#16603 - Thorstein Veblen - International Political Economy

THORSTEIN VEBLEN: CONSUMPTION AND THE LEISURE CLASS

QUESTIONS

What does Veblen mean when he refers to ‘predatory instincts’ and ‘predatory culture’?
What was Veblen’s critique of the ‘business logic’? [2017]

What is the basis of Veblen’s critique of ‘business logic’, and how does this relate to his account of social change?

What is the relevance of Veblen’s account of status-oriented consumption to our understanding of behaviour in the contemporary international political economy?
To what extent does Veblen provide a convincing alternative to neoclassical political economy? [2016]

BACKGROUND

Norwegian-American ‘economist’ Thorstein Veblen was a heterodox observer of modern capitalism. While educated in the late nineteenth-century iteration of neoclassical economics, Veblen was more drawn to the irrationality of what he observed than the optimizing rationality postulated by his predecessors.
In place of the prettified Marginalist depiction of homo economicus (‘a homogenous globule of desire of happiness’), Veblen sought to establish an evolutionary economics concerned with non-teleological processes of cumulative change and causation; that drew from anthropology, sociology, psychology and Darwinian principles. Economic organization is a dynamic process whereby changing material circumstances of life (as a result of technology) lead to changes in ‘habits of thought’, e.g. predation, emulation, curiosity. Each generation experiences the economy anew and constructs their identity accordingly.

‘The economic life history of the individual is a cumulative process of adaptation of means to ends that cumulatively change as the process goes on, both the agent and his environment being at any point the outcome of the last process.’

THE LEISURE CLASS & ‘CONSPICUOUS CONSUMPTION’

Written during a massive industrial boom in America, The Theory of the Leisure Class (1899) presents a critique of ‘conspicuous waste’ borne from excessive and unnecessary indulgence in luxury goods, which frustrated the prime function of an economy: serviceability. That is, ‘the ongoing ability of an economy to produce goods and services required for the health of the evolving community’ [Dowd]

His argument echoes the Calvinist ethics of parsimony, frugality and conservation.

‘With the growth of settled industry, opportunities for industrial aggression and the accumulation of property increase in scope and availability. The possession of wealth, which was at the outset valued simply bas evidence of efficiency, becomes, in popular apprehension, itself intrinsically honorable and confers honor to its possessor... Relative success, tested by an invidious pecuniary comparison with other men, becomes the conventional end of action’.
Members of the leisure class were ‘self-anointed arbiters of taste’ [Watson], whose intentional displays of flamboyance and idleness (i.e. non-engagement in any kind of productive or socially beneficial work) served as signals/emblems of social status founded on their unique ability to break the link between consumption and work. In short, they consumed ‘conspicuously’ for the sole purpose of flaunting discretionary economic power rooted in the economic disempowerment of others.

‘Leisure class activities were a manifestation of the social dysfunctionality of private ownership within what he called ‘the predatory phase of culture’’ [Watson]
Subjectivity is not construed based on some abstract economy, but always in relation to the self-consciousness consumption of specific brands or ‘Veblen goods’ like vintage wines, designer clothes, etc.

Pecuniary emulation – the tendency of lower class individuals to conspicuously consume or imitate leisure class spending habits in order to appear ‘upper class’.

BUSINESS VS. INDUSTRY

Veblen imagined history as a great dialectic between two instincts:

The predatory instinct (or ‘sportsmanship’) characterized by animism, class distinctions and ceremonial observances;
The creative instinct (or ‘workmanship’) characterized by thrift, integrity and an innate desire to pursue species continuity efficiently.

Viewing the contemporary scene, Veblen saw an irrepressible organizational/ideological tension between ‘business’ (embodying sportsmanship) and ‘industry’ (embodying workmanship):

‘Business enterprise and the machine process are the two primary movers in modern culture.’

