David Reisman’s new book offers a comprehensive account of Thorstein Veblen’s oeuvre qua “grand theory” (p. 312) of economic phenomena as inextricably rooted in dynamic natural and socio-historical contexts. Far from being the regrettably common reduction of Veblen’s work to a handful of notions—conspicuous consumption, conspicuous leisure, ‘Veblen goods,’ and Wilhelmine Germany—Reisman explores the rich intellectual output of the Norwegian-American economist and presents it as an original, organized, and coherent whole.
The first chapter serves as an introduction to the ensuing fifteen. Of these fifteen, the first four (i.e., chapters two through five) deal with the main assumptions and broader themes of Veblen’s grand theory.
Veblen regarded economic activity as grounded in socio-cultural habits or “institutions” (p. 5) that are shaped by ever-changing historical events as well as by prominent “instinctive proclivities” (p. 32) of the human psyche—all this being situated in turn within the larger biological framework of “Darwinian selection” (p. 8). Nothing, whether social or natural, is either fixed or fated in this ongoing process, which results, if successful, in the meaningful survival of as many members of a human community as possible, present as well as future. Survival through evolution does not mean progress or amelioration, though, for Veblen claimed (unconvincingly) to be mapping and explaining, not evaluating, the history of humankind as an industrious animal species characterized, inter alia, by the instinct for “workmanship” (p. 37). This animal species is said to have evolved from a poverty-stricken, cooperation-based, “savage” state to a more affluent, predatory, and acquisitive “barbaric” one, which still persists in the modern age (pp. 61–68). Individual creativity and divergence from established patterns, whether social or biological, are possible, though they are judged to carry little weight in evolutionary terms. What makes the difference is the bulk of humankind’s strongest institutions and most prominent instincts. Focusing upon the historical evolution of our species, Veblen’s account does not depict a harmonious picture. Friction between novel environmental circumstances and resilient habitual modes of action is frequent, whether because of the inertia of well-established institutions, or because of the awakening of instincts that had been neglected and frustrated under previous circumstances. The stream of socio-historical becoming does not flow easily on our planet. As Reisman writes, “[h]istory is a sequence of setbacks and spurts” (p. 51).
The following nine chapters (i.e., chapters six through fourteen) deal with more specific applications of Veblen’s theory, such as particular dimensions of economic life (i.e., consumption, production, management, finance, and property rights), socialism (i.e., its origins, its early twentieth-century developments, and the potentially revolutionary role of “engineers” [p. 224]), and international relations (especially the US “sham democracy” [p. 186] vis-à-vis imperial Germany, plus the issue of how to secure peace in Europe after World War I).
To this section belongs the account of Veblen’s best-known contribution to economics and the social sciences; i.e., his iconoclastic ethnography of the social élite of his day. The main reason for its popularity is certainly Veblen’s perceptive acumen, though Reisman offers an additional reason: the motives, rituals, and implications of barbaric emulation among the wealthy, the powerful, and the well-respected of the belle époque were described and discussed by Veblen with more than just dispassionate scientific candor, but also with the vitriolic gusto of a Swift-like satirist (p. 309).
To the same section belongs also the account of Veblen’s analyses of concrete power relations within the economic reality of his time, especially in the US. American capitalism is far from being an unfettered free-market utopia and a paradigm of industrial efficiency. Quite the opposite, it is described by Veblen as a supremely wasteful system of pecuniary aggrandizement that “does not serve human life or human well-being on the whole” (p. 197), and operates strictly on behest of a few gargantuan corporate oligopolies led by a handful of influential banks that are capable of bullying, bribing, and buying the legislature, the courts of law, the executive, the mass media, the stock exchange market, and the academia. Within this system, businesses’ for-profit sales, not efficient service to the citizenry, are the rule of the game—thus does “[b]ig business” equal “bad business” (p. 121). The sole aim of such businesses is to make money in almost any way possible; hence, not to produce life-enhancing goods. Consistently, individual wants are catered for, not human needs—such wants having typically been instilled into the individual’s mind by the most sophisticated forms of “manipulative demand-management” (p. 187). Premeditate underproduction or “sabotage” (p. 145) of industrial efficiency and de facto cartelization are also the norm, for the big players wish to eschew any genuine competition. Rent-seeking and rent-getting absentee owners are the key beneficiaries of this system, not Schumpeterian or Promethean entrepreneurs, who have the bad habit of rocking the boat. Rather than newer and better products, unproductive asset-price-inflation and financial speculation characterize this form of capitalism, which turns often to the State for bailouts, subsidies, or ad hoc overseas military operations, whenever gambles turn awry and taxpayers’ money is required to refill the coffers of the élite owning the largest trusts. The reader of this review can easily figure out how topical these considerations may be with regard to today’s crisis of global capitalism (see also Reinert and Viano Reference Reinert and Viano2012).
