1 Machine Discipline and Technological Change: Rediscovering Veblen's Evolutionary Theory John Latsis* Balliol College, Oxford
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Machine Discipline and Technological Change: Rediscovering Veblen’s Evolutionary Theory John Latsis* Balliol College, Oxford University [email protected] Abstract Recently, social scientists have focused considerable attention on technology, often funded through governments that perceive a link to growth and increased prosperity. In spite of his prolific contributions on the subject of technology, the work of Thorstein Veblen has not featured prominently in this new technology research. At the same time, modern Veblen scholars have tended to focus on historical and philosophical aspects of his work at the expense of developing his evolutionary research programme. This situation presents a puzzle to historians of economic thought: why did Veblen’s theory fail to generate a significant research programme in the social sciences? In this article, I present an outline of Veblen’s evolutionary theory, its historical and theoretical context, and Veblen’s motivations for attempting to revolutionise the social sciences. I go on to describe two problems that have plagued the Veblenian approach from its inception. The final part of the article suggests a possible route that would lead to the rediscovery of Veblen’s theory and its redeployment outside of economics in the field of technology studies. Keywords: Thorstein Veblen, social construction of technology, history of economic thought, economic methodology, machine discipline. EAEPE Research Area: Ontological Foundations of Evolutionary Economics 1 Introduction Thorstein Veblen was the founder of American Institutional Economics, or what has been called Old Institutionalism more recently1. At the turn of the twentieth century he proposed a substantially new theory of social change outlined in his three major theoretical books The Theory of the Leisure Class (1899), The Theory of Business Enterprise (1904) and The Instinct of Workmanship (1914). At the heart of Veblen’s Evolutionary Theory (VET) is a rejection of the optimistic picture of market co- ordination painted by classical economists and its replacement by an evolutionary account that emphasises the adaptation of economic institutions to a changing technological environment. Recently, the social sciences have begun to focus their attention on technology, often funded through governments that perceive a link to growth and increased prosperity. Yet VET has not featured prominently in new technology research2. Instead, Veblen’s successors have tended to focus on the historical and philosophical aspects of his work. This has presented a puzzle to historians of economic thought: why did Veblen’s theory fail to generate a significant research programme in the social sciences? In this paper, I will first present an outline of VET, its historical and theoretical context, and Veblen’s motivations for attempting to revolutionise the social sciences. In Section 2 I shall go on to describe two problems that have plagued the Veblenian approach from the start. The final two sections suggest a possible route that would lead to the rediscovery of VET and its redeployment outside of economics in the field of technology studies. * The author would like to thank Malcolm Rutherford and Nuno Martins for valuable comments on an earlier draft of this paper. 1 As distinguished from the New Institutionalism of recent years (North, 1990; Williamson, 1985). 2 Another economist who wrote about technological change, Joseph Schumpeter, has received increased attention in modern economics. There is now an entire research programme of ‘Evolutionary Economics’ based on his ideas (Nelson & Winter, 1982; Freeman & Soete, 1997). The Schumpeterian evolutionary economists have been quick to delve into theoretical and empirical problems relating to the development, exploitation and transfer of technology. 2 1. Veblen’s Evolutionary Theory Veblen’s evolutionary theory is founded on two basic elements that are tightly woven together throughout his contributions. On the one hand, Veblen was a methodologist and critic of the economic mainstream of his time, which he saw as genetically linked to a tradition that lasted from Adam Smith and David Ricardo through to the Utilitarians and Marginalists of the nineteenth century and the Classical economists of the twentieth. On the other, Veblen proposed a specific research programme for social studies based on the most up to date biological and anthropological theories of his day. This evolutionary theory was developed at length in his three most important books (Veblen, 1899; 1904; 1914). In the following two sections I will offer a brief survey of these ideas as a context to the more detailed discussion offered below. 1.1 The Critique of Classical Economics Veblen’s assessment of the bulk of traditional economic theory of his time was scathing. In economic theory he found a ‘premodern’ approach to science characterised by the reliance on natural law preconceptions, representing the social world through inappropriate Newtonian metaphors (Hamilton, 1991). More specifically, he emphasised three features of economics that effectively condemned it to irrelevance: 1. Economists’ theoretical focus on the ‘normal’ sequence of events is ‘animistic’. It relies on an assumption of spiritual or teleological tendencies to enforce an imagined order that is never attained in practice. 2. Thus, by its very nature, economic science is ‘taxonomic’, concerned purely with how disturbing factors can affect the aforementioned normal process of social progress. 3. Finally, economics is founded on a false and outdated assumption of hedonistic psychology inherited from the utilitarian philosophers of the nineteenth century. In ‘The Preconceptions of Economic Science – Part II’ (1899b), Veblen describes Adam Smith, the founder of modern economics, as having an ‘animistic bent’ – a predisposition towards an otherworldly principle of organisation that pre- 3 regulates the social system. Smith is offered as a contrast to Veblen’s own evolutionary approach to economics. By ‘animism’ Veblen means the ascription of goal-orientated or teleological characteristics to systems and institutions that do not possess the first person perspective. This is contrasted with an evolutionary approach that foregoes teleology for the sake of studying causal chains connecting past and future events, interpreting social life as the outcome of cumulative causal processes. The idea that supply and demand automatically equilibrate markets at a level that is consistent with the general welfare is Veblen’s favourite target. By describing Smith and the classics as animists he accused them of removing economics from the causal network of real world events. He argued that the notion of a self-equilibrating system cannot be the product of causal processes in the real world. Citing the famous discussion of natural prices in which Smith speaks of ‘accidents’ diverting prices from their natural level, Veblen shows that disturbances cannot shift a system away from its true course. In the evolutionary framework there can be no hypothetically ‘true path’ that runs counter to the actual course of events (Veblen,1899b: 116). Accordingly, Smith could not possibly mean ‘natural’ in the same sense as it is used in the natural sciences when he described price movements. Natural prices must have a different element other than the fact that they are causally determined by antecedent conditions3. To explain this, Veblen paints a picture of classical economics in which the state of perfect liberty, and the pure exercise of market forces without intervention, is an end state which societies should aim to emulate. The removal of the various constraints upon the operation of social laws will bring society one step closer to the achievement of a natural state to which it should gravitate. Veblen’s analysis places Smith’s theory firmly in the political and theological context of post-Enlightenment Scotland. With Adam Smith the ultimate ground of economic reality is the design of God, the teleological order; and his utilitarian generalisations, as well as the hedonistic character of his economic man, are but methods of the 3 According to Veblen, the confusion of actual causal relations and imputed metaphysical ends is characteristic of the enlightenment project in general. In a footnote to his discussion he says the following: “The discrepancy between the actual, causally determined situation and the divinely intended consummation is the metaphysical ground of all that inculcation of morality and enlightened policy that makes up so large a part of Adam Smith’s work. The like, of course, holds true for all moralists and reformers who proceed on the assumption of a providential order” (Veblen, 1899: 116n). 4 working-out of this natural order, not the substantial and self-legitimating ground. (1899: 131) This theological interpretation of Smith as well as the charge of animism puts the two approaches (classical economics and VET) into stark contrast: a system pre-ordained and constructed in order to fulfil the goals of a utopian society, and a system that is the product of ongoing and non law-governed negotiation. 1.2 A theory of social change through technological innovation As should be clear from this brief example, Veblen believed that the failings of classical economics were so great that an entirely new theoretical edifice had to be built to replace it. In his theoretical works, this is exactly what he set out to do. Veblen never trained specifically as an economist and read very widely in Comment