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Thorstein Veblen Theory of Institutional Change : Beyond Technology and Determinism - Olivier Brette Imprimer

Thorstein Veblen's Theory of Institutional Change: Beyond Technological Determinism - Olivier Brette - Final Version published in: European Journal of the History of Economic Thought 10:3 455-477 Autumn 2003

Abstract

The article presents a reappraisal of Veblen's theory of institutional change, challenging the thesis of technological determinism, supported by some commentators of Veblen. According to this latter interpretation, Veblen would consider institutional change as stemming from an exogenous transformation of the material and technical environment. But such a thesis disregards the significance of cultural determinism in Veblen's system. Taking this into account leads to argue that Veblen analyses institutional change as an emergent effect of the dynamics of interactions between instincts, institutions and the infrastructural conditions. Finally, Veblen's theory of institutional change proves consistent with his research programme, aiming at producing a cumulative and non-teleological theory of institutional evolution, a theory in which behavioural determinants of human beings would be the main explicative variables.

Keywords

Veblen, evolutionary economics, institutional change, technological and cultural determinism, emergent effects

1. Introduction

Institutional change is probably one of the most complex issues of Veblen's economics. The lack of clarity in Veblen's writings is somewhat responsible for this, inasmuch as he never synthesized his thinking on this issue as he did on other matters. What we have in mind here are his epistemological positions explained in a few articles reissued in The Place of Science in Modern Civilisation and Other Essays (Veblen 1990 [1919]). Therefore, giving an account of his theory of institutional change implies doing a demanding work of reconstruction of his thinking from scattered elements, whose linking up is not clear at first sight. Besides, this issue is all the more crucial as it is a key objective of Veblen's research programme. Challenging the relevance of his theory of institutional change is thus bound to lead to an undermining of his whole system of thought.

Our purpose in this paper is twofold. We will first show the biased nature of a type of reading especially destructive to the Veblenian system, according to which the origin of institutional change would be located in technological progress, itself considered as an exogenous factor. We will then try to suggest an endogenous analysis of Veblen's theory of institutional change, in which change appears as an emergent effect of the dynamics of mutual influences between instincts, institutions and the material and technical environment.

The task here intended partly rests on arguments already put forward by some commentators of Veblen. Rutherford (1984) has indeed contributed widely to the discredit of the thesis of a strict technological determinism. He has taken a great step forward in showing that, since Veblen's system is based on cumulative causation, the fact that technology affects institutions is not in contradiction to the fact that institutions affect technology. In a later paper, Rutherford (1998) has developed his interpretation of Veblen's theory of institutional change, stating the necessary conditions for new technology to result in a new institutional system. This later paper elaborates on the thesis introduced in the 1984 article, according to which any new technology can initially be developed without disturbing the prevailing institutional scheme; nevertheless new technology can bring about cumulative and unintended institutional consequences - through changing habits of life and thought - which finally may lead to a challenge of the current institutional scheme. Some of our arguments owe much to Rutherford (1984; 1998). However, unlike him, we do not think that 'for most of his positive theory of institutions and institutional change [Veblen's] instinct theory has only minor significance' (Rutherford 1984: 333). Even if Rutherford has put more emphasis on the instincts in his 1998 article, he still considers in this paper that 'the instinctive endowment gives only a starting point for the cumulative evolution of habits and institutions'.

Furthermore, he argues that 'in later phases of cultural development the instincts are layered over with social conventions and norms. The instincts do not disappear from the picture altogether, but they fall into the background' (Rutherford 1998: 466-7). Contrary to this view, we will consider the instincts as a key component of Veblen's theory of institutional evolution, in the same way as the institutions and the infrastructural conditions are.

Other issues at stake here have been discussed by Hodgson (1993: 123-38; 2002), Tilman (1996: 47-71) and Jennings and Waller (1994; 1998) in particular. Their essays have tried to clarify Veblen's borrowings from biology, especially from the Darwinian theory. They have wondered whether these borrowings are of a methodological, metaphorical, heuristic, analogical, or even ontological nature. We will only allude in the present paper to these debates regarding the biological foundations of Veblen's theory of institutional evolution. In our opinion, Veblen's economics is above all Darwinian in an epistemological and methodological sense. Even if he does use Darwinian concepts in his ownanalyses, 'it is doubtful that Veblen attempted to model his theory of institutional evolution on Darwinian notions of natural selection in any very close or exact manner' (Rutherford 1998: 465; see also Jennings and Waller 1998: 212-5).

Our own interpretation of Veblen's theory of institutional change will be founded on the notion of emergent effect. The emergence is usually viewed as a major property of open systems and it has recently been argued that 'Veblen appears thoroughly consistent with OS [open-systems] methodology' (Mearman 2002). However, the emergence is a broad concept which can be understood in various ways. According to Hodgson (1998), Veblen's emphasis on 'emergent properties' is most probably the outcome of C. Lloyd Morgan's influence. From the British biologist and philosopher, Veblen would have borrowed the idea that socio- economic evolution is an emergent level, namely socio-economic phenomena can not be entirely explained by the biological endowment of the individuals involved (Hodgson 1998: 420-3). Without rejecting this thesis, we will give the concept of emergence a meaning that is quite different from the one given by Hodgson (1998). We will argue that socio-economic evolution can itself bring about unpredictable institutional consequences - emergent effects - which are mainly due to the dynamic interactions between the key components of any cultural complex. In this perspective, the emergence will be used as a 'diachronic' rather than synchronic' concept (Mearman 2002: 578).

