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A neoinstitutional theory of social change in
Veblen's "The Theory of the Leisure Class"

Marc R. Tool
Professor Emeritus of Economics
California State University, Sacramento
5708 McAdoo Avenue
Sacramento CA 95819-2516
916 457 2782

Prepared for inclusion in Warren J. Samuels, ed., The Leisure Class and Sovereignty: The Centenary of The Founding of Institutional Economics, New York: Routledge.

Presented at Meetings of the European Association for Evolutionary Political Economy, Krakow, Poland, October 1995, and at meetings of the International Thorstein Veblen Association at Carleton College in Northfield MN May 1996.

The author wishes to thank Paul D. Bush for most helpful comments on earlier drafts.

A neoinstitutional theory of social change in
Veblen's The Theory of the Leisure Class

What pertinence does Thorstein Veblen's widely read but insufficiently understood volume, The Theory of the Leisure Class (1934), have for those guiding social and economic change in contemporary economies? What does it offer beyond provocative captions and social satire? It is the purpose of this essay to demonstrate something of the continuing relevance of Veblen's contribution by identifying and exploring various aspects of his theory of social change, first introduced in his The Theory of the Leisure Class.

As Veblen's first book, The Theory of the Leisure Class contains in embryonic form major constructs and analyses more fully developed in his later works. With the addition of his early methodological essays in his The Place of Science in Modern Civilization (1961), an initial exposure to the theoretical core of much of his subsequent writing is provided.

Veblen was the unknowing founder of American institutional economics. He "caused a whole generation of economists to search their souls lest the truth be not in them" (Foster, 1949). His philosophical and theoretical contributions continue to under gird and inform contemporary neoinstitutional analysis and policy (Bush 1994, 291-96).

This essay characterizes his theory of social change in the following five components: Part I presents Veblen's general theory of social change as a process of overcoming institutional rigidities and transforming institutional structure. Part II examines Veblen's broad analytical approach to inquiry. Part 111 considers sources of social change with special reference to human agency. Part IV explores the character of change with particular attention to the Veblenian dichotomy. Part V identifies impediments to social change generated by invidious distinctions.

I.General theory of social change

For Veblen, social change is a process of institutional adjustment and transformation. Any human community may be viewed as an economic mechanism," the structural fabric of which is institutional. "These institutions are habitual methods of carrying on the life process of the community in contact with the material environment in which it lives" (1934,193). Institutions are "prevalent habits of thought with respect to particular relations and particular functions of the individual and the community" (190). Communities are under continuing pressure from changing circumstances to modify their structural fabric. "The readjustment of institutions and habitual views to an altered environment is made in response to pressure from without" (193). The old ways no longer well enough serve contemporary demands. Those who are sheltered from the "action of the environment in any essential respect" will be slow to recognize the need for change, and may well resist efforts to modify structure.

Although Veblen speaks often of incessant habituation of behavior and mind sets and of cultural rigidities, he recognizes that "any one who is required to change his habits of life and his habitual relations to his fellow-men will feel the discrepancy between the method of life required of him by the newly arisen exigencies, and the traditional scheme of life to which he is accustomed. It is the individuals placed in this position who have the liveliest incentive to reconstruct the received scheme of life and are most readily persuaded to accept new standards." (1934,195). Thus, circumstances confronted will stimulate reflection on outcomes experienced. That reflection may lead to proposals for structural change in traditions and habits. Veblen acknowledges that outcomes as pecuniary exigencies" may at times be a stimulus for structural change [195].

Veblen's general theory of social change rests on the encompassing recognition that economies are comprised of institutional structure most of which have passed into habit and routine. Social change requires the adjustment of institutional structure. Individuals are confronted with pressures to modify their habits of mind and behavior. The expected differential impact of structural change on affected individuals leads some to support and some to oppose institutional modification. The central and continuing deliberations over social and economic policy options are addressed to the envisioned merits and probable consequences of proposed changes in institutional structure.

