Institutional Law and Economics: The Legal-Economic Nexus

  This section begins with a simultaneous causality of predation creating ownership and ownership creating predation in Veblen's mind. He says regardless of which comes first there grows with ownership a sense of differentiation between people based ons status, occupations, habits and many other characteristics.  In fact, people begin to grow in self-interest and the common interest that is exemplified by the parental bent is greatly diminished.  To the extent that any interest beyond the self exists, it is based on a false patriotism towards the flag only and not in the common good for all who reside in a community. Again, Veblen notes that as private ownership, wealth and predation grow so too does the power of the priesthood grow as well.  Generally, in fact the warlike Goods become predominant as this helps build the myth around those who are the warrior and predatory class.  The monarch is then supported by the priesthood (and can also be brought down by th...

In this section, Veblen starts by casting doubt on the presumed origins of private property. The standard story according to Veblen is that farmers and ranchers began to develop better techniques and a surplus of product they had to need to store such surpluses.  Veblen doubts that the institutional innovation of private property would have developed in this manner.  Instead, he starts his story with the idea that a portion of the now growing agricultural surplus is being captured by a priestly or magical class. He uses the term “inchoate priestly class” which could mean in preparation for a criminal act. In this case, I believe he means that some of the surplus will be removed by less than legitimate means at least in Veblen's view. He also points tot he fact that the very fact that technological growth and efficiency is occurring gives rise to a warrior class who can act in a predatory manner and take what others have produced.  This gives to the institution of a predat...

  Veblen begins the next section by stating three prepositions: 1) it is difficult to say when and how institutions will change in these earlier phases of industrial organization and 2) this early phase of workmanship can be contrasted with a later phase primarily dominated by private property and 3) the two phases may overlap to a large extent. The next couple of paragraphs lay the groundwork for what Veblen views as the material limitations imposed on these earlier cultures in the development of technology via their instinct of workmanship. Each culture has the inherent ability to further develop their technology and mastery of material conditions but become constrained by the natural environment that they face and in some cases by the older institutions they inherit from elders. Veblen believes we can make several general statements about transitions between what he calls “the savage state of affairs” to a “barbarian culture” which entails pecuniary control of industry and work ...

  Chapter 4 is entitled “The Technology of the Predatory Culture”.  It starts with a strong statement that the way of life is very much based on the group's holding of a stock of knowledge and no individual can truly do their work or create without access to a pool of knowledge.  This is a reversal from some of our traditional notions that individuals create knowledge and that knowledge is then shared with the group through usage and implementation.  This idea is present through much of Veblen's writing. Veblen does recognize that some individuals are more creative or hard working or more inherently skilled but that they are still a product of the group. The next few paragraphs Veblen focuses on the differences they exist across individuals due to chance of heredity and other random factors. He also makes the point that people will often deny the role of the group in their achievements and success. He writes that, “to evade or deny something of the breadth of their i...

  Veblen ends this chapter 3 with a discussion of the borrowing of technology across cultures. He also notes that a degree of religious or magical thinking is often associated with many prehistoric cultures. Here again he notes the problem that this causes with the mechanical arts although less so with the agricultural and animal arts. He then speculated that certain cultures borrowing from others may not carry over the religious or spiritual or magical elements.  Thus unencumbered borrowing in Veblen's mind would lead to more improvements in mechanical arts as they are tied into the problems of spiritual elements and more focused on matter of fact application.  It is hard not to see in this book so far that Veblen was very much arguing that 1) technological improvement was a key to human development and growth, 2) technological development was inhibited by imbecile institutions such as religious or spiritual practices versus matter of fact viewpoints, 3) spiritual or mag...

 In this post, we are looking at about 20 pages to catch up from the week missed. Veblen starts with the claim the the rate and nature of the technology of any community is a function of the material environment and the nature of the people in that community. He at first seems to claim that different communities will have different capacities for technological change but then wavers and seems to say that the character of people to seek and make technological change is a function of the material environment as well.  He then makes a further claim that communities which are made up of “hybrid” racial groups will be better able to achieve technological change and growth.  These are clearly empirical claims that could in theory be tested. Starting on page 117, Veblen starts with a claim that all of the European communities started at a low level of savagery in terms of their institutional and technological environment and character. These communities in this state of “savager...

  In chapter 3 entitled "The Savage State of the Industrial Arts", Veblen starts with his well known notion of the community stock of technological knowledge or as he often refers to it immaterial equipment. Well before Paul Romer and his Nobel prize, Veblen understood that economic growth and change was driven by changes in tools and know-how of humanity. Veblen's approach acknowledges that individuals come up with changes in tools use and ideas but that these individuals are immersed in a social and community setting.  This is the key connection that Veblen makes.  Individuals do have agency and do act but at the same time are immersed in a deep social network or setting that drives to some extent what we think about and our decision making processes.   There are a few underlying points or details that Veblen is at pains to make in this overall discussion.He points to the fact that at times certain specialists will be brought to bear.  And yet, he still argues...