Author
The large isosceles triangles of glass were temporarily gone from the attic's gables. More than most people cleaning the attic, Bill Melton needed ventilation and an egress for debris. Thick as Iowa topsoil on the attic's wide floorboards lay raccoon droppings, the silt of two decades without human habitation. Outside, the boarded windows and time-scoured clapboards also told of the abandonment of the Minnesota farmhouse where Thorstein Veblen grew up and, during a prolonged convalescence from malaria in this attic, read many of the books and formed many of the ideas that helped make him one of America's greatest social critics and most creative economists.
Melton, a 45-year-old economist with a passion for history and a taste for historic preservation, is saving the home that incarnates his most cherished values—altruism, craftsmanship and critical intelligence. In June 1992, Melton bought the 127-year-old house and barn from a local preservation trust that had been unable to raise funds for its renovation. He began his rehabilitation of the National Historic Landmark modestly, by evicting the raccoons. To be exact: 14 raccoons, one skunk and one opossum.
If known at all to the general public, Veblen is known as the author of the term "conspicuous consumption." Students of literature and social history may have tasted the high-flown, riddling, cranky and deliciously opinionated tone of his first and best known book, The Theory of the Leisure Class. But in the books he wrote between 1899 and 1923, Veblen's subjects ranged from social custom to business organization to German imperialism. His admirers range from Einstein to David Riesman. His fields of contribution range from sociology to literature. Veblen was one of the first Americans to recognize that there was a business cycle. Wesley C. Mitchell, founder of the National Bureau of Economic Research and a student of Veblen, called him "a disturbing genius ... the visitor from another world, who dissected the current commonplaces which the student had unconsciously acquired, as if the most familiar of his daily thoughts were curious products wrought in him by outside forces." Another Veblen student, H. Parker Willis, helped craft the Federal Reserve Act of 1913 while an aide to U.S. Sen. Carter Glass.
Despite his intellectual acclaim, Veblen is largely ignored by mainstream economists whose work is dominated by neoclassical economics steeped in mathematical technique, market equilibrium and self-interest as the individual's major motivator.
Veblen scoffed at the notion of such an orderly, rational world and the "normalistic obsession" of classical economics. His view was more anthropological; it owed more to Darwin than to Adam Smith and Alfred Marshall. To Veblen, nothing was static; economic institutions were constantly evolving (one reason his followers call themselves "institutionalists" or "evolutionary" economists). Individual behavior was largely shaped by cultural influences.
To Veblen, few customs were without a deeper significance and links to a barbarian past. Of college sports, he wrote: "They are partly simple and unreflected expressions of an attitude of emulative ferocity, partly activities deliberately entered upon with a view to gain repute for prowess. ... The addiction to sports, therefore, in a peculiar degree marks an arrested development in man's moral nature." Such Victorian fashions as corsets, hoop skirts and walking sticks conformed "to the leisure-class canon of reputable waste," and differed little from the showy destruction of household goods at the potlatches of Northern Indians.
The persistence of extravagant inutility—consider megamalls, 500- channel cable systems, stretch limos and eight-figure executive salaries—keeps Veblen relevant. "Up until recently, we've been going through a period when pecuniary gain and sportsmanship have been the dominant values," said Rick Tilman, a professor of public administration at the University of Nevada, Las Vegas, who is writing a three-volume analysis of Veblen and last year founded a new association dedicated to his ideas. "Take Las Vegas, Nevada. The idea of conspicuous consumption, conspicuous waste and conspicuous exemption from useful labor pretty much explains the whole package."
Rather than trust the efficacy of capitalism's unseen hand, Veblen measured institutions, economic structures and even football games by their value to "the collective life." Craftsmen were worth more than financiers, for example, because they made palpably useful products.
"He had a notion of social relationships and economic relationships as, in essence, in many, many ways, very dysfunctional," Melton explained. "So there wasn't an optimization process. There was all sorts of junk lying around."
