2. Conspicuous consumption

Veblen's theory of consumer behavior is founded upon the fact that social status is critically important to people and thus strongly affects their behavior. His conception of social status conforms to Karl Polanyi's later contention that an individual is motivated “to safeguard his social standing, his social claims, his social assets. He values material goods only in so far as they serve this end” (1944: 46). Veblen gave an expressive account of the dynamics of this behavior in the somewhat socially mobile culture of his times in the following passage:

How people are judged by others constitutes the foundation for self-esteem, which John Rawls claimed to be “perhaps the most important primary good,” such that without it nothing else has much value (1999: 440). As Andrew Sayer notes:

This point was forcefully made by Veblen: “The usual basis of self-respect is the respect accorded by one's neighbors. Only individuals with an aberrant temperament can in the long run retain their self-esteem in the face of the disesteem of their fellows” (Veblen, Reference Veblen1934 [Reference Veblen1899]: 39).

How did this need for status, for the positive esteem of others, originate? As noted above, Veblen viewed it as “a pervading trait of human nature.” But why? Stephen Edgell and Rick Tilman argue that “evolutionism” was a pervasive influence on Veblen's social thought and he can be regarded as a “‘complete Darwinian’ in the sense that he drew heavily upon both his theories and his methods, and often used an identical evolutionary vocabulary” (1989: 1004, 1004, 1007).

Although the above view expressed by Edgell and Tilman is not shared by some Veblen scholars (e.g. Jennings and Waller, Reference Jennings and Waller1998), it is puzzling that Veblen did not note the manner in which Darwin explained the human preoccupation with status or relative social position within his theory of evolution. For Darwin, those with higher status, whatever its source, would possess disproportionate access to resources and to members of the opposite sex, thus permitting more and better-cared-for progeny. Their specific genes, and the behavioral traits they carry, would thereby be more readily passed into the future. The genes of those who failed to successfully mate would perish. In this manner, a proclivity for seeking status would thus be naturally selected.

Although Veblen “saw Darwinism as the apogee of modern science” (Camic and Hodgson, Reference Camic and Hodgson2011: 266), he failed to ground conspicuous consumption and the struggle for status more generally in one of the most central elements in Darwin's theory – his conception of sexual selection. Perhaps, as has been suggested, he was more concerned with what he viewed as Darwinian method than Darwin's evolutionary biology. Ann Jennings and William Waller write: “He made no use of any Darwinist biology, and his other references to Darwin are consistently methodological and metaphorical” (1998: 199). Similarly, Geoffrey Hodgson notes that “Veblen was the first economist to understand the implications for economics of Darwinism at [the] philosophical level . . . For Veblen, Darwin's philosophy was even more important than his theory” (2001: 385, 400).

Whatever might have guided Veblen's considerable interest in Darwin, having missed the latter's theory of sexual selection impeded him from grounding his social dynamics in one of Darwin's most powerful conceptions.Footnote ³ It impeded him from developing an understanding of the manner in which social institutions channel an innate human proclivity that Darwin and contemporary evolutionary biologists recognize as of foremost importance in understanding human behavior.

3. Sexual selection

All living organisms have evolved in a struggle to successfully make use of resources that permit them to reproduce and transmit their genes into the future. The very fact that organisms exist is testimony to the success of their ancestors in doing just this. All animals that sexually reproduce compete for sex, and humans are no exception, even in the most equal society in other terms.

Recognition of the competition that occurs in sexual selection enabled Darwin to solve an enigma in his theory of natural selection which views traits as selectively retained when they enhance chances of survival. The challenge Darwin faced was how his theory of natural selection could explain the existence of seemingly unfit traits such as the ornate and heavy male peacock's feathers, or the enormous racks of antlers found on stags? Such traits are expensive to grow and maintain. They make their owners less efficient in acquiring nourishment and avoiding predators. The huge tail on the peacock makes it difficult to pass through dense brush, take flight, or stay in the air. The antlers of the stag require huge investments in calories and minerals, slow down flight, and are discarded each year. They appear to be wasteful expenditure. They do not appear to fit the dynamics of Darwin's theory of natural selection.

