The Theory of the Leisure Class: An Economic Study of Institutions

The Theory of the Leisure Class is heavily influenced by the social, historical, and economic context of the Gilded Age (roughly 1870-1900). In the United State and Europe, the Gilded Age ushered in industrialization and urbanization that produced unseen wealth for society’s highest classes and led to emulation of their lavish lifestyles and fashions among the middle and working classes. Opulent architecture, food, and fashion characterized the lifestyle of society’s wealthiest individuals. By comparison, many working-class families lived in poverty. Cultural commentators used social Darwinism, i.e., notion of “survival of the fittest,” to rationalize the expanding wealth gap between rich and poor. Oppressed populations pushed back against these opinions with increased calls for labor reform, women’s suffrage, and protests against Jim Crow and other racist policies.

Veblen’s work critiques Gilded Age society as well as the belief in classical economics on which it is based. Classical economics is founded on the principle of supply and demand in a free market made up of rational consumers. Scottish economist and philosopher Adam Smith (1723-1790) founded this theory, and it has largely persisted, with some modifications, as the assumed basis of capitalist economies in the West. Veblen disagrees with Smith’s concept of a static economy that operates independently from cultural institutions.