John Kenneth Galbraith, who died in 2006 at the age of 97, oversaw the publication of his last book, The Essential Galbraith, in 2001. As its title suggests, the book is a compendium consisting mainly of chapters from such earlier works as The Affluent Society, The New Industrial State, and Annals of an Abiding Liberal.
Consecutive chapters of this last offering concern fellow practitioners of "the dismal science": "The Founding Faith: Adam Smith's Wealth of Nations," "The Massive Dissent of Karl Marx," and "Who Was Thorstein Veblen?" Perusers of the table of contents may think they discern, in the first two selections, mandatory discussions of famous, if unread, bookends to the library's economics shelf. But who was Thorstein Veblen?
The question, with its suggestion of former renown now lapsed into tip-of-the-tongue obscurity, is perfectly apt. Veblen's Theory of the Leisure Class, his first and best book, was published in 1899, at the height of the period Mark Twain christened "the gilded age." It is perhaps the only social science treatise that also qualifies as a (largely forgotten) masterpiece of American satiric prose.
The conceit of Theory of the Leisure Class is that the habits and customs of the wealthy, like those of other exotic tribesmen, require a scientific accounting. Under the guise of disinterested scholarship, Veblen supplies the analysis. Long paragraphs proceed, by means of an ornate prose style, to blunt and seemingly caustic conclusions, the satiric import of which the author blandly disavows.
The book's literary qualities did not obscure the attack, implicit but fierce, on orthodox economic creeds. That the calculating frugality of buyers and sellers should spin a web of perfect social utility did not, in Veblen's estimation, shed much light on monopolistic business practices, robber barons, the power of the large business firm, the rapid accumulation of large fortunes, the ostentatious display of the accoutrements of wealth--everything, in other words, that needed explaining if the observed world was to be comprehended.
Satire and social analysis merge in the consideration of economic choices made by the well-to-do. The familiar apparatus--supply and demand, competition, substitutes, equilibrium, financial maximization--cannot account for the purchase of, say, country-club memberships costing several times the annual income of a mid-level manager. Veblen's solution to this riddle is straightforward: the exorbitant price, which in the realm of theory should drive demand to zero, is actually the source of the demand.
Utility cannot be conceived simply. Though Hummers and Toyota Land Cruisers may not be the most efficient way of getting to the office, they do assist in the drawing of what Veblen, in a favorite phrase, calls "invidious comparisons." His supremely detached exposition develops this idea until the possessions of wealthy people take on the aspect of pelts dangling from the waist bands of primitives--that is, they are tokens of social prestige, the fit objects of (another favorite phrase) "pecuniary emulation."
Galbraith wrote that, as a graduate student at Berkeley, he and his classmates endlessly discussed the works of Veblen, who at the time was teaching at nearby Stanford. Galbraith eventually would attack the notion, from classical economics, of the sovereign consumer whose every whim is catered to by scrambling sellers. In his view, these "whims" are created, through advertising and other means, by large firms which then satisfy the artificial desires with attractively packaged products. It isn't hard to detect in this the influence of Veblen.
But, as Galbraith acknowledges, the conversation has moved on. In a time that resembles a new gilded age, the man who gave to our language the phrase "conspicuous consumption" has been forgotten. The index in my college economics textbook has several references to such figures as Milton Friedman and Galbraith himself. Veblen is absent.
This eclipse seems a particular shame where I live, in Minnesota, for Veblen is a native son. He was raised in Rice County, at a settlement of Norwegian immigrant farmers near present day Nerstrand, and was an early graduate of Carleton College, in Northfield. He went east for graduate school, first Johns Hopkins and then Yale, where he did not fit in with a student body drawn from the eastern aristocracy. Veblen's biographer Joseph Dorfman has advanced the legend of the young Minnesotan taking it all in, keeping his own counsel, while regarding what was for him a new world of wealth and privilege with bemused contempt.
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