In 2011, Thorstein Veblen was ranked seventh in a poll of economists on their favourite, dead, 20th century economist. He ranked behind Keynes, Friedman, Samuelson, Hayek, Schumpeter and Galbraith. His supporters were among the least liberal (in the classical sense of the word) of the survey participants. Given his approach to consumerism, as detailed in The Theory of the Leisure Class, this is no surprise.

The Theory of the Leisure Class, published in 1899, was one of the earliest books to explore the economic assumption that people wish to consume. Veblen noted this was not purely a desire to consume in itself. People also care about status, reputation and honour. They care about their relative position to others, such as their relative wealth. And consumption provides a means of establishing this relative position.

Conspicuous leisure and consumption

To turn wealth into status and reputation, you needs to signal your wealth. Veblen explored two possible signals, conspicuous leisure and conspicuous consumption, with Veblen’s coining of the latter term his best known claim to fame. Veblen has a relatively modern take on these two concepts, recognising the need for waste. Signalling theory tells us that waste required for a signal to be reliable.

When there are few goods for conspicuous consumption, as would be the case in primitive societies, conspicuous leisure is a more accessible way to signal wealth. Conspicuous leisure might involve reaching a level of manners and etiquette that could only be achieved through an excessive use of time, or becoming proficient at sports. Veblen also considers what he calls “vicarious conspicuous leisure”, whereby the head of the house employs servants (or even the housewife) in exercises that waste time.

As society advances, people move from conspicuous leisure to conspicuous consumption. They have an increasingly large circle of people with whom they associate and wish to signal status to. In a small village, everyone is familiar with each other and will note the habits of the servants and other householders carrying out the conspicuous leisure. In a larger city, the conspicuous waste needs to be visible, and conspicuous consumption in the nature of watches, clothing and carriages is immediately obvious. Conspicuous consumption can also be vicarious, with servants dressed up in excessive livery.

Veblen considered that conspicuous consumption will consume all future growth in production and efficiency. He states:

The need of conspicuous waste, therefore, stands ready to absorb any increase in the community’s industrial efficiency or output of goods, after the most elementary physical wants have been provided for.

Veblen also suggests that the use of additional production for conspicuous consumption acts as a Malthusian check on fertility. If signals are wasteful, then some of these resources will not be available for increasing the number of offspring. However, to be evolutionary stable, any reduction in conspicuous consumption by an individual would have them suffer a cost in the form of reputation and status, and in turn, mating opportunities.

One of Veblen’s interesting perspectives is that costliness masquerades under the name of beauty. Veblen states that “beauty, in the naive sense of the word, is the occasion rather than the ground of their monopolization or of their commercial value.” The marks of expensiveness, rarity and exclusivity become known as beauty.

This leads to imperfections in goods, which are evidence of being hand and not machine-made, becoming signs of beauty. Counterfeits lose their beauty on being identified as such. Or each year the fashion changes, which is wasteful – and people prefer the more recent fashions to the older ones.

Veblen applies this concept to beauty in women, with tastes shifting from “women of physical presence” to a “lady”, as conspicuous consumption and leisure grew. The less suited a woman is for work, the more waste, and the more beautiful she would be perceived.

The evolution of the leisure class

Veblen follows his discussion of beauty with a series of evolutionary arguments on the nature of the leisure class. The “leisure class” is an unproductive upper class, and contrasts with the “industrial class”, a subordinated but productive working class. Veblen’s line of argument is often difficult to follow, with the boundary between social and genetic selection unclear. His underlying agenda, a critique of the leisure class, also clouds his arguments.

Veblen argues that the selection of institutions affects the selection of people within society. Institutions change fast, so although only the fittest habits of thought will normally survive, the selection of people cannot keep up. Further, changes which may be good for society as a whole may be bad for certain people. Veblen’s discussion provides a nice picture of a dynamic environment and selection pressures that vary with it.

Despite this dynamism, society is slow to change and conservative. Veblen argues that the leisure class is able to keep society conservative through withdrawing the means of sustenance to the industrial class. As a result, the industrial class does not have the resources to invest in new ideas and habits. Even if they did gain some surplus, that would be wasted on the conspicuous consumption that the leisure class has established as the societal norm.