Given these arguments, the aim of this paper is to give a comprehensive interpretation of Veblen's theory of institutional change and to clarify the articulation between the main variables of this theory, namely the instincts, the institutions and the material and technical conditions. To this end, we will start by defining Veblen's research programme (section 2) before showing in what way it is incompatible with the thesis of a strict technological determinism (section 3). We will then endeavour to demonstrate that this interpretation disregards fundamental aspects of Veblen's discourse. Taking those aspects into account will enable us to grasp institutional change as an endogenous phenomenon in the evolution process. In fact, we will point out the scope and range of the emergent properties of institutional evolution in Veblen's theory of stages, which analyses the history of the Western world as a sequence of four main institutional eras (section 4). Thus, we will give evidence that the theory of institutional dynamics developed by Veblen proves consistent with his epistemological and methodological postulates.

2. Definition of Veblen's research programme

Veblen's scientific project mainly rests on an original epistemological positioning that needs to be briefly introduced in order to grasp the nature of his ambitions.

According to Veblen: Modern science is becoming substantially a theory of the process of consecutive change, which is taken as a sequence of cumulative change, realised to be self-continuing or self-propagating and to have no final term. (Veblen 1990 [1919, 1908b]: 37) Veblen deduces this definition of science from his relativistic epistemological positions1. Indeed, 'modern science' is an institutional mode of knowledge which has emerged in a specific cultural context, just as all the world representation systems that mankind has conceived since its origin. So Veblen considers that the modern scientific point of view arose from the decisive impact of machine development on the Western civilization in the nineteenth century. This new way of viewing phenomena is characteristically illustrated by the Darwinian theory, so much so that Veblen willingly identifies 'modern science' with 'evolutionary science' and 'post-Darwinian science' (Veblen 1990 [1919, 1898a]). Now economics has not assimilated the scope of this epistemological revolution, so that 'there is the economic life process still in great measure awaiting theoretical formulation' (Veblen 1990 [1919, 1898a]: 70).

From then on, the aim of the Veblenian research programme is to provide economics with the characteristics of modern science. In Veblen's view, this implies turning it into a theory of the 'genesis', 'growth' and 'variation' of institutions explained from an 'impersonal' and 'matter-of-fact'2 point of view (Veblen 1990 [1919]). More precisely 'an evolutionary economics must be [...] a theory of a cumulative sequence of economic institutions stated in terms of the process itself' (Veblen 1990 [1919, 1898a]: 77). In fact, Veblen's ambition is to produce a theory of institutional evolution that respects two fundamental and closely complementary criteria. On the one hand, he focuses his analysis on the institutional dynamics as such, without reference to the concept of equilibrium. 'The process of causation, the interval of instability and transition between initial cause and definitive effect' are thus stressed (Veblen 1990 [1919, 1908b]: 37). On the other hand, he aims at building up a non-teleological theory of institutional evolution, which means that the outcome of evolution is not a priori specified and even remains out of the range of knowledge.

This cumulative and non-teleological conception of institutional dynamics implies a break with the Newtonian framework and its reversible definition of time (Renault 1997). From this standpoint, Veblen objects to the outdated 'preconceptions' of 'orthodox' political economy which, by focusing on the issue of equilibrium, gets caught in a 'taxonomic' and static and thus 'pre-Darwinian' definition of economics (Veblen 1990 [1919, 1908a]: 192). Finally, this short introduction to Veblen's research programme has to be concluded by emphasizing the issue of human behaviour. Indeed, Veblen asserts that 'economic action must be the subject-matter of the science if the science is to fall into line as an evolutionary science' (Veblen 1990 [1919, 1898a]: 72). As we will see later on (section 4), this implies that the determinants of economic, and more generally human behaviour, must be the main explanatory variables of his theory of institutional dynamics. Consequently, Veblen's representation of human nature must allow him to theorize about the process of institutional evolution and it must be consistent with the results of other evolutionary sciences, notably anthropology, psychology and biology (Veblen 1990 [1919, 1898a]: 56). It is therefore to fit these two requirements that Veblen (1990 [1919, 1898a]: 74) defines the human being as 'a coherent structure of propensities and habits which seeks realisation and expression in an unfolding activity'.

3. Technological determinism and exogenous institutional change

According to Veblen, the history of the Western world can be divided into four successive eras. 'The savage and peaceable era', stretching over a very long period, started in the dawn of humanity and closed at the end of the Bronze Age. The appearance of private property then plunged the West into what Veblen calls 'the barbarian or predatory era'. By the close of the Middle Ages, this era gave way to 'the era of handicraft' which, in its turn, was displaced by the industrial revolution and the advent of 'the era of the machine industry'.

Veblen's theory of institutional evolution precisely aims at accounting for this succession of stages, all of them corresponding to a rather homogenous phase, from an institutional point of view.

3.1. The foundations of technological determinism

Veblen considers that human behaviour responds in the main to two kinds of determinants. On the one hand, it results from the impulse of instinctive factors. On the other hand, it conforms to habits, and notably to habits of thought whose crystallization at the social level gives rise to institutions. The main feature of every instinct is to 'more or less imperatively, propose an objective end of endeavour' (Veblen 1990 [1914]: 3). In other words, any instinct is primarily defined by the motive for the action it supports. In this respect, Veblen distinguishes three basic propensities of the human race, propensities whose first manifestations date back to the dawn of humanity: 'the instinct of workmanship', 'the parental bent' and 'the bent of idle curiosity'.

