Thorstein Veblen

CONTENT
 Introduction and Intellectual Influences
 Theory of Leisure Class _ Conspicuous Leisure and
Consumption
 Veblen Goods
 Pecuniary Emulation and Waste
 Business versus Industry; Pecuniary struggle and
Conservatism
 Differences between Marx and Lenin
 Conclusion
Profile Photo

2
Presented to : Sir Khalil Ahmad

Presented by
Ali Hassan Roll no 12
Abu Huraira Roll no 20
Sania Saif Roll no 22
M. Anwar Roll no 32
Ushna Ehsan Roll no 18
Introduction
 Born (1857) in Wisconsin, USA.
 He Grew up around the Norwegian community and this
allowed him to look critically at American society.
 he got a PHD from Yale university in sociology in
1884.
 he was American economist and social scientist who
sought to apply an evolutionary, dynamic approach to
the study of economic institutions.
 with the theory of leisure class (1899) he won fame in
literary circles and in describing the life of the wealthy,
he coined phrases conspicuous consumption and
pecuniary emulation that are still widely used.
 Veblen’s Intellectual influences
 Veblen was influenced by the four major ways of
thinking
1. The German Historical School
( Individuals don’t really matter, we need to look at
social patterns and structures )
2. Darwin's theory of evolution
( Every theory has a cause , there is no divine reasons
behind the world, there fore there’s no equilibrium)
3. Pragmatism
( people have free will, and use this free will to shape
the society and its culture/ institution)
4. Marxism
( small number of parasitic owners
control everything at the expense of
productive members of society,
technology can cause social change )
Institutional Economics
 Veblen helped to create a way of thinking
which is known as institutional political
economy or institutional Economy.
 Most economists understand the economy as
static, in equilibrium and separate from
politics and society.
 he argued that economy is embedded in our
society, and saw relationship between social/
cultural institutions and the economy.
 if this is true, Veblen suggests its also
impossible to separate economics from the
other social sciences.
 Theory of Leisure class
 Leisure class has pecuniary superiority over other classes
despite they contribute nothing to society
 In particular he was concerned with the “ leisure class “a
group of unproductive consumers whose main objective
is to exert that how much money they had.
 In his book he said that “ In order to gain and to hold the
esteem of men it is not sufficient merely to possess
wealth and power . the wealth or power must be put in
evidence, for esteem is awarded only on evidence “. In
other words , what’s the point of being rich if you can’t
show people that you are
Conspicuous Leisure and Conspicuous consumption
 Leisure class consume excessively to show their status and power.
 As Veblen stated that “In order to stand well in the eyes of the
community, it is necessary to come up to a certain, somewhat
indefinite, conventional standard of wealth.”
 The preindustrial leisure class enjoys conspicuous leisure
Gladiator’s games in Coliseum of Ancient Rome
Building large palaces and tombs. Horse riding
Learning old languages
Conspicuous Consumptions
 The industrial leisure class exercises
conspicuous consumption
 Consumption of luxuries on a lavish
scale in order to enhance one’s
prestige
Having lavish parties
Buying branded items
Jalal & Sons owner spent 200
crore on marriage of his son
DRESS ( as an expression of the pecuniary
culture )
 In his book its (chapter 7) where he discuss the topic of
dress.
 this is a fancy way of saying “ clothes are about
showing off”.
 the original purpose of clothing is to protect us from the
environment .
 clothing is one of the earliest form of conspicuous
consumption that we see around us.
 we use clothing to indicate our status in society, or to
show people how much money we have.
 Veblen's Goods
 Part of Veblen’s lasting impact on the analysis of the economy is in the
concept of “ Veblen goods “.
 in mainstream economics thinking, a rise in price means lower
demands for the good( as fewer people can purchase it )
 by contrast a Veblen good is a commodity which ad the price rises,
the demand for the good increases due to its luxury status.
An example of this is fashionable clothes,
where many retailers find increasing the price,
increases the amount of sales.
 The opposite effect is that when prices fall,
the desirability of the goods fall with it.
Invidious Distinction and Pecuniary Emulation
 Invidious distinction is made between two occupations
where the unproductive and exploitative came to be seen
as “worthy, honourable and noble”
 Pecuniary Emulation: Invidious Distinction led the
middle or lower class to follow the same consuming
behaviour as the leisure class has
 If all individual will engage in useless consumption this
will create lot of waste of money and time.
 Business versus Industry
 Business is all about producing money whereas industry concerns
with producing goods
 The leisure class is the business class. It controls the economy
and politics
 They are exploiters of workmanship of industry. Veblen view
them as waste.
 Veblen says that “business class also hinders the growth of
industrial craft by reducing productivity in order to raise
prices”
 Whereas the industry class is the one that produces good, leads
to technological innovation
Historical Pecuniary Struggle of Leisure Class
 like Marks, Veblen argues human societies have evolved from
primitive social structures with no class distinctions or
ownership.
 the “Leisure class “ begins when human being create ownership
and property for the first time.
 This class accumulated their wealth violently( Feudal land lords
and kings) and demonstrate their (power) and ( prestige) through
non productive activity.
 (Conquerors) gave themselves high status occupations (hunting
and warfare) and the conquered low status occupations
(agriculture and manufacturing)
 in previous societies this made the lower class dependent
on the leisure class for protection.
 Veblen argument : our current society evolved out of this
earlier society, retain many of its traits.
 occupation contributing to society, are not valued, those
contributing nothing are celebrated.
 Pecuniary Struggle and Conservatism
 Pecuniary struggle is the struggle to acquire and exhibit
wealth (private property in order to gain status.
 Owing to this pecuniary struggle, leisure class always stay
conservative
 Veblen suggested that we inherit our institutions from the
past
(social norms, political views, culture)
 The leisure class maintain there dominant position partly by
supporting out dated institutions.
 They do this to maintain their position and legitimacy.
 Veblen then argues that this is why the leisure class have a
tendency to support political conservatism.
Pecuniary Struggle and Conservatism

