ABSTRACT
This chapter begins by describing the evolution of laissez-faire capitalism from small firms to large limited liability corporations in the United States, and the ideas of Thorstein Veblen regarding this society. It describes the rise of US monopoly capitalism and how the economic system was structured relative to owners, workers, the government, as well as race, gender, ethnicity, and imperialism. The chapter explains the approach taken by neoclassical economists and what they were trying to achieve with their approach. It discusses the major concepts developed by Thorstein Veblen: evolution, institutions, culture, pecuniary emulation, conspicuous consumption, making money vs. making goods, and the vested interests. The chapter also describes how the roaring 1920s in the United States created the conditions for the Great Depression, and how the Great Depression created the conditions for a new approach to economics. Inequality can be a major problem for an economy in that it can result in macroeconomic instability.
