his predatory Viking ancestors—about whom he clearly thought a lot. But his scorn for pecuniary plunderers was also an inheritance. Where he grew up, the value of honest labor and the denunciation of “idleness, waste, extravagant display, and ill-gotten acquisitions” were drilled into the local children in church and in elementary school, and Camic explains why they would be. The family farm, “which both owns the means of production and provides the labor power to set them in motion,” if not exactly outside the capitalist system, was external enough to generate sharp critique of that system, especially as banks, railroads, and middlemen gradually extended their influence.

Veblen was also helped by the fact that Darwin’s theory of evolution had dazzled the heads of the new research universities, who were aiming their young faculty at a newly prestigious ideal of scientificity. Anything evolutionary could at least get a hearing. Like many a male moralist before him, Veblen wrote about female fashion, using it to illustrate the concept of “conspicuous consumption.” A fashionably “cumbrous” garment, he argued, displays economic success by showing the woman wearing it “is manifestly incapable of doing anything that is of any use.” But his finger pointed at the system, not at women. In the same way, a man’s walking stick was “an advertisement that the bearer’s hands are employed otherwise than in useful effort.” The walking stick was also a barbaric weapon, “comforting to anyone who is gifted with even a moderate share of ferocity.” The sardonic moral passion that allows him to see ferocity as a gift is carefully framed within an inductive, empirically-based interpretation of how the economic system had evolved.

Veblen distinguished between the industrial, which is about making useful things and providing useful services, and the pecuniary, which is about trying to get something for nothing.

The point Veblen was making with conspicuous consumption was not that “everything is subjective.” He turned to anthropology not for its valuing of collective subjectivity as such, but because he was seeking an evolutionary theory, which demanded cultural comparisons in space as well as time. Veblen was not immune from the complacencies that have made evolution seem, today, the worst possible guide to anthropological knowledge. He was not above speaking of “racial” differences, even if he does not tend to admire his fellow descendants of the Vikings. Like Darwin, however, Veblen refused the self-serving belief that evolution guaranteed progress. Hence his references to “savages” largely avoid the usual civilizational self-flattery.

Given his background, it seems mysterious in retrospect that Veblen was not more welcoming to agrarian populism, which came out of the Midwest and espoused many of the same values. His reticence on the subject is revealing. For most of his career, Veblen saw himself above all as a scholar addressing fellow scholars. From that perspective, with which Camic does not quarrel, the economic opinions of the uneducated did not have to be taken seriously. His relative indifference to other progressive movements of his time also rested on another questionable premise: that a major source of popular unrest was the efforts of the poor to emulate the consumption habits of the rich. 

One phrase that might well be associated with Veblen, though he never claimed it, is “A Theory of Militarism.” In The Theory of Business Enterprise, he argued that there were only two ways history might be heading after the catastrophic failure of “business.” The first was war, which he referred to as “barbarism redux.” War seemed a very likely possibility given that “the business men of one nation are pitted against those of another and swing the forces of the state, legislative, diplomatic, and military, against one another in the strategic game of pecuniary advantage.” This was written well before the outbreak of World War I. The other possibility he discusses is socialism, which he chose as a minor field in graduate school. Veblen did not always speak well of the ideology. What he disliked most about existing socialist theory was its dependence on the state, which he saw, consistent with the high value he assigned to making useful things, as “a deep pocket of non-productivity.” Veblen’s own speculative version of socialism was non-statist. In any event, between socialism and war it’s clear which possibility he prefers.

Camic says relatively little about Veblen’s personal life. He is described as “shy, detached, and hard to read in social situations”—but this description comes only on page 348, fifteen pages before the end. When Camic does make a foray into the personal, it sounds like this, on the subject of Veblen’s first marriage: “Due to a rare anatomical abnormality, Ellen was unable to have sexual intercourse, but . . . the two shared a variety of intellectual and social interests.” I can’t be alone in feeling that this sentence is a tad too quick to pivot on “but,” and clutch grimly onto the balance of its second half. It might be better that Camic mainly sticks to the institutions of higher education.

Camic argues that Veblen’s reputation as an adulterer has been greatly exaggerated. Yet there is no doubt that Veblen’s relations with women affected his career. One cause of his departure from the University of Chicago, with which Camic opens his concluding chapter, is an alleged affair which the president of the university (egged on by Ellen) took seriously; Camic, like Veblen, denies it ever happened. Much the same thing occurred at Stanford, where Veblen went after Chicago. Ellen, who had refused his request for a divorce, “besieged” Stanford’s president with accounts of “her husband’s infidelities,” and within three years of his arrival, Veblen had been asked to resign. After he left Stanford, Camic says, his career “went into a tailspin.” His fame was not enough to obtain solid institutional support. He did much unspecialized writing and won for himself a larger and committed readership. But there was considerable precarity at the end as well as the beginning of his career. He died alone in a cabin outside Palo Alto, weeks before the Wall Street Crash of 1929 that catastrophically proved his arguments about the inefficient rule of the pecuniary.  

Veblen would no doubt have some scathing things to say about the economics of higher education today, with its collapsed job market and its wildly ballooning student debt.

It may be my imagination, but Camic seems slightly less comfortable with the other factor behind this professional trajectory: “his vitriolic attack on the control of universities by corporate executives, which was the centerpiece of the chapter he had removed from The Theory of Business Enterprise and was then trying to publish as a stand-alone book.” It seems that the president of the University of Chicago “could not risk alienating donors by subjecting them to criticism by a member of the department of political economy.”

Camic stops his narrative before this stand-alone book appeared in 1918 under the title The Higher Learning in America. As a result, he largely misses Veblen’s denunciation of the way university presidents were putting themselves in voluntary servitude to rich corporate donors—another resonant bit of prophecy. In this sense, like Camic, he idealizes the university. But Veblen’s experience might be considered to refute Camic’s pro-university case. If people like Veblen could not find or keep employment because the universities were indeed already selling out to the “business principles” that ruled elsewhere, then a narrative of the institutions of higher education that does not set them firmly in a larger politico-economic context can’t really satisfy. Veblen would no doubt have some scathing things to say about the economics of higher education today, with its collapsed job market and its wildly ballooning student debt.

Under the circumstances, it takes an effort to retrieve the hopeful message that’s buried in Camic’s story. Veblen could be embraced a century ago by fellow economists because, though controversial, he had only crystallized a sense of capitalism’s barbaric inefficiencies, irrationalities, and inequities that was already circulating around him. If this is true of our supposedly benighted past, then gathering and mobilizing a common-sense majority that wants the end of that barbarism cannot possibly be as impossible as it sometimes seems.