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    The Preconceptions of Economic Science
    The Preconceptions of Economic Science
    The Preconceptions of Economic Science
    Ebook113 pages1 hour

    The Preconceptions of Economic Science

    By Thorstein Veblen

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    Thorstein Veblen was probably the greatest economist working in early 20th century America. In this treatise, Veblen sets out the preconceptions and uninformed ideas people have when beginning to study the economy, taking each problem and addressing it in turn, hoping to open the readers mind to a better understanding of one of the most difficult and complex problems of the modern world, the economy. We are republishing this work with a brand new short introductory biography of the author.
    LanguageEnglish
    PublisherWhite Press
    Release dateMay 30, 2014
    ISBN9781473396180
    The Preconceptions of Economic Science

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      Book preview

      The Preconceptions of Economic Science - Thorstein Veblen

      THE PRECONCEPTIONS OF ECONOMIC SCIENCE

      The Quarterly Journal of Economics 13 (1899)

      BY

      THORSTEIN VEBLEN

      Copyright © 2013 Read Books Ltd.

      This book is copyright and may not be

      reproduced or copied in any way without

      the express permission of the publisher in writing

      British Library Cataloguing-in-Publication Data

      A catalogue record for this book is available from the British Library

      Contents

      THE PRECONCEPTIONS OF ECONOMIC SCIENCE

      Thorstein Veblen

      I

      II

      III

      Thorstein Veblen

      Thorstein Bunde Veblen was born Torsten Bunde Veblen on 30th July 1857 in Cato, Wisconsin, United States, to Norwegian immigrant parents.

      Veblen grew up on his parents farm in Nerstrand, Minnesota. This area and others like it were known as little Norways due to the religious and cultural traditions that had been imported from the old country. Although Norwegian was his first language, the young Veblen learned English from neighbours and at school.

      His parents put a lot of emphasis on education and hard work and at age seventeen he was sent to study at Carleton College Academy. It was there that he met John Bates Clark (1847–1938) who went on to become a leader in the new field of neoclassical economics. Upon graduating Veblen conducted graduate work under Charles Sanders Pierce (the founder of the pragmatist school in philosophy) at John Hopkins University. He then moved to Yale in 1884 to take a Ph.D. and completed his dissertation on Ethical Grounds of a Doctrine of Retribution.

      Upon leaving Yale he was unable to find a employment. This was partly due to prejudice against Norwegians, and partly because most universities considered him insufficiently educated in Christianity; most academics at the time held divinity degrees. Due to this, Veblen returned to the family farm – ostensibly to recover from malaria – and spent six years there reading voraciously. However, in 1891 he was accepted to study economics as a graduate student at Cornell University. From here on his academic career took off, obtaining his first professional appointment at the University of Chicago – where in 1900 he was promoted to assistant professor – and from there moving on work at institutions including Stanford University and the University of Missouri.

      Veblen drew from the work of 19th century intellectuals such as Charles Darwin and Herbert Spencer to develop a 20th century theory of evolutionary economics. He described economic behaviour as socially determined and saw economic organization as a process of ongoing evolution. In his work The Theory of the Leisure Class (1899) he outlined how rich and poor alike, attempt to impress others and seek to gain advantage through what Veblen coined conspicuous consumption and the ability to engage in conspicuous leisure. In The Theory of Business Enterprise (1904) he used evolutionary analysis to explain the growth of business combinations and trusts.

      In the 21st century his ideas have come back into the spotlight as a valid approach for studying the intricacies of economic systems and his theory that humans do not rationally pursue value and utility is one of the cornerstones of the modern discipline of behavioural economics. Veblen made a lasting contribution to his field and has influenced many scholars that have followed him.

      Thorstein Veblen died in California on 3rd August 1929, less than three months before the crash of the U.S. Stock market crash which led to the great depression.

