1. Why is Economics not an Evolutionary Science?

2James’ work on psychology re-invigorated work on the subject and, following him, John Dewey and George Herbert Mead, both at the University of Chicago from 1894, developed their psychological researches into human behavior undertaken in 1892 at the University of Michigan, laying the foundations for the Chicago School of Functional Psychology. Furthermore, in 1896 James R. Angell and Addison W. Moore undertook a psychological experiment on attention and habit under the guidance of Dewey and Mead (Angell & Moore 1896).

4In particular, in 1898 Veblen published an article against the taxonomic nature of orthodox economic science. He portrayed economists as “unable to handle its subject matter in such a way as to earn it standing as a modern science” (Veblen 1898a: 373). Veblen accused orthodox economic theories of being short-sighted for merely focusing upon material elements that compound economic institutions. Supported by a symbolic, often ambiguous, use of language, orthodox economics referred to a theoretical model rooted in some metaphysical assumptions which considered nature as the expression of a pre-ordered and aim-oriented structure, and that considered the human agent as an element of this system. Hence economic theories were rooted in a habit of thought that, through an expedient of abstract reason, referred to homo oeconomicus as inserted in a competitive system which elaborates fixed economic laws totally detached from the becoming of reality and of human actions.

5From such a perspective, the theory was unable to catch the dynamic and evolving nature of the history of the individual’s economic life, preferring to characterize it as a feat of scientific imagination (Veblen 1899b: 422-3). In other words, in lieu of being the product of a process of adaptation of means and ends subject to the becoming of human evolutionary processes, economics revealed it to be a deductive science which consolidated a mechanism of conservation of equilibrium reflecting a natural law order. This conservative, static representation of reality was legitimated by faith in a progressive cumulative tendency that had not been abandoned with the shift from the pre-Darwinian to the Darwinian perspective. Hence economic theories maintained unaltered the idea that a stability of causal law is the product of a process of gradual amelioration of the phenomena of social and economic sciences. The perspectives of classical economists since Smith could be defined as the perspective of a ceremonial adaptation:

The ultimate laws and principles which they formulated were laws of the normal or the natural, according to a preconception regarding the ends to which in the nature of things, all things tend. In effect, this preconception imputes to things a tendency to work out what the instructed common sense of the time accepts as the adequate or worthy end of human effort. It is a projection of the accepted ideal of conduct. This ideal of conduct is made to serve as a canon of truth, to the extent that the investigator contents himself with an appeal to its legitimation for premises that run back of the facts with which he is immediately dealing, for the “controlling principles” that are conceived intangibly to underlie the process discussed and for the “tendencies” that run beyond the situation as it lies before him. (Veblen 1898a: 382)

6One instance of this way of conceiving knowledge was “conjectural history” in the classical treatment of economic institutions, as well as the affective metaphors for money, depicted as “the great wheel of circulation” (Smith 1904: II, 2, 26).

7As noted by Veblen, such “figurative,” “metaphoric,” “inscrutable” linguistic forms were used as “ultimate terms” by economists aiming to construct theories such as those of money and wages, referring to their concrete implications just to corroborate their thesis. In so doing, Veblen continued,

the ways and means and the mechanical structure of industry are formulated in a conventionalized nomenclature, and the observed motions of this mechanical apparatus are then reduced to a normalized scheme of relations. (Veblen 1898a: 383)

8The scheme becomes “spiritually binding on the behavior of the phenomena contemplated” and the permutations of a given segment of the apparatus are worked out “according to the values assigned the several items and features comprised in the calculation.” This is the “deductive method,” composed of

a body of logically consistent propositions concerning the normal relations of things – a system of economic taxonomy. At its worst, it is a body of maxims for the conduct of business and a polemical discussion of disputed points of policy. (Veblen 1898a: 384)

2. Veblen’s Notion of “Habit” between Peirce’s Logic and James’ Psychology

9What are we going to do about it?, asked Veblen. His reply was a plea for a methodological revolution in economics that seems now to be analogous to those implemented by Copernicus in the study of nature and Kant in epistemology. Such a methodological revolution consisted in shifting one’s attention from material elements belonging to economic taxonomy, and clustered under the conceptual category of “capital,” conceived as “a mass of material objects serviceable for human use” (Veblen 1898a: 387), to the human agent as the subject matter of the science. It is the human agent that changes, reflects, evaluates, selects the materials. The accumulation of materials already to hand conditions the utilization of material offered, but such a limitation pertains to what the human agent can do and their method of doing it. And the continuity of development is to be looked for in human material. It is the human agent who is the motor force of the process of economic development that thus needs to be studied by economic science. Such a new approach allows economics to become a social science which can reckon with the research results and studies of other human and natural sciences. The material objects are:

