Thorstein Veblen

Based on Wikipedia: Thorstein Veblen

The man who gave us the phrase "conspicuous consumption" couldn't hold down a job.

Thorstein Veblen was brilliant, cantankerous, and perpetually unemployable. He coined terms that shaped how we think about wealth and status for over a century. Yet he spent seven years after earning his doctorate working on his family farm, unable to convince any university to hire him. When he finally did land academic positions, he kept getting fired—sometimes for alleged affairs, sometimes for being too strange, and at least once, allegedly, for defending Chinese workers in California.

His most famous book, The Theory of the Leisure Class, published in 1899, introduced ideas that still echo through our culture today. Every time someone mocks a luxury purchase as being "just for status," every time a sociologist discusses wealth signaling, every time an economist talks about goods that become more desirable as they become more expensive—they're working in intellectual territory that Veblen mapped out more than a hundred years ago.

From Norwegian Immigrant to American Intellectual

Veblen was born in 1857 in Cato, Wisconsin, the sixth of twelve children. His parents, Thomas and Kari Bunde Veblen, had arrived in America a decade earlier with almost nothing—no money to speak of, no English. They had made the journey from Valdres, Norway, traveling through Drammen, Hamburg, and Quebec before finally reaching Milwaukee. The trip took four and a half months.

Thomas Veblen knew carpentry and construction. Kari Veblen knew persistence. Together, they built something remarkable: a successful family farm in Rice County, Minnesota, where they moved in 1864. That farm, near the town of Nerstrand, would eventually become a National Historic Landmark. Kari, despite having no formal medical training, became known throughout the surrounding area for providing medical treatment to neighbors in need.

Norwegian was Thorstein's first language. He learned English from neighbors and at school, picking it up the way children do—absorbing it from the world around him. His parents eventually learned English too, though they continued to read Norwegian literature at home, keeping their children connected to the old country even as they put down roots in the new one.

The farm prospered. And unlike most immigrant families of the time, the Veblens could afford to send their children to college. Every single one of them received a higher education. Thorstein's sister Emily became, reportedly, the first daughter of Norwegian immigrants to graduate from an American college. His older brother Andrew became a physics professor at Iowa State University and fathered Oswald Veblen, who would become one of America's leading mathematicians at Princeton.

This dual existence—Norwegian at home, American in the wider world—shaped Veblen profoundly. The sociologist David Riesman, writing from Harvard, argued that Veblen was alienated from his parents' culture but never fully absorbed into American culture either. The historian George Fredrickson put it more starkly: the Norwegian community in Minnesota was so isolated that when Veblen finally left it, "he was, in a sense, emigrating to America."

He would spend his entire life as an outsider looking in, and that perspective would become his greatest intellectual asset.

The Education of an Economist

At seventeen, Veblen enrolled at Carleton College in Northfield, Minnesota. There he studied under John Bates Clark, a young professor who would later become a founding figure in neoclassical economics—the dominant school of economic thought for the next century. Clark taught Veblen formal economics, and in doing so, revealed to him the limitations of the field's abstract hypothetical models.

Veblen absorbed Clark's teachings. Then he spent his career attacking them.

He developed broader interests: philosophy, natural history, classical philology. The works of Herbert Spencer—the Victorian philosopher who coined the phrase "survival of the fittest"—fascinated him. Spencer's evolutionary thinking about society would later inform Veblen's own theories about how economic institutions develop and change over time.

After Carleton, Veblen traveled east to Johns Hopkins University to study philosophy. There he encountered Charles Sanders Peirce, the founder of pragmatism—an American philosophical tradition that rejected absolute truths in favor of practical consequences and the recognition that humans, through their own choices, shape the institutions that govern their lives. When Veblen failed to secure a scholarship at Hopkins, he moved to Yale, where he earned his doctorate in 1884.

His dissertation was titled "Ethical Grounds of a Doctrine of Retribution." We don't know exactly what it contained, because the dissertation has been missing from Yale's archives since 1935. The only scholar who ever studied it was Joseph Dorfman, who examined it for his 1934 biography of Veblen. According to Dorfman, the work engaged with evolutionary thought and Kantian moral philosophy—but beyond that, the details are lost to history.