      The Preconceptions of Economic Science

      I

      In an earlier paper(1*) the view has been expressed that the economics handed down by the great writers of a past generation is substantially a taxonomic science. A view of much the same purport, so far as concerns the point here immediately in question, is presented in an admirably lucid and cogent way by Professor Clark in a recent number of this journal.(2*) There is no wish hereby to burden Professor Clark with a putative sponsorship of any ungraceful or questionable generalisations reached in working outward from this main position, but expression may not be denied the comfort which his unintended authentication of the main position affords. It is true, Professor Clark does not speak of taxonomy, but employs the term statics which is this connection, through its use by Professor Clark and by other writers eminent in the science, it is fairly to be questioned whether the term can legitimately be used to characterize the received economic theories. The word is borrowed from the jargon of physics, where it is used to designate the theory of bodies at rest or of forces in equilibrium. But there is much in the received economic theories to which the analogy of bodies at rest or of forces in equilibrium will not apply. It is perhaps not too much to say that those articles of economic theory that do not lend themselves to this analogy make up the major portion of the received doctrines. So, for instance, it seems scarcely to the point to speak of the statics of production, exchange, consumption, circulation. There are, no doubt, appreciable elements in the theory of these several processes that may fairly be characterized as statical features of the theory; but the doctrines handed down are after all, in the main, theories of the process discussed under each head, and the theory of a process does not belong in statics. The epithet statical would, for instance, have to be wrenched somewhat ungently to make it apply to Quesnay’s classic Tableau Economique or to the great body of Physiocratic speculations that take their rise from it. The like is true for Books II. and III. of Adam Smith’s Wealth of Nations, as also for considerable portions generation, for much of Marshall’s Principles, and for such a modern discussion as Smart’s Studies in Economics, as well as for the fruitful activity of the Austrians and of the later representatives of the Historical School.

      But to return from this terminological digression. While economic science in the remoter past of its history has been mainly of a taxonomic character, later writers of all schools show something of a divergence from the taxonomic line and an inclination to make the science a genetic account of the economic life process, sometimes even without an ulterior view to the taxonomic value of the results obtained. The divergence from the ancient canons of theoretical formulation is to be taken as an episode of the movement that is going forward in latter-day science generally; and the progressive change which thus affects the ideals and the objective point of the modern sciences seems in its turn to be an expression of that matter-of-fact habit of mind which the prosy but exacting exigencies of life in a modern industrial community breed in men exposed to their unmitigated impact.

      In speaking of this matter-of-fact character of the modern sciences it has been broadly characterized as evolutionary; and the evolutionary method and the evolutionary ideals have been placed in antithesis to the taxonomic methods and ideals of pre-evolutionary days. But the characteristic attitude, aims, and ideals which are so designated here are by no means peculiar to the group of sciences that are professedly occupied with a process of development, taking that term in its most widely accepted meaning. The latter-day inorganic sciences are in this respect like the organic. They occupy themselves with dynamic relations and sequences. The question which they ask is always, What takes place next, and why? Given a situation wrought out out by the forces under inquiry, what follows as the consequence of the situation so wrought out? or what follows upon the accession of further element of force? Even in so non-evolutionary a science as inorganic chemistry the inquiry consistently runs on a process, an active sequence, and the value of the resulting situation as a point of departure for the next step in an interminable cumulative sequence. The last step in the chemist’s experimental inquiry into any substance is, What comes of the substance determined? What will it do? What will it lead to, when it is made the point of departure in further chemical action? There is no ultimate term, and no definite solution except in terms of further action. The theory worked out is always a theory of a genetic succession of phenomena, and the relations determined and elaborated into a body of doctrine are always genetic relations. In modern chemistry no cognisance is taken of the honorific bearing of reactions or molecular formulae. The modern chemist, as contrasted with this ancient congener, knows nothing of the worth, elegance, or cogency of the relations that may subsist between the particles of matter with which he busies himself, for any other than the genetic purpose. The spiritual element and the elements of worth and propensity no longer count. Alchemic symbolism and the hierarchical glamour and virtue that once hedged about the nobler and more potent elements and reagents are almost altogether a departed glory of the science. Even the modest imputation of propensity involved in the construction of a scheme of coercive normality, for the putative

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