Methodological Individualism: Background, History and Meaning (Routledge Studies in Social and Political Thought)

Methodological Individualism Background, history and meaning Lars Udehn

London and New York

First published 2001 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2002. ©2001 Lars Udehn All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Udehn, Lars, 1948– Methodological individualism : background, history, and meaning / Lars Udehn. p. cm. Includes bibliographical references and index. 1. Individualism. I. Title. HM1276 .U33 2001 302.5~4–dc21 2001019663 ISBN 0–415–21811–x (Print edition) ISBN 0-203-20783-1 Master e-book ISBN

ISBN 0-203-20786-6 (Adobe eReader Format)

Contents

List of figures Preface Acknowledgements

x xi xii

1 Introduction

1

2 Background

7

The social contract 7 The invisible hand 10 Classical economics 11 German historicism 19 Positivist sociology 27 Holism and collectivism 38

3 Psychologism in early social science

41

British psychologism 43 John Stuart Mill 43 Utilitarian economics 49 German psychologism 58 The rise of psychology 58 Wilhelm Dilthey 67 Georg Simmel 73 Psychologism on trial 77

4 Austrian methodological individualism Carl Menger 87 Max Weber 95 Joseph Schumpeter 104 Ludwig von Mises 107 Friedrich von Hayek 114 The Austrian influence 121

87

viii

Contents

5 Society as subjectively meaningful interaction

126

Symbolic interactionism 127 Phenomenological sociology 137 Existentialism 144 Ethnomethodology 150 Social constructionism 160

6 Positivism in philosophy and social science

167

Positivist philosophy 167 British empiricism 168 Logical positivism 173 Positivist social science 179 Systematic empiricism 179 Positivist social theory 189 Homans’s theory of exchange 190 German Verhaltenstheorie 196

7 Popperian methodological individualism

200

Karl Popper 200 J.W.N. Watkins 211 Institutional individualism 218 Joseph Agassi 218 Ian C. Jarvie 221 John O. Wisdom 224 Conclusion 226

8 Economics: the individualist science

228

Macroeconomics and microfoundations 230 General equilibrium theory 241 Game theory 250 Conclusion 254

9 The new institutional economics Social organisations 260 The household 261 The firm 265 The state 272 Interest groups 275 Conclusion 275 Social rules 276 Property rights 276 Law 278 Constitutions 281 Evolutionary economics 281 Conclusion 286

255

Contents ix

10 Rational choice individualism

288

Rational choice sociology 290 James Coleman 292 Raymond Boudon 306 Analytical Marxism 309 Jon Elster 310 John Roemer 316 Structural individualism 318

11 Why methodological individualism?

320

Philosophical background 321 Reductionism 324 Scientific reduction 324 Psychologism 331 Microfoundations 336 Normative individualism 336 Political individualism 337 Humanism 339 Conclusion 345

12 Methodological individualism restated

346

Strong and weak methodological individualism 346 Versions of strong methodological individualism 349 Explanatory methodological individualism 354

Notes Bibliography Index of author names Index

357 388 437 441

Figures

1.1 2.1 2.2 2.3 2.4 3.1 4.1 4.2 4.3 5.1 5.2 5.3 5.4 5.5 6.1 6.2 6.3 7.1 8.1 8.2 9.1 9.2 10.1 10.2 10.3 10.4 10.5 10.6 12.1 12.2

A graphic representation of methodological individualism The theory of the social contract Adam Smith’s theory of the invisible hand Emile Durkheim’s rules of sociological method Social wholes and collectives John Stuart Mill’s psychologistic methodological individualism Carl Menger’s theory of social institutions Actions and institutions according to Robert Nozick Individuals in society according to Weber, Mises and Hayek Society according to symbolic interactionism Society according to phenomenological sociology Society according to ethnomethodology Berger and Luckmann’s dialectic of individual and society A mapping of some sociological theories in a two-dimensional space Mario Bunge’s methodological systemism Roy Bhaskar’s transformational model of the society/person connection Hedström and Swedberg’s typology of social mechanisms Popperian institutional individualism The elements of the economic system according to Keynes The methodological individualism of general equilibrium theory Social institutions as endogenous variables Social institutions as endogenous and exogenous variables Coleman’s micro–macro scheme Methodological individualism according to Coleman Coleman’s micro–macro scheme extended in time Social structure as a determinant of individual action Social structure as positions to be filled Structural individualism The individualistic research programme, or versions of strong methodological individualism Deductive–nomological explanations

5 9 11 34 40 49 91 125 125 136 144 160 161 165 186 187 188 227 232 245 286 287 299 300 301 303 305 318 353 355

Preface

This book is partly based on my doctoral thesis, Methodological Individualism – A Critical Appraisal (1987). More exactly, chapters 1, 4–7 and 11–12 are revised versions of parts of my dissertation, while chapters 2–3, and 8–10 are entirely new. I estimate the new material to make up about half of this book. Of my previous work, I have used only the first part, which consists of a presentation and clarification of methodological individualism, but not the second, critical, part. The reason for this is not that I am less critical of the original doctrine of methodological individualism today, than I was in 1987, but that I wanted to expand my presentation and explication of this doctrine. One thing, however, makes a critical appraisal of methodological individualism more complicated today than it was in 1987. It is now more obvious than it was before that methodological individualism exists in a number of weak versions, in addition to the strong version that still dominates in economics. These weak versions of methodological individualism are, in my opinion, far less objectionable than the original strong version, which I criticised in 1987. I don’t believe, however, that they are unobjectionable, but I will save my objections to a later work. The present book is part of a larger research project, which is going to include three more volumes. The first of these is a history of the individualistic theory of ‘man’ and society from Greek Antiquity to the rise of social science and of methodological individualism. My work on this volume is almost finished, and I hope that it will be published in about a year or so. A second volume will deal with the obverse of methodological individualism, usually called methodological collectivism, or holism. Also this volume is well on its way and I plan to complete it within the next couple of years. In a third volume, finally, I will return to the critique of methodological individualism, which I began in my dissertation. My intention is to try to carve out a position of my own, which is based on the viable elements of both individualism and holism, but avoids their objectionable features.

Acknowledgements

I have been working on this book for quite some time. My first research on the topic of methodological individualism goes back to the end of the 1970s. Over the years I have been helped in various ways by lots of people and I am afraid that today I do not even remember all who made some contribution to the end result which is this book. My first and greatest debt is to Thomas Coniavitis, who suggested that I should write my doctoral thesis on methodological individualism and who influenced my thinking about it over many years of teaching and discussion. Without him, this book would most probably not have been written at all, and had it been written, it had been different from what it is. My intellectual exchange with Thomas has shaped my own thinking about social theory and methodology in important ways. My thesis was written at the Department of Sociology, Uppsala University, and my supervisors were Björn Eriksson and Ulf Himmelstrand. I am grateful to both of them, not only for the help they gave as part of their duty, but also for help I received after they had finished their assigned tasks. Peter Johnson read the whole manuscript and helped me improve upon many arguments and formulations. I am particularly grateful for his efforts to improve my English. A special thanks goes also to Tommy Törnqvist for intellectual stimulation and, not least, for unfailing moral support. Lola Billås wrote the whole thesis on a PC, with scrupulous exactitude, before I had myself switched to this new technology. Other people, then at the department of sociology in Uppsala, who read parts of my thesis and made valuable suggestions include Göran Ahrne, Tom Burns, Magdalena Czaplicka, Peter Ekegren, Mats Franzén, Kaj Håkansson, Bo Lewin, Peter Sohlberg, Richard Swedberg and Börje Svensson. A special thanks goes to Wodek Rabinowicz and Lars Bergström, then at the Department of Philosophy in Uppsala, who generously offered their philosophical expertise to a dilettante in this field. While helping me to avoid some philosophical blunders, they have no responsibility for those that remain. I am, finally, indebted to Margareta Bertilsson and Sven Eliaeson, who also read and commented on the manuscript to my dissertation. My doctoral thesis was presented and defended at a disputation in Uppsala in 1987. The faculty opponent was Steven Lukes, who is one of the main authorities on the subject of individualism, including methodological individualism. I

Acknowledgements xiii am grateful both for his critical remarks and for his valuable suggestions for future revisions of my thesis. Much of the later work on this book has been done at the Department of Sociology in Stockholm. Once more I had the benefit of constant support from Göran Ahrne and Richard Swedberg, who both moved there before me. Richard has commented on some new parts of the manuscript and advised me in many ways on how to improve it. In Stockholm, I have also benefited from discussions about methodological individualism with Patrik Aspers, Christofer Edling, Peter Hedström, Fredrik Liljeros and Per-Anders Lindén. Robert Andersson and Jens Rydgren read my dissertation voluntarily and made me think twice about some matters I had considered settled. In this second phase of my work on methodological individualism, I have finally received much help from Christine Roman, who has been my main discussant about everything that had to do with the writing of this book. Most of chapter 9 of this book, on the new institutionalism in economics, was written while I was a visiting guest at the Max-Planck-Institute for Research into Economic Systems in Jena. I am grateful to the Institutional Economic Unit for inviting me to this extremely favourable milieu for doing research. During my stay there in September-October 1998, I had every opportunity to read, write and discuss what I had written, undisturbed by any burdening duties. I am particularly indebted to Thrainn Eggertssom, who first invited me, and to Annette Mummert, Uwe Mummert, Oliver Volckart, Stefan Voigt and Michael Wohlgemuth for making my stay in Jena both intellectually stimulating and pleasant in every way. Two anonymous reviewers have read parts of the manuscript and offered some good advice on how to make a book out of it. I recognise one of them as Victor Vanberg, who has written an important book on methodological individualism, himself. I am particularly grateful for his generous comments on my manuscript. I would, finally, like to thank the Swedish Council for Research in the Humanities and Social Sciences (Humanistisk-Samhällsvetenskapliga Forskningsrådet, or HSFR), now a part of The Swedish Research Council (Vetenskapsrådet), for necessary financial support. Without the grants I have received from this source during large periods of my work on methodological individualism, it would have been quite impossible to write a book like this.

1

Introduction

There has been in the history of social thought a constant battle over the true nature of society and about the best way to understand and explain it. A major divide goes between those who see society as an aggregate, collection, or complex of individuals and those who see society as some kind of ordered whole and/or unitary collective. The former try to explain social phenomena in terms of individuals and their interaction, while the latter maintain that this is not possible without essential reference to the social wholes of which they are part and/or the collectives to which they belong.1 The opposition between these conceptions of society was inherited by the social sciences and divided them in two conflicting camps. With the emergence of the social sciences, however, the metaphysical issue was increasingly turned into a methodological issue. As we shall see, this does not mean that the metaphysical issue disappeared, only that it receded into the background. There have been many names used to designate the two camps and their respective doctrines. In the twentieth century two (or three) names have been selected as the most common. The battle has been increasingly waged in terms of methodological individualism, and its transmutations, versus methodological collectivism and/or holism. My interest, in this book, is in the former, but in order to understand one side, it is necessary to take a look also at the other side. Above all, it is necessary that there is a genuine divide separating the two doctrines, or else this book would be very much ado about nothing. There are those who see, in this issue, the most fundamental and most important problem of the social sciences: that of the relation between individual and society. According to others, however, individualists and holists are engaged in a sham battle.2 I believe the first view is more correct. Anyone the least acquainted with the social sciences, knows that it matters which view you adopt in this matter. Methodological collectivists and holists do tend to ask different questions and provide different answers than do methodological individualists. There are important differences also within the two camps, but this is another matter. I also find it hard and a little bit odd to believe that the best minds in the history of social thought should really have engaged, and with so much energy, in something which turns out to be a sham battle. Didn’t they notice? When I first started working on the topic of methodological individualism, I

2

Introduction

was often told that the debate about it was over. Several sociologists tried to persuade me that arguments against methodological individualism advanced by Steven Lukes and others are so strong as to render methodological individualism a mere curiosity, or at least harmless. The main point of Lukes was that it is vain to discuss methodological individualism without making clear what conception of ‘individuals’ you are using (Lukes, 1968; see also Burman, 1979). His argument was addressed in part to the methodological individualist, J.W.N Watkins, who had argued that methodological individualism is, or follows, from the ontological ‘truism’ that ‘[a]ll social phenomena are, directly or indirectly, human creations’ (Watkins, 1952a: 28). Today, we know that the debate about methodological individualists was not over. With the recent upsurge of rational choice, a new wave of methodological individualism has swept the social sciences. One of the most influential advocates of this approach, Jon Elster (1986b: 66; 1989b: 13),3 has recently repeated Watkins’s claim that methodological individualism is trivially true, but since it is impossible for a methodology to be at all true, I suppose that Elster really means metaphysical, or ontological, individualism.4 J.W.N. Watkins was more correct on this point, at least, since he recognised that his truism is an ontological thesis rather than a methodological rule. But, as he later himself admitted (1952b: 186f), he was nevertheless wrong to assume that the latter follows from the former. Even if ontological individualism is trivially true, it does not follow that methodological individualism is the only, or even the best, way to explain all social phenomena (Lukes, 1968; Kinkaid, 1997: 4, 16f). As Ernest Gellner (1956: 176) put it some time ago, with respect to history: ‘History is about chaps. It does not follow that its explanations are always in terms of chaps’. Today, it is fairly common to accept ontological individualism, but deny methodological individualism.5 I am not going to argue against ontological individualism, here, but I deny that it is trivially true. It is only if stated in a trivial enough way, that ontological individualism is true, but this says little, or nothing, about the real issues involved in the debate about it (cf. Miller, 1978; 1987: 115). If, for instance, methodological individualism is only intended to deny that society is literally an organism endowed with a mind, or consciousness, which exists apart from the minds of individuals, then, it is of course true, but as Miller points out, even the archholist, Hegel, maintained that the world spirit is manifested in the actions of individual human beings and nowhere else.6 Also, to suggest that the ‘truth’ of methodological individualism is secured by the fact that social wholes are made up of individuals and their relations to one another is to beg the fundamentally important questions: ‘What is an individual?’ and ‘What is a social relation?’7 The issue between methodological individualists and their critics, then, is genuine, but this does not mean that the debate has always been about the real issues involved. Far from it. There has been too much confusion surrounding the meaning and implications of the two positions, for a really fruitful debate to take place. This sad fact, has, no doubt, contributed to create the impression of a sham battle. To an astonishing degree, the disputants have argued at cross-

Introduction

3

purposes, and without a manifest intention to understand the opposite point of view. There has been a marked tendency among representatives of both sides to misinterpret and misrepresent the ideas and arguments put forward by the other side. The reason for this is, probably, that the issue of methodological individualism versus collectivism and holism is felt to be important, not only for purely scientific, but for extra-scientific reasons as well (cf. Kinkaid, 1997: 2ff). First of all, it seems to be inextricably mixed up with some of people’s most entrenched, and most strongly-held beliefs about human nature and society. Second, these beliefs seem to be closely linked to their moral and political convictions. Third, there is clearly a connection with fundamental beliefs about science and its growth. Finally, there is a more crass reason for social scientists to have strong opinions about methodological individualism. It seems to have territorial implications. Many social scientists, especially sociologists, have, no doubt, rejected methodological individualism, because they believed that it implies psychologism, or the reduction of sociology to psychology. If so, methodological individualism would rob sociologists of their discipline. For all these reasons, the debate between methodological individualists and their critics has been more confused than usual in social science and philosophy. It may be maintained – and sometimes I have been inclined to think so myself – that the debate between methodological individualists and methodological holists concerns one of those eternal issues which will never be settled by social science, philosophy, or by any form of argument. If so, it is, of course, mere waste of energy to write a book about it. Now, obviously, this is not what I believe. While, I still think that the issue between individualists and holists might never be finally settled, once and for all, I do believe that it is possible to make some progress. The aim of this study is to bring some clarity about the meaning of one side of the divide: methodological individualism.8 This is much needed, since, as David-Hillel Ruben (1985: 132) has maintained: ‘methodological individualism has never been stated with enough clarity and precision to permit its proper evaluation’. Now, I do not cherish any illusions about what can be accomplished by way of remedy, but I do hope to be able to shed, at least, some light on this controversial doctrine. I will try to do so by writing the history of methodological individualism. As far as I can see, there is no other way to contribute to our understanding of a doctrine than by looking at the various statements and uses of it in the history of ideas; in this particular case, in social science and philosophy. Since no doctrine can reasonably be interpreted as the sum total of all statements about it, at first I imposed two criteria of adequacy: Statements about methodological individualism must be consistent, and the doctrine stated must be significant. By the latter criterion, I mean that methodological individualism must be stated in such a way that it fits those social scientific theories and approaches which are generally considered individualistic. While working with this book, I have decided to drop both criteria. The

4

Introduction

reason is that the idea of methodological individualism has developed in curious ways, and is hard to recognise these days. It would, of course, be possible to stick to the criterion of consistency and rule out what is not consistent with the original version of methodological individualism as being something else. When an increasing number of people begin to believe that this else is methodological individualism, however, this strategy becomes problematic. In this situation, I have decided to take a less essentialist approach and accept the development of new versions of methodological individualism, different from the original one, but, nevertheless, versions of methodological individualism. The criterion of significance is, of course, dependent upon that of consistency, but it is still possible to conceive of some social scientific theories as being paradigm cases of methodological individualism and other theories as being more or less individualistic, compared to these paradigmatic cases. There are several possible ways of approaching the task I have set myself. The most obvious way to proceed is, probably, to scan the literature for explicit statements of the doctrine of methodological individualism. Another way is to concentrate on the uses of methodological individualism in social science and history. There might be other ways, as well, but these are the ways I have followed. In order to clarify and, perhaps, justify the second route, I make a distinction between methodological individualism as a principle, or programme, of social research, and methodological-individualism-in-use; social science that is in line with this principle, or programme, without being explicitly based upon it. It is, of course, possible to suggest, or accept, theories that comply with the strictures of methodological individualism, without being committed to, or even be aware of this principle, or programme. If we have to do with theories rather than particular explanations, it is possible to speak of ‘theoretical individualism’, and if it is a general theory, of the ‘individualistic theory of society’. When I use these expressions, in this book, I understand pieces of social science, which qualify as methodological-individualism-in-use. This study, then, seeks the meaning of methodological individualism in the short history of this doctrine. Methodological individualism goes back to the nineteenth century, and the various attempts to lay the foundation of the social sciences. The individualist theory of society is much older, of course, but this is a topic I will treat in another book.9 How do I choose what to include in this history? Who are the main representatives of programmatic methodological individualism and which theories are paradigms of methodological-individualism-in-use? There is no certain way to decide these things and, in the end, you have to rely on previous knowledge and rules-of-thumb, as your main guides. A first rule I have tried to follow, is to concentrate on those social scientists and philosophers, who themselves are adherents of methodological individualism, to the exclusion of those who merely comment upon it, or criticise it. A second rule I have followed, is to pay most attention to those methodological individualists who are singled out as most important by the scientific and philosophical communities. ‘Most important’, in this case, means most cited in the literature. Equally, when it comes to method-

Introduction

5

ological-individualism-in-use. I have presented those theories and approaches which are commonly cited as individualistic and actually there is more agreement on this than on the exact meaning of methodological individualism. In order to illustrate the differences there are between various versions of methodological individualism, I am going to make use of some graphic representations (see Figure 1.1). More specifically, I will use a scheme I have borrowed from the philosopher Arthur Danto (1965a). As we shall see, many others have used similar schemes to represent the relations between individual and society, action and structure, or micro and macro. As I use Danto’s scheme there are two levels, representing the individual and society, respectively. The arrows represent the direction of explanation according to methodological individualism proper, or of causality in the case of ontological individualism.

Figure 1.1 A graphic representation of methodological individualism Source: Adapted with modification from Danto (1965a: 269)

A word of warning should be voiced immediately against interpreting this simple scheme too literally. Individualists and collectivists usually understand both individual and society in different ways. To assume that we can talk about the individual and society in a neutral way is, therefore, an illusion (Lukes, 1968: 123ff; Archer, 1995: 34ff). If necessary qualifications are made, however, I think the Danto’s two-level scheme is a useful tool for making the differences between various versions of methodological individualism visible. Two more clarifications need to be made before I get on to my real task. This study is all about the meaning of methodological individualism, and not at all about its merits, if any. This does not mean that I am, somehow, neutral in the debate between methodological individualism and its critics. I belong to the critics, even if I am far less critical of the recent, weak versions of methodological individualism than I am of the original, strong version. Even so, I have refrained from passing explicit judgement on methodological individualism in this work and I have tried, seriously, to give a fair account of its background, history and meaning. I hope that I have succeeded. Finally, I am a sociologist, interested in the other social sciences and in philosophy, but, nevertheless, a dilettante, outside my own discipline. I have tried to

6

Introduction

understand the intricacies of economics and philosophy, in particular, and I hope I have succeeded reasonably well, but I may, of course, have failed in some respect. If so, I hope that my failure does not seriously damage the overall quality of this work.

2

Background

The individualist theory of society has a long history in Western thought. Since I will try to tell this history in another volume, I will not go into details here. My purpose in this chapter is merely to provide a brief background to the rise of the specifically methodological version of individualism. For this purpose, I will first present the two main versions of the individualist theory of society which preceded methodological individualism; the theory of the social contract and the theory of spontaneous order, as it took shape in Adam Smith’s idea of the market as an invisible hand. This idea laid the foundation of economics and it is often assumed that classical economics was not only the first social science, but also the first example of methodological individualism. I am going to argue below that, as such, it was not an altogether clearcut example, although I agree, of course, that it was more individualistic than the views of most of its critics. Classical economics was mainly a British phenomenon, but in Germany, and to a lesser degree in France, there was a massive reaction against the individualism of the Enlightenment, of utilitarianism and of classical economics. The main expression of this reaction is the cultural movement known as Romanticism, whose most significant manifestation in the human sciences is German historicism. In France there emerged a doctrine which shared some elements with both British and German thinking, namely the positivist sociology of Auguste Comte. Methodological individualism emerged, I believe, as an individualist counterreaction to the anti-individualist reaction of German historicism and the sociologism of positivist sociology. If this belief is correct, it becomes necessary to include the latter two intellectual currents as important parts in any account of the background of methodological individualism.

The social contract The individualist theory of society goes back, as far as we know, to Greek Antiquity, where it was advanced, in particular, by the Sophists and by the Epicureans. The former invented the theory of the social contract and saw all social institutions as man-made conventions. The latter adopted the theory of the social contract and added to it an atomist metaphysics and a hedonist psychology. The individualist theory of society disappeared with Antiquity and was

8

Background

replaced by a more holistic and collectivist view of society in the Middle Ages. It reappeared in the Renaissance and culminated with the Enlightenment. The most important figures are Thomas Hobbes (1588–1679) and John Locke (1632–1704), at least from an individualist point of view. Of these, I believe Hobbes is the most important as a representative of a theoretical, and perhaps also methodological, individualism, while Locke is more important as a representative of political individualism. The point of departure of most theories of the social contract, and Hobbes’s theory is no exception, is the ‘state of nature’. In Hobbes’s version, the state of nature is characterised by a war of each individual against all other individuals. In such condition, there is no place for industry; because the fruit thereof is uncertain; and consequently no Culture of the Earth; no navigation, nor use of the commodities that may be imported by Sea; no commodious Building; no Instruments of moving, and removing such things as require much force; no Knowledge of the face of the Earth; no Account of Time; no Arts; no Letters; no Society; and which is worst of all, continual feare, and danger of violent death; and the life of man, solitary, poore, nasty, brutish and short. (Hobbes, [1651] 1968: 186). The reason for this sad state of things is that there is no law and no common power to fear. But why is there need for a power to fear? Do people abide by law only for fear of consequences? According to Hobbes: Yes! Human nature is such that individuals seek only their own gain, and above all, glory, without regard for others. Without a law to prevent them, they will invade one another in order to take what they want, or to prevent others from taking what they want. Happily, human beings are not only self-interested, they are also rational, and this is their salvation. Hobbes’s state of nature is no place you would choose to inhabit, if there were an alternative. Now, since human beings are rational they realise that they would all be better off in a state of society where there is law and justice and, therefore, peace. Hence, they enter a contract where they give up their natural right to everything and authorise an absolute sovereign to institute justice. This is a schematic version of Hobbes’s theory of the social contract. It is a theory, which is extremely individualistic, in the sense that it starts with natural, or pre-social individuals and explains the institution of society, or the state, solely in terms of the human nature of these individuals (Peacock, 1986: 11–13; Pizzorno, 1991). Since human beings, according to Hobbes, are rational egoists, it is possible to see his theory of the social contract as a piece of rational choice analysis (see, e.g., Hechter, 1989: 60). It has been suggested by Steven Lukes (1968: 119; 1973: 110) that Hobbes was also the first to articulate the principle of methodological individualist (see also Watkins, 1955b: 132f; [1965] 1973: 34), but this is more doubtful. The closest you get to an articulation of methodological individualism, in the writings of Hobbes, is his advocacy of the method of resolution and composition, which is similar to the synthetic method suggested by Friedrich von Hayek (see p. 117). After Hobbes, the theory of the social contract was propagated by Benedict

Background

9

Spinoza (1632–77), Samuel Pufendorf (1632–94), John Locke (1632–1704) and Jean-Jacques Rousseau (1712–78), among others. Of these, Spinoza and Rousseau were not individualists at all. Pufendorf was an individualist, but with some reservations. Locke, however, was certainly an individualist, but he was primarily a political individualist and only secondarily a theoretical individualist. Like Hobbes, Locke took his point of departure in the state of nature, defined negatively as the absence of government. He did not share Hobbes’s view of the state of nature as a state of war, however. When Locke turns to the state of nature in the second volume of Two Treatises of Civil Government ([1690] 1960), he depicts it as a state of freedom, equality and reason. According to Locke, reason is the law of nature telling every man ‘not to harm another man in his Life, Health, Liberty and Possessions’ (p. 311). When Locke returns to the state of nature later on in Two Treatises, however, he paints another picture, closer to that of Hobbes. It is now a state of uncertainty, where the individual is ‘constantly exposed to the Invasion of others’. This makes him willing to quit a Condition, which however free, is full of fears and continual dangers; And ’tis not without reason, that he seeks out, and is willing to joyn in Society with others who are already united, or have a mind to unite for the mutual Preservation of their Lives, Liberties and Estates, which I call by a general name, Property. (Locke [1690] 1960: 395) Once in the condition of society, individuals see its advantages and consent to put themselves ‘under an obligation to every one of that society’, and ‘to submit to the determination of the majority’ (p. 376). The social contract, or compact, of Locke, is not limited to the original contract and it need not be explicit. People may also give their tacit consent to a Government, which fulfils its chief end; ‘the preservation of their property’ (p. 395). The theory of the social contract, in one form or another, is the main theory of society before the eighteenth century. It is also the first paradigm of an individualist theory of society, or of methodological-individualism-in-use. Using a, nowadays, common, if problematic, way of representing the relation of individuals to society, as two distinct levels of reality and/or analysis, I suggest the following representation of the theory of the social contract.

Figure 2.1 The theory of the social contract

10

Background

The invisible hand After Locke, there was a break with the theory of the social contract, at least as a theory of society. Social theory developed in a less rationalist and less individualist direction. In France and Scotland, there emerged the insight that social institutions are not conscious inventions, but have developed gradually and unintentionally. In the terminology, recently made popular by Friedrich von Hayek, most social institutions are ‘spontaneous orders’. Following the Scottish philosopher Adam Ferguson (1723–1816), he maintains, that they are the result of human action, but not of human design (Hayek, 1948: 7). Among the most important critics of the theory of the social contract was another Scottish philosopher, David Hume (1711–76), who dismissed this idea as a mere fiction invented for political purposes ([1741/2] 1963: 452ff). The most important application of the idea that social institutions are the unintended consequences of the intentional actions of individuals would turn out to be the market. In this case there was a special twist to the idea of spontaneous order, because of its somewhat miraculous power of turning self-interested individual action into a collective good. The first to make this idea well known was the Dutch born physician Bernard Mandeville (c. 1670–1733), who moved to England and wrote his infamous Fable of the Bees (1714/29/32), with the more telling subtitle, Private Vices, Public Benefits. The argument of Mandeville is that many selfish and even some vicious actions, such as crimes, are turned into public benefits. The most famous use of the idea of spontaneous order, transforming private self-interest into collective benefit, is of course Adam Smith’s theory of the market working as if governed by an invisible hand. (1723–90). In The Wealth of Nations (1776), he suggested that an individual, while intending only his own gain, is in many cases ‘led by an invisible hand to promote an end [the public interest] which was not part of his intention’ ([1776] 1937: 423). It is common among more recent methodological individualists to trace this doctrine back to the idea of spontaneous order, as suggested by Bernard Mandeville, David Hume, Adam Ferguson and Adam Smith. The most wellknown example is Friedrich von Hayek, but he is not alone.1 It is my impression that this interpretation is most common among social scientists and philosophers who share a commitment to classical liberalism, which suggests a relation between methodological and political individualism. Be that as it may, those who trace the origin of methodological individualism to Mandeville and the Scottish philosophers have been anxious to point out that this version of individualism is, not only less rationalistic, but also less radical than that of the theory of the social contract. It is pointed out that the Scottish version of individualism takes its point of departure in the human individual as a social being, with a language and other social institutions. I agree with this interpretation, but suggest that this version of methodological individualism is different, not only from that implicit in the theory of the social contract, but also from all explicitly stated versions of this principle before Joseph Agassi suggested the principle of institutional individualism (cf. Song, 1995).

Background Society

Individual

11

Social institutions Prices

Market exchange

Figure 2.2 Adam Smith’s theory of the invisible hand

Classical economics The individual and isolated hunter and fisherman, with whom Smith and Ricardo begin, belongs among the unimaginative conceits of the eighteenth-century Robinsonades, which in no way express merely a reaction against over-sophistication and a return to a misunderstood natural life … Smith and Ricardo still stand with both feet on the shoulders of the eighteenth-century prophets, in whose imaginations this eighteenth-century individual … appears as an ideal whose existence they project into the past. Not as a historic result but as history’s point of departure. As the Natural Individual appropriate to their notion of human nature, not arising historically, but posited by nature. This illusion has been common to each new epoch to this day. (Marx, 1857–8: 83) This quotation is from the first page of Marx’s Grundrisse. A similar charge was made in the famous section on commodity fetishism in Capital, vol. 1 ([1867] 1976), where he observes that ‘political economists are fond of Robinson Crusoe stories’ (p. 169).2 Marx was not the only one and not the first to accuse political economists of excessive individualism. Similar accusations were part of the standard critique directed at classical economics from the quarters of German and English Romanticism.3 In his Past and Present (1843), Thomas Carlyle (1795–1881) had called economics ‘The Dismal Science’ preaching the ‘Gospel of Mammonism’ and reaching strange conclusions: We call it a Society; and go about professing openly the totalest separation, isolation. Our life is not mutual helpfulness; but rather, cloaked under due laws-of-war, named ‘fair competition’, and so forth, it is mutual hostility. We have profoundly forgotten everywhere that Cash-payment is not the sole relation between human beings; we think, nothing doubting, that it absolves and liquidates all engagements of Man. ‘My starving workers?’ answers the rich mill-owner: ‘Did not I hire them fairly in the market? Did I not pay them, to

12

Background the last sixpence, the sum covenanted for? What have I to do with them more?’ – Verily Mammon worship is a melancholy creed. (Carlyle [1843] 1965: 148f)

Carlyle was a conservative, but he was cited with approval by Marx and Engels in the Communist Manifesto ([1848] 1967: 82), and it is not hard to see why. There is a close affinity between the conservative and the radical, socialist critique of captalism in the nineteenth century. This is even more obvious in the writings of John Ruskin (1819–1900), who was also a conservative, but exerted a strong influence on the guild socialists. Ruskin took a more scholarly approach to economics than did Carlyle, and made a detailed, if not very pertinent, critique of the theories of Ricardo and John Stuart Mill. The ideal economy, for Ruskin, was that of the household, which is a moral economy, governed by moral principles of the organisation of labour and of the distribution of its fruits. Political economy, therefore, ought to be a moral science, rather than a catallactics, or theory of exchange (Ruskin, 1857–62).4 In the critique of political economy by Carlyle and Ruskin are mixed theoretical, political and moral considerations. Economics is both theoretically and morally individualistic and by moral individualism, is understood self-interest. This is typical of the nineteenth century. Usually, no distinction was made between theoretical and methodological considerations on the one hand, and political, economic and moral considerations on the other hand (cf. Sowell, 1974: ch. 1 and Vanberg, 1975: ch. 1). As we shall see, the term ‘methodological individualism’ was introduced to make the distinction between methodological and political individualism.5 The view that classical economics was individualistic is not a story made up by its critics, however. As we have already seen, it is common among defenders of methodological individualism to trace the origin of this doctrine to the Scottish Enlightenment and this tradition included Adam Smith, the acknowledged founder of classical economics and, therefore, the father of economic science. But were Adam Smith and the other classical economists methodological individualists? There is no clear answer to this question, for several reasons. First of all, the classical economists, before John Stuart Mill, did not engage very much in methodological discussion and not at all systematically (Sowell, 1974: 112). By the time of John Stuart Mill, however, classical economics had become individualistic. Smith, however, was not a radical individualist, like Mill, and it was only later that his model of the market as a spontaneous order was turned into a paradigm of strong methodological individualism. In the theory of general equilibrium, first suggested by Walras and more recently developed by Arrow and Debreu (among others), we find an economic theory without any social institutions. The individualism of classical economics was more political and economic than theoretical and methodological. The classical economists favoured a free market with limited government, but their view of society was not radically individualistic and they did not advocate an individualistic methodology. Their

Background

13

approach to society is more aptly described by the term ‘institutionalism’. It is true, though, that Adam Smith’s analysis of the market as if steered by an invisible hand, when stripped of the institutional element, has turned into a paradigm of an individualist theory of society, or of methodological individualism-in-use. Thomas Malthus’s (1766–1834) An Essay on the Principle of Population ([1798] 1970) seems to be rather different from Smith’s Wealth of Nations. The pessimistic argument of the book is based on two postulates: ‘First, That food is necessary to the existence of man. Second, That the passion between the sexes is necessary and will remain nearly in its present state’ (p. 70). From ‘these fixed laws of our nature’, together with some additional assumptions, Malthus arrives at the following conclusion: ‘Population, when unchecked, increases in a geometrical ratio. Subsistence increases only in an arithmetic ratio’ (p. 71). This is an extremely individualistic argument, without a trace of social institutions, or historical relativity. But appearances are deceptive. The word ‘unchecked’ is important, indeed. The laws about the increase of population and food, are subject to a ceteris paribus clause (pp. 112f). As a matter of fact, Malthus’ discussion is unusually rich with observations on social institutions, which counteract the tendency to shortage of food. It may also be pointed out that, despite appearances to the contrary, Malthus was not an advocate of an abstract-deductive approach to political economy. He was very careful to support his laws by empirical evidence and in his Summary View of the Principle of Population (1830) he maintains that they are inductive generalisations, derived from experience. But this was after the intellectual exchange with his friend David Ricardo. On the other side of the Channel, Jean-Baptiste Say (1776–1832) also defended a more inductive and more ‘holistic’ approach to economics. Without denying the utility of the abstract-deductive method, which he himself frequently used, he maintained that all principles of economics must be based, not on hypotheses, but on observation of facts and derived from these facts by induction ([1803] 1971: xxvf, lii). Like Malthus, Say criticised Ricardo for starting from abstract hypotheses and then reasoning in a straight line, without ever comparing his conclusion with observed facts. ‘From that instant nothing in the author’s work is represented as it really occurs in nature’ (p. xlvii). In order to be of practical utility, however, the science of political economy must be based on observed facts. Say’s economist par préference was Adam Smith and, like the latter, he was some kind of methodological institutionalist. He seems to have gone further in a holistic direction, however. Not only did he advocate the approach of social economy, but he obviously conceived of society as an organism of interrelated parts (Forget, 1999: 53ff). He did not, however, wish to include politics in the science of political economy. Economics is a science of the production, distribution and consumption of wealth, but not of the government, or state, conceived of as a household, writ large. Jean-Baptiste Say clearly did not contribute to making classical economics more methodologically individualistic. He was, however, an advocate of laissez-faire and Say’s law of the market,

14

Background

which says that markets are always cleared (Sowell, 1974: ch. 2),6 is an article of faith for most libertarian economists. It is fair to say, I believe, that economics became more individualistic with David Ricardo (1772–1823). At least, it became more abstract, and this led to a more individualistic approach, simply because it was social institutions and relations which disappeared in the process of abstraction. In the case of Ricardo, there is some justification for Marx’s complaint in the quotation above. Ricardo frequently places his abstract reasoning in ‘the early stages of society’ (Ricardo, [1817] 1973: passim), as if it were a fully fledged market society. It is this lack of historical insight which Marx objects to with some justice.7 It should be pointed out, though, that Ricardo is still looking at the distribution of wealth, as a matter of its division among the three classes in society: ‘the proprietor of the land, the owner of the stock or capital necessary for its cultivation, and the labourers by whose industry it is cultivated’ (p. 3). This makes it possible to talk about ‘the holism of the Classicals’ (Greaves, 1996: 2). Economics would definitely become more individualistic with the rise of the neoclassical school of economics. In 1820 Malthus published his Principles of Political Economy, partly as a reply to Ricardo, who had criticised his theory of rent. This is not my business, but besides this disagreement there is a more principal one concerning approach and method. Malthus sides clearly with Smith against Ricardo ([1820] 1989: 22f), and this means that he is sceptical about the excessive simplification and generalisation, which follows with using mathematics, or geometry, as a model for economic theory (pp. 1ff). He is also critical of the unwillingness of some economists to test their theories, but, nevertheless, to use them as guides to political practice. Malthus repeats these complaints in Definitions in Political Economy ([1827] 1971 1ff), where he also criticises Ricardo for breeding confusion by using familiar economic terms in unfamiliar ways (pp. 28–36). This critique of Ricardo’s way with words was echoed by Nassau Senior (1790–1864) in An Outline of the Science of Political Economy ([1836] 1965: 5), where he also repeated some other complaints, made by Malthus, against Ricardo. Senior shared Ricardo’s view of economics as an abstract-deductive science, resting on a small number of indubitable general propositions, from which inferences are drawn, which, if our logic is impeccable, are as true as the premises. According to Senior, inferences about the nature and production of wealth are universally true, whereas those about its distribution are affected by ‘disturbing causes’, in the form of ‘the peculiar institutions of particular countries’ (p. 3). But no matter how general and how true the economist’s conclusions, they do not authorize him in adding a single syllable of advice. That privilege belongs to the writer or the statesman who has considered all the causes which may promote or impede the general welfare of those he addresses, not to the theorist who has considered only one, though among the most important, of those causes. The business of a Political Economist is neither to recommend nor to dissuade, but to state those general principles, which it

