In Our Time - The Theory of the Leisure Class

Episode Date: December 14, 2023

Melvyn Bragg and guests discuss the most influential work of Thorstein Veblen (1857-1929). In 1899, during America’s Gilded Age, Veblen wrote The Theory of the Leisure Class as a reminder that all that glisters is not gold. He picked on traits of the waning landed class of Americans and showed how the new moneyed class was adopting these in ways that led to greater waste throughout society. He called these conspicuous leisure and conspicuous consumption and he developed a critique of a system that favoured profits for owners without regard to social good. The Theory of the Leisure Class was a best seller and funded Veblen for the rest of his life, and his ideas influenced the New Deal of the 1930s. Since then, an item that becomes more desirable as it becomes more expensive is known as a Veblen good. With Matthew Watson Professor of Political Economy at the University of WarwickBill Waller Professor of Economics at Hobart and William Smith Colleges, New YorkAndMary Wrenn Senior Lecturer in Economics at the University of the West of EnglandProducer: Simon TillotsonReading list:Charles Camic, Veblen: The Making of an Economist who Unmade Economics (Harvard University Press, 2021)John P. Diggins, Thorstein Veblen: Theorist of the Leisure Class (Princeton University Press, 1999)John P. Diggins, The Bard of Savagery: Thorstein Veblen and Modern Social Theory (Seabury Press, 1978)John Kenneth Galbraith, The Affluent Society (Penguin, 1999) Robert Heilbroner, The Worldly Philosophers: The Lives, Times and Ideas of the Great Economic Thinkers (Penguin, 2000), particularly the chapter ‘The Savage Society of Thorstein Veblen’Ken McCormick, Veblen in Plain English: A Complete Introduction to Thorstein Veblen’s Economics (Cambria Press, 2006)Sidney Plotkin and Rick Tilman, The Political Ideas of Thorstein Veblen (Yale University Press, 2012)Juliet B. Schor, The Overspent American: Why We Want What We Don't Need (William Morrow & Company, 1999)Juliet B. Schor, Born to Buy: The Commercialized Child and the New Consumer Culture (Simon & Schuster Ltd, 2005)Thorstein Veblen, The Theory of the Leisure Class (first published 1899; Oxford University Press, 2009)Thorstein Veblen, The Theory of Business Enterprise (first published 1904; Legare Street Press, 2022)Thorstein Veblen, The Higher Learning in America (first published 2018; Johns Hopkins University Press, 2015) Thorstein Veblen, Absentee Ownership and Business Enterprise in Recent Times: The Case of America (first published 1923; Routledge, 2017)Thorstein Veblen, Conspicuous Consumption (Penguin, 2005)Thorstein Veblen, The Complete Works (Musaicum Books, 2017)Charles J. Whalen (ed.), Institutional Economics: Perspective and Methods in Pursuit of a Better World (Routledge, 2021)

BBC Sounds, music, radio, podcasts. This is in our time from BBC Radio 4, and this is one of more than a thousand episodes you can find on BBC Sounds and on our website. If you scroll down the page for this edition, you can find a reading list to go with it. I hope you enjoyed the programme. Hello, in 1890, at the height of the American Gilded Age,

Faustine Vablund wrote The Theory of the Leisure Class, a reminder that all that glisters is not gold. Vablund picked up on traits of the waning landed class of Americans and showed how the new moneyed class was adopting these in ways that led to greater waste throughout society. He called these conspicuous leisure and conspicuous consumption and developed a critique of a system that favoured profits for owners without regard to social good. It was a bestseller and funded Vellan for the rest of his life. With me to discuss the theory of the leisure class are Matthew Watson,

Professor of Political Economy at the University of Warwick, Bill Waller, Professor of Economics at Hobart and William Smith Colleges, New York, and Mary Wren, senior lecturer in economics at the University of the West of England. Mary Wend, what was Thorntzine Fable's background? Fablellon was born in 1857 in Cato, Wisconsin. He was the sixth of 12 children, and just a decade before his parents had immigrated over to the United States in a wave of immigration from Norway, the dispossessed farmers of Norway,

into the Midwest. His parents farmed. Eventually, they built up enough money, wealth, to move to Minnesota and to buy a farmstead there. Vellin's family was very focused on education, made sure all 12 of their children, received all of their schooling, and pretty rare for those times. They had a pretty egalitarian view of education, so all the boys and girls were encouraged to go to school. Close to the Veblen Farm, a new college opened, Carlton College, and the Veblen siblings would go through there to study for their undergraduate degrees, and Veblen did as well. While he was at Carleton, by chance, one of his professors was John Bates-Clark, who would go on to become a very famous economist.