II.Approach to inquiry

What is Veblen's approach to social and economic inquiry? Upon what sort of knowledge base does Veblen's theory of social change rest? The short answer is scientifically warranted exoteric knowledge, i.e., factual knowledge, continuously generated, publicly available, open to challenge. Veblen distinguishes between knowledge claims that are evidentially grounded and those that are not:

The habit of mind which best lends itself to the purposes of a peaceable, industrial community, is that matterf4act temper which recognizes the value of material facts simply as opaque items in the mechanical sequence. It is that frame of mind which does not instinctively impute an animistic propensity to things, nor resort to preternatural intervention as an explanation of perplexing phenomena, nor depend on an unseen hand to shape the course of events to human use. To meet the requirements of the highest economic efficiency under modern conditions, the world process must habitually be apprehended in terms of quantitative, dispassionate force and sequence (1934, 304-05). That is, inquiry is an empirical, objective and processual quest to formulate explanations in causal terms.

Esoteric knowledge, i.e., non-factual, authoritative, private, privileged, is pursued by members of the leisure class in part to demonstrate their irrelevancy to the world of industry and productive labor. They are engaged in a quest for honorific status. "The canons of reputable living act to throw.. intellectual interest as seeks expression among the [leisure] class on the side of classical and formal erudition, rather than on the side of the sciences that bear some relation to the community's industrial life" (1934, 382). In contrast the artisan class draws knowledge from its industrial connection that "requires a constant recognition of the undisguised phenomena of impersonal, matter of fact sequence and an unreserved conformity to the law of cause and effect"(322). More generally, Veblen's approach to social and economic inquiry may be characterized as anthropological, historical, analytical, scientific, and, in spite of his objections, normative.


Veblen advised his better students to read, as did he, in the then newly emerging anthropological literature in order to gain "a view of man in perspective and more in the generic than is ordinarily attained by the classical economists" (quoted in Dorfman 1947, 133). Veblen had a continuing interest in behavioral traits of primitive cultures (1934, 6). He engaged in comparative cultural analysis in pursuit of fundamental characteristics, continuing attributes and regularities, and culturally acquired habits of mind and conduct. His theory of instincts reflects this inquiry focus as well (1946a). He is examining "the sequence of cultural evolution" (1934, 8). He argues that the continuity of any community is dependent upon its economic institutions.


Corollary with the foregoing is Veblen's exploration of the transition of cultures through time. All cultures evolve; generally structures change slowly; sometimes they change rapidly. His whole analysis encompasses the idea of cultural transformations. Veblen draws developmental distinctions among (a) early primitive cultures (Eskimos, Aniu: small groups, peaceable, sedentary, poor); (b) lower barbarian cultures (Polynesian, Icelandic: differentiation of function but preclass societies); (c) higher barbarian cultures (feudal Europe and Japan, Brahmin India: employment-defined classes, leisure and lower classes distinct); and (d) contemporary industrial cultures (US, Germany: leisure class preeminent in status and perhaps dominion) (1934,1-21). He speaks not only of cultural differences but of historical transformations of cultures over time.


Veblen develops original analytical constructs--the instinct of workmanship, invidious distinctions, conspicuous consumption, conspicuous waste--to explain in causal terms motivations and habituations that drive conduct, determine the structural ordering of economies, identify sources of productivity, arrange the distribution of income, and define the loci of power. He seeks to understand how the institutional fabric is constituted, how it functions, and what the actual consequences of its operations are. His analyses examine a social order in process; his mode of inquiry is then necessarily processual. It incorporates concepts that have a provisional status, that can be adapted to observable changes in institutional form and substance.


For Veblen, scientific inquiry is a quest for "an articulate recognition of causal sequence in phenomena, whether physical or social" (1934, 386). "The exigencies of modern industrial life," he insists, "have enforced the recognition of causal sequence in the practical contact of mankind with their environment" (387). The rudimentary pursuit of such systematized knowledge is impaired by "anthropomorphic sentiment," by "an expression of an archaic, animistic habit of mind," by "professions of devotional zeal," and the like (178).

Science is a pursuit of "knowledge for its own sake, the exercise of the faculty of comprehension without ulterior purpose" (1934, 383). The pursuit of scientific knowledge in universities--the "higher learning"-- is retarded, regrettably, by judgments of status (382), by invidious distinctions rooted in gender (376), and by resistance from established scholars. "New views, new departures in scientific theory, especially new departures which touch the theory of human relations at any point, have found a place in the scheme of the university tardily and by a reluctant tolerance, rather than by a cordial welcome" (380).


Veblen disclaims, perhaps mischievously, any normative intent or responsibility in his approach to inquiry. He contends, for example, that he has "nothing to say in the way of eulogy or depreciation of the office of the leisure class as a vehicle of conservatism or reversion in social structure" and that "right" and "wrong" are "used without conveying any reflection as to what ought or ought not to be"(1934, 208-07).

