Thorstein Veblen's theory of institutional change: beyond technological determinism

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 on-teleological theory of institutional evolution, a theory in which behavioural determinants of human beings would be the main explicative variables.

Development blocks, malinvestment and structural tensions – the Åkerman–Dahmén theory of the business cycle

“…Yet, despite his institutional approach, Akerman considered scientific-driven technological progress to be the ultimate determinant of Western industrialism.Åkerman's institutional, but basically technological, explanation of the cumulative industrial process was similar to Veblen's view. The resemblances betweenÅkerman's and Veblen's view on the industrial revolution are striking, although some scholars have questioned that Veblen, by referring to the significance of habits of thought, was a clear proponent of 'technological determinism' (Brette 2003;Hodgson, 2004: 180-182, 209-210). 7Å kerman denied that basic inventions had been determined by 'human motivations, the prevailing institutional order, and prior scientific attainment' (Åkerman, 1960: 19).…”

How can the History of Economic thought Contribute to an Understanding of Institutional Change?

“…7 See, for example, Balabkins (1988), Backhaus (1993), Priddat (1995), Nau (2000), Peukert (2001), Shionoya (2005). 8 See, for example, Samuels (1998), O'Hara (2000), Louçã and Perlman (2000), Brette (2003). 9 The term "extended order" was introduced by Friedrich August Hayek in his last book, The Fatal Conceit: The Errors of Socialism (1988).…”

Free Software, Business Capital, and Institutional Change: A Veblenian Analysis of the Software Industry

“…In technological development, Veblen argues, these two instinctive dispositions complement the instinct of workmanship in their own ways: The parental bent through the "sentimental approval of economy and efficiency for the common good" (27) and the idle curiosity by contributing to the "available knowledge" in society, i.e., society's common stock of technological knowledge, and thus by serving "the ends of workmanship" (88). Brette (2003) observes that "[i]f the instinct of workmanship is the main determinant of technological progress … the other two original instincts of mankind indirectly contribute to it" (474, endnote 4).…”

“…"Culture," therefore, is a generic concept in the Veblenian framework, denoting the matrix of social institutions within a historically specific material and technical environment. Brette (2003) contends indeed that "the concept of culture is fundamental in Veblen's system as it expresses the organic nature of the institutional complex" (464). At this general level of analysis, Veblen divides human history into four general cultural eras: the peaceful culture of savagery, the predatory culture afterwards characterized by the rise of private property, the handicraft cultural era and, lastly, the acquisitive business culture created by the machine industry (Veblen [1914(Veblen [ ] 1918see Brette 2003;Edgell 1975).…”

“…They are units of selection in the sense that technological developments bring about evolutionary social change as certain habits of thought and institutions are "selected," or favored, in the process of adaptation to the new material and technological conditions. Veblen hereby theorizes not where the social evolution will exactly lead to -as in the teleological theories of social change (Brette 2003) -but rather the "mechanism" of change, that is, how social evolution takes place in response to the changes in material and technological conditions. Let us finally observe that, for Veblen, this process of institutional change is not the result of purposeful or calculative behavior, but is the "unintended" result of "habituation that occurs through the conditioning influence of the new material circumstances" (Rutherford 1998, 469, emphasis original).…”