Adam Smith and Thorstein Veblen on the Pursuit of Status Through Consumption versus Work

‘The outstanding discovery of recent historical and anthropological research is that a man’s economy, as a rule, is submerged in his social relationships.’ (Karl Polanyi, 1944, p. 46)‘...all the best business men want to get money, but many of them do not care about it much for its own sake; they want it chiefly as the most convincing proof to themselves and others that they have succeeded.’ (Alfred Marshall 1890, p. 635)‘[T]he competitive order must be partly responsible for making emulation and rivalry the outstanding quality in the character of the Western peoples who have adopted and developed it.’ (Frank Knight, 1999, p. 39)Adam Smith and Thorstein Veblen, divided culturally and by over a century of capitalism’s differing degrees of maturation, analysed the basic institutions of capitalism in radically different manners and came to contrary views as to capitalism’s serviceability to human welfare. Yet, despite their differences, and that Veblen appears not to have read Smith’s principal treatise on human behaviour, The Theory of Moral Sentiments, they shared remarkably similar views as to why humans behave as they do. Both saw humans as seeking self-respect by acquiring approval or social certification from others, often pursued through conspicuous consumption. However, whereas Smith viewed the seeking of status through consumption as stimulating economic dynamism, Veblen viewed it as generating waste and impairing human welfare, claiming work as a socially superior channel for acquiring social and self-respect. Nevertheless, what is broadly common in their theories of human behaviour has great importance for social theory, and especially for addressing the contemporary mistake in wealthy societies of sacrificing important social goals to the pursuit of ever-more material wealth.