Why is Economics not an Evolutionary Science

Thorstein Veblen

• Publisher: Read & Co. Books
• Year: 2015
• Print ISBN: 9781473324336
• eBook ISBN: 9781473398863
• Topic: Economics
• Subtopic: Economic Theory
• Index: Economics

Why is Economics not an Evolutionary Science' was first published in 1898 in the Quarterly Journal of Economics. It's author, Thorstein Veblen, was the son of Norwegian American immigrants. He grew up to become a prominent economist and sociologist, producing many books and articles. The subject of this article is arguably the concept he is best known for: utilising evolutionary theory to develop a 20th century theory of economics. This is a must read for anyone with an interest in the influential ideas of this renowned thinker. We are republishing this work with a brand new introductory biography.

Why is Economics not an Evolutionary Science

by

Thorstein Veblen

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Contents

Thorstein Veblen

“Why is Economics Not an Evolutionary Science”

Thorstein Veblen

Thorstein Bunde Veblen was born Torsten Bunde Veblen on 30th July 1857 in Cato, Wisconsin, United States, to Norwegian immigrant parents.

Veblen grew up on his parents farm in Nerstrand, Minnesota. This area and others like it were known as little Norways due to the religious and cultural traditions that had been imported from the old country. Although Norwegian was his first language, the young Veblen learned English from neighbours and at school.

His parents put a lot of emphasis on education and hard work and at age seventeen he was sent to study at Carleton College Academy. It was there that he met John Bates Clark (1847–1938) who went on to become a leader in the new field of neoclassical economics. Upon graduating Veblen conducted graduate work under Charles Sanders Pierce (the founder of the pragmatist school in philosophy) at John Hopkins University. He then moved to Yale in 1884 to take a Ph.D. and completed his dissertation on “Ethical Grounds of a Doctrine of Retribution.”

Upon leaving Yale he was unable to find a employment. This was partly due to prejudice against Norwegians, and partly because most universities considered him insufficiently educated in Christianity; most academics at the time held divinity degrees. Due to this, Veblen returned to the family farm – ostensibly to recover from malaria – and spent six years there reading voraciously. However, in 1891 he was accepted to study economics as a graduate student at Cornell University. From here on his academic career took off, obtaining his first professional appointment at the University of Chicago – where in 1900 he was promoted to assistant professor – and from there moving on work at institutions including Stanford University and the University of Missouri.

Veblen drew from the work of 19th century intellectuals such as Charles Darwin and Herbert Spencer to develop a 20th century theory of evolutionary economics. He described economic behaviour as socially determined and saw economic organization as a process of ongoing evolution. In his work The Theory of the Leisure Class (1899) he outlined how rich and poor alike, attempt to impress others and seek to gain advantage through what Veblen coined “conspicuous consumption” and the ability to engage in “conspicuous leisure.” In The Theory of Business Enterprise (1904) he used evolutionary analysis to explain the growth of business combinations and trusts.

In the 21st century his ideas have come back into the spotlight as a valid approach for studying the intricacies of economic systems and his theory that humans do not rationally pursue value and utility is one of the cornerstones of the modern discipline of behavioural economics. Veblen made a lasting contribution to his field and has influenced many scholars that have followed him.

Thorstein Veblen died in California on 3rd August 1929, less than three months before the crash of the U.S. Stock market crash which led to the great depression.

“Why is Economics
Not an Evolutionary Science”

The Quarterly Journal
of Economics Volume 12, 1898.

