Thorstein Veblen and Socialism

Abstract

This article is the first comprehensive account of Veblen’s views on socialism. While Veblen had strong socialist sympathies, his views on socialism and its feasibility shifted slightly during his lifetime. The article also connects Veblen’s opinions on socialism with his theoretical analysis, including his dichotomy between pecuniary and industrial employments. This dichotomy is consistent with his socialism, but the dichotomy itself is open to criticism. Veblen’s stress on the habit- and community-based nature of knowledge could raise questions about its transferability and tacitness, and about the possibility or otherwise of comprehensive socialist economic planning, which relies on the gathering together much relevant knowledge. It is noted that John Dewey also held a habit- and community-based view of knowledge, and he became a socialist in the 1930s. But others have suggested that the tacit nature of much relevant knowledge makes comprehensive socialist planning highly problematic. This leaves open the question whether Veblen’s socialism was consistent with an adequate understanding of the nature and role of knowledge. Veblen’s views on socialism are both revealing and enigmatic.

Keywords:

• Thorstein Veblen
• socialism
• planning
• pecuniary-industrial dichotomy
• tacit knowledge
• collective knowledge
• habits
• John Dewey

JEL Classification Codes:

• B14
• B15
• B31
• B52
• P20

Disclosure Statement

No potential conflict of interest was reported by the author.

Notes

1 www.collinsdictionary.com/dictionary/english/socialism. Accessed January 16, 2022.

2 Veblen was writing before the rise of the guild socialist movement (Cole 1920). Elsewhere (Hodgson 2023) it is argued that Cole’s model of decentralized power with public ownership is unfeasible, and, despite his intentions, it would lead to concentrated power at the center.

3 Notes taken by his students, including those of John G. Thompson (held in the Joseph Dorfman archive at Columbia University), Schäffle’s The Impossibility of Social Democracy came to the attention of the students attending Veblen’s lecture course at the University of Chicago in October-December 1903. The same book (copies of which are extremely rare) can be found in the library at Stanford University. Note that, in Schäffle’s time, social democracy and socialism were virtual synonyms. Schäffle’s book would be better titled today as The Impossibility of Democratic Socialism. In the twentieth century, the term social democracy shifted in meaning, and it came to be associated with the promotion of a mixed economy with markets, alongside a strong and redistributive welfare state. This major change was clear in the policy declarations of the German Social Democratic Party (SPD) at its Bad Godesberg Congress in 1959 (Hodgson 2021, 10–13).

4 In Joseph Dorfman Papers, Columbia University, quoted in Tilman (1996, 197) and in Camic (2020, 468). Underlining as in the original.

5 Mill ([1871] 1909, 199) wrote: “[t]he laws and conditions of the Production of wealth partake of the character of physical truths. There is nothing optional, or arbitrary in them.”

6 See Hodgson (2019, chap. 2) for arguments that viable decentralized socialism requires markets.

7 See, for example, Suchman (1987), Button (1993), Star (1995), Collins and Kusch (1998).

8 In a later publication, Veblen moved slightly closer to a view that technology is inextricably entwined with social relations. Veblen (1923, 280) wrote: “[t]he technological system is an organisation of intelligence, a structure of intangibles and imponderables, in the nature of habits of thought. It resides in the habits of thoughts of the community and comes to a head in the habits of thought of the technicians.”

9 For further arguments and evidence on these points see Hodgson (2019).

10 See Hodgson (2021, 15–16) for remarks on Dewey’s views on knowledge and socialism. Hodgson (2023) shows that the guild socialists proposed nationalization rather than devolved common ownership and that their system had an unavoidable centralizing dynamic.

11 For other views on tacit knowledge see Reber (1993), Collins (2010), Oğuz (2010), Gascoigne and Thornton (2013).

Additional information

Notes on contributors

Geoffrey M. Hodgson

Geoffrey M. Hodgson is Emeritus professor at Loughborough University, London. The author thanks Bill Waller and anonymous referees for helpful comments on a previous draft of this essay.