This, and similar comments notwithstanding, Veblen's inquiry is everywhere driven by an intellectual purposiveness that seeks to explain reality in order to foster identification and revision of the "imbecile" institutions that prevent a community from solving its problems of adequate provisioning and more equitable distribution. He distinguishes on the one hand, between those activities that actually enhance the community's ability efficiently to generate and sustain the flow of real income, and on the other hand, those activities that invidiously divert resource creation and use to comparatively noncontributive forms reflected in invidious display, conspicuous consumption, and ceremonial waste. Veblen seeks to generate an inquiry approach that will facilitate the replacement of imbecile institutions with more culturally and intellectually warranted institutions. Although he is not remembered as a persistent and influential policy advisor, many of his students took on such responsibilities. In sum, Veblen's theory of social change is culturally embedded, processually constituted, analytically cogent, scientifically warranted , and normatively evaluative as an explanation of causal phenomena.

Ill.Human agency as a source of change

In The Theory of the Leisure Class and elsewhere, Veblen views men [in this context, generic for persons] as discretionary actors. "As a matter of selective necessity man is an agent. He is, in his own apprehension, a center of unfolding impulsive activity. ... He is an agent seeking in every act the accomplishment of some concrete, objective, impersonal end.... [A] sense of the merit of serviceability or efficiency and of the demerit of futility, waste, or incapacity" (1934, 15). People are culturally emergent. In purposive interaction with the culture, they acquire habits of mind and habits of behavior (212-30). People live only in the presence of others. Accordingly, terms and conditions of interrelations are from infancy learned and imbedded in the psyche; they constitute habits. "Human nature will have to be restated in terms of habit" (221). People are cultural products even as they are agents in revising the habitual patterns that have become customary and governing.

Given such continuing cultural interdependence and interaction, an individual's personal quest for identity and recognition, for being well thought of, may, in Veblen's view, take either of two forms: First, the engaged individual may be "possessed of a taste for effective work and a distaste for futile effort. He has a sense of the merit of serviceability or efficiency and of the demerit of futility, waste, or incapacity. This aptitude or propensity may be called the instinct of workmanship" (1934,15). Second, where a culture, through long habituation, honors the "predatory habit of life. it becomes the able-bodied man's [non generic] accredited office in the social economy to kill, to destroy such competitors in the struggle for existence as attempt to resist or elude him, to overcome and reduce to subservience those alien forces that assert themselves refractorily in the environment" (1934,14-15).

It is Veblen's view that in "the primitive phase of social development" where the culture is peaceable, sedentary, and without elaborate ownership arrangements, "the efficiency of the individual can be shown chiefly and most consistently in some employment that goes to further the life of the group"(1934, 16). The instinct of workmanship fosters esteem and generates emulation in support of "industrial serviceability." If and when a culture passes into a predatory phase of life, however, the magnitude and character of esteem and consequent emulation dramatically changes. Activity becomes more and more exploitative. "[M]en who constitute the inchoate leisure class. . .must be habituated to the infliction of injury by force and stratagem" (7-8). "Tangible evidences of prowess--trophies--find a place in men's habits of thought. .. Aggression becomes the accredited form of action...the...worthy form of self-assertion is contest" (17). Seizure becomes an approved means of acquiring goods. They love to "reap where then have not strewn" (14).

Human agency can therefore be exercised in either of two ways: first by engaging in productive work, of which industrial employment guided by the instinct of workmanship, is a general characterization; second by engaging in exploitation and seizure guided by the "habitual bellicose frame of mind" reflected in coercive behavior. In a "sequence of cultural evolution" from peaceable to predatory phases, cultural conceptions of human worth shift from the former to the latter. Indeed "labour acquires a character of irksomeness by virtue of the indignity imputed to it" (1934, 17).

An invidious distinction emerges: industrial labor is demeaning, and therefore irksome; predatory labor may become the main source of social approval. "Industrial employment" gives way, significantly but not entirely, to "exploit and acquisition by seizure." Coercion and intimidation become mechanisms through which agents' purposes are realized. Shifts in attitude and behavior reflect altered conceptions of worthiness. Discretion exists for human agents. Its exercise may often be culturally supported but it will, over time, reflect changes in habits of mind. Meanings of purposiveness will be revised. The predatory proclivity may at times override the instinct of workmanship.