Also in 1884, Veblen wrote what appears to be the first English-language study of Immanuel Kant's third major philosophical work, the Critique of Judgment. This was a young man with serious intellectual ambitions and genuine scholarly achievements.

Then he graduated. And nothing happened.

Seven Years in the Wilderness

For seven years after earning his doctorate from Yale, Thorstein Veblen could not find work.

This wasn't for lack of trying, and it wasn't for lack of credentials. He had strong letters of recommendation. He had published scholarly work. He had a Ph.D. from one of America's most prestigious universities.

But something was wrong. Historians have proposed several theories. Perhaps his dissertation topic—concerning retribution and ethics—was considered unsuitable. Perhaps there was prejudice against Norwegians in American academia. Most likely, the problem was religion. In the late nineteenth century, most American academics held divinity degrees. Veblen did not. Worse, he openly identified as an agnostic. In an era when universities were still deeply intertwined with religious institutions, this was a serious liability.

So Veblen went home. He returned to the family farm in Minnesota, claiming to be recovering from malaria. Whether the malaria was real or merely a convenient excuse, he spent those seven years reading voraciously, thinking deeply, and becoming increasingly bitter about an academic world that had no place for him.

This experience would later fuel one of his books, The Higher Learning in America, published in 1918. In it, Veblen argued that universities had abandoned genuine academic values in favor of institutional self-interest and profitability. The critique reads like the revenge of a man who had been rejected by the very institutions he was analyzing.

Finally, a Career

In 1891, at age thirty-four, Veblen returned to academia. He enrolled as a graduate student at Cornell University to study economics under James Laurence Laughlin. When Laughlin moved to the newly founded University of Chicago, he brought Veblen with him as a fellow.

At Chicago, Veblen finally had a platform. He did editorial work for the Journal of Political Economy and used it as an outlet for his own writings. His work also appeared in the American Journal of Sociology. He was still a marginal figure at the university—teaching classes but not achieving prominence—but he was finally producing the work that would make him famous.

In 1899, he published The Theory of the Leisure Class.

Conspicuous Consumption

The central insight of The Theory of the Leisure Class is deceptively simple: wealthy people don't just buy things because they want them. They buy things to demonstrate that they're wealthy.

Veblen called this "conspicuous consumption"—the purchase of goods and services not for their practical value but for their ability to signal status. A wealthy man doesn't buy a gold watch because it keeps better time than a steel one. He buys it because other people can see that it's gold. A wealthy woman doesn't wear expensive clothes because they're more comfortable. She wears them because they're visibly expensive.

Alongside this, Veblen introduced the concept of "conspicuous leisure"—the display of time spent not working. Throughout history, the upper classes have demonstrated their status by engaging in activities that serve no productive purpose: elaborate hobbies, extensive travel, complex social rituals. The point isn't the activity itself. The point is showing everyone that you don't have to work.

These ideas seem obvious now, which is a testament to how thoroughly they've permeated our culture. But in 1899, mainstream economics was focused on utility—the idea that people buy things because they want the things themselves. Veblen was arguing for something more complex: that consumption is fundamentally social, that we buy things to communicate with others, and that much of what we call "demand" is really about status competition.

The concept of a "Veblen good" emerged from this analysis. Normal economic theory says that when prices rise, demand falls. But for certain luxury goods, the opposite happens: higher prices make them more desirable, precisely because the high price is part of what makes them desirable. A handbag that costs fifty thousand dollars isn't valuable despite its absurd price. It's valuable because of its absurd price. The price is the point.

Institutional Economics

Veblen's influence extended far beyond his famous phrases. He laid the foundation for what would become institutional economics—a school of thought that emphasizes how economic behavior is shaped by social institutions, cultural norms, and historical development rather than by abstract mathematical models.

His key distinction was between "institutions" and "technology"—what economists now call the Veblenian dichotomy. Institutions, in Veblen's framework, are the habits of thought and social arrangements that govern behavior: property rights, business practices, social hierarchies. Technology represents the practical knowledge and tools that humans use to make things. Veblen argued that institutions tend to be conservative, preserving existing power structures, while technology tends to be progressive, enabling new possibilities.

