Working Paper No. 88, Algorithms and Thorstein Veblen’s ‘Machine Process’

This inquiry seeks to establish that the ‘machine process’ which Thorstein Veblen introduced into the Economics literature back in 1904, exhibits similarities to algorithms that are readily found in contemporary times--more than one hundred years on. In The Theory of Business Enterprise [1904] (2005), Veblen defines the machine process as a system that prioritizes efficiency, standardization, and automation. Relatedly, this inquiry argues that algorithms are based upon similar principles and exhibit similar tendencies that yield similar outcomes. Additionally, this inquiry explores the institutional role of algorithms, elaborating upon how their increasing prevalence and solidification might serve to enhance efficiency in such areas as financial systems, hiring processes, consumer markets, and the like. Furthermore, it shall be argued that much like the machine process which Veblen detailed, algorithms should also be understood as further reinforcing structures that serve to perpetuate and even exacerbate social inequalities. As uses of algorithms expand for shaping decision-making processes, concerns over fairness, accessibility, and ethical accountability become increasingly urgent. While algorithms appear to serve as powerful tools promoting economic progress, their unchecked advances should be examined critically for promoting tendencies that further exacerbate and entrench social hierarchies.