Consecrating Capitalism: The United States Prosperity Gospel and Neoliberalism

Neoliberalism relies on optimism. Without faith in meritocracy—unwavering belief that rewards will eventually and justly come to those who work hard enough—support for the capitalist system and belief in neoliberalism would unravel. How that optimism is perpetuated in the face of persistent income inequality and exploitation within the workplace requires an examination of those cultural institutions which reinforce and reproduce optimism over practical experience. This research focuses on one particular religious institution of the United States—the Prosperity Gospel.

The Prosperity Gospel is a modern, neoliberal variation of Pentecostalism that is premised on the belief that a Biblical covenant between the individual believer and God guarantees that believer blessings of health and wealth, provided she demonstrates adequate faith. Accordingly, for those who are less adept at navigating the business world, financial success is still available for those believers who can dedicate themselves with the same frenzied ambition to the spiritual world. The Prosperity Gospel thus supports and sustains neoliberalism; the Prosperity Gospel is an institution which provides ref-uge to individuals from the exigencies of the market as well as a social practice which reinforces individual responsibility and fault. The Prosperity Gospel is the spiritual articulation of neoliberalism as well as a reinforcing institution.     

Joseph Schumpeter and Thorstein Veblen on technological determinism,individualism and institutions

This article investigates Joseph Schumpeter's affinities with Thorstein Veblen with respect to technological change and determinism, the future of capitalism, individualism and institutions. From a methodological point of view, a common point in their analysis is their anti-teleological view regarding economics as a discipline. Also, in the Schumpeterian system, technology is the cornerstone of economic evolution and appears as the making of new combinations. In the Veblenian theoretical framework, the bearer of change is to be found, inter alia, in technology, just like in Schumpeter's works, although not without differences. They also share the opinion that technology revolutionises capitalism and has serious implications for its future as a system. Furthermore, regarding individualism, in his work Schumpeter stresses the importance of the social milieu on individual action, a fact which bears strong resemblance to the Veblenian notion of evolution as ‘depersonalized evolution’. In this sense, Schumpeter is very close to Veblen, although Schumpeter's approach could be classified in what is called institutionalist individualism, whereas Veblen could be classified as holist. Undoubtedly, the role of institutions is of great importance in both Schumpeter and Veblen. Ιnstitutions in the Schumpeterian schema play a central role closely related to the future of capitalism. Institutional and non-institutional factors enter into complex forms of interaction just like in Veblen's approach. There, institutions are part of the social milieu and their underlying framework, much wider than mere economic and social. Of course, the theoretical analyses of Schumpeter and Veblen are not devoid of differences springing mainly from their methodological approach such as the role of the individual in the capitalist process which is probably the most significant difference regarding the importance attributed to it in Schumpeter's early works. Also, the way technical change appears constitutes another difference. However, his views are quite close to Veblen's. After all, Schumpeter began to write in a social, political, theoretical and ideological environment at a time when evolutionary ideas dominated social thought.     

Lifestyle conformity and lifecycle saving: a Veblenian perspective

Since the 1950s, the lifecycle hypothesis has been the dominantexplanation for the ‘inverse U’ in household wealthaccumulation. This paper advances an alternative explanation,rooted in the ideas of Veblen, that emphasises the role of lifestyleconformity: Because people tend to adopt lifestyles common totheir social group and modify them in standard ways as theyage, lifecycle norms impart a certain order to the accumulationof assets and liabilities, which enables people to ‘do’lifecycle saving via habitual thinking. After laying out theargument conceptually, the paper provides empirical evidenceon the role of conformity in lifecycle saving and discussesits contribution to the current low saving rate in the USA.     

Habit,Decision-Making,and Rationality: Comparing Thorstein Veblen and Early Herbert Simon

The article aims to contribute to the convergence between institutional and neo-Schumpeterian evolutionary economics. It intends to help unify the behavioral foundations of these two strands of thought by returning to the original views of their main historical inspirations. It thus proposes a comparative analysis of the theory of human behavior developed by Thorstein Veblen and Herbert Simon, respectively. The article notably discusses how Simon’s early work links together the notions of habit, rationality, and the decision-making process, and explores the extent to which his views are consistent with, complementary to, or divergent from Veblen’s. The article highlights several commonalities between Simon and Veblen’s views on habits. However, Simon departs from Veblen in developing a dual model of human behavior which clearly differentiates habit-based from decision-based behaviors. The article argues that neo-Schumpeterian evolutionary economists should go beyond this binary model and build on the pragmatist-Veblenian approach, in which these two dimensions are intimately entangled. This process could allow the economists in question to take advantage of the most valuable insights of institutional economics regarding the interactions between individual choices and habits and institutions.     

