Thoughts from 1975 Provoked by Veblen in 1908-09

I am sorting and packing at the moment, and I came across an essay I wrote as an undergraduate at the University of Wisconsin in 1975. (I had returned after several years of sometimes blissful hippiedom.) It’s in response to a pair of articles written by Veblen in the early years of the twentieth century denouncing marginalist economics. Here’s an excerpt:

“Certainly what is not justified is the movement from a descriptive to a normative role for price. Veblen argues persuasively that contracts are situated, that prices are sensible only as adjustments to situations, and that the forces that constitute the situation bias the results. By setting these adjustments up on a pedestal and calling it [sic] “optimality”, economists may unwittingly serve to buttress the constraints operating to define the original situation. Also, as Veblen never tired of pointing out, in no society are human beings only individuals; no theory that fails to accord a prominent place to collective and undifferentiated activity can claim to tell the whole story. In my opinion, this is particularly true of theories of demand.

“...Veblen’s accusation that neoclassical economics is reductionist has much going for it. Again, he was hampered in his effort to develop this criticism by his lack of mathematical training. Modern economics—and modern social science in general—has much to learn from developments in other fields that demonstrate that there is more to quantitative analysis than mere size and rate of growth. Concepts of pattern and sequencing in ecology, molecular biology and information theory, for example, indicate that many matters of “quality” can be understood in terms of quantity. And beyond the ability of mathematical methods to describe, qualitative changes still take place that any science must grapple with as best it can. A specific charge could be made, moreover, that marginal theory relies too heavily on a notion of incrementalism in descriptive methodology; particularly in a social science which concerns itself with people who look ahead and make decisions on the basis of patterned perceptions, the incremental bias may miss as much as it captures.

“The first casualty of a reductionist methodology is an adequate conception of change. This is because, while at any given moment things can be isolated for separate, quantitative analysis, they change as part of an interconnected whole which can only be perceived in terms of what these various things do with and to one another....In economics this becomes a special problem since part of this whole is not human economic behavior, but also the material world, whose “utilities” are regulated by very different sets of laws.”

I’m surprised by how much this essay, written for my first ever economics course, sets the tone for nearly all my thinking since then. I hope I’m more precise now, but in some ways I’m still right there.

Incidentally, my professor’s response at the end was: “Your paper is abstract and difficult to respond to.”