Background

15

is fatal to neglect, but neither advisable, nor perhaps practicable, to use as the sole, or even the principal, guides in the actual conduct of affairs. (Senior [1836] 1965: 3) The voices of Malthus and Senior were two in a choir. The critique against Ricardo’s use of the abstract-deductive approach was massive, even from those who used such an approach themselves. There were mainly two charges: (1) Ricardo failed to see that abstraction is also simplification and (2) he made illegitimate use of his abstract theory as a basis for political recommendations, later called the ‘Ricardian Vice’ (Schumpeter, 1954: 472). It is commonly assumed that Ricardo owed his method to his close friend James Mill (1773–1836), while Mill owed his knowledge about economic matters to Ricardo (Hutchison, 1978: ch. 2). Against this view, Samuel Hollander (1985: 1) has argued that ‘[a] sharp distinction should be made between the methodological orientations of James Mill and David Ricardo’. While Ricardo never published anything substantial about the method of economics, Hollander maintains that he had a fairly sophisticated view of the nature and limitations of economic analysis in his unpublished writings (pp. 15–36). That, in fact, he did fully recognise that abstraction is simplification. According to Hollander, then, Mill is the one to blame, not Ricardo. In a forceful reply to Hollander, Hutchison (1994: 91) describes this view as ‘odd’, since it is to deny ‘plain fact’, ‘for which there is abundant evidence’. Allen Oakley (1994) grants that Ricardo may have been a more sophisticated methodologist than commonly believed (p. 132), but it remains the case that the public impression given by Ricardo to his contemporaries and immediate successors was that he espoused a severely abstractdeductive methodology as the one most appropriate to political economy’ (p. 134). There is no doubt whatsoever that James Mill was a champion of an abstractdeductive methodology, based on the model of mathematics, and used it without hesitation, as a basis of political recommendation. In the Preface to The Elements of Political Economy (1820b), it is written: ‘My object has been to compose a school-book of Political Economy, to detach the essential principles of the science from all extraneous topics, to state the propositions clearly and in their logical order, and to subjoin its demonstrations to each’ (p. 204). He goes on to draw an analogy between demonstrations in political economy and in mathematics, which says something about his view of economic theory. In the introduction he makes another analogy: ‘Political economy is to the State, what domestic economy is to the family’ (p. 210). This view of economics was later deemed seriously wrong by the Austrian methodological economists. Friedrich von Hayek called it ‘false individualism’ (pp. 119f ). If political economy is a matter of state, there must be a sharing of subject matter between economics and political science. But this is not all. According to Mill, there is also a sharing of approach. In his famous ‘Essay on Government’ (1820a), Mill used an economic approach to politics, much like the recent theory of public choice.8 Mill’s main source of inspiration was Jeremy Bentham, who

16

Background

provided his view of human nature: ‘We may allow, for example, in general terms, that the lot of every human being is determined by his pains and pleasures; that his happiness corresponds with the degree in which his pleasures are great, and his pains are small’ (pp. 55f). This is Bentham’s first assumption. His second assumption is that it is the business of government to maximise happiness in society. A more remote source of inspiration was Hobbes, who provided Mill with two more assumptions: (1) that the principal means used to maximise happiness are wealth and power, and (2) that individuals, unless prevented, will use their power to appropriate the wealth of others. The task of government, then, becomes that of preventing individuals from interfering with the property of others.9 The question Mill tried to answer in his Essay was this: What is the best form of government, on the assumption that it is made up of individuals, who pursue their own selfish ends? The answer he reached differed from that of Hobbes. Instead of an absolute sovereign, Mill recommended a representative system. But then the original question reappears. There can be no doubt, that, if power is granted to a body of men, called Representatives, they, like any other men, will use their power, not for the advantage of the community, but for their own advantage, if they can. The only question is, therefore, how they can be prevented? In other words, how are the interests of the Representatives to be identified with those of the community? (Mill [1820a] 1978: 75) The answer Mill came up with was a form of representative democracy, which, however, excluded women on the ground that their interests are included in that of their fathers or their husbands, as the case may be (p. 79). Mill’s essay was bound to create controversy. The conservatives disliked it, because they rejected any form of democracy and those more radical than Mill himself – eventually including his own son John Stuart Mill – were disappointed with his exclusion of women. The most effective critique came from the historian Thomas B. Macaulay (1800–59), in a famous article in Edinburgh Review (1829). Macaulay’s critique was directed, not at this or that conclusion, but at the approach as such – an approach which, according to Macaulay, makes it possible to reach any conclusion whatsoever: ‘Our objection to the Essay of Mr Mill is fundamental. We believe that it is utterly impossible to deduce the science of government from the principles of human nature’ ([1829] 1978: 124). What proposition is there respecting human nature which is absolutely and universally true? We know of only one: and that is not only true but identical [tautological]; that men always act from self-interest. This truism the Utilitarians proclaim with as much pride as if it were new and as much zeal as if it were important. But in fact, when explained, it means only that men,

Background

17

if they can, will do as they choose. … If the doctrine that men always act from self-interest, be laid down in any other sense than this – if the meaning of the word self-interest be narrowed so as to exclude any one of the motives which may by possibility act on any human being, – the proposition ceases to be identical; but at the same time it ceases to be true. (Macaulay [1829] 1978: 124f) Macaulay’s argument made a deep impression upon the younger Mill, who also was disappointed with the reply of his father (Mill [1873] 1961: 96f). By the time of Macaulay’s attack, John Stuart was already in a state of mental crisis, due, at least partly, to increasing doubts about his inherited worldview. The theory, method and politics of Benthamite utilitarianism no longer seemed to provide all the answers. Macaulay’s article was the last nail in the coffin of his father’s absolute intellectual authority. What escaped the notice of both Macaulay and John Stuart Mill, however, is the fact that James Mill did not derive his conclusions from assumptions of human nature alone. Equally important for his argument are the institutional arrangement; monarchy, aristocracy, democracy, different voting rules, etc., within which the play of individual interest takes place. The approach of James Mill was that of institutional individualism. It is arguable that John Stuart’s psychologism was more individualistic than the geometric method of James Mill. Eventually John Stuart would reject the geometric method altogether, and especially in politics, where he came to believe that the assumption of economic man simply does not work (see p. 47). Before he reached this conclusion, however, he wrote his classic article ‘On the Definition of Political Economy and the Method of Investigation Proper to It’ (1836). In this article, the younger Mill still believed that the abstract-deductive method of economics, and the other social sciences, is strictly analogous to the geometric method of Euclides. Unlike the elder Mill, however, he did realise, with perfect clarity, that abstraction is also simplification and, as a corollary, that abstract-deductive theories are inadequate guides to political action, and the more abstract, the less adequate. In the article ‘On the Definition of Political Economy’ Mill made a clear distinction between economics as a science and as an art: ‘Science is a collection of truths; art, a body of rules or directions for conduct’ (1836: 410). Political economy is a science, not to be confused with the art of domestic economy. More specifically, it is a moral – or psychological – science (p. 414). As such, it depends on the laws of mind, or human nature, but not upon these alone. According to Mill, we must distinguish between the individual (1) in isolation from other individuals, (2) in interaction with other individuals and, (3) ‘as living in a state of society, that is forming part of a body or aggregation of human beings, systematically co-operating for common purposes’ (p. 417). Mill calls the science of (3) ‘social economy’, or the ‘science of politics’. Political economy is not social economy, however, ‘but a branch of that science’.

18

Background It does not treat of the whole of man’s nature as modified by the social state, nor of the whole conduct of man in society. It is concerned with him solely as a being who desires to possess wealth, and who is capable of judging of the comparative efficacy of economic means for obtaining that end. It predicts only such of the phenomena of the social state as take place in consequence of the pursuit of wealth. It makes entire abstraction of every human passion or motive, except those which may be regarded as perpetually antagonizing principles to the desire of wealth, namely, aversion to labour and desire of the present enjoyment of costly indulgences. These it takes, to a certain extent, into its calculations, because these do not merely, like other desires, occasionally conflict with the pursuit of wealth, but accompany it always as drag or impediment, and are therefore inseparably mixed up in the consideration of it. (Mill [1836] 1950: 420)

This is the first clear statement of the character and methodological role of economic man in the history of economic thought. Mill’s next step is to maintain that this is the procedure of political economy, not because ‘any political economist was ever so absurd as to suppose that mankind are really thus constituted, but because this is the mode in which science must necessarily proceed’ (p. 421). Even so, the assumption of wealth maximisation, is a fairly good approximation to the truth about men and women in their economic endeavours. Mill goes on to deny that political economy is based on induction. It is, on the contrary, essentially ‘an abstract science’ and its method is ‘the method a priori’ (p. 424). Just like geometry starts from an arbitrary definition of a line, political economy starts from an arbitrary definition of man. They are both equally removed from reality and their conclusions are only true ‘in the abstract’ (p. 425). Mill defends the use of the geometric method in social science, by pointing out that experiments are not feasible. I still find it a bit surprising that he saw the geometric method as the only alternative to experiment, especially, since he goes on to acknowledge the existence of disturbing causes (pp. 429ff) and to argue that because of them, the operation of laws in society give rise to tendencies only. In geometry, there are neither causes, nor tendencies. Except for the misleading analogy with geometry, Mill’s characterisation of political economy stands out as the first really adequate attempt to grasp the nature of economics as a science. In his most important work on the method of science, A System of Logic (1843), Mill abandoned the view that political economy uses a geometric method and in his Principles of Political Economy (1848), he departed from a strict use of the abstract-deductive method. Instead of neglecting disturbing causes, he frequently introduced them in his analysis. One example is his discussion of the division of the produce, which is said to be ‘the result of two determining agencies: Competition and custom’ ([1848] 1976: 242). The final statement of the method of classical economics is J.E. Cairnes’s The Character and Logical Method of Political Economy (1875), which is a work largely

Background

19

based on the position of Mill. Cairnes defends political economy against enemies, such as Comte, and he defends the Ricardian abstract-deductive version of economics against the alternative conceptions of Say and Senior. He is very emphatic about the importance of the ceteris paribus clause in the case of all economic laws ([1875] 1965: 61ff) and he seems to believe that the laws of economics depend upon those of physics and psychology (pp. 52, 72). Sometimes he also includes institutions among the facts that are given to economic analysis. In the considerations just adduced, we may perceive what the proper limits are of economic inquiry – at what point the economist, in tracing the phenomena of wealth to their causes and laws, may properly stop to consider his task as completed, his task as solved. It is precisely at that point at which in the course of his reasonings he finds himself in contact with some phenomenon not economic, with some physical or mental fact, some political or social institution. So soon as he has traced the phenomena of wealth to causes of this order, he has reached the proper goal of his researches; and such causes, therefore, are properly regarded as ‘ultimate’ in relation to economic science. Not that they may not deserve and admit of further analysis and explanation, but that this analysis and explanation is not the business of the economist – is not the specific problem which he undertakes to solve. (Cairnes [1875] 1965: 53f) This quotation is interesting mainly because it is a fairly clear – maybe the first – statement of what economists today would call exogenous variables, or givens. From my point of view, however, it presents a problem: like John Stuart Mill, Cairnes clearly senses the importance of social institutions for the functioning of the market, but, like the former, he is not equally clear about their role in economic analysis and explanation. As I have already said, he usually mentions only the physical and mental facts and laws on which, not only economics, but ‘historical, political and, in general, social investigation’ depend. Political economy belongs ‘neither to the department of physical nor to that of mental inquiry’, but occupies ‘an intermediate position’. The phenomena it investigates depend on ‘physical, physiological, and mental causes’ and are explained by ‘the concurrence of physical, physiological, and mental laws’ (p. 52). The conclusion I draw from these statements is that Cairnes believed that social institutions can be explained by the physical, physiological and mental laws. If this interpretation is correct, Cairnes – like Mill – was a psychologistic, rather than an institutional individualist (see pp. 218–27).

German historicism It has been pointed out, that the French and the British saw history as the advance of civilisation, whereas the Germans, with characteristic disdain for

20

Background

science and capitalism, saw themselves as the carriers of culture (Elias [1939] 1968: 3–34). This particular manifestation of German nationalism, would survive well into the twentieth century and reached a peak during the First World War (Kusch, 1995: 212ff). As a nation characterised by its culture, the Germans attached great value to the humanities and especially to history. Because of this, the dominating approach to man and society in Germany was historicism. There is a certain confusion surrounding the term ‘historicism’ (Iggers, 1995). According to the well-known view of Karl Popper, it denotes ‘an approach to the social sciences which assumes that historical prediction is the principal aim, and which assumes that this aim is attainable by discovering the “rhythms” or the “patterns”, the “laws” or the “trends” that underlie the evolution of society’ (Popper, 1957: 3). But this is not what most people understand by ‘historicism’. One problem with Popper’s view, is that it includes many philosophers and historians from Antiquity to the Enlightenment, who also saw history as a law-bound process, but who did not manifest the most typical marks of ‘historicism’, such as historical relativism. The solution to this puzzle is that Popper made a distinction between ‘historicism’ and ‘historism’ (p. 17). What most people today understand by ‘historicism’ is what Popper, in accordance with an earlier convention, called ‘historism’. In this second sense of ‘historicism’, is denoted a doctrine which emphasises the historicity and individuality of human beings and societies. ‘The essence of historism is the substitution of a process of individualising observation for a generalising view of human forces in history’ (Meinecke, [1959] 1972: lv).10 All social phenomena, such as languages, myths, laws, customs, social institutions, even man herself, are products of history. As such they differ between times and places. Since human beings also change with history, historicism rejects the idea, defended most strongly in Great Britain, of a constant human nature. In this chapter, I want to add a third meaning to the term ‘historicism’. ‘Historicism’, as I use this term, also means a reduction, or subordination, of other disciplines to history. This form of ‘historicism’ was a distinctive feature of the human sciences in nineteenth-century Germany. Philosophy, economics, jurisprudence, linguistics, were dominated by historical schools and, more or less, transformed into historical sciences. Theoretical economics had no place at all in this intellectual milieu. Sociology was also resisted, but less so than economics. As I have already mentioned, German historicism did not share the French adoration of science and technology, but, above all, it rejected the positivist claim of unity of method between the human and the natural sciences. But what about psychology? Before I turn to this question, I will give a brief sketch of the development of German historicism, because it was this doctrine, or some of its elements, that methodological individualism was created to defeat. It should be pointed out at the beginning, however, that methodological individualism, as an explicitly stated principle of social science, emerged in a milieu dominated by German historicism, and adopted many of its ideas. In a rich and fascinating study of Carl Menger and the Origins of Austrian Economics (1990), Max Alter argues that the largely unknown roots of Austrian Economics are in

Background

21

German historicism and Romanticism. I find his argument, on the whole, convincing and recommend Part I of his book as a somewhat richer presentation of German historicism than the one I give here. The roots of historicism are to be found in Romanticism, and in the beginning there was an almost complete overlap between the two movements. Romanticism, of course, was broader, since it included literature and the arts. It is a commonplace to see Romanticism as a reaction against the Enlightenment. If the latter was characterised by rationalism, mechanism, individualism and utilitarianism, the former was a manifestation of irrationalism, vitalism, collectivism and culturalism. Against rationalism it emphasised emotion and will, against mechanism it posited life and organicism, against individualism it cherished the reality and value of nation, state and community and against utilitarianism it posited the Greek ideals of autonomy, virtue and self-realisation. A common source of Romanticism and historicism is the philosophy of history of Johann Gottfried Herder (1744–1803). In a prize-winning ‘Essay on the Origins of Language’ (1772), he criticised the Enlightenment view that language is the result of an agreement to use words in certain ways ([1772] 1966: 100f). Language is the result of organic growth (p. 113). ‘Least of all is it agreement. An arbitrary convention of society’ (p. 119). In his first important contribution to the philosophy of history, Auch eine Philosophie der Geschichte zur Bildung der Menscheit (1774), he poured scorn and irony on the philosophy of history of the French Enlightenment and its belief in linear development, progress and ultimate superiority of European civilisation ([1774] 1967 102). Against this view, Herder maintains that each people, like each individual is a unique individuality, which cannot be compared to other peoples (pp. 41, 61). All peoples, however, are part of humanity and contribute to its culture. Despite his humanism, Herder is most famous as the father of nationalism. In his main work, Reflections on the Philosophy of the History of Mankind (1784–91), he maintains that ‘every nation is one people, having its own national form, as well as its own language: the climate, it is true stamps on each its mark … but not sufficient to destroy the original national character’ ([1784–91] 1968: 7). ‘Time, place, and national character alone, in short the general cooperation of active powers in their most determinate individuality, govern all the events that happen among mankind’ (p. 159). Herder is often mentioned together with the Italian philosopher Giambattista Vico (1668–1744), because of the similarity of their views of history and society. Vico was the first to grasp clearly the differences between nature and history and, therefore, also between the methods used in the two sciences. Among other things, Vico maintained that we understand what is created by human beings, in a way different from the way we understand nature (see Berlin, 1976: xvi–xix). The reason for this is that human beings express themselves in their creations. There is no constant human nature, however, but humanity changes with the course of history. This means that we must understand each human creation as the expression, not only of a particular human being, but above all, of a human being belonging to a particular culture at a particular time and in a particular

22

Background

place. The fact that social institutions, like law, language, government, etc, are human creations, does not mean that they are constructions, made by design. Vico was a critic of the theory of the social contract. Like Mandeville, though independent of him, he argued that social institutions and nations are the unintended consequences of intentional human activity. Following Aristotle, he maintained that they grow, like organisms; that they are natural growths. All these ideas were shared by Herder, especially the idea of ‘expressionism’, to borrow a useful term from Isaiah Berlin. ‘Expressionism [is] the doctrine that human activity in general, and art in particular, express the entire personality of the individual or the group, and are intelligible only to the degree to which they do so’ (Berlin, 1976: 153). What led Herder to adopt and develop this idea, was his interest in the origin and development of languages and their various uses, especially in poetry (pp. 169–72). It is in language, above all, that we find the character, spirit, or soul, of a people (Volksseele), or what we, nowadays, call its culture (pp. 194–9).11 The idea of natural growth was also to become of tremendous importance in German historicism. It was shared by the conservative founder of the Historical School of Law, Friedrich, Karl von Savigny (1779–1861), who insisted that law is, or should be, the result of historical development, not of rational construction and by his student Karl Marx, who constantly maintained that society is a natural growth (naturwüchsig). In The Vocation of Our Age for Legislation and Jurisprudence (1814), written in the wake of French occupation, Savigny rejects all attempts to introduce the Code Napoleon in German legislation. He is also concerned about the foreign element of Roman law. German law must be based on German legal tradition. The reason is that, like in the case of language, there is an ‘organic connection of law with the being and character of the people … Law grows with the growth, and strengthens with the strength of the people, and, finally dies away as the nation loses its nationality’ ([1814] 1975: 27). The main task of German jurisprudence is the study of German customary law, which must be the basis of all German law. ‘We shall then possess a truly national law; and a powerful expressive language will not be wanting to it. We may then give up the Roman law to history, and we shall have, not merely a feeble imitation of the Roman system, but a truly national and new system of our own’ (p. 154f). It may be pointed out that this, originally holistic, view of social institutions, was adopted by the methodological individualists Carl Menger and Friedrich von Hayek, who both suggested individualistic models of the growth, or evolution of, social institutions. An important role in the development of German historicism must also be assigned to German idealist philosophy and, in particular, to the philosophy of Hegel (1770–1831). In his Philosophy of Right (1821), Hegel maintained that ‘The state is the actuality of the ethical idea’ ([1821] 1967: 155) and of ‘concrete freedom’ (p. 160). As such, it ‘has supreme right against the individual, whose supreme duty is to be a member of a state’ (p. 156). The theoretical justification for this subordination of the individual to the state is that the state is an organism, such that each member is a part of this organic whole and depend

Background

23

upon the other parts for his/her existence and thriving. This is the ‘organic’, or, as it is sometimes called, the ‘metaphysical’ theory of the state, which was common to Romanticism and idealist philosophy, and which was eventually adopted also by most historians. Hegel’s theory of the state was part of his philosophy of history, which owes a lot to the ideas of Herder. Before the state, there is the people and a people is a ‘spiritual individual’, which expresses itself in ‘its religion, its cult, its customs, its constitution and political laws, the whole scope of its institutions, its events and deeds. This is its work: This one people. People’s are what their deeds are’ (Hegel, [1837] 1953: 89f). Each people has a history of its own and passes through different stages, according to a principle of differentiation, which turns each spirit into a particular national spirit. Each national spirit, in its turn, is only a moment in the development of the ‘world spirit’ towards self-consciousness, absolute knowledge and freedom. The idealist theory of the state as an ethical idea was adopted by the most famous of all German historians and historicists, Leopold von Ranke (1795–1886). Most people probably think of him as an ‘empiricist’ historian who introduced the critical method to the discipline in the form of new and more severe standards of documentary evidence and who saw the task of the historian as finding out how it really was (wie es eigentlich gewesen). But Ranke was also a defender of the idealist and metaphysical theory of the state as ‘a spiritual reality’ (Ranke, [1836] 1973: 110), ‘a living thing, an individual, a unique self ’ (p. 112). Because of the role of historians and of historicism in the creation and consolidation of the German nation-state, it is possible to see the former as its servants and the latter as its ideology (Iggers [1968] 1983: 17–28). Ranke was the head of its conservative branch. Due to the importance attached to the state in nineteenth-century Germany, economics took the form of political economy, or Nationalökonomie. ‘For the German economists the symbiosis of state and economy was self-evident’ (Tribe, 1988: 5). Because of the strength of historicism in the German universities, economics assumed the form of history. In Germany, the Historical School dominated economics well into the twentieth century, or until the Nazis seized power. The founder of the Historical School of Economics, was Wilhelm Roscher (1817–94). Other members of the Older Historical School, were Bruno Hildebrand and Karl Knies. The Older Historical School adopted some of the typical ideas of historicism, in general. According to Roscher, for instance, the national economy is an organism, and the task of political economy (Staatswirtschaft) is to find the law of development of this organism (1843: 4). Towards the end of the nineteenth century, there emerged a Younger Historical School in Economics, with Gustav Schmoller as its head. Other members were Lujo Brentano and G.F. Knapp. The Younger Historical School had thrown off most of the romanticist baggage, but retained the view of economics as political economy. It was characterised, above all, by detailed empirical investigation of economic institutions. The German Historical School of Economics was to

24

Background

become the immediate object of attack for the Austrian methodological individualists.12 To sum up my presentation of historicism, so far, I suggest that it comprises the following holistic doctrines: I Organicism: The state and/or society is conceived of as an organism. This idea has two elements: (1) Organisms are wholes, where each part depends for its existence and functioning upon the other parts and upon its place in the whole. This doctrine is the traditional opposite of the individualist theory of the state and society. (2) As other organisms, social institutions and societies grow. The implications of this idea are not clear, however. According to one idea of organic growth (2a), it implies that history is irrational and unpredictable, because there is novelty in the development of life. According to a second idea of organic growth (2b), it implies Aristotelian teleology. Like natural organisms, societies originate as germs, or embryos, and grow until they reach their fully developed form. For some organicists, development is arrested at the stage of perfection, for others, societies also decay and die. Still others, understand by organic growth (2c) only spontaneous development. This is the thesis that social phenomena are the unintended consequences of human activity. There is also the idea of philosophy of history that history has a goal and/or meaning. This idea is not necessarily associated with organicism, but is more theological in origin. While organicism, tends to be materialistic, philosophy of history tends to be idealistic. It conceives of history as the development of mind, spirit, or reason. This view of history, brings me to the second important idea of early historicism: II Objective idealism: Like the natural organism of an individual human being has a mind, the social organism has a mind of its own. The ideas and values of a people (Volk) are expressed in their language, customs, laws, constitution, myths, literature, etc. All these social institutions are but various expressions of the soul, or spirit, of the people. In the well-known case of Hegel, objective idealism takes the form of a teleological philosophy of history, but this is an exception. Most versions of objective idealism, are content to point out the historical and geographical variability of folk spirits, but refrain from forcing them into a pattern of development, or succession. The main legacy of Romanticism, then, was holistic, but there was also, especially in the early phase, a fairly strong tendency of individualism. German individualism, however, was different from French and British individualism and the difference is caught very well by Georg Simmel ([1917] 1950: 81), who calls the latter quantitative and the former qualitative. As the term ‘qualitative’ suggests,

Background

25

German individualism highlights the individuality and uniqueness of human beings, rather than their equality. Because it tends to give pride of place to great individuals, or personalities, it has also been called ‘aristocratic’ individualism (Köhler, 1922: 48). Aristocratic individualism is both methodological and ethical: as a methodology, it assigns an important role to great individuals in historical explanation; as an ethic, it assigns more value to great individuals than to lesser ones. In Germany, qualitative individualism was represented, in particular, by Goethe, Schiller and Wilhelm von Humboldt, and, later, by Friedrich Nietzsche, but it also influenced some British philosophers and historians, such as Coleridge and Carlyle, and, to some extent, also John Stuart Mill (see p. 44). I find it convenient to divide qualitative individualism in three forms: political, historical and expressive. I Political individualism: While liberalism in Great Britain and France was characterised by quantitative individualism, the German version of liberalism was distinguished by qualitative individualism. In The Limits of State Action (1791–2) Humboldt saw political individualism, in the form of a minimal state, as a precondition for the free development of individuals, as did many other leading figures of German Romanticism. According to George G. Iggers ([1968] 1983: 7ff, 40ff), it was the experience of French dominion and the wars of liberation (1792–1815), which turned most German intellectuals, including Humboldt, into nationalists and defenders of a strong state. The historian Johann Gustav Droysen is a case in point, but also Max Weber would be an example. II Historical individualism: Historicism inherited, from Romanticism, the admiration of great individuals and personalities, and a corresponding contempt for, or at least lack of interest in, the destiny of the common people, or ‘masses’, as they were commonly called. This historical individualism originated in Germany, but it is best epitomised by the Briton Thomas Carlyle, who wrote in his On Heroes, Hero-Worship and the Heroic in History: ([1841] 1975: 239, 235, 266) that ‘the history of the world is but the biography of great men’. Historical individualism was opposed by many historians – especially Marxists – and there ensued an intense debate about the role of the individual in history. III Expressive individualism: I will end my short presentation of historicism, with a note about method. Historicism was, from the very beginning, closely associated with the study of language and this is probably the reason for the importance attached to the hermeneutical method, or art of interpretation. Vico had suggested that we understand human creations better than nature. Also Herder,

26

Background

had mentioned Einfühlung as a way to understand human expressions. The most important founder of hermeneutics, however, is the great theologian Friedrich Schleiermacher (1768–1834). He developed hermeneutics into an astonishingly sophisticated art of interpretation, to which I cannot here, of course, do justice. An important point for my purposes is that he made a distinction between subjective, psychological interpretation and objective grammatical interpretation of language. ‘Understanding has a dual direction, towards the language and towards the thought’ and ‘[n]either language nor the individual as productive speaking individual can exist except via the being-in-each-other of both relationships’ (Schleiermacher [1809–10] 1998: 229). Both types of understanding are contextual: ‘every utterance has a dual relationship, to the totality of language and to the whole thought of its originator’ (Schleiermacher [1809–10] 1998: 8). The consequence of this is the famous hermeneutic circle: ‘The vocabulary and the history of the era of an author relate as the whole from which his writings must be understood as part, and the whole must, in turn, be understood from the part’ (p. 24). There is a hermeneutic circle also on the psychological side (pp. 90ff), but both moments rest on knowledge, not on intuition, or empathy, even though he admits that some people have a ‘talent for knowledge about individual people’ (p. 11). Wilhelm von Humboldt was also an important pioneer in the study of language, but his idea of hermeneutics is more romantic than was that of Schleiermacher. Humboldt pays lip service to Ranke’s view of the historians’ task, which is to ‘present what actually happened’ ([1821] 1967: 57), but actually, he is against this view. According to Humboldt, literal truth is strictly impossible. The reason for this is that the essence of truth is hidden from observation. When all the facts are collected, there remains the intuitive understanding of their ‘inner causal nexus, on which, after all, their inner truth is solely dependent’ (p. 58). Humboldt’s account of the historians’ task is suggestive, but impressionistic. It is not clear, for instance, what ‘inner truth’ refers to: if it is the subjective truth of the individuals acting in history, if it is some kind of objective truth inherent in their creations; a work of art, a system of ideas, or a historical event, or if it is the inner truth of the historian. One thing is clear, however: according to Humboldt, the task of the historian involves an important element of artistic creativity. Among professional historians, it was Johann Gustav Droysen (1808–84) who, more than anyone else, tried to develop the method of verstehen in history. Droysen was engaged in a two-front war against the critical method of Ranke, on the one hand, and the scientific history of Buckle, on the other hand. A liberal like Humboldt, Droysen was opposed to the conservative Ranke for political reasons. In the eyes of Droysen, Ranke’s critical method would reduce history to a sterile concern with mere facts, thereby robbing it of its role in the education (Bildung) and emancipation of mankind (MacLean, 1982). A similar concern, made him reject also the scientific history of Comte and Buckle. The problem with scientific history is that it is deterministic and aims at prediction.13 Once again like Humboldt, Droysen saw history as an art, not as a science.14 The method of verstehen was launched in opposition to both critical and scientific

Background

27

history, as a way of introducing moral agents, or subjects, in history (cf. Burger, 1978). Droysen made a distinction between nature and history in terms of the categories of space and time. The method of the natural sciences is explanation (erklären), that of history, understanding (verstehen) (Droysen [1858] 1977: 22, 150f). History deals with the traces left by human beings. Every such trace left is the expression of an individual “I”, but, nevertheless, an individual possible to understand. ‘With human beings … we have an essential kinship and reciprocity of nature: every “I” enclosed in itself, yet each in its utterances disclosing itself to every other’ (pp. 121f). The impression created by this translation is that Droysen’s method of verstehen is radically individualistic. This is not the case, however. For Droysen, psychological interpretation is only the third, of four, forms of interpretation. The other three, are (1) pragmatic interpretation, (2) interpretation of conditions and (4) interpretation of moral forces and ideas ([1858] 1977: 149ff). Of these, the first and third are clearly individualistic, while the second and fourth are not. Pragmatic interpretation is concerned with instrumental action; what the historical remains reveal about the ends of historical actors, while psychological interpretation digs deeper into their personalities. The conditions of action include, among other things, social institutions, while moral forces and ideas include cultural entities like religions, ideologies and worldviews. There is nothing to indicate that Droysen saw social institutions and cultural phenomena as psychic, or, in any other way, individualistic, as did some later advocates of the method of verstehen. On the contrary, Droysen is safely anchored in the tradition of historicism, collectivism and holism (Iggers [1968] 1983: 110ff; MacLean, 1982: 355).

Positivist sociology In France, the dominating approach to the scientific study of ‘man’ and society was positivist sociology. The first positivist sociologist, of some importance, was Henri St Simon, who is the source of many ideas, including that of a coming industrial society.15 More important, however, was his secretary Auguste Comte, who introduced, not only the terms ‘positivism’ and ‘sociology’, but also that of ‘altruism’. By ‘positivism’, Comte understood a science based upon observation of facts, as distinguished from religion based upon faith and metaphysics based on speculation. According to his famous law of the three stages, religion is the first, metaphysics the second, and positive science the third stage in the development of the human mind. ‘Sociology’ is the highest, but also the least developed and least exact, in the hierarchy of the sciences: mathematics, astronomy, physics, chemistry, biology and sociology. The reason sociology is the least developed and the least exact is that it deals with the most complex phenomena. Except for this, however, there is no gulf between natural science and social science. Their methods are essentially alike. Comte’s positivism, then, is a methodological monism. It may be noted that, neither economics, nor psychology is part of Comte’s

28

Background

ladder. The reason economics is missing is that Comte saw it as part of sociology; the all-encompassing science of society as a whole. The mistake of economics is to analyse the economy in isolation from the rest of society and from its history (Comte [1836–42] 1974: 446–50). It may be noted that Comte’s critique of economics is not directed at Adam Smith, who is mentioned with great admiration. Since I am partly engaged in a terminological survey, it may also be noted that Comte uses the term ‘spontaneous order’, made famous by Friedrich von Hayek and in a similar manner, to designate those social phenomena, including the market, which are not consciously designed.16 The term ‘altruism’ was also introduced with an eye on economics and the assumption of rational egoism, or self-interest. If the altruistic instincts did not exist in us, the mutual services that this activity of industry calls out would certainly not be able to create them. Were this dismal hypothesis a true one, the reciprocal assistance of man to man would never become gratuitous, and the only moral influence that this aid would have, would be to develop a constant prudence of interest. (Comte [1851–4] 1975: 407) Psychology fares even worse than economics, since it has no place at all in Comte’s system. A first reason for this is that the mind is unobservable and therefore inaccessible to positive investigation. A second reason is that the self is multiple rather than unitary. The idea of an I, or a self is a fiction created by religion and metaphysics. According to Comte ([1836–42] 1974: 3, 380ff), there is nothing in between the biological and social organism. Psychology is an ideology and, as such, superfluous. The affective and intellectual faculties it is used to explain is better explained by (phrenological) physiology. Psychology, then, is reducible to physiology. But only partly. Human beings are social beings and the main bulk of human action is part of society. What cannot be explained by physiology, therefore, must be explained by sociology. In addition to being a physiological reductionist, then, Comte was a sociological reductionist; the founder, not just of sociology, but of sociologism. Like many other social theorists in the nineteenth century, Comte conceived of society as an organism and like most of them, he saw the social organism as a whole which must be investigated as such: ‘viewing each element in the light of the whole system’ (p. 462). Sociology is divided in two branches: statics and dynamics, the former concerned with the mutual interdependency of the parts of the social organism and the latter with its development or growth. Social statics, or the theory of spontaneous order, seeks laws of coexistence, or harmony, while social dynamics seeks the laws of succession of social phenomena. The raison d’être of sociology lies in the historicity of social phenomena. At the beginning of history, social phenomena may be explained in terms of human nature alone. As soon as human beings have been modified by social develop-

Background

29

ment, however, this is no longer possible. Biological reductionism, therefore, is wrong. ‘The consequence of this error is that social modifications proper to certain periods, and passing away with them, are too often supposed to be inherent in human nature, and therefore indestructible’ (Comte [1836–42] 1974: 488). This argument has lost none of its topicality. It seems to be the main message also of the various versions of contemporary social constructionism. The reason, adduced by Comte, for the variability of human nature is the more dated. Human beings have become social beings and must be understood as part of the social organism. Comte does not reject all use of the laws of human nature in sociology. Since human nature does set limits to the variability of social phenomena, no law arrived at by way of historical induction can be allowed to contradict the ‘known laws of human nature’. This argument, in particular, appealed to John Stuart Mill, who made it the basis of his inverse-deductive, or historical, method. Comte’s organicism and his argument about the historicity of social phenomena is similar to that of German historicism (see pp. 20–22), but he is less interested in the spiritual, or cultural, side of society. His law of the three stages is about the development of knowledge, but there is no place for concepts like ‘folk soul’ and ‘national spirit’ in his sociology. The main difference, between them is that Comte was a positivist, preaching unity of method, whereas the German historicists saw the human sciences as entirely different from the natural sciences. Because of this, Comte was actually a main target of attack from historicist quarters. For the purposes of this book, however, the similarities are more important than the differences. Like the German historicists, Auguste Comte was a methodological holist, and as such both were common targets for the attacks of methodological individualists. It may be added that he was not an economic, or political individualist either and this contributed to his unpopularity among methodological individualists.17 According to Comte, the market may be spontaneous, but it is not self-regulating. If left to itself, it leads to chaos rather than order. This was one reason why Comte supported a big government, engaged in large-scale social engineering; in technocracy, if not in bureaucracy.18 A final note on positivism and the science of statistics.19 Comte, himself, saw no use for statistical, or other mathematical, methods in positivist sociology. He believed that social phenomena are too complex for mathematical treatment, and criticised Condorcet for failing to see the limits of mathematical analysis, including the probability calculus, in social science ([1819–26] 1974: 166–74; [1836–42] 1974: 492–4). But there were others, such as the Belgian statistician Lambert A.J. Quetelet (1796–1894) and the English historian Henry Thomas Buckle (1821–62), who saw the possibility of using statistics for the purposes of a positivist sociology and history. Quetelet was a pioneer in statistics and especially in its use to register moral phenomena. Following St Simon and Comte, he called his moral statistics, social physics. Quetelet is famous for his idea of the Average Man, which was much criticised, because it was believed that he failed to see that the Average Man is a

30

Background

fiction. Actually, Quetelet was aware that the Average Man is a ‘fictitious being’ ([1835] 1842: 8), but he obviously believed that averages tell us something important about ‘man in general’ and about society. Quetelet was also among the first to observe the astonishing constancy of many statistical phenomena, such as crime and suicide rates. Above all, he was among the first to collect a large body of statistical data to demonstrate such regularities. Quetelet was not satisfied, merely to register statistical regularities, he wanted to explain them, and his explanation was sociological: Society includes within itself the germs of all the crimes committed, and at the same time the necessary facilities for their development. It is the social state, in some measure, which prepares these crimes, and the criminal is merely the instrument to execute them. Every social state supposes, then, a certain number and a certain order of crimes, these being merely the necessary consequences of its organisation. (Quetelet [1835] 1842: 6) According to Quetelet, the crime rate depends upon social institutions, and this is encouraging, since it is possible to change social institutions in a way that reduces the number of crimes. Buckle’s views on statistics can be found in his History of Civilization in England (1858). In this work he appears as a follower of Comte and Quetelet, attempting to demonstrate that history, like the natural sciences is subject to necessity and, therefore, law-governed. His main argument for this thesis is the regularities found in moral statistics. These regularities, according to Buckle (pp. 20ff), force us to conclude that the actions of men are determined by the state of society and, therefore, subject to social laws. His main example is the apparently individual act of suicide, which exhibits such an astonishing regularity in the aggregate – a fact which led Buckle to reach the following dubious conclusion: In a given state of society, a certain number of persons must put an end to their own life. This is the general law; and the special question as to who shall commit the crime depends of course upon special laws; which, however, in their total action, must obey the large social law to which they are subordinate. And the power of the larger law is so irresistible, that neither the love of life nor the fear of another world can avail any thing towards even checking its operation. (Buckle, 1858: 25f) Buckle was not alone to be fascinated by statistical regularities and the suicide rate, in particular, had a powerful grip on the minds of nineteenth-century social scientists. The most famous study is, of course, Emile Durkheim’s Suicide (1897), ‘the masterpiece of nineteenth century statistical sociology’ (Hacking, 1990: 64).20 Before I turn to Durkheim, however, I will stay in Britain for a while. Early positivist sociology was mainly a French affair, but it is common to