For Veblen, institutional change then is not deterministic in the sense of conformity to some natural or historical law. Veblen offers no great-man theory, "law of motion" dictum, or preternatural account of social change. He sees all cultures as continuously evolving but not according to any predetermined pattern. Habits govern behavior but habits are themselves subject to discretionary alteration when perceived circumstances suggest or demand revision.

Institutions are products of the past process, are adapted to past circumstances, and are therefore never in full accord with the requirements of the present. .. .This process of selective adaptation can never catch up with the progressively changing situation in which the community finds itself at any given time; for the environment, the situation, the exigencies of life which enforce the adaptation and exercise the selection, change from day to day; and each successive situation of the community in its turn tends to obsolescence as soon as it has been established (1934,191).

What Veblen offers is a recognition of the continuing need for institutional adjustment. The growth of warranted knowledge permits the identification of structure that has become "obsolescent." For Veblen, the institution of the leisure class is one such.

It is clear that Veblen does not advocate a purposive shift to some recipe-like ismic model--capitalism, socialism, or communism. He saw economies as evolving, complex structural entities. There is nothing in Veblen's The Theory of the Leisure Class, for example, comparable to the normative use, by neoclassicists, of the capitalist competitive model to define or delineate direction for economic and social change (Tool 1986, 104-25; Tool 1995, 197-211).

Veblen acknowledges that an habitual inquiry approach will define the way factual material is perceived and that the approach, over time, will be refined and the material changed. "The habit of distinguishing and classifying the various purposes and directions of activity prevails of necessity always and everywhere; for it is indispensable in reaching a working theory or scheme of life" (1934, 9). Social change is evolutionary; social change is discretionary. At issue, is the character of inquiry employed in the construction of choices that determine the "various purposes and directions of activity." Veblen's theory of social change affirms, then, that people are culturally emergent, discretionary agents, whose acquired habits of mind and conduct encompass, for example, the constructive instinct of workmanship and/or the destructive predatory bent.

An illustration: A particularly compelling application of Veblen's conception of agency, reflecting the differing impact of the instinct of workmanship and the predatory bent, can be touched upon here only briefly.

In the years following the breakup of the Soviet Union, the discretion held by the central planning bodies was dissolved. Under pressures from Western advisors to "privatize," "stabilize," and "liberalize" the economy, discretion devolved upon plant managers, union groups, and local bureaucrats but seemingly without guiding patterns or controls that sufficiently embody or reflect the instinct of workmanship. In the absence of effective constraints, opportunistic and criminal Mafias moved in and exploited an unstable and deeply factious political setting. Through bribery, intimidation, payoffs and other forms of coercion, they evidently took control over much the economy (Goldman 1995, 21; Vanhecke 1995,15). This substantial dominion served their own invidious interests, not that of the larger community. Control of supplies, prices, deliveries and labor generated local monopolies and cartel-like bodies responsible to no public body. Accordingly, there was little, if any, continuing or substantive accountability. Other agents, observing this concentration of control, were left with very limited options--that of joining with or accommodating to Mafia interests. The Mafias' income levels permitted priority claims on such luxury goods as were available domestically and abroad and generated social status for a newly formed "leisure class."

IV.Character of change

The Veblenian Dichotomy

As captioned by post-Veblenian institutionalists, the Veblenian dichotomy is a construct that facilitates an appraisal of the character and import of social change. The fundamental Veblenian distinction, a dichotomy connoting mutually exclusive paired constructs, originates with his concept of instincts, two of which--workmanship and predation--are mentioned above. For Veblen, instincts are "innate and persistent propensities of human nature" (1 946a, 2-3) that today might be referred to as basic drives or impulses. As I elsewhere wrote, "Veblen does not use instinct to mean that people inherit predispostions to choose or act in particular ways. He understood cultural conditioning, habitual behavior, and the mores principle. Instincts are not the hereditary transmission of choice behavior; they are 'native proclivities' which consciousness and intellect channel into culturally acknowledged modes of behavior" (Tool 1966, 35).