Although Darwin began his answer to this enigma in On the Origin of Species, it was in The Descent of Man and Selection in Relation to Sex that he provided extensive elaboration. The enigma's answer was an additional mode of selection which Darwin called sexual selection. Sexual selection “depends, not on a struggle for existence, but on a struggle between the males for possession of the females; the result is not death to the unsuccessful competitor, but few or no offspring” (1859: 88). Thus, “when the males and females of any animal have the same general habits . . . but differ in structure, colour, or ornament, such differences have been mainly caused by sexual selection” (Darwin, 1859: 89). Many of these differences found among males provide females with indicators as to which males to choose. They are advertisements of the male's fitness and thus signs of carrying healthy genes. Darwin elaborated:

Natural and sexual selection relate to fitness and are driven by only one thing – reproductive success. Whereas natural selection occurs as a species undergoes mutations enabling a better fit to the opportunities and challenges of its environment, sexual selection occurs within how members of the species relate to each other. Sexual selection is a form of natural selection that works through mating selection as opposed to physical survival. As evolutionary psychologists Margo Wilson et al. put it:

Those individuals who are unsuccessful in mating with a member of the opposite sex have a unique complex of genes – their own – that will become extinct.

Individuals of both genders must possess adequately attractive traits if their genes are to survive. For most animals all of these traits are genetically inherited and they survive because sexual partners have evolved with preferences to choose to mate with their carriers. The peacock's feathers and the stag's antlers are selected in evolution because they are preferred by females. They reveal to females that their carriers must indeed be fit and powerful if they survive with such handicaps. Only the best nourished and healthiest peacocks can manage the feat of growing and carrying around such costly ornamentation. Only a very powerful stag could survive with such weighty and otherwise handicapping antlers – the “handicap principle” (Zahavi, Reference Zahavi1975; Zahavi and Zahavi, Reference Zahavi and Zahavi1999). But whereas these expensive tail feathers and antlers handicap their carriers’ chances of physical survival, they enhance the potential for their genes to survive into the future by being attractive to females, by serving as “badges of status,” by affecting “how much recognition – prestige – others accord an individual” (Zahavi and Zahavi, Reference Zahavi and Zahavi1999: 55).

4. Institutional steering of sexual competition

Humans, of course, are by no means exempt from this biological imperative of sexual selection. Physical fitness indicators among humans that are important in mate selection include well-proportioned bodies, blemish-free skin, symmetrical faces, and for males especially, size and musculature. Size and muscle generally suggest greater potential for successful hunting and offering protection, and are therefore attractive to mates since they provide greater promise that their offspring, and thus their genes, will survive into future generations. For women, an ideal waist–hip ratio of 7 to 10 signals fertility potential – “A relatively narrow waist means ‘I'm female, I'm young, and I'm not pregnant’” (Low, Reference Low2001: 80). At times, corsets and bustles were used by women to attain or accentuate these measurements. These physical features are generally what underlie what humans have judged to be physically beautiful in their species. Denis Dutton points out, for instance, that this waist–hip ratio “occurs in sexy women in art from Botticelli's Birth of Venus to Modigliani nudes” (2010: 142).

However, especially among primates, physical traits such as size, muscle, and body shape are far from all that is important in sexual selection. Humans stand out from other animals in the central importance of cultural traits, and as evolutionary and behavioral ecologist Bobbi Low puts it, “in human societies, social complexities so outweigh the impact of physical size that size alone is a poor predictor of success” (2001: 217). Of course, being a highly successful hunter or gatherer would signal a capacity to provide sustenance and protection for offspring and thus be found attractive. But since the cultural explosion thirty to sixty thousand years ago (Mithen, Reference Mithen1999), being a fine singer, dancer, story teller, or drawer have also been highly appreciated. It has been persuasively claimed that what we define as arts – as the esthetically beautiful – evolved as a consequence of the dynamics of sexual selection (Dutton, Reference Dutton2010; Miller, Reference Miller2001; Prum, Reference Prum2017).

Excepting forced sex (rape), individuals must sufficiently please at least one fertile member of the opposite sex if their genes are to survive into the future. They might succeed in doing so if they possess physical characteristics such as handsome faces, blemish-free skin, and strong and well-proportioned bodies. Thus there would be a tendency for these characteristics to survive into future generations. But social behavior can be equally if not much more important. Those who behave in a manner sufficiently attractive to the opposite sex will successfully mate and through the dynamic of gene-culture co-evolution, the genes that carry these behavioral traits will be found in their offspring.