Background

31

include also the British sociologist Herbert Spencer among its ranks. Spencer, himself, protested against being associated with Comte and published a list of Reasons for Dissenting From the Philosophy of M. Comte (Spencer [1864] 1984: 23). He did not deny, however, being a ‘positivist’ in a more general sense of that term. Spencer’s main quarrel with Comte was political. Being a radical individualist in matters political and economic, Spencer did not at all fancy the political part of Comte’s positivist programme (pp. 18f, 23f). In sharp contrast to Comte, Spencer was a supporter of a free market society watched by a minimal state.21 In this respect, Spencer had much more in common with another critic of Comte, Friedrich von Hayek. Another cause of dissension was Comte’s dismissal of subjective psychology as an important science in itself, and as an indispensable basis of sociology (Spencer [1864] 1984:10).22 According to Spencer, ‘psychological truths underlie sociological truths, and must therefore be sought by the sociologist’ ([1873] 1961: 348). No one indeed, who is led to dwell on the matter, can fail to see how absurd is the supposition that there can be a rational interpretation of men’s combined actions, without a previous rational interpretation of those thoughts and feelings by which their individual actions are prompted. Nothing comes out of society but what originates in the motive of an individual, or in the united similar motives of many individuals, or in the conflict of the united similar motives of some having certain interests, with the diverse motives of others whose interests are different. (Spencer [1873] 1961: 348f; see also [1864] 1984: 15) This seems to be a fairly clear statement of psychologism cum methodological individualism, but perhaps it is not clear enough. A problem with Spencer is that he also emphatically endorsed the idea of society as an organism (Spencer, 1860).23 As I have already indicated, this idea is almost unanimously conceived of as holistic and as the very opposite of methodological individualism.24 In the literature about Spencer, it is a recurrent allegation that there is a conflict between his individualism on the one hand and his organicism on the other. An extensive survey of these allegations can be found in Gray (1985) and Taylor (1992), who both argue that it is possible to save Spencer from contradiction. In a second and much extended work, Gray (1996) accepts that there are a number of apparent tensions both between his methodological individualism and organicism (ch. 2) and between atomism/mechanism and organicism in his theory of society (ch. 5). Even so, he argues (ch. 14) that most of these tensions are, indeed, more apparent than real, since they are due to conceptual ambiguity. A problem with this controversy is that the authors do not always distinguish clearly between ontological, methodological and political issues. For my part, I agree that there is no necessary conflict between political individualism and organicism. Even if most organicists are political collectivists, it is possible to combine organicism with political and economic individualism, and Herbert

32

Background

Spencer is, indeed, the primary example of this unusual combination.25 It is important to observe the difference between those who say that the state is an organism and those who say that society is an organism. The individualists are to be found among the latter and they usually have a leaning towards conservatism. There is an unintentional ‘wisdom’ in the organically grown traditions and in the working of the spontaneous order of the market, which cannot be achieved, only ruined, by political means. Of special importance for Spencer’s pro-market attitude was his view that the social organism lacks a consciousness of its own. Only individuals have consciousness (Spencer [1860] 1982: 397). The particular wisdom of the market lies in the spontaneous co-operation of individuals with specialised knowledge. This view foreshadows Hayek’s famous argument about the role of knowledge in a market economy (cf. Taylor, 1992: 143).26 Concerning the conflict between methodological individualism and organicism, I see more of a problem, even if I agree that it is always possible to formulate these doctrines in a way that makes the conflict disappear (see Gray, 1985: 246–53; 1996: ch. 14). I am not convinced that Spencer can be saved in this way, but my interest is not in the consistency of his position. I am interested in the question of whether or not he was a methodological individualist, and on that point I find myself in agreement with Ellen Frankel Paul (1988): ‘That Spencer was a methodological holist is, I think, beyond question’ (p. 443). She adds that ‘elements of methodological individualism can be discerned in some of Spencer’s writings but it must be considered a minor element’ (p. 444). After Spencer, positivist sociology returned to France. The most important figure was Emile Durkheim, who praised Spencer for going further than Comte in spelling out the details of the organism analogy. Like Spencer, Durkheim saw society as a spontaneous order, but he credits the economists with being first to suggest this idea. They [the economists] were the first to sense all that is living and spontaneous in societies. They understood that collective life could not brusquely be established by some clever artifice; that it did not result from an external mechanical impulsion but is slowly elaborated in the very heart of society. In this way they were able to ground a theory of liberty on a foundation more solid than a metaphysical hypothesis. In effect, it is obvious that if collective life is spontaneous, it must not be deprived of its spontaneity. Any fetter would be absurd. (Durkheim [1888] 1978: 48) Here agreement ends, however. According to Durkheim, Spencer made the mistake of believing that self-interested individuals could engage in peaceful exchange, without a system of rights and duties to regulate their behaviour. I do not believe, this is an altogether fair critique of Spencer, but it is certainly fair to say that Spencer was much more pro-market than Durkheim, who saw an important role for state in economic life (see Udehn, 1996: 354–7). Durkheim’s agreement with the economists is also limited to the idea of spon-

Background

33

taneous order. Economics is the individualist social science, par excellence, and, like most sociologists, Durkheim is the very opposite: a methodological holist, who sees methodological individualism as a serious defect.27 I will quote a passage at some length, because I believe it gives a clear and concise picture of economics that is fairly typical among sociologists. According to them [the economists], there is nothing real in society but the individual. Everything emanates from him, and it is toward him that everything converges. A nation is only a nominal entity; it is a word which serves to designate a mechanical aggregate of juxtaposed individuals. But it has no specific properties that distinguish it from other things. Its properties are those of the elements that compose it, merely enlarged and amplified. The individual is, therefore, the only tangible reality that the observer can get at, and the only question which science can set for itself is to investigate how the individual should conduct himself in the principal circumstances of economic life, given his nature. Economics and, more broadly, social laws, are not, then, very general facts which the scholar induces from the observation of societies, but logical consequences deduced from the definition of the individual. The economist does not say, ‘Things happen in this way because experience has established that fact.’ Rather he says, ‘Things should happen in this way because it would be absurd if it were otherwise.’ The word natural should therefore be replaced by the word rational, which is not the same thing. If only this concept of the individual, which is supposed to contain in itself the entire science, were adequate in reality! But in the attempt to simplify things, the economists have artificially impoverished the concept. Not only have they ignored the circumstances of time, place, and country in order to conceive of man’s abstract type in general, but in this ideal type itself they have neglected everything which does not bear upon strictly individual life to such an extent that, passing from abstraction to abstraction, nothing is left but the sad portrait of an isolated egoist. (Durkheim [1888] 1978: 49) Durkheim’s description of economics is, I believe, representative of the view of a majority of sociologists and (economic) historians in the nineteenth century. To some extent Durkheim’s view may be based on that of Comte, but it owes much more to his reading of Adolf Wagner, Gustav Schmoller and other economists belonging to the German Historical School (see Durkheim [1887] 1993: 58–77; [1888] 1978: 59ff). But is it a fair description, or is it the prejudice of an ignorant sociologist? The answer, I believe, is that Durkheim paints a largely correct picture of economics, at least at the end of the nineteenth century. It should be added, though, that what is a vice to the typical sociologist is a virtue to the typical economist. Durkheim seems to have shared Comte’s sociologistic view that economics is best conceived of as a part of ‘general sociology’ (Durkheim [1909] 1978: 83).

34

Background

He also shared some of the latter’s dismissive attitude towards psychology.28 He did not, however, deny it a place in the hierarchy of sciences. ‘In succession, physics and chemistry, then biology and finally psychology have been established’ (Durkheim [1888] 1978: 47). He even admitted that sociology depends upon psychology. He emphatically denied, however, that sociology is reducible to, psychology. It was the merit of Comte to have established the fact that society is like a living organism and, as such, ‘something more than a collection of individuals. A whole is not identical to the sum of its parts, even though without them it would be nothing’ (p. 50). Or in other words: ‘for Comte society was a being sui generis’ (p. 54). Durkheim adopted this view of society. For him, social facts are sui generis and, therefore, irreducible to facts about individuals. More specifically, social facts have two characteristics: (1) they are external to individuals and (2) have coercive power over them (p. 51; see also Durkheim, [1895] 1982: Ch. 1 and 1898). This does not mean, however, that social facts exist outside all individuals taken collectively. Durkheim’s argument is that they are external to each single individual. Nevertheless, from these characteristics of social facts, Durkheim derives the methodological rule that social facts must be explained in terms of other social facts, not in terms of facts about human nature ([1895] 1982: 134). Using the scheme I borrowed from Arthur Danto (see Introduction, p. 5), it is possible to represent Emile Durkheim’s methodology in the following way:

Figure 2.3 Emile Durkheim’s rules of sociological method

Vertical arrows represent Durkheim’s methodological rule that social facts are external constraints on individual behaviour, while horizontal arrows represent the rule that social facts must be explained in terms of other social facts. His famous explanation of the differences in suicide rates between countries is described, by himself, as horizontal, but James Coleman (1986a: 347f) has argued that it is better represented by the vertical arrows. I tend to agree with Coleman. Since Durkheim wants to explain an aggregated macro-phenomenon – namely differences in suicide rates, in terms of social facts such as solidarity and social control, it is clear that these social facts really act upon individuals (Durkheim [1897] 1951: 297ff), who decide to commit, or not commit suicide. In comparison with Comte and Spencer, Durkheim moved away from

Background

35

organicism towards idealism. What makes social facts sui generis is not that society is an organism, but that it has a collective consciousness (Durkheim [1900] 1973: 13; [1911] 1974: 93). The source of this change is probably Durkheim’s visit to Germany in the 1880s, where he was exposed to Völkerpsychologie and to Wilhelm Wundt’s empirical approach to ethics (Durkheim, 1887). There is, in fact, strong reason to believe that Durkheim derived most of his view of social facts from Wundt (Gisbert, 1959; Hall, 1993: 37–51). One idea, in particular, has been assumed to derive from Wundt; that of ‘creative synthesis’ (Ginsberg, 1956: 45). Just as life emerges out of the association of molecules in the cell and mind from the combination of physiological processes in the brain, social facts emerge as a result of the interaction of individual minds.29 Before Wundt, the idea of creative synthesis was used by John Stuart Mill, under the name of ‘mental chemistry’, to argue that new ideas emerge in the mind of individuals, but it was Wundt who used it to explain the emergence of social facts (see p. 61). Another source of Durkheim’s holism was the view of the statistician Quetelet, who led him to see in the stability of various statistical measures over time a sign of the existence of social facts. His own study of Suicide (1897) strengthened him in this belief and led him to argue that the suicide rate ‘is not simply the sum of independent units, a collective total, but is itself a fact sui generis, with its own unity, individuality and consequently its own nature – a nature, furthermore, dominantly social’ ([1897] 1951 46). Before leaving Durkheim, it is important to point out that when he maintains that sociology is irreducible to psychology, he intends individual psychology, of which he has a rather narrow view. It seems to be restricted to a concern with human beings as unaffected by society. As soon as they turn into social beings, they become the subject matter of sociology. Durkheim has no objection at all to calling sociology a form of ‘social’, or ‘collective psychology’ and therefore, in a broader sense, a proper part of psychology (see, e.g. Durkheim [1895] 1982: 249f; [1897] 1951: 312; [1898] 1974: 34). Because of this, and some other considerations, Lorenzo Infantino (1998: ch. 5) asks the question: ‘Is an “Individualistic” reading of Durkheim possible?’ Given the fact that Durkheim is probably the most often cited representative of collectivism and holism (see, e.g. Pratt, 1978: 112ff; Rosenberg 1988: 118ff; Pettit [1993] 1996: 132ff), this question might seem absurd, but I do not think it is. At least not with respect to ontological individualism. Having made this admission, I had better add that I also believe that an individualistic reading of Durkheim, even if not absurd, is ultimately wrong, and it is not possible with respect to methodology. Durkheim was certainly not a methodological individualist. Not all French sociologists joined the sociologistic camp. Durkheim’s fiercest critic, Gabriel Tarde was among the founders of social psychology and a defender of psychologism in sociology. On this issue he sided with Mill against Comte (Tarde [1898] 1969: 77ff). He was also critical of Quetelet’s social physics (Tarde [1890] 1962: 114ff) and the organicism of Spencer. His main target, however, was Durkheim. According to Tarde, Durkheim’s argument that social facts are sui generis, implies their existence in some Platonic heaven over and

36

Background

above individual human beings ([1894] 1969: 114ff). In a debate with Durkheim in 1903, he is reported to have said: Does Mr. Durkheim think that social reality is anything other than individuals and individual acts or facts? ‘If you believe that,’ said Mr Tarde, ‘I understand your method, which is pure ontology. Between us is the debate between nominalism and scholastic realism. I am a nominalist. There can only be individual actions and interactions. The rest is only a metaphysical entity, mysticism’. (Tarde, [1904] 1969: 140) In contradistinction to Durkheim, Tarde maintains that ‘it is imitation which is the elementary and universal social fact’ ([1898] 1969: 54). All social phenomena are transmitted not collectively, but individually, ‘from one individual – parent, teacher, friend, neighbour, comrade – to another’. This is not to deny, however, that the collective result often is fairly constant. According to Tarde, it is this fact which ‘gives rise to Mr Durkheim’s ontological illusion. For there is no doubt that it is veritable scholastic ontology that the learned writer is undertaking to inject into sociology in place of the psychology he opposes’ ([1894] 1969: 115). ‘To sum up the question which I began by asking: What is society? I have answered: Society is imitation. We have still to ask: What is imitation? Here the sociologist must yield to the psychologist’ ([1890] 1962: 76). Tarde, then, reaches the same conclusion as did Mill, and it is possible to see in the laws of imitation an attempt to realise Mill’s unfinished project of a science of ethology (see pp. 45f ). Tarde, then, is highly critical of Durkheim’s idea of social facts sui generis and, it might be added, of his associated idea of a ‘collective consciousness’, which is distinct from the individual consciousness of human beings. According to Tarde, there is nothing but individual consciousness. This does not imply, however, that there is nothing but individual psychology. Sociology is collective, or social, psychology, even if it depends on individual psychology. Collective psychology, inter-mental psychology, that is sociology, is thus possible only because individual psychology, intra-mental psychology, includes elements which can be transmitted and communicated from one consciousness to others, elements which, despite the irreducible hiatus between individuals, are capable of uniting and joining together in order to form true social forces and quantities, currents of opinion or popular impulses, traditions or national customs. (Tarde [1898] 1969: 95) In the debate between Durkheim and Tarde, it eventually turned out that also the former saw sociology as a kind of social psychology. Does this mean that there is no important difference between their respective versions of sociology? I believe there is, but I am not going to argue this point here. It may be added, though, that Tarde was critical of other aspects of positivist sociology, as well,

Background

37

and, especially, of its organicism and historicism ([1898] 1969: 77ff). While it would be absurd to call Emile Durkheim a ‘methodological individualist’, it seems fair enough to attach this epithet to Gabriel Tarde. I have suggested that sociology emerged, at least in part, as a holistic reaction to the individualistic discipline of economics. If so, what was the position of Vilfredo Pareto, who was both a neoclassical economist and a classical sociologist? It is often assumed (see e.g. Boland, 1982: 27ff), as more or less self-evident, that Pareto was a methodological individualist – maybe because it is simply taken for granted that a neoclassical economist has to be a methodological individualist – but I wish to cast some doubt upon this seemingly self-evident truth. Some things suggest that Pareto was, indeed, a methodological individualist: (1) his denial of the possibility of interpersonal comparisons of utility is typical of methodological individualists, at least in the Austrian tradition. (2) His famous Pareto optimality has become part and parcel of political individualism. (3) His critique of conceptual realism and leaning toward nominalism (Pareto, [1916] 1963: 31f, 1094ff), point in the direction of ontological individualism. But there are other indications pointing in the opposite direction. In his first important book, Cours d’Economie Politique ([1896] 1976), Pareto dresses his theory explicitly in organicist language, usually associated with social holism, and social evolution is an important theme. In his later works, organicism gives way to a theory of the economic system, as part of a larger social system, and evolution becomes a less prominent theme. Still, there is much that points in the direction of social holism. Pareto was a fierce critic of theories dealing with the origins of social institutions (see, e.g., Pareto [1909] 1972: 17f), as did the theory of the social contract and some of the Austrian economists. Instead of the causal-genetic approach, he favoured theories of functional interdependence. Pareto’s main units of analysis were the economic system and the larger social system. The main elements of these systems are ‘residues’ (motives) and ‘derivations’ (beliefs) inhering in individual human beings (pp. 1433ff), but residues and derivations are partly social facts (pp. 33, 71–4). According to Pareto, they are individual, from one point of view, and social from another. Investigating whether moral sentiments have an individual or social origin is useless. The man who does not live in society is a very unusual man, one who is almost, or rather entirely, unknown to us. And a society distinct from individuals is an abstraction which does not correspond to anything real. Consequently, all the sentiments which are observed in a man living in society are individual from one point of view, and social from another. (Pareto [1909] 1972: 71) The fact that we deal with individua by no means implies that a number of individua taken together are to be considered a simple sum. They form

38

Background compounds which, like chemical compounds, may have properties that are not the sum of the properties of their components. (Pareto, [1916] 1963: 32)

This is the doctrine of emergence, typically used by holists, such as Wundt and Durkheim, to defend their position. It recurs in Pareto’s discussion of the composition of social forces, where he suggests that some composition effects are analogous to mechanical resultants, while others are analogous to the compounding of chemical elements (pp. 1446ff). Much like Durkheim, Pareto argues that these emergent social facts are objective and external to individual human beings. He also accepts the reality of social groups and makes a distinction between individuals and the positions they occupy in the social structure. There is, thus, quite a lot that goes against an interpretation of Pareto as a programmatic methodological individualist.

Holism and collectivism Methodological individualism has been opposed to a large number of nominally different doctrines, but most commonly to methodological collectivism and holism. In the early stages of its development, especially in the case of Austrian methodological individualism, it was usually opposed to collectivism. In the later stages of its development, methodological individualism has been increasingly contrasted with methodological holism. This change, which is due mainly to Karl Popper, was not possible until J.C. Smuts introduced the term ‘holism’ in his book Holism and Evolution (1926). I think it is possible to make a distinction between collectivism and holism, which may be worth keeping in mind throughout the rest of this book. In the doctrine of emergent evolution, which was a source of inspiration for both Smuts and Durkheim, these two root ideas are combined. The suggestion is that new phenomena, such as life, individual consciousness, and ‘folk souls’ emerge as a result of the organisation of parts into wholes, by way of creative synthesis. Holism is the term here coined (from olos = whole) to designate that wholeward tendency in Nature, this fundamental feature of ‘wholes’ in the universe … Every organism, every plant or animal is a whole with a certain internal organisation and a measure of self-direction, and an individual specific character of its own … beyond the ordinary domain of biology it applies in a limited sense to human associations like the state, and to the creations of the human spirit in all its greatest and most significant activities. (Smuts [1926] 1936: 96) Genuine wholes differ from mere aggregates by being more than the sum of their parts. ‘A whole which is more than the sum of its parts, has something internal, some inwardness of structure and function, some specific inner relations, some internality of character or nature which constitutes more’ (Smuts

Background

39

[1926] 1936: 101f). The difference, then, is that the parts of genuine wholes are internally related. This makes them different also from mechanical composites, whose parts are only externally related. ‘It is the very essence of a whole that while it is formed of its parts, it in turn influences the parts and affects their relations and functions. This reciprocal influence underlies the internality or interior character of the whole’ (p. 103). The picture of the world painted by the doctrine of emergent evolution is that of the universe as a hierarchic order of different levels, where each level has emerged from, but is supervenient upon, and irreducible to, the level immediate below. We have a progressive superposition of level on level. Higher kinds of relatedness – chemical, vital and conscious – are each in turn supervenient on those that stand lower in the scale; but they do not supersede them in the sense that, when some higher kind of relatedness comes, the lower kinds go. (Morgan, 1923: 278) According to the idea of social holism, society is the highest level of organisation in this hierarchic order. It is supervenient upon, but irreducible to, human individuals and their actions. This is the meaning of Emile Durkheim’s claim that society is sui generis. Actually, however, there are two distinct, though related claims made by Durkheim and by most social holists and both claims can be traced back to German Romanticism. In the section on German historicism, above, I made a distinction between organicism and objective idealism. According to the first doctrine, societies are wholes made up of interdependent and functional parts. If we assume that the parts of societies are individuals, the relation between individuals, according to organicism, is that of part-whole. According to objective idealism, on the other hand, social organisms have minds, or souls, which are expressed in their language, customs, laws, literature, etc. In this case, the relation between individuals and folk souls is not that between part and whole, but rather something they have in common, something they share. The relation here is more akin to that of particular-universal. Emile Durkheim’s distinction between mechanic and organic solidarity was an early attempt to catch this difference (Durkheim, 1893: 70ff). More recently, Philip Pettit ([1993] 1996: chs 3–4) has suggested that the opposite of individualism is collectivism, but not holism, which is instead the opposite of atomism. I agree with Pettit that there is a difference between collectivism and holism, but I do not agree with his rendering of this difference.30 The ideas of social organisms and social minds are metaphors, which were soon abandoned by social scientists, although they remain as root ideas about social life, even in contemporary social science. Organicism turned into structural-functionalism, which combines two holistic ideas: structure and function. The ideas about folk souls, national spirits and collective consciousness have turned into the social scientific idea of culture. Now, I suggest that it is possible to make a distinction between holism and collectivism. Holism is the idea that there are wholes made of social parts, which

40

Background

are interrelated in a way that makes them different from a mere aggregate and irreducible to the parts taken in isolation. Collectivism is the idea that individuals have something in common which turns them into a collective. The most common form of collectivism is ‘idealistic’. Individuals are supposed to share a culture that is common to the group to which they belong. But collectivism may also derive from structuralism. In this case, individuals are supposed to form a collective by virtue of the fact that they occupy the same position in the social structure. This is the Marxist case of class analysis. Holism and collectivism often combine into entities which are both wholes and collectives. All organisations, for instance, tend to be both: the wholes made up of parts (this is the meaning of organisation), but they also tend to develop a common culture and typically they act in common. To this extent, they are also collectives. A simple illustration of the distinction between wholes and collectives, would be this:

Figure 2.4 Social wholes and collectives

Having made this distinction between collectivism and holism, I immediately announce that I intend not to use it, unless it is called for by the circumstances or purpose at hand. Throughout this book, I am going to use the term ‘holism’ to refer both to collectivism and holism.

3

Psychologism in early social science

Methodological individualism, as a programme in social research, goes back to the nineteenth century, and the various attempts to lay a foundation for the social sciences. The rise of a specifically methodological version of individualism at this particular time probably had much to do with the divorce of the various social sciences from philosophy, and their establishment as academic disciplines at the universities of Europe and the USA. To turn the individualist theories of society into a methodological rule, principle, or programme for social scientific analysis answered a deeply felt need for philosophical justification. As we have seen in chapter 2, there existed at the beginning of the nineteenth century one social science; economics, and this science was largely individualistic. Other approaches to society, such as German historicism and French positivist sociology developed, partly, as reactions to the individualism of economics. Methodological individualism is, I suggest, a reaction to this reaction. In the nineteenth century, philosophers and social scientists started to reflect on the proper methodology of the social sciences, and the issue of individualism versus collectivism in social science was one of the most hotly debated. The nineteenth century was also characterised by the emancipation of the various human sciences from philosophy and their further differentiation into a number of academic disciplines fighting for a territory of their own. In particular, the relation of psychology first to philosophy and second to the various human sciences was a matter of much concern, and it was closely intertwined with the issue of individualism versus collectivism. Since psychology is the science of human individuals, it is only natural that methodological individualism should take the form of a requirement or suggestion that the human sciences must be based on psychology. It is the thesis of this chapter that individualism, as a methodological principle or programme for social research, arose in the nineteenth century and made its first appearance in the form of psychologism. The term ‘methodological individualism’ did not appear until the twentieth century. There is little agreement about the meaning of the term psychologism.1 For my purposes, it is a form of reductionism. Some other theory or discipline is reducible to, or at least heavily dependent upon, some form of psychology. I leave the term ‘reduction’ undefined in this chapter (see chapter 11 for a more

42

Psychologism in early social science

detailed discussion), except to say that I understand it in a broad sense to include both complete and partial reduction. Most often, in the nineteenth and early twentieth century, it was philosophy that was supposed to be reducible to psychology. We may call this version ‘philosophical psychologism’. My interest, however, is in psychologism with respect to the human sciences: the thesis that they are reducible to psychology. This thesis might be called ‘scientific psychologism’. These two versions of psychologism are analytically distinct, but not independent. Many psychologicists have endorsed both and some anti-psychologicists have defended the autonomy of both philosophy and social science and for a similar reason. The methodological individualist Karl Popper, for instance, would be one example (see pp. 202–10). For him, the existence of a third world, or world 3, of objective ideas makes both philosophy and the social sciences autonomous vis-à-vis psychology. ‘Psychology’, in its turn, may also mean different things (see pp. 331–36), but for the purposes of this chapter, I suggest that psychology is whatever putative knowledge we have of the minds and behaviour of individual human beings. On the basis of this broad view of psychology, I suggest that there are three forms of psychologism in social science: (1) scientific psychologism, which claims that all social phenomena can be explained by and all social laws deduced from, psychological laws, existing or potential; (2) folk psychologism, which maintains that all social phenomena can be explained by mental phenomena and/or human actions, and (3) ontological psychologism, which maintains that social phenomena are made up of, or constituted by, mental phenomena and/or human actions. Psychologism as an approach to philosophy, including social philosophy, is as old as individualism and, for obvious reasons, closely related to it. Psychology, for all its diversity, is a theory about the mental states and/or behaviour of individual human beings. Virtually all individualist theories of society, therefore, have been based upon some ‘psychological’ view of human nature. Actually, there is one view of human nature, in particular, which has dominated the history of individualism: the view of man as a rational egoist. This theory is really the conjunction of views of human nature: the Aristotelian idea of ‘man’ as a rational animal and Epicurean hedonism. This view of human nature was the psychological foundation of the theory of the social contract. It was eventually adopted and baptised as economic man (see Myers, 1983). A second psychological theory of considerable importance in the history of social thought is the suggestion that our beliefs result invariably from the association of ideas. This theory was held by most British empiricists and is an important part of David Hume’s theory of knowledge, in particular. The most elaborated version of associationist psychology is to be found in James Mill’s Analysis of the Phenomena of the Human Mind (1829).2 As we shall see in later chapters, these two psychological theories, or views of human nature, are far from dead. On the contrary, they are very much part of the short history of methodological individualism; the first, as part of economics and eventually of rational choice theory in all social sciences; the second because it is part of John Stuart Mill’s psychologism and the forerunner of behaviourist

Psychologism in early social science

43

psychology, which was the psychological foundation of George Homans’s methodological individualism (see pp. 190–96). The doctrine of psychologism made its first appearance in the nineteenth century along with the discipline of psychology, and immediately became a matter of heated controversy. An important reason for this was, no doubt, the competition between representatives of the various academic disciplines for recognition and resources at a time when these disciplines were institutionalised at the universities in Europe and the USA (Kusch, 1995). Important as it is, however, this is not the only reason. There were also a number of genuine questions concerning the proper content and methods of the emerging social scientific and humanistic disciplines at issue. My interest in this chapter is mainly in psychologism as a doctrine which maintains that the foundation of the human sciences is to be found in psychology. As I have already suggested, this version of psychologism may be seen as the first form of the principle of methodological individualism in the social sciences. Following the methodological individualist Karl Popper, we may call it psychologistic methodological individualism. Its origin is in Great Britain and the first social science it conquered was economics. In the latter half of the nineteenth century, the centre of psychologism was in Germany, where its main impact was on the humanities and eventually on sociology.

British psychologism I have mentioned two psychological theories in the history of social thought: hedonism and associationism. Both of them had their strongest hold in Great Britain. I think it is fairly safe to suggest that before the nineteenth century at least Great Britain was the main seat of psychologism. In no other country was the interest in human nature more intense. Psychology was at the centre of discussion, both among the British moralists and of the early social scientists. The conviction of most British social philosophers was that there is a universal human nature, constant over time and all over the world. The only problem was to find out exactly what this universal human nature is. John Stuart Mill John Stuart Mill is often mentioned as an exponent of psychologism, both in philosophy and in the social sciences. My interest is in the latter, viz., his view that social laws can and should be reduced to psychological laws. This view is generally considered a form of methodological individualism.3 Indeed, the methodological individualist Karl Popper ([1945] 1966: 88–99) has appointed Mill to being the main representative of ‘methodological psychologism’, which is according to him, an extreme and untenable form of methodological individualism. Popper’s follower Joseph Agassi (1960) has suggested the term ‘psychologistic individualism’, to designate the position Popper ascribed to Mill. Lorenzo Infantino (1998: 45–7) makes a distinction between the two, but I

44

Psychologism in early social science

suppose he would not deny that psychologism is a form of methodological individualism. George Homans, however, is a methodological individualist who equates the two doctrines. Maybe that is because he is the only recent methodological individualist who was clearly indebted to John Stuart Mill? As a philosopher, Mill was deeply rooted in the British empiricist tradition. Like Locke, Berkeley and Hume, he believed that all knowledge, not self-evident, is based on induction from sensory experience. Like all empiricists, he also rejected conceptual realism, but he was not a nominalist, like Hobbes and Berkeley. With Locke, he accepted the existence of abstract ideas, which is to say that he was a conceptualist. Above all, however, John Stuart Mill was a defender of the associationist psychology, used by David Hume and his own father to explain the acquisition of belief.4 Mill was not a naive empiricist, though. He defended the deductive method in economics and he was a pioneer of the hypothetical-deductive, or covering-law, model of scientific explanation. Mill was also a utilitarian of sorts, but not in the form given to this doctrine by Jeremy Bentham and his father. At the end of the 1820s, he was exposed to certain alternative ways of looking at human beings in society and he was led in a direction away from simple-minded utilitarianism, both in ethics and social science. In his Autobiography (Mill [1873] 1961: 94ff), he mentions three people as particularly important in modifying his utilitarian view of ‘man’ and society: the historian Thomas B. Macaulay (1800–59), the poet and philosopher Samuel Taylor Coleridge (1772–1834) and the philosopher and sociologist Auguste Comte (see pp. 27–29). I have already mentioned the strong impression that Macaulay’s critique of James Mill’s ‘Essay on Government’ made on his son. The younger Mill was shaken in his belief in the excellence of utilitarianism and of the ‘geometric’, or abstract-deductive, method. His doubts were reinforced by his reading of Coleridge, who introduced him to the ideas of German Romanticism (Mill [1840a] 1969). A first insight gained from reading Coleridge was that there are certain essential requisites of civil society, not noticed by Enlightenment thinkers. Mill mentions three: (1) ‘a system of education’ incurring a ‘restraining discipline’; (2) ‘a feeling of allegiance, or loyalty’, and (3) ‘a principle of cohesion among the members of the same community or state’ (Mill [1840a] 1969: 133–5). A second insight, gained from acquaintance with the work of Wilhelm von Humboldt, in particular, concerned the existence and value of individuality; of differences between individuals, ignored by utilitarian individualism (Mill [1859] 1975: 69–91; Hinchman, 1990). According to Mill, Bentham himself was entirely insensitive to spiritual ends and failed to recognise the fundamental importance of self-formation, or self-culture, in a system of ethics. But formation of self, or character is also important in social science, where it is the subject matter of the all-important science of ethology (see below). Self-formation is, finally, important in Mill’s solution to the problem of freedom. While it is the task of ethology to explain individual character as the necessary consequence of circumstances, it is possible for individuals to influence their own circumstances and, thus, their character (Mill [1843–72] 1974: 836–43).

Psychologism in early social science

45

The extent of Mill’s debt to Comte is a matter of some controversy. According to Hayek, ‘Mill himself, in the sixth book of his Logic, which deals with the methods of the moral sciences, became little more than an expounder of Comtian doctrine’ (1955: 186). Alan Ryan, points out that Mill himself ‘was anxious not to be thought to have learned everything from Comte’ and adds that ‘there is every reason to believe his declaration on this point’ (1974: 228). So far, I agree with Ryan, but there is, on the other hand, no reason at all to believe Mill, if the following statement is a correct rendering of his view of the matter: ‘[t]he only area in which Mill recognised a clear debt to Comte was that of the so-called method of inverse deduction’. Mill’s debt went further than this, but he did not share Comte’s view of psychology and political economy and, above all, he positively disliked Comte’s political thinking, not to speak of his later ideas of positivism as a religion of humanity. Probably, most of the differences between them boils down to the fact that Comte was a holist and collectivist, whereas Mill was an individualist. John Stuart Mill’s System of Logic (1843) was probably the most influential work written on scientific method in the nineteenth century and this is especially true of the part devoted to the ‘social’ or ‘moral’ sciences.5 Mill did not use the term ‘methodological individualism’, but he did address the issue and advanced certain ideas that are clear manifestations of ‘methodological individualism’, in the sense eventually attached to this term. Like Comte, Mill was a methodological monist, who saw but one remedy of the backwardness of the social sciences: the use of the method that had already proved so successful in the natural sciences. He also agreed with Comte that the complexity of social phenomena makes this an exceedingly difficult task. Mill recognised three types of law in social science: (1) laws of the mind; (2) laws of the formation of character, and (3) laws of society. Laws of the mind are, of course, psychological law belonging to the science of psychology ([1843–72] 1974: 849–60). The main example of such laws are those of the laws of association, identified by Mill’s father James Mill (p. 852). Since there are no innate ideas, all our beliefs are a result of the association of ideas. Of our desires, on the other hand, some may be natural, even though most of them are acquired (p. 856). It is interesting that Mill sees a place for ‘mental chemistry’, as distinguished from mechanics. Just as two substances like hydrogen and oxygen, when mixed, give rise to a new substance, water, which has properties of its own, so association of ideas may give rise to new ideas.6 This is the idea of emergence, which was eventually to play such an important role in the doctrine of holism. It is significant, though, that Mill recognised emergence only within the individual mind, but not in the collective consciousness, as did the holist Emile Durkheim (see p. 35). Laws of the formation of character belong to the science of ethology, which was intended to be Mill’s own contribution to social science. Ryan has suggested that it corresponds to social psychology and I believe that this is largely correct. The subject matter of ethology is the way human beings are socialised and educated to become new members of society. Because the circumstances in

46

Psychologism in early social science

which individuals are brought up are never exactly the same, each individual will become to some extent unique. Also, since circumstances differ between nations, there will be different national, or collective, characters. This phenomenon used to be the main object of investigation by German Völkerpsychologie, but it is not within the scope of mainstream social psychology today. The laws of ethology are either empirical or causal. As examples of the former, Mill mentions the maxims of common wisdom that exist in all countries.7 Invaluable as they are in everyday life, these approximate generalisations are not scientific. To the extent that they are true, they need to be explained by causal laws about the formation of character. The science of ethology does not exist, but it is an absolutely necessary precondition for the development of social science. The causal laws of ethology are the axiomata media which connects the laws of society with the laws of mind.8 The laws of the formation of character are derivative laws, depending upon the laws of mind and the specific circumstances. They tell us what will be the influence of circumstances on the formation of character. ‘In other words, Ethology, the deductive science is a system of corollaries from Psychology, the experimental science’ (p. 872). Mill went on to make clear that the science of ‘[e]thology is still to be created’ (p. 872) and he saw it as his own task to do so. His efforts in this direction failed, however, and he turned to other projects (Feuer, 1976; Collini, et al., 1983: 156ff). Among other things he wrote a book on political economy and an autobiography. Laws of society, finally, may be divided into laws of coexistence and laws of succession. The possibility of laws of coexistence are based upon the fact that there is a consensus among the different parts of society; that only certain combinations of social phenomena can coexist. Mill even uses the holistic metaphor of an organism to express this fact ([1843–72] 1974: pp. 899, 912). ‘The fundamental problem’ of social science, however, ‘is to find the laws according to which any state of society produces the state which succeeds it and takes its place’ (p. 912). The discussion, in which this passage occurs, has led Popper to accuse Mill of both holism and historicism (Popper, 1957: 72). I believe this accusation is a bit unfair. First of all, I think it is pretty obvious that Mill makes no serious use of the organism metaphor. He talks about ‘states of society’ succeeding one another, but this is ‘holism’ only in an extensive sense, to be carefully distinguished from true holism, which asserts that there are social wholes, which cannot be explained in terms of individuals. According to Mill, however, all laws about social states must be explained in terms of psychological laws. The same goes for Mill’s alleged historicism. He does suggest that there are historical laws of development, even if they are hard to come by, but they have the status of empirical laws, or trends, only. Like the laws of coexistence, they are only derivative law, which must be deduced from the ultimate laws of human nature ([1843–72] 1974: p. 916). A problem with finding the laws of society is that experiments are not feasible. The inductive or ‘chemical’ method suggested by Bacon is, therefore,

Psychologism in early social science

47

inapplicable. Nor is the abstract or ‘geometric’ method used by Hobbes and the Benthamist school appropriate, except, perhaps, in the case of economics. One problem with the geometric method is that it relies entirely on the assumption of self-interest, but does not admit of conflicting forces in the form of mixed motives (pp. 887ff). The method of the social sciences is the ‘physical’ or concrete deductive. The following statement from Mill’s Autobiography is interesting, because it reveals the connection, first, between the method of concrete deduction and a mechanistic view of society and, second, between the latter and individualism. It is a characteristic feature of mechanical forces that they can be added, or aggregated, in a way that makes the whole equal to, instead of more than, the sum of its parts. My practice (learnt from Hobbes and my father) being to study abstract principles by means of the best concrete instances I could find, the Composition of Forces, in dynamics, occurred to me as the most complete example of the logical process I was investigating. On examining, accordingly, what the mind does when it applies the principle of the Composition of Forces, I found that it performs a simple act of addition. It adds the separate effects as the joint effect. But is this a legitimate process? In dynamics, and in all the mathematical branches of physics, it is; but in some other cases, as in chemistry, it is not … I now saw that a science is either deductive or experimental, according as, in the province it deals with, the effects when conjoined, are or are not the sums of the effects which the same causes produce when separate. It followed that politics must be a deductive science. It thus appeared that both Macaulay and my father were wrong; the one in assimilating the method of philosophizing in politics to the purely experimental method of chemistry; while the other, though right in adopting a deductive method, had made a wrong selection of one, having taken as the type of deduction, not the appropriate process, that of the deductive branches of natural philosophy, but the inappropriate one of pure geometry, which, not being a science of causation at all, does not require or admit of any summing up of effects. (Mill [1873] 1961: 98) In the case of the general science of society, or sociology, however, the only possible method is that of inverse deduction, suggested by Comte (see p. 29). Since only such social states can exist that are compatible with human nature, laws of society must be subjected to ‘constant verification by psychological and ethological laws’ (p. 917). An important vehicle for tracing and verifying empirical laws of society is the emerging field of statistics. In an addition to the 1862 edition of a System of Logic, Mill (pp. 931–42) comments upon the recently published History of Civilization in England (1857) by Henry Thomas Buckle. In this book, as we have seen (p. 30) Buckle argued, like Quetelet before him, that the constancy of certain statistical phenomena, such as suicide and crime rates, is proof that there are statistical

48

Psychologism in early social science

laws. It is significant that Mill rejects this argument in favour of a more individualist interpretation (p. 934). He also gives qualified support to the ‘aristocratic’ individualism of Carlyle, which assigns a special importance to great men in history. While agreeing that ‘the varieties of character among ordinary individuals neutralize one another on any large scale, exceptional individuals in important positions do not in any given age neutralize one another’ (p. 937). According to Mill, laws of society are empirical laws, or generalisations, only. As such they must be explained by the causal laws of the mind and of the formation of character on which they ultimately depend (pp. 896, 908, 914, 924f).9 The laws of the phenomena of society are, and can be, nothing but the laws of the actions and passions of human beings united together in the social state. Men, however, in a state of society are still men; their actions and passions are obedient to the laws of individual human nature. Men are not, when brought together, converted into another kind of substance, with different properties, as hydrogen and oxygen are different from water, or as hydrogen, oxygen, carbon, and azote, are different from nerves, muscles, and tendons. Human beings in society have no properties but those which are derived from, and may be resolved into, the laws of the nature of individual man. In social phenomena the Composition of Causes is the universal law. (Mill [1843–72] 1974: 879) This passage is usually quoted as proof that Mill was a methodological individualist and, as such, it seems conclusive. It seems equally clear that his methodological individualism was psychologistic. According to Mill, all causal laws in social science are psychological laws about human nature. Social science is turned into large-scale psychology. More precisely, however, it is a metaphysical, or ontological, justification for methodological individualism. Mill explicitly denies that social phenomena have emergent properties and make up a reality of its own, or sui generis. Instead, he affirms the mechanist view of social phenomena as resultants, or composite effect, of the actions of individuals as governed by the laws of human nature. It seems clear that Mill was a psychologistic methodological individualist, as Karl Popper maintained. But Popper went further and maintained that Mill’s psychologism ‘forces him to adopt a historicist method’ (Popper [1945] 1966: 92) and ‘to operate with the idea of a beginning of society’ (p. 93). Alan Ryan rejects Popper’s argument and maintains that Mill’s psychologism is not different from Popper’s methodological individualism (Ryan, 1970: 156ff). Since it is not my aim to criticise psychologism here, I will not consider Popper’s argument, even though I believe that he is basically right (Udehn, 1987: 192–201). I also believe, however, that Ryan is right to maintain that Mill’s psychologism is not different from Popper’s methodological individualism. It takes Popper’s institutionalism to get rid of psychologistic historicism and Mill assigns no explicit role to social institutions in his methodology of the social sciences. There are only the laws of

Psychologism in early social science

49

individual and social psychology (ethology). It may be argued that the science of ethology makes room for social institutions, but being a science of the formation of character, it is bound to give a psychologistic interpretation of them, and this is not enough to escape historicism in the sense of a quest for origins. It is quite another matter that Mill often treats institutions as real factors given to analysis and treated as causal factors in his empirical investigations.10 According to Mill, then, the social sciences are based on psychology. This view was in contradistinction to that of Comte, who saw no role at all for this science. But Mill took exception also to Comte’s view of economics. Whereas the latter argued that the economy must be analysed as part of society and inductively, rather than deductively, Mill defended the abstract-deductive approach of his father and his friend David Ricardo. Mill’s philosophy of the social sciences made a tremendous impact on the early human sciences. Even those who did not share his views, like Wilhelm Dilthey, advanced their own views in opposition to the positivism of Mill and Comte. The Austrians read Mill and were probably to some extent influenced by his psychologism, even if other influences may have been stronger. Karl Popper developed his institutionalism in contrast to Mill’s psychologism. The most clear example of Mill’s influence is the sociologist George Homans, who suggests a version of methodological individualism, which looks almost exactly like that of Mill (see pp. 190–96). But it is possible to see similarities also between Mill’s psychologism and the quest for microfoundations, advanced recently by many sociologists (see pp. 187–89). Like the latter, Mill maintained that empirical generalisations; both those of common sense and those of official statistics, must be provided by microfoundations in the form of causal laws of psychology.

