Had Keynes Read More Veblen: The Imperative of a Scientific Theory of Human Behavior

Jon Wisman

No 2022-05, Working Papers from American University, Department of Economics

Abstract: John Maynard Keynes rejected the strict assumption of rational behavior embraced by neoclassical economists, providing causal importance to instincts, habits, and intuition. However, he mostly failed, as did they, to incorporate in his analysis that human decisions are frequently, if not most often, dependent upon the decisions of others. Further, and more particularly, he failed to grant importance to the fact that humans struggle for the recognition and social status necessary for social and self-respect. Thorstein Veblen also rejected the neoclassical expression of rational behavior, and 37 years before Keynes's The General Theory, focused upon interdependence in decision making and status competition by drawing upon Charles Darwin's theory of evolutionary biology to ground in science his theory of human behavior. Had Keynes read Veblen's The Theory of the Leisure Class (1899), he may have recognized the need in his own theory to account for interpersonal decision making and especially of incorporating the struggle for social recognition and status. This article examines how drawing upon aspects of Veblen's work would have enriched the explanatory power of Keynes's economics as well as that of those engaged in furthering Keynes's project. It concludes with reflections on the necessity that economic analysis, and social science generally, be constructed upon a scientifically-grounded conception of human behavior.

Keywords: Marginal propensity to consume; Conspicuous consumption; Darwinism; Instinct; Status; Emulation (search for similar items in EconPapers)
JEL-codes: B22 B41 E12 E71 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-ban, nep-cwa, nep-evo, nep-his, nep-hme, nep-hpe, nep-mac and nep-pke
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