Taking the modern for nature: methodological individualism as an interesting mistake

Abstract

Marx claims that what early modern writers took as the isolated individual in nature, was actually the individual in modern civil society. This is a mistake, but an interesting one. The paper traces the idea of the methodological individualist isolated individual in Hobbes, Locke, Bentham, Austrian and neoclassical economics. The idea is untenable because it prevents a distinction between the individual and the economy in which it supposedly pursues its interest. But the mistake pushes beyond itself, pointing to a tenable alternative, plural individuality. The alternative view is thus grounded in its contrary, rather than simply rejecting it.     

Methodological individualism: True and false

I apply Hayek’s distinction between ‘true’ and ‘false’ individualism to methodological individualism. Hayek traced ‘false’ individualism to Cartesian rationalism; Hayek’s rejection of Mises’ praxeology was due to its rationalist underpinnings. The first half of this paper identifies praxeology’s foundational philosophical concepts, emphasising their Cartesian nature, and illustrates how together they constitute a case for methodological individualism: intuition and deduction; reductionism; judgement; dualism. In the second half of this paper, I draw upon philosophy and cognitive science to articulate ‘Hayekian’ (N.B. not Hayek’s) alternatives to these Cartesian concepts. The Hayekian alternative allows a ‘gestalt switch’ from the individual- to the system-level perspective. I therefore suggest that methodological individualism is both true and false: true, in that economic phenomena are grounded in the actions of individuals; false, in that certain problems might be reconceived/discovered at the system-level. I finish by suggesting three avenues of research at system-level: optimisation; stigmergy; computational complexity.     

在“郎顾斗法”的背后

在2004年的一桩惊动中国学术界和企业界的公案中,论辩双方各执一词,也有国家主管机关出面澄清相关问题。国资改革作为中国经济体制改革的重点难点,势必要在争论和不断的革新中推进和寻求突破。我们认为,争论是有益的,并且这种争论还将持续下去。本刊编发的这三篇稿件不属于同一声音,但体现的都是一种期待规范的初衷。     

Joseph Schumpeter and Thorstein Veblen on technological determinism,individualism and institutions

This article investigates Joseph Schumpeter's affinities with Thorstein Veblen with respect to technological change and determinism, the future of capitalism, individualism and institutions. From a methodological point of view, a common point in their analysis is their anti-teleological view regarding economics as a discipline. Also, in the Schumpeterian system, technology is the cornerstone of economic evolution and appears as the making of new combinations. In the Veblenian theoretical framework, the bearer of change is to be found, inter alia, in technology, just like in Schumpeter's works, although not without differences. They also share the opinion that technology revolutionises capitalism and has serious implications for its future as a system. Furthermore, regarding individualism, in his work Schumpeter stresses the importance of the social milieu on individual action, a fact which bears strong resemblance to the Veblenian notion of evolution as ‘depersonalized evolution’. In this sense, Schumpeter is very close to Veblen, although Schumpeter's approach could be classified in what is called institutionalist individualism, whereas Veblen could be classified as holist. Undoubtedly, the role of institutions is of great importance in both Schumpeter and Veblen. Ιnstitutions in the Schumpeterian schema play a central role closely related to the future of capitalism. Institutional and non-institutional factors enter into complex forms of interaction just like in Veblen's approach. There, institutions are part of the social milieu and their underlying framework, much wider than mere economic and social. Of course, the theoretical analyses of Schumpeter and Veblen are not devoid of differences springing mainly from their methodological approach such as the role of the individual in the capitalist process which is probably the most significant difference regarding the importance attributed to it in Schumpeter's early works. Also, the way technical change appears constitutes another difference. However, his views are quite close to Veblen's. After all, Schumpeter began to write in a social, political, theoretical and ideological environment at a time when evolutionary ideas dominated social thought.     

What is the Theory Behind?

Book reviewed in this article:
Utz-Peter Reich, Review of National Accounts and Economic Values—A Study in Concepts     

Apportionment Behind the Veil of Uncertainty

Apportionment of representatives is a basic rule of everyday politics. By definition, this basic rule is a constitutional stage problem and should be decided behind the veil of uncertainty. To bring apportionment closer to quotas, we introduce f‐divergence for utilitarianism and Bregman divergence for consistent optimization. Even in our less restricted condition, we find that we must use α‐divergence for optimization and show that the minimization of α‐divergence induces the same divisor methods that correspond to the maximization of the Kolm–Atkinson social welfare function (or the expected utility function), which is bounded by constant relative risk aversion.     