And a great influence on Veblen. And had a great influence on Veblen. What was changing in America broadly in the so-called Gilded Age? Why was it gilded? It was gilded because it was a time of wealth inequality that did not originate from inheritance. So it was a period of what we call in the United States, It's the robber barons.

And these robber barons were industrialists whose names we still know today, talking about Carnegie, Rockefeller, Mellon, J.P. Morgan, the Vanderbiltz. Their wealth came from the rampant industrialization as the United States was shifting from an agrarian economy to manufacturing economy. Is it a good time to ask what about the rise of marginalism? where pay was linked to profit, not production. Certainly, certainly. Economics in the United States wasn't a unified discipline by any means at this point, and they were looking for a way to explain wealth inequality.

And over in Europe, the marginalists had developed, and were developing the marginal utility theory. And so economists over in the United States, specifically, Vellin's old teacher, John Bates-Clark, took marginal utility theory and applied it to... What is it? Marginal theory is... It's a way of looking at a firm's production and revenues in incremental bits. And so it is...

Marginal theory is saying, how much output would we increase if we increased labor by one? So if we hired one more worker, how much would production, extra-productive? would we get out of that worker? What benefit did that have? Well, what it did, what John Bates-Clark was able to do was to take marginal productivity theory and apply it to labor, so it justified the wages that people received. And in effect, justified wealth inequality because it said that, according to the theory, that people were paid according to their productivity and according to their contribution.

to production. Thank you very much. Bill Waller, historically, can we go back to the leisure class? Who were the leisure class in Vablin's view? Historically, the leisure class was originally based on a sexual division of labor between men and women. But once we get to the era of agriculture, the division of labor ceased to be more important and was who controlled the surplus. In any agricultural society that produces a surplus, it has to be administered. Whoever administered it often had a great deal of power, and then they eventually justified that historically based on ideology or religion. So you got a group of

people who administered the surplus, had access to the community's wealth on a differential basis, and then had to justify that ideologically. They generally speaking were not producers. They might have been clerks, priests, warlords, and then they would become the leisure class. And and would be separate in terms of being honorifically more important in that culture. The trappings of those offices continued through the agricultural period. Now, of course, in the medieval period, birth determined where you were in the social hierarchy. And so the aristocracy had access to the agricultural surplus, and they used that to develop a social order for themselves that was different

from the common agricultural worker. And that persisted for a very long period of time and was very static. Medieval periods, a thousand years where essentially the social structure in Europe does not change significantly. As Mary pointed out, with industrialization, that makes this system a lot more dynamic, and it changes rather quickly. It's not a stable system. It changes much more rapidly under industrialization because of mass production.

and mass production means that those particular items or activities that the leader class exclusively had access to are now much lower in cost and become accessible to people lower in the income hierarchy of society. Such as what had they access to that they didn't have before? Luxury goods are things that were perceived as luxury goods. For example, buying homes, manufactured clothing, tableware, all these things got much more available and much less expensive after industrialization and mass production comes in. Broadly, Beblin, his approach to economics is said to be evolutionary

in the sense of Darwin evolutionary. Obviously it comes from Darwin, but what did that mean to him as an economist? Well, first of all, that there was no tendency towards equilibrium. There was no particular trend in the economy, that the economy would move by blind drift unless we intervene. in it. The source of the evolutionary change, though, was obviously not biological. It was social. And he identified the changes in social institutions as the source of the evolutionary change. Matthew Watson, others may disagree with. What would you say was motivating Vemblon?

I think we see a very clear and compelling message in everything that he wrote, and that helps us to understand what was motivating that writing. Just because the world looks as it does now, he said, doesn't mean that it always has. to look this way. So there's an instinct underpinning his work about social change and that social change can always be harnessed in an attempt to derive a better world than the one that we live in now. Do you think social change was outside the purlier of ordinary people? Did it happen because of mass movements, a subterraneous movements, almost as it were? Yes and no. Yes, to the extent that without mass movements, then the social institutions

of the economy were unlikely to change in any dramatic way, but no, insofar as the instincts on which those social movements were based, were not necessarily generated from within. It was a back and forth between economic change and social change, redrawing the cultural boundaries of the economy. Was this point of view of his, was it special to him or a few people thinking the same thing at the same time? I think there are, again, elements of both, that his biography becomes important to understanding the specificities of his work.

It was a real shock to him when he left his tight-knit Norwegian community in Minnesota and found out that there was a world out there that didn't operate along the same lines. The Lutheran upbringing, which stayed with him, at least to an extent, all of the way through his life, was not something that he encountered outside of his own community. So he was a stranger in his own land in many ways. And I think that that estrangement from a more general American society helped his argument that things could always be different because he'd experienced firsthand something that was already different.