Veblen also defines a 'predatory instinct', that, strictly speaking, he does not seem to consider as an original component of mankind. More specifically : The propensity to predatory emulation [...] is but a special development of the instinct of workmanship, a variant, relatively late and ephemeral in spite of its great absolute antiquity. The emulative predatory impulse [...] is essentially unstable in comparison with the primordial instinct of workmanship out of which it has been developed and differentiated. (Veblen 1994 [1899]: 270) The predatory instinct thus only appears as an independent category at the beginning of the barbarian era3. Contrary to tropism, the instinct does not lead to reflex acts which are devoid of any conscious thought. According to Veblen, 'instinctive action is teleological, consciously so', to such an extent that it can be considered as 'intelligent in some degree' (Veblen 1990 [1914]: 3, 30). So it would be erroneous to reduce instinct to a mere impulse mechanically determining a specific behavioural response to a given stimulus. On the contrary, the instincts 'leave a more open field for adaptation of behaviour to the circumstances of the case' (Veblen 1990 [1914]: 38). This faculty of adaptation is of major importance insofar as it allows man to develop habits. Indeed, '[an] impulsive action [which] suffers no adaptation through habitual use, is not properly to be called instinctive' (Veblen 1990 [1914]: 38). In other words, if the instincts define the general motives for human action, habits allow their appropriate adaptation to circumstances. More precisely, Veblen describes a gradual process in which individuals start developing habits of action, under the impulse of their instincts, and in contact with the material conditions of the society they live in. From then on, these habits of action will determine what man is prone to think, individually first, and then collectively. Indeed, 'habits of thought are an outcome of habits of life' (Veblen 1990 [1919, 1908b]: 38) and institutions are themselves defined as 'settled habits of thought common to the generality of men' (Veblen 1990 [1919, 1909]: 239). From that point of view, institutions appear in fine as the product of the infrastructural conditions of the society that sees them arise. This materialistic determinism leads us to look for the origin of institutional change in the transformation of the material living conditions. It cannot be denied that this thesis, often developed by Veblen, forms a key component of his system of thought. For instance, he asserts that: The discipline of daily life acts to alter or reinforce the received habits of thought, and so acts to alter or fortify the received institutions under which men live. And the direction in which, on the whole, the alteration proceeds is conditioned by the trend of the discipline of daily life. (Veblen 1990 [1919, 1901]: 314) Moreover, the transformation of the infrastructural conditions, from which institutional change stems, chiefly denotes a change in 'the state of the industrial arts'. Veblen (1994 [1899]: 20) particularly considers that 'the transition from peace to predation therefore depends on the growth of technical knowledge and the use of tools' which, by providing an increasing wealth, encouraged greed and appropriation by force. In the same way, the technical revolution the Western world experienced at the end of the eighteenth century gave rise to a new institutional system that Veblen (1990 [1914]: 299) names 'the era of the machine industry, or of the machine process'. Indeed, mechanical processes radically transform the organization of production. They impose their discipline on the habits of thought of engineers, technicians and workers. They prescribe a standardized conception oftime to individuals, 'the discipline of the timepiece' (Veblen 1990 [1914]: 312). Finally, they redefine the aim and the method of science. In other words, 'in the modern culture, industry, industrial processes, and industrial products [...] have become the chief force in shaping men's daily life, and therefore the chief factor in shaping men's habits of thought' (Veblen 1990 [1919, 1906]: 17).

3.2. The thesis of exogenous institutional change

The idea, according to which institutional change would be conditioned by the transformations of the material and technical environment of society, has lead some commentators to misunderstand the true nature of Veblen's theory of institutional evolution. For Walker (1977: 220) notably, 'the central thesis' of Veblen would come down to the idea that 'new institutions are formed as the result of the dynamic impact of technology', even if, by nature, 'institutions are static and resist change'. As to technological progress, Walker admits that according to Veblen, it would stem from the basic human instincts which lead man, directly or indirectly, to improve his mastery over his environment4.

However, Walker still considers that the role attributed by Veblen to instincts in his explanation of technological progress is not important enough to endogenize his analysis of institutional change.Although technological progress in [Veblen's] system is a result of instinctive behaviour, the activity of undertaking such change does not itself generate new habits of mind. In Veblen's theory they are not formed in the course of the continual exercise of an instinct, but as a consequence of the impact on the human constitution of the external conditions of the machine process. (Walker 1977: 221) In other words, the role of instincts would amount to giving an impulse to technological progress, the latter appearing as the true driving force of institutional evolution. By doing so, Walker sides with Coat's conclusion according to which, 'the truly dynamic factor in Veblen's system is technological change; yet Veblen provided no adequate theory of how technology changed' (Coats 1954: 533). Far from being specific to these two authors, this interpretation of Veblen's thought is shared by a number of commentators5. We will only mention here Rosenberg's (1993 [1948]: 53) somewhat terse phrase according to which 'for the most part, Marx and Veblen were technological determinists'. Finally, 'orthodox' economics largely contributed to the spreading of this thesis: 'Veblen's emphasis on the discipline of the machine process opened him to the criticism made by the conventional economists that his work was adversely affected by the acceptance of an untenable technological determinism' (Gruchy 1969: 6). This kind of reading generally aims at demonstrating the exogenous nature of Veblen's theory of institutional change. Now, this criticism is crucial since it emphasizes Veblen's inability to fulfil the requirements of his own research programme. Indeed, if institutional changes are only produced by an exogenous technological progress, this would then mean that Veblen did not succeed in building up a theory of institutional evolution 'stated in terms of the process itself' (Veblen 1990 [1919, 1898a]: 77). Furthermore, the teleological, not to say naively optimistic, nature of such a technological determinism also comes up against Veblen's definition of post-Darwinian economics. However, this interpretation of the Veblenian theory disregards so many fundamental sections of Veblen's discourse that it proves somewhat difficult to sustain.

