Veblen vs. the marginalists

In his biography of Thorstein Veblen, Charles Camic shows how, contrary to common belief, Thorstein Veblen debated questions of economic theory -- especially regarding wealth distribution -- from within the academy. Veblen is regarded as an iconoclast, and he was, but he was an iconoclast when iconoclasts were cool. Camic's arguent is convincing (Veblen was editor of the Journal of Political Economy for 11 years, after all) and the biography provides good context of the changes occurring in the American (and global) economy in the late 1800s / early 1900s.

What interested me most about the book was how important these arguments were to later developments in economic theory (and how thoroughly they seem to have been forgotten by many economists today).

In short, Veblen believed that economics should assume that (i) people exist in a social context, (ii) time exists and moves in one direction (the case for dynamic, evolutionary economics), and (iii) some contributions are productive (a worker building a chair) and others are predatory / pecuniary (an investor merging chair companies into a chair monopoly so he can extract rent through higher chair prices).

The people he was arguing against understood the distinction. For example "[John Bates] Clark instigated this movement [toward deductive theorizing], ironically, at the same moment he was breaking with the Older School over questions of value and distribution. For, to make this break, he reverted to using the same intellectual tools he had previously condemned in his critique of classical economics: namely, abstract, deductive theorizing designed to formulate universal scientific laws." (p. 288)

[much more here on the German historical school, Clark's reasoning, Veblen's experiences, etc.]