Although humans, like all other organisms, “will act as though they are able to calculate costs and benefits” (Low, Reference Low2001: xiv), they are not generally conscious, and rarely fully conscious, that the deep force driving their behavior is sexually driven. As neuroscientist and psychobiologist Jaak Panskepp observes, “It is a remarkable feat of nature to weave powerful sexual feelings and desire in the fabric of the brain without revealing the reproductive purpose of these feelings to the eager participant” (quoted in Thompson, Reference Thompson2015: 35). It might be noted that although Veblen did not express this sexual dynamic, he appreciated that humans are mostly driven by forces beneath their conscious reason: “Under the Darwinian norm it must be held that men's reasoning is largely controlled by other than logical, intellectual forces” (Veblen, Reference Veblen1919: 401).Footnote ⁵

Human signaling for sexual selection can institutionally become highly complex and bizarre. In China, for instance, wealthy families bound the feet of their daughters, rendering them unable to do work or much else beyond bearing children and being elegant. Males would be attracted to them because as wives, they signal that their husbands are so wealthy that they can afford a wife incapable of being economically useful – a particularly cruel variation of conspicuous consumption that Veblen noted.Footnote ⁶ Being able to signal the ability to afford such a wife would make the male more attractive to potential additional wives. Similarly, a woman's paler skin in agricultural societies, where work was mainly outdoors, suggested she did not need to work and was therefore of elite status. In industrial society, by contrast, where work moved predominantly indoors, a tan indicated that one had the leisure to lie beneath the sun, impressively at a beach, or even more ostentatiously, on a sailboat or yacht.

Navigating interaction with the opposite sex begins at practically the earliest ages and continues throughout life. From early childhood, we are aware of our actions that are intended to favorably impress members of the opposite sex. And everyone is also aware that members of the same gender are in competition with each other in this pursuit. Everyone knows that at times this competition can be extreme,Footnote ⁷ although it is far less often expressed in physical fighting than is the case among many other mammals.

The manner in which sexual selection is the ultimate end of the line in the causation of inequality generally runs counter to people's self-understanding. In spite of the fact that sex permeates virtually all aspects of society – that society is saturated with sexuality – considerable effort is taken to hide or even deny its expression. Note that humans are the only animal species that requires its members to hide their genitalia.Footnote ⁸ Yet it shares with violence top billing in our entertainment, from pop music to opera, from soaps to classical theater, from pulp fiction to the literature of the classic canon. It is endlessly exploited in commercial advertising.

Precisely because of the centrality of sexual competition in human behavior and the fact that human society requires cooperation, cultural practices have evolved to mask or soften its expression. Thus, attitudes have evolved to downplay sexual competition and highlight the value of cooperation. Humans are depicted as driven by more “noble” motives. Consequently, few if any are aware of the extent to which striving for excellence is ultimately driven by Darwin's dynamic of sexual selection. Nevertheless, humans have evolved to sexually compete for mates and reproduce. From an evolution perspective, this is understandable. If someone fails to mate, their specific set of genes faces oblivion.

As to how to behave, humans, as well as other animals, generally act on proximate cues and are unaware of the ultimate end driving their actions. Evolutionary psychologists Satoshi Kanazawa and Mary Still note, for instance, that “Human actors believe that they are choosing to mate with the ones they love and desire, not the ones with characteristics that increase their reproductive success (measured by the number of grandchildren). Human actors are not usually conscious of the evolutionary logic behind their emotions” (1999: 46).

5. Veblen's instincts institutionally channeled

Veblen viewed instincts as “the innate and persistent properties of human nature . . . irreducible elements of human nature” (1914: 2, 3), which motivate behavior: “These native proclivities alone make anything worthwhile, and out of their working emerge not only the purpose and efficiency of life, but its substantial pleasures and pains as well” (1914: 1). Although he viewed these as innate in human nature, he saw their expression as plastic, “subject to development and hence to modification by habit” (1914: 38). Yet “after all has been said it remains true that the margin within which the instinctive nature of the race can be effectively adapted to changing circumstances is relatively narrow – narrow as contrasted with the range of variation in institutions – and the limits of such adaptation are somewhat rigid” (1914: 36).

