Imagining a Different Economy

By Paul W. GleasonMarch 22, 2021

Imagining a Different Economy

Veblen: The Making of an Economist Who Unmade Economics by Charles Camic

FOR DECADES, Thorstein Veblen has been the greatest American thinker without a good biography. An unsparing critic of our last gilded age, he savaged the upper classes, from their manners to the economic theories that justified their wealth, while also offering an alternative view of how the economy ought to work, and for whom.

After his death, Veblen quickly fell out of intellectual fashion. His foes among the conservative economists — marginalists and members of the Austrian School — won the field, and arguably still hold it. Cold War liberal sociologists, including David Riesman, Daniel Bell, and Talcott Parsons, dismissed him as a utopian socialist. The Marxist Theodor Adorno thought him too much of a technocratic pragmatist to be a real revolutionary. He is known today, if at all, as a dyspeptic outsider with a scandalous sex life, who also coined a few neat phrases like “conspicuous consumption” and “the leisure class.”

Charles Camic’s new biography, Veblen: The Making of an Economist Who Unmade Economics, presents Veblen differently — as an academic insider, deeply involved in academic institutions and scholarly debates. In order to make his case, Camic devotes at least as much time to Veblen’s colleagues as he does to the man himself, and the book might be best read as a group biography of Veblen and his mentors, a portrait of American economics as a young science.

Veblen’s ideas and life are worth recalling, especially now. During his lifetime (1857–1929), he had a front-row seat as the American economy took something like its current form, evolving from an agrarian into an industrial and eventually a financialized economy. The economic theories that rose to prominence during his lifetime still reign in ours. At every step, Veblen pointed out their oversights and absurdities. He also imagined a different economy, one rooted in his family life and education on the Minnesota prairie.


Thorstein Bunde Veblen was the sixth child of Thomas Veblen and Kari Bunde, immigrant farmers from Valdres, Norway. In 1847, his parents arrived in Milwaukee holding three dollars between them. Fortunately, they had considerable inner resources. Kari had a brain that was “the fastest machine that God ever made,” according to her son Edward. She was endlessly resourceful in matters of home economics and had a knack for frontier medicine. In personality and build, Thomas reminded his eldest son, Andrew, of a mass of “unchiseled grey rock.” He was a physical dynamo, an eager adopter of the latest farming technology, and he built farmhouses that still stand today. The Veblens bought a series of farms in Wisconsin and Minnesota, turning one uncultivated tract of land after another into agricultural abundance. Thirteen years after arriving in Milwaukee, they owned the second-richest farmstead in Wheeling Township, Minnesota.

It is hard to imagine a more clear-cut immigrant success story. They were a prosperous, self-sufficient family, exemplary American pioneers. Self-sufficient, however, is not the same thing as self-made, let alone self-interested. Federal policy made farmland cheap and abundant. After their arrival, more established Norwegian immigrants gave them money, lodging, and advice. Everyone on the pioneer farm, writes Camic, was “working for the benefit of the family as a collective unit, [so] it functioned in ways that deviated from the individualistic model of ‘the quintessential economic man.’” On the contrary, Norwegian-language newspapers constantly warned newcomers against bankers, lawyers, commodity speculators — anyone looking to skim a little cream off the top of the burgeoning agricultural economy without ever milking a cow.

Many parents not only put their children to work at home but also rented them out to neighboring farms. Not the Veblens. Instead, Thomas and Kari sent their children to a new American institution: the “common school.” On top of providing facts about history, geography, and natural science, Camic notes, the standard textbooks also “took every opportunity to decry idleness, waste, extravagant display, and ill-gotten acquisitions, and to contrast these derelictions with the cardinal virtues of honest labor, frugality, and self-denial.” Thorstein was immediately precocious. Andrew remembered him as “the most advanced pupil in the school, and I believe the teachers were closely enough put to it to keep ahead of him.”

In an even more unusual step, Thorstein (and several of his siblings) attended nearby Carleton College. American higher education already represented a curious blend of financial and intellectual interests. Funded by a new breed of philanthropic industrialists, colleges promised to prepare students for careers in medicine, law, and government, but when Thorstein enrolled in the 1870s, they were also adopting the scientific research methods of the German universities, which were hypothetically above financial concerns. Carleton’s first president, James Strong, vowed that his college would be “inferior to none in its standard of scholarship.”