The tension between these forces—between social arrangements designed to preserve the status quo and technological capabilities that could enable change—was, for Veblen, the central dynamic of economic history.

This was a direct challenge to the economics of his day. Neoclassical economists—including his former teacher John Bates Clark—built models based on rational individuals maximizing their own utility. Veblen thought this approach missed the point entirely. Human beings aren't calculating machines. They're social animals shaped by culture, habit, and the institutions they've inherited from the past.

A Difficult Man

Veblen was, by most accounts, not easy to work with.

His students at Chicago considered his teaching "dreadful." At Stanford, where he moved in 1906, students found him "boring." But the teaching wasn't his real problem. His real problem was that he kept getting entangled in scandals.

At Chicago, he offended Victorian sensibilities with what were described as extramarital affairs. At Stanford, the same accusations followed him. In 1909, he was forced to resign, which made it extremely difficult to find another academic position. Once you've been let go from one university for moral reasons, other universities become reluctant to take a chance on you.

There's an apocryphal story that he was fired from Stanford after Jane Stanford, the university's co-founder, sent him a telegram from Paris expressing disapproval of his support for Chinese workers in California. The story is almost certainly false—Jane Stanford died in 1905, and Veblen wasn't appointed until 1906—but it captures something about how Veblen was perceived. He was the kind of person about whom such stories seemed plausible.

His personal life was complicated. He married Ellen Rolfe, the niece of Carleton College's president, in 1888. They separated repeatedly and finally divorced in 1911. After Ellen's death in 1926, an autopsy revealed that she had been unable to bear children due to a developmental abnormality. His stepdaughter later wrote that this explained Ellen's "disinterest in a normal wifely relationship" and that Veblen had "treated her more like a sister, a loving sister, than a wife."

Despite his reputation as a womanizer, there's apparently little evidence that he actually had sexual relationships outside his marriages. He may have been strange and socially awkward in ways that were misinterpreted as impropriety, or he may have been genuinely improper. The historical record is unclear.

In 1914, he married Ann Bradley Bevans, a former student, and became stepfather to her two daughters. By most accounts, this was a happier relationship. Ann was a suffragette, a socialist, and an advocate for workers' rights. When they were expecting a child together in 1915, the pregnancy ended in miscarriage. Veblen never had biological children of his own.

Ann died in 1920. After her death, Veblen devoted himself to caring for his stepdaughters. Becky, the older one, accompanied him when he moved to California and was with him when he died in 1929.

War, Peace, and Engineers

After being forced out of Stanford, Veblen landed at the University of Missouri in 1911, thanks to a friend who ran the economics department there. He hated it. The position was lower in rank than what he'd held before, the pay was worse, and he disliked the town of Columbia, Missouri.

But he kept writing. In 1914, he published The Instinct of Workmanship and the State of the Industrial Arts. Then World War I began, and Veblen turned his attention to larger matters.

In 1915, he published Imperial Germany and the Industrial Revolution, analyzing how Germany's rapid industrialization had occurred under authoritarian political structures, in contrast to Britain's more democratic development. He saw warfare as a threat to economic productivity and worried about the implications of industrial power in the hands of militaristic governments.

By 1917, Veblen had moved to Washington, D.C., where he worked with a group commissioned by President Woodrow Wilson to analyze possible peace settlements for the war. This work culminated in his book An Inquiry into the Nature of Peace and the Terms of Its Perpetuation.

After a brief stint with the United States Food Administration, Veblen moved to New York City to work as an editor at The Dial, a literary magazine. When the magazine changed direction, he lost that position too.

But he'd made connections with other intellectuals who shared his interests: Charles Beard, James Harvey Robinson, John Dewey. Together, they founded what they called The New School for Social Research—known today simply as The New School. It emerged from the progressive education movement with an explicit mission to pursue "an unbiased understanding of the existing order, its genesis, growth, and present working."

At The New School, Veblen wrote The Engineers and the Price System, perhaps his most radical work. In it, he proposed what he called a "soviet of engineers"—a governing council of technical experts who would manage industrial production more rationally than the profit-seeking businessmen who currently controlled it.