It has been a common practice among American institutionalists to identify four principal instincts within Veblen's work: the predatory instinct, parental bent, the instinct of workmanship, and idle curiosity. Tilman claims that “Basically, two clusters [of instincts] are discernable: parental bent, idle curiosity and workmanship blend together as other-regarding traits, as do aggression and predation, which are self-regarding” (Tilman, Reference Tilman1996: 99). But had Veblen carefully read Darwin's The Descent of Man and Selection in Relation to Sex, he may have noted that insofar as all can be reduced to Darwin's dynamic of sexual selection, all of these instincts might be viewed as self-regarding insofar as they all were selected through evolution to enhance the potential for reproduction. This section will briefly explore how Veblen might have come to this conclusion.

Veblen wrote:

However, he held that with the exception of these quasi-peaceable eras such as those of hunters and later of handicraft producers, aggression and predation always held sway, first through military might and later through pecuniary force.

But had Veblen drawn on Darwin's concept of sexual selection, he would not so readily have presumed that a non-aggressive era ever existed. Indeed, recent evidence suggests that warfare in pre-agricultural societies was incessant, driven more by the sexual rewards of being a successful warrior than by economic advantage (Diamond, Reference Diamond2012; Flannery and Marcus, Reference Flannery and Marcus2012; Keeley, Reference Keeley1997). Warriors who succeeded in killing enemies sired more children, thereby passing more of their homicidal genes into future generations (the dynamics of gene-culture co-evolution).Footnote ⁹ Aggressive routes to prestige included leading warriors into combat, killing large numbers of the enemy, and returning with captive's heads, scalps, genitalia, or other body parts as proof. Napoleon Chagnon calculated that among the Amazonian Yanomamö, those who had killed had an average of over two-and-a-half more wives and more than three times as many children (Diamond, Reference Diamond2012: 163). Kent Flannery and Joyce Marcus note that among some peoples, “A man who had beheaded no one was considered such a wimp that he had trouble getting a wife” (2012: 105). They also report that once more modern societies conquered these peoples and outlawed head hunting, complaints such as the following were voiced: “Once we had leaders who lined the walls of our men's house with enemy skulls, but now we are reduced to squabbling like girly men” (2012: 51). Flannery and Marcus also report the case of an Inca general who had lost a number of battles being sent women's clothing and forced to wear them upon returning to Cusco (2012: 538).

The rise of the state and civilization constituted an institutional revolution whereby aggression and predation could enable advantages in mating to those successful in using violence or economic power to accumulate material wealth, political power, and thus high status.Footnote ¹⁰ These advantages would signal to potential sexual partners that their bearers would hold greater potential for offering protection and sustenance to them and their offspring.

Veblen's instinct of parental bent “has a large part in the sentimental concern entertained by nearly all persons for the life and comfort of the community at large, and particularly for the community's future welfare” (1914: 27). Within forager groups, being cooperative and generous earned the social respect of others and that with this came greater sexual success (Flannery and Marcus, Reference Flannery and Marcus2012; Wilson and Gowdy, Reference Wilson and Gowdy2015). Thus, because social approval was essential for sexual success, what would appear as egoism, ambition, or greed within hunter–gatherer societies had to be repressed. It was imperative that others be treated generously. The properly generous were considered superior in virtue, which gave them more access to mates and thus more offspring (Flannery and Marcus, Reference Flannery and Marcus2012: 561). Thus, although Veblen did not present it as such, his parental bent can be viewed as ultimately self-regarding.

Veblen claimed that his instinct of workmanship:

Further, “The only other instinctive factor of human nature that could with any likelihood dispute this primacy [of workmanship] would be the parental bent” (1914: 25), and indeed, the former is serviceable to the latter: “the instinct of workmanship is in the main a propensity to work out the ends which the parental bent makes worth while” (1914: 48).

Anthropologists inform us that in early society the individual's motivation for carrying out productive activity must be seen as more social than material. Work provided a principal means by which individuals achieved the approbation of others. Richard Thurnwald has noted that for early societies, “It is for social distinction that work is done, not for the acquisition of money or material goods, since these do not play the same intermediary role for acquiring reputation that they do in our society” (1932: 178). Similarly, Bronislaw Malinowski noted of the Trobriand Islands' male's motivation to work that “He wants . . . to achieve social distinction as a good gardener and a good worker in general” (1922: 62). Or where wealth is sought, it is for the purpose of giving it away to achieve the approbation of others. As David Wilson and John Gowdy put it, “Concern for one's reputation is an example of a motive that is self-interested in a proximate sense but benefits the common good in an ultimate sense, when reputation is contingent on good conduct” (2015: 43).