Is it useful to talk about him as an inside and an outside? If so, inside and outside, what? He certainly had outsiders' experience of American society at that time. Because of being brought up on a farm and in the Midwest, you mean? Yes, and not speaking English until relatively late in his life and not being exposed to the cultural norms of a consumption society that went beyond the consumption of necessities. So there was a definite outsider tendency in his biography,

and I think he also played up to that both in his work and in his career more generally. But he also had some very favourable attributes as well. Indulgence of family, friends, wives, employers, college administrators to allow him to think very much in his own way, unencumbered by other demands on his time. So if you look at the background to his academic career, he does look like a consummate insider in that regard. Mary, can you briefly tell us what the new leisure class, what trouble they've learned about it?

This is a period where industrialists are working very hard and are amassing huge wealth. And not only is there a concentration of wealth, there's a concentration of markets as well. And so we see these robber barons amassing wealth, and they're doing so through, work in the business world, work in manufacturing, in steel, in oil, in finance, with this new leisure class that is essentially having to work very hard, they are having to make connections with one another, they are constantly expanding their empires, so to speak. We see that the leisure class has a very different character than it did previously in the medieval period, like Bill was saying. It's not a leisure class that's based on landed aristocracy or inherited wealth. This is a

leisure class that because these are industrialists, because they are putting in such hours, expanding their empires, because they are working so much, they have to signal their wealth in a different way. And so, for instance, conspicuous leisure takes on a very different form. Can I turn to you for that one, Bill? How do you see conspicuous layer, as I keep calling it? Very nice for the audience to have a real transatlantic cast a mind in this, involved in this discussion. Conspicuous leisure does not mean that they were sitting around doing nothing. They were engaging in activities that weren't particularly productive.

Sports like polo, yachting, engaging in transforming their fashion every few months or every few years. building extremely large homes in multiple locations that they traveled back and forth to, but they weren't employed. Whereas conspicuous consumption is simply the purchase and use of goods, and you can do that when you don't work. So the conspicuous leisure of the next generation of the leisure class is mostly carried on by their wives and children. The wives doing charity work to demonstrate that they don't need to keep a home,

sending your children to university so that they can sit around for four years, study the classics, and not learn anything useful that could possibly be productive. You're demonstrating to the community that they don't need to work. So consumption grows dramatically during this period of time as a social symbol of wealth. And what does conspicuous as you look like if it's conspicuous? Well, parties in the society page, lighting cigars with $100 bills, driving vows, driving very expensive automobiles when no one else has an automobile, taking vacations to Europe for very long periods of time, the children of the wealthy would come and travel around the world

for an entire year. Also, social rituals as well. So you get debutante balls and very elaborate rights of passage that are conspicuous consumption and conspicuous leisure. The importance of conspicuous consumption is in this industrial age. the goods that they use to demonstrate their status are continuously becoming cheaper because of mass production. And this creates a dynamic sense of consumption. Would such as? Well, for example, watches.

You know, a watch would be something that a very wealthy person would have, and over that period of time they become cheaper and cheaper and cheaper. The middle class can now afford them, so they no longer distinguish the middle class from the upper class. Eventually, you get cheap enough watches that working people have them. And so they no longer distinguish, and the very wealthy come up with other things.

Very expensive pens, second homes, all sorts of things that they can consume that are not available to ordinary working people or middle class people in the United States. There's a phrase, Matthew, Matthew Watson called pecuniary emulation. Can you tell the listeners what that means and what it implies? I can certainly try. Vatlin thought that America had reinvented itself as a pecuniary culture in which the value of everything, the value of people, the value of possessions, the value of memories, the value of anything you can think of, was to be judged in purely monetary terms. And the surest route to ascendancy in a social structure of this nature was to show that you could replicate the spending,

patterns of those people who otherwise might be treated as your social superiors, whether by birth or profession or something of that nature. So at its basic level, pecuniary emulation is simply keeping up with the Joneses, but doing it to be able to demonstrate that the Joneses are not out of your league when it comes to spending capacity. And Vablund talked about the necessary visibility of payment in this regard. was demonstrating the ability to pay, and in particular, paying for maybe frivolous acts of consumption rather than something that made a material difference to people's lives. It was not only to make social advance, though, everyone is now looking at their peers

and making sure that they fit in with their social reference group and hopefully moving to another one, but the worst thing you could do is not keep up. If you could fall in status by not being able to replicate the consumption patterns of your current status group, and you could only move up if you could replicate it of another income group above you. Does it seem curious to you that this in America alone of the free inequality should be so obsessed with this? Does it surprise me? No. But I think that manufacturing and the fact that we could rapidly manufacture new goods quickly was going to make this whole process very, very dynamic.

