Academic, Economist (1857-1929)
Thorstein Veblen was a Norwegian-American economist and sociologist most famous for his works leading to the creation of the institutional economics school of thought.
Veblen disregarded his contemporaries’ views that the economy was an autonomous, stable and static system. Alternatively, Veblen argued that the economic system is embedded in social institutions and evolves over time. He went on to intertwine economics and sociology to offer his own explanations of consumption and production.
In his book ‘The Theory of the Leisure Class’, Veblen posits the concept of ‘conspicuous consumption’; this being his idea that consumption becomes a function of wealth and social status. Veblen criticised the ‘leisure class’ for buying goods for more than they are worth. The implication is that social status may be bought rather than earned financially, and this can become a widespread problem throughout society.
Veblen also developed further critical thoughts on the capitalist system. He contended that businesses aimed to make profits and, in order to keep profits high, they limited production. Consequently, business negatively influence the rest of the economy because they cause, for instance, higher rates of unemployment.
“Born in iniquity and conceived in sin, the spirit of nationalism has never ceased to bend human institutions to the service of dissension and distress.”
“No one travelling on a business trip would be missed if he failed to arrive.”
– Thorstein Veblen