4. Institutional change as an emergent effect of the evolution process

Veblen claims to impart a crucial role to the determinants of human behaviour in his theory of institutional evolution. Far from the interpretations which view exogenous technological advance as the main explanatory variable of his analysis of institutional change, Veblen asserts that: The changes that take place in the mechanical contrivances are an expression of changes in the human factor. Changes in the material facts breed further change only through the human factor. It is in the human material that the continuity of development is to be looked for; and it is here, therefore, that the motor forces of the process of economic development must be studied if they are to be studied in action at all. (Veblen 1990 [1919, 1898a]: 71-2) Therefore, as important as technological progress may be, it is but an intermediary variable in the process of institutional change. On the contrary, it is man and his behavioural determinants that truly form the driving force of change. From this viewpoint, it is relevant here to consider the nature of the institutional system - as Veblen conceives it - as well as its impact on human behaviour and technological progress.

4.1. The significance of cultural determinism

Technological determinism - emphasized in section 3 - must be qualified by the fact that, once established, institutions gain a certain autonomy and fall into a relatively coherent system that will, in turn, exert a determining influence on individual and social behaviour. Veblen refers to this system with expressions such as 'cultural scheme' (Veblen 1990 [1919, 1908b]: 39), 'cultural complex' (Veblen 1990 [1919, 1909]: 241), or else 'scheme of life' (Veblen 1994 [1899]: 190). [It] is made up of the aggregate of institutions in force at a given time or at a given point in the development of any society, [and] may, on the psychological side, be broadly characterised as a prevalent spiritual attitude or a prevalent theory of life. (Veblen 1994 [1899]: 190) This cultural system imposes itself on individuals and shapes their habits of action and thought. One of the most significant illustrations of this conditioning is given by the analysis of consumer behaviour in The Theory of the Leisure Class. Veblen (1994 [1899]: 85) shows in this work how modern pecuniary institutions direct consumer acts to such an extent that 'no class of society, not even the most abjectly poor, forgoes all customary conspicuous consumption'; 'it is a desire to live up to the conventional standard of decency in the amount and grade of goods consumed' (Veblen 1994 [1899]: 102). But the institutional matrix is not content with shaping individual habits of action and thought, it also carries out a selective control over instincts and institutions themselves. First, this suggests that the cultural environment inhibits, or, on the contrary, encourages the expression of some instincts. Veblen supports a 'racialist' - and not 'racist' - (Boyles and Tilman 1993: 1204) biological explanation of this phenomenon, from the idea that there would be, in the Western world, several primitive ethnic types corresponding to so many different instinctive combinations. Besides, these types would have mixed over a period of time so that 'the peoples of Europe, each and several, are hybrid mixtures made up of several racial stocks' (Veblen 1990 [1914]: 21). Finally, Veblen considers that: In the mixture of races that make up the population of the Western nations a competitive struggle for survival has apparently always been going on among the several racial stocks that enter into the hybrid mass, with varying fortunes according as the shifting cultural demands and opportunities have favoured now one, nowanother type of man.(Veblen 1990 [1914]: 16) In short, at a given point of the evolution process, the prevailing institutional matrix plays a selective role among the instinctive dispositions of the population.Moreover, instincts are shaped by the institutional environment in which they attempt toexpress themselves.

So that the manner, and in a great degree the measure, in which the instinctive ends of life are worked out under any given cultural situation is somewhat closely conditioned by thes elements of habit, which so fall into shape as an accepted scheme of life. (Veblen 1990 [1914]: 7) All in all, the cultural scheme not only selects some instincts - and counter-selects some others - but it denatures them so as to make them coherent with itself.

Finally, the institutional system also carries out a selective action on the new institutions that appear within society. Institutions are not only themselves the result of a selective and adaptive process which shapes the prevailing or dominant types of spiritual attitude and aptitudes; they are at the same time special methods of life and of human relations, and are therefore in their turn efficient factors of selection. (Veblen 1994 [1899]: 188)

Veblen thus clearly asserts the existence of a many-sided cultural determinism through which the prevailing institutional matrix exerts a selective control over individual habits of action and thought, instincts and institutions themselves. This cultural determinism largely rests on an unconscious conditioning which does not necessarily presuppose some kind of intent. This does not mean that individuals are devoid of any free will or else that the institutional matrix does not support any relations of power and domination of which some individuals take advantage. This simply means that, once established, the institutional system tends to become relatively autonomous and to impose itself on instincts, individual habits and new institutions so as to make them consistent with itself. Therefore, the concept of culture is fundamental in Veblen's system as it expresses the organic nature of the institutional complex. 'In this manner any institutional system tends, over time, to become internally coherent and highly interrelated or "possessed of a certain systematic solidarity" (Veblen 1964 [1915]: 267)' (Rutherford 1984: 334). In this process, it gradually acquires a certain stability which keeps it out of line regarding the development of the material and technical conditions. It thus has a ceremonial nature in so far as it survives the men and the infrastructural context that witnessed its birth (see notably Veblen 1994 [1899]: 191).