And a lot of waste would be the result of it. All societies have their founding myths, of course. So maybe if we look at America as the land of the free and of equality, as a founding myth, the myth itself covers up so many of the social practices of conspicuous consensure. It covers up all of those downsides of a pecuniary culture in which someone else's misfortune becomes a measure of your recognition of your own self-worth that you can get off on the terrible things that happen to other people when that leads to unmet needs where you can out-trump those with the sort of spending that you're engaged in. I think that's a critical

point. Yeah, absolutely. One of the core founding myths of the United States is that of the self-made individual. And so along with that myth of self-madeness is the idea that if you are wealthy and successful, it is because you work hard, you have ambition, you're intelligent, but if you are not financially successful, then you are a failure, you as an individual, have failed. And so conspicuous consumption is not just about demonstrating financial prowess. It's also about demonstrating reputability. So it becomes a sign of character as well as wealth. What to Bayron was some of the unattractive consequences of conspicuous consumption? Waste was the largest one.

He made a distinction between consumption that was serviceable, contributing to the generic means of life, versus waste, where it was simply for demonstration purposes. It was simply to show the community, to illustrate to the community, your capacity to purchase items simply because you wanted them. Such as? townhouses in New York and farms in the countryside, engaging in sporting events that demonstrated your prowess, which took a tremendous amount of skill to participate in, but were largely ridiculous. Polo became popular, for example, where, you know, you have to have three ponies and years of training on the back of a horse to hit a little ball with a mallet.

And you can't do that as a working person. and you can't afford the prerequisites to participate in that activity. Sailing was another one. Very expensive boats, very time-consuming to learn how to do it, required a lot of expensive appliances, and was totally out of the reach of working people. Well, a lot of people would value these in themselves, and some of the things you said they might increase in value,

the boat you bought might increase in money, and so on and so forth. Why was they so against all this? Well, that meant that productive capacity was being used to produce things that were in essential in terms of the generic means of life, meaning that that productive activity was not turned towards dealing with the needs of the larger population. Does everything have to be essential? No. The arts certainly don't need to be essential, and our lives are enriched by them, and that was also a part of this system. but a lot of the things were just purely wasteful. Yes, and he attacked waste wherever he saw it, really, didn't he? Pretty much, but not completely consistently.

He had access to funds. His family had access to funds later on, and they had a vacation home in Washington Island. He traveled to Europe regularly. He was picky about his clothing on occasion, but not others. He had a brownstone in New York City when he was at the new school for social research, which was where he earned his greatest amount of money as an academic.

So it isn't that he was against these things. He was against it as a social movement and a social measure of value that people would be judged by and could distract us from producing things that were absolutely necessary. Absolutely. Veblen wrote the theory of the leisure class in order to provide a counter theory

to the theory of utility that was coming to do. dominate the economics discipline. And the theory of utility says that consumption is based on usefulness that people will spend according to the usefulness, how useful a particular product is. And Veblen said, no. Actually, people will buy, yes, for usefulness, but they also engage in conspicuous consumption in order to signal their social standing. And this is where he talked about consumption, conspicuous consumption as wasteful. When he used the word wasteful, he meant it very specifically to refer to non-productive. So it didn't contribute to the household. It didn't

contribute to the individual. It didn't contribute to the community. It was expenditure that was for show, for signaling only. And he wanted to juxtapose that against, counter against, the utility theory that was becoming part of the mainstream in economics. I mean, you could disagree with them, couldn't you? You could say collecting art seems to be useless. But actually, it gives great pleasure. That's not nothing.

And if you're looking for the money side of it, if you bought the right sort of art, it could zoom in price so you'd make a profit. And you could say that of a lot of other things. Certainly, you could. And I think for him it would be a differentiation between buying art to showcase your ability to purchase it rather than as an investment per se.

Nothing's changed then. Yeah. Pretty much nothing has changed. Matthew, was he proposing an alternative, such as socialism, for instance? Fablin's politics, that's quite a tricky one on the grounds that he never really got around to telling anyone exactly what his politics were.

What is that a wise or cunning or kind of being carelessness? Maybe cunning, because it doesn't stop people asking, does it? And I know that his first wife was extremely fed up about the fact that everyone would come to her and say, is Torstein a socialist? And she didn't know either, because he hadn't bothered sharing it with her. Probably we need to look at the programmatic reform that Fablin would have recommended,

rather than trying to pin a particular political label upon him. And central to that programmatic reform was a move to collective ownership. And he thought that this would tick a number of boxes. For a start, it would collapse the distinction between making goods to service needs and making goods to service profit. Because under a system of collective ownership, there was no necessary need for there to be profit in the first place. it would eliminate a lot of the waste.