Although foragers may not have defined such activities as work (Wisman, Reference Wisman1989), being a good hunter or gatherer, a courageous warrior, a skilled tool maker would be highly valued by othersFootnote ¹¹ and provide signals that they would be promising mates who could care for a family's welfare, and therefore be found sexually attractive. Sexual selection would have provided Veblen with a means for demonstrating how his instinct of workmanship could have evolved in Darwinian terms, what Hodgson claims he did not do (2004: 198–201). It could also have revealed its self-regarding character.

Of the fourth of Veblen's principal instincts, that of idle curiosity, he wrote, “Human curiosity is doubtless an ‘idle’ propensity, in the sense that no utilitarian aim enters in its habitual exercise” (1914: 88). Within the context of Darwinian sexual selection, this would make it seemingly wasteful, a bit like the male peacock's elaborate tail feathers, something that might be exercised by someone with the luxury of extra time after other utilitarian needs have been met: “an ‘idle’ curiosity by force of which men, more or less insistently, want to know things, when graver interests do not engross their attention” (Veblen, Reference Veblen1914: 85). Therefore, the reason such a propensity might have been selected over the course of human evolution is that it would signal such survival fitness that surplus idle time was available. Those successful enough to have idle time would make promising mates: thus, in Veblen's world, the high status of his leisure class. In the end, his instinct of idle curiosity can be viewed as self-regarding.

Veblen went on to note that, although no part of its motivation, the results of idle curiosity might wind up having some utilitarian value: “the material information which is by this means [the exercise of idle curiosity] drawn into the agent's available knowledge may none the less come to serve the ends of workmanship.” But this need not be the case. It could instead “lend itself to conceptions of magical efficacy rather than to mechanical efficiency” and thereby “result in a retardation of the technological advance,” by being obstructive of workmanship (1914: 88, 89).

Being able to engage in idle curiosity would signal fitness, much as has been found to be the case with art (Dutton, Reference Dutton2010; Miller, Reference Miller2001; Prum, Reference Prum2017). Those who probe for answers to important questions and demonstrate success in solving them would be attractive. The intelligence this would suggest would be made yet more evident by skillful use of language. Nicholas Wade reports that “eloquence and articulate speech signal the quality of an individual's mind, and will be highly favored by both men and women in their sexual partners. Language is a device that lets us learn about potential mates more thoroughly than any other method” (2007: 44–45). Veblen recognized how “Elegant diction, whether in writing or speaking, is an effective means of reputability” (1934 [Reference Veblen1899]: 398).

Veblen noted that “The distinctive feature by the mark of which any given instinct is identified is to be found in the particular character of the purpose to which it drives” (1914: 4). However, because he had apparently not become familiar with Darwin's theory of sexual selection, he concerned himself with proximate purposes as opposed to the underlying purpose of mate selection.

Nevertheless, although his understanding of Darwin was incomplete, Veblen had laid an intellectual foundation for building a science of society on the biological nature of humans as revealed by one of the greatest intellectual breakthroughs in the history of science.

6. Veblen's breakthrough derailed

Daniel Dennett (Reference Dennett1995) claims that the revolution in evolutionary biology launched by Charles Darwin was the greatest scientific breakthrough for human understanding in history, surpassing in importance even Isaac Newton's much earlier breakthrough in physics. Yet as John Tooby and Leda Cosmides lamented over a decade ago, “nearly a century and a half after The Origin of Species was published, the psychological, social, and behavioral sciences remain largely untouched by these implications” (2005: 5). Instead, these disciplines have been captured by the “standard social science model,” whereby “the mind is blank-slate like, and lacks specialized circuits that were designed by natural selection to respond differentially to inputs by virtue of their evolved significance” (2005: 6). The blank slate metaphor presumes that experience writes the full script for human behavior. As will be seen below, American institutional economics got caught up in this theoretical mistake.

Veblen's work stands out as an important early exception to the blank slate mistake that has handicapped social understanding over the past century. Veblen wished to revolutionize economics and social science more generally by making them conformable to the latest finding in our understanding of the biological character of our species, and he was presciently convinced not only that Darwin's revolutionary work had successfully identified the fundamental biological dynamics of all living things, but that this breakthrough was of importance for social science. His Darwinian science of society required investigating the manner in which innate instincts have been channeled over time by evolving social institutions. This focus he placed upon institutions gave the school of economics that he participated in launching its name of institutionalism.