Melton does not choose sides; in his view, Marshall and Veblen both ask interesting, albeit different questions. "The optimization model is a very, very powerful tool. But it's not the only tool in the box," said Melton, a weekend carpenter. "From my standpoint, you need all the tools you can get. If you're smart, you'll realize the limits of the tools."
The connection between Veblen, the great turn-of-the century iconoclast, and Melton, a late 20th century business economist, is largely serendipity, a happy intersection of opportunity and resources. But it also reflects a fertile skepticism and devotion to craftsmanship and family common to both.
Let the record show that the renovation of a dilapidated house and barn on a remote 10-acre site a mile east of the tiny town of Nerstrand, Minn., optimizes nothing but liabilities. Melton's preservation easement with the Preservation Alliance of Minnesota gives him ownership and requires him to restore the buildings to their 19th century luster (with such 20th century comforts as indoor plumbing and central heating discreetly added) and to open them to the public seven days a year. Other than preservationists and Veblen's faithful, however, few visitors are likely to call. Melton has scant hope of recovering his capital costs. He merely hopes to find a tenant able to cover operating expenses.
"Invariably the economics of historic sites are either hopeless or very marginal," Melton acknowledged. As he said in his project proposal: "Affection truly must take priority over economic considerations."
Veblen called such sentiment the "parental instinct" or altruism, the drive to do something for the larger community. Melton cites a Wordsworth poem that contrasts the sensibility behind the beautiful chapel at King's College, Cambridge, with the "close calculation of less and more" of economics.
With historic restoration, he said, "You've got to leave off on the close calculation of less and more because it's just going to be more and more and more."
How does an economist calculate the value of history? "The value of it is that you might be able to learn something about yourself, where you came from. And maybe you'll be a little less stupid next week than you were this week."
Still, Veblen might snort at the notion of investing hundreds of thousands of dollars in preserving his childhood home. When he died in California in 1929, he left a note asking "that no tombstone, slab, epitaph, effigy, tablet, inscription or monument of any name or nature, be set up in my memory or name in any place or at any time." Per his direction, his ashes were scattered over the Pacific.
If ashes-to-ashes was Veblen's intent, Britta Bloomberg is glad his wish is being ignored. The deputy historic preservation officer for Minnesota became involved with the Veblen homestead in 1989, when a band of weary preservationists in Rice County needed help. Led by Ruthmary Penick, a retired archivist from Veblen's alma mater—Carleton College, the local preservationists played a crucial role in the home's survival. They rescued it from obscurity in the 1970s by hunting down its history and establishing that the derelict property was indeed the Veblen home. In 1982, the group acquired the house, barn and surrounding 10 acres, reroofed the house, and tried with meager success to raise more funds for its rehabilitation. But by 1989, the house had been vacant nearly 15 years. The mortgage was in arrears. There had not been money even to repair a gaping hole in the barn roof. "Every time we had a heavy snowfall, I'd call down and ask a neighbor—'Is the barn still standing?'" Bloomberg said. "It was that close." When the Historical Society put out the call for renovation proposals, Melton answered.
To the historian, the farmstead's value extends beyond its association with Veblen. It also is a window into the lives of Norwegian immigrants like Kari and Thomas Veblen, Thorstein's parents. "There's a lot of scholarship, a lot of research going on about what people brought with them from the old country," Bloomberg said. "In the Veblen farmstead, we're finding the evidence is there. You just have to look.
"Historic preservation really sees historic properties as a primary source of information. Some of this is learning how to read a different kind of document. How do you read a landscape, a barn?"
