What happens when a few people have too much money?
Thorstein Veblen (1857-1929) lived in a very different Earth than ours. But he’d already made that question. Like others before him, he thought of a new, emerging class that no one had identified before: the leisure class. Born in Norway and emigrated to the US, he came from a hard-working highly-successful family.
Think twice before spending: Thorstein Veblen is watching
In a sense, he shared something with my admired Schumpeter: he took an approach to reality that included not only the dismal science but also Anthropology, Psychology and Sociology. That way he wasn’t seen Economics as an isolated science, but interrelated with human evolution and human behaviour. Social changes would mean economical changes. Instincts would matter.
In The Theory of the Leisure Class he explores the origins of property. For Veblen the first form of ownership was the property of the woman by the man. That would be coherent with some ancestral practices like seizing women from defeated enemies as trophies. Later that form of ownership would extend to new forms such as marriage, slavery or finally the ownership of things.
He opposes to explain the pursue of wealth as an evolution of the fight for subsistence. Sure that is possible in a very early phase of development or in a scarcity situation. But if the resources are high enough, people do not fight for subsistence. (you do?… cos I don’t)
Most economists would say that, survival assured, people fight to rise their way of living. That’s reasonable too. But those that already have a higher standard don’t need to worry about that. What drives the lives of those that already have too much?
For it’s not enough to posses wealth, people crave for honour. And honour is not something you can share with yourself. Honour requires recognition. The wealth or power must become evident for others, so they can recognise it.
It’s funny how Veblen thinks about the hierarchy of needs half a century before Maslow made his in 1943
And high thinking would require a separation of menial tasks. We still think of it. The highest class is abhorred of manual labor. That way of thinking has been going on for ages. And it’s not about survival: it’s about differentiation.
In Veblen’s thoughts that would mean two simple concepts:
Conspicuous leisure, kind of symbolic work, not quite useful for the community, but that marks a status:
- Activities like taking long exhausting vacations and, most of all, bringing souvenirs back to all our relatives. Where’s the value of a souvenir? Which signal do we send?
- Why did the highest class have to work when they had serfs? They didn’t.
- Why did hunting survive when farming or animal domestication was far more productive? It still does.
- Couldn’t armies help with menial work in times of peace? They didn’t either.
- Don’t you know someone who’s work is highly symbolical but of little practical utility? You’ll find closer examples at work, but Veblen was thinking of government, war, sports, and devout observances.
Conspicuous consumption, waste of resources to display a higher status than others.
- Of work. Like the consumption of servant’s work, specially totally unproductive work. Is there a better way of displaying power than having a lot of people just wasting your time for you? Just being there for your unproductive whims, to maintain and increase your honour? Of course you’d say that the well off class didn’t have time for doing things themselves. Specially when they had so many obligations like clubs, sports, or even sewing circles. (While they had their clothes sewed by servants)
- Of goods. Certain rituals, or beverages, were initially reserved for the superior class, specially intoxicating ones and stimulators. Women would administer them. It would be manly to consume them, always resisting the temptation of excessive indulgence. It still is. Luxuries would be for masters, the more refined the better. Are consumers seeking excellence? Differenciation again and again in everyday life.
Scarcity or differenciation? luxury or waste of money?
In 1899 Veblen was already thinking of Jumeirah Palm. Time has passed, the planet has changed, but we haven’t.