Most economists in the US who have identified themselves as institutionalists recognize Veblen as the father of their intellectual tradition. Their research frequently reveals his inspiration and often draws upon his conceptual frameworks.

However, while some of the ink of his later writings was still drying, a momentous transformation in psychology redirected understanding of human behavior away from Veblen's Darwinian focus. Veblen had clearly recognized within Darwin's evolutionary biology what he believed to be the socially important biological determinants of human agency. Later American institutionalists, however, moved the school away from this position, as instinct theory fell out of fashion and behavioral psychology captured the social sciences. This move was abetted by the rise of logical empiricism (logical positivism), which insisted that all elements within science must be empirically observable. Because instincts or inner drives are not empirically observable, they can play no part in science.

The coup de grace for American institutionalism's move away from instinct theory was the highly influential work of Clarence Ayres, who argued that Veblen “had allowed himself to be misled . . . into explaining everything in terms of contrary instincts” (1967: 4–5). Instead, Ayres adopted a behaviorist theory of human behavior: “human nature is a social or cultural phenomenon, . . . not a biological one” (1949: 11). And consequently, “culture has replaced human nature as the foundation idea for an understanding of the actions, thoughts, and feelings of all human beings” (1961: 71). Ayres’ work had a profound effect on institutionalism: “the analysis of the biological determinants of human behavior . . . vanished from the institutionalist literature” (Asso and Fiorito, Reference Asso and Fiorito2004: 474).

A yet further distancing among institutionalists from Veblen's instinct-grounded theory came with the later turn to “instrumental value theory,” which claims, as Marc Tool put it, that “The primary and dynamic element in social change is human beings' capacity to think critically and coherently over wide areas of their experience . . . [and that this] has been the fundamental element subversive of status quos over the centuries” (1986: 7).

The turn away from developing institutional economics with biological foundations has retarded its development, generating a school that lacks a coherent theoretical structure, with the consequence that analyses are frequently highly relativistic (Wisman and Rozansky, Reference Wisman and Rozansky1991). By abandoning the grounding of human behavior in evolutionary biology, it inadvertently sacrificed a foundation that may have enabled it to identify social regularities promising the formulation of more rigorous economic theory.

7. Biology, sexual selection, and institutional economics

All social sciences and human history are constructed upon conceptions of human nature, although lamentably these are seldom made explicit or clearly specified. This has ever been a serious mistake. It is imperative that works in social science and history come clean on what is understood as human nature. To be scientific, social sciences must conform to our understanding of human behavior at the most fundamental level, that of evolved biological beings.Footnote ¹² Veblen was a pioneer in his efforts to do just this. He recognized the importance of Darwin's breakthrough in evolutionary biology and struggled to ground his analysis of social dynamics within these biological dynamics.

However, as noted above, members of the school of institutional economics Veblen founded have generally abandoned his insistence on biological foundations. They have embraced, albeit often only implicitly, the widespread presumption among social scientists and historians that human behavior is highly, or even fully, plastic, capable of being molded or directed by culture such that human biology can be ignored. But, as Pinker (Reference Pinker2002) and many others have made clear, this is not a tenable position. In human evolution, biological traits were selected that strongly determine behavior. For social science or history to have adequate depth and coherence, the biological character of human social action must be explicitly specified.

The past half century has witnessed a significant expansion of interest in developing institutional economics, although much of this interest has developed independently of Veblen's work or that of his followers. The most successful expression of this renewed interest has been new institutional economics, a movement with far closer theoretical ties to neoclassical economics than to Veblenian or “old institutional economics.” Since the publication of Richard Nelson and Sidney Winter's An Evolutionary Theory of Economic Change in 1982, attention has also been given to reconstructing the discipline upon evolutionary dynamics to provide a more realistic and powerful alternative to mainstream economics. It is also widely recognized that institutional economics, whatever its expression, must be evolutionary economics.