Veblen identifies two sorts of instincts: one set supports the life process generally; the other set provides "contaminants" of that process. The former includes the instincts of workmanship, parental bent, and idle curiosity. Workmanship, "occupies the interest with practical expedients, ways and means, devices and contrivances of efficiency and economy, proficiency, creative work and technological mastery of facts," and a "proclivity for taking pains" (Veblen 1 946a, 33-34). The parental bent is a proclivity that exhibits "an unselfish solicitude for the well-being of the incoming generation--a bias for the highest efficiency and fullest volume of life in the group, with particular drift to the future" (46-47). Idle curiosity is a drive to "seek knowledge, and value it men are by native gift actuated with an idle curiosity--'idle' in the sense that a knowledge of things is sought apart from any ulterior use of the knowledge so gained" (Veblen 1965a, 5). The latter proclivities, the contaminants, encompass impulses to predatory behavior and invidious emulation. Practices of exploit, prowess, pecuniary acquisition and dominion illustrate predation. Practices of conspicuous display and conspicuous waste illustrate invidious emulation (Veblen 1964a, passim).

Veblen clearly distinguishes between constructive proclivities that generate and sustain the well being of communities and contaminating proclivities that sabotage the community's ability to generate and distribute the material means of life. The Veblenian dichotomy, per se, extends beyond, but does not abandon, the presumed instinctual proclivities of individual persons identified above. What is evident and operative in virtually ALL of Veblen's writings in political economy is a general dichotomous principle of institutional assessment and judgment presented in a large number of different forms and versions (Tool 1986, 36-37). That principle juxtaposes ceremonial versus technological or invidious versus noninvidious structure and conduct. For Veblen, the term invidious means a "comparison of persons with a view to rating and grading them in respect of relative worth or value"(1 934, 34). In The Theory of the Leisure Class Veblen says:

Institutions--the economic structure--may be roughly distinguished into two classes or categories, according as they serve one or the other of two divergent purposes of economic life. . . [Economic institutions] are institutions of acquisition or of production. . . .[T]hey are pecuniary or industrial institutions. . . .[T]hey are institutions serving either the invidious or the non-invidious economic interest. The former category have to do with "business," the latter with industry (1934, 208).

Thus institutions either do or do not enhance human life as a whole and achieve the largest and most serviceable production of goods and services. I note in passing that subsequent neoinstitutionalist scholarship demonstrates that institutions may well serve both invidious and non-invidious functions (e.g., Bush 1988,128-36).

Veblen's concern is to minimize the damage generated by a leisure class. That class is committed to pecuniary emulation, invidious display, and the pursuit of a life reflecting a conspicuous exemption from all useful employment" achieved by primary involvement in occupations relating to "government, war, sports, and devout observances"(1 934, 40).

"Abstention from labour," he says, "is the conventional evidence of wealth and is therefore the conventional mark of social standing" and of worthiness. "Productive labor. . .becomes intrinsically unworthy" (41).

The Normative Veblen

The Veblenian dichotomy is the original and primary source of neoinstitutionalists' normative analysis; it undergirds their social value theory (Tool 1986, 33-84). Disclaimers notwithstanding, Veblen's dichotomy constitutes an embryonic normative construct.

Digressing briefly, the logic of the matter cannot be at issue. Any credible theory of social change must be normative as well as positive. If social inquiry is to be addressed to problem solving (its only raison d'être), there is no way of identifying a problem for inquiry without applying some conception of a difference between "what is" and "what ought to be. "The "ought" is an integral part of inquiry (Tool 1993,127-31). Principles of oughtness can be and have been drawn from Veblen's warranted approach to inquiry alluded to above.

Veblen actually utilizes his basic dichotomy as an encompassing and governing normative tenet. He distinguishes between behaviors that, in substantive economic terms, enhance the community's well being and behaviors that, on invidious grounds, divert productive effort to destructive areas, for example, of invidious display, coercive control, and ceremonial waste. This distinction becomes, for example, a major construct in his analyses and assessments of the economic emergence and political significance, in Germany, of cameralist (national economy) policies that diverted "all available technological improvement to extend the dominion and improve the efficiency of the [dynastic] state" (1964a, 78) and, in Japan, that provided for the "unique combination of a high-wrought spirit of feudalistic fealty and chivalric honor with material efficiency given by the modern technology "(1964b, 251). Veblen is indeed a normative theorist; his analytical approach undercuts his normative disclaimers.

Character of Change

If we build on the Veblenian distinction in The Theory of the Leisure Class between institutions that promote acquisition, pecuniary, and invidious ends-in-view, on the one hand, and on the other, those that promote production, industry, and non-invidious interests, we can identify which are the progressive forces for social change and which are the regressive forces. (For definitive treatments that extend and refine this initial distinction between progressive and regressive change, see Bush 1988 and 1994).

