Thorstein Veblen (1857–1929)

Who They Were

Thorstein Veblen (1857-1929) was an American economist and sociologist, born to Norwegian immigrant parents, and the founder of the institutional school of economics in the United States. Institutionalism holds that habits, customs, laws and institutions -- rather than pure rational calculation -- shape economic behavior. Veblen was a sharp, satirical critic of the orthodox economics of his day and of the culture of wealth in America's Gilded Age. Writing from outside the mainstream marginalist tradition that Marshall and others were consolidating, he attacked its picture of human beings as calm, rational calculators, insisting instead that social status, custom and emulation drive much of what people buy and do.

Key Contributions

Veblen's best-known work, The Theory of the Leisure Class (1899), attacked the whole orthodox picture of economic man from outside and coined the enduring phrase conspicuous consumption -- spending on goods less for their usefulness than to display wealth and status. More broadly, he founded American institutional economics, the school holding that habits, customs, laws and institutions, rather than pure rational calculation, shape economic behavior. This put him at odds with the marginalist mainstream: where neoclassical economics modelled people as rational utility-maximizers, Veblen stressed evolved habits, social emulation, and the influence of technology and business organization. His ideas fed a distinctively American tradition of institutional and evolutionary economics that influenced later thinkers and remains a recognised counter-current to standard microeconomic theory.

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American economist who founded institutionalism and coined 'conspicuous consumption' in The Theory of the Leisure Class. Play the games that feature Thorstein Veblen:

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