The fall 2014 issue of Journal of Institutional Economics was dedicated to assessing the status and future of institutional and evolutionary economics. Although some contributors expressed guarded optimism, the general tenor is that efforts remain highly fragmented. Hodgson and Stoelhorst projected that “without the development of a theoretical core, this fragmentation is likely to increase” (2014: 530). Few concrete proposals were offered for fruitful coherent progress. But what is striking in this issue, as well as in contemporary discourse in various “brands” of institutional economics, is how, with a few exceptions (e.g. Gowdy, Hodgson, Stoelhorst, Wilson, Witt, Reference Witt2014), little mention is made of the need to ground theory in the biological nature of human behavior.

Arguably, providing this grounding should be the first order of business. Might the Darwinian dynamic of sexual selection that Veblen missed be a foundational building block? The demonstration above of the manner in which the four principal instincts identified by Veblen could be viewed as stemming from the dynamics of sexual selection is suggestive of the central role it might play. Indeed, just how much human behavior is ultimately motivated by these dynamics? Kanazawa claims that “Everything . . . in life, even survival, is a means to reproductive success” (2009: 26), even though humans are not generally conscious that their drives were selected to enhance their potential for reproduction. It should also be noted that although reproduction is the ultimate motivator, much behavior is steered by institutions in ways that reduce or even eliminate the potential for reproduction; e.g. the extreme instance of religion-mandated celibacy.

The fact that the ultimate, but typically unrecognized, driver of behavior is reproductive success does not mean that proximate motivations are not experienced by people as non-self-regarding, as moral, or as self-sacrifice for others. Humans have evolved not only to seek the approbation of others, but also as Adam Smith put it, “not only to be loved, but to be lovely; or to be that thing which is the natural and proper object of love” (1976 [1759]: 208). Of the highest value to humans is self-esteem.

Attempting to formulate a theory of institutional and evolutionary economics by drawing on the dynamics of sexual selection is clearly beyond the scope of this article. Nevertheless, a sense of its potential character might be garnered from a glimpse at the manner in which institutions evolved to channel sexual selection during early human history. History can, as Bas van Bavel (Reference Bavel2015) reminds us, serve as a laboratory for better understanding institutional change.

Darwin revealed that as sexually reproducing animals, humans compete for sex. In doing so, they strive to stand out, to be above others in whatever manner is socially approved and therefore attractive to the opposite sex. No matter how equal a society might be in all other respects, sexual competition will lead to differential access to the opposite sex and thus the potential for sending genes into future generations. And in terms of evolutionary biology, this is the inequality that has always mattered most.

However, although humans are genetically programed to seek status, how it is attained has varied considerably historically. History reveals that, depending upon the institutional rules of the game, social status has been attained as much by work, generosity, and community spiritedness as by wealth and political power. What earns status is thus substantially determined by a society's institutions, but the results of successfully attaining high status are the same cross-culturally. As evolutionary psychologists David Geary et al. put it, “Although the markers for social status can vary somewhat from one culture to the next, the basic relation is the same: Culturally successful men are preferred as mating and marriage partners” (2004: 30).

But why in the human species do alpha males not dominate access to females, as is the case with other primates? It appears to be traceable to the development of tools. Many of the tools that served to increase the productivity of hunting, gathering, and food preparation could also serve as weapons to be used against humans. These earliest weapons could serve, as Nicholas Wade puts it, as “great equalizers . . . flattening out the male hierarchy of a still apelike society” (2009: 47). Size differences between males and females declined as did violent competition between males for females, an example of gene-culture co-evolution. Further, this reduction in male-to-male aggression permitted greater potential for cooperation, which could be reinforced as the weaker formed coalitions against tyrannical bullies (Diamond, Reference Diamond1998: 6). Parenthetically, it was to Veblen's credit that he saw technological change as the prime force altering institutions.

The institutions – Veblen's shared habits of thought and North's shared mental models (North, Reference North1991)Footnote ¹³ – that evolved to best enable survival within foragers’ technological and natural environments encouraged cooperation in sharing food, childcare, defense, and practically everything else. Sexual selection within these environments favored traits that enhanced cooperation and coordination within the group. In a seeming contradiction, cooperation constituted a form of competition. So too did generosity. Those viewed as contributing most to group efforts would be appreciated and thus be found more sexually attractive. Their contribution to the well-being of others could be expected to be reciprocated, and their children would be more likely to receive the care of others, and thus their genes would more readily survive into the future.Footnote ¹⁴

Yet in spite of their cooperativeness and high degree of equality, foragers were, as discussed above, exceedingly homicidal toward members of other groups. The reason is that warriors proved their mettle and acquired status by returning to camp with trophy evidence such as heads, scalps, or genitalia, for which they gained sexual advantages (Diamond, Reference Diamond2012; Flannery and Marcus, Reference Flannery and Marcus2012; Keeley, Reference Keeley1997).