Figure 3.1 John Stuart Mill’s psychologistic methodological individualism

Utilitarian economics In chapter 2, we saw that classical economics was largely if not wholly individualistic. There was also an important element of institutionalism in several of the classical economists. In my opinion, economics became definitely individualistic in 1871, when Stanley Jevons and Carl Menger made the marginalist revolution, together with Leon Walras (1874). The idea that revolutionised economics was that economic decisions about what to buy depend, not upon the total utility, but

50

Psychologism in early social science

on their marginal utility to the consumer. What matters is not the utility of the total quantity I possess of a certain good, but the utility of an additional unit of that good. An important part of this revolution was also the switch from an objectivist to a subjectivist theory of value. A consequence of this switch was a shift in economic theory, from a concern with the problems of production and distribution to an almost exclusive preoccupation with consumption. All market phenomena were explained, in the last instance, as the result of the consumer’s subjective valuation and choice of goods. In this section, I am going to concentrate on the British branch of neoclassical economics, which is the clearest example of psychologism, at least in the early phase of its development. The psychological theory, used by the early British marginalists was, of course, the utilitarianism of Jeremey Bentham and James Mill. Stanley Jevons (1835–82) was first to introduce marginalism in British economics. He did not use the term ‘marginal utility’, however, but called it ‘final utility’. Jevons was also first to build economics on the foundation of utilitarianism, and described his theory as ‘the mechanics of utility and self-interest’ ( Jevons [1871] 1970: 90). He took utilitarianism from Bentham, but turned it from an ethical theory into an explanatory theory of human behaviour. ‘In this work I have attempted to treat economy as a calculus of pleasure and pain, and have sketched out, almost irrespective of previous opinions, the form which the science, as it seems to me, must ultimately take’ ( Jevons [1871] 1970: 44). Pleasure and pain are undoubtedly the ultimate objects of the calculus of economics. To satisfy our wants to the utmost with the least effort – to procure the greatest amount of what is desirable – in other words, to maximise pleasure is the problem of economics. ( Jevons [1871] 1970: 101) It may be noticed that, for Jevons, utility was not a psychic phenomenon, but a quality of objects with the capacity of producing a feeling of pleasure in its utilisers. However, in order to maximise pleasure or happiness we have to maximise utility. Jevons did not state any principle of methodological individualism, although there are some indications of individualism in his major work. He rejected the possibility of comparing the feelings of pleasure in different minds and, hence, of arriving at a utility function for a collectivity of individuals. According to Jevons, ‘the weighing of motives must always be confined to the bosom of the individual’ (p. 85). I must here point out that, though the theory presumes to investigate the condition of a mind, and bases upon this investigation the whole of economics, practically it is an aggregate of individuals which will be treated. The general form of the laws of economics are the same in the case of individuals and nations; and, in reality, it is a law operating in the case of

Psychologism in early social science

51

multitudes of individuals which gives rise to the aggregate represented in the transactions of a nation. ( Jevons [1871] 1970: 86) Jevons here points to a practical problem which always did beset methodological individualism and which has led some social scientists to adopt a more collectivistic methodology. He continues: Practically, however, it is quite impossible to detect the operation of general laws of this kind in the actions of one or more individuals. The motives and conditions are so numerous and complicated that the resulting actions have the appearance of caprice, and are beyond the analytic powers of science. ( Jevons [1871] 1970: 86) The solution to this problem is to use averages, or aggregates, assuming that, in the long run, accidental and disturbing causes will neutralise each other and produce a more predictable aggregate outcome. ‘Accordingly, questions which appear, and perhaps are, quite indeterminate as regards individuals, may be capable of exact investigation and solution in regard to great masses and wide averages’ (p. 86). Jevons’s solution is not, however, to follow Quetelet and give up individualism, but to insist that laws of the aggregate depend upon laws of individual behaviour: The laws which we are about to trace out are to be conceived as theoretically true of the individual; they can only be practically verified as regards the aggregate transactions, productions, and consumptions of a large body of people. But the laws of the aggregate depend of course upon the laws applying to individual cases. ( Jevons [1871] 1970: 108f. See also p. 135) Jevons is no more explicit about the assumption of rationality. Of course it may be objected that the assumption of rationality is implicit in that of utilitymaximisation or, even, that they are identical. This is a common view today, but it is a view that I reject for at least two reasons. First of all, rationality presupposes conscious intention, whereas utility-maximisation does not, and second, individuals may try to maximise utility, but fail because they are irrational. It may be argued that Jevons talks about the calculus of pleasure and pain and that calculation certainly is part of rational choice. He also mentions that we derive pleasure from anticipation of future pleasure (p. 99). This is a further indication of conscious intention. On the other hand, he immediately adds that, in our ordinary affairs, we make these calculations almost unconsciously (p. 100). Francis Y. Edgeworth followed Jevons in leaning on Bentham’s principle of greatest happiness, but considered two different versions of this principle: the ethical and the economic. He called the former ‘utilitarian’ and the latter ‘egoistic’. According to Edgeworth the scope of economics is limited to self-interested

52

Psychologism in early social science

utility-maximisation. In his well-known statement, ‘the first principle of Economics is that every agent is actuated only by self-interest’ ([1881] 1967: 16). As things turned out, however, also the utilitarian version would become a concern of economists. Edgeworth’s utilitarian calculus may be conceived of as an early contribution to welfare economics. More important, from a narrowly scientific point of view, Edgeworth was first to introduce the idea of indifference curves (pp. 21ff), thereby creating the possibility for an alternative mathematical representation of economic theory. Edgeworth’s distinction between an economical and a utilitarian calculus was based on a distinction between ‘egoistic’ and ‘universalistic’ hedonism made by Henry Sidgwick in his monumental and influential The Methods of Ethics (1874). There is no exact correspondence, however, since Sidgwick conceived of both as ethical doctrines to be distinguished from ‘psychological hedonism’. The latter corresponds to Edgeworth’s egoistic principle, which is also the first principle of the science of economics. Sidgwick was of another opinion, however. He defended universal hedonism, or utilitarianism, as an ethical theory, but rejected egoistic hedonism. Benevolence, not self-interest is the centrepiece of common sense morality and, therefore, of ethics. But there would be little point in defending universal hedonism if human nature were entirely dominated by psychological hedonism. Because of this, Sidgwick went to great length in order to rebut the latter assumption (Sidgwick [1874] 1981: 42ff, 199ff, 497ff). It would still be possible, of course, to use self-interest as a simplifying assumption for the purposes of economics, but Sidgwick rejected even this use of psychological hedonism. While admitting that economics has to use simplifying assumptions (Sidgwick, 1885: 37), he denied that it has to use the assumption of strict self-interest. All that the deductive reasonings of English economists supply is a method of analysing the phenomena and a statement of the general causes that govern them, and of the manner of their operation. In this analysis, no doubt, the assumption is fundamental that the individuals concerned in the actual determination of the economic quantities resulting from free exchange will aim, ceteris paribus, at getting the most they can for what they sell and giving the least they can for what they buy. (Sidgwick, 1885: 34) The reason this assumption does not imply self-interest is that individuals trying to get the most they can when selling and giving the least they can when buying, may do so for the benefit of their family, their friends, or some other people, rather than for their own benefit (p. 29). Sidgwick, then, appears as a precursor of Wicksteed’s principle of non-tuism. Instead of self-interest, economics relies on the assumption of wealth-maximisation: Other things being equal, they always prefer more to less (Sidgwick [1883] 1901: 46).

Psychologism in early social science

53

The first and most fundamental [assumption] is that in a state of economic freedom, all persons engaged in industry will, in selling or lending goods or contracting to render services, endeavour, other things being equal, to get as much wealth as they can in return for the commodity they offer. This is more briefly expressed by saying the Political Economy assumes the universality and unlimitedness of the desire for wealth. (Sidgwick [1883] 1901: 41) Sidgwick does not express any manifest belief in methodological individualism. He does talk about ‘individualism or economic egoism’ to designate the nature of economic man ([1883] 1901: 34) and he often refers to a free market economy as the ‘individualistic organization’ of industry, or society (pp. 44, 591); still this does not imply methodological individualism. This principle seems to be implicit, however, in the first quotation from Sidgwick, above, and it may underlie his critique of organicist sociology (Sidgwick, 1885: 41–57). Philip Wicksteed was less committed to utilitarianism, and closer, in some respects, to Austrian than to British marginalism. In his first contribution to economics, The Alphabet of Economic Science (1888), he was still exploring the field opened up by Jevons, Walras and Marshall and, consequently, much concerned with ‘marginal utility’, yet he was much more interested in the rational choices made by individuals comparing the marginal utility of various goods (Wicksteed [1888] 1970: 51ff).11 His paradigm of a rational economic agent is the householder, which, as it happens, is usually a housewife: The clever housekeeper has a delicate sense for marginal utilities, and can balance them with great nicety. She is always on the alert and free from the slavery of tradition. She follows changes of condition closely and quickly, and keeps her system of expenditure fluid, so to speak, always ready to rise or fall on any one of innumerable and ever shifting, expanding and contracting channels through which it is distributed, and so always keeping or recovering the same level everywhere. She keeps her marginal utilities balanced, and never spends a penny on A when it would be more effective if spent on B; and combines the maximum of comfort and economy with the minimum of ‘pinching’. (Wicksteed [1888] 1970: 126) Wicksteed is also more individualistic than the other British marginalists. Like the Austrians, he insists that ‘we must make the relative intensity of the desires and wants of the individual our starting-point’ (p. 77). Consequently, he starts his analysis with the case of Robinson Crusoe. From this individualistic point of view, it is not legitimate to compare the desires and wants of different individuals and, hence, to arrive at a utility function for the whole community, conceived as a unity. Economics is a science of a ‘catallactic community … in which the individuals freely exchange commodities one with another, each with a view to

54

Psychologism in early social science

making the enjoyment he derives from his possessions a maximum’ (p. 79, note).12 In Wicksteed’s major work, The Common Sense of Political Economy (1910), utilitymaximisation is pushed a bit further into the background. Economics is now based on a ‘psychology of choice between alternatives’ ([1910] 1933: 2f). For the purposes of economic theory, each individual is endowed with a single scale of preferences encompassing all objects of desire (pp. 32–6). The economic problem confronting each individual is how to administer limited resources in the choice between alternatives according to his/her scale of preferences. Wicksteed is aware that choice is not always deliberate and not always rational, but maintains that the principle of price is always active (p. 28). Wicksteed’s real point of departure is the household, not the individual, but he assumes that it is administered by an individual in the form of a housewife. The end of economic analysis, however, is to explain the organization of industry and commerce. As in his first work, he calls it a ‘catallactic community’, but he also describes it as a ‘spontaneous organisation’, made up of ‘spontaneous relations’ (pp. 15f). The ‘aggregate’, or combined, result of the actions of all individuals in this catallactic community is called, with a term borrowed from mechanics, a resultant. (see, e.g. pp. 5, 162, 167). Wicksteed is critical of the idea of economic man acting from a specific economic motive. Economics is not based on the assumption of a specific motive at all, but on a specific, impersonal, economic relation called ‘non-tuism’. For the purposes of economic science there is no need to assume that individuals are self-interested. They may very well act from altruism or benevolence. The only assumption needed is that individuals are not altruistic or benevolent towards parties to exchange, but that they try to strike the best bargain they can in their economic transactions. ‘The economic relation does not exclude from my mind everyone but me, it potentially includes every one but you’ ([1910] 1933: 174). Wicksteed knows, of course, that economic relations are usually ‘embedded’ in social relations of various sorts, but defends the simplifying assumption of isolated economic relations for the purposes of economic science (pp. 194ff).13 Economics, then, is not based on assuming a particular motive such as selfinterest, or utility-maximisation, still this does not mean that it is free from psychology (Wicksteed [1914] 1933: 780): ‘If political economy is the science of wealth, then it deals with efforts made by man to supply wants and satisfy desires. “Want,” “effort,” “desire,” “satisfaction,” are each and all psychic phenomena’ (Wicksteed [1914] 1933: 766). It is equally obvious, however, that the economist is not engaged in doing psychology. Following John Neville Keynes, Wicksteed argues that economics takes psychological principles as its point of departure, rather than subjecting them to investigation. But the ultimate laws of economics are psychological and ‘it may be argued that political economy is largely, or even prevailingly, applied psychology, so that the economist must from first to last realise that he is dealing with psychological phenomena, and must be guided throughout by psychological considerations’ (p. 767). Alfred Marshall (1842–1924) was probably the most influential of the British

Psychologism in early social science

55

neoclassical economists, at least in the long run, but he was not altogether orthodox in his outlook. Marshall was less prone than other neoclassical economists to engage in abstraction and insisted that economics is about real men and women as members of society and not about an abstract economic man acting in splendid isolation (Marshall [1890] 1920: 12–23). More than other neoclassical economists, Marshall took an interest in the German Historical School of Economics and in sociology, and tried to make use of some of its ideas (Coase [1975] 1982: 412). One obvious sign of this influence is that Marshall rejected the orthodox view of human nature as a constant ([1890] 1920: 3ff, 622, 630f). Another sign is that Marshall conceived of his own theory as holistic, or organicist, rather than as individualistic (pp. 20f, 637).14 Unlike the other British marginalists, he also advocated a development of economic theory in a more evolutionary direction (Foster, 1993). Marshall wished to play down the break with classical economics and accused Jevons for exaggerating discontinuity between classical and marginalist economics. He denied that value is altogether determined by utility and not at all by cost of production. ‘We might as reasonably dispute whether it is the upper or the under blade of a pair of scissors that cuts a piece of paper, as whether value is governed by utility or cost of production’ (Marshall [1890] 1920: 290). He also rejected Jevons’s claim that the theory of consumption is the scientific basis of economics. Economics is a science of human action and of choice, not of wants, or of utility. Wants are of interest, only to the extent that they manifest themselves in the use of money for their satisfaction. The existence of the measuring rod of money is the basis of economics as a science and the reason for its superiority to the other social sciences. Marshall, then, might be seen as a progenitor of the idea of starting from revealed preferences, rather than from the psychological basis of choice. Economics, then, is a science of action and of choice as manifested in the use of money on the market. But this does not mean that Marshall conceives of all action as the result of deliberate choice. When we speak of the measurement of desire by the action to which it forms the incentive, it is not to be supposed that we assume every action to be deliberate, and the outcome of calculation. For in this, as in every other respect, economics takes man just as he is in ordinary life: and in ordinary life people do not weigh beforehand the results of every action, whether the impulses to it come from their higher nature or their lower. (Marshall [1890] 1920: 17) According to Marshall, much of ordinary life is governed by habit and custom, but he also suggests that most customs have been adopted and survive because they are rational, or functional, especially in the modern world ([1890] 1920: 18f; 1885: 48ff). It is a thesis of Marshall, that there has been a historical development from a society dominated by custom, to a society increasingly dominated by deliberate choice (Marshall [1890] 1920: 1–11, 602–23). A

56

Psychologism in early social science

consequence of this thesis is that the theory of rational choice is of wider scope in modern than in traditional society. With all these provisos, it should finally be admitted that the main legacy of Alfred Marshall is as a founder of individualist neoclassical economics. It may be argued that Marshall’s methodology rested upon two pillars: the principles of substitution and continuity (cf. Boland, 1992: chs 2–3). According to the first, every economic agent will try ‘to obtain better results with a given expenditure, or equal results with a lesser expenditure’ (Marshall [1890] 1920: 295). In other words: individuals are constrained maximisers. The principle of continuity says that everything is relative and a matter of degree (314f). Most importantly, the principle of continuity applies to time. Thus there is only a difference of degree between the long run and the short. In the short run, both technology and social institutions are exogenously given as constraints on maximisation. In the long run, however, they themselves may be treated as endogenous variables subject to constrained maximisation. Which variables are conceived of as exogenous and endogenous is entirely relative to the time-perspective and to their stability over time. Those ‘variables’ that are stable over long periods of time, are treated as exogenously fixed conditions. Although the proximate causes of the chief events in history are to be found in the actions of individuals, yet most of the conditions which have made these events possible are traceable to the influence of inherited institutions and race qualities and of physical nature. (Marshall [1890] 1920: 602) It seems to me that Marshall represents what has been later called institutional individualism (see chapter 6). His way of tackling the problem reminds one of the new institutionalism in economics (see chapter 8), which is not surprising, since he has been a major influence on at least one of its branches, namely the Chicago School. I believe there is a difference, however. Whereas Marshall suggested that we should try to maximise the number of exogenously fixed conditions (see Boland, 1992: 27ff), the Chicago School tries to endogenise as much as possible. The strategy of the former may be described as institutionalistic and that of the latter as individualistic. In the beginning of the nineteenth century, economics was gradually to free itself from its dependence upon utilitarianism, and turn into a theory of rational choice, more or less drained of psychological content (see Stigler, 1950). Part of the responsibility for this development lies with the other branches of marginalism: the Austrian and Lausanne schools of economics. I believe it was mainly the Austrians, who turned economics from utilitarianism to rational choice (see chapter 4), while the Lausanne school paid virtually no attention at all to the individual, except as a cog in the lifeless machine of the market (see pp. 241–50). Of great importance in this development was also the mathematical–technical side of the matter. The first important steps were apparently taken by Irving Fischer and Vilfredo Pareto in the beginning of the 1890s.

Psychologism in early social science

57

Other figures who contributed to this development were Gustav Cassel and Eugen Slutsky. The final step was taken by John R. Hicks and Roy G.D. Allen in their article ‘A Reconsideration of the Theory of Value’ (1934). According to them (p. 52), the most important figure in the replacement of the concept of utility by that of a scale of preferences was Vilfredo Pareto, the successor of Leon Walras in Lausanne (see also Stigler, 1950: 386ff, and Marchionatti and Gambino, 1997). It is a bit surprising, therefore, that Lawrence Boland (1982: 27ff) should single out Pareto’s position, among all economists, as an example of psychologism. However, this is not to suggest, that he is entirely wrong to do so. In Pareto’s main sociological treatise, The Mind and Society ([1916] 1963: 1442), we read: ‘All human conduct is psychological and, from that standpoint, not only the study of economics but the study of every other branch of human activity is a psychological study and the facts of all such branches are psychological facts’. This passage is quoted by Lawrence Boland (1982: 27) at the beginning of a chapter on methodological individualism, where he suggests that Pareto was a proponent of psychologism. But was he? It depends, of course, upon what you understand by ‘psychologism’, but I do not think that Pareto is a very good example of psychologism in economics. The passage quoted by Boland is from a note, where Pareto is really more concerned to play down the importance of psychology for the science of economics (see also pp. 20f, 324), but he might also have quoted the following passage from his main work on economics, Manual of Political Economy: Clearly psychology is fundamental to political economy and all the social sciences in general. Perhaps a day will come when the laws of social science can be deduced from principles of psychology, just as some day perhaps the principles of the composition of matter will give us all the laws of physics and chemistry by deduction; but we are still very far from that state of affairs, and we must take a different approach. (Pareto [1909] 1972: 29) This is the programme of reductionism, in general, and of psychologism, in particular, but it is not a programme that Pareto recommends, as can be seen from the last sentence. And it is not his own procedure. Being a follower of Walras, Pareto’s psychologism is minimalistic indeed. According to Pareto, the economist is not interested in the tastes of individuals (Pareto [1909] 1972: 95). Individuals may be represented by their indifference curves. ‘The individual can disappear, provided he leaves us this photograph of his tastes’ (p. 120).15 The relation of economics to psychology has been a constant bone of contention. While most economists deny that economics has anything to learn from psychology, there have always been dissenters who maintain the opposite. Some of the former go as far as to deny that economics in any way depends upon psychological knowledge. I believe that this view is mistaken (see pp. 331–36). It is rather a matter of the extent to which economics depends on psychological

58

Psychologism in early social science

knowledge and what kind of psychological knowledge it is. Whether it should be based on detailed knowledge about human behaviour derived from the science of psychology, or upon some simple assumptions derived from common sense. I suggest that we make a distinction between thin and thick versions of psychologism. Thin psychologism is minimalistic, and makes use of very simple psychological assumptions, like those about economic man. It does not rely on any acquaintance with the science of psychology. Thick psychologism, on the other hand, makes use of more detailed knowledge about the motives and reasoning of human beings. An important source of this more sophisticated knowledge is, of course, the science of psychology. The psychologism of Pareto was a thin version of this doctrine. Pareto’s main contribution to individualism, was not his psychologism, but his denial of the possibility of interpersonal comparisons of utility and his famous idea of optimality, commonly called Pareto optimality, or Pareto efficiency. The latter idea is one of the central pillars of the individualist tradition in normative economics and political philosophy. Its basis, the denial of the possibility of comparing the utilities of different individuals is also a characteristic mark of individualism, but not of utilitarianism (despite the fact that Jevons also denied this possibility). Among economists, it is typically the most outspoken methodological individualists, the Austrians, who deny the possibility of comparing the utility of different individuals. The reason, of course, is that it blocks the possibility of constructing a collective utility-function and, more importantly, of a collectivistic politics, based on such a utility-function. The intellectual roots of this view are, I believe, in German qualitative individualism, which is a source, not only for Austrian individualists, but also for Pareto (cf. Carroll, 1973).

German psychologism In chapter 1, we saw that thinking about the individual and society in nineteenth-century Germany was dominated by historicism. It is perhaps paradoxical that the science of psychology should first emerge in this intellectual context, and that it should take the form of a natural, rather than a human, science. Nevertheless, it did, but not without a fight. The natural and experimental science of psychology met with strong resistance from the start and, in the end, there was a split between an experimental and explanatory psychology, on the one hand, and a phenomenological and descriptive psychology, on the other. The latter was conceived of as the foundation upon which all human sciences rest. The implication was a kind of psychologism, that was the most common version of methodological individualism in sociology (see chapter 5) before the rise of rational choice sociology (see chapter 10). The rise of psychology It is commonly agreed that psychology as a science, or at least as an academic discipline, originated in Germany in the middle of the nineteenth century. It had

Psychologism in early social science

59

two roots; one in philosophy, the other in natural science. Of these, the latter was the more important in turning psychology into a science, but institutionally speaking, psychology emerged as a sub-discipline of philosophy. There were, for quite some time no separate chairs in psychology. Psychologists competed with philosophers for chairs in their discipline. Like a young cuckoo, the science of psychology threatened to crowd out the philosophers from their nest. Or, so it seemed to philosophers proper, who mounted a counterattack in the form of anti-psychologism. Armed with the mighty weapon of logic, the philosophers eventually succeeded in throwing the psychologists out of their discipline. This story is told in much detail, and in a persuasive manner, by Martin Kusch (1995). In a larger perspective, it is just another chapter in the play of group interests which drives the process of the specialisation and differentiation of scientific knowledge. In Great Britain, as we have seen, philosophy was largely psychologistic. This was not the case in Germany: not even at the start. German philosophy in the nineteenth century was largely anti-psychologistic, and this explains some of the animosity, but even so, it did contribute to the emergence and development of the new discipline. It is virtually impossible to say anything at all about German philosophy without going back to Immanuel Kant. Unlike John Stuart Mill in England, Kant denied that philosophy depends upon psychology. Pure logic, for instance, ‘has nothing to do with empirical principles, and does not … borrow anything from psychology … Pure logic is a body of demonstrated doctrine, and everything in it must be certain a prior’ ([1781/7] 1965: 95). He also denied that psychology is possible as a science in its own right. In Kant’s terminology, only an ‘empirical’ psychology, but not a ‘rational’ psychology is possible (328ff). ‘This is because mathematics is inapplicable to the phenomena of the internal sense and their laws, unless one might want to take into consideration merely the laws of continuity in the flow of this sense’s internal changes’ (Kant [1786] 1970: 8). It might be added that, for Kant, science means natural science and quantification is its distinguishing mark. The reason why psychic phenomena are not quantifiable, in its turn, is that psychic experience exists only in time, but not in space. Perhaps, this says more about Kant’s concept of science, than about the prospects of psychology. According to Kant, chemistry also fails to qualify as a science. I suspect that Kant’s view of mental phenomena continued to play some role in the discussions about the possibility of measuring and comparing the utility of different individuals, which has been so important in welfare economics. Despite Kant’s own doubts, some of his disciples tried to establish psychology as a science (see Leary, 1978), and, ironically, two of them, Jacob Friedrich Fries (1773–1843) and Friedrich Eduard Beneke (1798–1854), may have been first to advance and defend psychologism in philosophy (Notturno, 1985: 12). More well known is Friedrich Herbart (1776–1881), who argued, against Kant, that psychological experiences are, indeed, quantifiable. His most famous thesis was that the

60

Psychologism in early social science

intensity of various sensations tend towards equilibrium. A change in the intensity of one sensation is offset by changes in other sensations. At the beginning of the nineteenth century, Kant was replaced by the German idealists, Johann Gottlieb Fichte (1762–1814), Friedrich Wilhelm von Schelling (1775–1854) and Georg Wilhelm Friedrich Hegel (1770–1831), as the dominant philosophers of the epoch. The tenor of their philosophy was even more anti-psychologistic than that of Kant. While psychology is a science of the subjective experience of individual human beings, German idealism was holistic and objectivistic. From the latter point of view, the approach of psychology appeared as limited, at best. According to the German idealists, the mind of the individual is but a moment in the development of the absolute spirit. Even so, it made some contributions to the burgeoning science of psychology. First of all, it gave philosophical legitimacy to social psychology as a special branch of the new science. In Germany, social psychology took the special form of folk psychology (Völkerpsychologie).16 Second, Fichte, in particular, emphasised the active side of human beings, as a manifestation of will. This theme was developed by other philosophers, such as Arthur Schopenhauer and by Friedrich Nietzsche, in a more individualistic direction, but it also made an impact on psychology (Leary, 1980). The main root of scientific psychology, however, was natural science. Two important figures were Ernst Heinrich Weber (1795–1878) and Gustav Fechner (1801–87), who both – but especially the latter – contributed to the famous Weber–Fechner law of psychophysics. According to this law, the smallest noticeable difference in the intensity of sensations increases in proportion to this intensity. The explanation for this fact is that the intensity of our sensations increases at a slower rate than the increase in the stimuli which causes the sensation. The most important natural scientist behind the development of scientific psychology, however, was Hermann von Helmholtz (1821–94), who specialised in the investigation of the functioning and activity of our senses and muscles. Part of Helmholz’s importance lies in the fact that he was the teacher of Wilhelm Wundt, who is considered by many the real founder of psychology as a science. Mention should, finally, be made of Hermann Lotze (1817–81), who was a philosopher and successor of Herbart, but who was trained in medicine and tried to accomplish a marriage between psychology and physiology. Among Lotze’s pupils was Franz Brentano, who might be considered a co-founder of scientific psychology. The emergence of psychology was gradual, but there is reason to assign a special importance to the year 1874. In this year two books of particular importance for the establishment of psychology as a science were published (see Titchener, 1921), namely Wilhelm Wundt’s Grundzüge der physiologischen Psychologie (Lectures on Human and Animal Psychology) and Franz Brentano’s Psychologie vom empirischen Standpunkte (Psychology from an Empirical Standpoint). Wilhelm Wundt (1832–1920) was an incredibly productive writer and, in

Psychologism in early social science

61

addition, a good organiser, who created the first laboratory for experimental psychology in Leipzig in 1879. He did more than anyone to establish psychology as an academic discipline and therefore is often mentioned as the founder of psychology. As I have already mentioned, his background was in physiology and he always considered psychophysics an important part of psychology. The central part, however, was the study of mental phenomena themselves, and for the grounding of this part, he relied heavily on the associationist psychology of James and John Stuart Mill. It might be noted that he borrows the idea of mental chemistry from the later Mill, but calls it ‘psychic synthesis’ (Wundt, 1874: 484). Also this part, however, was to become part of experimental psychology. Eventually, Wundt would become much interested in Völkerpsychologie.17 In the first stage of his career, Wundt appears as a follower of Mill also in matters concerning the logic of the human sciences (Geisteswissenschaften). In the first edition of his own Logik (1883), Wundt consistently maintains that (individual) psychology is the foundation of the human sciences (pp. 478ff, 572). The latter establishes facts of a singular, or generic, nature, but it takes psychological laws to explain them and the reason is that only psychological laws are causal (pp. 500, 514–18, 541). Statistical regularities, for instance, are not causal, but only empirical, and, therefore, in need of a causal explanation in terms of psychological laws (pp. 77–9). A significant difference between Wundt and Mill is that the former makes an important distinction between history and social science. In the case of sociology, he follows Mill closely, except in his opinion of Comte, which is much more negative. Wundt sees no justification for a science of sociology, à la Comte, which he dismisses as philosophy of history (p. 568f). Like most Germans, he is also somewhat less impressed by the achievements of abstract-deductive economics (pp. 586ff). As a German, finally, he assigns an important place to hermeneutics, or the art of interpretation, in the humanities (pp. 518ff). In his Ethics, however, written only three years later (1886), Wundt has turned into a critic of ‘the one-sided individualism of the Enlightenment’ (p. 394) and of utilitarianism (p. iv). He still maintains that psychology is an important aid to the social sciences and history, but now it is Völkerpsychologie, not individual psychology, which provides the foundation. As we have seen (p. 35), Wundt’s Ethics had a profound effect upon the sociologist Emile Durkheim and its place is in the history of holism, rather than in that of methodological individualism. Although Durkheim tried to deny it, Wundt is most probably the source of his idea of ‘creative synthesis’. As I have already suggested, Wundt took the idea of psychic synthesis from Mill and used it to explain novelty in the minds of individuals. This idea is also hinted at in the first edition of his Logik (1883: 523f), where he talks about ‘the creation of psychic energy’ in individuals. It is only in the second edition of this work (1895: 267–97), however, that creative synthesis (schöpferische Synthese) becomes an important topic and Wundt now applies this idea to cultural phenomena that originate in a community of individuals, rather than in an individual mind.