It would stop the private owners acting as industrial saboteurs, undermining the productive capacity of the economy simply to produce profit. So I guess naturally this brings him close to the trade union movements of the time. Did they feel he was coming close to them? Did he have an influence there? I think he had an influence on their thinking broadly, perhaps not on their organization more specifically because he wasn't interested in that sort of stuff.

Vellem was incredibly pessimistic about social change, which may be why he didn't develop a political program. At the end of his second major book, he talks about the fact where, yes, organization on the shop floor might lead to greater productivity and a pursuit of greater output rather than restricting output for profits. But he said,

the owners are just going to buy off the managers. You know, this potential for organizing is not going to be realized. By the time he gets to his last book, Absentee Ownership, he's totally frustrated. He doesn't believe that change is really going to be very possible. He thinks we ought to try, but he has a very dim view of the possibility. He at one point says that more civilizations have collapsed because of imbecile institutions than have saved themselves from dire circumstances by social change. I mean, he was very pessimistic, and I think that really limited his capacity to generate a positive program.

Mary, Mary Wren, what impact did this book have on the way he was perceived? Well, he published Theory of the Leisure Class when he was at Chicago, and he had already published a lot of journal articles up to that point, but this was his first book. And it really solidified his standing in the discipline. I think he was surprised that the general public bought his book because he wrote it specifically for the economics discipline. He was writing in order to counter utility theory that was in economics. And so he was writing for other economists.

And those other economists, they took the work seriously, even those who were critical of the theory of the leisure class. They wrote up their critique. They published that critique, and then Vellin would respond to that critique in a following publication. So they took his ideas very seriously, and his standing within the field rose,

his stature in the field rose. After the publication of Theory of the Leisure Class, he was invited by the AEA, the American Economics Association, to serve on their organizing counsel. He served two consecutive three-year terms. A few years later, he did a series of lectures at Harvard. Shortly after that, he got his job at Stanford.

So the theory of the leisure class really solidified his reputation as a serious scholar. Why do you think it was such a best seller that it kept him in funds for the rest of his life? The literary community recognized the theory of the leisure class as a major work of American rights. And so Dean Howell published a very two-part favorable review in a journal of American criticism. And as a consequence, the book got a push into a completely different community, as well as being very influential in sociology in the United States and anthropology. So it sort of crossed over his intended audience, which was economists, and replacing utility as the motive for consumption with pecuniary.

It hit a much bigger chord in American society. I think we also have to take into account just how cleverly written it is because he writes the theory of the leisure class in the vernacular, in the prose of the leisure class. And so it has layers to it that, well, economists probably it would go over their head, but other readers would catch on to it. So it has an element of satire in there as well. And so I think that added to its popularity too. Yeah, there's a definite playfulness in the text. And I think the playfulness in the text appeal to the literary mindset more than to the scientific mindset of contemporary economists. It's always the case that with students of mine, if they can remember having read F, Scott, Fitzgerald's, the Great Gatsby at school, I then get them reading Vablund's theory, the leisure class.

and something clicks in their mind, it feels familiar to them because of that crossover into the literary world where so many plot lines, Fitzgerald was an obvious one, so many plot lines seem to follow Veblen's analytical approach. The same is true with Edith Wharton's novels about the Leisure Class in the Gilded Age. They fall very closely in with Veblen's analysis of American culture at that period of time. He'd tell you to be rude about mainstream economics of his day.

In what way did that enhance or block or his career? What effect did it have? I think that it alienated the more ideologically oriented members of the economics profession. But the economics profession during this time was much more pluralist than it was today. A lot of economists were trained in Germany, the others in England, and only more recently Veblen's period in the United States. So there was a lot of more discussion of alternative perspectives. His early articles on the preconceptions of economic science are brutal.

They just dissect the underlying natural law foundations of mainstream economics, the animistic character of it, the imagined tendency towards equilibrium in every circumstance in which competition results. So that certainly would have offended a certain portion of the academic profession. And they were divided over him, as was seen in the politics of the profession. particular in the American Economic Association. One of his professors founded the American Economic Association, but a significant portion of the membership would have rejected VEB1 as a member of the profession.