Business	Businessmen occupy a paradoxical social location. The compulsion to profitability drives them to act selfishly; but as leaders of society, they are required to organize industrial production such that all provisioning needs are met. Machines are deliberately operated at partial capacity according to a logic of enterprise. Firms with monopoly power practice ‘advised idleness’ in order to create market shortages that artificially raises prices and enables profit accumulation, i.e. ‘capitalization of inefficiency’. This restricts the mass production of cheap goods and thus, the possibility of improving living standards throughout society. ‘The requirements of profitable business will not tolerate overproduction. Hence, the rate and volume of output must be adjusted to market needs, not the working capacity of available resources, equipment and manpower, nor to the community’s need of consumable goods’. As prices signal relative scarcity, such competitive manipulations intensified the ‘pecuniary canons of taste’ which fueled leisure class lifestyles (see: LEISURE CLASS). Given that the sanctity/rationality of a price system is predicated on the enduring psychic pressure of scarcity; businesses must become institutions of organized, commercially functional scarcity. Importantly, this form of technological suppression takes place in the full knowledge of those who would benefit most from maximum operating capacity. As such, Veblen identifies two political mechanisms at play: Advertising (i.e. an enterprise in exploit and the ‘misdirection of effort’) A complex of methods used by corporate leaders to thwart economic common sense; to steer the energies, desires and purposes of consumers away from preoccupations with material need and inexpensive items of use, toward goals of invidious distinction, emulation and conspicuous consumption. This ‘organized fabrication of popular convictions [accentuates] the self-regarding antithesis between man and man’, and serves to obscure prospects for liberation from scarcity and the labor its entails. Appropriation of nationalist discourse The social losses resulting from strategies of profit maximization are thus relegated to the periphery of public consciousness, as the self-interested decisions of businessmen are redressed as a patriotic effort to enrich ‘our’ nation at other nations’ expense. Private ownership ‘confers a legal right of sabotage’ (defined as the ‘conscientious withdrawal of efficiency’). This offers a powerful endorsement of Smith’s observation: ‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices’
Industry	Machines are operated at maximum capacity. This generates broad-based societal support because it involves the harnessing of technological change to produce actual wealth and satisfy the provisioning needs/welfare of as many people as possible. The ‘machine process’ served as a conditioning agency, socializing workers into the values/habits of workmanship such that they rejected the pecuniary thinking of dominant business culture. Veblen believed that engineers constituted the revolutionary class in America. As ‘industrial experts [emboldened by] training, insight and interest’, they would discover the structural paradox and totalitarianism of business civilization; uprooting the industrial order based in profitability, in favor of an industrial order based on efficiency and social justice.

Business

Businessmen occupy a paradoxical social location. The compulsion to profitability drives them to act selfishly; but as leaders of society, they are required to organize industrial production such that all provisioning needs are met.

Machines are deliberately operated at partial capacity according to a logic of enterprise. Firms with monopoly power practice ‘advised idleness’ in order to create market shortages that artificially raises prices and enables profit accumulation, i.e. ‘capitalization of inefficiency’. This restricts the mass production of cheap goods and thus, the possibility of improving living standards throughout society.

‘The requirements of profitable business will not tolerate overproduction. Hence, the rate and volume of output must be adjusted to market needs, not the working capacity of available resources, equipment and manpower, nor to the community’s need of consumable goods’.
As prices signal relative scarcity, such competitive manipulations intensified the ‘pecuniary canons of taste’ which fueled leisure class lifestyles (see: LEISURE CLASS). Given that the sanctity/rationality of a price system is predicated on the enduring psychic pressure of scarcity; businesses must become institutions of organized, commercially functional scarcity.

Importantly, this form of technological suppression takes place in the full knowledge of those who would benefit most from maximum operating capacity. As such, Veblen identifies two political mechanisms at play:

Advertising (i.e. an enterprise in exploit and the ‘misdirection of effort’)

A complex of methods used by corporate leaders to thwart economic common sense; to steer the energies, desires and purposes of consumers away from preoccupations with material need and inexpensive items of use, toward goals of invidious distinction, emulation and conspicuous consumption. This ‘organized fabrication of popular convictions [accentuates] the self-regarding antithesis between man and man’, and serves to obscure prospects for liberation from scarcity and the labor its entails.

Appropriation of nationalist discourse

The social losses resulting from strategies of profit maximization are thus relegated to the periphery of public consciousness, as the self-interested decisions of businessmen are redressed as a patriotic effort to enrich ‘our’ nation at other nations’ expense.

Private ownership ‘confers a legal right of sabotage’ (defined as the ‘conscientious withdrawal of efficiency’). This offers a powerful endorsement of Smith’s observation: ‘People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices’

Industry

Machines are operated at maximum capacity. This generates broad-based societal support because it involves the harnessing of technological change to produce actual wealth and satisfy the provisioning needs/welfare of as many people as possible.
The ‘machine process’ served as a conditioning agency, socializing workers into the values/habits of workmanship such that they rejected the pecuniary thinking of dominant business culture.
Veblen believed that engineers constituted the revolutionary class in America. As ‘industrial experts [emboldened by] training, insight and interest’, they would discover the structural paradox and totalitarianism of business civilization; uprooting the industrial order based in profitability, in favor of an industrial order based on efficiency and social justice.

SMITH* VS. VEBLEN

Veblen utilized the benefit of hindsight unavailable to Smith to assert a more fundamental interdependence (co-evolution) between the individual’s economic and moral instincts.

For Smith, the ‘impartial spectator’ could be corrupted by the allure of material possessions and thus encourage self-partiality/vanity by not counteracting the urge towards reckless acquisitiveness, however it always retained its impartial essence unless threatened by the wholesale de-moralization of society; i.e. the systematic appropriation of property relations for the purpose of social differentiation.
From Veblen’s perspective, market institutions had been reconstituted internally specifically to promote such vanity because it is most conducive to business profit. Loss of personal virtue in conspicuous consumption and the reproduction of business...

#16603 - Thorstein Veblen - International Political Economy

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