One of Carleton’s rising stars was John Bates Clark, a young economist who had trained at Heidelberg. Clark taught Veblen to reject Adam Smith’s static, self-interested homo economicus and instead study economic actors as social animals, psychologically complex and conditioned by their institutions over time. Veblen would follow this advice in everything he wrote. Yet Clark also defended the emerging industrial economy, particularly its distribution of wealth. Dismissing old distinctions between productive and unproductive labor and consumption, he insisted that capitalists deserved their profits and that their spending drove production. The industrialist’s factory “worked,” his new mansion employed masons, and so on.

Likely with Clark’s encouragement, Veblen went to graduate school at some of the United States’s finest nascent universities (Johns Hopkins, Yale, and Cornell), where he studied the latest economic ideas. The most consequential was marginalism. Instead of studying production (the province of classical economists), the marginalists focused on consumption and turned it into a novel theory of value: a thing was worth whatever a consumer would pay for one additional unit. That included people’s time. Hourly wages reflected the workers’ expected productivity, meaning no one could justly complain about low pay. Veblen’s old mentor Clark embraced marginalism enthusiastically. “We get what we produce,” he announced, “such is the dominant rule of life.”

Veblen would spend his career fulminating against this conclusion and the social system it supported.


His career began in earnest at the University of Chicago. After arriving in 1892, he helmed the Journal of Political Economy, translated a German economic treatise into English, and wrote a series of solid but unspectacular articles with titles like “The Price of Wheat since 1867.”

He also, however, wrote an article on “The Economic Theory of Women’s Dress.” High-end women’s fashions, he observed, are expensive and ever-changing, waste a tremendous amount of fabric, and are so impractical as to render their wearers “manifestly incapable of doing anything that is of any use.” According to Veblen, that was the point. The greater the “conspicuous waste” evident in a lady’s dress, the greater her husband’s wealth. The article is hilarious, as Veblen so often is, but it was also a broadside against the marginalists. Without the ability to distinguish between productive and unproductive consumption, Veblen suggests, economists will miss the true significance of women’s fashion — and who knows what else.

The article on women’s dress previewed The Theory of the Leisure Class, published in 1899 largely at Veblen’s own expense. Drawing on contemporary evolutionary theory and anthropology, Veblen claimed that, as societies moved from lower “savage” to higher “barbarian” stages of development, strong and charismatic figures excused themselves from daily drudgery. Soldiers, priests, and political leaders eventually composed a distinct and highly visible upper class, a leisure class: “[T]he characteristic feature of leisure class life is a conspicuous exemption from all useful employment,” wrote Veblen. The key word is conspicuous. Members of the leisure class signaled their exalted status through “conspicuous consumption”: impractically large dwellings, fancy dress and armor, ceremonial pomp — anything visible to all but of practical use to none. They then engaged in competitive “pecuniary emulation,” competing to see who could have the biggest castles, the fanciest dresses, the longest ceremonies. Whoever wasted the most money won top status.

The idea was obvious enough when applied to barbarian chieftains, but Veblen’s real target was the leisure class of his own “civilized” historical stage and its apologists. The book is full of everyday examples that make rich men look silly, their top hats and walking sticks recast as barbarous headdresses and totems. “The walking-stick serves the purpose of an advertisement that the bearer’s hands are employed otherwise than in useful effort, and it therefore has utility as an evidence of leisure,” Veblen observes. “But it is also a weapon, and it meets a felt need of barbarian man on that ground.”

The real puzzle, though, was how they got away with it. How did men “employed otherwise than in useful effort” have so much money? Veblen’s answer was that, whereas the primitive leisure class had taken what it wanted by force, the industrial leisure class now relied on “chicane,” “fraud and prudence.” Especially important were “pecuniary institutions,” such as bankruptcy law and receiverships, limited liability, banking and currency — all of which ensured "peaceable and orderly exploitation.” The marginalists, Camic informs us, preferred to imagine that the rich were creative entrepreneurs and brilliant “captains of industry.” Borrowing a biblical (and agricultural) image, Veblen disagreed. More often than not, members of the leisure class “reap where they have not strewn.”

Reaction to the book was mixed. The famous critic and novelist William Dean Howells introduced Veblen to a wide audience, praising the book as a sharp satire of the aristocracy. The marginalists, however, were not amused. One called it “vicious,” and the Harvard economist John Cummings wrote a 30-page rebuttal (published by Veblen in the JPE) disputing Veblen’s distinction between useful industrial labor and wasteful “pecuniary activities” (i.e., investments and banking). Not only did the industrialist work hard, Cummings maintained, but his was labor “of a higher order.” Veblen conceded that he could have defined the difference between productive and unproductive labor more clearly.