Pareto’s methodological project

A man of realities. A man of facts and calculations. A man who proceeds upon the principle that two and two are four, and nothing over, and who is not to be talked into allowing for anything over. (Charles Dickens, Hard Times, 1854)     

关于云南省绿色经济建设的思考

本文认为云南省提出的建设绿色经济强省的设想和规划是云南改革开放和现代化建设迈向新的重要历史时期的重大战略抉择,勇于开拓创新,符合云南实际,是云南在２１世纪初期经济社会发展的基本思路。这个战略抉择具有鲜明的时代特征。它将对云南省乃至中国２１世纪的区域分工格局和经济社会发展产生深远的影响。     

小煤窑暴利的背后

在利益的驱动下。目前有一些乡镇煤矿，特别是私人煤矿，以大量破坏资源、损害生态环境、减少安全生产投入、压低工人工资为代价去谋取暴利。如果把治理污染、保护资源、修复生态的费用计算在内。这些小煤窑对经济增长的贡献很可能是负数。     

Schumpeterian dynamics : Some methodological notes

The main purpose of this paper is to define ‘Schumpeterian dynamics’ and to indicate how it can serve as a basis and starting point for studies in development economics irrespective of how Schumpeter used his general approach and what kind of hypotheses he launched. Schumpeterian dynamics is characterized by its focus on economic transformation. This implies that the main interest is in causal chains outside the scope of macroeconomic growth analyses, namely in disequilibria and chain effects created inter alia by entrepreneurial activities, market processes and competition as a dynamic force. The micro underpinnings of such analyses therefore differ from those of growth models which deal with aggregates, such as investments and saving, productivity, income distribution, wage shares in value added, and capital/output ratios. Seen through Schumpeterian glasses, the micro units have no well-defined generalizable ‘propensities’, and they are not fully informed calculators reacting in a mechanical way to prices that they cannot influence. Instead, firms continuously seek new information and often search for projects which, if carried out, exert transformation pressure on the markets. Consumers can also actively influence firms and markets and do not only passively react to supply prices. Transformation analyses should not replace macroeconomic growth models, but a change of roles is called for. Such analyses have too long and too often been regarded as empirical complements to growth analyses and therefore as belonging mainly to the domain of economic historians. The stress on ‘complement’ instead of ‘alternative’ implies that some sort of a synthesis should be sought in theoretical as well as in empirical research.     

Institutional individualism and institutional change: the search for a middle way mode of explanation

After noting the lack of enthusiasm of several well-known scholarsconcerning the adoption of both methodological holism and methodologicalindividualism in its several versions, this paper shows thatinstitutional individualism is a different mode of explanationfrom both of these and also that it is not the same thing asthe so-called Popperian programme of situational analysis. Institutionalindividualism is a mode of explanation that yields non-systemicand non-reductionist explanations at the same time as it allowsfor the incorporation into economic theories and models of themany formal and informal institutional aspects surrounding allhuman interactions, whether these interactions take place withinstable structures of legal rules and social norms or whetherthey attempt to change the said rules and norms. Finally, thepaper shows that it is possible for old institutionalists tomake institutional individualist analyses of institutional changeswhile retaining the remaining methodological assumptions ofthe school. The same is true for new institutionalists. Someexamples are offered from both camps.     

Beyond welfare economics: some methodological issues

When one wishes to formulate, evaluate and implement public policies, the existence of a plurality of social actors, with interest in the policy being assessed, generates a conflictual situation. How such a conflict should be dealt with? This paper defends the thesis articulated in the following points: (1) Different metrics are linked to different objectives and values. To use only one measurement unit (on the grounds of the so-called commensurability principle) for incorporating a plurality of dimensions, objectives and values, implies reductionism necessarily. (2) Point (1) can be proven as a matter of formal logic by drawing on the work of Geach about moral philosophy. This theoretical demonstration is an original contribution of this article. Moreover, here the distinction between predicative and attributive adjectives is formalised and definitions are provided. Predicative adjectives are further distinguished into the new categories of absolute and relative ones. The new concepts of set commensurability and rod commensurability are introduced too. (3) Weak comparability of values, which is grounded on incommensurability, is proposed as the main methodological foundation of well-being evaluation. Incommensurability does not imply incomparability; on the contrary incommensurability is the only possible way to compare societal options under a plurality of policy objectives. Weak comparability can be implemented by using multicriteria evaluation, which is a formal framework for applied consequentialism under incommensurability.