I visited the Veblen house on a bleak day in January, when the work of tearing off a century's worth of alterations was done and reconstruction was about to begin. The exterior of the two-story house has the formal symmetry of the Greek Revival style, with doors, windows and chimneys balanced by size and location. The style was popular in the America of the 1850s and 1860s. Inside, though, the home's character is Norwegian functionalism: low pine ceilings and wainscoting, a first-floor parlor with a built-in hutch and a large workroom on the second floor where Kari Veblen wove cloth and quilted. There are splendid eccentricities: The dining room narrows at one end to make room for a staircase on the other side of the wall. A chimney edges to one side in the attic in order to exit the roof in symmetry with its partner. When crumbling plaster was torn off an interior wall, the contractor found Veblen's initials—T.B.V.—engraved on a stud. While his father was building the house, nine- or ten-year-old Thorstein apparently used a lathe nail to make his Kilroy-was-here mark on the board before Papa Veblen could incorporate it into a wall. Melton will leave the monogram exposed.
My guide, Jonathan Larson, points out such details to my undiscerning eye. Dressed in black from his sailor's cap to his sturdy, knee-high boots, the large, goateed man looks like a Viking motorcyclist. A writer and sometimes carpenter who lives in Faribault, he's an unabashed Veblen fan. In tiny Nerstrand, Larson asks the elderly cashier at the town's only convenience store whether she knew the blacksmith whose shop once occupied this spot—a craftsman whom Veblen often visited as a child. She knew a blacksmith but not that one—the associations are a generation or two off. She's also too young to know of Thorstein's precocious childhood. A bookish kid, he learned several languages at a tender age. Supposedly, when a neighbor's dog persistently harassed his horse, Thorstein retaliated: He shot the dog and wrote anathemas in Greek on the neighbor's fence.
At the Veblen house, Larson makes clear why it holds such significance for Veblen devotees. "When Thorstein talked about the instinct of workmanship, I think he was talking about his father. In my mind that's why we're saving the house—to honor his parents."
Larson, who once renovated old houses for a living, was drawn to Veblen's ideas after he moved to nearby Faribault. He now keeps a protective watch on the homestead. Last year, his book applying Veblenian ideas on technology to environmental problems—Elegant Technology—was published by a small Massachusetts press.
Like many of Veblen's followers, Larson is discontented with the ways of modern America. "The only ones [in my generation] who've done anything are [computer mavericks] Steven Jobs and Bill Gates. Considering that we all went to college, that's not a very good record."
In some ways, Melton is an unlikely steward for Veblen's legacy. The optimization model was basic to his training. His Ph.D. thesis at Harvard applied that model to the Swedish banking system. During his stint as chief of the monetary analysis division for the Federal Reserve Bank of New York and his years as a money market economist for Irving Trust, as well as in his current post as vice president of international research for IDS Financial Services in Minneapolis, there has been no institutionalist edge to his work. His 1984 book, Inside the Fed: Making Monetary Policy, betrays no populist leanings.
But the resume doesn't tell the whole story. Melton's father, Rosser, was an economics professor at North Texas State University and a lifelong admirer of Veblen. Such Veblenian terms as "conspicuous consumption" and "machine process" were part of his everyday vocabulary. The late Rosser Melton also evinced "a generalized skepticism" that his son inherited. To quote the younger Melton: "You've got to have blinders on not to see that 75 percent of daily activities don't make sense."
In the wake of Reaganomics and growing concern about income inequities and environmental toll of modern life, Veblen is enjoying a modest revival. Labor Secretary Robert Reich calls himself an institutionalist. Tilman's new organization devoted to Veblen was founded a year ago. The most established group with a Veblenian bent, the Association for Evolutionary Economics, is 30 years old and has about 2,000 members.
Melton is not among them. The man who is investing some sweat equity and a small fortune in restoring the Veblen homestead is an admirer, but not a devotee. He speaks with as much admiration of Thomas and Kari Veblen as of the best known of their 12 children.
"You had people who had a lot of skills, who had tremendous ambition, who worked very hard and who made it," he said. "They imbued their kids with a tremendous sense of what was possible and the value of education in making it all work."