That was the goal of his next book, The Theory of Business Enterprise (1904). While admitting that many businessmen spend long hours at their offices, Veblen still launches what Camic calls “a three-pronged” assault on the marginalists’ “productivity theory of distribution.” First, Veblen further defined the difference between “industrial” and “pecuniary” (or financial) employment; the former, wrote Veblen, directly supplies “the needs or the conveniences of the community at large,” whereas the latter “are lucrative without necessarily being serviceable.” Second, the marginalists were stuck in Adam Smith’s world, where the factory owner was usually the inventor of whatever the factory produced. In Veblen’s day, profits were increasingly coming from the “credit economy” and the “capital market.” But don’t the “captains of solvency” (as Veblen later dubbed them) allocate money efficiently, thereby boosting economic productivity? On the contrary, he replied in his third prong, they often entered “coalitions with other businessmen” to limit competition and reduce productivity in order keep prices (and profits) high. We get what we produce? In many cases, Clark and the other marginalists had it exactly backward.

Nowhere did Veblen distrust market logic more than in higher education. At the University of Chicago, he started writing what would appear in 1918 as The Higher Learning in America: A Memorandum on the Conduct of Universities by Businessmen. (His original subtitle was less coy: “A study in depravity.”) The basis of scientific discovery, he declared, was “idle curiosity,” a disinterested consideration of natural or social processes. Scientific advancement was also a social product, being built on previous discoveries. Financial interests spoiled scientific research by rushing it along or diverting it in lucrative but dubious directions.

Veblen combined his defense of disinterested inquiry with a fine-grained account of how financial interests warped the university’s twin mission of education and research, touching on everything from athletics and architecture to vocational training. He also composed satirical sketches of money-minded administrators. The ideal administrators, he wrote, will possess “administrative facility, plausibility, proficiency as public speakers and parliamentarians, ready versatility of convictions, and a staunch loyalty to their bread.” He was hardest of all on university presidents. They tended to be men “peculiarly open to the appeal of parade and ephemeral celebrity.” Devoting their time to football and fundraising dinners and other “gluttonous bouts,” they developed “a flabby habit of body, hypertrophy of the abdomen, varicose veins, particularly of the facial tissues, a blear eye and a coloration suggestive of bile and apoplexy.”

This last unflattering portrait was plainly based on Veblen’s employer, the University of Chicago’s first president, William Rainey Harper, an indefatigable fundraiser and a substantial man. Legend has it that Veblen delivered an early version of the book to Harper’s desk.

Unsurprisingly, Veblen was not long for the University of Chicago. Due to deteriorating relations with the administration (and a personal scandal), Veblen left for Stanford in 1907. He taught there for four years before moving (again due to a personal scandal) to the University of Missouri.

Camic may be right to call the University of Missouri “an academic backwater in [a] country town,” but Veblen was terrifically productive there. As a capstone to his anthropological research, he wrote The Instinct of Workmanship and the State of the Industrial Arts (1914), which argued that idle curiosity, workmanship, and the caring “parental bent,” not competition, were the deep driving forces of social evolution. He also entered the field of foreign affairs with An Inquiry into the Nature of Peace and the Terms of Its Perpetuation (1917), in which he theorized that the profit motive led businessmen of different nations into conflict, and war would be the all-but-inevitable result. In the long term, the only answer was to give up “the rights of ownership, and of the price system in which these rights take effect.”

In the final phase of his career, Veblen left conventional academia. He published The Higher Learning in America on his way out the door (1918), worked for the US Food Administration, moved to New York City to edit the intellectual journal The Dial, and later took a position at The New School for Social Research.

While he was at The New School, Veblen published The Engineers and the Price System (1921). Here he got prescriptive. Reiterating an argument from The Theory of Business Enterprise, he pointed out that factories often ran “not to the working capacity of the available resources, equipment and man power, nor to the community’s need of consumable goods.” They aimed first at profitability, not productivity. Wouldn’t it be better, asked Veblen, if the engineers who actually designed and ran the factory could seize control and maximize output, creating jobs for the jobless and cheap goods for the public? In short, a “Soviet of Technicians” should replace the “captains of solvency” and run the economy on the basis of “tangible benefit to the community at large.”