M.G. de Lapouge recently said, Anthropology is destined to revolutionise the political and the social sciences as radically as bacteriology has revolutionised the science of medicine.”1 In so far as he speaks of economics, the eminent anthropologist is not alone in his conviction that the science stands in need of rehabilitation. His words convey a rebuke and an admonition, and in both respects he speaks the sense of many scientists in his own and related lines of inquiry. It may be taken as the consensus of those men who are doing the serious work of modern anthropology, ethnology, and psychology, as well as of those in the biological sciences proper, that economics is helplessly behind the times, and unable to handle its subject matter in a way to entitle it to standing as a modern science. The other political and social sciences come in for their share of this obloquy, and perhaps on equally cogent grounds. Nor are the economists themselves buoyantly indifferent to the rebuke. Probably no economist today has either the hardihood or the inclination to say that the science has now reached a definitive formulation, either in the detail of results or as regards the fundamental features of theory. The nearest recent approach to such a position on the part of an economist of accredited standing is perhaps to be found in Professor Marshall’s Cambridge address of a year and a half ago.2 But these utterances are so far from the jaunty confidence shown by the classical economists of half a century ago that what most forcibly strikes the reader of Professor Marshall’s address is the exceeding modesty and the uncalled for humility of the spokesman for the “old generation.” With the economists who are most attentively looked to for guidance, uncertainty as to the definitive value of what has been and is being done, and as to what we may, with effect, take to next, is so common as to suggest that indecision is a meritorious work. Even the Historical School, who made their innovation with so much home grown applause some time back, have been unable to settle down contentedly to the pace which they set themselves.

The men of the sciences that are proud to own themselves “modern” find fault with the economists for being still content to occupy themselves with repairing a structure and doctrines and maxims resting on natural rights, utilitarianism, and administrative expediency. This aspersion is not altogether merited, but is near enough to the mark to carry a sting. These modern sciences are evolutionary sciences, and their adepts contemplate that characteristic of their work with some complacency. Economics is not an evolutionary science -- by the confession of its spokesmen; and the economists turn their eyes with something of envy and some sense of baffled emulation to these rivals that make broad their phylacteries with the legend, “Up to date.”

Precisely wherein the social and political sciences, including economics, fall short of being evolutionary sciences, is not so plain. At least, it has not been satisfactorily pointed out by their critics. Their successful rivals in this matter, the sciences that deal with human nature among the rest, claim as their substantial distinction that they are realistic: they deal with facts. But economics, too, is realistic in this sense: it deals with facts, often in the most painstaking way, and latterly with an increasingly strenuous insistence on the sole efficacy of data. But this “realism” does not make economics an evolutionary science. The insistence on data could scarcely be carried to a higher pitch than it was carried by the first generation of the Historical School; and yet no economics is farther from being an evolutionary science than the received economics of the Historical School. The whole broad range of erudition and research that engaged the energies of that school commonly falls short of being science, in that, when consistent, they have contented themselves with an enumeration of data and a narrative account of industrial development, and have not presumed to offer a theory of anything or to elaborate their results into a consistent body of knowledge.

Any evolutionary science, on the other hand, is a close knit body of theory. It is a theory of a process, of an unfolding sequence. But here, again, economics seems to meet the test in a fair measure, without satisfying its critics that its credentials are good. It must be admitted, e.g., that J.S. Mill’s doctrines of production, distribution, and exchange, are a theory of certain economic processes, and that he deals in a consistent and effective fashion with the sequences of fact that make up his subject matter. So, also, Cairnes’s discussion of normal value, of the rate of wages, and of international trade, are excellent instances of a theoretical handling of economic processes of sequence and the orderly unfolding development of fact. But an attempt to cite Mill and Cairnes as exponents of an evolutionary economics will produce no better effect than perplexity, and not a great deal of that. Very much of monetary theory might be cited to the same purpose and with the like effect. Something similar is true even of late writers who have avowed some penchant for the evolutionary point of view; as, e.g., Professor Hadley, to cite a work of unquestioned merit and unusual reach. Measurably, he keeps the word of promise to the ear; but any one who may cite his Economics as having brought political economy into line as an evolutionary science will convince neither himself nor his interlocutor. Something to the like effect may fairly be said of the published work of that later English strain of economists represented by Professors Cunningham and Ashley, and Mr Cannan, to name but a few of the more eminent figures in the group.

Of the achievements of the classical economists, recent and living, the science may justly be proud; but they fall short of the evolutionist’s standard of adequacy, not in failing to offer a theory of a process or of a developmental relation, but through conceiving their theory in terms alien to the evolutionist’s habits of thought. The difference between the evolutionary and the pre-evolutionary sciences lies not in the insistence on facts. There was a great and fruitful activity in the natural sciences in collecting a collating facts before these sciences took on the character which marks them as evolutionary. Nor does the difference lie in the absence of efforts to formulate and explain schemes of process, sequence, growth, and development in the pre-evolut...

Table of contents

• Thorstein Veblen
• “Why is Economics Not an Evolutionary Science”