Progressive change in The Theory of the Leisure Class, and in Veblen's subsequent writings (Tool 1986, 34-37), is technologically grounded and serves non-invidious interests. It is accomplished where energy and activity are institutionally coordinated to support the acquisition of matter-of fact knowledge, its application in the tangible performance of productive skills, and the incorporation of competent workmanship. Progressive change is in pursuit of productive efficiency, of technological advancement, and of industrial development for the community generally. Veblen believes that the economy should be managed so that its institutions produce the "largest and most serviceable output of goods and services," with the "most economical use of the country's material resources and man-power" (Veblen 1945, 169). The community's interest in serviceability and the common man's interest in productive employment and a decent income are to be enhanced by social change.

Regressive change, in contrast, is ceremonial or invidious in impact. It occurs where energy and activity are institutionally coordinated to support acquisition of ownership, competitive advertising, ceremonial status claims, vested interests (a "legitimate right to get something for nothing" (1946b, 161), invidious emulation, and a "conscientious withdrawal of efficiency" in support of business interests (1965b, 1-4). "The interest of the community at large demands industrial efficiency and serviceability of the product, while the business interests of the concern as such demands vendibility of the product" (Veblen 1932,157-58).

Positively stated, progressive change is the quest to direct all effort "to enhance human life," to "elaborate the material means of life" (Veblen 1934,10) and to reaffirm the dignity and worth of those engaged in providing these "material means of life." Negatively stated, progressive change is to erode the status, power and parasitic waste of the leisure class. In the most general sense, The Theory of the Leisure Class was addressed to repeated demonstrations of the significance of the Veblenian dichotomy in distinguishing between invidious and noninvidious purposes, between what is and is not in service of public purposes.

In sum, Veblen's theory of social change demonstrates, but does not admit, that social and economic inquiry must be normative as well as positive, and be concerned with "what ought" as well as "what is." He actually derived his normative tenet through an historical and analytical review and assessment of conduct and motive, on the one hand, and an examination and assessment of the character of consequences invoked, on the other. Moreover, the Veblenian dichotomy provides an approach for the evaluation of the purposes to be served in and by the provision of the means of life and experience. The Veblenian dichotomy suggests what sorts of questions to pose, and what kinds of inquiry to pursue; it does not spin out automatic or ritualistic responses.

V.Impediments to change

In The Theory of the Leisure Class, as noted, Veblen's referential content for "invidious" is "a comparison of persons with a view to rating and grading them in respect of relative worth or value" (1934, 34). Invidious distinctions, then, are "aesthetic or moral" characterizations in which human differences--ancestry, ethnicity, gender, race, wealth, caste, class, age, et al--are used as indices of comparative or relative rank, worth, and status. "[A] process of valuation of persons in respect of worth" (34) defines who is to be regarded as inferior and who as superior.

Veblen's initial use of this construct in The Theory of the Leisure Class is to explain the differential significance attributable to categories of employment, beginning with the earliest cultures. He writes:

[T]he distinction between exploit and drudgery is an invidious distinction between employments. Those employments which are to be classed as exploit are worthy, honourable, noble; other employments, which do not contain this element of exploit, and especially those which imply subservience or submission, are unworthy, debasing, ignoble. The concept of dignity, worth, or honour, as applied either to persons or conduct, is of first-rate consequence in the development of classes and of class distinctions" (1934, 15).

Veblen bases the origins of the leisure class in the emergence of this distinction between exploitative and ordinary productive work and its application to the organization of the economic order. What is construed to be worthy activity, exploit, becomes the primary source of social esteem and invidious acclaim. Invidious display fostering invidious emulation becomes the accepted standard of social and personal appraisal. Ownership of property, acquired initially by exploit, later by purchase or inheritance, becomes a conspicuous indicator of achieved status and entitlement to a deferential share of the community's resources. "The motive that lies at the root of ownership is emulation; and the same motive of emulation continues active in the further development of the institutions to which it has given rise. .. .The possession of wealth confers honour; it is an invidious distinction" (1934, 25-26).

The leisure class exhibits its position of status and influence through its demonstration of conspicuous leisure (1934, 35-37): The term "leisure" for Veblen, "does not connote indolence or quiescence"; it connotes "non-productive consumption of time" spawned by "a sense of the unworthiness of productive work" and is an indication of the "pecuniary ability to afford a life of idleness" (43). Conspicuous leisure wastes potential productive talent and generates resistance to economic or social change that might impinge adversely on status and/or pecuniary income.

