TEXT OF COMMENTARY
Kai Ryssdal: If you’ve got a stack of books yet to be read piling up on your nightstand then it’s a good thing summer’s here because this is a great time to work though that stack. The bad news, though, is that we’re about to add to it.
Our summer series Marketplace Beach Reads is back this week with nominations from some of our regular commentators. Today’s title comes to us from the Gilded Age. Marketplace commentator Robert Reich says more than a century later, it’s themes still resonate.
Robert Reich: Ordinarily, I’d never recommend you take a book by an economist to the beach. I wouldn’t even recommend you take an economist to the beach. The exception is Thorstein Veblen, and his book is “The Theory of the Leisure Class.”
Veblen wrote this classic in 1899, near the end of the Gilded Age when robber barons ran wild, but the book is just as fresh and relevant today. In Veblen’s view, the reason people seek great wealth has more to do with social status than purchasing power.
One way wealthy people show their superiority is through what he called “conspicuous leisure,” signaling they have so much wealth they don’t have to break a sweat. When Veblen was writing, the rich had private railroad carriages to take them wherever and whenever they wanted, just as today’s financial and corporate barons have their private jets. Veblen likened the very rich to the ancient Polynesian chiefs, who under the stress of good form preferred to starve than carry their food to their mouths with their own hands.
The other way the rich show their superiority is through what Veblen called “conspicuous consumption.” In order to establish their place in the pecking order of the wealthy, the very rich want the not-so-very rich to witness their power to consume. So in the Gilded Age, they built giant estates, gave lavish parties, bought new-fangled horseless carriages and dined at the fanciest and most expensive restaurants. Sound familiar?
Economics normally assumes that the demand for goods and services drops as their prices increase, but Veblen noted that among the very rich, it’s often the opposite. Demand is highest for the highest-priced goods not because they’re necessarily better but because their high prices offer status for people who can afford them.
Now what to do about the vast concentration of wealth and income that characterized the Gilded Age? Veblen was skeptical that government would do much. Just as they controlled big corporations and Wall Street, the wealthy also controlled government. In his words, “Representative government means, chiefly, representation of business interests.”
The year was 1899, but it might have been 2008. We’re in America’s second Gilded Age. So take Veblen to the beach and learn more about it — but don’t expect him to give you much social status: He’s in paperback and he’s cheap.
Ryssdal: Robert Reich is a professor of public policy at the University of California Berkeley.
We have asked for and gotten recommendations from some of you. Since we’re exploring the Gilded Age today, how about the appropriately titled satire “The Gilded Age” by Mark Twain and Charles Dudley Warner? That came to us from Dan Faherty of Rockledge, Florida.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.
You make our
Support nonprofit news you love with a gift today.