 The leisure class is conservative, finding no reasons to support

changes, because they enjoy the status quo and are little affected
by economic pressures.
 the example of the leisure class fosters conspicuous consumption,
which diverts resources away from sustenance of the lower
classes.
 Since leisure class discourage change, it hinders evolutionary
progress.
 LUCK
 Veblen devotes chapter 2 of his book
to the cult of luck.
 gambling is a display of consumption
and of conspicuous leisure.
 gambling is a display of true zero
sum game, no value is created, one
sides win, the other sides loses.
 modern finance is basically
gambling, we even refer to betting
on the shares.
Higher Education
 Veblen also critiqued the role of universities in modern life.
 highlights difference between the universities and polytechnical
education.
 at university we learn abstract subjects, whereas polytechnical
colleges teach practical skills.
 Universities are considered hight prestige institution , polytechnical
colleges are not even the skills they teach generate significant
value.
Veblen argued many people study degrees just for the status, and that
ceremonial symbols is universities indicate it a leisure class institution.
 Some differences between Veblen and Marx
 Production vs consumption focus
Marxist theory focused on
production and exchange
 Labour theory of value
Veblen did not accept the labour
theory of value, which is central to
Marxist analysis.
 Revolutionary changes
Marx believed that the time was
ready for revolution, and felt it was
important to encourage workers to
overthrow capitalism
Veblen's theory focuses on
consumption and division of labour
it creates
Veblen understood machines as
becoming more important over
time than people
Veblen was pessimistic about the
prospect for social change, and felt
the lower classes would attempt
copy the higher classes, this
corrupted them.
 Some similarities between Veblen and
 Historical Analysis
Marx
Veblen and Marx both look at the historical development of
capitalism and explain both where it came from and where it will
likely to go.

 Criticism of Exploitation
Both Veblen and Marx believed that an unproductive upper class
is exploiting the masses of workers
 Competition

Veblen and Marx both identify the negative consequences of competition

creating monopoly capitalism and waste .
 So what can we learn from Veblen
 Capitalism isn’t ( always) a rational system, or at least there are
limits to its rationally, neither is it always a productive system.
 The economy doesn't work in a vacuum, it’s the result of an
evolutionary process and of concrete history, society and culture.
 Some people does not contribute in society but still get
rewarded.
 Through conspicuous consumption, entitled class maintains its
power and status, but waste a lot of time and money on useless
things
 Sometime we can expect poorer people try to copy the richer
people and their habits and tastes.
Thank You