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The Theory of the Leisure Class

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Why we put this in the Reading Room

This is the book that gave us the phrase “conspicuous consumption.” Veblen, an economist with a famously acid pen, published it in 1899 to argue that a great deal of human spending has nothing to do with comfort or need — it is about display, about ranking yourself above your neighbours by showing what you can afford to waste.

I keep it in the Reading Room because it is the most honest thing ever written about why people overspend. Franklin and Clason tell you to save; Veblen tells you why you don’t — because the wanting is a moving target and the audience is everyone else. Read these passages and you will never look at a status purchase, your own included, the same way again.

— Phil Baratelli, CPA, MBA

Selected Passages
The Theory of the Leisure Class
Thorstein Veblen · 1899 · Selected Passages
Four passages are reproduced below, drawn from the chapters on pecuniary emulation and conspicuous consumption. The complete book is in the public domain and free to read in every format at Project Gutenberg.

The Standard That Always Recedes

But as fast as a person makes new acquisitions, and becomes accustomed to the resulting new standard of wealth, the new standard forthwith ceases to afford appreciably greater satisfaction than the earlier standard did. The tendency in any case is constantly to make the present pecuniary standard the point of departure for a fresh increase of wealth; and this in turn gives rise to a new standard of sufficiency and a new pecuniary classification of one's self as compared with one's neighbours. So far as concerns the present question, the end sought by accumulation is to rank high in comparison with the rest of the community in point of pecuniary strength. So long as the comparison is distinctly unfavourable to himself, the normal, average individual will live in chronic dissatisfaction with his present lot; and when he has reached what may be called the normal pecuniary standard of the community, or of his class in the community, this chronic dissatisfaction will give place to a restless straining to place a wider and ever-widening pecuniary interval between himself and this average standard. The invidious comparison can never become so favourable to the individual making it that he would not gladly rate himself still higher relatively to his competitors in the struggle for pecuniary reputability.

In the nature of the case, the desire for wealth can scarcely be satiated in any individual instance, and evidently a satiation of the average or general desire for wealth is out of the question. However widely, or equally, or "fairly", it may be distributed, no general increase of the community's wealth can make any approach to satiating this need, the ground of which is the desire of every one to excel every one else in the accumulation of goods. If, as is sometimes assumed, the incentive to accumulation were the want of subsistence or of physical comfort, then the aggregate economic wants of a community might conceivably be satisfied at some point in the advance of industrial efficiency; but since the struggle is substantially a race for reputability on the basis of an invidious comparison, no approach to a definitive attainment is possible.

Wealth Must Be Put in Evidence

In order to gain and to hold the esteem of men it is not sufficient merely to possess wealth or power. The wealth or power must be put in evidence, for esteem is awarded only on evidence. And not only does the evidence of wealth serve to impress one's importance on others and to keep their sense of his importance alive and alert, but it is of scarcely less use in building up and preserving one's self-complacency. In all but the lowest stages of culture the normally constituted man is comforted and upheld in his self-respect by "decent surroundings" and by exemption from "menial offices". Enforced departure from his habitual standard of decency, either in the paraphernalia of life or in the kind and amount of his everyday activity, is felt to be a slight upon his human dignity, even apart from all conscious consideration of the approval or disapproval of his fellows.

Conspicuous Consumption

Conspicuous consumption of valuable goods is a means of reputability to the gentleman of leisure. As wealth accumulates on his hands, his own unaided effort will not avail to sufficiently put his opulence in evidence by this method. The aid of friends and competitors is therefore brought in by resorting to the giving of valuable presents and expensive feasts and entertainments. Presents and feasts had probably another origin than that of naive ostentation, but they required their utility for this purpose very early, and they have retained that character to the present; so that their utility in this respect has now long been the substantial ground on which these usages rest. Costly entertainments, such as the potlatch or the ball, are peculiarly adapted to serve this end. The competitor with whom the entertainer wishes to institute a comparison is, by this method, made to serve as a means to the end. He consumes vicariously for his host at the same time that he is witness to the consumption of that excess of good things which his host is unable to dispose of single-handed, and he is also made to witness his host's facility in etiquette.

Read it Against

Where to take this next

Veblen diagnosed the disease; here’s the treatment on this site.

Guide
The Psychology of Wealth
The modern, practical answer to Veblen: how to stop spending for the audience and build wealth on your own terms.
Guide
Treasure & Passion Assets
Where conspicuous consumption and real investing collide — art, watches, wine. When the status object is also an asset.
Reading Room
The Way to Wealth — Franklin
Veblen’s opposite number: the plain case for thrift, written 140 years earlier.

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