The Economic Crisis in Retrospect

The Economic Crisis in Retrospect

Explanations by Great Economists

Edited by G. Page West III and Robert M. Whaples

As the United States continues its slow recovery from the global financial crisis of 2008, politicians, policymakers and academics are increasingly turning to the lessons of history to gain insight into how we might address both current and future economic challenges. This volume offers contributions by eminent economists and historians, each commenting on the theories of a particular 20th century economist and the ways in which those theories apply to modern economic thought.

Chapter 3: Insights from Thorstein Veblen

Robert Prasch

Subjects: economics and finance, economic psychology, history of economic thought, international economics, political economy


However historians of ideas may come to evaluate today’s economics and economists, I believe that all of us can agree that advances in any field of learning (or technology) always involve a trade-off. All change, even for the better, is accompanied by some loss. For instance, I enjoy the convenience and mobility of having a car. However, I do not doubt that I am thicker around the middle than I would have been had I lived 100 years ago. Again, advances almost always mean that there is something left behind. This generalization is certainly true for economics, and perhaps even truer for what we might call ‘economic philosophy’ (which, to my mind, is the practice of sustained reflection on the categories underlying economic theory). Consequently, as we move forward and leave things behind, it is worthwhile to pause periodically to assess what may have been lost. Gazing back over recent economic history, several substantial changes are striking. Relative to 1975, the level of consumption is substantially higher, the median real wage is about the same, and the financial sector plays a much more significant role in the American economy (Orhangazi, 2008). Higher consumption is valuable but, as the recent literature on ‘happiness’ suggests, this trend may be accompanied by one or more drawbacks that prevent us from concluding that our quality of life has risen as quickly as the conventional measure of gross domestic product might suggest (Turner, 2012).

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