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OEconomia (2013), 2013:171-173 NecPlus
Copyright © Nec Plus / Association OEconomia 2013
doi:10.4074/S2113520713011092

Book Review

Comptes rendus / Reviews

David Reisman, The Social Economics of Thorstein Veblen

Cheltenham, Edward Elgar, 2012, 338 pages, ISBN: 978-0857932181

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Malcolm Rutherforda1

a1 University of Victoria.
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rutherford m [Google Scholar]

There have been other books on Veblen in the not too distant past by writers such as Rick Tilman (1996), John Diggins (1999), Elizabeth and Henry Jorgensen (1999), Stephen Edgell (2001), and Charles Camic and Geoffrey Hodgson (2011), but Reisman’s book provides a more complete overview of Veblen’s work than any other. The first five chapters deal with the issues of instincts and habits, institutions, and cumulative change—the basic building blocks of Veblen’s analytical scheme. The next five chapters deal with conspicuous consumption, production, corporations, credit and profit, and the institutions of property and democracy—the central ideas in Veblen’s treatment of the capitalist system of his time. This is followed by two chapters on Veblen and socialism, including his views on the revolutionary potential of workers and engineers, and two chapters on war and peace, dealing with Veblen on imperial Germany, nationalism, and the possibilities for peace. Only then does Reisman provide a brief discussion of Veblen’s views on neoclassical economics, and an even briefer glimpse at Veblen’s biography.

Reisman’s focus is on Veblen’s own analytical system in all its parts. His aim is to show the unity of Veblen’s underlying system of thought and in this he succeeds. As Reisman points out, it is perhaps his notion of the instinct of workmanship “that more than anything else unites the whole of Veblen’s social economics” (240). The book also benefits from Reisman’s earlier work on the economics of Adam Smith, Alfred Marshall, and J. K. Galbraith as there are many occasions where interesting parallels are drawn. I also very much appreciated the emphasis that Reisman gives to the significance of the Russian revolution in Veblen’s thinking and his notion of a “Soviet of engineers.” The American literature on Veblen is often reluctant to identify the extent of Veblen’s socialism, but his use of the language of the Soviet is no mere accident or whim.

On the other side, I am less happy with the fact that the book does not bring out or deal with areas of recent debate over Veblen. These areas include issues relating to Veblen’s biography, the “Darwinian” nature or otherwise of his treatment of institutional change, and the status to be given to his thinking concerning the potential role of engineers in any future state of affairs. For example, on the issue of institutional change, Reisman cites the well known passage from The Leisure Class in which Veblen talks of a “natural selection” of institutions, but does not provide a detailed discussion of how Veblen actually presents instances of significant institutional change. If he had, it would become apparent that Veblen does not see institutional change as a matter of some independent institutional variations being selected by a given environment, but as a matter of environmental change in the form of new technologies and ways of making a living themselves prompting an associated change in ways of thinking and institutional forms. There is still a struggle of sorts here as new ways of thinking have to make their way against established norms and vested interests, but this process involves both cultural and political processes that Veblen is not terribly explicit about.

I have some other issues too. Reisman discusses the role of what he calls the desire for “approbation” in Veblen in terms of it being an “implicit forth instinct” (in addition to parental bent, workmanship, and idle curiosity) or as a “meta-instinct” (52-55). But my reading of Veblen is that this is an aspect of workmanship. While Reisman does discuss the manner in which the instincts of idle curiosity and parental bent can become “contaminated”, he provides no similar discussion of the contamination of workmanship that produces emulation and invidious comparison. Further, Reisman’s discussion of the issues of ownership and management in Veblen does not properly account for his non-standard definition of terms. In Business Enterprise, Veblen defines the owners of the industrial equipment as the debenture holders and the managers as the larger common stock holders. The control of corporations in Veblen remains in the hands of the larger common stock holder or their representative in the form of the investment banker. Salaried managers are not seen as possessing discretionary control of the corporation.

I also have occasional difficulty with the way in which Reisman presents certain transitions in Veblen’s work. Within Business Enterprise, for example, there is a not always very clearly demarcated transition from the consideration of business under competitive conditions to a consideration of business after some substantial degree of consolidation has taken place. Business cycles belong in the competitive phase, but Reisman discusses cycles only after presenting Veblen’s ideas on consolidation, an arrangement that creates confusion. A different kind of transition occurs between various books of Veblen’s. One good example is the shift in Veblen’s treatment of unions and their revolutionary potential. Veblen changed his mind on this, I suspect largely because of the intervening work of his Chicago colleague Robert Hoxie. As a result, Veblen shifted his attention to the engineers, but it is worth stressing the point that Veblen always included the engineers in the group that would be affected by their contact with machines and mechanical ways of thinking. This particular shift in Veblen’s thinking is not dealt with as precisely as it might have been.

Despite my complaints, I think this is an excellent book on Veblen. I have found much more to complain about with other books on Veblen. The book does not fall into the common traps: it is most definitely not hagiography, but neither is it unsympathetic. It focuses on the central theoretical issues, outlines the basic structure of Veblen’s thinking, and presents a strong interpretation of that thinking, centered on the role of Veblen’s concept of workmanship. As Reisman concludes:

Veblen’s world-view was solid and robust. It is grand theory in the cross-disciplinary tradition of Smith, Marx, Spencer, Weber and Pareto. It is a single system if one knows where to find the organic whole … The chapters of this book, read one after another, add up to a single paradigm. The links are hidden but not destroyed … It has been the message of this book that careful pruning can reveal the iron-clad structure hidden in the overgrowth of words (312).


References

Camic, Charles and Geoffrey, Hodgson (eds). 2011. Essential Writings of Thorstein Veblen. London: Routledge. [Google Scholar]

Diggins, John Patrick. 1999. Thorstein Veblen: Theorist of the Leisure Class. Princeton, NJ: Princeton University Press. [Google Scholar]

Edgell, Stephen. 2001. Veblen in Perspective: His Life and Thought. Armonk, NY: M. E. Sharpe. [Google Scholar]

Jorgensen, Elizabeth, and Henry, Jorgensen. 1999. Thorstein Veblen: Victorian Firebrand. Armonk, NY: M. E. Sharpe. [Google Scholar]

Tilman, Rick. 1996. The Intellectual Legacy of Thorstein Veblen: Unresolved Issues. Westport, CN: Greenwood Press. [Google Scholar]