Was the pursuit of economics and the stuff of economics changing at this time? Yeah, very much so. Most of the academic literature caused it a process of professionalization and that economics was trying to reinvent itself as a singular science to operate in the same way that other scientific subject fields do, to try to identify a core theoretical set of statements and to build everything up on more or less formal modelling on that basis. And Fablin's approach to economics, it really couldn't be any more different. But I think it's important not to just focus on his critique and the theory

of the leisure class. When we teach economics, the first place we start is consumption. and the theory of the leisure class is his alternative theory of consumption. His next book is The Theory of Business Enterprise, which is his attack on the theory of the firm. His next book is the instinct of workmanship, which is his attack on production. The next book is on development. The final book is on property rights. Literally, the five volumes of his major theoretical works are an alternative system for understanding the economy. And that, I think, was certainly his intent.

and it was driven by an continuous level of frustration with the unequal distribution of wealth in society. What effect did it have those five volumes? Well, there's a whole school of institutional economics and evolutionary economics, which considers that the foundational works of the way we look at economics. It's been pretty much driven underground in the United States, but it's taught here in England. It's taught in Brazil. It's taught in Mexico, it's taught in Italy, it's taught in Germany, in significant numbers.

Where there is pluralism in economics, institutional economics survives. Matthew? I think the effects of Fablin's alternative agenda are important to the extent that they cannot be enclosed within economics and within economic theory. And here we see the big divide, I think. Economists trying to develop economic science were writing about quintessentially, economic things, whereas Vablund thought that this was to completely misunderstand the economic system. And if we look at the way in which he brings that critique together through the five books, there is an account that could still be intensely relevant today, I think. There's an

account of the way in which social change has to pass through all of these different aspects of the economy, at the same time as changing the people who are members of that economic system, changing the way that they relate to the world around them, changing the way that they relate to other people around them. And aren't these the big political questions of today? Aren't all of those political questions of today all about whether the economic system that we have, whether it's up to the task, whether it can take us to where we want to go if we know where that is? Has he got older, did he become more moderate?

I think he became more like a caricature of himself, more belligerent in a lot of his personal characteristics that fed through into some of his writing. No, I don't think he moderated at all. I think that the level of frustration that he had that his earlier work had been lauded, celebrated, but not actively worked into economic theory, just led to more general frustration with the nature of academic discourse

and a more belligerent attitude towards it. Mary Mann, what did his followers do next? Well, Beblen died in early August, 1929, and at the end of October of that same year, we get the great crash. And that great stock market crash amplifies. the depressionary period in the United States, and we get the Great Depression. And so I think following on Veblen's death, seeing the Great Crash, a lot of his students, his followers, his admirers in the discipline, Veblen must have looked incredibly prescient

because this was all part of what he would have predicted. And many of his followers, his students, became involved once FDR, was elected into office, he wiped out all of the economic advisors that have been part of the Hoover administration and all of the economists that he brought in were admirers of Thorsten Veblen or some of his students. And so they played a very active role in the construction of the New Deal and sort of solidified his importance in the policy arena, along with another institutionalists John R. Commons out of Wisconsin. And after that, his tradition, their involvement in the New Deal, especially throughout the interwar period, meant that institutionalists paid less

attention to what was happening in academia. And so institutionalists were squeezed out of higher education by and large. They became more marginalized. But since the post-World War II, period, institutionalism has continued to survive and has followers today, people who are working in that same tradition. Are you a follower, Bill? I hope that I'm a contributor. No, Vellin wouldn't want a follower in the sense of heriting exactly what he said because he was focused on the way culture changes through institutional change.

And, of course, the institutional and cultural structure we're in today is very, very different than in his time. Again, nobody knows which direction cultural will evolve. We try and solve our problems if we can, and if we don't solve our problems, then things just get worse. And I think that's Fibb one's fundamental pessimism. Could you describe his legacy? Is there a legacy you can describe? Yes. First of all, looking at the economy as an open cultural system, rather than the simple summation of individual choices and actions. The focus on trying to formulate sensible public policy. Many, many of Ebb ones followers, even today, working government agencies rather than in the academy, trying to formulate policy. And it's

pragmatic problem solving, which I think is his biggest legacy in the legacy of institutional. Is it a positive legacy? Yes, I think it is. I think the New Deal was the implementation of the welfare state, the United States, and possibly the most successful policy program the countries ever had. Matthew, do you want to come in here? Yeah, I think his legacy is almost one of a mindset. It's the mindset towards critique. It's the mindset towards challenging those things that other people will tell you are normal and of trying to historicize those cultural attributes and to show how specific they are to the society that we live in. Vablund thought that his own society was an historical aberration and that it was the only society in history that had managed

to turn people against what he saw was the natural human disposition to cooperate. He spent his life trying to understand those social institutions, those cultural practices that got in the way of cooperation. And I think we can learn a lot about that still today. What were those cultural practices? The cultural practices that are focused on a pecuniary society. Thinking of recognition of self-worth in terms of status seeking, thinking about our own moral lives in terms of possessions and in terms of ability to pay. I think if you read any of his major works, Theory of the leisure class, higher learning in America, you're going to to see distinct parallels that are relevant today.

