John Rae and Thorstein Veblen.

Author:Alcott, Blake
Position:Economists
 
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All that the possessor of the luxury desires, is, to have a means of showing that he has acquired the command of a certain amount of the exertions of other men.

--John Rae, Statement of Some New Principles on the Subject of Political Economy

Rae's "Accumulation"

Many of Thorstein Veblen's ideas in The Theory of the Leisure Class ([1899] 1998) are found in John Rae's Statement of Some New Principles on the Subject of Political Economy: Exposing the Fallacies of the System of Free Trade, and of Some Other Doctrines Maintained in the "Wealth of Nations" ([1834] 1964). Rae was born near Aberdeen in Scotland in 1796 and emigrated to Canada in 1821, to Boston and New York in 1848, and then to the Sandwich Islands in 1851; after a life of teaching, headmastering, writing, inventing, farming, and financial straits, he died in New York City in 1872. He was a freethinker and linguist who worked on the evolution of human language in general and the Polynesian language in particular. Rae influenced Nassau Senior, John Stuart Mill, W. Stanley Jevons, Eugen von Bohm-Bawerk, Alfred Marshall, Irving Fisher, Frank Taussig, and Joseph Schumpeter (Mixter 1905, xxxii; Edgell and Tilman 1991, 731). (1)

Rae's subjects were capital formation--accumulation as opposed to prodigality ([1834] 1964, 118-29, 199, 206; Mixter 1902)--and technological progress through knowledge and invention (Spengler 1959). Accumulation is of "instruments" of slower or quicker return according to the labor put into their formation, their capacity of return, and the "length of time ... elapsing between their formation and exhaustion" (Rae [1834] 1964, 100-01,278), as well as by their efficiency and absolute durability (109-17). Instruments include not only tools but also houses and arable fields (86-89, 170-171). (Veblen's "accumulation" is closer to mere "acquisition" [(1899) 1998, 25-41,230]). For Rae "knowledge" and "provident forethought" distinguish us from "inferior animals," and together these cause a better future (Rae [1834] 1964, 81; Veblen [1899] 1998, 10, 20, 74, 93, 227). The genesis of economic stratification is that frugal people become richer than prodigal ones (Rae [1834] 1964, 198-207).

Rae took as human givens not only concern for offspring but also "the interests of society" and the ability "to provide for the wants of futurity" ([1834] 1964, 81, 89, 119-125, 158-160). These emotions aid the effective desire of accumulation, which satisfies future "real wants" (265, 271,289, 290). Within terms of the central category of time, a cost is "the sacrifice of some smaller present good" and a benefit is "the production of some greater future good" (118, 121, 136, 138). By building a well-insulated dwelling, for instance, with good cupboards, this greater good is the fuel, food, wearing apparel, and metabolized body energy which is thereby not "wasted" (200-03, 313-19); for Veblen also, to say the least, waste is a crucial category ([1899] 1998, 15, 59, 83-85, 91, 97-101, passim).

Because it is truistic that "all men prefer a greater to a less" and the future good or saving is obviously greater, the time factor must be invoked to explain prodigality, or nonfrugality. Not only do we not live forever but the exact date of our demise is uncertain, and thus this "desire of accumulation" is contravened by our natural preference for present pleasure (time preference, discounting the future)--"to spend is easy, to spare, hard." That capital which does get formed is thus a function of a person's net factor of "the effective desire of accumulation" (Rae [1834] 1964, 118-21, 129, 206-07). Strengthening the hand of present over future enjoyment even more are both our covetous glances at the "rank immediately above" us (which we perceive as "rolling in superfluous extravagance") and our desire for the "articles ... necessary to [our] condition" or "rank" (Rae [1834] 1964, 120; Veblen [1899] 1998, 1-3, 22-34, 140-41). Indeed, "merely personal considerations" can yield no more than a weak desire of accumulation (Rae [1834] 1964, 120; Veblen [1899] 1998, 89). Providing for some comfort in our own old age motivates us to some extent, but Rae is asking (128-29, 80-81), like Kenneth Boulding (1973), why we consider posterity at all.

"But man's pleasures are not altogether selfish"; Rae's empirical wisdom is that a person is also moved by "love" of others, "the conjugal and parental relations, the claims of his kindred, his friends, his country, or his race" ([1834] 1964, 121-22). This is equivalent to Veblen's "group solidarity" of the "peaceable savagery" phase ([1899] 1998, 7, 33, 219; [1914] 1964, 36) or to his "non-invidious impulses" serving the "generic life process" ([1899] 1998, 16,259, 275, chap. 13), "parental bent" ([1914] 1964, 11, 25), or "other features of human nature ... alien to ... conspicuous consumption," without which no saving whatsoever would occur ([1899] 1998, 91). Thus for Rae the "uncertainty and worthlessness [of] future goods" is counterbalanced and a degree of effective accumulation is after all achieved by these "social and benevolent affections" (122, 142) Further help comes from our "intellectual powers" (Veblen's "idle curiosity"?) because they strengthen invention (122, 275-76).

