Thorstein Veblen, a prophet sans honour

2018 marks the bicentennial of the birth of Karl Marx, the great dissector of human societies, and the co-author of the theories that inspired Communism as a political ideology. Among other things, Communism discourages private ownership of property through some abstruse mechanism of mass-leveling of people, irrespective of their natural talents and acquired skills. A sweeping reading of the works of the great man would reveal a deeply passionate, even emotional man devoted to finding enduring solutions to the glaring iniquitous human conditions of his day. At the risk of being dubbed presumptuous, I should like to humbly observe that Marx’s emotions might have somewhat discounted his otherwise formidable intellect in the course of constructing his ambitious proposition; otherwise he ought to have discerned that his mass-leveling offended against the natural order.

Expectedly, Communism hasn’t succeeded in any country. More instructively, no country today practises Communism in its original form – not Russia or China. Just as expectedly, a whole school of Marxist critics has arisen since his passing in 1883. A leading member of that school shares Marx’s first name: Karl Popper, the great twentieth century philosopher who called Marx a false prophet. Neither the Chinese president, Xi Jinping, nor the European Commission president, Jean-Claude Juncker, agrees, at least going by their respective complimentary remarks to commemorate Marx’s bicentennial. The Chinese president’s remarks read in part, “Like a spectacular sunrise, the theory (Marxism) illuminated the path of humanity’s expectation of the law of history, and humanity’s search for (its) own liberation… Marx pointed out the direction, with scientific theory, towards an ideal society with no oppression or exploitation, where every person would enjoy equity and freedom…”. On the same day at a different gathering, Juncker said, “Today he (Marx) stands for things he is not responsible for and which he didn’t cause, because many of the things he wrote down were redrafted into opposite…”. Many critics have forcefully disagreed with these views; but it is best to let time determine Karl Marx’s final place in history.

Thinking of Marx as a prophet on his bicentennial caused me to recall another prophet who could pass as Marx’s diametric opposite number. This prophet dispassionately dissected the human societies of his day; he had been so detached in his socio-analyses that his biographers respectively described him as “a creature from another planet.” His name was Thorstein Veblen; an American by birth, but of Norwegian origin. Born about 40 years after Marx’s birth, Veblen openly derided the Marxist much-talked about proletarian takeover of the commanding heights of the economy, termed the “Proletarian overthrow of the leadership class”; all wrong! he chided. The leadership class, according to Veblen, is comprised of a certain category of persons. Only those with requisite ability and qualification can enter therein. That class is looked upon with mixed admiration and awe by the proletarian, a majority of whom with time would aspire to enter that privilege class. In Veblen’s view, the working class does not aspire to replace or overthrow the leadership, rather, it aims to emulate it – a view that would as likely cause Marx and his life-long partner, Friedrich Engels, to wince with pain.

But wince or not you cannot but agree with this prophet because the world has yet to witness any such overthrow as was postulated by Marx and Engels. Most of Veblen’s other postulations have since been wholly vindicated, more so in the immediate post Great Depression years; this is the reason for the title of this short piece. Some of Veblen’s published major works include: The theory of the leisure class; The theory of the business enterprises; The instinct of the workmanship and the state of the industrial arts; Imperial Germany and the industrial revolution; An inquiry into the nature of peace and the terms of its perpetuation; The higher learning in America; The vested interest and the common man; The engineer and the price system; The place of science in modern civilization; The evolution of scientific point of view; Why is economics not an evolutionary science? The limitations of marginal utility; Some neglected points in the theory of socialism; The socialist economics of Karl Marx; The industrial system and the captains of industry; The captains of finance and the engineers; etc.

It is puzzling that a man of such prodigious intellectual production and proven correctness is seldom accorded commensurate celebration. This was something that characterized the man’s life. He would always grumble that recognition of his works usually arrived too late for his pleasure. True what they say, a true prophet is not without honour except in his country – and I might add, in his time. Could Veblen’s time of honour finally be in the offing? This question cannot be exhaustively discussed without taking a critical look at the unending global financial crises, which culminate in trade cycles – with grave consequences in our day. The previous of these occurred in 2007/2008. The United States of America alone had to part with over USD800million of tax payers funds to bail out corporate entities that were deemed too big to fail. (Quite a novel coinage, that. Could those entities’ unwieldy sizes not be the reason they verged on failing in the first place? Is there no optimal size for corporate entities as suggested by the Law of Diminishing Returns? I often wonder what Robert Heilbroner’s Worldly philophers would have thought of the term, too big to fail).

Economics analysts since Adams Smith have dealt with the seeming intractable challenge of trade cycles with no universally approbated solution. But, typical of his reputation, Veblen broached the challenge with the eyes of an “outsider”. In The Engineers and the Price system, Veblen identified a group in the wealth creating cycle, which he called the saboteurs. According to Veblen, if the wealth creating cycle ran as it should, the saboteurs would have zero utility value; therefore, this group of persons could not lay claim to any income in the process of wealth creation. Thus, in the characteristic Veblenist cutting edge analysis, we learn that the wealth-creating architecture was designed to suffer periodic breakdowns to justify the income of the saboteurs(!) This is as much intriguing as it is refreshingly new in economics; but without a doubt a line of inquiry worth pursuing to its logical conclusion.

The foregoing revelations are part of the reason I contended that the present body of orthodox economics is eclipsed (Guardian 18th November 2014); and later called for thinking outside the box (Guardian 27th September 2016). This should be the effective path to economic liberation for the underdeveloped countries, who ultimately bear the inevitable global subsidy-costs of the existing economic orthodoxy. Veblen, the unorthodox nineteenth century prophet, certainly left many inviting trails in his published works, which contemporary global financial crises now enjoin developing nations to pursue to logical conclusion. If they dare to diligently heed those compelling invitations, the world may, forty years hence, chance on discoveries that would persuade it to accord Thorstein Veblen his due honour during his own bicentennial birthday.
• Nkemdiche, a consulting engineer, lives in Abuja.