On an individual level, Veblen considers there are two basic types of people – predatory and peaceful. Predatory types are violent (in certain stages of society), selfish and dishonest, and are not diligent. Peaceful types are the opposite. Which traits are expressed will depend on the state of society. For Veblen, the spectrum of predatory to peaceful roughly coincides with the spectrum of blonde through brunette to Mediterranean ethnicities.

Veblen suggests that society progressed from a peaceful, native state, to a barbarian state, before shifting back towards the more peaceful modern society. Peaceful traits were selected for in the native state, and predatory traits selected for in the barbarian states. Veblen states, however, that selection did not eliminate all the peaceful traits in the barbarian era, allowing peaceful traits to be present in modern society.

As to how these traits are distributed at his time of writing, Veblen sees the leisure class as the predatory type and the industrial class of the peaceful type. The leisure class is not able to be violent in modern society, so they use more “peaceful predatory” methods, such as fraud. The industrial class is not in need of predatory habits, with Veblen suggesting that “economic man” in the sense of the selfish person (an indirect slight on Adam Smith) is useless for modern society. It is by being diligent and honest that the industrial man thrives.

Veblen’s shot at “economic man” is not particularly effective, and does not recognise that selfishness is required, in an evolutionary sense, for all people. The reason industrial man is diligent is because that is how he benefits. If he did not benefit, he would be selected against and disappear. That society benefits is the operation of Smith’s invisible hand.

Despite his categorisation of types between classes, Veblen later suggests that there are no broad character differences between the leisure class and the rest. Some predatory behaviour persists in the industrial class due to the behaviour of the leisure class. He also notes that people in the leisure class, by virtue of their resources, are not subject to harsh selection pressure, so peaceful characteristics can persist. What is most determinative of the traits in the leisure class are those traits which lead to admission to the class. While these have changed over time (say, from raw violence to fraud), they are generally of a predatory nature. It is not easy to gel this position of no difference with his earlier statements, and I am not sure they can be reconciled. My one suggestion is that the differences will grow if the current institutional framework continues to exist.

Put together, Veblen’s use of evolutionary theory is a strange mix of group selection and broad statements on inherent traits. There is little detailed consideration of the selection process that might have occurred. If nothing else, it appears that Veblen simply wanted to critique the leisure class and would use whatever tools were at his disposal. Through his evolutionary discussion, Veblen also manages to avoid addressing the basis for the desire for reputation and status.

Sport, religion and education

The rest of the book largely involves Veblen applying his framework to sport, religion and education.

Sports reflect the predatory skills of the leisure class and delinquents. Veblen disagreed with the common view that sports build temperament, and instead they involve chicanery, falsehood and browbeating. That is why we need umpires. For the industrial classes, Veblen felt that sport is more a diversion than a habit, although the role of sport for the industrial class seems somewhat different today.

Veblen considered that the temperament that inclines one to sport inclines one to religion (and vice versa). Religion, and the conspicuous leisure and consumption associated with it, change the patterns of consumption in the community and lowers its vitality. As an example, Veblen referred to the religious Southern United States. He considered that their industry was more handicraft than industrial. Their range of habits, such as duels, cock-fighting and male sexual incontinence (shown by the presence of mulattoes) were evidence of barbarian traits.

On education, Veblen saw the alignment of education institutions with sport and religion as evidence of education’s status as a leisure class activity. Higher education has many rituals and ceremonies and encourages proper speech and spelling (conspicuous leisure), while lower schools tend to more practical. The teaching of the classics and dead languages were, in particular, conspicuous consumption.

One interesting sideline is Veblen’s view on how industrialisation has affected the status of women. Industrialisation allows women to revert to a more primitive type (Veblen’s primitive type being peaceful and industrial). The leisure class, however, needs to keep women in their place to engage in vicarious conspicuous leisure (they are, after all, a signal for the man). As a result, when educational institutions finally began to admit women, they were primarily enrolled in courses with a quasi-artistic quality, which help women in performing vicarious conspicuous leisure.

[This post is a combined and edited version of three previous posts exploring the book. Those old posts are here, here and here.]