Taken as a whole, Veblen’s corpus represents a road not taken both in American economic theory and in the American economy. Although he briefly inspired a movement called “institutional economics,” Veblen and his ideas lost out to marginalism. The American economy is now almost the exact opposite of everything Veblen hoped for. He wanted to give the widest possible latitude to idle curiosity, workmanship, and production — all in service of “the community at large.” Instead, we have an economy based on consumption, private gain, financial prestidigitation, and “pecuniary emulation.”


As a book about how Veblen fits into the history of American economics, this biography is fantastic. It will also leave some readers wanting more. Camic’s main narrative ends when Veblen is only 50 years old, and he has little to say about Veblen’s romantic or family life, summing up love affairs, marriages, divorces, and deaths in a few pages here or there (one interviewer asked Camic, “Next time, will you leaven the disciplinary details with more stuff from your subject’s sex life?”). Camic seems to anticipate some disappointment. “Depending on what a twenty-first-century-reader wants to learn about Veblen’s life and ideas,” he admits, “my neglect of [personal and non-economic] topics is more or less serious.” (The present reviewer, himself a would-be Veblen biographer, was a little relieved.)

To be fair, the Veblen biographer faces formidable challenges. Veblen was a mystery even to those who knew him best, his archive is scattered around the country, and he turned his private papers into a bonfire before he died. But his personal life is a fascinating counterpoint to his theories. In his private life, no less than in his public writing, he tried to discover a different economy. And although by reputation Veblen was a lothario (purportedly bedding his colleagues’ wives left and right), in truth his romantic life was a tragedy rather than a farce.

At Carleton, Veblen met and courted Ellen Rolfe. She was the daughter of a prominent Iowa businessman and the niece of President Strong. She wore elaborate high collars, and a classmate remembered her as “easily the most intellectual member” of her class, possessing a “sparkling and, at times, slightly caustic wit.” She was the editor of the school paper and planned to become a schoolteacher; in a graduation poem, she appeared to imagine a future as a happily unmarried woman. Veblen changed her mind, and they were wed, after a long engagement, in 1888.

Given his later writings on wealth, women, and status, Veblen’s pursuit of Ellen makes sense. Unfortunately, they were disastrously ill-matched. Ellen had a thyroid condition and was self-conscious about a large, butterfly-shaped goiter on her neck (hence the high collars); she was also susceptible to mood disorders, namely anxiety and depression. Attention-seeking and given to metaphysical religious enthusiasms, she later claimed that Veblen was ashamed of her speaking her mind in public. After they were estranged, she said that their relationship was all his idea, and all his fault. “[S]he was always the shrinking fearful maiden,” a friend of hers recalled, “and he appeared — as she talked — the bold centaur.”

Contrary to popular belief, there is no evidence that Veblen was serially unfaithful to Ellen, or that he seduced his colleagues’ wives. He did, however, fall in love with graduate students. The first was Sarah Hardy, who took his class on socialism. “[D]uring the two years that followed,” Camic writes, “their professor-student relationship grew into long talks and long walks — and into a correspondence that was, from Veblen’s side, increasingly intimate and fevered.” When Hardy became engaged to a San Francisco lawyer in 1896, Veblen wrote two letters. One revealed his feelings to Hardy: “[E]ver since the first time I saw you, in the library, you have gone with me as a vision of light and life and divine grace,” he confessed. The other explained his feelings for Hardy to Ellen and asked her for a divorce: “I am not your husband in fact and ought no longer to be so in name.” Hardy married her San Francisco lawyer; Ellen kept the letter for future use.

The second was Ann Bradley Bevans, a 27-year-old mother of two who met Veblen around 1904. Her own marriage was ending when she and Veblen started their affair (the only Veblen affair we have any evidence of). In retaliation, Ellen contacted President Harper, likely showing him Veblen’s letter about Hardy. Affairs were unacceptable at the University of Chicago, due in part to its reliance on its strict Baptist benefactor, John D. Rockefeller. Veblen was lucky to receive an offer from Stanford, leaving before he could be fired.

His domestic situation in California remained complicated. He first tried to reconcile with Ellen, but when that failed, Ann moved to the Bay Area, where the two tried to resume their affair discreetly. Ellen would not allow it. According to Camic, in 1909 “she besieged [Stanford’s] President Jordan, via letters and in person, regarding her husband’s infidelities with Bevans.” Jordan tried to be more understanding than Harper, but when Veblen was summoned to his office and refused to explain himself, Jordan had little choice but to ask Veblen to resign, writing to a third party that “the whole matter is a kind of Bohemianism which is inconsistent with the requirements of life outside Bohemia.” Veblen landed his academic job at the University of Missouri, but only because a former student pulled strings for him.