4.2. Institutional locking-in

Without anticipating the underlying reasons for institutional change, it is possible to analyse the process of the genesis and growth of institutions in two successive stages involving a technological and then cultural determinism. From a schematic point of view, instincts and institutions may be considered as first subjected to 'a process of selective adaptation' to their material and technical environment (Veblen 1994 [1899]: 188). We here again come across the idea that the infrastructural context exerts a determining influence on institutions (see section 3.1.). As for the impact of this context on instincts, Veblen notably considers that precarious material conditions - such as the ones the West had experienced up to the Neolithic age - encourage the expression of the instinct of workmanship and of the parental bent, in so far as humansurvival is at stake. Archaic man was necessarily a member of a group, and during this early stage, when industrial efficiency was still inconsiderable, no group could have survived except on the basis of a sense of solidarity strong enough to throw self-interest into the background. (Veblen 1998 [1934, 1898b]: 87) From then on, this stage of materialistic determinism is followed by a process of self- reinforcement through which the selected institutions exert, in their turn, their discipline on instincts and on new institutions. In this respect, it is significant that Veblen should remain quite vague on the nature of the mechanisms at work in the 'process of selective adaptation' of instincts and institutions to their material and cultural environment. More precisely, although Veblen often uses a Darwinian rhetoric in terms of natural selection in his analysis, he also resorts to a Lamarckian argumentation based on the inheritance of acquired characters6. Furthermore, we agree with Rutherford (1998: 467) and Jennings and Waller (1998: 212-3) on the fact that Veblen gives the expression 'selective adaptation' different meanings. They also rightly point out that the idea of 'a selection between stable types of temperament and character', to which this expression is sometimes related in Veblen's earlier work, has significantly lost of its importance in his later work. Anyhow, Veblen has already admitted by 1899 that 'the question as to the nature of the adaptive process [...] is of less importance than the fact that, by one method or another, institutions change and develop' (Veblen 1994 [1899]: 190). So, whatever the underlying mechanisms, the main issue at stake is the appearance of a process of positive feedback between instincts and institutions, from which the locking-in of a given institutional logic7 stems. Indeed, by being reinforced in their dominant position, the selected instincts and new institutions support in return the cultural complex that prevails in society. This process of self-reinforcement, which can be represented by Figure 1, is clearly underscored by Veblen in the following quotation: This comprehensive scheme of habitual apprehensions and appreciations is what is called the 'genius', spirit, or character of any given culture. In all this range of habitual preconceptions touching the nature of things there prevails a degree of solidarity, of mutual support and re-enforcement among the several lines of habitual activity comprised in the current scheme of life; so that a certain characteristic tone or bias runs through the whole, in so far as the cultural situation has attained that degree of maturity or assimilation that will allow it to be spoken of as a distinctive whole, standing out as a determinate and coherent phase in the life-history of the race. To this bias of scope and method in the current scheme of life, intellectual and sentimental, any new element or item must be assimilated if it is not to be rejected as alien and unreal or to fall through by neglect. (Veblen 1990 [1914]: 177) By emphasizing the significance of cultural determinism and the self-reinforcing nature of the institutional system, Veblen's theory of institutional evolution is freed from strict technological determinism. Besides, by stressing the cumulative and irreversible nature of the evolution process, Veblen succeeds in including mutual dependence phenomena in his explanatory system, while avoiding the contradiction of a static circular causality.

Consequently, to explain institutional change is to think through the changes of a complex system, formed by numerous elements interacting with one another in a relatively coherent and integrated frame. Indeed, 'the cultural scheme is, after all, a single one, comprising many interlocking elements, no one of which can be greatly disturbed without disturbing the working of all the rest' (Veblen 1975 [1904]: 374).

4.3. Endogenous technological progress

The material and technical conditions are not an exogenous variable in Veblen's theoretical system. On the contrary, they stand in a system of interdependence in which they exert both a determining action on (individual and social) habits of action and thought and an action determined by the prevailing instinctive and institutional factors. Consequently, if technological progress is capable of leading to institutional changes, it is itself conditioned by the institutional logic and the instincts which prevail in society.

More specifically, Veblen considers technological progress as a product of the instinct of workmanship expressing itself in an institutional context more or less favourable to its full bloom. Given the material environment, the rate and character of the technological gains made in any communitywill depend on the initiative and application of its members, in so far as the growth of institutions has not seriously diverted the genius of the race from its natural bent. (Veblen 1990 [1914]: 110) This notably explains the sharp slowdown in the development of techniques that the Western world experienced during the barbarian era. In fact, this period characterized by the institutionalization of private property witnesses 'the predatory attitude becom[ing] the habitual and accredited spiritual attitude for the members of the group' (Veblen 1994 [1899]:19). The industrial activities being considered as degrading, the instinct of workmanship found itself repressed and technological progress considerably slowed down. From then on, it is only after the progressive pacification of barbarian institutions and the arrival at the 'commercial phase of the same pecuniary culture' that the instinct of workmanship could express itself again and allow 'a slow recovery and advance in technological efficiency and scientific insight' (Veblen 1990 [1914]: 180-1).