62

Psychologism in early social science

From the 1880s to the end of his life, Wundt moved progressively away from individual psychology and individualism to Völkerpsychologie and social holism. In the preface to the posthumously published fourth edition of Logik (1921), his son Max Wundt writes that, his father’s last concern was to overcome individualism (Wundt, 1921: viii). Franz Brentano was a scholar of a somewhat different bent from Wundt. His training was in classical philosophy rather than natural science. As a Catholic he had a strong leaning towards Aristotle and the scholastics, but he was also well versed in modern philosophy, including Comte and Mill. Of these two, he preferred Mill, if for no other reason than that he defended psychology against the critique of Comte (Brentano [1874] 1973: 33–5). For Brentano, himself, psychology is the science of mental phenomena (pp. 19, 100) and it occupies an important place of its own in the hierarchy of the sciences. Brentano goes to some length in rebutting Comte’s reduction of psychology to physiology (pp. 48ff, 128f), but follows Mill in attempting to reduce philosophy and social science to psychology. ‘Along with aesthetics and logic, ethics and politics also stem from the field of psychology. And so psychology appears to be the fundamental condition of human progress in precisely those things which, above all, constitute human dignity’ (p. 21). With direct address to Comte, he also writes: The observation of mental phenomena in human society undoubtedly sheds light upon the mental phenomena of the individual; the opposite, however, is even more true. Indeed, in general it is a more natural procedure to try to understand society and its development on the basis of what has been discovered about individuals than to proceed the other way around and try to shed light on the problems of individual psychology by means of the observation of society. (Brentano [1874] 1973: 43) Brentano, then, seems to have been a psychologicist and, consequently, a methodological individualist, but this is not a central part of his argument. His most well-known contribution to philosophy and psychology is his argument that mental phenomena are characterised by intentionality; by ‘reference to a content, direction toward an object (which is not to be understood here as a thing), or immanent objectivity’. Every mental phenomenon includes something as object within itself, although they do not all do so in the same way. In presentation something is presented, in judgement something is affirmed or denied, in love loved, in hate hated, in desire desired and so on. (Brentano [1874] 1973: 88) Brentano’s conception of psychology was somewhat modified towards the end of the century. In his later writings he made a sharp distinction between ‘genetic’, or explanatory, and ‘descriptive’ psychology, akin to, but not identical

Psychologism in early social science

63

with, that made by Wilhelm Dilthey (see pp. 68, 70f). The former is an inductive science seeking laws of ‘mental’ phenomena. It is a ‘natural science’ connecting mental with physiological phenomena, in the manner of psychophysics. The descriptive psychologist, on the other hand, ‘investigates the constituents of human consciousness; he seeks out its elements and attempts to determine as exhaustively as possible their modes of combination’ (Brentano, 1890–1, quoted in Chisholm, 1976: 92). Descriptive psychology is also an ‘empirical’ though not an inductive science, since it aims at discovering apodictic, or certain, truths about psychic phenomena. It is a posteriori, to the extent that it is based on experience, but a priori, to the extent that its truths are independent of experience. In this respect, Brentano’s descriptive psychology complies with Kant’s synthetic a priori. Most of its statements, however, are analytic. Brentano’s descriptive psychology, therefore cuts across Kant’s distinction between analytic and synthetic judgements (see Chisholm, 1976; de Boer, 1976). To conclude: unlike Dilthey’s descriptive psychology, that of Brentano is an exact science. Brentano’s ideas of a descriptive psychology and of the intentionality of mental phenomena would become important elements in the burgeoning phenomenology of Edmund Husserl, who had attended Brentano’s lectures as a student (Husserl 1981: 342–8). More important, for my purposes, is the suggestion that Brentano influenced members of the Austrian School of Economics. It is likely that Carl Menger got some of his Aristotelianism from Brentano, and more than likely that he got his idea of economics as an exact science from him (see Gordon, 1993: 17ff and Smith, 1986: 8ff). It has also been argued that Ludwig von Mises praxeological version of Austrian Economics pointed out that it owes a lot to Brentano (Chisholm, 1986: 191f). If so, it is a bit odd that Mises did not recognise the similarities between his own view and that of Menger, but believed that the latter was a follower of Mill (Mises, 1969: 27f). Wundt in particular, but also Brentano had a large number of students, who eventually became famous psychologists. I am not, however, aware of anyone who made an important contribution to psychologism in the human sciences. Wundt’s experimental psychology also made a great impact outside Germany and, especially, in the USA. An important link between Germany and the USA was the British psychologist E.B. Titchener (1867–1927), who had been a student of Wundt and organised his own laboratory at Cornell University. This is not to suggest, however, that psychology in the USA was imported from Germany. The Unites States had a tradition of its own closely associated with pragmatist philosophy, which exerted an important formative influence on the further development of psychology and philosophy, not only in the USA, but also in Europe. The pioneer was William James, who wrote one of the classics of the discipline, The Principles of Psychology (1890), which includes the famous chapter IX on ‘The Stream of Thought’. In this chapter, James rejects the analysis of the mind suggested by associationist psychology. The mind, or consciousness, is not a passive receptor of sense-impressions, as in Locke’s tabula rasa, but a function of human activity: hence, the label ‘functionalist

64

Psychologism in early social science

psychology’.18 Equally wrong is the atomism of associationist psychology. The mind does not consist of bits and pieces put together into complex ideas. Whatever goes on in the mind is a process, or a stream. Consciousness, then, does not appear to itself chopped up in bits. Such words as ‘chain’ or ‘train’ do not describe it fitly as it presents itself in the first instance. It is nothing jointed; it flows. A ‘river’ or a ‘stream’ are the metaphors by which it is most naturally described. In talking of it hereafter, let us call it the stream of thought, of consciousness, or of subjective life. ( James, [1890] 1950: 239) Also important is James’s theory of the self, and on this point he is more in agreement with associationist psychology, especially that of Hume. Like the latter, he rejects the idea of the self as some kind of substance. James’s analysis of the self is in terms of an ‘I’ and, especially, of a ‘me’, or empirical self. This empirical self is inclusive, indeed: In its widest possible sense … a man’s Self is the sum total of all that he can call his, not only his body and his psychic powers, but his clothes and his house, his wife and children, his ancestors and friends, his reputation and works, his lands and horses, and yacht and bank-account. ( James, [1890] 1950: 291) It is evident from this list that the self is, to a large extent, a social self. According to James, ‘[a] man’s social Self is the recognition which he gets from his mates’ ( [1890] 1950: 293). Or, properly speaking, ‘a man has as many social selves as there are individuals who recognize him and carry an image of him in their mind’ (p. 294). James goes on to suggest that these individuals fall into different classes, which means that an individual ‘has as many different social selves as there are distinct groups of persons about whose opinion he cares’ (p. 294). For each of these groups, an individual shows a different side of his/her self. What James is hinting at here is the idea of a social role, which would later become an important part of social psychology and sociology. William James influenced the symbolic interactionists, and also Henri Bergson and Alfred Schutz, to mention only some of the more important. He also influenced John Dewey, who adopted his functionalism with respect both to mind and society. Around the turn of the century, a sub-discipline called social psychology was established as a field of its own. Of particular importance in the history of social psychology is the year 1908. In that year two books with that title were published – one written by the American sociologist E.A. Ross (1908), the other by the British psychologist William McDougall (1908). Of these works, the former was largely based upon the ideas of Tarde, while the latter exhibits important influences from him in the parts that deal with social psychology rather than general psychology. Both authors claim that social psychology provides a much-needed

Psychologism in early social science

65

and necessary basis for the social sciences, and sociology in particular (Ross, 1908: 2; McDougall [1908] 1924: 1–3, 16), but neither in Ross, nor in McDougall, is it possible to find an explicit avowal of psychologism.19 The roots of social psychology are to be found both in Europe and the USA. In Europe, Völkerpsychologie was one source, even if it was closer to ethnology and social anthropology than to social psychology, as conceived of today. Two other sources were the sociologists Gabriel Tarde and Georg Simmel, who both wrote treatises on social psychology (Tarde, 1898; Simmel, 1908c). In the USA, James and Dewey had already been moving in the direction of a social psychology and Dewey’s follower Charles Ellwood wrote a ‘Prolegomena to Social Psychology’ (1899), which suggested an extremely holistic version of social psychology, derived from German Romanticism and from Hegel. In his later writings, however, Ellwood retreats from social holism into a more individualistic version of psychology and even into psychologism. In The Psychology of Human Society (1925), he has reached the conclusion that sociology differs from psychology in subject matter, but its explanations are ‘psychological’ (pp. 14ff). Unlike psychology, sociology is about groups, but since groups consist of individuals interacting with one another, and individuals consist of body and mind, or psyche, explanations of group life must be psychological. Ellwood claims that ‘psychological sociology’ is only a part of sociology, but his broad view of psychology makes it hard to see what would not be ‘psychological’. According to Ellwood (pp. 11, 461–6), the category of the ‘psychic’ includes culture. Ellwood’s later sociology, or social psychology is launched as a third way between the two untenable theories of society which had dominated earlier social thought: the theory of the social contract and the theory of society as an organism (pp. 453ff). Ellwood’s psychology of society is a synthetic work based upon the contributions made to social psychology in the first quarter of the nineteenth century and upon contributions to sociology, which are psychologistic, or, at least individualistic. Among social psychologists, Ellwood was influenced by William James, John Dewey, James Baldwin, William McDougall, E.A. Ross and Floyd H. Allport. Among sociologists, he mentions Georg Simmel and Gabriel Tarde, but seems to be most influenced by Franklin H. Giddings, Charles Horton Cooley, W.I. Thomas, L.T. Hobhouse and Robert M. MacIver. Of these, the sociologists L.T. Hobhouse and Robert M. MacIver, in particular, may be mentioned, since they were important critics of collectivism in social science. Hobhouse wrote a wellknown critique of The Metaphysical Theory of the State (Hobhouse, 1918), directed at the political philosophy of Hegel and, especially, at a book by his British follower Bernard Bosanquet: The Philosophical Theory of the State (1899). MacIver wrote a number of articles (MacIver, 1911; 1913; 1914; 1915), where he criticised both organicism and the idea of society as some kind of super-person with a social mind or collective consciousness. From Tarde, Baldwin and Ross, Ellwood took the idea of imitation as a form of learning,20 from McDougall, the notion of instincts, and from Giddings the theory of socialisation. From Simmel and Ross he borrowed the idea that

66

Psychologism in early social science

sociology is about groups and from the interactionists Cooley and Thomas his concept of culture, as something subjective, or psychic. From Hobhouse, MacIver and Allport, finally, he derived his critical stance towards organicism and the concept of social mind. Among the most influential works in the early history of the discipline is Floyd H. Allport’s Social Psychology from 1924. In this work, Allport appears as a psychological reductionist, and as a passionate critic of all forms of the ‘group fallacy’ in social science. Social psychology, according to Allport is a science of the individual and, as such, a part of the psychology of the individual. There is no such thing as a psychology of the group, as distinguished from the psychology of individuals. Theories about a social mind, group mind, collective consciousness, class consciousness, general will and the like, are but various forms of the group fallacy, as is also the idea of a social organism (Allport, 1924b: 4–10). ‘Behavior, consciousness, and organic life, belong strictly to individuals’, which is also the reason why, according to Allport, social psychology is the foundation science of sociology (pp. 10f). ‘Since all behavior phenomena of groups are reducible to mechanisms of individual behavior in the social environment, the relation of social psychology to the disciplines which treat of these higher aggregates is a fundamental one’ (p. 382). Allport’s psychologism is even more explicit, and its identity with methodological individualism more evident, in the article ‘The Group Fallacy in Relation to Social Science’. As in Social Psychology, Allport argues that social phenomena must be explained by social psychology. The reason, once again, is that the cause of social phenomena is invariably to be found in the behaviour of individuals. Social institutions exist in the attitudes and consciousness of individuals (Allport, 1924a: 690ff). But psychologism is also justified as part of a more general reduction programme for scientific explanation. In the hierarchy of the sciences, each science describes phenomena at their own level, but they are only explained by a description of phenomena at the level immediately below. Turning now to the sociologist, we find that the data which he describes reach the highest point of breadth and complexity. They embrace collections of individuals in organised societies, the products of such organisations, and the changes which they undergo. This is indeed a vast field for descriptive analysis. Yet for explanation sociology is in its turn dependent upon the descriptive formulas of the science just below it, namely psychology. Just as psychology has to seek its causation within the units (reflex arcs) of which its material, individual behavior is composed; so sociology must find its explanatory principles in the units (individuals) of which society is composed. (Allport, 1924a: 700) When we turn to the individual for causation, we only follow the rule of the other sciences in explaining the complex in terms of the simple, the whole in

Psychologism in early social science

67

terms of its parts (p. 703). In the case of sociology, this means behaviour that is stimulated by the behaviour of others, that is social behaviour, as investigated by social psychology. More specifically, then, when we want to explain social phenomena, as described by sociology, it is to social psychology that we should turn. ‘The work of sociology, therefore, would be to describe social aggregates and social change in terms of the group, but to explain these phenomena in terms of the social psychology of the individual’ (p. 703).21 Allport’s psychologism bears a striking resemblance to that of John Stuart Mill and Gabriel Tarde. Like the latter two, he argues that theories about social wholes and their development only describes, whereas a causal explanation must be sought at the level below, that is in the laws of psychology and social psychology. As we shall see later on, this is a view shared by many methodological individualists, who argue that any theory about social wholes, or aggregates, must be provided with individualistic microfoundations. The similarity goes further than a mere quest for microfoundations. Like some recent methodological individualists (see pp. 187–89), Allport identifies the causal mechanism of social phenomena in the behaviour of individuals.22 All theories which partake of the group fallacy have the unfortunate consequence of diverting attention from the true locus of cause and effect, namely, the behavior mechanism of the individual. They place the group prior to this mechanism in order of study, and substitute description of social effects in place of true explanation. (Allport, 1924b: 9) Wilhelm Dilthey The new science of psychology met with much resistance, from historians and social scientists, but, above all, from the philosophers. As I have already hinted at, the reason for this was that the philosophers had most to loose by the emergence of psychology. While historians and social scientists risked only the autonomy of their disciplines, philosophers also risked loosing their jobs. Psychologists were appointed as philosophers. In addition, philosophy was threatened, not only by psychology, but by positivism and historicism, as well. There was no place for philosophy in Comte’s hierarchy of the sciences and a seeming implication of his law of the three stages is that it belongs to the metaphysical stage and, thus, to history. The future belongs to the positive sciences. The effect of historicism was to turn philosophy into a kind of history of mind, or spirit, best exemplified by the philosophy of Hegel. It was in this situation that some philosophers turned to Kant as their saviour. Under the battle cry: ‘Back to Kant’, they fought back against all enemies trying to obliterate philosophy completely, or annex it to their own province (Willey, 1978). According to Kant, philosophy is a theory of knowledge, assuming the form of a critique of knowledge. This is an activity which cannot be reduced to any one of the scientific disciplines, not even to all of them together. Neo-Kantians showed the strongest

68

Psychologism in early social science

resistance against positivism, historicism and psychologism, but they were not alone. They were joined by logicians, such as Gottlob Frege, and by Edmund Husserl, the founder of phenomenology. The most common reaction, from philosophers, then, was to deny that philosophy is, in any way, dependent upon psychology, or any other discipline. Some philosophers, however, admitted that philosophy does depend on psychology, but not upon experimental psychology. The main example of this reaction was Wilhelm Dilthey, who was a pupil of one of the founders of Völkerpsychologie, Moritz Lazarus. Dilthey wanted to build a new foundation for the human sciences in the form of descriptive psychology, to be distinguished from the explanative psychology of the professional psychologists. Dilthey’s first important attempt to lay a new foundation for the human sciences was in his Introduction to the Human Sciences (Einleitung in die Geisteswissenschaften, 1883), a work that was not far behind Comte’s Cours de Philosophie Positive and Mill’s System of Logic in terms of influence upon the human sciences. To some extent, it was also written as a response to the works of Comte and Mill. The main thesis of Dilthey is that there is a fundamental difference between the natural and the human sciences ([1883a] 1989: 60ff, 80f). While the former deal with external reality, which can only be inferred from experience, the latter deal with inner experience itself. Because we have direct access to our inner experience, the human sciences are epistemologically privileged, relative to the natural sciences. One consequence of this is that also their methods differ. In the human sciences, the method of understanding (vertstehen) plays an important role (pp. 88, 158), even if this is not at all an important theme in Introduction to the Human Sciences.23 But Dilthey was critical also of many aspects of historicism. He explicitly rejected the notions of Volksseele and Volksgeist ([1883a] 1989: 83, 92), which were used by his teacher Moritz Lazarus, and also the idea of a social organism (pp. 83, 87, 121). There is no unity of consciousness in a people and the analogy between a society and an organism is taken much too far by historicists and sociologists alike. Dilthey, finally, denied unity also to history. There is no meaning or goal of history and there are no laws of historical development. The attempts to detect such unilinear patterns by sociology and the philosophy of history are misconceived (pp. 142ff). The rejection of the most holistic aspects of historicism and sociology, does not lead Dilthey to run to the other extreme and jump right into the camp of radical individualism. ‘The fundamental error of the ancient natural-law school was to isolate individuals and then to connect them mechanistically as the method of constructing society’ ([1883a] 1989: 82). Dilthey wants to steer a middle course between the extremes of individualism and holism, but it is my belief, that he stays on the individualistic side of the divide, at least in his early writings. It is possible to understand his project as that of providing historicism with a new individualistic foundation (see pp. 48–52). The main idea of Dilthey was that the human sciences must be provided with a new foundation in the form of psychology. ‘Analysis designates the life-unit,

Psychologism in early social science

69

i.e., the psycho-physical individual, as the element from which society and history are formed; and the study of these life-units constitutes the most fundamental group of the human sciences’ ([1883a] 1989: 80). As we have already seen, however, Dilthey rejected the extreme individualism of natural law, which takes its point of departure in the isolated, or abstract, individual. It is part of his foundation of the human sciences that individuals interact: The units that act on one another in the marvellously complex totality of history and society are individuals, psychophysical wholes, each of which differs from every other, each of which constitutes a world, for the world exists nowhere else but in the representations of such an individual. (Dilthey [1883a] 1989: 80f) There is, I believe, an obvious reference to Leibniz’s ‘monadology’ in this quotation, and there is no doubt about the influence of Leibniz on Dilthey, but if Leibniz’s monad has no windows, Dilthey’s individual has. ‘Thus the individual is found within it [society] in interaction with other elements’ ([1883a] 1989: 87). This interaction, moreover, is not ‘mechanical’ as in the case of neoclassical economics, but social, and for Dilthey this means symbolic or at least meaningful. It would probably not be too wide off the mark to conceive of Dilthey as the first symbolic interactionist, but as we shall see later, he was also a progenitor of phenomenology. A consequence of seeing society as meaningful interaction between individuals is that each individual can only be understood in the context of systems of interaction. ‘The individual is … an element in the interactions of society, a point of intersection of the various systems of these interactions, reacting to the influences of that society with conscious intentions and actions’ (p. 89). According to Dilthey, then, the human sciences are concerned with the intentional actions of human beings. He goes on to point out that intentions, or motives, are different from other causes, but he does not deny that they are causes. ‘The interaction which occurs here, namely, the motive which arises in consciousness, differs from every other cause’ ([1883a] 1989: 89). On this point he takes a position similar to that of Max Weber. The interaction of individuals in history gives rise to three classes of objects, which the human sciences need to study: ‘the external organization of society; the cultural systems within it, and individual peoples. Of all these enduring entities that of a people as a whole is the most complex and difficult’ (Dilthey [1883a] 1989: 92f). The sciences devoted to the study of these objects have to introduce, what Dilthey calls, ‘second-order concepts’ and the theories arrived at are, consequently, ‘second-order theories’, relative to individual psychology (pp. 92, 96). By second-order concepts, Dilthey understands all concepts developed within the human sciences, such as ‘work’, ‘value’, ‘price’, ‘status’, ‘role’, etc. There is no question, however, but that the second-order concepts and theories, used by second-order human sciences, such as philology, economics and ethnology, make sense only to the extent that they refer to psychic facts about the lived experience

70

Psychologism in early social science

of individuals (pp. 114ff). All human studies become scientific ‘by establishing the reference of their concepts and propositions to psychological and psychophysical facts’ (p. 129). When this is achieved, ‘the sciences of the external organization of humanity would be based upon concepts of psychic and psychophysical facts and upon propositions about them which correspond to the concepts and propositions on which the sciences of the cultural systems are based’ (p. 118). I hope it is clear by now that Dilthey saw the basis of the human sciences in psychology. At the beginning of my presentation of Dilthey, I also mentioned that this psychology is called descriptive, as distinguished from the explanative psychology of Mill and Wundt. What the former amounts to is not made clear, except by what is indicated by the label ‘descriptive’. The latter, however, is characterised by its attempt to explain the whole of human reality by means of a few simple assumptions, or hypotheses, about human nature ([1883a] 1989: 84). Dilthey’s idea of a ‘descriptive’ psychology was a bit more developed in Ideas Concerning a Descriptive and Analytic Psychology (1894). Once again, it is contrasted with the explanatory psychology of associationism and various types of materialism, that seeks to explain the constitution of the psychic life [Seelenleben] with the help of its components, energies and law, just as physics and chemistry explain those of the corporeal world … By explanatory science is to be understood every subordination of a domain of experience to a system of causality [Kausalzusammenhang] by means of a limited number of well-determined elements (i.e., the components of the system). (Dilthey [1894] 1977: 23) A first characteristic of explanatory psychology, then, is that, like the natural sciences, it seeks to give a causal explanation of psychic life with the help of a combination of hypothetical laws. ‘In the human studies, to the contrary, the nexus of psychic life constitutes originally a primitive and fundamental datum. We explain nature, we understand psychic life’ ([1894] 1977: 27). A second characteristic of explanatory psychology is that it is ‘constructive’, or ‘synthetic’. With another term, equally apt, and often used to describe British associationist psychology, we might call it ‘atomistic’. In sharp contrast to explanatory psychology, descriptive psychology is holistic. It is holistic because experience, immediately given, lived experience is holistic. ‘[L]ife exists everywhere only as a nexus or coherent whole’ (p. 28). Psychic life-process is originally and above all, from its most elementary forms to the highest, a unity. Psychic life does not grow together from parts; it is not composed of elements; it is not a composite nor is it a result of the collaboration of sensory or affective atoms: it is originally and always a comprehensive unity. (Dilthey [1894] 1977: 92)

Psychologism in early social science

71

That psychic life is a whole does not imply, however, that social life or cultural life is also a whole, and it is not at all unusual that methodological individualists are psychological holists in the manner of Dilthey (cf. Rickman, 1979: 9–11). The reason for this is, of course, that psychic life – even if a whole – is contained in individual human beings. There are purposive systems of social life, such as economic life, law, art and religion, which may be studied apart. ‘But the ensemble of such a system is nothing other than the psychic nexus, of the people who cooperate in it. It is therefore, in the end, psychological’ (Dilthey [1894] 1977: 40). For Dilthey, the human sciences start and end in the psychic life of individuals. This is, in the first instance, an epistemological thesis. But it is also an ontological thesis. While the natural sciences point towards an external reality, existing independently of the lived experience of individuals, the human sciences do not. Society and culture exist nowhere, except in the immediately given, lived experience of individual human beings. This is subjective idealism, at least with regard to society and culture, and to that extent congruent with phenomenology. I mentioned above that Dilthey saw explanatory psychology as synthetic. Consequently, descriptive psychology is analytic. If psychic life is given to experience as a whole, it is the task of descriptive psychology to analyse this whole in its various parts ([1894] 1977: 51ff). ‘In the service of this descriptive activity stand the logical operations of comparing, distinguishing, establishing degrees, separating degrees, separating and associating, abstracting, connecting parts into a whole, deducing similar relationships from particular cases, analyzing individual events and classifying’ (p. 56). It is possible to see, in these tasks of descriptive psychology, a point of contact with phenomenology.24 It is a common observation among students of Dilthey that his view of psychology and its relation to the human sciences changed towards the end of his life. The direction of this change was away from subjectivism and individualism towards a more objectivistic and holistic view; from psychological experience to cultural hermeneutics.25 A clear sign of change can be found in the article on ‘The Development of Hermeneutics’ (1900). The source of knowledge about culture is no longer the lived experience of individuals, but the expressions of others and, especially of written records. Hermeneutics is defined as ‘the methodology of the interpretation of written records’ ([1900] 1976: 249). Such interpretation invariably takes the form of a circle: The whole of a work must be understood from individual words and their combination, but full understanding of an individual part presupposes understanding of the whole. This circle is repeated in the relation of an individual work to the mentality and development of its author, and it recurs again in the relation of such an individual work to its literary genre. (Dilthey, [1900] 1976: 259) What is only hinted at in the article on hermeneutics, however, is more fully developed in ‘The Understanding of Other Persons and Their Life-Expressions’

72

Psychologism in early social science

(c. 1910). Dilthey here makes a distinction between two classes of lifeexpressions: (1) concepts, judgements and thought structures and (2) actions ([1927] 1986: 153). He also makes a distinction between elementary and higher forms of understanding of life-expressions. By elementary understanding, Dilthey means understanding of ‘single life-expressions’, for instance an assertion or a facial expression. A third example would be ‘elementary acts of which continuous activities are composed, such as picking up an object, letting the hammer drop, cutting wood with a saw’ (p. 154).26 The higher form of understanding also goes in two directions: either it seeks the relation between product and producer, or it is oriented to the relation between expression and what is expressed, which is not at all reducible to what the producer intended to express. When understanding is oriented to the producer of a life-expression, understanding takes the form or ‘re-creation’, or ‘re-living’ (Nacherlebnis). This is not, however, a psychological form of understanding. According to the later Dilthey, all understanding rests on the objective mind. ‘It is the medium in which the understanding of other persons and their life-expressions takes place’ (p. 155). A sentence is intelligible because a language, the meaning of words and of inflections, as well as the significance of syntactical arrangements is common to a community. The fixed order of behaviour within a culture makes it possible for greetings or bows to signify, by their nuances, a certain mental attitude to other people and to be understood as doing so. In different countries the crafts developed particular procedures and particular instruments for special purposes; when, therefore, the craftsman uses a hammer or saw, his purpose is intelligible to us. In this sphere the relation between life-expression and mental content is always fixed by a common order. This explains why this relation is present in the apprehension of an individual expression and why – without conscious inference based on the relation between expression and what is expressed – both parts of the process are welded into a unity in the understanding. (Dilthey [1927] 1986: p. 156) Dilthey’s commitment to the idea of an objective mind is clearly a move away from psychologism, at least in epistemology and methodology, but is it also a break with ontological and methodological individualism? H.P. Rickman, one of the authorities on Dilthey, argues that he made no metaphysical claims about the entities of the objective mind (1962: 42; 1979: 116f). They are human creations and have an existence independent of individuals. I am not at all convinced that this is a correct interpretation of Dilthey, but I will not argue that point here. I will call attention, instead, to a decisive difference between Dilthey and the methodological individualist Max Weber. The latter made a distinction, similar to that of Dilthey between elementary and higher understanding, but he called them direct and explanatory understanding. Weber, even used exactly the same example of a woodcutter, as did Dilthey, before him. For Weber, however, explanatory understanding, does not include

Psychologism in early social science

73

reference to culture and social structure, which it certainly did to Dilthey. For Weber, explanatory understanding is exclusively understanding in terms of the motive of the producer of the product or, more generally, of the acting individual (see pp. 100f ). If the later Dilthey was a methodological individualist, therefore, he was not a methodological individualist in the sense of Weber and probably not at all. Georg Simmel It should be clear by now that in Germany it was history that dominated the human sciences. Psychology was also established as an academic discipline, first as an explanatory natural science, but in the second half of the nineteenth century also as a descriptive science of mind and as a science of culture (Völkerpsychologie). It might be added that philosophy was still strong and encyclopaedic. In this situation, there is little wonder that sociology met with much resistance – if less than psychology – before it was accepted as an academic discipline, and that the first German sociologists had somehow to adapt to this situation. Of the two most famous German sociologists, Max Weber was also a historian, and Georg Simmel a philosopher, making important contributions to the philosophy of history. Both of them rejected French and British positivism and created their own versions of sociology, better suited to German conditions. In the case of Weber, it was an interpretative (verstehende) sociology, in the case of Simmel a formal sociology. The impression created is that Weber owed most to Dilthey, whereas Simmel owed more to neo-Kantianism. The truth, I believe, is that it was the other way around, but certainly both Weber and Simmel were influenced by both Dilthey and neo-Kantianism.27 In the case of Weber, however, there was a third important influence, from the Austrian School of Economics. It was this influence, in particular, which turned Weber into a programmatic methodological individualist. I have found it convenient, therefore, to present Weber in the next chapter, which is devoted to Austrian methodological individualism. Here I will concentrate on Simmel, who was a kind of psychologicist, at least for a start. Like Dilthey, Simmel was a pupil of Moritz Lazarus and, therefore, certainly familiar with his Völkerpsychologie. It is also pretty certain that Simmel owed some important ideas to the latter, especially in his early writings, which include quite a lot on the theme of psychology (Frisby, 1992: ch. 2).28 Simmel’s debt to Dilthey was even larger and it is possible to detect many interesting similarities between them. The idea that the individual is situated at the point of intersection between many social circles, or groups, is, perhaps, the most obvious one. Both Dilthey and Simmel made important contributions to the philosophy of history and made much to clarify the problem of interpretation (verstehen).29 It has even been suggested that there is a parallel in the development of the thinkers: from psychologism to the idea of an objective mind, or culture (Oakes, 1980: 57–60). One difference between them is that Simmel tried to lay the foundation of sociology, a discipline that Dilthey rejected. But, then, it should be mentioned that

74

Psychologism in early social science

Simmel’s sociology was not at all like that of Comte and much more in line with Dilthey’s view of the human sciences. Simmel is sometimes classified as a methodological individualist (Infantino, 1998: 95–9, 106–13, 131–34) and even as a psychologicist (Moscovici [1988] 1993: 236). I do not deny that there are some good reasons for doing so, but nevertheless I believe that it is wrong. Already in an early version of his article ‘The Problem of Sociology’ (1895) he wrote: ‘the overthrow of the individualist point of view may be considered the most important and fruitful step which historical science and the moral sciences (Geisteswissenschaften) generally have made in our time’ (p. 52). Of course this is not proof enough, since Simmel may have had some extreme version of individualism in mind, but it is an indication. In my view, Simmel attempted to steer a middle course in between the extremes of atomistic individualism and romanticist collectivism, but he ended up as more of a holistic structuralist, than as a methodological individualist. Simmel’s sociology is called ‘formal sociology’ because he was interested in the forms of social life, as distinguished from its content. The distinction between form and content he borrowed from Kant. With forms of social life, Simmel intended things like superiority, subordination, hierarchy, competition, opposition, division of labour, representation, etc. ([1908] 1909: 299). There are, I believe, two possible reasons for conceiving of Simmel as a psychologistic methodological individualist. The first obvious reason is that he maintained that the content, or stuff, of society is mental, or psychic (Simmel, 1895: 54; [1908] 1950: 24). The other, equally obvious reason is that he maintained that the form of society takes the shape of forms of interaction, or of social relationships (Simmel, 1895: 54; [1908] 1950: 10, 21, 40). Society, according to Simmel, is the sum-total of ‘intersubjective relations which bring it to pass that individuals become societies’ (1895: 61). Simmel’s concept of ‘society’, then, is a synthesis of two views of society: 1 2

The intersubjectivist theory of society as being made up solely of ideas in the minds of individuals. The interactionist theory of society, which says that society is made up of the sum total of interactions between individuals.

If this were the end of it, Simmel would clearly be a psychologistic methodological individualist, but it is not. First of all, it does not follow from the fact that the content of social phenomena is psychic, if that is a fact, that the explanation of social phenomena must be psychological. In The Problems of the Philosophy of History ([1892] 1977: 113–17) Simmel discusses the role of psychological laws in history. He takes his point of departure in the thesis that the ultimate constituents of society are human beings. Only human beings are real entities, with causal efficacy, whereas groups exist only in a secondary sense. Does it follow from this that the laws of history must be laws of individual psychology? Simmel does not want to draw this conclusion: first of

Psychologism in early social science

75

all because the minds of individuals are extremely complex entities, which might be resolved into simpler elements. ‘Simplicity and complexity are relative concepts’. Simmel, himself seems to take an agnostic attitude to ontology. ‘Suppose there are no absolutely basic units or entities. Suppose that the definition of the unit of investigation is simply a consequence of the special criteria of each science’. If this is so, it is ‘certainly not prima facie self-evident’ that the ‘composite phenomena of historical life are nomologically comprehensible only if they can be deduced from the established laws of individual psychology … the theoretical interests of history could permit the societal group to function as its basic “unit” of inquiry’ (p. 114). Simmel agrees with the individualists that ‘at least in one sense’ the ultimate source of knowledge about history is ‘the individual mind or personal psyche’. It is therefore, also the basic unit of historical inquiry. ‘The mind is a basic unit or entity for this reason: what we call unity or uniformity is possible only as a consequence of the inner, first-person experience of the self ’ ([1892] 1977: 115). But he adds something potentially important: ‘It is not psychic unity or the mental entity as such that constitutes the historical event; on the contrary, it is the contents of mind’ (p. 117). This conclusion points in the direction of Simmel’s Hegelian idea of objective spirit, or in modern terminology, of culture. The development of the social freedom of the individual is correlated with the formation of an objective spirit, a wealth of superpersonal cultural products, scientific, aesthetic, and technological. These propositions and others like them may be regarded as precursors of proto-forms of structures that will eventually be the objects of exact nomological knowledge. (Simmel [1892] 1977: 145f) Simmel returned the theory of objective spirit and objective culture in his Philosophy of Money ([1900] 1978: 446ff), where his break with psychologistic individualism is fairly evident. Products of the objective mind (cultural products, such as buildings, machines, books, works of art, etc.) have an objective existence independent of each particular individual and exert a profound influence on individual human beings. Interaction taking place in this created cultural environment crystallises into more or less permanent social structures (pp. 170ff). These facts cast serious doubts on Infantino’s attempt to find convergences between Simmel and Carl Menger. Not that it is difficult to find such convergences, but the divergences seem, to me, more significant. Take their respective theories of money. For Carl Menger, as we shall see in the next chapter, the allimportant task is to explain the origin of money. For, Simmel, on the contrary, the main concern is to analyse the effects of money (pp. 228ff). In ‘The Problem of Sociology’ ([1908] 1909), Simmel admits that his discussion of this science ‘appear[s] to be nothing but chapters of psychology, or at most of social psychology’ (p. 313), but adds ‘that the scientific treatment of psychical facts still by no means needs to be psychology’ (p. 314). I interpret these passages as indicating that Simmel was an ontological individualist, but not a

76

Psychologism in early social science

methodological individualist. At least not a psychologistic methodological individualist. But there are some clear indications that, in the end, Simmel gave up even his ontological individualism. Forms of interaction between individuals ‘crystallise’ into social structures, which take on a life of their own. More specifically, the interactions we have in mind when we talk about ‘society’ are crystallized as definable consistent structures such as the state and the family, the guild and the church, social classes and organizations based on common interests … The large systems and super-individual organizations that customarily come to mind when we think of society, are nothing but immediate interactions that occur among men constantly, every minute, but that have become crystallized as permanent fields, as autonomous phenomena. As they crystallize, they attain their own existence and their own laws, and may even confront or oppose spontaneous interaction itself. (Simmel [1908] 1950: 9f) In addition to individual human beings, then, there also exist social structures, which are autonomous relative to individuals. Thus, according to Simmel, society takes on a life of its own: ‘ “Society” develops its own vehicles and organs by whose claims and commands the individual is confronted as by an alien party’ ([1917] 1950: 58). The result is a kind of split between individual and society, which is inconceivable to an ontological individualist. A society … is a structure which consists of beings who stand inside and outside of it at the same time. This fact forms the basis for one of the most important sociological phenomena, namely, that between a society and its component individuals a relation may exist as between two parties. (Simmel [1908] 1971: 14f) The conclusion of Simmel’s investigation is that ‘[s]ociety is a structure composed of unequal elements’ ([1908] 1971: 18). He offers the phenomenon of bureaucracy as a small-scale analogue of society. Typical for a bureaucracy is that it consists of a structure of positions with a predetermined function assigned to each position, irrespective of the particular person occupying that position. Society ‘is a system of elements each of which occupies an individual place, a co-ordination of functions and function-centers which have objective existence’ (p. 20). There is much in Simmel that reminds us of Marx and Durkheim, but which has no place in an individualist theory, as represented by symbolic interactionism, phenomenology, existentialism and ethnomethodology (see chapter 5). There are certain similarities between Simmel’s notion of sociation (Vergesellschaftung) and Anthony Gidden’s theory of structuration, but Simmel’s dualistic conception of individual and society, make him clearly less individual-

Psychologism in early social science

77

istic than Giddens. Because of this dualism, Simmel is closer to the later Sartre, Berger and Luckmann and Pierre Bourdieu (see pp. 147f, 161ff, 186f ), perhaps also to Roy Bhaskar. To conclude: Georg Simmel was not a psychologistic methodological individualist and probably not even an ontological individualist. It is still possible to classify him as a less radical methodological individualist. Perhaps, it is possible to conceive of him as a structural individualist (see chapter 10).

Psychologism on trial Dilthey’s move away from psychologism was, at least in part, a reaction to objections raised against this doctrine by the neo-Kantian philosophers Wilhelm Windelband and Heinrich Rickert, and by the phenomenological philosopher Edmund Husserl. The most destructive critique, however, was directed at Dilthey’s particular form of descriptive psychology, by the experimental psychologist Hermann Ebbinghaus. Georg Simmel was influenced both by Dilthey and neo-Kantianism, but was not, himself, an object of much critique. Most critique was directed at experimental psychology, but this is not my business here. In the last section of this chapter, I will focus on some reactions to Dilthey, and also on some positive contributions to psychologism in social science. At the University of Strasbourg in 1894 in his famous Rectorial Address on ‘History and Natural Science’, the leader of the Southwest School of neoKantian philosophy, Wilhelm Windelband, took issue with Dilthey’s way of making a distinction between the natural and the human sciences ([1894] 1980: 173).30 The main problem with Dilthey’s dichotomy seems to be that psychology belongs to both types of science (p. 174). Instead of making this distinction on the basis of a substantive dichotomy of nature and mind, we should use an epistemological distinction, in terms of cognitive interest. From this point of view, the empirical sciences can be divided into those that seek general laws and those which are interested in specific historical facts. In the well-known terminology suggested by Windelband, ‘scientific thought is nomothetic in the former case and ideographic in the latter case’. In terms of this dichotomy, ‘psychology falls unambiguously within the domain of the natural sciences’ (p. 174). With Windelband’s distinction between history and natural science, it becomes necessary to reject also the positivist attempt to turn history into a natural science, seeking laws of historical development. Against this view, ‘it is necessary to insist upon the following: every interest and judgement, every ascription of human value is based upon the singular and unique’ (p. 182). The role of values was to become even more prominent in the constitution of the ‘cultural sciences’ by Windelband’s pupil Heinrich Rickert. Rickert’s much more ambitious attempt to establish a distinction between history and natural science can be found in his most important work, The Limits of Concept Formation in the Natural Science (Die Grenzen der naturwissenschaftlichen Begriffsbildung, 1902) and in the shorter Science and History (also 1902).31 Like Windelband, Rickert was much concerned to combat various reductionisms and,

78

Psychologism in early social science

in the first instance, those that threaten philosophy. Thus, he rejected historicism and positivism in philosophy. Psychologism was also rejected, because it is a natural science and psychologism, therefore, a form of positivism. ‘In all of its essential aspects, however, ours is a logical, or a methodological and epistemological, investigation’ ([1902] 1986: 19). Rickert’s main task, however, was to save history from being reduced to natural science, in the manner of Comte’s positivism (pp. 23ff). Hence, the project of identifying the limits to natural science, once again including psychology. Rickert’s distinction between history and natural science is similar to that of Windelband, but much more elaborated and refined. History and natural science are based on different cognitive interests: ‘Empirical reality becomes nature when we conceive of it with reference to the general. It becomes history when we conceive it with reference to the distinctive and the individual’ (Rickert [1902] 1986: 54). For Windelband this distinction was absolute. Rickert, however, saw the difference as relative and preferred to talk about the method of history as individualising and that of natural science as generalising ([1902] 1986: xii). Rickert’s point of departure was Kantian: there is an unbridgeable gap between concept and reality and the latter is inaccessible to our knowledge. Every form of epistemological realism, and especially the picture theory of meaning is therefore excluded from the outset. Reality is reality as perceived, or experienced, and as constructed by means of concepts. ‘Reality itself, the infinite manifold of which scorns every conception, can best be called “irrational,” and even this designation could be applied to it only on the grounds that it resists every conception’ ([1902] 1986: 52). According to Rickert, then, empirical reality is indefinite and, therefore, practically infinite. It is extensively infinite, in the sense that there are an infinite number of possible objects of knowledge and it is intensively infinite, in the sense that there are infinitely many aspects of every single object of knowledge. In order to cognitively master this infinite manifold, we use abstraction. The procedure of the natural sciences is to go searching for similarities, while abstracting from the differences of objects, including their position in space and time. Positivism assumes that this is the only scientific procedure. But, according to Rickert, there are limits to natural scientific concept formation, since it prevents us from seeing what is unique and individual about objects of knowledge. But this is exactly the cognitive interest of the historical sciences. They are interested in individual events, languages, works of art, cultures, etc, in space and time. The real problem that Rickert set out to solve was that of concept formation in history. If empirical reality is an infinite manifold and the method individualising, what kind of abstraction is used in history? Obviously, history is only interested in some of the (extensively infinite) manifold of individuals there are in empirical reality, and only in some aspects of these (intensively infinite) individuals. Rickert calls them ‘historical individuals’ and they comprise, not only human individuals, or personalities, but all sorts of historical particulars, such as the Renaissance, the French revolution and World War I (Rickert [1902] 1986: 78–98). Rickert’s solution to this problem is the so-

Psychologism in early social science

79

called value relevance, or value relation (Wertbeziehung). History concentrates on those individuals and those aspects of individuals to which a value, or meaning is attached by people in general, that is individuals who are considered interesting and/or important in terms of cultural values. The thesis that the knowledge interest of history is directed at ‘historical individuals’, then, does not imply a focus on human beings and Rickert denies that history is ‘individualistic’ in this sense. First of all, he rejects the ‘rationalisticteleological’ historiography in which ‘historical events are shown to be intended consequences produced by rational and purposive beings’ ([1902] 1986: 103). Those who see the setting of a conscious purpose and the conduct that follows from it as the motive force of all historical movements, and in consequence regard purpose as the explanatory principle of history, must not only see individual personalities as the chief objects of history – because the setting of conscious purpose can be confirmed in them alone; as the result of this, they must also take the view that single individuals make history, so that everything becomes a product of individual intention. But we are far from advocating an individualistic conception of history in this sense. (Rickert [1902] 1986: 104) Second, Rickert denies that history is ‘individualistic’, even if by individuals we understand historical individuals. The reason is that no historical individual, whether a person or some larger individual, can be understood in isolation from the historical nexus, or whole, of which it is a part (pp. 107ff). Like Dilthey, then, Rickert argued that historical understanding is, in a sense, ‘holistic’. He also agreed with Dilthey (and Hegel) that understanding is of objective mind, or spirit ([1902] 1986: 138ff). Unlike Dilthey, however, Rickert took great care to point out that objective mind is ideal and nonreal. Culture consists both of that part of reality to which meaning is attached, and this nonreal meaning, or spirit, itself. According to Rickert ‘Dilthey confuses the nonreal meaningful content of culture that is situated in the realities of history with the real psychic existence that actually occurs in the mental life of single individuals’ (p. 146). This accusation would have been entirely justified, had Rickert intended Dilthey’s early writings, but his target is actually the theory of the human sciences that Dilthey developed in his last writings. This does not make sense to me, but the whole issue is too complex to be treated here. It seems extremely important for Rickert to distinguish culture from the psychic, or mental. A first reason for this is, no doubt, that his distinction between the natural and the cultural sciences must not be reducible to Dilthey’s distinction between natural and human sciences. A second, and related, reason, I presume, is that his logical/epistemological distinction must not be reducible to a material distinction between nature and mind, or spirit. Even so, there is a sense in which Rickert falls back upon an ontology of individuals and their minds. First, his view of objective mind as nonreal, makes it possible to avoid conceptual realism and maintain that only human individuals exist ([1902] 1986:

80

Psychologism in early social science

150f ). The fact that ‘[m]eaningful wholes can be understood only as unities or totalities’ (p. 159), does not imply that there are real wholes, irreducible to their parts. The object of understanding as nonreal meaning configuration always remains a whole or a unity. Realities, on the other hand, are decomposed into their parts for the purpose of explanation. Or, in explanation, the path leads from the parts to the whole; in understanding, it proceeds in the opposite direction, from the whole to the parts. (Rickert [1902] 1986: 159) Since, for Rickert, the parts of real ‘wholes’ are individuals, this view is in agreement with the methodological individualism of Weber’s interpretive sociology (see pp. 101f ), which admits that holistic understanding is necessary as a preparation before the real sociological investigation of motives begins. Unlike Weber, however, Rickert never allowed subjective meaning to play an important role in historical methodology. While agreeing in substance, their emphasis is entirely different. Rickert admits that historical reality is meaningful because individuals attach meaning to it and values are valid because accepted as valid by individuals, but he never attaches much importance to the subjective meaning and causal explanation. For Weber, on the other hand, the subjective meaning of human action and causal explanation in terms of motives are the core of interpretive sociology. To conclude: Rickert was a metaphysical individualist, since he conceived of objective mind as nonreal. He was not a methodological individualist, if this is understood as a principle of understanding – which, according to him, is the main task of the cultural sciences – but to the extent that the cultural sciences engage in explanation, they are individualistic. The reason for this difference may be that Rickert’s methodology was intended for history, whereas Weber was engaged in the attempt to create an interpretive sociology. The most famous, and most influential, critique of psychologism came from Edmund Husserl (1859–1938), the founder of phenomenology. It can be found in the first volume – the so-called ‘Prolegomena’ – of his Logical Investigations (1900). Space does not admit of any detailed presentation of Husserl’s argument and it is not necessary for my purposes, since his argument was directed at psychologism in philosophy.32 Simply put, Husserl maintained that psychology has no bearing on normative disciplines such as mathematics and ethics, but leads to subjectivism, scepticism and relativism. In the second volume of (the German edition of) Logical Investigations, Husserl set out his first version of phenomenology, which, paradoxically, owed much to the descriptive psychology of his teacher Franz Brentano. ‘The Logical Investigations … are a full development of Brentano’s suggestions, as is a matter of course, since I was an immediate student of Brentano’ (Husserl, 1977: 24). The most important borrowing is the idea that mental phenomena are intentional. It also had some-

Psychologism in early social science

81

thing in common with Dilthey’s epistemology and descriptive psychology, at least that is what Dilthey, himself, thought.33 The mature version of phenomenology, however, took shape in the first decade of the twentieth century. A first groping attempt to lay a new foundation for this philosophy was made by Husserl in a series of lectures given in 1907, later published as The Idea of Phenomenology (1950). It is not easy to understand from these lectures what phenomenology really is, but it is clear that it has little to do with psychology, including descriptive psychology ([1950] 1973: 5, 33ff). Phenomenology is a priori (p. 41), but not in the sense of mathematics. ‘Phenomenology proceeds by “seeing,” clarifying, and determining meaning, and by distinguishing meanings’ (p. 46). Husserl’s method is that of Descartes. Like the latter, he seeks absolute certainty and finds it in cognition. A few years later, Husserl made a new attack on psychologism in ‘Philosophy as a Rigorous Science’ (1911), but it is clear that he conceives of psychology as a natural science. The main fault of this naturalistic psychology is ‘to set aside any direct and pure analysis of consciousness’ (1981: 174). This time Husserl’s critique is extended to include also historicism (pp. 185ff), which ‘if consistently carried through, carries over into extreme sceptical subjectivism’ (p. 186). The target is Wilhelm Dilthey’s ‘Weltanschauung philosophy’, which, according to Husserl, is bound to lead to relativism. It is doubtful whether this is really the case, but what is more interesting is that Husserl makes no recognition of Dilthey’s version of a descriptive and analytic psychology, despite his knowledge about it.34 The first comprehensive expression of Husserl’s mature version of phenomenology is to be found in Ideas Pertaining to a Pure Phenomenology and to a Phenomenological Philosophy (First Book 1913). This is not the place to assume the demanding task of doing justice to Husserl’s pure phenomenology. I will do no more than indicate some of the ideas, which may help us better to understand phenomenological sociology (see pp. 137–44). In our everyday life, we take the existence of an external world of physical things and other human individuals for granted. I suppose this is roughly what is understood by ‘common sense’ or ‘naive realism’. Husserl calls it the ‘natural attitude’, but, according to him, it characterises not only common sense, but also the empirical, or ‘experiential’ sciences. The distinguishing mark of the natural attitude is that it posits a world of external, or ‘transcendent’, objects in space and time. In addition to cognition of matters of fact, however, there is something Husserl calls ‘eidetic seeing’, or intuition of essences (Wesensschau), which is about a new sort of ideal universal objects (Eidos). The idea of a straight line in geometrics would be one example. The sciences about these objects are called the eidetic sciences and they include logic and mathematics, but also the ‘pure theories of time, space, motion, and so forth’ (p. 16). Pure phenomenology, as created by Husserl, is an eidetic science about essences – if different from mathematics and logic – and, like all such sciences, it is also a science about phenomena, or objects of intention, but not about a world of things beyond them, or things-in-themselves. In order to be able to attend

82

Psychologism in early social science

only to phenomena, Husserl maintains that we must free ourselves from the natural attitude of presupposing things-in-themselves; we must put the objective world ‘within brackets’. This is the method of phenomenological reduction, which is similar to Descartes’s methodical doubt, except that it excludes also doubt. We simply disregard everything objective. Husserl calls it the phenomenological epoché, and it is a first preparatory step in order to reach the world of pure phenomena. The next step towards pure, transcendental, phenomenology is the intuition of essences, which I have already mentioned. This is called the eidetic reduction, because it leads from particular phenomena, such as this house, to universal phenomena and the necessary relations between them, but it is not yet the transcendental reduction which leads to the transcendental ego of pure phenomenology. In Ideas Husserl juxtaposed phenomenology to psychology and denied any common ground between them. Of course, they have something in common: both are theories of phenomena of consciousness; he even admitted that there is an eidetic psychology, but pure phenomenology is distinct from psychology and there is no phenomenological psychology. In his ‘Inaugural Lecture at Freiburg in Breslau’ in 1917, he told his audience that ‘pure phenomenology is too separated sharply from psychology at large and, specifically, from the descriptive psychology of the phenomena of consciousness’ (Husserl 1981: 14).35 In the middle of the 1920s, however, there is a new revision of phenomenology. An interesting document from this period is Husserl’s lectures on phenomenological psychology, given in Paris in 1925 (Husserl, 1977). In these lectures Husserl begins by paying tribute to Dilthey and Brentano. After hailing Dilthey as a genius, he goes on to state his main critique, which is that Dilthey was more of an intuitive than analytical thinker and therefore failed to lay the foundation of a new psychology. His main complaint, however, is that Dilthey was too much of a historicist, seeking the unique and culturally relative. A phenomenological psychology, on the contrary, seeks essences and universal laws. As firmly as Mill, he believes in a universal human nature, which it is the task of phenomenology to lay bare, and which is at the bottom of all social life. All concepts of the human sciences, therefore, rest on the foundation of phenomenological psychology. Having originated in the living nexus of the human psyche, they can be understood only on this same basis. Only because there is uniformity and regularity in psychic life can they arise as forces overreaching the individual and making the same order possible for all individuals. Another significant point is their combination with the theory of knowledge. (Husserl, 1977: 10) In the famous 1927 article on ‘Phenomenology’ in Encyclopaedia Britannica (repr. in Husserl, 1981), Husserl divides phenomenology into ‘phenomenological psychology’ and ‘transcendental phenomenology’. What is somewhat confusing,

Psychologism in early social science

83

however, is that phenomenological psychology seems to have almost everything in common with pure phenomenology, as construed in Ideas, except that it operates within the natural attitude (p. 29). Like pure phenomenology, in Ideas, it is the result of both a phenomenological and an eidetic reduction (pp. 24ff). Pure phenomenology is now pushed back into the realm of the transcendental ego and is consequently called ‘transcendental phenomenology’. I will not even try to account for the ontology of possibilities that can be dimly perceived. Husserl himself is perfectly aware that to grasp the distinction between transcendental and phenomenological psychology is difficult, indeed. In his preface to the English edition of Ideas, he admits that it ‘is a problem that as a rule brings great difficulties with it … It has led to misunderstandings, to which even thinkers who subscribe to the phenomenological line of thought are subject’ (1981: 44). Despite these acknowledged problems, however, Husserl is confident that transcendental phenomenology is the universal science and the foundation of all other sciences and of all knowledge.36 It should be obvious by now that phenomenology is a form of radical subjectivism. What is perhaps less obvious, as yet, is that it is a form of intersubjectivism. ‘The reductive method is transferred from self-experience to the experience of others’. The application of the method of phenomenological reduction to ‘community experience’, or ‘community mental life’ is called ‘intersubjective reduction’ (Husserl, 1981: 25). ‘[T]the reduced intersubjectivity, in pure form and concretely grasped is a community of pure “persons” acting in the intersubjective realm of the pure life of consciousness’ (p. 25). Although these quotations referred to phenomenological psychology, transcendental phenomenology also is intersubjective. The psychic subjectivity, the concretely grasped ‘I’ and ‘we’ of ordinary conversation is experienced in its pure psychic ownness through the method of phenomenological-psychological reduction. Modified into eidetic form it provides the ground for pure phenomenological psychology. Transcendental subjectivity, which is inquired into in the transcendental problem, and which subjectivity is presupposed in it as an existing basis is none other than again ‘I’ myself and ‘we’ ourselves; not, however, as found in the natural attitude of everyday or of positive science; i.e., apperceived as components of the objectively present world before us, but rather as subjects of conscious life, in which this world and all that is present – for ‘us’ – ‘makes’ itself through certain apperceptions’. (Husserl, 1981: 30) Husserl’s claim that phenomenology implies intersubjectivity has always appeared as a problem to his critics. The subjectivist point of departure would rather seem to imply solipsism. In the fifth of the Cartesian Meditations (1929), Husserl set out to solve the problem of transcendental intersubjectivity. His proposed solution is in terms of Leibnizian monadology. According to Leibniz, monads have no windows; which means that they do not influence one another,

84

Psychologism in early social science

at least not in a substantial way. The order of the world is a pre-established harmony. Now, according to Husserl, the transcendental ego is similarly unaffected by any interaction between ego and others. Transcendental intersubjectivity is egological and derived by analogy. ‘It is clear from the very beginning that only a similarity connecting, within my primordial sphere, that body over there with my body can serve as the motivational basis for the “analogizing” apprehension of that body as another animate organism’ ([1929] 1973: 111). Husserl’s term for this form of analogy is ‘pairing association’. It may be objected that this solution does not explain intersubjectivity, but this would be unfair, since phenomenology is not intended to be explanatory. In the terminology of Husserl, phenomenology ‘constitutes’ the world. Whether Husserl’s suggested solution to the problem of transcendental intersubjectivity is a successful constitution, or not, is beyond my power to judge. I will end this short presentation by mentioning the last development of Husserl’s thinking. Towards the end of his life, Husserl was working fervently with a new foundation for phenomenology and knowledge. The result was The Crisis of European Sciences and Transcendental Phenomenology (written between 1935–7 and publihsed in 1954), which remained unfinished at his death in 1937. In this work, Husserl proceeds in the unusual way of a history of knowledge. Transcendental phenomenology now appears as the end-product and consummation of this history.37 The most interesting novelty, for my purposes, however, is the introduction of the concept of ‘life-world’ [Lebenswelt] as a new point of departure for phenomenological reduction. In their everyday life, human beings live together in a pregiven intersubjective world, which they take for granted ([1954] 1970: 103ff). ‘The life-world is a realm of original self-evidences’ (p. 127) or ‘common-sense’. The life-world is pre-scientific, both historically and epistemologically. Science emerges from the life-world, as the result of the rise of the ‘theoretical attitude’ in Greek Antiquity, but it is forever anchored in the life-world, to the extent that science is a human creation and a social activity (pp. 269ff).38 The dominant form of the theoretical attitude in the history of Western rationalism has been the objectivism of natural science. Also psychology has been snared in this unfortunate conception. According to Husserl, not even Brentano and Dilthey were successful in their attempts to escape this trap (pp. 222f, 245f). Closest to a breakthrough was Brentano, with his important insight that mental phenomena are intentional (pp. 233f).39 The only way to establish psychology as a rigorous science is subjectivism and phenomenological reduction ([1954] 1970: 212). The point of departure is the life-world, but stripped of any trace of objectivism. Why does not the whole flowing life-world not figure at the very beginning of a psychology as something ‘psychic,’ indeed as the psychic realm which is primarily accessible, the first field in which immediately given psychic phenomena can be explicated according to types? … Naturally there are differences in the manner of life-world experience, depending on whether one experiences stones, rivers, mountains or, on the other hand, reflectively

Psychologism in early social science

85

experiences one’s experience of them or other ego-activity, one’s own or that of others … But does this change the fact that everything about the lifeworld is obviously ‘subjective’? Can psychology as a universal science, have any other theme than the totality of the subjective? (Husserl [1954] 1970: 220) As I have already pointed out, The Crisis is an unfinished work. It is risky, therefore, to use it as a basis for drawing conclusions about Husserl’s final position. It does seem to me, however, as if Husserl had been moving in the direction of psychologism. It is pretty obvious, I believe, that descriptive psychology now occupies an important place in the phenomenological reduction ([1954] 1970: 191ff, 235–41). Husserl even concludes that ‘pure psychology in itself is identical with transcendental philosophy as the science of transcendental subjectivity’ (p. 258). This conclusion looks like philosophical psychologism. But Husserl seems to be a psychologicist also with respect to the human sciences. what is required for the regional sciences of man, then, is obviously first of all what is sometimes called (by contrast to social psychology) individual psychology … This individual psychology must … be the foundation for a sociology and likewise for a science of objectified spirit (of cultural things), which after all refers, in its own way, to the human being as person, i.e., to the life of the soul. (Husserl [1954] 1970: 228) Husserl’s phenomenology, especially his phenomenological psychology and his idea of a life-world, made a tremendous impact on continental philosophy and on the social sciences, especially sociology. Among others, it influenced, directly and indirectly, Dilthey, Scheler, Jaspers, Heidegger, Schutz, MerleauPonty, Sartre, Ethnomethodolgy, the Frankfurt School, especially Habermas, Bourdieu and Giddens. Indirectly, through Schutz, it may even have influenced the Austrian School of Economics. I will return to some of these figures in later chapters. Here I will make a brief remark on the immediate reception of Husserl’s phenomenology. It has been maintained, by Kusch (1995: 224ff), that Husserl’s phenomenology emerged victorious in the battle between philosophical schools in Germany, at the beginning of the nineteenth century. The most important reason for this was the success of Husserl’s critique of psychologism. Another reason was that phenomenology, unlike neo-Kantianism, could be assimilated by the emerging philosophy of life (Lebensphilosophie). Kusch mentions three philosophers and three texts as especially important for the development of philosophy in the Weimar Republic. One of them, Oswald Spengler, was a historicist and holist, who is of no interest for my purposes. More interesting is Max Scheler, who was an influential philosopher – eventually sociologist of knowledge – who started as a phenomenologist, but later oriented himself towards the new philosophy of life. In an influential article

86

Psychologism in early social science

from 1915, he hailed Friedrich Nietzsche, Wilhelm Dilthey and Henri Bergson as the most important representatives of this new philosophy (Scheler, 1915). All three have a place in the history of individualism. I have already discussed Dilthey and I am going to discuss Nietzsche in another work on the history of individualism. This leaves the French philosopher Henri Bergson (1859–1941), who suggested a view of consciousness similar to that of German idealism and of William James. In his Time and Free Will (1889), Bergson rejected any attempt to quantify and measure psychic states, including the utilitarian states of pleasure and pain and the sensations of the Weber–Fechner law of psychophysics. So far, he agreed with Kant. He did not, however, accept Kant’s theory of the forms of understanding. In particular, he disagreed with Kant’s view of time and free will. Much like his friend and ally, William James, Bergson saw consciousness as a flow. Consciousness takes the form of duration (durée) of heterogeneous states, but not of a succession of measurable, homogeneous, time-units. The latter concept of time is really a misleading derivation from our concept of space. As indicated by the title of the English translation, Bergson’s book is about free will, which he accepted as a matter fact. We experience free will, and the reason, though philosophers and scientists often deny it, is the idea of time, modelled on that of space and fostered by science, or, at least, by mechanicism. Bergson was not an individualist and his main legacy was holistic. In his most famous work, Creative Evolution (1907), he advanced the idea of emergence of novel phenomena, which played an important part in the development of the doctrine of holism (see Udehn, 1987: 85ff). In his last book, The Two Sources of Morality and Religion (1932), Bergson adheres to an organicist view of society, which is clearly holistic. But he also introduces the distinction between closed and open societies ([1932] 1977: 30ff), which Karl Popper used in his famous book The Open Society and Its Enemies (1945), and which includes one of most cited statements of the principle of methodological individualism (see pp. 200ff ). But even if Bergson was not a methodological individualist, himself, he did play a role in the development of an individualist theory of society. Bergson exerted a considerable influence on the phenomenology, not only of Max Scheler, but also of Alfred Schutz, and he also influenced the existentialism of Jean Paul Sartre and Maurice Merleau-Ponty (see chapter 5). The third philosopher, mentioned by Kusch (1995: 228, 236ff) is Karl Jaspers, and the text is Psychologie der Weltanschauungslehre (1919), where Jaspers makes a ‘psychological’ analysis of worldviews. Jaspers mentions some precursors of this type of analysis, such as Hegel and Dilthey, but rejects the approach of the former. His own approach is based mainly on two of Hegel’s individualistic critics: Nietzsche and Kierkegaard. Among other things Jaspers discusses individualism and collectivism/holism, but only as Weltanschauungen, as psychological facts that is. Jaspers is often conceived of as the founder of existentialism and, the germ of this doctrine can be clearly detected in his Psychologie, with its frequent references to the Existenz of human beings.40

4

Austrian methodological individualism

The new Austrian methodology, which traced market prices to the actions of individuals was known as methodological individualism. It pointed out that market prices, as well as all other economic phenomena, rested unequivocally on the decisions, preferences, and subjective values of individuals. (Greaves, 1996: 2) Methodological individualism, as an explicitly stated principle for social scientific research, originates with the Austrian School of Economics. It is also the members and sympathisers of this school, who have made most to propagate this principle in the social sciences, at least in the early stages of its development. The Austrian School has little in common with the British and Lausanne schools of economics besides the principle of marginal utility. Its roots are not in utilitarianism and it does not make much use of mathematics and the idea of equilibrium. Its hallmark is subjectivism and it uses a genetic approach to social institutions, prices included. The Austrian School of Economics is, I believe, best understood against the background of German and Austrian thinking about methodology, economy and society.1

Carl Menger The founding father of the Austrian School in Economics was Carl Menger (1840–1917), one of those three economists who made the marginalist revolution. The other two were W. Stanley Jevons and Leon Walras. Menger’s contribution to the rise of neoclassical economics was Principles of Economics (Grundsätze der Volkswirtschaftslehre, 1871). The main message of this work was that the value and the price of an economic good is determined, neither by the labour it takes to produce it, nor by the total costs of production, but by the subjective evaluations of economising individuals. The ultimate determinant of economic value and of price is the needs of individual human beings.2 Already in the Preface to Principles of Economics, Menger makes the following proclamation:

88

Austrian methodological individualism In what follows I have endeavoured to reduce the complex phenomena of human economic activity to the simplest elements that can still be subjected to accurate observation, to apply to these elements the measure corresponding to their nature, and constantly adhering to this measure, to investigate the manner in which the more complex economic phenomena evolve from their elements to definite principles. (Menger [1871] 1976: 46f)

This, according to Menger, is the method proposed by Francis Bacon and commonly accepted in the natural sciences.3 Applied to economics, it amounts to demonstrating ‘that man with his needs and his command of the means to satisfy them, is himself the point at which human economic life both begins and ends’ (p. 108). The ultimate explanation of all economic phenomena, therefore, is in terms of the behaviour of economising individuals. The starting-point of Menger’s analysis is the isolated individual, represented by Robinson Crusoe alone on his island (pp. 133ff), but the same principles of economising govern the behaviour of individuals exchanging goods on a market. This is Menger’s ‘atomistic’ method, which would later become known as ‘methodological individualism’ (see Hayek, 1973: 8; 1978: 276f). Principles of Economics was a work on substantive economic theory, containing only a few scattered remarks on methodology. The latter subject was treated more fully some ten years later in Menger’s second major work, Problems of Economics and Sociology (Untersuchungen über die Methode der Socialwissenschaften und der Politischen Oekonomie insbesondere, 1883). The reason Menger turned to methodology was the relative neglect of his work on economic theory in an academic atmosphere dominated by the German Historical School in economics. His methodological treatise would become all but neglected. It became the igniting spark of the famous Battle of Methods (Methodenstreit), which divided German and Austrian economists of different scientific and political persuasions for several decades.4 The main combatants in this battle were Carl Menger and Gustav von Schmoller, the undisputed leader of the Younger Historical School in German economics. One, largely latent, source of animosity between the two combatants was no doubt political-ideological (cf. Cubeddo, 1993: 21ff). Menger was a liberal, with a certain conservative leaning, defending a free market economy against state intervention. Schmoller was a conservative state socialist, a so-called ‘Academic Socialist’, or ‘Socialist of the Chair’ (Kathedersozialist), who saw the economy as an affair of the state and advocated social reform. Simply put, Menger was relatively more pro-market, Schmoller more pro-state. More manifestly, however, the battle raged over the nature of economic science and the methods proper to it. Menger defended a theoretical economics proceeding, like classical economics, by abstraction and deduction. First, rational and self-interested economic man is abstracted from concrete human beings. Second, the market of pure exchange relations is abstracted from the society in which it is embedded. The laws governing the universe of theoretical economics have the status of exact natural

Austrian methodological individualism

89

laws. Schmoller conceived of economics as a historical science proceeding by induction from concrete historical reality, in order, eventually, to arrive at laws of economic phenomena. From this point of view, the postulates of theoretical economics are simply false – figments of the imagination. An important part of the argument concerned the relation between theory and practice, but this is not my business here. The most important difference, for my purposes, is that Menger defended an atomistic method focusing on individuals, while Schmoller suggested a holistic approach focusing on social institutions. For Schmoller, the economy is but one aspect of the life of nations and must be analysed as part of society as a whole.5 In his Problems of Economics and Sociology (1883), Menger made a division of the field of economics into three groups: the historical, the theoretical and the practical sciences. His main concern was to defend theoretical economics against the attempts to turn economics into a historical science. Theoretical economics, in its turn, was divided into a realistic-empirical and an exact orientation. Without denying the utility of the former, Menger saw, as the crowning achievement of theoretical economics, its development into an exact science.6 One of the historical school’s main criticisms of theoretical economics was that it is atomistic. This charge of atomism ‘is supposedly based on the fact that economic phenomena theoretically are reduced ultimately to individual economic efforts or to their simplest constituent elements, and are thus explained’ (Menger [1883] 1963: 90f). According to Menger, however, this criticism is based upon a misunderstanding, since all exact sciences are necessarily atomistic. Arguing for an exact economics, therefore, is tantamount to arguing for an atomist method (pp. 93f). Menger’s defence of atomism in economics is combined with a critique of the alternative interpretation of ‘national economy’ as concerned with the nation as ‘a large subject that has needs, that works, practices economy, and consumes’ ([1883] 1963: 92f). Thus the phenomena of ‘national economy’ are by no means direct expressions of the life of the nation as such or direct results of an ‘economic nation.’ They are, rather the results of all the innumerable individual economic efforts in the nation, and they therefore are not to be brought within the scope of our theoretical understanding from the point of view of the above fiction … Whoever wants to understand theoretically the phenomena of ‘national economy,’ those complicated human phenomena which we are accustomed to designate with this expression, must for this reason attempt to go back to their true elements, to the singular economies in the nation, and to investigate the laws by which the former are built up from the latter. But whoever takes the opposite road fails to recognize the nature of ‘national economy.’ He moves on the foundation of a fiction, but at the same time he fails to recognize the most important problem of the

90

Austrian methodological individualism exact orientation of theoretical research, the problem of reducing complicated phenomena to their elements. (Menger [1883] 1963: 93)

Menger does not, however, deny the existence of unitary social wholes. While critical of the excesses of organicism in nineteenth-century social theory, he does admit that there are social ‘organisms’, in the sense of unitary wholes. He also admits that they may be subjected to functional analysis of social institutions as parts of such wholes. But the existence of organic wholes is not something to be assumed a priori, it is something to find out by research, and even unitary wholes are amenable to an exact atomistic analysis. ‘The acknowledgement of a number of social phenomena as “organisms” is in no way in contradiction to the aspiration for exact (atomistic!) understanding of them’ ([1883] 1963: 141). The defining characteristic of an ‘organism’ is that it has grown, without being anyone’s deliberate creation. Menger, thus, sides with the critics of the theory of the social contract, such as Hegel and Savigny. While many social institutions and structures are mechanisms of pragmatic origin, others are organisms which have ‘grown’, in the sense of being the unintended result of the actions of many men. This is the immediate source of Hayek’s celebrated distinction between two types of order: organisations and spontaneous orders (see p. 120). The most well known example of an organism or spontaneous order, in the sense of Menger and Hayek, is the market. At least, as analysed by Adam Smith, where the it appears as if guided by an invisible hand. Prices and other economic phenomena are the unintended results of the economic action of many individuals and, as such, amenable to atomistic analysis. More original and interesting, however, is Menger’s suggestion that other social institutions also, such as the family, the state, and law can be explained in similar manner. Simply stated, the procedure is to show how social institutions emerge as the unintended end-result of a sequence of actions, many of which are intended and rational, others mere custom. Menger himself uses this type of atomistic analysis in his well-known explanation of the origin of money (Menger [1871] 1976: ch. 8; [1883] 1963: 152–5; 1892). In the beginning, human beings exchanged goods in the form of barter. But some goods are more useful for this purpose than others, since they fulfil needs that are common to many people. These goods, therefore, are more saleable. Cattle, for instance, is a good which virtually all individuals find useful and therefore tend to accept as payment. This praxis turns into custom and this custom seems to have been the embryo of money in many cultures. Though useful, cattle have some disadvantages. They are big and heavy and not perfectly divisible, at least not when alive. Other goods such as shells and pieces of metal have obvious advantages in this respect. How it comes about that money takes exactly the form it has today may be hard to tell, but the principle of explanation is clear: It is clear … that the origin of money can truly be brought to our full under-

Austrian methodological individualism

91

standing only by our learning to understand the social institution discussed here as the unintended result, as the unplanned outcome of specifically individual efforts of members of society. (Menger [1883] 1963: 155) I suggested earlier (p. 9) that Hobbes’s theory of the social contract was a first paradigm of methodological individualism-in-use. I also suggested that Adam Smith’s idea of the market, as governed by an invisible hand, was a second paradigm of theoretical individualism (p. 12). I now wish to suggest that Carl Menger’s explanation of the origin of money is a third paradigm of methodological individualism-in-use.7 It is an explanation which has precedents in the conservative thinking of German historicism, especially that of Savigny and in Hume’s analysis of convention. It is similar to Smith’s theory of the market, to the extent that it is an invisible-hand explanation of a spontaneous order, but it is different in being an evolutionary, or genetic, explanation. Menger’s explanation, forebodes, not only the game-theoretic analysis of conventions as solutions to games of co-ordination (Wärneryd, 1990: ch. 4), but also explanations in terms of path-dependence.

Figure 4.1 Carl Menger’s theory of social institutions

The German economist Gustav von Schmoller reviewed Menger’s book on methodology in the year of its appearance, but in a tone that Menger did not like at all. From his pedestal in German academic life, Schmoller looked down upon Menger as an ‘acute dialectician, with a logical mind’, but lacking ‘the universal philosophical and historical training’ necessary for a reformation of economics (Schmoller, 1883: 251). It must have been the tone that Menger reacted to, since Schmoller was very predictable in his review and actually agreed with some of Menger’s views. Anyway, Menger became absolutely furious and wrote a piece called Irrthümer des Historismus (Delusions of Historism, 1884), which consists of little more than invectives and ironies directed at Schmoller. The final act was melodramatic: Schmoller (1884: 677) returned his copy of Menger’s Irrthümer to its author with an open letter explaining that the alternative would have been to throw it in the waste-paper basket.8 The Battle of Methods raged for decades and included several contributions by Menger himself and by his pupils. Nothing of great importance was added,

92

Austrian methodological individualism

however, to the topic of methodological individualism, or atomism. Menger made an addition to his earlier tri-partition of economics to comprise also a morphological orientation (1889) which may be seen as a departure from methodological individualism.9 Emil Sax (1884: ch. 5) made a distinction between individualism and collectivism as tendencies in the motives and actions of human beings and went on to argue that corresponding to these tendencies are different economic theories (ch. 6). Nothing follows from Sax’s suggestion, however, for the issue of methodological individualism versus collectivism. Eugen von Philippovich (1886: 50, n 3) rejected Sax’s distinction and restated Menger’s original position, which he clarified in some respects. He maintained (pp. 38f), for instance, that economics accepts individuals’ wants (preferences) as given, without asking the further question why they happen to have these particular wants. Friedrich von Wieser (1851–1926) agreed with Menger that there is no such thing as a social interest (1884: 25). Society is not a person and has no interest other than the interests of its members. He also defended the atomistic method of marginalist economics. The fundamental law of ‘marginal utility’ – a term that Wieser introduced (p. 128) – is true of the isolated individual, no less than of individuals in exchange (pp. 210–14). This is in contrast to the theory of price, which is a theory of economic exchange (Wieser [1893] 1971: 50–3). While critical of the ‘naive formulation’ of the ‘individualistic theory of society’, typical of political individualism, he defended methodological individualism: one cannot get away from its fundamental concept, that the individual is the subject of social intercourse. The individuals who comprise society are the sole possessors of all consciousness and of all will. The ‘organic’ explanation, which seeks to make society as such, without reference to individuals, the subject of social activity, has patently proved a failure. One must hold himself aloof from the excesses of the individualistic exposition, but the explanation must still run in terms of the individual. It is in the individual that one must look for those tendencies that make the social structure, that dove-tail (if we may use that expression) in such a manner as to give the firm cohesion of social unity and at the same time provide the foundation for the erection of social power. (Wieser [1914] 1967: 154) Eugen Böhm-Bawerk (1851–1914) similarly distinguished between two economic processes: one involving only the isolated Robinson Crusoe and the goods he uses, the other involving exchange of goods with other individuals (1891: 379). In the individualist imagery of Böhm-Bawerk, atomism is replaced by the idea of the individual as a microcosm, reflecting the macrocosm of the economy as a whole (pp. 380f). In his famous critique of Marxian economics, Böhm-Bawerk (1896: 258ff, 278f, 287) maintains that the root of the trouble is Marx’s use of Hegelian dialectics instead of adequate psychological microfoundations.

Austrian methodological individualism

93

Like early British neoclassical economics, the early Austrian School was clearly and explicitly psychologistic (Endres, 1997: 33–7).10 As we have already seen, the psychological foundation of Menger’s economics was a theory of needs. Von Wieser and Böhm-Bawer dropped the psychology of needs, but retained psychologism in the form of satisfaction of wants. According to von Wieser (1884: 39), ‘the theory of value, rightly conceived, is applied psychology’ and Böhm-Bawerk agreed, as we have seen. Increasingly, however, psychologism was replaced by new microfoundations in the form of rational choice (Endres, 1997: 213–15), conceived of as free from psychology. Menger was much less explicit about rationality than he was about methodological individualism. The individualist basis of his theory is individuals engaged in the satisfaction of their needs. No doubt, however, Menger’s reasoning is based on the assumption that individuals do so in a rational way. This becomes evident when he makes the qualification that individuals do not always act rationally in the satisfaction of their needs: Even individuals whose economic activity is conducted rationally, and who therefore certainly endeavour to recognize the true importance of satisfactions in order to gain an accurate foundation for their economic activity, are subject to error. Error is inseparable from all human knowledge. (Menger [1871] 1976: 148) It seems to me that the element of rational choice in early marginalist economics was pointed out most clearly by economists outside the Austrian camp. One of them was Heinrich Dietzel who argued, in effect, that economics is a theory of rational action. The economic principle (Das wirtschaftliche Prinzip) does not depend upon any particular motive, such as self-interest, but states only that individuals are instrumentally rational in the choice of means to satisfy their needs (Dietzel, 1883: 26ff; 1884: 17–44).11 The Austrian economist Emile Sax responded to Dietzel’s suggestion by pointing out that his formulation of the economic principle fails to exclude technology from the scope of economic theory. Following the German sociologist Albert Schäffle, Sax suggested that the economic principle is what the Austrians called economising (wirtschaften): the use of scarce resources to achieve a maximum of satisfaction (Sax, 1884: 9ff). This is, I believe, the main contribution of Austrian Economics to a theory of rational choice: they all conceived of economic theory as essentially concerned with individuals rationally engaged in economising on scarce resources, with alternative uses. This view of economics was eventually made famous by Lionel Robbins in his The Nature and Significance of Economic Science (1932). The Austrians of the first generation were aware and admitted that marginalist economics relies on an assumption of purposeful and rational behaviour on the part of economic agents, but this assumption was never the focus of their attention. It is my conjecture that the work of Max Weber contributed significantly to make rationality a central assumption of Austrian

94

Austrian methodological individualism

Economics – it was certainly an important theme of Max Weber’s own work in history and sociology. To conclude: Carl Menger may be considered the founder of ‘methodological individualism’, but, like Mill, he did not use this term himself. Borrowing a label used by the critics of classical economics, he called it ‘atomism’, which means that complex phenomena should be explained in terms of their simplest elements, or parts. It is not absolutely clear to me whether Menger’s atomism necessarily implies strict methodological individualism, or if there may be atoms larger than individual human beings. From the point of view of economic theory any economising unit – a household, a firm, even a state – may be treated as an atom of analysis (see Menger [1871] 1963: 193–6). On the other hand, it is perfectly clear that, according to Menger, the ultimate explanation of all economic phenomena is in terms of needs, something attributable only to individuals. Menger’s plea for atomist analysis is not dogmatic and it is strictly limited to the exact orientation of theoretical economics. History and the empirical-realistic orientation in social science make legitimate and necessary use of a collectivist method.12 Menger’s immediate followers accepted his atomistic method, as well as its limits, but did not contribute to its development, or clarification. Among Austrian economists, it is above all Friedrich von Hayek who has followed Menger in matters methodological. But there were others. Two German economists, Heinrich Dietzel and Max Weber, were swimming against the tide and professed a heretical belief in abstraction and atomism against the orthodoxy of the Historical School. Of these two, Weber is by far the most important, and will be treated in a separate section below, but the now forgotten Heinrich Dietzel was not without influence in his own lifetime and deserves a few comments. Dietzel was read by the Austrian economists and may have had some influence on their methodological views. Like them, he made a distinction between the theory of man’s relation to economic goods, which he called economics (Wirtschaftslehre), and the theory of economic exchange, which he called social economics (Socialwirtschaftslehre, later Socialökonomik). Like Menger, Dietzel was critical of the idea of a ‘national economy’ (Volkswirtschaft or Nationalökonomie) because of the misleading connotations of this term (Dietzel, 1895: 51ff). His own preferred term ‘social economics’ was suggested as a way to avoid the Romantic ideas of a people (Volk) and a nation (Nation), which only obscured the true nature of the economy as marketplace. Dietzel was a defender of classical economics and later also of marginal economics against the critique of the Historical School. He defended the abstract or, as he preferred to call it, the isolating method and also atomism, or individualism, at least for the purposes of social economics. Dietzel (1882: 55) referred to individualism as a ‘premiss’ of social economics and, indirectly, as a ‘methodological assumption’ (p. 62) which comes close to suggesting the term ‘methodological individualism’, although he did not actually do so. Methodological individualism is also implicit in Dietzel’s conception of economics as a theory of instrumental action, more specifically

Austrian methodological individualism

95

economic action, aimed at the satisfaction of needs by means of economic goods (Dietzel, 1883: 59ff; 1884: 17ff). Social phenomena are caused and constituted by the actions of individuals, which are caused by the motives of action, which are caused by the needs of individuals (Dietzel, 1895: 18). Dropping needs as the ultimate causes of social phenomena, we get something close to Max Weber’s view in a nutshell.

