The purpose of this essay is to argue that, for Veblen, the contribution of advertising to mature business enterprise was crucial. Although Thorstein Veblen’s Theory of the Leisure Class is widely credited with introducing the concept of “conspicuous consumption”, that book is silent on the contribution of the sales effort – or advertising – to such consumption. One must turn to Veblen’s later writings on the business system to find an analysis of advertising within oligopoly capitalism, what Veblen called the system of “absentee ownership”. At the beginning of the twentieth century business faced looming threats of technological progress and democratic discontent. The material prospect of accelerating productivity might soon “end the struggle or lessen the strain” of economic life; democracy might insist that the industrial system serve social needs in efficient ways. To ward off such challenges, business developed a two-prong approach to perpetuate scarcity: carefully managed control of output and an increasingly insistent, rationalized and expensive sales effort. The growth of advertising reflected a systematic expenditure of energy, talent and resources on a misdirection of human effort, one whose chief effect was to prolong “the strain” of everyday life in futile pursuit of waste. Whether such irrationality could be sustained indefinitely, or whether it might finally undermine the society that propels its pursuit, is an issue that Veblen raises, but to which he refuses to give any final answer.
The paper analyzes the full range of Veblen’s theoretical writings on consumption, technology and the sales effort.
The paper insists that Veblen is the first radical political economist to provide a systematic critical analysis of advertising as an essential element of mature capitalism.
The paper connects Veblen’s earliest thinking on “conspicuous consumption” to his mature analysis of advertising in the functioning of business enterprise. It will enrich understanding among academics and students, scholars of marketing and economic and social theorists, of Veblen’s critical analysis of the evolution of consumption, production and business enterprise.
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