In Veblen's system, technological progress is thus really an endogenous variable in the evolution process. And what Walker (1977: 220) analyses as a contradiction, namely the coexistence of institutional and technological determinism in the same explanatory system, actually refers to a dynamic process of mutual dependence. Indeed, if 'the causal links between institutions and technology run in both directions' (Rutherford 1984: 338), this circular causality is made coherent by the cumulative and irreversible nature of the evolution process. The impact of technology on institutions at a certain point of the evolution process is thus not in conflict with the later influence of the institutional matrix on the development of techniques. These are two specific and historically dated causal connections which appear in a given evolution process. Finally, the endogenous nature of technological progress does not prevent a new technology coming from outside to enter the cultural system and possibly to disturb it. As in every open system, the cultural complex, in Veblen's view, is characterized by a lack of 'external closure' (Mearman 2002: 573). For instance, Veblen (1964 [1915]) shows how important technological borrowings from England were for the German industrial development in the nineteenth century. However, any technological transfer should be interpreted, not as a separate phenomenon, but from the standpoint of the cultural system as a whole. As Veblen emphasizes: The borrowing community or cultural group is already furnished with its own system of conceits and observances - in magic, religion, property, and any other line of conventional necessity - and the introduction of a new scheme, or the intrusion of new and alien elements into the accredited scheme already in force, is a work of habituation that takes time and special provocation. All of which applies with added force to the introduction of isolated technological elements from an alien culture, still more particularly, of course, where the technological expedients borrowed are turned to other uses and utilised by other methods than those employed in the culture from which they were borrowed. (Veblen 1964 [1915]: 37-8)

4.4. The emergent effects of institutional dynamics

Institutional change appears in Veblen's system as an emergent effect of the dynamics of the interactions between technical, instinctive and institutional factors. Although the connections of mutual dependence between these factors are a priori self-reinforcing and ensure the perpetuation of a given cultural complex, they can also bring about unpredictable consequences which may lead to the questioning of its very existence8. Besides, these emergent effects are mainly attributable to the very characteristics of instincts and institutions as Veblen considers them. This point is crucial in so far as it substantiates the idea that Veblen has succeeded in producing an endogenous theory of institutional change, in which the determinants of human behaviour are the main driving forces of institutional evolution (see the definition of Veblen's research programme in section 2). On the one hand, the emergence of a new cultural complex may originate in a phenomenon of a denaturing of instincts under the effect of the material, technical and institutional growthin a given society. It is this very mechanism that allows Veblen to explain the transition from the savage era to the barbarian one in his historical analysis of the Western world. In short, the savage era was characterized by the coexistence of small peaceful communities, no private property and the predominance of a strong parental bent. This context was especially favourable to the expression of the instinct of workmanship, and consequently to technical progress and an improvement in the material conditions of living. Then, this significant growth of produced wealth caused the concomitant appearance of private property and of a predatory instinct which Veblen describes as a degenerate expression of the instinct of workmanship (Veblen 1990 [1914]: 160; Veblen 1994 [1899]: 270). With the advent of the predatory stage of life there comes a change in the requirements of the successful human character [leading to] ferocity, self-seeking, clannishness, and disingenuousness - a free resort to force and fraud. (Veblen 1994 [1899]: 224-5)

From then on, a process of positive feedback was engaged between this predatory instinct and the institution of private property, leading in fine to the emergence of a new cultural complex in which 'labour comes to be associated in men's habits of thought with weakness and subjection to a master. It is therefore a mark of inferiority' (Veblen 1994 [1899]: 36). Thus, institutional change here appears as an emergent effect of the evolution process itself, an unpredictable consequence of the improvement in material conditions, mainly due to the perversion of the instinct of workmanship into predatory impulse.

On the other hand, institutional change can also be explained by the biological dimension of instincts and, more precisely, by their hereditary character. According to Veblen, the 'counter-selection' of some instinct in a given period of the evolution process does not imply its definitive disappearance. On the contrary, it remains in the 'genetic inheritance' of the population in a latent state so that, if the material and institutional environment allows it, it will be able to express itself again, or even recover its dominant position. In other words, 'instincts are not lost through disuse' (Rutherford 1998: 466n). Now, this feature of instincts is fundamental in that it leads to an understanding that the instinct of workmanship and the parental bent could survive the barbarian era.

They appear to be hereditary characteristics of the race, and to have persisted in spite of the altered requirements of success under the predatory and the later pecuniary stages of culture. [...] Such a generic feature is not readily eliminated, even under a process of selection so severe and protracted as that to which the traits here under discussion were subjected during the predatory and quasi-peaceable stages. (Veblen 1994 [1899]: 222)9 Then, this hereditary transmission of instincts considerably broadens the possibilities of institutional change in so far as a 'counter-selected' instinct is always potentially capable of reappearing to support the development of a new cultural complex. Moreover, the ceremonial character of institutions, namely their resistance to the changing infrastructural conditions of society, can have unpredictable institutional consequences.

This is particularly true in the legal area as it cannot be denied that, in Veblen's view, 'such institutional factors as, e. g., the common law are necessarily of slow growth' (Veblen 1990 [1914]: 340). The perseverance of 'the system of Natural Rights'10 in the era of the machine is a significant illustration in this respect (Veblen 1990 [1914]: 286). According to Veblen, this system is a by-product of the individualistic industrial organization which was characteristic of the first stages of the era of handicraft. It reflects the idea that 'the individual is thrown on his own devices for his life, liberty and pursuit of happiness' (Veblen 1990 [1914]: 287). In this respect, 'the system of Natural Rights' defines as an inalienable right of human nature 'that of property in whatever wealth has been honestly acquired, subject only to the qualification that it must not be turned to the detriment of one's fellows' (Veblen 1990 [1914]: 287). But this system, adapted to the demands of craftsmanship and petty trade, finally reached its maturity only in the second half of the eighteenth century, at a time when the era of handicraft gave way to that of the machine industry (Veblen 1990 [1914]: 341). According to Veblen, the consequences of this maladjustment of the legal institutions to the new material and technical conditions are first-rate. Indeed, production on a large scale, led by the development of mechanical industries, implies an increasing division of labour between the strictly productive activities on the one hand, and the commercial and financial activities on the other hand. Hence the modern capitalistic firm happens to be the scene of two discordant logics: an industrial logic supported by the producers of usage values (workers, technicians and engineers), and a pecuniary logic taken on by businessmen, namely the owners of the means of production or else those who represent them. Now, the system of Natural Rights grants the latter ones an exclusive discretionary power which they use to protect their own pecuniary interests, even if it is harmful to the industrial efficiency, and so to 'the common good' (Veblen 1990 [1914]: 344). In other words, businessmen find themselves endowed with a 'legal right of sabotage' (Veblen 1967 [1923]: 66), which allows them to create scarcities and other 'disturbances' (Veblen 1990 [1914]: 354) only aiming at satisfying their pursuit of profit.

