The Concise Encyclopedia of Economics

Thorstein Veblen

Thorstein Veblen was odd man out in late-nineteenth and early-twentieth-century American economics. His position on the fringe started early. Veblen grew up in a Norwegian immigrant farming community in Wisconsin. He spoke only Norwegian at home and did not learn English until his teens. He studied economics under John Bates Clark, a leading neoclassical economist, but rejected his ideas. Later he did his graduate work at Johns Hopkins University under Charles Sanders Peirce, the founder of the pragmatist school in philosophy, and at Yale University under laissez-faire proponent William Graham Sumner. He repudiated their views as well.

Veblen is best known for his book The Theory of the Leisure Class. In it he introduced the term "conspicuous consumption." Conspicuous consumption was consumption undertaken to make a statement to others about one's class or accomplishments. This term, more than any other, is what Veblen is known for.

Veblen did not reject economists' answers to the questions they posed. Rather, he thought their questions were too narrow. Veblen wanted economists to try to understand the social and cultural causes and effects of economic changes. What social and cultural causes were responsible for the shift from hunting and fishing to farming, for example, and what were the social and cultural effects of this shift? Veblen was singularly unsuccessful at getting economists to focus on such questions. His failure may explain the sarcastic tone toward his fellow economists in his writing.

Veblen had to struggle to stay in academia. In the late nineteenth century many universities were affiliated in a substantial way with churches. Veblen's skepticism about religion and his rough manners and unkempt appearance made him unattractive to such universities. As a result, from 1884 to 1891 Veblen lived off his family and his wife's family. His big break came in 1892 when the newly formed University of Chicago hired his mentor, J. Laurence Laughlin. Laughlin took Veblen with him as a teaching assistant. Veblen later became managing editor of the Journal of Political Economy, which was and is edited at the University of Chicago. Veblen spent fourteen years at Chicago and the next three at Stanford. He died in obscurity in 1929.

Selected Works

The Theory of Business Enterprise. 1904.

The Theory of the Leisure Class. 1899.

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