Conspicuous leisure is reflected in conspicuous consumption (1934, 68-101). "Unproductive consumption of goods is honourable, primarily as a mark of prowess and perquisite of human dignity"; in addition, "it becomes substantially honourable in itself" (69). Conspicuous consumption encourages the skewing of production to meet significant demands for high cost and unhealthy goods, exotic merchandise and services; and encourages unproductive and unhealthy emulation among more ordinary folk. Perhaps the defining exhibition is conspicuous waste. Any purchase that augments the "consumers good fame must be an expenditure of superfluities. In order to be reputable it must be wasteful" (1934, 96). A wasteful expenditure "does not serve human life or human well-being on the whole" (97). "Nothing should be included under the head of conspicuous waste but such expenditure as is incurred on the ground of an invidious pecuniary comparison" (99). "The test to which all expenditure must be brought is the question whether it serves directly to enhance human life on the whole--whether it furthers the life process taken impersonally." (99). Conspicuous waste drains productive effort and resources that might otherwise be used for non-invidious purposes;"[I]t does not enhance human life on the whole"; it enhances the life of a self-serving and power-conscious elite. It "guides the formation of habits of thought as to what is honest and reputable in life and in commodities" (116). It elevates invidiousness into a standard of judgment and social ordering. What all of these manifestations of leisure class motive and behavior demonstrate, of course, is their near total irrelevance for the development and growth of an economy that is able to provide the material means of life for all members of the community.

Indeed, many neoinstitutionalists, as did Veblen, extend the characterizations of invidious distinctions well beyond the area of employment. They view it more generally as a powerful explanatory construct to undergird a credible theory of social change. Distinguishing between invidious and non invidious judgments and behaviors permits any community more ably to identify actual problematic impediments to the provisioning process and to fashion institutional adjustments that will restore congruity and efficiency to that process.

Why and how is this so? When human differences are viewed invidiously, some persons are in consequence defined as inferior and unworthy, while others are construed to be superior and worthy. This motive and behavior of demeaning categorizations precludes, erodes, or destroys a sense of communal interdependence and mutual responsibility by setting invidiously defined group against invidiously defined group. Invidiously identified differences do not constructively or significantly enhance the problem-solving capabilities of any social segment. On the contrary, invidious discrimination in educational access and career options, for example, limits or denies the acquisition of needed knowledge and skills. The ability of the community to develop pertinent warranted knowledge and to apply it to the production and distribution of real income is sabotaged. Technological judgments are prevented from pragmatically generating needed institutional adjustments. Problematic consequences are attributed to invidiously defined groups. Scapegoating of teenage mothers, ghetto blacks or ethnic rivals as being wholly responsible, respectively, for their own dire circumstances, is commonplace. Substantive analysis identifying the factual determinants of problems is left undeveloped. The task of rationally reordering the institutional fabric to enhance its productive capabilities is ignored. The achievement of a sense of mutual commitment to public purposes is forestalled. Without this mutuality to invoke inquiry and propose substantive structural change, problems will remain unresolved. Constructive social change will be aborted. Conflicts over invidious claims and counterclaims will comprise the universe of "discourse."

Invidious distinctions, then, profoundly impair the collective ability to create a viable and learning community, to generate a sharing and egalitarian community, and to ensure the adequacy and continuity of the provisioning process within the community. When invidious judgments are endemic, social dialogue is reduced to placing blame and conduct is directed to getting even. Those made to feel unworthy or inferior live blighted, undeveloped, and hence unfulfilled lives! Their quest for self esteem and recognition for workmanship are ignored. The emulation by the underclass of predatory conduct and conspicuous waste of the leisure class is demeaning and self-destructive. The contemporary popularity of state and national lotteries reflects this emulative scramble. It is illusory to suppose that access otherwise invidiously denied can be overcome with gaming luck!

Those in the leisure class who are made to feel worthy and superior on invidious grounds lead underdeveloped and parasitic lives! Their contributions to the substantive generation of the sources of economic growth and development are marginal at best. Their instincts of workmanship are diverted to wasteful and frivolous pursuits; they resolve into an effort "to excel others in pecuniary achievement. Relative success, tested by an invidious pecuniary comparison with other men, becomes the conventional end of action" (Veblen 1934, 33).