Max Weber The Austrians of the first generation were aware and admitted that marginalist economics relies on an assumption of purposeful and rational behaviour on the part of economic agents, but this assumption was never the focus of their attention. It is my conjecture that the work of Max Weber contributed significantly to make rationality a central assumption of Austrian Economics – it was arguably the central concern of Max Weber’s own work in history and sociology. As is well known, Max Weber saw history, or at least the history of the West, as subject to a tendency of increasing rationalisation. Not only economic life, but also politics, social life and culture, are subject to the irresistible force of human reason. In economic life, we see a culmination of instrumental rationality with the development of modern capitalism and the market. For this reason, economics, in particular, must be based on the assumption of instrumental rationality on the part of agents. (Udehn, 1991: 134–6). The first source of Weber’s view of the role of rationality in economics is in some notes he made to a course on theoretical economics in 1898 (Weber [1898] 1990: 29ff). Weber here conceives of economising as means-ends rationality, but does not yet make the distinction between economic and technical rationality. He is careful to point out that economics is not about real human beings, but about a constructed economic subject with certain ideal characteristics. Among the most important features of this ideal figure are those that define her/his rationality: perfect knowledge of the situation (the alternatives) and perfect understanding of the most adequate means to realise the various alternatives. Weber returns to the ideal typical assumption of rationality in his early methodological essays on “‘Objectivity” in Social Science and Social Policy’ (1904) and on the German economist of the Historical School Karl Knies (Weber, 1903–6). In the first essay, Weber arrives at the common interpretation of economics as bound up with the fundamental fact of scarcity (1949: 64f). This article also contains Weber’s first extensive discussion of ideal types, illustrated by abstract economic theory: ‘It offers us an ideal picture of events on the commodity-market under conditions of a society organized on the principles of an exchange economy, free competition and rigorously rational conduct’ (pp. 89f). In the second article, Weber’s starting-point is Knies’s argument that freedom of will is somehow irrational and, therefore, escapes social scientific treatment ([1903–6] 1975: 95–101). Against this argument, Weber correctly maintains that freedom is related to rationality rather than to irrationality, and also that free and rational actions are most eminently suited to social scientific

96

Austrian methodological individualism

treatment (pp. 120–9). Weber presents rational interpretation as the most important form of interpretive understanding. Rational action, which consists in choosing the most adequate means to reach an end, exhibits a unique degree of self-evidence, which makes it methodologically privileged. If we know that an action X is related to Y as cause to effect, then we can explain X as a means to reach the end Y. Such rational interpretation can be used either as a hypothesis to be verified by the facts, or as an ideal type, with which to compare actual actions. Actions, which are not rational, may then be understood as non-rational actions, as deviations from the ideal type of rational action. In both cases, according to Weber, rational interpretation is of ‘extraordinary heuristic value’ (pp. 186–191). With this argument, Weber appears as an early advocate of the ‘principle of charity’, later defended by Donald Davidson and Jon Elster, among others. A fourth source of Weber’s views of rationality in economics is his article on ‘Marginal Utility and “The Fundamental Law of Psychophysics”’ (Weber, 1908a). His main business in this article is to deny that the idea of marginal utility is in any way dependent on the Weber–Fechner law of psychophysics or any other psychological laws for that matter. Economics is based on certain common-sense observations of economic behaviour and on the equally common-sense assumption that individuals are rational in their economic activity. Economic theory rests on the assumption of perfect rationality and its heuristic value rests on the socio-cultural fact that economic life in the West increasingly approximates this assumption. Weber’s last treatment of the methodology of economics, is in his article on ‘The Meaning of “Ethical Neutrality” in Sociology and Economics’ and in chapter II of Economy and Society (1922). In the first, you will find Weber’s second extensive treatment of ideal types, once again exemplified by economics: Economic theory makes certain assumptions which scarcely ever correspond completely with reality but which approximate it in various degrees and asks: how would men act under these assumed conditions, if their actions were entirely rational? It assumes the dominance of pure economic interests and precludes the operation of political or other non-economic considerations. (Weber 1949: 44) In Economy and Society, Weber returns to the nature of economics. Economic action is now defined as ‘any peaceful exercise of an actor’s control over resources which is in its main impulse oriented towards economic ends’. Economic action is not necessarily rational. Rational economic action ‘requires instrumental rationality in this orientation, that is deliberate planning’ ([1922] 1978: 63). But resources are necessarily scarce, ‘the most essential aspect of economic action for practical purposes is the prudent choice between ends’ (p. 65). Weber has finally arrived at the distinction between economics and technology. The difference between them is this: ‘Economic action is primarily oriented to

Austrian methodological individualism

97

the problem of choosing the end to which a thing shall be applied; technology, to the problem, given the end, of choosing the appropriate means’ (pp. 66f).13 Max Weber was not from Austria and he was not only an economist. He was a jurist, historian, economist and sociologist, with a special interest in methodology. To posterity Max Weber is known as a sociologist, but it has been argued that he was first of all an economist, albeit of a kind that is extinct today; a member of the German Historical School in economics (Hennis, 1988: ch. 3). More common is the view that Weber was primarily a historian, using sociology as an auxiliary science, providing history with a system of basic concepts (Burger, 1976: 138; 1994; Roth, 1976). This view is often coupled with the suggestion that he developed from being a historian, to becoming more of a sociologist.14 I think that Max Weber defies classification in terms of disciplinary belonging, but that is probably the least important thing about him. Whatever he was, Max Weber was a great scholar and a great thinker. Weber’s attention to methodological issues was, at least partly, occasioned by the Methodenstreit and resulted in his intervention in that battle. It is generally agreed that Weber tried to steer a middle course between the positions of the main combatants Menger and Schmoller. The famous ideal type is often interpreted as Weber’s way to avoid both horns of a dilemma.15 Weber agreed with Menger that theoretical economics is, and should be, an abstract and atomistic science, but agreed with Schmoller and the Historical School that economics is a cultural science and a Wirklichkeitswissenschaft; a science of reality (von Schelting, 1922: 701–26; Tenbruck, 1986). The simplifying assumptions of economics; homo economicus, perfect competition, etc., are ideal types used for heuristic purposes, but should not be mistaken for natural laws. As Schumpeter (1954: 819) suggests, Weber ‘saw no objection of principle to what economic theorists actually did, though he disagreed with them on what they thought they were doing, that is on the epistemological interpretation of their procedure’. Even so, Joseph Schumpeter classified Weber as a member of the ‘Youngest Historical School’ in economics. His reason for doing so is Weber’s adherence to the doctrine of Verstehen (cf. also Lachmann, 1970: 17–48). I suggest that Weber shared the substantive concerns of the Historical School, but was closer to the Austrian School in methodology.16 There are many sources of Weber’s methodology, but three, in particular, are generally recognised: Heinrich Rickert’s neo-Kantianism, Austrian Economics and Dilthey’s doctrine of Verstehen (Eliaesson, 1990).17 For my present purposes, the influence of Austrian Economics is most important, because this is the most immediate source of his methodological individualism. By way of extreme simplification, I suggest that Weber took methodological individualism from the Austrian School of Economics, supported it by a neo-Kantian view of concept formation and turned it into subjectivist methodological individualism with the help of Dilthey and Simmel.18 The suggestion that Weber took his methodological individualism from economics gains support from a letter he wrote to the economist Robert Liefmann in 1920:

98

Austrian methodological individualism I do understand your battle against sociology. But let me tell you: If I now happen to be a sociologist according to my appointment papers, then I became one in order to put an end to the mischievous enterprise which still operates with collective notions (Kollektivbegriffe). In other words, sociology, too, can only be practised by proceeding from the action of one or more, few or many, individuals, that means, by employing a strictly ‘individualist’ method. (Quoted in Roth, 1976: 306)

This is the first time Weber makes explicit mention of an ‘individualist method’. His critique of the use of collective concepts, however, goes back to his early methodological essays. Already in his articles on Roscher and Knies (1903–6) – economists of the German historical school – Weber criticises, as metaphysical, the use of concepts such as ‘Volk’ and ‘general will’. He is also critical of the view of societies as organic wholes, and the attempt by Roscher to arrive at the laws of development of such wholes (Weber [1903–6] 1975: 60–91, 202–7). Weber sees in the use of such concepts and doctrines the influence of German Romanticism and especially of Hegelian ‘panlogism’. What he objects to, is the view that particular cultural phenomena are explained as ‘emanations’ of a volksgeist and as parts of an organic whole. Weber obviously prefers the opposite route. To the extent that there are such things as Volksgeists and social wholes at all, they have to be explained as the results of particular cultural values and beliefs entertained by individual human beings (cf. Burger, 1994: 88ff). Weber, then, sides with Austrian atomism against the collectivism and organicism of the German Historical School.19 In his article “‘Objectivity” in Social Science and Social Policy’ (1904), Weber criticises the conflation of concept with reality. The failure to realise that concepts are theoretical constructs of the mind, has particularly unwholesome effects in the case of collective concepts taken from the language of everyday life. Weber mentions as particularly problematic the ascription of interests to collective entities such as ‘agriculture’, ‘classes’ and the ‘state’. ‘The use of the undifferentiated collective concepts of everyday speech is always a cloak for confusion of thought and action’ (Weber, 1949: 107–10). With respect to the scientific conception of the ‘state’, Weber makes clear that it is ‘always a synthesis which we construct for certain heuristic purposes … abstracted from the unclear syntheses which are found in the minds of human beings’ (p. 99). When we inquire as to what corresponds to the idea of the ‘state’ in empirical reality, we find an infinity of diffuse and discrete human actions, both active and passive, factually and legally regulated relationships, partly unique and partly recurrent in character, all bound together by an idea, namely, the belief in the actual or normative validity of rules and of the authority-relationships of some human beings towards others. (Weber, 1949: 99)

Austrian methodological individualism

99

Weber’s distrust of collective concepts was also voiced in his contribution to the meeting of the German Sociological Association in 1910. He attacked a certain Dr Ploetz for making unscientific use of the concepts ‘race’ and ‘society’. Biological traits do not explain social phenomena. The social use of the concept of ‘race’ is invariably ideological; invented and used to serve the interest of some group in the oppression of another group (race). The concept of ‘society’, according to Weber ([1910] 1971: 36), is purely conventional and may be replaced by ‘social relationships and social institutions’. What Weber objected to was Ploetz’s suggestion that society is a living creature; his organicism. From a sociological point of view ‘nothing useful ever emerges from the joining together of several precise concepts with indefinite notions. And so it is here. We have the possibility of understanding the rational behavior of single human individuals through intellectual empathy’ (p. 39). In these short remarks are contained two important seeds of Weber’s emerging sociology: (1) the belief that all complex social phenomena can be defined in terms of social relationships and (2) the conviction that all social phenomena can be ultimately understood and explained in terms of individuals’ motives for their own actions. Weber’s first positive statement of methodological individualism, or ‘atomism’, can be found in his article ‘Some Categories of Interpretive Sociology’ (1913). This article, written in preparation of his magnum opus Economy and Society (Wirtschaft und Gesellschaft, 1922), also for the first time contains an outline of his interpretive (verstehende) sociology. Methodological individualism, in fact, is presented as the logical outcome of verstehen. The object of the discussion, ‘Verstehen,’ is ultimately also the reason why interpretive (verstehende) sociology (as we have defined it) treats the single individual and his action as its basic unit, as its ‘atom,’ if a questionable analogy is allowed here. (Weber [1913] 1981: 158) Weber contrasts his sociology with other approaches, which treat the individual either as a complex of smaller (chemical or psychic) parts, or as parts of social wholes. Interpretive sociology, then, is atomistic not only in the sense of treating the human individual as its elementary unit, but also in the sense of treating the individual as itself indivisible. Most relevant for my purposes is the standpoint of interpretive sociology with respect to collective concepts. It is peculiar not only to language but also to our thinking that the concepts that comprehend action let it appear in the guise of a persistent structure, either of a material entity, or of a personified force leading a life of its own. This is true particularly in sociology. Concepts such as the ‘state,’ ‘association,’ ‘feudalism,’ and the like generally indicate for sociology categories of certain kinds of joint human action; it is therefore the task of sociology to reduce these concepts to ‘understandable’ action, meaning, without

100

Austrian methodological individualism exception, the action of the participating individuals. This is not necessarily true for other disciplines. (Weber [1913] 1981: 158)

Weber mentions jurisprudence, which is justified in treating some collectives as wholes, without bothering much about the component individuals. Thus, for the purposes of legal science, the state might be treated as a ‘legal person’, but ‘[f]or sociological analysis, the word “state” – if it is used at all – signifies only a course of human action of a particular kind’ (Weber [1913] 1981: 159). In his essay on ‘The Meaning of “Ethical Neutrality” in Sociology and Economics’ (1917), Weber writes about the ‘individualistic orientation’ of economic theory and maintains that this individualistic orientation is ‘apolitical’ and for ‘analytical purposes only’ (Weber, 1949: 44) The term ‘individualistic method’ does not appear in Weber’s writings until the posthumous publication of Economy and Society (1922). This work also contains Weber’s most mature and most extensive treatment of methodological individualism and is, therefore, the main source for an understanding of his ideas on this subject. What he has explicitly to say about methodological individualism appears in the negative form of contrasts and oppositions to other doctrines, from which a positive statement has to be extracted. But one thing emerges clearly: Weber’s ‘individualistic method’ is inseparable from his definition of sociology as concerned only with subjectively meaningful behaviour, that is, action. Sociology (in the sense in which this highly ambiguous word is used here) is a science concerning itself with the interpretive understanding of social action and thereby with a causal explanation of its course and consequences. We shall speak of ‘action’ insofar as the acting individual attaches a subjective meaning to his behavior – be it overt or covert, omission or acquiescence. Action is ‘social’ insofar as its subjective meaning takes account of the behavior of others and is thereby oriented in its course. (Weber [1922] 1978: 4) It is to be observed that interpretive understanding is not an end in itself, but a means for arriving at a causal explanation of action. To this effect, Weber makes the distinction between ‘direct observational understanding’ and ‘explanatory understanding’, which was part and parcel of the hermeneutic tradition before Weber. Direct observational understanding is achieved when an action is identified as being of a certain type, explanatory understanding when the motive of the action is known. ‘A correct causal interpretation of a concrete course of action is arrived at when the overt action and the motives have both been correctly apprehended and at the same time their relation has become meaningfully comprehensible’ ([1922] 1978: 12). It may also be pointed out that Weber’s social action makes sociology different from economics, which starts with the isolated individual and sees the

Austrian methodological individualism

101

market as a play against nature (see Swedberg, 1998: ch. 2). For Weber, then, rationality is not parametric. Individuals do take the actions of others into account, but Weber did not have the means (game theory) at his disposal to arrive at the idea of strategic rationality (Elster, 1979a; 68f; 2000: 38f). Unlike both mainstream economics and game theory, however, Weber focuses his attention on meaning and this meaning is cultural. For Weber, therefore, both economics and sociology are ‘cultural sciences’ dealing with cultural phenomena (Weber, 1949: 66ff).20 The reason why, according to Weber, his interpretive sociology implies an individualist method, is that only individuals act. ‘Action in the sense of subjectively understandable orientation of behavior exists only as the behavior of one or more individual human beings’ ([1922] 1978: 13). This is also the reason why Weber contrasts the sociological use of collective concepts with that of jurisprudence. In juridical contexts social collectives, such as the state, business corporations, associations and foundations are treated like individual persons – legal persons – and according to Weber, this is perfectly legitimate. But for the subjective interpretation of action in sociological work these collectivities must be treated as solely the resultants of and modes of organization of the particular acts of individual persons, since these alone can be treated as agents in the course of subjectively understandable action. (Weber [1922] 1978: 13) Weber’s conclusion is not, however, that concepts denoting social collectives should – or could? (Weber is not absolutely clear on this point) – be entirely eliminated from sociological analysis. Such elimination is unrealistic for several reasons, including their use in other disciplines and in everyday speech. The important thing, according to Weber, is to keep in mind that ‘for sociological purposes there is no such thing as a collective personality which “acts”’, and in sociological contexts collective concepts refer only to ‘a certain kind of development of actual or possible social actions of individual persons’ ([1922] 1978: 14). Weber also opposes methodological individualism to the functionalist or ‘organic’ school of sociology, most typically represented by Albert Schäffle and his ‘brilliant work’ Bau und Leben des sozialen K örpers (1878). Weber does not, however, dismiss the functional approach as of no value at all to sociology. He assigns to it the role of something like a heuristic device, and this is yet another reason why, according to Weber, collective concepts cannot be altogether eliminated from sociological analysis. The functional frame of reference is useful, first of all, for illustration and for a provisional orientation. Second, the functional approach is sometimes the only means of identifying the processes at work in a given social phenomenon. Weber warns us, however, against overestimating the cognitive value and, thereby, illegitimately ‘reifying’ the collective concepts used. Functional analysis is only the beginning of sociological analysis, as understood by Weber. In sociological analysis it is possible to ‘go beyond merely

102

Austrian methodological individualism

demonstrating functional relationships’. It is possible to attain a ‘subjective understanding of the action of the component individuals’ ([1922] 1978: 15). Additional light is thrown upon Weber’s view of sociology, its individualist method and relation to functionalism, by looking at his encounter with the functionalist or ‘universalist’ method of Othmar Spann. Weber grants to Spann the insight that we must know what kind of action is necessary for the ‘survival’ or maintenance of a cultural type before we can even pose the question of what motives determine the action.21 It is necessary to know what a ‘king’, an ‘official’, an ‘entrepreneur’, a ‘procurer’, or a ‘magician’ does, that is, what kind of typical action, which justifies classifying an individual in one of these categories, is important and relevant for an analysis, before it is possible to undertake the analysis itself … But it is only this analysis itself which can achieve the sociological understanding of the actions of typically differentiated human (and only human) individuals, and which hence constitutes the specific function of sociology. (Weber [1922] 1978: 18) Weber concludes his discussion of methodological individualism by criticising, as mistaken, the belief that an individualist method somehow presupposes individualist values, or is applicable only to a free market economy. According to Weber, even a socialist economy has to be understood sociologically in the same ‘individualistic’ terms. Once again: The real empirical sociological investigation begins with the question: What motives determine and lead the individual members and participants in this socialist community to behave in such a way that the community came into being in the first place and that it continues to exist? Any form of functional analysis which proceeds from the whole to the parts can accomplish only a preliminary preparation for this investigation – a preparation, the utility and indispensability of which, if properly carried out, is naturally beyond question. (Weber [1922] 1978: 18) This exhausts what Weber has to say about the ‘individualistic method’. Any presentation of Weber’s version of methodological individualism would be incomplete, however, without a mention of his definition of the basic concepts of his sociology in terms of the social actions of individuals ([1922] 1978: 22ff). Weber’s verstehende sociology starts from the concept of ‘social action’, which, as we have seen above, is action oriented to the behaviour of others. On this concept is based the concept of ‘social relationship’ which is social action involving a plurality of actors, each taking account of the actions of the others. Of special importance is Weber’s utilisation of the concept of ‘probability’ in his definition of ‘social relationship’. A social relationship, according to Weber ‘consists entirely and exclusively in the existence of a probability that there will

Austrian methodological individualism

103

be a meaningful course of social action – irrespective, for the time being, of the basis for this probability’ (pp. 26f). It has been argued (see, e.g., Wrong, 1970: 24f; Weiss, 1975: 88–90), correctly I believe, that Weber’s use of the concept of ‘probability’, in this and in other definitions, should be understood as an attempt to avoid reification and, thereby, to secure methodological individualism (cf. also Ringer, 1997: 158f). Social orders or structures, being complexes of social relationships, do not exist as entities sui generis, but only as the probability that certain individuals will act in certain ways. Weber, then, recognises the ‘existence’ of organisations – such as firms and states – and of social structures – such as markets, religions, systems of law, cities, classes, status groups, nations, races, etc. – but not of society. There is no such thing as society. Society exists neither as an entity, nor as a ‘level of reality’ in addition to individuals and their actions. Weber’s sociology, therefore, has no use for the concept of ‘society’ (cf. Tyrell, 1994). Sociology is a science of individuals and their actions, not of society.22 To conclude this presentation of Weber’s methodological individualism: Weber advanced his ‘individualistic method’ in opposition to the use of collective concepts in sociology. Collective concepts are used in everyday life and influence the actions of individuals. As such, they are relevant for the sociologist. But sociologists should not turn collective concepts used in everyday life into their own tools of analysis. Collective concepts, such as class, race, etc., are also used by social scientists, but should then be treated with utmost suspicion, because they are often used for dubious ideological purposes. Weber did not, however, want to abolish collective concepts from sociological analysis altogether, provided one remembers that they denote nothing but complexes of actions of individual persons. To this end, collective concepts must be defined in terms of individuals. Weber’s definitions at the beginning of Economy and Society of the basic concepts of sociology in terms of social action is his attempt to achieve this end. But Weber’s methodological individualism is not only about concepts. It is also inseparable from his definition of sociology as exclusively concerned with the interpretation of the subjective meaning individuals attach to their actions and the causal explanation of these actions in terms of motives. From this definition follows that Weber did not allow the use of collective concepts in sociological explanation. A highly plausible interpretation of Weber’s methodological individualism, therefore, is that it forbids the use of collective concepts, if not in sociological analysis, then at least in sociological explanation (cf. Runciman, 1972: 24f). It is not altogether clear to me if Weber intended to suggest that all social phenomena should be explained in terms of motive alone and, if so, if he conceived of this as a peculiarity of his own interpretive sociology, or as imperative for all sociology. My guess is that the answer to the first question is yes, but that he saw interpretive sociology as one of several possible types of sociology.

104

Austrian methodological individualism

Joseph Schumpeter In 1909, when Max Weber was planning a handbook in economics called Grundriss in Sozialökonomik (Outline of Social Economics), he asked Friedrich von Wieser to write about economic theory and his pupil Joseph Schumpeter to write a piece on the history of economic theory. Wieser’s part was published in 1914 as Theorie der Gesellschaftlichen Wirtschaft (Social Economics, 1927). Schumpeter’s contribution was published the same year (1914) as Epochen der Dogmen- und Methodengeschichte (Economic Doctrine and Method, 1954). Eventually, Weber was to make a contribution of his own to this project; Wirtschaft und Gesellschaft, published posthumously in 1922 (Economy and Society, 1978). When Weber, in 1918 was offered a chair in economics in Vienna, he was asked to give his opinion on the candidates to another chair in theoretical economics. Weber unhesitatingly recommended Joseph Schumpeter to the post – the ‘greatest theoretical talent’, who is also ‘an excellent teacher’ (quoted in Hennis, 1991: 49). Weber and Schumpeter knew and respected each other, but little is known about their personal relationship.23 Intellectually, influence was probably asymmetric, running mainly from the older man to the younger. It has been argued by Richard Swedberg (1991: 2) that Schumpeter was heavily influenced by Weber’s idea of a transdisciplinary economics, called Sozialökonomik (social economics), and eventually made it his own. There is a presumption of a connection between Schumpeter’s theory of economic development and Weber’s theory of capitalism. Schumpeter’s innovative entrepreneur seems to have something in common with Weber’s charismatic leader (Macdonald, 1965). Schumpeter defended and adopted Weber’s doctrine of value neutrality (Osterhammel, 1987: 109). Schumpeter’s theory of democracy, finally, bears a clear imprint of Weber’s ditto (Udehn, 1996: 138). Weber, on the other hand, got at least one thing from Schumpeter: the term ‘methodological individualism’. Schumpeter was probably first to use the term ‘methodological individualism’ (see Machlup [1951] 1978: 471f). He introduced it in Das Wesen und der Hauptinhalt der theoretischen Nationalökonomie (The Nature and Essence of Theoretical Economics, 1908) in order to make the distinction between methodological and political individualism and, above all, to argue that they are altogether independent. The ultimate purpose of the distinction was to defend the theory of marginal utility against the recurrent accusations that, like classical economics, it propagates political individualism (Schumpeter, 1908: 88–98). The argument is repeated in Economic Doctrine and Method, which also includes a rather odd characterisation of political individualism: This method of starting from a fact of individual psychology led to two groups of objections. Firstly, the general objections to individualism and atomism were levelled especially against this school. In this respect an adequate distinction between political individualism, the view that individuals are independent causes of social phenomena which represent merely a

Austrian methodological individualism

105

resultant of these causes, and the mere method of starting from the individual for purposes of pure economics was not made. (Schumpeter [1914] 1954: 190) In the History of Economic Analysis (1954), Schumpeter distinguishes three forms of individualism: political, sociological and methodological. By the first, Schumpeter now means Manchester liberalism. What in the above quotation was called ‘political individualism’, is now called ‘sociological individualism’: the view widely held in the seventeenth and eighteenth centuries, that the self-governing individual constitutes the ultimate unit of the social sciences; and that all social phenomena resolve themselves into decisions and actions that need not or cannot be further analyzed in terms of superindividual factors. This view is, of course, untenable so far as it implies a theory of the social process. From this, however, it does not follow that, for the special purposes of a particular set of investigations, it is never admissible to start from the given behavior of individuals without going into the factors that formed this behavior … In this case we speak of Methodological Individualism. (Schumpeter, 1954: 888f) With ‘methodological individualism’, then, Schumpeter understood the method-in-use of theoretical economics: ‘the point of departure when describing economic phenomena is the actions of individuals’ (dass man bei der Beschreibung gewisser wirtschaftlicher Vorgänge von dem Handeln der Individuen ausgehe [Schumpeter, 1908: 90f] my translation). Unlike Weber, however, Schumpeter himself was not committed to ‘methodological individualism’, and he did not believe that this method was of much use in other theories and disciplines. In the theory of organisations, for instance, and in sociology more generally, Schumpeter did not believe that you would get very far with an individualist method (pp. 94f; 539–41).24 In a speech Schumpeter gave in Japan in 1931, but published only recently (1991), Schumpeter’s instrumental attitude to methodology in general, and to methodological individualism in particular, is most clearly expressed. It is no use before approaching a problem to form a preconceived idea of how to proceed with it. As you know, at the beginning of the eighteenth century all economists used to start in their analysis with the individual. The nineteenth-century economists also took the individualistic standpoint. It is [the creed of methodological universalism] that it is quite wrong to start from the individual. The individual is only a product of the social environment and therefore it is wrong to start from him. We know that every individual is fashioned by the social influences in which he grows up. In this sense he is the product of the social entity or class and therefore not a free agent. That is certainly so, but it is quite uninteresting as long as it is stated

106

Austrian methodological individualism in this general form, where it is nothing but a phrase. It is interesting only when we can build a concrete knowledge on the basis of that view, and my great objection to it is that we do not make anything out of preaching universalism as a creed. In some problems of sociology or political life and so on we have no choice but to start from the social whole. In other cases, such as market phenomenon and most problems of modern industry, there is no choice but to start from the individual. In one class universalism and in the other class individualism is the indicated method. Therefore we ought to be neither individualistic nor universalistic. It is a matter of convenience; neither individualism nor universalism is an eternal truth. (Schumpeter, 1991: 286f)

This passage shows clearly that Schumpeter, like the early Austrians, was a methodological pluralist. It also indicates that ‘methodological individualism’ meant something different for Schumpeter, than it does for many contemporary methodological individualists (see pp. 112, 210). Finally, it shows that Schumpeter did not follow Weber in his attempt to build an individualistic sociology. With respect to sociology, Schumpeter sided with Weber’s methodological opposite Emile Durkheim. In his own sociological works, Schumpeter did not practise methodological individualism.25 The main sources of inspiration for his theory of social classes was Gustav Schmoller, Emile Durkheim and Othmar Spann (Schumpeter [1927] 1951: 135). As Schroeter has pointed out (1985: 163), this makes for ‘a very holistic and deterministic approach’, far from the individualistic method of Max Weber. And, indeed, according to Schumpeter ‘every social class is a special social organism, living, acting, and suffering as such and in need of being understood as such’ (Schumpeter, 1927: 137). Weber would have disapproved strongly of this definition, had he been alive. Another deviation from methodological individualism (cf. Swedberg, 1991: 104) is that Schumpeter saw the family, not the individual, as the unit of class analysis (Schumpeter [1927] 1951: 148).26 The term ‘methodological individualism, then, was coined by Joseph Schumpeter. However he himself did not adhere to any doctrine with this name. Schumpeter was a methodological pluralist with an exceptional tolerance for alternative approaches. Schumpeter used the term ‘methodological individualism’ descriptively, to designate the method of theoretical economics, but without normative implications for other theories. He also used it to distinguish between political, sociological and methodological individualism. I believe that another distinction would help to clarify his own position. I suggest that a fruitful distinction can be made between substantive and procedural methodological individualism. Substantive methodological individualism says something about the content of concepts and/or explanations. This is how Weber understood methodological individualism and, as we shall see, it is the most common version. Procedural methodological individualism, on the other hand, says something about the order of analysis and/or presentation. For Schumpeter, methodological individualism did not say anything about social reality, about the

Austrian methodological individualism

107

causes of social phenomena, or about how to explain them. It was merely an acknowledgement of the fact that marginal economics actually starts with the wants of individual human beings – something he calls its modus procedendi (Schumpeter, 1909: 214). Methodological individualism, according to Schumpeter, is procedural methodological individualism.

Ludwig von Mises Methodological individualism was also proposed by the Austrian economist Ludwig von Mises. Although never his pupil, Mises was, as an economist, much influenced by Menger,27 and eventually became a leading representative of the Austrian, or the New Austrian, School in economics. He did not, however, share all of Menger’s ideas on methodology. According to Mises, ‘Menger was too much under the sway of John Stuart Mill’s empiricism to carry his own point of view to its full logical consequences’ (Mises, 1969: 27f). In matters methodological, Mises was also influenced by Weber (Selgin, 1988: 22), and this includes the matter of methodological individualism (Rothbard, 1979: 57). He was personally acquainted with Weber and frequently discussed methodological issues with him (Mises, 1978: 4). It has also been testified that Weber’s interpretive sociology was a favourite topic at Mises’s private seminar in the 1920s, which included members such as F.A. von Hayek, Fritz Machlup, Alfred Schutz and Felix Kaufmann (Haberler [1961] 1974: 191). There is no reason to doubt this testimony. Mises’s first substantial contribution to social science methodology, ‘Sociology and History’ (Soziologie und Geschichte, [1929] 1933), was a critical discussion of Weber’s ideal type. Like Schumpeter, Mises was sympathetic to Weber’s doctrine of valuefreedom. Unlike the former, however, he also agreed with Weber that sociology should conform to the principle of methodological individualism. It should be noted, though, that at least initially Mises had a different conception of ‘sociology’. He conceived of it as a general theory of action, which included economics, as its most developed branch. As soon as he realised that this was not in conformity with common usage, he replaced the term ‘sociology’ by the term ‘praxeology’. What Mises liked best about Weber’s sociology was its subjectivism and the fact that it is defined as a theory of action. He did not, however, agree with Weber on the status of economic laws as ideal types and on his concept of ‘rationality’ (Mises, 1933: 68ff; 1961: 124–7). For Mises, all action, as distinguished from (reactive) behaviour, is rational. Action is a category ultimately given to our experience, and praxeology is an a prioristic science resulting from pondering on this ultimate experience. It is sometimes maintained that Mises’s praxeology should be understood along Kantian lines (Rothbard, 1979: 35f; Parsons, 1990: 296ff), as made up of a priori statements that are either analytic (Smith, 1990: 279–82), or synthetic (Selgin, 1988: 21), but this is not the only possibility. Praxeology may also be understood as an exact science in the sense of phenomenology (Chisholm, 1986: 191; Smith, 1990: 279ff). Mises’s first discussion and defence of methodological individualism was in

108

Austrian methodological individualism

Socialism. An Economic and Sociological Analysis (Die Gemeinwirtschaft, 1922). First among Austrian economists, Mises explicitly insisted that economic action is rational action. Methodological individualism follows as consequence of this fact: All rational action is economic. All economic activity is rational action. All rational action is in the first place individual action. Only the individual thinks. Only the individual reasons. Only the individual acts. How society arises from the actions of individuals will be shown in a later part of our discussion. (Mises [1922] 1951: 113) Mises’s next step is to argue that economics is based on principles governing the action of the isolated individual. Mises goes further than his predecessors and argues that it is ‘quite correct to regard all economic activity, even the economic activity of isolated man, as exchange’ (p. 117). Exchange, for Mises, reduces to choice. It is to prefer (exchange) A to (for) B. This does not mean, however, that Mises operates with an abstract, or asocial, individual. Rational man is a social being. Man is already a member of a social body when he appears as a thinking, willing creature, for the thinking man is inconceivable as a solitary individual … The development of human reason and the development of human society are one and the same process. All further growth of social relations is entirely a matter of will. Society is the product of thought and will. It does not exist outside thought and will. Its being lies within man, not in the outer world. It is projected from within outwards. (Mises [1922] 1951: 291) The prerequisite of all social life is language (pp. 321f). First of all, language is a precondition for thinking and rational action. Second, it is a precondition for co-operation and, hence, for society. Society, according to Mises, is co-operation and takes the form of division of labour. Therefore, to ask ‘how society arises from the actions of individuals’, is to ask for an explanation of division of labour. The explanation is simple: ‘Progress in the division of labour depends entirely on a realization of its advantages, that is of its higher productivity’ (p. 302). This seems like a rationalistic account of society, but Mises does not accept rationalism wholesale. He rejects the theory of the social contract. The doctrine of natural law has erred in regarding this great change, which lifts man from the state of brutes into human society, as a conscious process; as an action, that is, in which man is completely aware of his motives, of his aims and how to pursue them. (Mises [1922] 1951: 43)

Austrian methodological individualism

109

Like Menger, Mises recognises two types of social order: organisations and organisms; the former being conscious creations, the latter a result of growth. Mises is also influenced by Herbert Spencer, and it is probably from him, that he picks up a second way of drawing the above distinction: ‘Organization is an association based on authority, organism is mutuality’ ([1922] 1951: 296). The Organisation is the state, the Organism is the market and do not let the former interfere with the latter. Mises’s first explicit mention of methodological individualism is, probably, in the article ‘On the Development of the Subjective Theory of Value’ (Vom Weg der Subjektivistischen Wertlehre), first published in 1929 and included in his Epistemological Problems of Economics (Grundprobleme der Nationalökonomie, 1933). In this article, Mises ([1933] 1976: 153) identifies individualism with nominalism and opposes it to universalism (Universalismus). He returns to this subject, at greater length, in the main essay in this book, ‘The Task and Scope of the Science of Human Action’ (Aufgabe und Umfang der allgemeinen Wissenschaft von menschlichen Handeln, 1933), which is a preparatory work for his magnum opus Human Action. For the purposes of science we must start from the action of the individual because this is the only thing of which we can have direct cognition. The idea of a society that could operate or manifest itself apart from the action of individuals is absurd. Everything social must in some way be recognizable in the action of the individual. What would the mystical totality of the universalists be if it were not alive in every individual? Every form of society is operative in the actions of individuals aiming at definite ends. What would a German national character be that did not find expression in the Germanism of individuals? What would a church be that did not express the faith of individuals? (Mises [1933] 1976: 43) In this quotation, Mises uses an epistemological argument to back up a kind of procedural methodological individualism. Social science takes the individual as its point of departure, since only the individual human being is immediately given to experience. Mises differs from Schumpeter, however, by suggesting that the individual is the ‘empirical’ point of departure. For Schumpeter, the individual was the theoretical point of departure. Second, this epistemological argument is supported by the ontological thesis that only individual human beings exist, or that collective entities exist only in the actions of individuals. Methodological individualism is associated with nominalism and collectivism with conceptual realism. According to Mises, the development of methodological individualism in the eighteenth and nineteenth centuries, which supplanted the older conceptual realism or universalism was the Copernican revolution of social science (Mises [1933] 1976: 153). Mises returns to the principle of methodological individualism in his most important work, Human Action (1949), but little is added to his earlier treatment of

110

Austrian methodological individualism

this topic. Methodological individualism now appears as an implication of praxeology, the science of human action. Praxeology deals with the actions of individual men. It is only in the further course of its inquiries that cognition of human cooperation is attained and social action is treated as a special case of the more universal category of human action as such. (Mises [1949] 1966: 41) As in Socialism, Mises argues that economics starts with the isolated individual and also that action is exchange. He now makes a distinction, however, between autistic exchange and interpersonal exchange ([1949] 1966: 97f).28 Once again, ‘Society is concerted action, cooperation’. As such, it ‘is the outcome of conscious and purposeful behavior’ (p. 143). More surprising, Mises also endorses the following statement, if reluctantly: ‘Individual man is born into a socially organized environment. In this sense alone we may accept the saying that society is – logically and historically – antecedent to the individual’ (p. 143). This is a statement typically made by collectivists against individualism. The presumption is, of course, that the way society is organised to some extent determines the behaviour of individuals. This is how Schumpeter saw the matter and the reason he was a methodological collectivist (universalist) in sociology (see p. 366, note 26). But how does Mises avoid this conclusion. By shifting from methodology to ontology. ‘[S]ociety is nothing but the combination of individuals for cooperative effort. It exists nowhere else than in the actions of individuals’ (p. 142). As in Epistemological Problems of Economics, Mises introduces the topic of methodological individualism by discussing its relation to the issue of nominalism versus realism, but now with a more uncertain relation between methodological individualism and nominalism. No less inappropriate with regard to our problem is the reference to the antagonism of realism and nominalism, both these terms being understood in the meaning which medieval scholasticism attached to them. It is uncontested that in the sphere of human action social entities have real existence. Nobody ventures to deny that nations, states, municipalities, parties, religious communities, are real factors determining the course of human events. Methodological individualism, far from contesting the significance of such collective wholes, considers it as one of its main tasks to describe and to analyze their becoming and disappearing, their changing structures, and their operation. (Mises [1949] 1966: 42) Mises now seems to suggest that the problem of individualism versus collectivism has nothing to do with that of nominalism versus realism, but later on in the same work he once again lumps them together and declares that the doctrines of collectivism, conceptual realism, universalism and holism are the arch-enemies

Austrian methodological individualism

111

of individualism ([1949] 1966: 44, 145). The inconsistency disappears when it is realised that Mises uses the term ‘collectivism’ in two senses, rejecting it in one sense and accepting it in another: Insofar as collectivism asserts that collective entities have an existence independent of, or apart from, individual human beings, and insofar as it endows these collective entities with minds, purposes and interests of their own, it is wrong. If it merely asserts that individuals associate and co-operate for certain purposes, collectivism is quite legitimate and compatible with methodological individualism (pp. 145–53). But Mises not only accepts the existence of collective entities; in the quotation above, he maintains that collective wholes, such as ‘nations, states, municipalities, parties, religious communities, are real factors determining the course of human events’. How can this statement be compatible with methodological individualism? The answer is that his collectivism is illusory. Collective wholes do not exist ‘out there’. They exist in the minds and in the acts of individuals, and as such they determine the course of human events. It is the meaning which the acting individuals and all those who are touched by their action attribute to an action, that determines its character. It is the meaning that marks one action as an action of an individual and another action as the action of the state or the municipality. The hangman, not the state, executes the criminal. It is the meaning of those concerned that discerns in the hangman’s action an action of the state. (Mises [1949] 1966: 42) The reason why Mises can hold that collective wholes determine the course of human events and still be a methodological individualist is that, according to him, a ‘collective whole is a particular aspect of the actions of individuals and as such a real thing determining the course of human events’ ([1949] 1966: 43). Mises, then, does not at all accept the existence of collective wholes. Like Weber, he only accepts that individuals use collective concepts in their thinking and talking about ‘society’. Collective concepts, not real collectives, determine the actions of individuals. Because of this ontology of the social world, epistemological considerations suggest that methodological individualism is the appropriate procedure. If we scrutinize the meaning of the various actions performed by individuals we must necessarily learn everything about the actions of collective wholes … Thus the way to a cognition of collective wholes is through the analysis of the individual’s actions. (Mises [1949] 1966: 42) It is one thing, however, to say that something determines the meaning or character of an action, and another thing to say that it determines the course of events. Mises does not clearly separate these two cases, but actually holds that ideas ‘determine’ the actions of individuals in both ways. It would have been

112

Austrian methodological individualism

better, had Mises said that ideas about collectives determine the course of events, for this is what, in the end, it all comes down to. Mises’s methodological individualism turns out to be some kind of ‘subjective idealism’ opposed, primarily, to Marxian materialism. Society is a product of human action. Human action is directed by ideologies. Thus society and any concrete order of social affairs are the outcome of ideologies; ideologies are not as Marxism asserts, a product of a certain state of social affairs. (Mises [1949] 1966: 187) Methodological individualism is also an important theme in Theory and History (1957), and in The Ultimate Foundation of Economic Science (1962). Very little is added, however, to his earlier views on this matter. In the first work, Mises makes the somewhat startling statement that ‘collectivist philosophy denies that there are such things as individuals and actions of individuals’ ([1957] 1985: 256). In the latter work, he warns us against the mistake of hypostatisation, that is, the ascription of substance or existence to mental constructs. As an example of this fallacy Mises takes the way the term ‘society’ is used by the ‘various schools of pseudo science’. Against these schools – Mises’s example is Marxism – he holds that ‘society itself is neither a substance, nor a power, nor an acting being’ (1962: 78–80). Once again methodological individualism appears as a form of ‘subjective idealism’ advanced in direct opposition to Marxist ‘materialism’. For if one realizes that what sets action in motion is ideas, one cannot help admitting that these ideas originate in the minds of some individuals and are transmitted to other individuals. But then one has accepted the fundamental thesis of methodological individualism, viz., that it is ideas held by individuals that determine their group allegiance. (Mises, 1962: 82) So far I have concentrated on the meaning of Mises’s methodological individualism, but said nothing about its status and range of application. The immediate impression is that Mises is more dogmatic about it than were the earlier Austrians. I believe that Mises conceives of methodological individualism as a principle a priori, which the sciences of human action have to follow, because epistemology and ontology dictate that it is the only correct way to proceed. I also think it is safe to suggest that, for Mises, methodological individualism is universally applicable to the sciences of human action. According to Mises, there are two sciences of human action: praxeology and history (sociology is divided between them). Praxeology, as we have seen is certainly individualistic. But what about history? It is individualistic too. Methodological individualism, therefore, is universal in scope.