Substantially, prevalent habits of thought, and it is as such that they enter into the process of industrial development. The physical properties of the material accessible to man are constants: it is the human agent that changes – his insight and his appreciation of what these things can be used for is what develops. (Veblen 1898a: 387-8)

11In 1877 Peirce had published The Fixation of Belief, in which he had defined the habit of mind as the result of an act of natural selection consisting in the capacities of human beings to elaborate inferences which validity is verified by their practical applications. In other words, human agents are able to select inferences useful to practical ends through a process of logical evaluation of the possible advantages of certain inferences rather than others. Hence the function of thought is to produce some habits of action and, consequently, the meanings of objects and ideas result from the appreciation of implied practical consequences. As Peirce argued:

We are, doubtless, in the main logical animals, but we are not perfectly so […]. Logicality in regard to practical matters (if this be understood, not in the old sense, but as consisting in a wise union of security with fruitfulness of reasoning) is the most useful quality an animal can possess, and might, therefore, result from the action of natural selection; but outside of these it is probably of more advantage to the animal to have his mind filled with pleasing and encouraging visions, independently of their truth; and thus, upon unpractical subjects, natural selection might occasion a fallacious tendency of thought. (CP 5.366)

12Besides the inferential ability, Peirce’s definition of human being as ‘logical animal’ emphasizes characters influencing a person’s beliefs and way of acting, namely her behavioral dispositions. As Peirce argued in How to Make Our Ideas Clear, “the whole function of thought is to produce habits of action” (CP 5.400). What a thing means is what habit of action it involves, and what the habit is depends on when it causes the person to act, that is when the perception causes the stimulus to action, and how it causes to produce some sensible result, that is some purpose of action. As Peirce puts it, “there is no distinction of meaning so fine as to consist in anything but a possible difference of practice” (CP 5.400).

13The feeling of belief is a more or less sure indication of there being some habits which will determine our actions that are embedded in our nature. What the habit is depends on when and how it causes us to act. As for the when, every stimulus to action is derived from perception; as for the how, every purpose of action is to produce some sensible result. Thus, we come down to what is tangible and conceivably practical, as the root of every real distinction of thought, no matter how subtle it may be.

15If on the one hand Peirce’s logic offered Veblen the notion of habits of thought and the general process of the fixation of beliefs, on the other, James’ psychology offered Veblen the basis for a psychological explanation of the development of habits. In particular, James’ functionalism offered him a psychological explanation of the differentiation of social ends and interests that accompany the changing processes of habits of thought.

The canons of knowledge are of the nature of habits of thought, and habit does not break with the past, nor do the hereditary aptitudes that find expression in habit vary gratuitously with the mere lapse of time. What is true in this respect, for instance, in the domain of law and institutions is true, likewise, in the domain of science. What men have learned to accept as good and definitive for the guidance of conduct and of human relations remains true and definitive and unimpeachable until the exigencies of a later, altered situation enforce a variation from the norms and canons of the past, and so give rise to a modification of the habits of thought that decide what is, for the time, right in human conduct. (Veblen 1900: 240-1)

17Strongly reinforced by modern sciences, the changes in human life that industrial revolutions have generated, have divested the knowledge of non-human phenomena of that teleological self-directing life that was one imputed to them, reducing this knowledge to therms of opaque causal sequence. As Veblen argued, non-human phenomena have not been supplanted by the equally uncouth denomination of habits, propensities, aptitudes, and conventions, even if these notions are at the basis of a way of considering non-human phenomena in economic science. So it is necessary to shift attention to those human phenomena that appeal the psychological dimension of economic human conduct. And this is possible only if economic science adopts the idea of an undetermined science and an undetermined universe, the object of an explanation that would take steps from an inductive non-a priori approach and consider the evolution of habits of thought as the product of a process of adaptation in which some methodological assumptions about different forms of human knowledge are involved.

