Wealth

The link between wealth and power can also be expressed indirectly. Thorstein Veblen (1857–1929) in his Theory of the Leisure Class (1899) articulated this through his notion of conspicuous consumption. He argued that to enjoy esteem it was not sufficient merely to be wealthy, others had to be made aware of that fact (it had to be conspicuous). In its purest form, consuming conspicuously is consumption of the totally useless, but (less perfectly) it is the consumption of "high maintenance" goods like white clothes in a dirty industrial environment. While there were predecessors (including Adam Smith), Veblen's analysis was free of the moralizing that often appeared in economists. The leading contemporary economist of Veblen's time, Alfred Marshall (1842–1924) in his Principles of Economics (1890), declared the desire for wealth as a means of display to be unwholesome. Marshall was here following his most distinguished predecessor, John Stuart Mill (1806–1873), who had declared that the subject of political economy itself was wealth, which he defined (after a critique of the mercantilist version) as "all useful or agreeable things that possess exchangeable value" (p. 15). However, he proceeded to maintain that the English needed instruction in the use of wealth and how to appreciate those objects of desire that wealth cannot purchase. Mill here implied a distinction between the pursuit of wealth (the art of "getting on" as he put it) and the worthwhileness of what is being pursued (the art of living).

This implicit distinction is made explicit and its moralism exposed by Veblen. He distinctively drew attention to the divergence between the drive to accumulate wealth, as a symbol of reward for industry, and the desire, once it has been accumulated, to look upon its possession as intrinsically worthy. Since social status is attributed to the possession of wealth, the imperative is to exhibit leisure (the nonproductive consumption of time) and dissociate thereby the actual possession of the wealth from the effort expended to attain it. Later economists have developed his ideas in their analysis of consumption in the form of the "demonstration effect" and what they call nonfunctional demand. A "Veblen effect" has been identified where, in an exact reversal of the assumed practice of the rational consumer, the demand increases when the price rises. Only the "truly" wealthy can afford to flout that rationality.

Of course, at another level there is a rationality at work—namely that of demonstrating one's wealth and impressing others by its possession. Under that guise this indirect linkage between wealth and power is a recurrent feature. One of its most striking manifestations is the practice of "potlatch." The status system of the tribes of northwest America is maintained by display, as exhibited in the hosting of great feasts. In the Nootka tribe the chief is presented with the first catch of the salmon traps, the first pickings of ripe fruit, and so on, but having received these, he then holds a feast where the gifts are communally consumed. This pattern is also characteristic of the so-called big man systems of the Pacific. Among the Kaoka of Guadalcanal, reputation is enhanced not by accumulating wealth but by giving it away. The more one can bestow upon others, the greater one's social standing. Hence every significant event such as a birth or wedding is celebrated by a feast, and the more feasts, and the more lavish the fare, that can be "afforded," the greater the prestige. The social leaders (the holders of political power) in all such systems are those whose wealth is manifest by being able to give away most.