The values are similar to those Melton grew up with. As a boy, he read history in the popular Landmark series, built contraptions from wood scraps with his brothers and learned to lip-read to compensate for his poor hearing. Jane Zimmerman, Melton's wife, sees her husband's patronage of the Veblen home as a way of honoring his father. "Bill honored and was very close to his father." She also reports that her husband shares some of Veblen's values. "Bill tends to be very conservative financially and materially."
Like Veblen, who cobbled together his own furniture and built two cabins, Melton is a skilled amateur carpenter. During much of the time he worked for the Fed and Irving Trust, he spent evenings and weekends refurbishing an 1830 home in Princeton, N.J. Since he now has two young children at home, Melton yielded to his wife's plea that he hire a carpenter to do virtually all the work on the Veblen house.
Melton is a tall man with a soft, pale face, a bristly mustache and wavy black hair specked with gray. His manner is relaxed, wry and courteous. He is little given to the totems of status often seen on executive floors. His wire-rimmed glasses and oxford shirts are more serviceable than stylish. He often rides his bike to work from his home in Edina. He declined an office with an Olympian view from the 30th floor of the IDS building because, as a lip-reader, he is so attuned to motion that the distraction of windows makes it harder for him to concentrate on work. The office he chose is comfortable but unpretentious. There are two monitors blinking with market data and a pile of books from the National Bureau of Economic Research (NBER). In the center of his conference table is a small pile of money—samples of nearly worthless, hyperinflated currencies he has gathered. There are also photos of his family and a baseball card of another Bill Melton, who spent a few seasons with the White Sox before being dispatched to the minors.
Melton's job is interpreting movements in economies outside the United States and helping financial analysts at IDS use that data to make investment decisions. For that job, a Veblenian perspective is sometimes helpful. "What I find is that my colleagues are overwhelmingly interested in change. They're interested in disequilibrium. They also have strong historical interest. They wouldn't express it that way. They're interested in trends and those kinds of things are all very much the kind of things Veblen was talking about."
Part of what intrigues Melton about Veblen is the way his ideas keep turning up in unexpected places. Last fall, Melton received an NBER working paper on "Veblen goods"—products that are attractive for some reason other than utility. An excise tax doesn't necessarily reduce their consumption, the author concluded; higher prices may make such goods more attractive. Cornell University economist Vernon Briggs cited Veblen in a recent book on immigration. US immigration policy is always fighting the last war because institutions always lag behind economic development, he wrote.
John Kenneth Galbraith is probably Veblen's closest professional heir, sharing his keen eye for the contradictions and absurdities of western capitalism. The Harvard economist played a small role in preserving the Veblen homestead. He contributed money to early preservation efforts and was so disturbed by the home's condition when he used it as a backdrop for a BBC special in the 1970s that he urged Minnesota's governor to save it. In his letter, Galbraith appealed to Norwegian pride. After all, he noted, even the thrifty Scots had managed to preserve Adam Smith's birthplace.
Melton is also intrigued by Veblen because he believes that the standard biography—Joseph Dorfman's tome published in 1934—got much of the story wrong. The image of Veblen as a philandering, lonely, indigent cynic getting even for his childhood poverty by attacking the monied classes is false, Melton argues.
"It's almost like a murder mystery in the sense that you have this story that has been reproduced ad infinitum. Figuring out what the truth of it is vs. a stylized story that has just been peddled high and low and all around—that's kind of fun," he said.
Once Melton undertook the renovation of the Veblen farmstead, he supplemented grunt labor with scholarship. He went to original sources—Dorfman's archives at Columbia University and files of Andrew Veblen, Thorstein's older brother, at the Minnesota Historical Society. He's also been in touch with Veblen's 92-year-old stepdaughter in Idaho and with Veblen relatives in California.
Bloomberg couldn't be happier. "I never dreamed we'd find someone with this level of interest. Bill is really a scholar in his own right—the way he's researching the family. He's really doing everything right."
