------------ EH.NET BOOK REVIEW --------------
Published by EH.NET (November 2007)

Janet T. Knoedler, Robert E. Prasch and Dell P. Champlin, editors, 
_Thorstein Veblen and the Revival of Free Market Capitalism_. 
Cheltenham, UK: Edward Elgar, 2007. xxi + 239 pp. $125 (cloth), ISBN: 
978-1-84542-540-1.

Reviewed for EH.NET by Warren J. Samuels, Department of Economics, 
Michigan State University.


Within neoclassical price theory and its applications, a common 
problem arises. Although the conventional protocol calls for unique 
determinate optimum equilibrium solutions, a change in assumption or 
circumstance yields two different such solutions. The problem has to 
do with which price structure is to be used in making calculations, 
the pre-change or the post-change structure. That problem is one of a 
larger genre. Consider, for example, a change from one Smithian stage 
to the next stage. Which cultural norms, which legal rights, and 
which moral rules, as between the two stages, are to be used in 
rendering interpretations and normative judgments? On a more homely 
level, we observe intergenerational conflict, a conflict that is 
perhaps sharpest between ?migr? parents and their children, each 
raised in different cultures. The book under review is noteworthy for 
its variations on the theme.

The editors are well-known institutionalists. Janet Knoedler is Chair 
of the Department of Economics at Bucknell University. Robert Prasch 
is in the Department of Economics at Middlebury College. Dell 
Champlin is Visiting Professor of Economics at Western Washington 
University. In the editors' introduction to the ten contributions 
comprising this new collection, they argue that "to understand 
Veblen, it must be appreciated that as a youth he came of age in a 
time and place influenced by the Populist movement, but, 
intellectually, he came of age during the Progressive era. As a 
consequence, his thinking shares elements of both, but cannot be 
located in either" (p. xiii). Each of the ten chapters raises the 
problem, directly or indirectly. For that reason alone, the authors 
are to be seen as breaking new interpretative ground in understanding 
Veblen -- not as to whether or not he was correct but in 
understanding the tensions and ambiguities raised by his analysis.

Perhaps the most pregnant essay, apparently the essay most deeply 
felt by the editors, is that by the political scientist and Veblen 
scholar Sidney Plotkin. In his view, Veblen distrusted both the 
Captains of Industry and the legislators, judges and administrators 
who form the government, all of whom operate on the basis of status 
emulation centering on wealth. Government is an important institution 
but its officeholders are much beholden to business. Democracy is 
thus sabotaged from within, by those seeking hierarchical status and 
by those seeking power. What is there about government which makes it 
legitimate? If neither the leaders of business nor those of 
government pay attention to the masses, except to identify what 
political language will serve to manipulate them along desired lines, 
is democracy a fraud?

Anne Mayhew's opening essay appropriately considers the place of 
science in a society whose culture encompasses more than science. 
Relying in part on insights from Joel Mokyr , Mayhew examines the 
cultural foundations of the relationships between science and 
technology and the questions which science is unable to answer, 
questions of a religious and metaphysical nature. What is there about 
science and metaphysics which lead some people to consider one and 
not the other legitimate? What is there about biological and cultural 
factors which lead some people to emphasize one and not the other? 
She concludes with an even deeper query: "What should or can be 
shielded from science and what opened to its dispassionate glare 
remains a question to which Veblen gave no definitive answer" (p. 
14). For some people, Veblen is so persuasive they readily overlook 
his lack of conclusiveness when held at arm's length.

In a collection in which no chapter is weak, one of the deepest is 
Robert Prasch's analysis of the origins and meaning of private 
property. Property is to be understood in a context of power 
structure, affirmation and denaturalization of property, status 
emulation, property as a means of support and participation by the 
individual, property as predation, the inevitable changes in the 
institution of property, and so on. Every generation thinks that its 
social construction of property is both the true one and the one from 
time immemorial. Given change in the law of property, which law, the 
old or the new, is to be the basis of interpretation and evaluation?

A similar situation pertains to the corporation and the various forms 
of capital, outlined by Eric Hake. The evolution of the corporation, 
capital, markets, asset valuation, credit, securities markets and 
their sundry combinations, each of which defines the economy for some 
people, can be unidirectional or multidirectional. The question, 
which is the interpretive base from which all else is to be viewed, 
announces the common problem. It is not only the institutions of 
property and the corporation that have evolved. So too have the 
cultural incidence of pecuniary institutions and the machine process, 
their interrelations and the further "financialization" of the 
economy, as Glen Atkinson puts it. William Waller examines the 
variety of theories of exchange and of markets, as well as value, 
from Adam Smith to the present, emphasizing what is missing in the 
work of Veblen, though not in the work of numerous later disciples of 
Veblen. When do we follow Veblen and when not?

Atkinson focuses on the evolution of the economy, and Waller 
identifies what is missing from Veblen. Geoffrey Hodgson takes up 
four myths of Veblenian institutionalism: (a) that Veblen's 
psychology was behaviorist, (b) that Veblen saw individual behavior 
as being almost entirely explained by culture or institutions, (c) 
that Veblen upheld a "dichotomy" between institutions and technology, 
and (d) that the work of Clarence Ayres represents a direct 
continuation and development of Veblenian precepts (p. 127). All four 
will be controversial, but especially the latter two.

Each chapter presents lines of reasoning and evidence that lead to a 
further general question: Veblen developed his theories in the 
context of his times. What would Veblen say about the new world of 
business, government, higher education, and religion? It is because 
the contributors to this volume are aware of the situational 
specificity of Veblen's theories that each, so far from merely 
rehearsing Veblen's ideas, wonders what "a reassessment and 
reintegration" (p. 64) will look like.

While the insights of John R. Commons and Malcolm Rutherford are 
amply and properly brought to bear by several contributors, only one 
mention of Hyman Minsky is to be found and none of Daniel Bromley or 
of A. Allan Schmid.

The contributors have two further things in common. Each chapter is 
rich in detail and, although only Mayhew explicitly elaborates on 
pragmatism in her account, pretty much all contributors tell stories 
amenable to pragmatist interpretation.

I am not quite certain as to what lesson the editors intend to convey 
by juxtaposing "the revival of free market capitalism" to Veblen. I 
am, however, optimistic that the volume will mark the onset of a new 
stage in the interpretation and reformulation of Veblen's 
institutionalism.


Warren J. Samuels is Professor Emeritus of Economics at Michigan 
State University. He is currently working on preliminary articles 
based on his study of the use of the concept of the invisible hand in 
economics.

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