The fifteenth chapter of the book assesses the critical implications of Veblen’s theory for another facet of today’s economic life; i.e. mainstream academic economics, which is based upon different assumptions than Veblen’s “institutional economics” (p. 5) and emphasizes rather different themes. For example, Veblen’s approach is deemed to reveal the deeply ahistorical, a-sociological, and a-biological character of mainstream economic thought, which limits widespread understanding by means of largely unnecessary and self-referential “jargon” and “mathematics” (p. 297), builds theorems upon thinly substantiated “metaphysical” axioms (p. 295), and reifies given institutions (e.g., property rights, entrepreneurship, interest on loans), paying no heed to their historical contingency and their complex socio-cultural “genetic dimension” (p. 298).
The short concluding chapter of the book addresses Veblen’s baffling personality and demanding style, upon which many pundits have often focused in order to marginalize, ignore, or dismiss his original contribution to economics. By considering these matters in the last chapter, Reisman implicitly reminds economists and social scientists at large that they should better make themselves familiar with Veblen’s thought before discarding it as the taxing elucubrations of an eccentric “lone wolf” (p. 311). Quite the opposite, Reisman’s account makes a convincing case vis-à-vis rediscovering Veblen’s astounding wealth of insight into the actual history of market economies and the socio-cultural as well as biological awareness of his old institutional economics, especially if one considers “the inability of conventional economics to comprehend the socio-economic convulsions over the past few years in so many countries” (S. Hollander, back-cover blurb).
Moreover, Reisman’s erudite study does an excellent job in placing Veblen’s work within its own historical and socio-cultural context by means of carefully selected quotes, explanations, and references. He does so not only with respect to the intellectual and political trends of his day (e.g., pragmatism, Darwinism, liberalism, socialism), a few representative fellow scholars and scientists addressing analogous issues (e.g., McDougall, Durkheim, Pareto, Weber), and the most significant events unfolding during his lifetime (e.g., the US antitrust legislation, the Great War, the Bolshevik Revolution, the ascendancy of Japan). Reisman also contextualizes Veblen’s work with regard to the time-honored roots of his approach to economic reality (from Aristotle and Aquinas to classical political economy), as well as to the influence that Veblen had on successive economists operating along similar lines of analysis (e.g., Commons, Mitchell, Galbraith).
An additional positive feature of Reisman’s book is its reader-friendly prose. Unlike Veblen, Reisman avoids long, convoluted periods, multiple incidentals, extensive digressions, and ambiguous wording. Often, Reisman succeeds in being both clear and concise while hammering upon an explanandum to the author’s—and reader’s—satisfaction by means of sequences of separate periods that encapsulate snapshot-like examples, relevant references, and short elucidations. Similar clarity and conciseness apply to Reisman’s critical remarks on Veblen. In this case, however, the same two qualities combined do not help the author of the book. Rather than being persuasive, such transparent and brief critical considerations come across as mere opinions, which would need much more conceptual and textual substantiation in order to be effective. Probably, Reisman did opt for such a rhetorical strategy for the sake of succinctness, but this means that any reader looking for a detailed critique of Veblen’s work should look for it elsewhere (e.g., Wood Reference Wood1993). As an exposition of Veblen’s work, though, Reisman’s book is exemplary.
