The Theory of the Leisure Class was based on a trio of articles published in the American Journal of Sociology in 1898, and contained most of the major themes Veblen would develop in his later works. Veblen’s theories were based on and relevant to contemporary issues in the U.S., but were conceived at the starting point of American social sciences. He was influenced by writers such as Charles Darwin, Adam Smith and Herbert Spencer. His most important inspiration, however, seems to have been Karl Marx, in that Veblen argues for a materialist perspective on the formation of society, saying that the latter is shaped by its citizens' ways of procuring a livelihood. Unlike Marx, on the other hand, Veblen did not see labor, but technology and industrial arts, as the creative forces in society. His interest in production as not just a means of serving society's needs, but also a way of making a profit for the owner class, was shared by classical theorists of his day.

Veblen thought that economists of his era were too static and hedonistic in their theories, despite being an economist himself. He argued that instead of focusing solely on theoretical deductions, economists should take larger social and cultural issues into account. Whereas neoclassical economics define human beings as rational, utility-seeking agents who try to maximize their pleasure, Veblen recast people as irrational, economic creatures who pursue social status with little regard to their own happiness. He saw the rise of conspicuous consumption in the 19th century not as progress, but as influenced by the British aristocracy, and therefore un-American. The Theory of the Leisure Class was not so much a timeless theory as a result of Veblen's perception of a rapidly developing society. His opinion of the U.S. was also colored by his background as a child of Norwegian immigrants who had lived in a Norwegian community within America. Veblen’s perception of the U.S. was therefore underlined by its sharp contrasts to the immigrant community where he grew up.

The Theory of the Leisure Class: An Economic Study of Institutions (1899), by Thorstein Veblen, is an economic treatise and detailed social critique of conspicuous consumption, as a function of social-class consumerism. It proposes that the social strata and the division of labor of the feudal period continued into the modern era. The lords of the manor employed themselves in the economically useless practices of conspicuous consumption and conspicuous leisure, while the middle and lower classes were employed in the industrial occupations that support the whole of society. Economically wasteful activities are those activities that do not contribute to the economy or to the material productivity required for the fruitful functioning of society. Veblen's analyses of business cycles and prices, and of the emergent technocratic division of labor by speciality (scientists, engineers, technologists) at the end of the 19th century proved to be accurate predictions of the nature of an industrial society.

Thorstein Bunde Veblen (born Torsten Bunde Veblen; July 30, 1857 – August 3, 1929) was an American economist and sociologist, and leader of the institutional economics movement. Veblen is credited for the main technical principle used by institutional economists, known as the Veblenian dichotomy. It is a distinction between what Veblen called "institutions" and "technology".Besides his technical work, Veblen was a popular and witty critic of capitalism, as illustrated by his best-known book The Theory of the Leisure Class (1899).