Breaking The Laws Of Our Modern Reality

I was first introduced to the term Veblen good while taking economics 101 in college. Back then, I didn’t have much time to apply what I’ve learned to my daily life due to academic and social commitments. Now, with more time on my hand and less pressure to do anything, it’s probably best to revisit the concept of Veblen good.

According to Wikipedia,

Veblen goods are types of material commodities for which the demand is proportional to its high price.”

Veblen’s theory is more than a century old, but it still seems to be quite reflective our modern reality. The actionable tips represent my opinions and they are by no means free of prejudice and limitations.

Chapter 1: Introduction

Veblen’s main points:

  • People of the upper class, or the leisure class, don’t have to work for their livelihood.
  • People belonging to the upper-class are, in fact, predators because they reap the rewards they do not physically earn through ownership. Prey are people who are exploited to do inferior repetitive work.
  • There are 2 fundamental requirements for the upper class to exist: 1) people who are exploiting and people who are exploited; 2) subsistence needs to be easily obtainable even if a considerable portion of the community are exempted from routine labor.
  • In any society where economic differentiation plays an important role, success needs to be displayed visibly.
  • The predatory culture depends on the growth of technical knowledge and the use of tools.

Actionable tips:

  • We all need to create passive income streams in order to guarantee ourselves with basic income so we can get ahead and free ourselves. We need to learn how to take advantage of our social structure to get ahead.

Chapter 2: Pecuniary Emulation

Veblen’s main points:

  • A habitual neglect of work does not constitute a leisure class; neither does the mechanical fact of use and consumption constitute ownership.
  • The upper class can afford leisure because they own productive products or people so they don’t have to resort to work for subsistence.
  • It’s a struggle to acquire wealth because there’s competition everywhere. Our social acceptance and identities depend on the things we own. However, wealth from inheritance always confers more honor than wealth earned through merit.
  • Rich is relative and it requires a benchmark for comparison and a lack of wealth represents failure. It’s a never-ending race to acquire more.

Actionable tips:

  • Stop buying junk, acquire assets, and adopt a minimalist lifestyle.
  • A company is a profit making entity. It’s NOT a human being so don’t get too attached.
  • Stop defining your self-worth with how much money you earn.

Chapter 3: Conspicuous Leisure

Veblen’s main points:

  • Within the working class, productive labor is the means of acquiring goods. That’s why being industrious and frugal is respected and honored. However, according to the leisure class, such activities are regarded as “base.” Veblen used the example of Polynesian chiefs who preferred to starve rather than feed themselves with their hands.
  • The leisure class has the ability to engage in idleness such as learning of dead languages, occult sciences, acquiring dress and furniture, etc. A system of titles, badge, and ranking is created to confer superficial status. The people of upper class engage mannerism because it takes “work” to cultivate.
  • The use of well-trained servants represents an achievement in the leisured class.

Actionable tips:

  • Be a contrarian if you have to because your happiness depends on you.
  • Diversify your active income stream to passive income streams if you have an endpoint in mind.
  • Working hard doesn’t matter if you are not working on the right things.

Chapter 4: Conspicuous Consumption

Veblen’s main points:

  • The leisure class consumes expensive products freely because the failure to do so is a mark of inferiority and demerit.
  • Conspicuous consumption is more widespread in urban areas. However, it’s more costly for people in rural to engage in such activities simply because they’ll have to live from hand-to-mouth.
  • Wastefulness is a form of wealth signaling and the requirement to conform becomes mandatory as one progress up the social ladder.

Actionable tips:

  • Find out what the leisure class is willing to pay and make a business out of it.
  • Take advantage of geo-arbitrage and globalization to level the playing field.
  • If you don’t know where your hard-earned money is going, you are probably wasting it on the wrong stuff.

Chapter 5: Standards Of Living

Veblen’s main points:

  • It’s hard to downsize our lifestyles because conspicuous expenditure is easy. And because we are constantly trying to outclass others, any change in our societal habitual attitude will take time.
  • Habits are difficult to break because we constantly reinforce practices that ensure our survival. Unless we are coerced, we will tend not to give up our current lifestyle and consumption habits. Our personalities and inherited traits are key to habit changing lifestyle. We tend not to keep our money if we acquire them quickly.
  • People of the leisure class have fewer children because children are expensive.

Actionable tips:

  • Cultivating prudent habits, such as saving, make it easier to keep our lifestyle inflation in check.
  • We should take risks so we can gain perspectives outside our knowledge in order to break our bad habits.
  • One man’s garbage is another man’s gold.