This case is a good illustration of the idea that institutional change in Veblen's view does not consist in a mere adaptation of institutions to the evolution of infrastructural conditions. On the contrary, the resistance of institutions towards change can bring about unpredictable institutional consequences. Finally, the appearance of institutional emergent effects can be directly ascribed to the internal dynamics of institutions themselves. Indeed, the self-reinforcement stage, during which the cultural scheme of society tends to enhance its stability and its domination over the other institutions, is accompanied by a process making the institutional matrix more complex. As Rutherford emphasizes, 'Veblen argues that this institutional logic will be subject to increasing elaboration and refinement over time' (Rutherford 1984: 334).This process can then also generate unexpected consequences that may in fine call into question the cultural complex itself. For instance, it is the very internal dynamics of the 'barbarian institutions' that allows Veblen to explain the emergence of the era of handicraft.

The simultaneous appearance of private property and of the predatory instinct paved the way to a troubled time in the Western world history, in which the use of violence was given an enhanced value at the cost of productive labour. In this first stage of the barbarian civilization, wealth strictly speaking is not amassed for itself, but because it testifies to the exploits of its holders: 'Property set out with being booty held as trophies of the successful raid' (Veblen 1994 [1899]: 27). Nevertheless, the development of barbarian institutions gradually made wealth as such the main criterion of social distinction. In other words, by a process of institutional 'refinement', one comes to consider that 'wealth is now itself intrinsically honourable and confers honour on its possessor' (Veblen 1994 [1899]: 29)11.

Thus: In the later barbarian culture society attained settled methods of acquisition and possession under the quasi- peaceable régime of status. Simple aggression and unrestrained violence in great measure gave place to shrewd practise and chicanery, as the best approved method of accumulating wealth. (Veblen 1994 [1899]: 236)

In so doing, this institutional dynamics allowed the development of a context that was more favourable to the expression of the instinct of workmanship, starting from this very moment the transition to the era of handicraft12. So, the calling into question of the barbarian institutional scheme clearly appears as an endogenous phenomenon, which can be ascribed to the barbarian institutions themselves becoming more complex.

5. Conclusion

 

This article set out to prove that Veblen's theory of institutional change cannot be reduced to a simple technological determinism except for a very partial reading of his writings. Indeed, in spite of the rather scattered nature of his writings on this point, a rebuilding of his thought suggests the idea of an endogenous theory of institutional evolution. More specifically,institutional change appears, in Veblen's work, as the unpredictable outcome of dynamic interactions between technical, instinctive and institutional factors. Therefore, Veblen's analysis of institutional dynamics proves consistent with his scientific project, which aims at producing a cumulative and non-teleological theory of institutional evolution whose driving force would be the determinants of human behaviour.

However, the present paper has left open a difficult issue which was already addressed by Rutherford (1984) at the end of his authoritative article, namely the possible impact of some specific decision made by an individual or a group on the course of institutional evolution.

The issue can be presented more accurately in the following terms: does Veblen's system allow, theoretically, the thinking out of collective action, namely the conscious and deliberate co-ordination of individual actions with a view to changing the institutional base? Rutherford has answered this question negatively, considering that 'the theory of habituation is frequently utilized by Veblen as a substitute for a proper analysis of how institutions change base and of how a new consensus is formed and extended, elaborated, and given concrete expression' (Rutherford 1984: 347).

Nevertheless, even if Rutherford's conclusion has some truth in it, his argument on this point is not extensive enough since it is only based on Veblen's inability to overcome his so- called 'psychologistic methodological approach' so as to adopt an individualistic perspective.

Indeed, the possible theoretical integration of collective action into Veblen's broader framework of institutional evolution, as it has been rebuilt in the present paper, is a crucial issue in itself. In this perspective, we need to clarify the role of 'the small-t teleology of individual intent' in the process of institutional change, while rejecting the 'Big-T Teleological' conceptions of institutional evolution (Jennings and Waller 1994). This issue first calls for an extensive reappraisal of Veblen's theory of human nature and particularly of his many-sided - psychological, biological and cultural - instinct theory, which is deliberately overlooked in Jennings and Waller's (1994) analysis. Finally, such an attempt should specify the theoretical foundations of Veblen's views on socialism - and notably on Marxism (Hodgson 1998: 418-20) - on trade-unions and on the requirements for a successful engineers' revolution as they were described in The Engineers and the Price system (Veblen 1965 [1921]); Stabile (1993 [1986]), Rutherford (1992) and Knoedler and Mayhew (1999) in particular have tackled this last issue, but from a specific perspective that would deserve to be widened and made more inclusive.

Notes

_

The author would like to thank William Williams and two anonymous referees for useful comments and suggestions, as well as Céline Rivoire, Laurence Collaud and David Paterson who translated most of the French typescript. All errors are, of course, the responsibility of the author.