This was a novel argument. Where Marxists saw workers as the revolutionary class that would overthrow capitalism, Veblen saw engineers. Workers might resent their exploitation, but engineers actually understood how the system worked. They knew how irrational and wasteful the profit motive could be. They had the technical knowledge to run things better.

Veblen collaborated with engineers like Morris Cooke and Henry Gantt, followers of Frederick Winslow Taylor's scientific management theory. Another collaborator, Howard Scott, would later help found the technocracy movement—a political ideology that advocated replacing politicians with scientists and engineers. Scott listed Veblen as being on the organizing committee of the Technical Alliance, possibly without consulting him first.

The Outsider's Perspective

What made Veblen such a distinctive thinker?

His biographers return again and again to his background: the child of Norwegian immigrants, raised in an isolated community within America, never fully at home in either culture. He could see American society with the eyes of an outsider, noticing things that seemed natural and inevitable to everyone else.

Conspicuous consumption seemed obvious to people who had always lived inside it. Of course wealthy people buy expensive things. That's what being wealthy means. But Veblen could step back and ask: why? What purpose does it serve? What does it tell us about human nature and social organization?

He drew on the American pragmatist tradition—the philosophical school founded by Charles Sanders Peirce, under whom he'd studied at Johns Hopkins. Pragmatism rejected absolute truths and recognized that humans, through their own choices and actions, shape the institutions that govern their lives. Nothing is fixed. Everything is contingent. The social arrangements we've inherited aren't natural laws—they're human creations that serve particular interests, and they can be changed.

He also drew on the German Historical School of economics, which emphasized the importance of historical development and cultural context in understanding economic behavior. Against the abstract mathematical models of the neoclassical economists, Veblen insisted that you couldn't understand an economy without understanding its history, its institutions, and its culture.

And he was funny, in a bitter and sardonic way. His writing style was deliberately obscure—long sentences, Germanic constructions, technical vocabulary—but underneath the complexity was a sharp wit and a deep cynicism about human pretensions. When he described the wealthy wasting their resources on status displays, you could feel his contempt. When he analyzed business practices, he made them sound absurd. He was an economist who thought most economic behavior was irrational, a professor who thought universities had abandoned their mission, an American who never quite felt American.

The Final Years

Veblen spent his summers from 1896 to 1926 at a study cabin on Washington Island in Wisconsin. There, he taught himself Icelandic—well enough to write articles that were accepted by an Icelandic newspaper and to translate the Laxdæla saga, a medieval Icelandic epic, into English.

After leaving The New School, he moved to California. At one point, he had saved a reasonable amount of money—he'd earned a good salary at The New School and lived frugally. He invested in California raisin vineyards and the stock market. Then he lost it all.

He spent his final years in a house on Sand Hill Road in Menlo Park that had once belonged to his first wife. His income was modest: five or six hundred dollars a year in royalties from his books, plus another five hundred dollars sent annually by a former student from his Chicago days. He lived simply. His stepdaughter Becky looked after him.

He died on August 3, 1929, just a few months before the stock market crash that would vindicate many of his critiques of American capitalism.

Legacy

Veblen never founded a school. He never led a movement. He was too ornery, too idiosyncratic, too marginal in his own institutions to build the kind of following that creates intellectual dynasties.

But his ideas spread anyway. Conspicuous consumption became part of the language. The Veblenian dichotomy between institutions and technology influenced generations of economists who questioned the assumptions of mainstream theory. His critiques of capitalism—coming from outside the Marxist tradition—provided tools for thinkers who wanted to criticize the system without embracing revolutionary socialism.

Contemporary economists still work with concepts that Veblen introduced. Behavioral economists, who study how psychological and social factors influence economic decisions, are grappling with questions that Veblen raised a century ago. Sociologists who study consumption and status are building on foundations he laid. Anyone who writes about inequality, about the psychology of wealth, about why people buy what they buy, is working in territory that Thorstein Veblen explored first.

He was a difficult man who led a difficult life, perpetually out of place, never quite fitting in anywhere. But that outsider's perspective let him see things that others couldn't see, and his insights have outlasted the institutions that rejected him.