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I respond to Patrick and Ann because I think they approach the question properly. Any
reasonable discussion of Veblen's assertions about "inefficiency" and "capitalization" has
to begin with acceptance of the meaning of those terms in his information environment.
Further, any reasonable discussion would then proceed without regard to the empirical
historical, or theoretical correctness of his views. The question of the correctness of
Veblen's views, for his own or any other time, is interesting and important, but it is
separate from the question of what his views were.
 
I have no quarrel with Patrick's discussion of "capitalization", though I think more could
be said on the point.  Ann's comments on "efficiency" do prompt a comment. There are at
least four kinds of "inefficiency" that I know of: (1) neoclassical inefficiency due to a
misallocation of resources; (2) Keynesian inefficiency due a failure to allocate resources
at all; (3) the inefficiency following from a dysfunctional set of institutions, even in
the presence of neoclassical and Keynesian efficiency, and (4) the engineering
inefficiency that is depreciated in most introductory economics texts. I think it was the
(3rd) kind of inefficiency that was Veblen's main preoccupation. I leave it to some
graduate student to ferret out the deficiencies entailed in Veblen's failure to
distinguish between economic and engineering efficiency, if, indeed, he is guilty of that
failure.
 
Robin Neill 
 
 
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