Chapter 6: Pecuniary Conons Of Taste

Veblen’s main points:

  • We buy expensive things because they are expensive, not because they are more useful and provide more value. Our societal reputations are at stake because our identities depend on the things we own.
  • Beauty is cultural. We perceive things as beautiful due to other people’s approval.
  • Cheap things are deemed unhonorable and nasty. Owning cheap things indicate the lack of pecuniary success.

Actionable tips:

  • Learn how to recognize value, not price.
  • Don’t allow social validation to coerce you into purchasing things.
  • Because people in different culture appreciate different things, there will always be an arbitrage opportunity.

Chapter 7: Dress As An Expression Of The Pecuniary Culture

Veblen’s main points:

  • We sacrifice comfort, utility, and intrinsic value when we buy clothes. However, fashion is constantly changing.
  • It’s hard to conform and keep up with fashion because we depend on advertisements to tell us what is fashionable.

Actionable tips:

  • Buy clothes that are comfortable and will never go out of style.

Chapter 8: Industrial Exemption And Conservativism

Veblen’s main points:

  • Our society is constantly undergoing selective adaptation. It determines what the dominant traits are and benefit certain category of people. Freedom and facility of readjustment depend on the capacity for growth in our social structure.
  • The more barriers we have in our society, the faster we become obsolete. Things are becoming obsolete as soon as they are established. However, our habits of thought may work against us due to our resistance to social and psychological changes. We will not change if our goal is unattainable.
  • The leisure class is privileged because they are able to take risks with less economic consequences. Knowledge and skills relevant today may not work tomorrow. Changes will improve the society as a whole, but there will always be inequality.
  • Change is uncomfortable because we are not used to our new habits. However, the ones who change tend to reap the most incentive from the new order. It’s tedious to change because we need to exert more mental energy, consume less, and accumulate surplus beyond the subsistence level.
  • The office of the leisure class in social evolution is to retard the movement and to conserve what is obsolescent. The wealthy class opposes innovation because they have a vested interest. There are opportunities in every obstacle and challenge.

Actionable tips:

  • The best offense is the best defense. Your dead end job prevents you from thinking, that’s why we all need to have passive income to provide us with a basic income.
  • Inequality will always exist. Savings allow you to escape the subsistence level so you have less risk and more time to implement changes.

Chapter 9: Conservation of Archaic traits

Veblen’s main points:

  • Rules and education system are means to eliminate and repress the individuals by the upper class. Work in the leisure class is accumulating and owning.
  • Institutions grow bigger and create more routine jobs. In order to attain the upper-class status, an individual needs to possess greater than average skills to overcome material difficulties.
  • Maintaining in the upper class require an entirely different skill compared to the working class.

Actionable tips:

  • Don’t stop learning new things.
  • Break social rules if necessary. Think rich and live poor.

Chapter 10: Modern Survival of Prowess

Veblen’s main points:

  • It takes time and money to cultivate good sportsmen.

Actionable tips:

  • There are winners and losers in sports.

Chapter 11: The Belief In Luck

Veblen’s main points:

  • Attribution to luck will lower the collective industrial efficiency of the community.

Actionable tips:

  • Hope as chance is not a strategy. Aim for replicable results.

Chapter 12: Devout observance

Veblen’s main points:

  • Sacred holidays are constructions of vicarious leisure so people can consume and signal their wealth.

Actionable tips:

  • Question if your religious and traditional observances are doing you good. Don’t simply follow.

Chapter 13: Survivals Of The Non-Invidious Interest

Veblen’s main points:

  • The chances of survival for individuals not gifted with skills are greater in the higher grades of the leisure class than in the general average of a population
  • The propaganda of culture is in great part an inculcation of new tastes

Actionable tips:

  • Travel often so you can acquire a fresh set of eyes to look at your own culture

Chapter 14: Higher Learning As An Expression Of The Pecuniary Culture

Veblen’s main points:

  • Knowledge needs to be acquired based on the learner’s own cognitive interest. Knowledge should be acquired without ulterior purpose and motivation. The leisure class is motivated by self-interest by deciding what the community learn.

Actionable tips:

  • There are vested interest in what we learn in school. Learn how to critically evaluate the knowledge we acquire.

Here’s a video to round up the idea using a similar concept called the snob effect.

Feel free to comment and let me know what you think.

2 thoughts on “Breaking The Laws Of Our Modern Reality

  1. Wow! Great summary of some econ stuff that I either never learned or forgot :). Also, great conclusions and actionable points!

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