In his research, Melton found that Andrew Veblen, persistently corrected extensive factual errors in Dorfman's drafts and was as persistently ignored by Dorfman. The errors extend from size of the house (Dorfman said it was a modest one-story) to Dorfman's assertion that Thomas Veblen knew no English (he spoke it but did not write it).
"Basically Dorfman's story was here was this—as Galbraith describes it—this 'impecunious peasant' and this guy lives in a log house and he splits rails like Abe Lincoln used to do," Melton explained. "And he soars to the heights, gets a Ph.D. in philosophy at Yale, and he experiences not only the economic trauma but experiences discrimination against Norskies, etc. Becomes a loner and cooks up a scathing, reactive description of society. Makes a nice story, and Dorfman worked real hard to get the pieces of the puzzle to fit. There's a little problem—first of all, they weren't poor, so the impecunious part doesn't work. Anytime he got information from the Veblen family that didn't fit his model, he discarded it."
Melton began gathering the pieces of a far more complex success story that includes most of the Veblen clan and is a paean to immigrants' hard work, self-sacrifice and education. Thomas Veblen, for example, was a "snedker"—a skilled carpenter and cabinetmaker—and brought his tools along when he emigrated from Norway. To keep his large farms running while he earned cash by building houses and barns, Veblen employed unskilled immigrants. He gave them room and board but no wages in exchange for their work in the fields, the barn or the house, where Kari Veblen was busy raising kids, weaving and on call for service as the community's midwife. Thorstein Veblen later used the same "no cash nexus" method at Stanford, giving two students and their father room and board in exchange for housework.
Financial records show that Thomas Veblen paid off his $1,800 of loans in less than five years after buying the farm. "So the guy must have been generating cash flow out of his ears," Melton said. He also found that Thomas and his brother liked to lead work teams when they cut timber because the work slowed down when they weren't setting the pace. In photographs, Thomas Veblen's arms "are about as big around as my legs are," Melton said, "and I think I know the reason why."
Yet Thomas Veblen valued education sufficiently to put nine children, including daughters, through Carleton College in nearby Northfield. At a time when most farmers exploited their children's labor, this was extraordinary. To save on room and board, Thomas and one helper built a house for them in town in one week. "He was using the batch process," Melton said.
To Melton, the house and barn also chronicle Thomas Veblen's willingness to adopt new technology. When the hoist replaced pitchforks as a way to move hay into the loft, he covered up windows to accommodate the hoist. Years later, Thorstein Veblen gave technological innovation a key place in his economic cosmology.
Lest one think that Thorstein Veblen was strictly a product of his youth, Melton has learned that he wanted most to emulate Joseph Conrad's precise but difficult prose style and that he was greatly influenced by the work of Franz Boas, who was at the Field Museum and publishing important ethnographic studies while Veblen was teaching at the University of Chicago.
Melton's findings are not limited to the intellectual. Based on his research, he disputes the popular image of Veblen as a lonely, philandering cynic. "He had some very strong convictions and believed that emulation distorted values. You might call him ticked off or irritated or aghast. But not cynical," Melton said.
Moreover, Veblen remained close to his family all his life and worried that others' family links were undermined by social differentiating and conspicuous competition. As for his reputation as a philanderer [he allegedly said "What can you do when the women just move in with you?"], Melton concludes that his extramarital affairs were limited to his long and unhappy first marriage, which involved long absences from his wife. In his second marriage, Veblen was both happy and faithful.
What can Thomas and Kari Veblen and their famous son teach us? "It's a developmental attitude. It's an attitude about improvement," Melton said. "I think there's a lot of things to learn about the way people lived in the 19th century. But I think you have to strip away some of the stereotypes. The problem with Dorfman was he had this cute little stereotype and he just ruthlessly suppressed the facts in pursuit of this beautiful little stereotype.
"I always tell people economics is the study of how to raise living standards. I think history is trying to see where you came from and where you're going. I think there's a lot of overlap."
More
Thorstein Veblen: The Theory of the Leisure Class [off-site]