It need be noted that a group within which social institutions encouraged this cooperativeness would have a competitive advantage over groups with weaker such institutions and would over the long run tend to out-survive these competitors, an example of group selection.Footnote ¹⁵ Further, as J. W. Stoelhorst writes, “Institutions stabilize groups by channeling within-group competition, but they do so by virtue of their success in furthering the success of groups in the competition with other groups” (2008: 421). Over the long course of human evolution, institutions that are supportive of cooperation would, through the dynamics of gene-culture co-evolution, edge the human species toward becoming more cooperative within social groups.

Technological advance in the form of agriculture laid the material foundations for the eventual rise of civilization. As productivity in agriculture improved, cultivators could produce more than was necessary for their own subsistence. If a small group could master superior military technology unavailable to cultivators, it could be deployed to expropriate the latter's surplus. And this superior military force became available with metallurgy. Whereas stone weapon technology, because it was readily available to all, had acted to limit inequality, new metal weaponry, because of its scarcity, unlocked the potential for extreme economic exploitation.Footnote ¹⁶

Thereby a new institution, the state, was born, run by powerful elites with comparative advantages in violence who lived off the surplus production of the masses (Boix, Reference Boix2015). Religion evolved to provide them with the highest level of legitimacy (Wisman and Smith, Reference Wisman and Smith2011). Concentrated state power witnessed the institutional appearance of increased class stratification and hereditary status, with the wealthier classes, and especially the rulers, commanding great advantages in sexual competition and thus reproduction, practicing polygamy, generally with harems, thereby better ensuring that their genes would pass into the future (Betzig, Reference Betzig and Ellis1993). Although these elites were unlikely to have been consciously aware that their underlying motivation was pursuit of reproductive advantage, the result follows from Darwin's dynamic of sexual selection.

Because the concentrated power of the state could protect private property, an important new institutional force became central to human sexual selection. Those who accumulated or possessed significant property would be more attractive as mates. Property provided greater material security and thus greater probability that its owners’ offspring would survive.

Although further institutional complexity would continually open yet more new domains in which sexual competition might occur, since the rise of the state and civilization, wealth and power have remained the foremost cultural means of signaling status and thus sexual attractiveness. The conspicuous consumption so aptly described by Veblen expressed this sexual competition and continues to do so today.

In more recent history, the importance of conspicuous consumption in signaling status was further enhanced as the degradation of work accompanying industrialization and the decline of community accompanying urbanization greatly weakened important alternative ways in which people could acquire social approval and esteem. Workers would have to rely increasingly on high levels of consumption to signal how skilled and hardworking they are, and thus what good mates they would make (Wisman and Davis, Reference Wisman and Davis2013).

If social institutions channel the manner in which sexual competition unfolds, what explains the evolution of institutions? The nature of institutions that can exist within any society will be constrained by its material conditions. Thus, the nomadic mode of subsistence among foragers meant that wealth accumulation could not readily evolve to signal status. This, as noted above, changed with the adoption of agricultural technology, which established the material conditions for metallurgy, which in turn enabled extreme inequality, accompanied by the new institutions of the state and private property. As these examples make clear, technological change serves as a prime force for institutional change. However, institutions breed institutions, “emergent properties that find their origin in the interactions among individuals” (Stoelhorst, Reference Stoelhorst2008: 420). That is, institutions set the conditions within which further institutions evolve. For instance, the institution of private property enables extreme inequality, generating religious doctrines that not only legitimate inequality, but that may serve to impede technological change, resulting, as history reveals, long periods of relatively stagnant institutional change.

The challenge for institutional economics remains the same as it was for Veblen. First, it is to ground understanding of human action in that which evolutionary biology has revealed to most fundamentally motivate human behavior; then, to examine how social institutions channel innate drives. Finally, it is to explore how technological change generates new institutions while destroying old ones and how institutions affect each other and breed new ones. Yet the challenge of formulating institutional theory is nothing less than daunting, given the extremely complex manner in which institutions evolve and act upon each other.