18Veblen’s references to functionalist psychology are present in both Why is Economics not an Evolutionary Science? and in The Preconceptions of Economic Science. Veblen refers to later psychology as biological, arguing that “the base of action – and economic action – at any step in the process is the entire organic complex of habits of thought that have been shaped by past process” (Veblen 1898a: 392-3).

3. Veblen’s References to Dewey’s and Mead’s Functionalist Psychology

20In The Reflex Arc Concept in Psychology (Dewey 1896), the manifesto of Chicago School of psychological functionalism, Dewey proposed a new psychological theory aiming to re-direct the attention of experimental psychology from the ontological mind-body distinction to the ‘organic relation’ between stimuli and response considered from a functionalistic perspective. In particular, he denounced the dualistic perspective of that experimental psychology which considered psychical phenomena statically, and called for an interpretation of human sensations, thinking, and actions as stages of the human act. Rather than a mechanistic explanation of the relation stimulus-response, he advanced the idea of a “sensorial circuit” highlighting the organic nature of the sense-motor process in which stimulus, selection, and motor response are considered as intertwined and interdependent stages instead of discrete and separated elements. According to Dewey, stimuli are not prior to an organism’s capacity to select them, for the distinction between stimulus and response presupposes a dynamic sensorial process through which the perceiving organism becomes aware of the sensible stimulus at the moment at which it is useful for the restoration of an interrupted act.

22Actually, Dewey’s theory of emotion was not his own product solely. Dewey himself admitted his debt to Mead concerning both the description of the relationship between vegetative functions and motor functions, and the hypothesis about non-human emotional attitudes. As he wrote to Angell in 1893:

• 13 Dewey’s letter to James Rowland Angell (The Correspondence of John Dewey, Volume 1: 1871-1918, May (...)

Among other things next year, Mead and I are going to try to experiment on mental images, with a view to getting some results on attention and on rhythm. Mead is also trying to work out something on sensation on the biological side. All of us recognize, that sensation, especially its qualitative features, has been the sticking point to a successful statement of idealism. He is trying to see if one could get back of the present qualities and show the sensation as a condensation or precipitation of past organic activities, so that everything which is aesthetic now was once practical or teleological. I do not [if] this brief statement conveys the thought, but it seems to me one of the most important working hypotheses turned up lately.13

23When Dewey and Mead arrived at the University of Chicago in 1894, they worked on the formulation of a psychology which would include a theory of consciousness in terms of organic functions. In particular, they elaborated a phylogenetic hypothesis concerning consciousness from the sensory-motor processes, so overtaking both the limits of an idealistic interpretation of sensations and the risks of a reductionist physicalism. In other words, they searched for a psychology which had to be founded empirically. Their research produced a theory of emotion the aim of which was to overcome James’ individualistic theory of emotion through a re-evaluation of the active role natural and social environments play in the emergence of emotions.

Emotion in its entirety is a mode of behavior [my italics] which is purposive or has an intellectual content, and which also reflects itself into feeling or Affects, as the subjective valuation of that which is objectively expressed in the idea or purpose.(Dewey 1895: 170-1)

25In other words, the emotion is aroused when the unification with activity is broken, calling for both a tension of intellectual recognition and the consideration of how to behave towards the object recognized:

• 15 It is interesting to note that Panksepp (2001) has now advanced a similar explanation of the emotio (...)

The emotion is, psychologically, the adjustment or tension of habit and ideal, and the organic changes in the body are the literal working out, in concrete terms, of the struggle of adjustment. (Dewey 1895: 185)15

It is under the influence of stimuli of this general character that the emotional states and their physiological parallels arise. The teleology of these states is that of giving the organism an evaluation of the act before the coordination that leads to the particular reaction has been completed. (Mead 1895: 164)

3.1 Instinct, Behavior, and Social Evolution

29Dewey’s and Mead’s works inserted themselves into ongoing debates on the methodologies and notions to be used in the new science of empirical psychology. Since the publication of Theodor Fechner’s Elemente der Psychophysik (1860), psychophysics had been proposing a natural method to measure the sensory stimulus-response mechanism, interpreting the intensity of the stimulus with causal physical laws. However, the debate around the psychophysical measurement did not yield useful results and pragmatists were aware of this. In 1885 Peirce and Jastrow published the results of experiments on small differences of sensation that showed the methodological limits of a psychophysical measurement of conscious states. Dewey (1887) also pointed out the limits of a psychophysical measurement in his review of Ladd’s Elements of Physiological Psychology (the first American publication on physiological psychology). And in 1894 Mead accused physicists to do not consider the fact that the only way to trace the distinction between the psychical and the physical characters of perceptions was to distinguish “between the world as composed of means and of ends” (Mead 1894: 23; emphasis added), namely between sensations that are means acting as stimuli and “ends or purposes in consciousness” (Mead 1894: 23).