The Evolution of the Veblenian Dichotomy: Veblen,Hamilton, Ayres,and Foster

One of the most troubling developments in recent years has been widening income inequality in the United States and elsewhere. We argue Post Keynesian Institutionalism (PKI) provides insight into the causes of increasing income inequality and our contribution is threefold. First, we compare PKI to the “financialization” literature, noting key similarities and differences. Second, we examine changes in financial structure and income inequality for a sample of developed nations, showing that financialization has increased in nearly all the countries sampled and that this increase has generally been accompanied by a rise in income inequality. Third, we demonstrate that the development of modern financial structures does not preclude an expansive welfare state and egalitarian public policies. Our finding is congruent with Hyman Minsky's conception of PKI, which stressed both that “economic systems are not natural systems” and that capitalism comes in as many varieties as Heinz has of pickles.     

Veblen and the New Growth Theory: Community as the Source of Capital's Productivity

A century ago Thorstein Veblen argued that knowledge, which is produced and possessed by the community as a whole, is the foundation on which the productivity of "capital" rests. Orthodox economists chose to ignore Veblen and instead accepted John Bates Clark's definition of capital and the marginal productivity theory that goes with it. Recently, however, mainstream economists working on the "New Growth Theory" have rejected Clark's approach and have redefined capital so as to emphasize the importance of knowledge as well as its social character. Nevertheless, they still have an important lesson to learn from Veblen about growth, namely that technological development is nothing less than a process of cultural transformation.     

The Institutionalist Roots of Macroprudential Ideas: Veblen and Galbraith on Regulation,Policy Success and Overconfidence

One consequence of the global financial crisis has been to prompt debate over macroprudential regulation – meant to limit private risk-taking that threatens systemic stability. In this paper, we stress the roots of macroprudential ideas in the Institutionalist economics of Veblen and Galbraith in a way that highlights both unrecognised policy possibilities and underappreciated impediments to policy effectiveness, arguing in particular that regulatory success can breed overconfidence. First, we argue that while Veblen's views anticipated macroprudential arguments, they also obscured tensions between the technocratic acumen of policy ‘engineers’ and popular legitimacy. Second, we argue that while Galbraith's views similarly shaped the postwar Keynesian policy mix, they also echoed Veblen in underrating the potential for populist resentment of an intellectual ‘technostructure’. We conclude that while this analysis can be seen as highlighting an overlooked century of macroprudential debate, it also demonstrates the potential for technocratic overconfidence – which can eventually undermine policy legitimacy and effectiveness.     

Instrumentalism and Economic Policy: The Quest for Reasonable Value

Neuroeconomics and behavioral economics (NEBE) is one of the most dynamic fields in contemporary economics. However, from the viewpoint of economic methodology there are still substantial reasons why NEBE is irrelevant for economic theory. This paper argues that they will only become an essential part of economics if they are embedded into a fully-fledged institutional and evolutionary paradigm. I develop a Neo-Veblenian theory of the individual that starts out from the observation that modern brain sciences do not support the notion of the brain to be an integrated and consistent rational decision apparatus. An evolutionary explanation is offered for this, which reinstates Veblen's distinction between adaptation as engineering optima and social selection. Individual identity does only emerge through communication and interaction among brains, in particular via language. The concept of the "extended brain" is proposed, which is applied to define human individuality as a social phenomenon. Thus, the systematic unity of neuroeconomics and institutional economics is established.     

Worker Cooperatives in the Theory of the Firm: Marx and Veblen on Technological Determinism

This article contends that, in their treatments of worker cooperatives, the predominant theories of the firm adhere to the logic of technological determinism, and can accordingly be evaluated using the ideas of Thorstein Veblen and Karl Marx. Invoking these patriarchs’ respective distinctions between instrumental and ceremonial institutions and between the technical and social relations of production, the article argues that, contrary to contemporary theories of the firm, worker cooperatives possess an inherent but often latent advantage in implementing bureaucratic organizational structures, enjoying their instrumental/technical benefits for technology and coordination without incurring their ceremonial/social drawbacks for behavior and cooperation.     

Thorstein Veblen’s 1904 contributions to q and insider/outsider analysis

The early 20th century saw the first steps in a tradition of leading economists explaining the link between corporate finance, investment and capital valuation. The writings of Keynes, and Tobin deal with the development of an investment theory based on the financial structure. However there is no mention Veblen, whereas he made an early American analysis of corporate governance structure. Our work is based on a critical review of the literature, which is guilty of omissions, lack of accuracy and errors of formalization. So that, we focus on the reasons why Veblen’s corporate financial analysis should not be forgotten.     

Veblen's critique of Marx's philosophical preconceptions of political economy

This paper explores some of the theoretical linkages between Thorstein Veblen and Karl Marx. Special reference is placed Veblen's criticisms of Marx and the Marxist tradition for adhering to the preconceptions of (a) the natural right of labour to the full product, and (b) the teleology of conscious agents directing action towards change. Veblen was incorrect to believe that Marx adhered to the natural right of labour thesis, but he was correct to assert that Marx utilized undesirable teleologies. Overall, however, Veblen was attempting to reformulate and modernise the materialistic conception of history through an evolutionary analysis of institutions. The two thinkers complement each other in important ways, although Veblen's analysis is more evolutionary, collectivist and holistic.     