Veblen’s personal life is known, if at all, for these dramatic episodes. Far more revealing than his romantic failures, however, were the happy domestic arrangements he eventually achieved. When Ellen moved out of his country house near Stanford, Veblen took lodgers: two male undergraduates and a housekeeper, along with her mother and granddaughter. Veblen’s only requirement was that there be no “cash nexus,” so an alternative economy governed the little hobby farm. The young men lived rent-free in a cabin, one later recalled in his memoirs, and they took care of the cows, chickens, and horses, including “a red-and-white mare named Beauty” that Veblen rode for exercise. The housekeeper, Mrs. Wilson, did the cooking and, a staunch socialist, read Das Kapital in the evenings. The entire setup recalled the communal self-sufficiency of Veblen’s childhood farm, though on a smaller scale. Mrs. Wilson’s daughter Virginia once saw the “T.B.” initials on Veblen’s mail and asked what they stood for. “Teddy Bear,” he replied. The student memoirist wondered how Veblen’s philosophies would have been different if he had had children of his own.

In a way, though, Veblen did end up with children. After Ellen finally granted him a divorce in 1912 (she showed up for the court proceedings in her white silk wedding dress, like Miss Havisham), Veblen married Ann, becoming an adoptive father to her two daughters. They all spent summers on a Lake Michigan island. There Veblen found opportunities to follow his instinct for workmanship. He built two cabins by hand, along with an elaborate raft for the girls. His stepdaughter Becky later recalled that he led them on berry hunts and nature walks around the island. He especially seemed to enjoy their birthdays. Drawing on his extensive readings in anthropology, Veblen designed ceremonial parties under “a large conifer that he named ‘Chief Spruce,’” Becky wrote. These years, when he could exercise his parental bent, appear to have been the happiest of his life.

Unfortunately, the Veblens’ family happiness didn’t last long. After they moved to New York City in 1918, Ann began to suffer from serious delusions. She believed that the German Kaiser’s son was on a “secret mission” to assassinate Thorstein. After a complete mental collapse, she was committed to Bellevue Hospital in Massachusetts, where she died in 1920. Veblen stayed in New York, teaching at The New School, but as its fortunes declined, he had to rely on former students to raise money for his salary. In 1926, with his health deteriorating, Veblen returned to the more comfortable California climate. He died of heart disease on August 3, 1929, about two months before the stock market crashed, just as he had predicted it would.


Hopefully, Camic’s book foretells a renewed interest in Veblen. Veblen offers something often lacking from the present conversation about political economy. One can read all day every day about the horrors of free-market capitalism, and about the need for political organization to defeat it. But what then? It’s rarer to read about what an alternative economy would look like.

Veblen can be a partial guide here. He was obsessed with how enterprises and technology work because he wanted to put them to better purposes. His Soviet of Technicians was the culmination of his lifelong quest to marry productivity, technological expertise, scientific advancement, and serviceability to the community. He was trying to update the immigrant farming experience for the industrial age — or, more specifically, keep the communal spirit of the former while adding the technological wonders of the latter. Doesn’t that still need to happen, only now for digital technology as well?

Overall, Camic’s biography recovers a neglected tradition, a time when economists like Veblen were as likely to criticize the free market as apologize for it. He also shows that Veblen was more than a splenetic critic of capitalism’s excesses; especially in the second half of his career, Veblen tried to imagine what a different economy would look like. But Veblen’s thought is only half the story. Camic mostly neglects Veblen’s home economics, which is precisely where he tried to live out an alternative to the emerging market order. Both are equally important for understanding who Veblen was, and how his life might hold lessons for the future.


Paul W. Gleason is an associate editor at Psychiatric Times. He holds a PhD from the University of Virginia’s religious studies department and has written book reviews on American religion, literature, and political economy for The Washington Post, Los Angeles Times, The Point, and other publications. He, too, is at work on a biography of Thorstein Veblen.

LARB Contributor

Paul W. Gleason’s essays and reviews have appeared in The Washington Post, The Los Angeles Times, The Point, and many other publications. He also writes the substack Unfamiliar Letters about his old scholarly interests: American religion, literature, and higher education. More of his writing is available at


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