30And if the psychological debate was not resolved, a fortiori it was not resolved in economics, as highlighted by Veblen. Analogously to psychophysics’ reduction of the qualitative intensity of sensation to the quantitative magnitude of its physical stimulus, utilitarians reduced happiness to a calculus of pleasure and pain, considering intensity and its duration as the only dimension belonging properly to feeling and that intensity of feeling is the instantaneous state that determines the degree of utility. Hence they determine quantitatively its maximization “by purchasing pleasure, as it were, at the lowest cost of pain” (Jevons 1888: 23) and identifying “the physical objects or actions” with the source of pleasure and pains (Jevons 1888: 37). The background of such an economic framework was a methodological a priori approach to human conduct based upon the hedonistic psychological assumption that actual impulsions are effects of the “obscure” demand of pleasure. As in the psychophysics measurement the qualitative dimension of sensation was reduced to a stimulus-response causal law, in economics human action was seen as the product of environment causal forces and the individual was seen as a “mechanism of commutation.” One of the consequences was the success of mechanistic and deterministic theories of human economic behavior. As Veblen argued:

The purpose of the valuation process through which the impulse is so conveyed, human nature may, therefore, be accepted as uniform; and the theory of the valuation process may be formulated quantitatively, in terms of the material forces affecting the human sensory and of their equivalents in the resulting activity. In the language of economics, the theory of value may be stated in terms of the consumable goods that afford the incentive to effort and the expenditure undergone in order to procure them. Between these two there subsists a necessary equality; but the magnitudes between which the equality subsists are hedonistic magnitudes, not magnitudes of kinetic energy nor of vital force, for the terms handled are sensuous terms. (Veblen 1899b: 414-5)

31According to Veblen, the problem of such a perspective was its onthological assumption of the measurability of such an equality of magnitudes, although such an assumption was based only in a methodological and conceptual need. The associationist psychology at the basis of economic theory was in this respect highly inappropriate since it conceived man as a passive isolated datum:

The human material with which the inquiry is concerned is conceived in hedonistic terms; that is to say in terms of a passive and substantially inert and immutably given nature. The psychological and anthropological preconceptions of the economists have been those which were accepted by psychological and social sciences some generations ago. The hedonistic conception of man is that of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact […]. He is an isolated definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another. (Veblen 1898a: 389)

32Hence psychophysics had contributed to legitimate hedonism (utility) as a ground of legitimacy and a guide in the normalization of knowledge in economics and ethics (Veblen 1899b: 414 ss.).

33However, as also Mead suggested already in 1894, physics needed to rethink the logical apparatus through which it looked at perceptual phenomena because, only by changing the logical apparatus, could it defeat its limits (limits that Mead (1903) later would extend to various psychological theories). Analogously, according to Veblen the reference to the notion of “organic activities” would help overcome the mechanistic approach to economic phenomena. He then referred explicitly to the “reflex arc” concept, in line with Dewey’s and Mead’s ideas about organic activity:

The causal sequence in the “reflex arc” is, no doubt, continuous; but the continuity is not, as formerly, conceived in terms of spiritual substance transmitting a shock: it is conceived in terms of the life activity of the organism. Human conduct, taken as the reaction of such an organism under stimulus, may be stated in terms of tropism, involving, of course, a very close-knit causal sequence between the impact and the response, but at the same time imputing to the organism a habit of life and a self-directing and selective attention in meeting the complex of forces that make up its environment. The selective play of this tropismatic complex that constitutes the organism’s habit of life under the impact of the forces of the environment counts as discretion.
So far, therefore, as it is to be placed in contrast with the hedonistic phase of the older psychological doctrines, the characteristic feature of the newer conception is the recognition of a selectively self-directing life process in the agent. (Veblen 1900: 247)

34Such a new conception refers to human agents not as calculators of pleasures and pain, but rather as acting teleologically, that is, as “a coherent structure of propensities and habits which seek realization and expression in an unfolding activity,” while desires and attitudes under whose guidance the action take place are: “circumstances of temperament which determine the specific direction in which the activity will unfold itself in the given case” (Veblen 1898a: 390). By “circumstances of temperament,” Veblen means those elements which specify the character of the individual. They are the “products of his hereditary traits and his past experience, cumulatively wrought out under a given body of traditions, conventionalities, and material circumstances” (Veblen 1898a: 390). Also the main reference to temperament here is a pragmatist one, for James speaks of ‘temperament’ in various parts of his Principles, referring to attitudes of human character in terms of “balanced temperament,” “irascible temperament,” “emotional temperament,” etc.

