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An initial step in the early stages of business cycle theories: The contribution of T. Veblen

Véronique Dutraive
p. 137-156

Abstracts

The purpose of this paper is to evaluate Veblen’s theory of business cycles and to examine the actual type of theory being put forward. The first section offers an understanding that emphasizes the institutional dimension underlying Veblen’s theory. The second section presents the business cycle and crises according to Veblen. The third section focuses on determining whether his conception of the business cycle can be classified as exogenous or endogenous, and whether the fluctuations considered are monetary or real. The final section proposes an interpretation highlighting the evolutionary and dynamic mechanisms with connections with some contemporary multi-agent models simulating financial crises.

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Excerpt

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Outline

Introduction
1. The institutional context of the business cycle
2. Prosperity and depression in Veblen’s business cycle theory
3. Veblen’s business cycle theory: endogenous or exogenous, real or monetary?
4. Veblen and multi-agent simulations of financial crises: a retrospective approach
Conclusion

First lines

Introduction

While T. Veblen has been recognized for being one of the leading founders of the American Institutionalist School, along with Commons and Mitchell, he is also considered today as one of the precursors of modern evolutionary economics (Veblen, 1898; David, 1985; Hodgson, 1994). His economic analysis has also received some attention. Notably, Veblen has made significant contributions both to microeconomics, with a theory of the firm and of some social interactions, and to macroeconomics, with a business cycle theory. More specifically, it is admitted that Veblen’s business cycle theory was an early attempt to consider the primary underpinning of fluctuations in the relationship between current capitalization and anticipated earning capacity.

Many authors have already defended that a business cycle theory can be developed from Veblen’s ideas, even if it is incomplete, admittedly not very systematic and lacking rigorousness. A relationship between Veblen’s theory and other bu...

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References

Bibliographical reference

Véronique Dutraive, « An initial step in the early stages of business cycle theories: The contribution of T. Veblen », Revue d'économie industrielle, 160 | 2017, 137-156.

Electronic reference

Véronique Dutraive, « An initial step in the early stages of business cycle theories: The contribution of T. Veblen », Revue d'économie industrielle [Online], 160 | 4e trimestre 2017, Online since 15 December 2019, connection on 20 October 2020. URL : http://journals.openedition.org/rei/6688 ; DOI : https://doi.org/10.4000/rei.6688

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About the author

Véronique Dutraive

Université Lumière Lyon 2 – TRIANGLE (UMR CNRS 5206)
veronique.dutraive@univ-lyon2.fr

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Copyright

© Revue d’économie industrielle

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