In sum, where the use of invidious distinctions destroys the capacity to create and sustain community, the continuity of the community itself will be perpetually at risk. A theory of social change, to be credible, must acknowledge and address this threat to the continuity and efficiency of the social and economic process.

Some illustrations. The invidious use of ancestry in this century has no equal: Veblen, early on, speaks of the "intellectual pre-eminence of Jews" in Europe and contends that persons of "Jewish extraction count for more than their proportionate share in the intellectual life of western civilization." (Veblen, 1 964b, 223-24). In the Holocaust, perpetrated by Nazi officials between 1939 and 1945, some six million Jews were sent to their deaths in concentration camps. Without even approaching the massive, unprecedented horrors of personal and families tragedies experienced, the economic costs alone were monumental. On the assumption that one to two million were adult intellectuals, well-trained technicians, skilled professionals, seasoned managers, and the like, Western Europe lost a whole multicultural generation of able thinkers and managers in consequence of the predacious genocide grounded solely in the invidious use of a racial-cultural characterization.

The invidious uses of gender and race also generate major social impediments: Affirmative Action programs (measures to correct for prior long term and extensive discrimination) were introduced in the US in the 1960s. These programs were designed to open access to jobs, contracts, positions and higher education to women and racial minorities from which they had long been partially or wholly excluded. As official policy, they were supported politically and intellectually (Livingston 1979). Affirmative Action policies were implemented through quotas, timetables, set-asides, and other measures to increase representation of women and minorities. That the problems to which Affirmative Action was addressed have not yet been resolved is suggested by the fact that, while women and minorities make up more than 70 percent of the workforce, they hold less than 5 percent of senior management positions in big corporations (Walker 1995, 6). Moreover, median earnings (year round full-time) for men remain roughly half again that of women (Statistical Abstract 1994, 431).

Finally, and more directly associated with the leisure class as such, is the invidious use of income and wealth: An invidiously formulated debate over welfare entitlements seems perpetually to be on the American political agenda. Those on low incomes who are recipients of public welfare subsidies (e.g., Aid to Dependent Children) are consistently denigrated as a burden that others must bear. Proposals to turn "unearned" welfare into "earned" workfare are legion.

What the critics of welfare aid fail to acknowledge, among other things, is that low income recipients of public assistance are not unique. Virtually all members of the community are recipients of public largess in some significant degree. Public grants and handouts for upper income groups bring no such invidious declarations. The subsidies received by the rich, for example, are no more worthy than the entitlements received by the poor living at or below the poverty margin, many of whom actually work at the minimum wage. In the federal tax code, for instance, "an enormous array of exclusions, deductions, tax credits, and preferential rates" called "tax expenditures" provide subsidies aggregating hundreds of billions of dollars for those already well off (Peterson 1994, 254-55). Through the receipt of special entitlements and dispensations, and the erosion of progressivity in tax schedules, the economic well-being of upper income groups are sustained, and from time to time, enhanced.

Similarly, corporate welfare programs in the US in the form of questionable "special spending and tax provisions narrowly targeted to subsidize influential industries" channel billions of dollars in assistance to selected corporate industries each year (Shapiro, 1995,1). Examples include price-subsidy supports for agricultural commodities, deductions of search and drilling costs for oil and gas industry, low royalties on mining company extractions, and the like (Shapiro 1995, 17-27).

While all are beneficiaries of one or another subsidy, policy questions remain. Which groups benefit and to what degree? What warrantable public purposes are in fact served by the array of subsidies that obtain? Which ones demonstrably enhance the productivity of the economy and equitably distribute this national product? Invidiously damning subsidies to the poor and ignoring those to the rich masks reality and skirts the needed analytical and normative dialogue.

In conclusion

The Veblenian contribution in The Theory of the Leisure Class provides, for inquirers, a pragmatic perspective, a relevant problem-solving approach, and pertinent analytical tools. For those seeking to understand actual institutional malperformance reflected in impaired production stalled systemic transition, inefficient organization and/or misuse of human and material resources, Veblen suggests causal determinants to consider. For those charged with assessment of institutional performance, he suggests public purposes that should be reflected in policy initiatives. His work assists an advocate of social and economic change to pose, in a provocative and instructive way, the continuing and profoundly significant questions of: Which direction is forward for an economy? What ought the character of production to be? Whose interests should the economy serve? Where should discretion over policy reside? Which habits of mind and conduct are pertinent to the achievement of economic well-being? He offers no glib responses but he does point direction for inquiry and judgment.

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