35Hence the activity is the substantial fact of the process, whereas the individual

is but a single complex of habits of thought, and the same psychical mechanism that expresses itself in one direction as conduct expresses itself in another direction as knowledge. The habits of thought formed in the one connection, in response to stimuli that call for a response in terms of conduct, must, therefore, have their effect when the same individual comes to respond to stimuli that call for a response in terms of knowledge. The scheme of thought or of knowledge is in good part a reverberation of the scheme of life. (Veblen 1899: 143)

36Veblen’s references to notions such as “reflex arc,” “organic activity,” and “habit of thought,” confirm that he was acquainted with Dewey’s and Mead’s psychology as the “later psychology” that would enable economic interests to be rooted in a social psychological dimension.

38Nevertheless, Veblen’s further development of human social agency seem to me to be consonant with Mead’s explanation of the passage from emotion to social interest as well as with the general pragmatist approach to the problem-solving theory of human development.

42Now, as Veblen argued in line with Mead’s theory, the responding organism is an “agent” whose intelligent behavioral response to stimulus is of a teleological character and that intelligence is “of the nature of an inhibitive selection” (Veblen 1919: 6). The human process of the evolution of habits and dispositions begins hence with the interruption of an act and the reply to social and natural stimuli through an interaction that is not merely mechanical:

Like other animals, man is an agent that acts in response to stimuli afforded by the environment in which he lives. Like other species, he is a creature of habit and propensity. But in a higher degree than other species, man mentally digests the content of the habits under whose guidance he acts, and appreciates the trend of these habits and propensities. He is in an eminent sense an intelligent agent. By selective necessity he is endowed with a proclivity for purposeful action. He is possessed of a discriminating sense of purpose, by force of which all futility of life or of action is distasteful to him. There may be a wide divergence between individuals as regards the form and the direction in which this impulse expresses itself, but the impulse itself is not a matter of idiosyncrasy, it is a generic feature of human nature. (Veblen 1898b: 188-9)

44As Veblen argued, in a sense in line with Dewey’s and Mead’s psychology, economic interest is a social interest as are aesthetic, sexual, humanitarians, and religious interests:

Since each of these passably isolable interests is a propensity of the organic agent man, with his complex of habits of thought, the expression of each is affected by habits of life formed under the guidance of all the rest. There is, therefore, no neatly isolable range of cultural phenomena that can be rigorously set apart under the head of economic institutions, although a category of “economic institutions” may be of service as a convenient captation, comprising those institutions in which the economic interest most immediately and consistently finds expression, and which most immediately and with the least limitation are of an economic bearing. (Veblen 1898a: 393)

4. Conclusion

46In the works that Veblen published at the University of Chicago we find a curious blend of Peirce’s logical approach and a pragmatist conceptualization of human conduct that has its roots, besides James’ functionalism, in Dewey’s and Mead’s functionalism. It seems that some of Veblen’s ideas are consonant with what Dewey and Mead were working on at the time. As it has been noted Veblen developed his theory of intelligent human conduct in the behavioral setting of stimulus and response. However, it was not a reductionist approach to human behavior, namely a sort of Watsonian behavioristic approach in which reason is reduced to a mere chooser’s rationality (Kilpinen 1999: 199), rather much more a Dewey’s and Mead’s pragmatic behavioral approach to human conduct in wich reflective reasoning is part of the transaction between organism and environment. It is for that reason that I choosed to focus on the period 1896-1900 mainly, because the period represents in my view a high water mark in the influence of Dewey’s and Mead’s psychology on Veblen’s thought. Hence it is possible to better comprehend the theoretical framework Veblen referred to when elaborating his first ideas of an evolutionary economics. It is also easier to understand why he rejected both the individual and society as the ultimate unity of explanation in the social sciences, searching for a balance between these two extremes.