1

As Samuels (1993 [1990]) rightly showed, Veblen's theory of preconceptions is 'self-consciously self- referential'. More specifically, Veblen (1990 [1919, 1908b]: 33) admits that the modern scientific point of view which he considers to be his, rests - as every other systematic mode of explanation of phenomena - on 'an unproven and unprovable postulate - that is to say, it is a metaphysical preconception'.

 

2

Veblen (1990 [1919, 1906]) uses this word to express his rejection of 'animism', that is the systematic imputation of a pre-established aim to phenomena.

3

We are grateful to an anonymous referee for having pointed out that one should be careful when referring to The Theory of the Leisure Class (Veblen 1994 [1899]), since Veblen's views on instincts did not take a definite shape until the publication of The Instinct of Workmanship (Veblen 1990 [1914]). In this perspective, it is sometimes argued that, in 1914, Veblen no longer viewed the predatory instinct as a propensity distinct from the instinct of workmanship, even in the later phases of cultural development. However, this thesis is refuted by the following quotation which leaves no ambiguity in this respect: 'The self-regarding sentiments of arrogance and abasement [...] and the instinctive proclivities of which these sentiments are the emotional expression are presumed to have remained unchanged in force and character through that long course of cumulative habituation that has given them their ascendancy in the institutions of the pecuniary culture, and of their own motion they will yield now results of the same kind as ever. But the like is true also for those other instincts out of whose working came the earlier gains made in knowledge and workmanship under the savage culture, before the self-regarding sentiments underlying the pecuniary culture took the upper hand. The parental bent and the instincts of workmanship and of curiosity will have been overborne by cumulative habituation to the rule of the self-regarding proclivities that triumphed in the culture of predation, and whose dominion has subsequently suffered some impairment in the later substitution of property rights for tenure by prowess, but these instincts that make for workmanship remain as intrinsic to human nature as the others' (Veblen 1990 [1914]: 181-2)

 

4

If the instinct of workmanship is the main determinant of technological progress in that it 'occupies the interest with practical expedients, ways and means, devices and contrivances of efficiency and economy, proficiency, creative work and technological mastery of facts' (Veblen 1990 [1914]: 33), the other two original instincts of mankind indirectly contribute to it. Although 'no utilitarian aim enters in its habitual exercise' (Veblen 1990 [1914]: 88), the bent of idle curiosity is at the origin of world representation systems which are capable of finding practical applications. As for the parental bent, it also encourages technological progress - especially by favouring peaceful relationship between men - on condition that it should serve the well-being of the community.

 

5

Rutherford (1984: 331, n. 1) gives a few examples.

 

6

To expand on this issue, Hodgson (1993: 123-38) and Tilman (1996: 47-71) can be referred to at this point. On the contrary, Jennings and Waller (1994: 1020-1) argue that the transposition to cultural processes of the debates over Darwin vs. Lamarck is misguided.

 

7

Hodgson (1993: 131) does stress that 'positive feedback can engender such phenomena as lock-in (to use the modern parlance), where outcomes become frozen because of their self-reinforcing attributes'. More generally, Hodgson (1993: 123-38) puts great emphasis on 'the cumulative and self-reinforcing aspect of institutions and routines' (131) in his interpretation of Veblen's economics. However, he does not identify the main origin of institutional change in this interaction process itself - as we will do in the next sections of the present paper - but in the instinct of idle curiosity. According to Hodgson (1993: 136), 'the principle of "idle curiosity" became [in Veblen's Darwinian economics] the ongoing source of variety or mutation in the evolutionary process'.

 

8

From a rather similar viewpoint, Rutherford (1984: 338, n. 42) asserts that 'Veblen does not explicitly distinguish between intended and unintended consequences, but the distinction has considerable importance in his work'. Nevertheless, it seems more appropriate to distinguish between the predictable and unpredictable consequences of the institutional dynamics, rather than deal with its intended and unintended consequences.

Indeed, the very self-reinforcement processes which institutional locking-in stems from, do not necessarily rest on intended mechanisms (see sections 4.1 and 4.2). Consequently, the issue is not so much to know if some institutional evolution was hoped for by individuals, as to know if it could have been foreseen. In this perspective, Hodgson (2002: 274-6) argues that 'predictability determinism' is undermined in 'open, complex, non-linear systems'; and Mearman (2002) acknowledges that Veblen's economics is consistent with an open-systems approach.

 

9

The quotation from The Instinct of Workmanship (Veblen 1990 [1914]: 181-2) in the third note of the present paper expresses the same idea.

10

According to Veblen (1990 [1914]: 286), this doctrine is the legal expression of a representation system of the world which was born in modern times in the West and was founded on the idea of 'Order of Nature and Natural Law'. It especially rests on John Locke's philosophy.

 

11

This institutional dynamics can be interpreted as a case of 'cultural flexibility' based on both 'ambiguity and redundancy', in accordance with Jennings and Waller's (1994) meaning of these concepts. On the one hand,'ambiguity permits systems of cultural meaning to be modified, through shifts in weightings of multiple cultural linkages, as novelty arises'. On the other hand, 'redundancy is the corollary of ambiguity: [cultural] terms can "stand in" for one another, permitting one to take over the "role" of another as shifts permitted by ambiguity occur' (Jennings and Waller 1994: 1008-9).

 

12

Rutherford (1998: 470) quotes a few phrases from Veblen's Instinct of Workmanship which fully sustain this idea: 'Within the region of the Western Civilisation [...] the growth of institutions has shifted from the footing of prowess to that of prescriptive ownership. So soon as this shift has securely been made, the development of trade, industry and a technological system has come into the foreground, and these habitual interests have then reacted on the character of the institutions in force' (Veblen 1990 [1914]: 203).

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