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.And unlikebusiness activities, the machine process valued workmanship.Itsoutput was functional or useful goods that satisfied man s needs toeat, to work constructively, and to satisfy his curiosity.Business activities were the root causes of the business cycle(Veblen 1978, p.237).Businessmen borrowed money based on theirexpectations of future profits.This borrowing increased economicactivity and prices, leading to higher profits.With their expectationsconfirmed, businessmen would form even more optimistic views offuture profits.And with things going so well, businesses couldborrow more and make even more money.At some point, however,unease about continued profits would arise and some businessmenwould see the possibility of making money in a contraction.Loanswould be called in, small businesses would start to go under, and arecession would follow.Stagnation would then continue until busi-nessmen saw enough opportunities for greater profit and were willingto borrow and expand their operations.In sharp contrast to other economists writing on business cycles inthe early twentieth century, Veblen saw no tendency for the eco-nomic system to equilibrate.Rather, he saw unending instability andoscillation.Any analysis of how economies reached an equilibriumwas therefore unscientific, according to Veblen.For economic analysisto be scientific, it had to focus on the evolutionary changes of insti-tutions over time rather than on the way an economy moves to astatic equilibrium point.Where did Veblen think this process was heading? Somewhatnaively, Veblen thought the machine process and the engineerwould help solve the many economic problems facing America.135THORSTEIN VEBLEN (1857 1929)The machine process would allow greater planning of productionand distribution.It would allow us to do away with the pricesystem.It would also end the waste of unemployment on the one handand the waste of conspicuous consumption on the other hand.Veblen was one of two or three best-known American economistsin the early twentieth century.He attempted to give economicsgreater breadth by bringing to it the insights from other social sci-ences.More specifically, he showed how habits, culture, and institu-tions mold human behavior, and how changing human behavioraffects the economy.As a result of this work, Veblen has become theintellectual father of the institutionalist school of economics.Works by VeblenThe Theory of the Leisure Class (1899), New York, Macmillan, 1908The Theory of Business Enterprise (1904), New Brunswick, Transaction Pub-lishers, 1978The Instinct of Workmanship and the State of the Industrial Arts, New York,Macmillan, 1914The Higher Learning in America: A Memorandum on the Conduct of Universitiesby Business Men, New York, B.W.Huebsch, 1918The Place of Science in Modern Civilization (1919), New Brunswick, Transac-tion Publishers, 1990The Vested Interests and the State of the Industrial Arts, New York, B.W.Huebsch, 1919The Engineers and the Price System (1921), New Brunswick, TransactionPublishers, 1983Absentee Ownership and Business Enterprise in Recent Times, New York, B.W.Huebsch, 1923A Veblen Treasury: From Leisure Class to War, Peace and Capitalism, ed.RickTilman, Armonk, New York, M.E.Sharpe, 1993Works about VeblenDiggins, John, The Bard of Savagery, New York, Seaburg Press, 1978Dorfman, Joseph, Thorstein Veblen and His America (1934), New York,Augustus M.Kelley, 1972Jorgensen, Elizabeth and Jorgensen, Henry, Thorstein Veblen: Victorian Fire-brand, Armonk, New York, M.E.Sharpe, 1999Mitchell, Wesley C.,   Thorstein Veblen,  in The Backward Art of SpendingMoney and Other Essays, New York, Augustus Kelley, 1950, pp.279 312Riesman, David, Thorstein Veblen: A Critical Interpretation, New York, CharlesScribner s Sons, 1953Tilman, Rick, Thorstein Veblen and His Critics, 1891 1963, Princeton, NewJersey, Princeton University Press, 1992136IRVING FISHER (1867 1947)IRVING FISHER (1867 1947)Irving Fisher spent his career studying questions about money andthe economy  how money affects interest rates, how money affectsinflation, and the impact of money on overall economic activity.Forthis work, he is regarded as the father of monetary economics.Fisher was born in 1867 in Saugerties, New York.His father was aclergyman, and so Fisher grew up in a highly religious environment.More than likely, this contributed to the sense of mission that charac-terized his personal life as well as his professional life.Fisher received a good public school education and excelled inmathematics.When he decided to attend college at Yale, his familymoved with him to New Haven.Graduating first in his class, Fisherremained at Yale to do graduate work in both mathematics and eco-nomics.He began studying economics with William GrahamSumner, an advocate of Social Darwinism, the philosophy holdingthat in social life the best competitors would always win out and thathuman improvement requires a competitive struggle (see Hofstadter1944).Under the influence of Summer, Fisher took every economicsand social science course offered at Yale (Allen 1993).However, itappears that the philosophy of Summer had little influence on Fisher [ Pobierz całość w formacie PDF ]