Vanity

Accumulation is thus the advancement of "the wealth of society, the capital and stock of communities," and it both enables the "consumption of utilities" and provides "additional supplies for the wants of futurity"; Rae's basic cleft is between "utilities" and "luxuries" ([1834] 1964, xv, 292, 275, 222, 238; also Boulding 1949-50). The main "check" on the "social affections and ... intellectual powers" that promote accumulation is the "purely selfish ... principle ... of vanity," and Rae's term for "the expenditure occasioned by the passion of vanity" is "luxury." Vanity is "the mere desire of superiority over others" by whatever criteria; "a perfect being" can achieve de facto superiority purely through "pleasure in the good he does," but it is the (vain) pleasure in "surpassing others" that moves the rest of us (Rae [1834] 1964, 265-66, 271-72, 290-91; Edgell and Tilman 1991, 735-36). Vanity is also the "pride" moving a man to rise in the world, "placing himself on an equality with those to whom he was once inferior" (325); for Veblen it is "to rank high" in "invidious comparison" with our "competitors" ([1899] 1998, 31-34, 16-17, 25-27), recalling Rae's "desire ... to rank high in the estimation of the world" (125, 120) and "It is invidious to run to expenses which others cannot follow" (282).

Veblen likewise contrasted the desire for "sustenance" ([1899] 1998, 103), "self-preservation" (110), "serviceability" (154), "physical necessities" (205), "the generically useful" (219), "subsistence" (24), "naive" consumption (25), and so on, with emulation, which is "the stimulus of an invidious comparison which prompts us to outdo those with whom we are in the habit of classing ourselves" (103, 31). Similar to Rae's "real practical utility" ([1834] 1964, 338), he also opposed "economic" to "aesthetic and ethical" serviceability (262-63). And his discussion of noninvidiousness parallels Rae's social affections and shows the mistake of emphasizing his sarcasm and coolness: in contrast to consumption due to "the human proclivity to emulation" which-like Rae's dissipating laborers' "abilities to spend" (326)-fulfills only a "secondary utility as evidence of relative ability to pay," there are goods "consumed as a means to the fuller unfolding of human life," to the end of "the fulness of life ... taken in absolute terms" (154, 24-26, 102-04).

These two categories of consumption are in terms of motivation, rather than the goods themselves. One is relative to others; the other is "absolute" or, better, relative to nature--"against the non-human environment" rather than the "human environment" (Veblen [1899] 1998, 220). Rae said that while many goods satisfy "real wants" ([1834] 1964, 289, 292), luxuries, seen in terms of the economy as a whole, "give no absolute enjoyment, it is all relative" (290, 275). John Maynard Keynes later contrasted "absolute" needs for health and survival with "relative" ones "in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows" (1930, 326). Veblen's corresponding two-tiered analysis is in terms of "higher" versus "lower" wants ([1899] 1998, 25, 103), or "physical want" versus "spiritual need" (85, 168). (2)

This dichotomy between absolute and relative, or intra, as opposed to intersubjective (Fullbrook 1998), is sociological, while the dichotomy in terms of needs and wants (Sanne 2002), or between subsistence and conspicuous consumption, requires physiological criteria, as in Veblen's "subsistence minimum ... required for the maintenance of life" ([1899] 1998, 107, 25-26, 69, 92) or John Hobson's "biological utility" or "organic human standard" (1929, 309, 337). Better than dozens of later writers who build on some such distinction, Rae and Veblen avoided the conflation of subjective and objective criteria. Good overviews are McAdams 1992 and Jackson and Marks 1999. In the interests of thoroughness it should be added that Rae's taxonomy was actually three-tiered-necessaries, conveniences, and "amusements," or luxury ([1834] 1964, 12, 118, 253,258, 272,275)-presaging Marshall's "necessaries, comforts, and luxuries" ([1890] 1916, 67).

Of course vanity or emulation also come in nonpecuniary varieties. Rae mentioned "excelling in virtue" or even vice ([1834] 1964, 266, 122), while Veblen granted "invidious comparison in other respects than opulence; as ... in the manifestation of moral, physical, intellectual, or aesthetic force" ([1899] 1998, 97). Like "knowledge of dead languages ... and fancy-bred animals," though, much of this is reducible to the pecuniary strength evidenced by leisure (43-45, 25, 91, 223). But both were mainly interested in wealth, and...

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