Maybe there are different expressions of the behaviors that he was describing, but that underlying imperative that he talked about, the underlying theory is still incredibly relevant and incredibly obvious today, I would say. So I think his legacy is pretty secure as long as we are in our current economic system. So to summarize before we leave this program, I would say that profit as a motive is going to lead to waste, whether it is in higher ed, whether it is in the general community, whether it is in particular products that are produced, and by waste, I mean it doesn't contribute to making people's lives easier, better, healthier, and so forth. Bill? I think

that looking at Beblen's work, the problems he identified have simply been amplified since his time, that the absurd practices grow to greater levels of absurdity. A simple example is the role of sports in higher education in the United States. In almost all 50 states, the highest paid state employee is a football or basketball coach. More than the governor's, more than any of the faculty, any of the faculty administrators, football coaches, basketball coaches, are the highest compensated people in higher education and in their respective states, which is an absurdity.

Well, thank you all very much. Thanks, Marion, Matthew Watson, and Bill Waller, and our studio engineer, Jackie Marjoram. Thank you. Next week, Marguer de Navarre, the woman at the heart of French culture in the early 16th century. Thank you for listening.

And the In Our Time podcast gets some extra time now with a few minutes of bonus material from Melvin and his guests. What would you like to have said that you didn't get a chance to say? Starting with you then, Mary. I think what I would have liked to have talked about is something that Bill brought up

that Veblen would not have wanted followers. He wouldn't want anybody who is holding him up as a hero. And that, I think, is really representative of his approach to the study of economics. He thought that economics should be evolutionary in and of itself. He wrote a very famous article in 1898 called Why Economics is not an evolutionary science. And he's Right. If you look at the writings at the end of the 19th century in economics and you look at undergraduate economics textbooks today, there's not a lot of difference between them. And Veblen was very much of the idea that economics has to change, that it has to evolve. Why? Because it's not a science

if it doesn't. Because if it sticks to the same theoretical frameworks and doesn't update itself for historical context. It doesn't change based on the location, what country it is in, the cultural practices, the social relationships of that country, then it becomes irrelevant. Bill said that the middle ages had the same economic system for a thousand years. Where does that take us? Well, because position in that those societies were determined by birth and the divine right of those people to have control over it, there was no social. social mobility of any significance during that period of time, what you get in the gilded age and with industrialization is a new emergent class, the bourgeoisie in Marx's

terms, and that created a dynamic pecuniary standard of living that because of mass production was always going to create new items for the leisure class, which would slowly trickle down to lower levels of income, that would require the leisure class to find something newer to distinguish themselves. So it made it much more dynamic. And there are certain consequences of this that are not awful in the sense that by the 1950s, certainly the American economy was no longer troubled by scarcity. It was troubled by distribution. So you get Galbraith, a Fowler, of Vellens, or a good student of Vellens, who writes the affluent society and says the problem is no longer production, its distribution. But we now know that production in and of itself is a problem

in terms of the environment. We obviously have to alter that system. We can't produce endless amounts of goods that people don't use and just accumulate in their garages and addicts. We have to take into account the changes this has had on the environment. And we think fundamentally what serviceability is in the economy. And it's going to be consuming a lot less. And we can't do that. until we examine seriously the culture of consumption itself, until we understand conspicuous consumption as a social practice. Do you want to come in? Yeah, I think this is a really interesting discussion

because it also links to Vevelin's view of technology more generally. And I think on many occasions he had a rose-tinted view of technology that you build the machines, and the machines will help you to cure also, shall ills. Underconsumption can be a thing of the past. Poverty can be a thing of the past. Inequality can be the thing of the past. As long as the machine process or the logic of the machine process, as he called it, was allowed to win out. That rose-tinted view of technology I think sometimes also falls over into a similarly romantic view of the heroic potential

of workers, because it's workers that stand by the machines. It's workers who can, he says, identify the potential of the machine process to have all of these really positive social effects of curing all of these social ills. But the workers suffer the indignity of having some sort of factory foreman come round and turn down the productive capacity of the machines that they're working on, because that is the level at which more private profit can be made. So it's fascinating how production and underconsumption work hand in hand with overproduction and the production and the liberation of the workers, which if we put that in the context of the discussion that we're having about today, doesn't seem right, does it?

You're absolutely correct. You're absolutely correct. Cain's made the same kind of arguments if we could only expand production that would solve our social ills. And they never really took into consideration the carrying capacity of the environment to tolerate that kind of production process and the side effects of it on the environment. So we can't be Vemlynians in that sense. We have to rethink what it means to have a decent, society that our children can live in. And this has just become very personal for me since my grandchildren have arrived. It's like you project into the future much farther. And John R. Commons talked about the essentials of having a sense of futurity. And I think the concerns with scarcity drove many economists, maybe all economists, to forget that. That in fact that, in fact that fact, you have to project what we're doing into the future and examine what the potential consequences are as well as identifying the current problems and trying to solve them. So you think the future is scarcity?