Economic Consequences of Armaments Production: Institutional Perspectives of J.K. Galbraith and T.B. Veblen

J.K. Galbraith’s short book, How to Control the Military, boldly championed political and institutional reforms to curb “the military power.” Galbraith stood out among economists for his advocacy of arms reduction negotiations with the Soviet Union. He rejected the hypothesis that the Soviet Union nurtured an aggressive expansionary military policy. At the same time, he maintained that the tenor of national policy and the shaping of national priorities emanated from the Pentagon. Galbraith’s assertion that the military was the dominant force within the “military-industrial complex” was never empirically demonstrated. Nor did he adequately address the crucial role that military outlays played in advancing major technological innovations which underwrote the accumulation process. Veblen offered a more comprehensive analysis of the role of military expenditures, correctly showing that forms of “waste” are highly functional to the institutional and ideological structure of the U.S. economy. Military Keynesianism constituted the evolution of his conceptualization.     

Original Institutional Economics and Political Anthropology: Reflections on the Nature of Coercive Power and Vested Interests in the Works of Thorstein Veblen and Pierre Clastres

Our inquiry advances a comparison of the anthropological content of Thorstein Veblen’s evolutionary perspective with the foundations of the political anthropology drawn from selected works of Pierre Clastres. We seek to establish that what can be referred to as a clastrean reference can simultaneously offer new perspectives on institutionalism, while maintaining a radical and emancipatory understanding of Veblen’s writings. In this sense, we seek to reconsider and reevaluate the role of economic surplus drawn from Veblen’s anthropology, while also offering a general and critical perspective for understanding the emergence of coercive power within societies.     

Religious Identity,Informal Institutions,and the Nation-States of the Near East

This paper uses the Near East as a case study to describe how religious identity became a source of preference formation and a cause of social cleavage. It formulates the concepts of identity-sharing groups and resource-sharing groups to bridge between religious identity's social-psychological aspects and its socioeconomic effects. The paper then argues that social cleavages among religious identity-sharing groups generated informal institutions that are incompatible with the abstract formal institutions of the nation-states of Iraq, Lebanon, and Syria. That incompatibility hobbles efforts of formal state institutions to promote economic development, and instead restrains economic growth by intensifying existing conflicts among groups. It suggests that a state that could promote economic development would be the one that recognizes and supports the informal, localized institutions and allows those of them with common features to evolve into abstract formal institutions.     

J.A. Schumpeter and T.B. Veblen on economic evolution: the dichotomy between statics and dynamics

At present, the discussion on the dichotomy between statics and dynamics is resolved by concentrating on its mathematical meaning. Yet, a simple formalisation masks the underlying methodological discussion. Overcoming this limitation, the paper discusses Schumpeter's and Veblen's viewpoint on dynamic economic systems as systems generating change from within. It contributes to an understanding on their ideas of how economics could become an evolutionary science and on their contributions to elaborate an evolutionary economics. It confronts Schumpeter's with Veblen's perspective on evolutionary economics and provides insight into their evolutionary economic theorising by discussing their ideas on the evolution of capitalism.     

The Bard of Savagery: Thorstein Veblen and Modern Social Theory

The hypothesis of this paper is that a detailed history of a specific location and period is more effective for isolating the important characteristics of institutions than studies which span multiple millennia across the globe. To illustrate this hypothesis, I examine three Italian city-states in the period between eleventh and sixteenth centuries. This was a time when the "commercial revolution" was underway in these city-states. As a result, there were institutional innovations in settlement patterns, work organization, and self-governing institutions to help provide for mutual defense and for the internalization of gains from long-distance trade. I contrast this case study with the methodology and findings employed by Douglass C. North, John J. Wallis, and Barry R. Weingast (2009) in Violence and Social Orders. Rather than analyze the importance of beliefs and the protection of property rights as in prior work of theirs, the authors here focus on the "Schumpeterian competition" between impersonal organizations as an effective institutional form to control violence. Moreover, the timeframe of their book extends to "all recorded human history." In contrast to North, Wallis, and Weingast's approach, I concentrate on Genoa, Florence, and Venice in an effort to explain more effectively the emergence of the public/private divide and the relationship between politics and economics in modern industrial society. Experimentation in medieval Italy in mediating conflict between newly emerging classes, innovating in public finance to support the military, and focusing on broad civic participation in the political process had a lasting impact on the development of the state as an institution.     

The Mind of the Social Individual: A Comment on Sherman and Hodgson

In the Spring 1998 (56(1): 47-57) and Fall 1998 (56(3): 295-306, 307-310) issues of this review, Howard Sherman and Geoffrey Hodgson debated, inter alia , the extent to which Veblen-Ayres institutionalism is compatible with Marx and recent Marxist work. This paper argues that the differences between Hodgson and Sherman"s positions do not rely on assumptions of "illogical" behavior, individualist arguments or structural conceptions of the individual. Instead, the debate turns on the authors' respective conceptions of the formation and role of the human mind in what it is to be a social individual.