Not necessarily scarcity, but certainly a much more constrained level of consumption that is going to have to be more thoughtful. I don't want to get rid of the arts. I don't want to get rid of leisure time, but I think that we need to transform the way we think of, uh, consuming. Yeah. And chances are it's also going to have implications for the size of the population. I don't think we can simply continue to exploit resources at the rate we are or in the way we are. Well, you say, who do you mean? The Western world. The human race. The human race, yeah. And we've turned full circle there, haven't we? We were back to the tension between overproduction and inequality. And that overproduction is a means of solving inequality,

but overproduction itself produces more social problems further down the line. So transformation within productive practices is almost certainly going to be the way forward in this regard. I know that lots of politicians talk about a green transition and a green new deal. And those new practices are possible. They're feasible. A lot of the technology is already. with us, that technology needs to be facilitated though. And if that means operating within a different structure of subsidies that can be thought of globally as well as nationally,

then that might possibly be a route to somewhere that looks like planetary habitability. I think that's the word for the future. Of course, we are limited by the economics discipline refusing to evolve, which was Fublin's original point that economics has to continually update itself and has to continually adapt to the changing circumstances, both natural and social,

in order to maintain its relevancy and its potency. You know, without that evolution, then the people who are advising the policymakers are not giving good advice. For some people, one of the things that Vellin is associated with those lurid stories about his private life, even though he was thought of as a rather

shy, awkward person. But there are his lurid stories with not succeeding in getting the divorce you wanted and so on and so forth. This was certainly a concern of mine when I started graduate school and started researching Veblen. And there was a lot of gossip that floated around. And much of that gossip came from the corporate executives at the top of the universities where Veblen worked. They were upset with Veblen's work, especially that work which attacked positions of power like theirs. And specifically, a chapter in the theory of the leisure class, which he developed later into a book, Higher Learning in America, that really put the spotlight on people in positions of power like them. And so they were looking

four reasons to edge him out. Now, this is not to say that Veblen was a perfect person from what we can tell and researchers have gone through a lot of the archival evidence. He had an emotional affair when he was in Chicago with a woman he wanted to marry, but she was already engaged to someone else. When he was at Stanford, he had another emotional affair. He had another. emotional affair that turned into his second marriage once he was able to divorce his first wife. There is certainly nothing in the archival evidence that suggests predation, that suggests manipulation, or that he was some Lethario, who was taking advantage of women's students, for instance. Given his back, background and the fact that in his household, women and men, girls and boys were treated as

equals when it came to access to education. And all of them were encouraged to go complete their schooling. And given the fact that Chicago, for instance, admitted women into their graduate programs, Veblen often stood up for his women graduate students. He would support them. and he treated them on par with men. Now, given that this is the end of the 19th century, people are going to whisper about that kind of position because it is not the social norm. And so I think it's a combination of those factors

that led to the gossip that bubbled up. And also his first marriage, his first wife was not happy with his emotional affairs. Any additions to that, Bill? I was fortunate enough to talk to some of Ebbwin's family, and his nephews indicated that he was in his second marriage a consummate family man. He adopted his wife's two children. They had hoped to have children on their own, and he just, any hint of scandal disappeared with that second marriage. And the family disputes most of these, and they do.

disputed it with Dorfman, his biographer, who perpetuated a lot of these stories, which have been repeated. So there's some real question as to what was going on in Veblen's life, but we certainly know, at least from the students who lived with him at Stanford, he was not living a monkish life. He did have women friends that he socialized with at Stanford, and eventually something there blew up in his face. But nobody is really quite certain, what? Because of the Vellin refused to dispute it and resigned without saying anything about it. Thank God very much. That was really good. It'll be much appreciated, I'm certain. I think I'll produce it once again at the time and Tillotson.

Does anyone want to tea? To your coffee? To you coffee? I'm okay just with the water, thanks. Yeah. The water's fine. Water is great, yeah. Melvin, do you want anything? I'm fine, thank you. It was big. This was not a wind, this was not a storm, this was a tsunami. But when confronted with change, humans are remarkably resilient. I knew in that moment as I fell to the ground that I would recover more.

I'm Dr. Sean Williams, psychologist and presenter of life-changing, the program that speaks to people whose worlds have been flipped upside down and transformed in a moment. If I had to live my life again, would I ever want to go through what I'm I went through. There's a very simple answer to that. I would go through it again. Subscribe to Life-changing on BBC Sounds.