Austrian methodological individualism

113

Individualism, as a principle of the philosophical, praxeological, and historical analysis of human action means the establishment of the facts that all actions can be traced back to individuals and that no scientific method can succeed in determining how definite external events, liable to a description by the methods of the natural sciences, produce within the human mind definite ideas, value judgements, and volitions. In this sense the individual that cannot be dissolved into components is both the starting point and the ultimate given of all endeavours to deal with human action. (Mises, 1962: 82) Mises rejects the idea of a social science distinct from praxeology and history. There is no science of society, only sciences of human action (Mises [1957] 1985: 256ff; 1962: 105–8). In this respect, Mises is a follower of Weber, who saw sociology as a science of action, but not of Menger. He also agrees with Weber that sociology, if it is not a part of praxeology, is a science auxiliary to history or, rather, a part of it. We saw, at the beginning of this section, that Mises criticised Weber’s doctrine of Verstehen and his notion of ideal types. But what Mises rejected was only Weber’s understanding of economics. Mises actually accepted Weber’s methodology, tout court, for the purposes of history.29 Mises’s version of methodological individualism derives partly from Menger, but mainly from Weber. For Mises, as for Weber, methodological individualism follows from a theory of action and from a subjectivist interpretation of social reality. There is a difference, however. For Weber, subjectivism is bound up with his idea of an interpretive sociology; subjective reality is the subject matter of sociology, but it is not necessarily the only social ‘reality’. For Mises, subjective reality is the exclusive social reality. A consequence of this difference is a change of emphasis, from the methodological level in the case of Weber, to the ontological level in the case of Mises. The reason for this change of emphasis is, probably, that Mises was influenced by the phenomenology of Edmund Husserl and Alfred Schutz (see Mises 1943/44: 530). When it comes to explicit formulations of methodological individualism, there is not much to touch upon in the case of Mises. One of its main tasks is said to be that of describing and analysing collective wholes in terms of individuals. This methodological principle is underpinned by the epistemological argument that all we can know about collective wholes is the actions of individuals, and the ontological thesis that collective wholes exist only in the minds and in the actions of individuals. But Mises also formulates methodological individualism as a thesis about social causation: it is ideas held by individuals that determine their group allegiance. More generally, Mises holds the ontogenetic thesis that collective wholes, including society at large, are the products of human action, which in turn are the outcomes of ideas held by individuals, so that, indirectly, society is the result of the ideas of individuals.

114

Austrian methodological individualism

Friedrich von Hayek The Austrian branch – actually it is more like the root and trunk – of methodological individualism culminates in the writings of Friedrich August von Hayek. His particular version of it is a development of the ideas of Max Weber, Alfred Schutz and of his teacher Ludwig von Mises, but it owes, perhaps, even more to the original version of Carl Menger. With Hayek, the circle of Austrian methodological individualism comes to a close.30 It is a form of methodological individualism, which is less radical than that of the theory of the social contract and also of mainstream neoclassical economics. Austrian methodological individualism is based on the premise that humans are social and cultural beings (cf. Madison, 1990: and Lange-von Kulessa, 1997). In his inaugural lecture at the London School of Economics in 1933, Hayek introduced some of the main themes of his future work (cf. Caldwell, 1988). One of them was his version of methodological individualism: ‘By combining elementary conclusions and following up their implications he [the economist] gradually constructs, from the familiar elements, a mental model which aims at reproducing the working of the economic system as a whole’ (Hayek, 1933b: 128). The year after, he wrote an introduction to a reprint of Menger’s Grundsätze der Volkwirtschaftslehre published by the London School of Economics. This piece was also published as an article in Economica (1934) presenting Carl Menger to an English public. A point to notice, because unusual, is that Hayek devotes considerable space also to Menger’s methodological work, Problems of Economics and Sociology, and maintains that it was ‘hardly less an achievement than the Grundsätze’ (Hayek, 1934: 405). ‘Of the central contentions of the book one may be singled out for further comment; his emphasis on the necessity of a strictly individualistic or, as he generally says, atomistic method of analysis’ (p. 406). If methodological individualism is now separated from ethical individualism and if the subjective element has been fully developed only by Austrian Economics, ‘this is largely due to Menger’s brilliant vindication in this book’ (p. 406). In 1937 Hayek’s now classic article ‘Economics and Knowledge’ appeared: it questioned not only the theory of general equilibrium, but also Mises’s praxeology, and eventually led to a split within the Austrian movement. Hayek argued that equilibrium analysis and praxeology are both tautological and fail to say anything about reality. The general remedy for this is to work with verstehen and ideal types, as suggested by Max Weber (Hayek, 1948: p. 47, n. 12 and p. 52, n. 18). A particular problem is the assumption of isolated individuals, which fails to account for the interdependence of people’s plans. For equilibrium to be possible in the real world, individuals would have to know the plans of other individuals. Game theory is one attempt to deal with this interdependence, but it does not solve the problem of knowledge (see p. 252).31 The main source for an understanding of Hayek’s ideas on methodological individualism is ‘Scientism and the Study of Man’, first published as articles in Economica (1942–4) and later included as Part One in The Counter-Revolution of Science (1955).32 This work is first of all an attack on ‘scientism’; the mechanical and uncritical application of habits of thought, taken from the natural sciences,

Austrian methodological individualism

115

in the social sciences. In contrast to the objective character of natural phenomena, Hayek stresses the subjective nature of human actions. In fact, most of the objects of social or human action are not ‘objective facts’ in the special narrow sense in which this term is used by the Sciences and contrasted to ‘opinions’, and they cannot at all be defined in physical terms. So far as human actions are concerned the things are what the acting people think they are. (Hayek, 1942–4: 277f; 1955: pp. 26f) Hayek’s subjectivism derives from his Austrian view of economics, but also from German hermeneutics and phenomenology. Therefore, since all human action is subjective in the sense of the above quotation, every science dealing with the results of conscious human action must follow the course taken by economics. The points which we want to stress are that in all such attempts we must start from what men think and mean to do, from the fact that the individuals which compose society are guided in their actions by a classification of things and events in a system of sense qualities and concepts which has a common structure and which we know because we, too, are men, and that the concrete knowledge which different individuals possess will differ in important respects. Not only man’s action towards external objects but also all the relations between men and all social institutions can be understood only in terms of what men think about them. (Hayek, 1942–4: 283; 1955: 33) So far, Hayek’s concern is with our understanding of human action. His aim seems to be the justification of a subjectivist methodology by epistemological arguments. Hayek is talking about knowledge. But his subjectivism goes deeper and turns out to be of an ontological nature, like that of Mises. Not only is our knowledge of society limited to knowledge about the beliefs of individuals. Society, itself, is made up of the beliefs of individuals. This is the reason knowledge of society is knowledge about the beliefs of individuals. Society as we know it is, as it were, built up from the concepts and ideas held by the people; and social phenomena can be recognized by us and have meaning to us only as they are reflected in the minds of men. (Hayek, 1942–4: 283; 1955: 33f) This does not imply, however, that the aim of social science is limited to investigating the minds of individual human beings. Social science is interested in social structures, but the true elements of social structures are beliefs existing in the minds of a plurality of individuals.

116

Austrian methodological individualism The structure of men’s minds, the common principle on which they classify external events, provide us with the knowledge of the recurrent elements of which different social structures are built up and in terms of which we can alone describe and explain them. While concepts or ideas can, of course, exist only in individual minds, and while, in particular, it is only in individual minds that different ideas can act upon another, it is not the whole of the individual minds in all their complexity, but the individual concepts, the views people have formed of each other and of things, which form the true elements of the social structure. (Hayek, 1942–4: 283f; 1955: 34)

In order to illustrate his subjectivism, Hayek gives some examples from the social sciences. The first example, presumably taken from functionalist anthropology, concerns the concepts of ‘tool’ and ‘instrument’. Such concepts – that of ‘hammer’, for instance – cannot be defined by their physical attributes, but must be defined in terms of their function, or the ‘purpose for which men think they can be used’ (1942–4: 278; 1955: 27). From archaeology Hayek takes the example of the problem of determining ‘whether what looks like a stone implement is in truth an “artifact”, made by man, or merely a chance product of nature’. According to Hayek, the only way to answer this question is ‘by trying to understand the working of the mind of prehistoric man, of attempting to understand how he would have made such an implement’ (1942–4: 278; 1955: 27). A final example concerns a problem that belongs to economics, but would occur as a problem only in economic history or economic anthropology. That the objects of economic activity cannot be defined in objective terms but only with reference to a human purpose goes without saying. Neither a ‘commodity’ or an ‘economic good’, nor ‘food’ or ‘money’, can be defined in physical terms but only in terms of the views people hold about things. Economic theory has nothing to say about the little round disks of metal as which an objective or materialist view might try to define money. It has nothing to say about iron or steel, timber or oil, or wheat or eggs as such. The history of any particular commodity indeed shows that as human knowledge changes the same material thing may represent quite different economic categories. Nor could we distinguish in physical terms whether two men barter or exchange or whether they are playing some game or performing some religious ritual. (Hayek, 1942–4: 281f; 1955: 31) Now, the subjectivism of Hayek should not be interpreted as implying that the social scientist must use only such concepts as are used in everyday life, and in the same way. Hayek is careful to guard himself against such misunderstanding of his standpoint (1942–4: 284f; 1955: 36). The ideas and concepts used in everyday life are only the starting-point, the elements from which the social scientist gradually builds up his model of the social structure. The reason

Austrian methodological individualism

117

why the social scientist must not and cannot confine himself to the use of such concepts as guide individuals in their acting, is that social phenomena are ‘the unintended or undesigned results of the actions of many men’ (1942–4: 276; 1955: 25). In order to make clear his own idea of a scientific model of social structure, as distinguished from a naive collectivist approach, Hayek makes a distinction between, on the one hand, those ideas which motivate people in their actions and which are constitutive of social phenomena and, on the other hand, those speculative ideas people form about these phenomena in order to explain them (1942–4: 285; 1955: 37). He is aware that the same idea may occur in both capacities, but insists that the social scientist starts his analysis from ideas in their constitutive capacity, and takes speculative ideas for what they are; popular myths. It is the ideas which the popular mind has formed about such collectives as ‘society’ or the ‘economic system’, ‘capitalism’ or ‘imperialism’, and other such collective entities, which the social scientist must regard as no more than provisional theories, popular abstractions, and which he must not mistake for facts. That he consistently refrains from treating these pseudoentities as ‘facts’, and that he systematically starts from the concepts which guide individuals in their actions and not from the results of their theorizing about their actions, is the characteristic feature of that methodological individualism which is closely connected with the subjectivism of the social sciences. (Hayek, 1942–4: 286; 1955: 37f) The subjectivism and individualism of the social sciences make them in an important respect different from the natural sciences. The difference is epistemological and Hayek uses it in support of his methodological individualism. In the natural sciences complex phenomena are observed; material things which, for their explanation, must be analysed into their component parts. Their method, therefore, is ‘analytic’. In the social sciences the opposite is the case. We know by direct acquaintance only the parts; the individuals, from which the complex phenomena must be constructed. The method of the social sciences, therefore is ‘compositive’, or ‘synthetic’ (1942–4: 287; 1955: 39). The complex phenomena to which the social scientist must give his sole attention are those phenomena which are the unintended results of the conscious action of many men. Consciously designed social phenomena, though sometimes in need of a psychological explanation, are in no need of a social scientific explanation. Hayek gives an example of how order is produced by the actions of many men without being intended by any one of them. The way in which footpaths are formed in a wild broken country is such an instance. At first everyone will seek for himself what seems to him the best path. But the fact that such a path has been used once is likely to make it easier to traverse and therefore more likely to be used again; and thus

118

Austrian methodological individualism gradually more and more clearly defined tracks arise and come to be used to the exclusion of other possible ways. Human movements through the region come to conform to a definite pattern which, although the result of deliberate decisions of many people, has yet not been consciously designed by anyone. This explanation of how this happens is an elementary ‘theory’ applicable to hundreds of particular instances … It makes no difference for our present purpose whether the process extends over a long period of time as it does in such cases as the evolution of money or the formation of language, or whether it is a process which is constantly repeated anew as in the case of the formation of prices or the direction of production under competition. (Hayek, 1955: 40; cf. 1942–4: 289)

This example shows the imprint of Menger on the methodology of Hayek. It is an attempt to illustrate the ‘exact’ and atomistic analysis of institutions suggested by Carl Menger in Problems of Economics and Sociology and used by Menger in his theory of money (see pp. 90f ). The particular example of the footpath, however, is borrowed from Descartes.33 Like Mises, Hayek sees a clear connection between individualism and nominalism, and collectivism and realism, respectively. Methodological collectivism is an outgrowth of conceptual realism. It makes the mistake of treating collective entities, such as society, economy, capitalism, or class as definite objects when, in fact, they are ‘models constructed by the popular mind to explain the connection between some of the individual phenomena which we observe’. The fundamental obstacle to the assumption made by naive realism is that ‘the wholes as such are never given to our observation but are without exception constructions of our mind’ (1942–4: 43; 1955: 54). But as with Mises, there is a certain ambiguity on this point. Hayek denies that collective entities exist as definite objects, but at the same time takes the view that wholes – the market, for instance – exist as structures of relationships (1942–4: 44; 1955: 55). The fallacy Hayek wants to avoid is also partly that of Mises. He wants to avoid the danger, inherent in collectivism, of treating collective entities as some kind of ‘superpersons’ endowed with ‘social’ or ‘collective’ minds (1942–4: 45; 1955: 57). In support of his view that collective entities are not definite objects, Hayek points to the fact that social wholes are not ‘natural units’ like flowers and butterflies; unlike physical things, they are not continuous in space and time, but ‘selections of certain elements of a complex picture on the basis of a theory about their coherence’ (1942–4: 43; 1955: 55). The social sciences, thus, do not deal with ‘given’ wholes but their task is to constitute these wholes by constructing models from the familiar elements – models which reproduce the structure of relationships between some of the many phenomena which we always simultaneously observe in real life. (Hayek, 1942–4: 44; 1955: 56)

Austrian methodological individualism

119

Hayek’s methodological individualism is also expounded in an article from the same period, ‘The Facts of the Social Sciences’ (1943), which is a concise statement of his views on the methodology of the social sciences. Social facts, including not only human actions and written language, but also ‘things’ such as tools, food, medicine and weapons, are subjective in contrast to the objective character of natural facts. ‘Collective wholes’ are not observable, and do not exist as definite objects, independent from the ‘theories’ people have about them. Collective wholes are ‘created by an act of construction or interpretation’. Terms denoting collective wholes refer to certain activities of individuals. This is all the theories of the social sciences aim to do. They are not about the social wholes as wholes; they do not pretend to discover by empirical observation laws of behaviour or change of these wholes. Their task is rather, if I may so call it, to constitute these wholes, to provide schemes of structural relationships which the historian can use when he has to attempt to fit together into a meaningful whole the elements which he actually finds. (Hayek [1948] 1972: 72) In this quotation, methodological individualism is opposed to the search for empirical laws about social wholes. This is another return to Carl Menger, who opposed the atomism of the exact orientation to the collectivism of the realisticempirical approach. But it is also an adjustment to the views of Weber and Mises. Hayek does not accept a social science based on the realistic-empirical approach. This type of research belongs to history. But social science is an aid to history by providing individualistic models of collective wholes. Or, in the terminology of Max Weber, sociology is an auxiliary discipline to history, providing individualistic ideal types of collective phenomena. In its early development, especially in Weber and Schumpeter, methodological individualism was clearly distinguished from political individualism. In Mises, this distinction is totally blurred. His allegiance to value-freedom is mere lip-service. Methodological individualism appears as inseparable from, sometimes even identical with, the political doctrine of liberalism. But Hayek is first among the proponents of methodological individualism to treat it as part of a wider system of ideas, something like a world view, including, or related to, a certain ideology. In his article ‘Individualism: True and False’ (1945), Hayek is careful to distinguish the ‘true individualism’ of the Scottish Enlightenment, and men such as Alexis de Tocqueville and Lord Acton, from the ‘false individualism’, which originates with Réné Descartes. The most significant expressions of the latter are the philosophy of the French Enlightenment, especially JeanJacques Rousseau, and the English philosophical radicalism of Jeremy Bentham and the two Mills. The most mistaken element of ‘false individualism’, is the ‘design theory’ of social institutions; the belief that society can be constructed according to a plan, or blueprint.

120

Austrian methodological individualism What, then, are the essential characteristics of true individualism? The first thing that should be said is that it is primarily a theory of society, an attempt to understand the forces which determine the social life of man, and only in the second instance a set of political maxims derived from this view of society … its basic contention … is that there is no other way toward an understanding of social phenomena but through our understanding of individual actions directed toward other people and guided by their expected behavior. This argument is directed against the properly collectivist theories of society which pretend to be able directly to comprehend social wholes like society, etc., as entities sui generis which exist independently of the individuals which compose them. (Hayek [1948] 1972: 6)

The main insight of true individualism is that most social phenomena are the unintended and unforeseen results of the actions of individuals; that like living organisms they have grown, step by step, without being consciously aimed at and constructed. This insight is used by Hayek, as by many other conservatives and liberals, to argue against social planning and social engineering. But Hayek has probably done more than anyone else to develop this argument in great detail, including the theory of society on which it is based. Like Menger, Hayek distinguishes two types of order: organisations and spontaneous orders (organisms). The main part of Hayek’s theory is about spontaneous orders, and the way they have developed in the course of history. The most important contributions to this theory are from the 1960s onwards. From about this time, Hayek also stops mentioning methodological individualism in his writings. I interpret this fact as an indication that Hayek no longer adheres to this principle, and for a good reason. His theory of society is no longer compatible with methodological individualism (see pp. 282–4). To sum up: Hayek’s methodological individualism is, like that of Weber and Mises, inseparable from subjectivism. Society exists only in the minds and actions of individual human beings. Social wholes do not exist as definite objects, on a par with natural units, like physical things and biological organisms. Concepts such as ‘society’, ‘capitalism’ and ‘imperialism’ are popular abstractions, and the concepts used by social science, such as ‘government’, ‘trade’ or ‘army’, are theoretical constructions. But neither the collective concepts of everyday life, nor those of social science, denote collectives that are real, independently of any idea, or theory, about them. I think it is possible to give the following explication of Weber’s, Mises’s and Hayek’s individualist analysis of collective concepts: their intension is ideas in people’s mind, their extension is the actions of individuals. But the subjective meaning individuals attach to actions and things is only the point of departure. The real task of social science is to construct and explain large-scale social (complex) phenomena. This is done by constructing models of individual actions and their intended and unintended consequences. The subjective meaning individuals attach to their actions (and to physical things) are the

Austrian methodological individualism

121

elements out of which the social scientist constitutes ‘social wholes’. Hayek’s methodological individualism is both procedural and substantive. The individual is the point of departure, but also the end of social science. The ultimate explanation of all social phenomena is in terms of individuals, their actions and the consequences of these actions. Like Menger, Hayek is especially interested in the evolution of social institutions, which he tends to see as conventions, in the manner of Hume.

The Austrian influence Although part of neoclassical marginalism, Austrian Economics has never really been part of mainstream economics. After the first generation, it disappeared definitely from the mainstream and formed a small marginal stream all of its own. At an early stage of its development, however, it made an impact on some important non-Austrian economists, who helped to propagate methodological individualism. I am going to end this chapter by mentioning three of them: Frank H. Knight, Lionel Robbins and the early Gunnar Myrdal. Frank H. Knight was an American economist and a founding father of the famous Chicago School of Economics, which counts among its members such prominent economists as George J. Stigler, Milton Friedman, Armen A. Alchian, Harold Demsetz, Richard Posner and Gary S. Becker. Knight was clearly influenced by all three versions of marginalism. He mentions Wicksteed, Pareto and Marshall, as especially important, but there is little doubt that also the Austrians loom large in his writings. His emphasis on uncertainty and his view that economics is an exact science, for instance, indicate an Austrian influence.34 In his classic treatise Risk, Uncertainty and Profit (1921), Frank H. Knight was first to make the important distinction between risk and uncertainty, where the former implies knowledge of the probabilities of different alternative outcomes, whereas the latter means that we are left completely in the dark concerning future states of affairs. According to Knight, it is the existence of uncertainty that gives rise to profit. If economic life were characterised by perfect knowledge, or even by risk, competition would eliminate profits. Despite the obvious problem of defining rationality in a state of uncertainty, Knight may have been the first to explicitly suggest that economics is a theory of ‘rational choice’ (Knight, 1921: 89).35 Following Wicksteed, he maintains that economics is a theory of choice, not of pleasure and pain. The term ‘rational choice’ is probably introduced to avoid the psychologism implicit in Wicksteed’s expression ‘psychology of choice’. The theory of conduct, relevant for economics, is the ‘Law of Choice’, stated by Knight in the following way: In the utilization of limited resources in competing fields of employment, which is the form of all rational activity in conduct, we tend to apportion resources among alternative uses that are open in such a way that equal amounts of resource yield equivalent returns in all fields. (Knight, 1921: 65)

122

Austrian methodological individualism

This is the Austrian view of economics, stated most succinctly by Weber and later by Lionel Robbins. It is possible to recognise an Austrian element also in Knight’s distinction between a Robinson Crusoe and a social economy. Economics is a theory of choice and exchange, but not of choice alone. This view is stated most clearly in The Economic Organization ([1933] 1971; see also 1961: 185–93, 273–82), where Knight draws the obvious conclusion that economics is limited in scope to systems of free market economics, but is repeated in The Ethics of Competition (1935/6). In its second aspect or stage, economic theory deals with social, in the sense of interindividual, relations. But the ‘economic man’ is not a ‘social animal’, and economic individualism excludes society in the proper human sense. Economic relations are impersonal. The social organization dealt with in economic theory is best pictured as a number of Crusoes interacting through the markets exclusively. (Knight, 1935/6: 282) Knight was not in any sense a radical individualist even though he did favour an individualistic organisation of the economy. He was fully aware of the significance of social institutions and social organisation for an understanding of social phenomena in general, and of economic phenomena in particular (see, e.g., Knight 1956: chs 1 (1951) and 5 (1941). It is difficult to tell, therefore, whether Knight was a programmatic methodological individualist, or not; and if so, what kind of methodological individualist he was. One thing is certain, however: like Schumpeter, he did conceive of theoretical economics as an individualistic science. By the nature of its fundamental conceptions, theoretical economics is an individualistic science. As explained at length in an earlier part of this essay, the ‘economic man’ is not a social man, and the ideal market dealings of theory are not social relations. The science takes its economic individual as a datum, in his three aspects of wants, resources and technical knowledge, ignoring all questions of origin; and it abstracts from all his social relations with other human beings, except those of the perfect market, which are really relations to commodities as such. (Knight, 1935/6: 337) Lionel Robbins was an English economist working at the famous London School of Economics in its most glorious days, from 1929 to 1961. He was an economist of somewhat similar bent as Frank Knight, but even more influenced by the Austrians and by Wicksteed. Robbins was the author of one of the most cited books on economic theory and methodology, his classic An Essay on the Nature and Significance of Economic Science (1932). In this book you find, I am sure, the most often cited definition of economics ever produced: ‘Economics is the science which studies human behaviour as a relationship between ends and

Austrian methodological individualism

123

scarce means which have alternative uses’ ([1932] 1935: 17). It may be added that, in this situation, ‘behaviour necessarily assumes the form of choice’ (p. 14). Robbins made no secret of the fact that this is the Austrian conception of economics, or at least half of it. Robbins did not follow most of the Austrians and Frank Knight in conceiving of economics as a theory of exchange, or catallactics. Without this limitation, economics becomes a general theory of human action applicable to various social phenomena other than market exchange. Robbins was thus a precursor of theoretical economic imperialism, and also made some suggestions in this direction: ‘There is an important sense in which the subject-matter of political science can be conceived to come within the scope of our definition of the economic. Systems of government, property relationships, and the like, can be conceived as the result of choice’ (Robbins [1932] 1935: 134.). Unlike some later proponents of economic imperialism, however, Robbins was keenly aware also of the limitations of the economic approach (pp. 131–5; see also Udehn, 1991; 1996). Robbins was one of the main figures in the project to free economics from its dependence on psychological hedonism and turn it into a theory of rational choice. Economics does not in any way indulge in speculation about the psychological ‘causes’ of human action. It takes people’s motives and wants as given and treats them as data in its own theories. The psychological content of economics boils down to two simple assumptions: (1) ‘that individuals can arrange their preferences in an order, and in fact do so’ (pp. 78f); and (2) ‘that each final choice is consistent with every other, in the sense that if I prefer A to B and B to C, I also prefer A to C’ (p. 92). This is the meaning of the term ‘rational’ in economics (p. 91). Another important strain in Robbins’s thought, is his (individualist) denial of the possibility of interpersonal comparisons of utility. ‘There is no means of testing the magnitude of A’s satisfaction as compared with B’s’ (pp. 139f). Hence, the impossibility of a scientific concept of ‘social utility’. The only possible significance of such a concept is as part of ethical theory, which must be clearly distinguished from the positive theory of economics. ‘It is simply the accidental deposit of the historical association of English Economics with Utilitarianism: and both … will be the better if this is clearly recognised’ (p. 141). There are many similarities between Robbins’s An Essay on the Nature and Significance of Economic Science (1932) and Gunnar Myrdal’s The Political Element in the Development of Economic Theory (1929), even though they came to different conclusions and Myrdal, eventually, took off in another direction.36 Myrdal was even more critical, than Robbins, of the dependence of early British marginalism on utilitarian psychological hedonism and on the idea of ‘social value’, or ‘social utility’, as a sum of the utilities of individuals. Such addition of individual utilities is only possible by the scientifically illicit procedure of comparing the utilities of different individuals. The utilitarian economists were individualists, but they were also radicals and social reformers. As such they had a strong inclination to develop their doctrine in a politically relevant direction. By adding the utilities of all members of

124

Austrian methodological individualism

society it was possible to arrive at the politically relevant notion of ‘social value’ or ‘social utility’, which is at the basis of welfare economics. From the very beginning, methodological individualists have been sceptical about welfare economics, and especially about notions such as ‘social value’ or ‘social utility’. A first objection is that it presupposes the possibility of comparing the utilities of different individuals. The most serious defect of concepts such as ‘social value’ and ‘social utility’, however, is that they seem to suggest some kind of collective subject, engaged in ‘collective’, or ‘social housekeeping’ (Myrdal [1929] 1953: ch. 6). There is a clear echo of Carl Menger’s critique of the concept of ‘national economy’ in Myrdal’s objections to the concepts of ‘social value’ and ‘social utility’. The worst sinners are, of course, the German political metaphysicians, with their organicism and their speculation about the essence of the state. But also the utilitarian economists – especially when they draw political conclusions from their doctrine – ‘tend to be forced into an untenable “communistic fiction” about the unity of society’ (p. 54). Like Robbins, Myrdal observes that economics has progressively freed itself from its dependence upon psychological hedonism, and from any other psychological theory for that matter. Economics has become a ‘behaviourist’ theory of choice (Wahlhandlungstheorie). Unlike Robbins, however, Myrdal did not at all welcome this development. From his point of view, a ‘behaviourist theory’ of choice, ‘is an attempt to construct a subjective theory of value without psychological content. Such an attempt is bound to lead to empty mathematical scholasticism’ ([1929] 1953: 97f ). For Myrdal, the solution is not to reintroduce psychological hedonism in the science of economics – this theory is proven wrong by the science of psychology – but to find some better psychological theory to replace it. Myrdal, then, appeared as one of the first in a long line of critics, who have tried to reintroduce the programme of psychologism in economics, but in vain.

Conclusion The Austrian School of Economics is the single most important source of methodological individualism in modern social science. Its founder Carl Menger defended the use of an atomistic method in theoretical economics against members of the German Historical School and Joseph Schumpeter coined the term ‘methodological individualism’ to refer to this method. An important part of Menger’s individualist programme was his suggestion that not only prices, but all social institutions are amenable to individualist analysis. A possible problem with this extension of the individualist programme has been pointed out by Robert Nozick, who notices that Menger provides an explanation of the creation and maintenance of institutions, but adds the seemingly obvious point that ‘[e]xisting institutions also shape and affect the actions of individuals’ Nozick, 1977: 357). According to Nozick, therefore, the interplay of individuals and institutions should rather look like this:

Austrian methodological individualism

125

Figure 4.2 Actions and institutions according to Robert Nozick Source: Nozick (1977: 358)

The pertinent question, now, is this: ‘If each time we explain the current situation as arising from previous actions in a certain institutional setting, then why are actions prior? In this apparent chicken and egg situation, why aren’t we equally methodological institutionalists?’ As we shall see in chapter 6 on Popperian methodological individualism, Nozick was not first to ask this question, but he may have been first to ask it explicitly about Menger’s methodological individualism. I do not know if the later Austrians, Weber, Mises and Hayek, were aware of this problem, or saw it as a problem, but they did suggest a way of escape. While Nozick implies that social institutions are irreducible to individuals and their actions, Weber, Mises and Hayek adopted an intersubjectivist theory of society, which situates social institutions in the minds of individuals. Social institutions are the subjective meaning individuals attach to social actions or social things like money. Instead of conceiving of individual and society as two levels, we get a horizontal, or flat picture of individuals interacting with one another. Since there is a shift from methodology to ontology involved in this common route of escape, I call it the ‘ontological turn’ or ‘twist’.

Figure 4.3 Individuals in society according to Weber, Mises and Hayek

5

Society as subjectively meaningful interaction

In the beginning, sociology was mainly holistic. Most sociologists saw society as a reality sui generis, with laws of its own, irreducible to the acting individuals. But there were also some early sociologists, who took a more individualistic view of society: Gabriel Tarde, George Simmel and Max Weber, for instance. The early Simmel and Weber conceived of society as constituted by the subjectively meaningful action of individuals. The most important sources of this conception of society were German Völkerpsychologie and the descriptive psychology of Wilhelm Dilthey, who also saw society as interaction. Simmel, who, like Dilthey, had intellectual roots in Völkerpsychologie, saw society as both subjective meaning and interaction. Borrowing a distinction from Kant, he saw society as both form and content. Society consists of forms of interaction, but its content is subjective meaning. This is, I believe, the main sociological version of the individualistic theory of society. It differs from the theory of the social contract and the economic theory of the market by taking a broader view of social action, but, above all, by its interest in the meaning of social phenomena.1 In the further development of the individualist theory of society in sociology, there was an important input from two philosophical schools: American pragmatism and German phenomenology. Of these, the former was not really individualistic, but nevertheless it exerted a profound influence on one particular version of the individualist theory of society, namely symbolic interactionism. The philosophical phenomenology of Edmund Husserl, finally, is the source, not only of phenomenological sociology, but also of existentialism – which is a theory somewhere in between philosophy, psychology and sociology – and of ethnomethodology. Symbolic interactionism, sociological phenomenology, existentialist sociology, and ethnomethodology are all sociological theories, which conceive of society as interaction and intersubjective meaning, even if they do not attach the same importance to both elements. Because these theories typically focus on interaction between human beings, in co-presence, or face-to-face relations, they are usually considered as ‘microsociology’ (Knorr-Cetina, 1981: 1ff) or as belonging to the ‘microinteractionist tradition’ (Collins, 1985: ch. 3). According to the American sociologist Jeffrey Alexander, the theories belonging to microinteractionist tradition are caught in an ‘individualist

Society as subjectively meaningful interaction

127

dilemma’. I agree with Alexander (and Parsons) that there is such an individualist dilemma, but my interest, in this chapter, is in individualism per se, without the dilemma.

Symbolic interactionism Symbolic interactionism is an American movement of thought usually associated with the name of George Herbert Mead, but really a creation of his pupil and follower, the sociologist Herbert Blumer. A philosopher and social psychologist of the pragmatist school, Mead was influenced by the work of Charles Peirce, William James and John Dewey.2 Also important for Mead’s theory of the individual and society were some ideas of the sociologist Charles Horton Cooley. A third influence – in this case it is probably better to talk about cross-fertilisation – was the so-called Chicago School of Sociology, founded by William I. Thomas and Robert E. Park. Although mainly an American product (Alexander, 1987: 196ff; Joas, 1987: 94ff), symbolic interactionism was also influenced by European thinking. Among the more remote sources of symbolic interactionism we find Adam Smith and other representatives of the Scottish Enlightenment, the German Romantics and Hegel.3 A more immediate influence came from Völkerpsychologie, Dilthey and Simmel.4 I take Cooley, Thomas and Mead to be the most important progenitors of symbolic interactionism. I dispute, however, that any one of them was a ‘symbolic interactionist’, in the present-day sense of that term. I also doubt that any one of them held the intersubjectivist theory of society, or was a theoretical individualist (cf. Joas, 1987: 94ff).5 I do agree, however, that all of them developed certain ideas, which, if taken in isolation, were important contributions to the further development of symbolic interactionism into an individualist theory of society. Cooley’s contribution to symbolic interactionism was his theory of the looking-glass self and the theory of society that it suggests. The looking-glass self has ‘three principal elements: the imagination of our appearance to the other person; the imagination of his judgement of that appearance, and some sort of self-feeling such as pride and mortification’ (Cooley [1902] 1964: 184). An important part of our selves, then, is the way we imagine we appear in other peoples’ minds. From this, it is but a short step to suggest that people exist primarily or, exclusively, as ideas in the minds of one another. Cooley’s conception of society, as advanced in his first and most influential book Human Nature and Social Order (1902), is probably the most extreme version of an idealist and intersubjectivist theory of society ever proposed by a sociologist. Society, according to Cooley, is mental: ‘The immediate social reality is the personal idea … Society, then in its immediate aspect, is a relation among personal ideas … Society exists in my mind as the contact and reciprocal influence of certain ideas named ‘I’ Thomas, Henry, Susan, Bridget, and so on’ ([1902] 1964: 119). A consequence of this view is ‘that there is no separation between real and imaginary persons; indeed to be imagined is to become real, in a social sense’ (p. 95).

128

Society as subjectively meaningful interaction

Another consequence is that corporeal existence is immaterial for the question of social existence. Historic persons, characters of fiction and mythological figures are as real as corporeal persons, since they exist as ideas in the minds of people. Indeed, they may be more real, since a corporeally existent person is not socially real unless he is imagined. If the nobleman thinks of the serf as a mere animal and does not attribute to him a human way of thinking and feeling, the latter is not real to him in the sense of acting personally upon his mind and conscience. (Cooley [1902] 1964: 123) W.I. Thomas shared Cooley’s subjectivism, at least in methodology. His main contribution to symbolic interactionism was his stress upon the importance for social scientific investigation of taking account of the individual’s own definition of his situation. ‘There is always a rivalry between the spontaneous definitions of the situation made by the member of an organized society and the definitions which his society has provided for him’ (Thomas [1923] 1967: 42). On the other hand, this definition of the situation is from one standpoint as good as if it were true. It is a representation of the situation as appreciated by the subject, ‘as if ’ it were so, and this is for the behavior study the most important phase of reality. (Thomas [1927] 1966: 160) The subjectivist strain in Thomas’s thought is best epitomised in his famous dictum, sometimes called Thomas’s theorem; ‘if men define situations as real, they are real in their consequences’ (Thomas and Thomas, 1929: 572). Thomas’ subjectivism, then, was more methodological than that of Cooley. The reason for this is probably that he was much more engaged in empirical investigation than the latter. His most famous study is The Polish Peasant in Europe and America (1918), written together with the Polish sociologist Florian Znaniecki. In the methodological introduction to this work, they state a methodological principle which, according to them, is fundamental both in social psychology and sociology: ‘The cause of a social or individual phenomenon is never another social or individual phenomenon alone, but always a combination of a social and an individual phenomenon’ ([1918] 1927: 44). This principle is of course written as a direct reply to Durkheim’s famous dictum (see p. 34), which denies the role of individual phenomena and individual psychology altogether. Thomas and Znaniecki opt for a less extreme alternative, which recognises the need for microfoundations, but not reduction, or, at least, only a partial reduction of sociology to psychology. George Herbert Mead’s main contribution to symbolic interactionism is his social psychological theory of the self and the main source for this theory is Mind, Self and Society (1934). It must be counted as an original and important contribution to social psychology, even if it was foreshadowed by Adam Smith, William James and Charles Horton Cooley. Mead’s theory deals with the rise of

Society as subjectively meaningful interaction

129

the self, both phylogenetically, in the human species, and ontogenetically, in the human individual, but above all, ontogenetically. As such, it is a theory about socialisation. The main contention of this theory is that the self can only arise in a human society. In very brief outline Mead’s theory of the self amounts to this: The self arises in communication by means of significant symbols, i.e., symbols that evoke the same kind of response in the self and in the other. The rise of the self, thus, presupposes a universe of discourse, a system of common or social meanings, that is, a common language. The self arises in the individual by his/her taking the attitude, or the role, of the other. It is only by taking the role of the other that the individual can become an object to him/herself, and it is only by becoming an object to him/herself that the individual acquires a self. Mead distinguishes two stages in the development of a social self in the child. The first stage is that of play, where the individual takes the role of a particular or ‘significant other’; a mother, a father, a policeman or a teacher. The second stage is that of game, where the child takes the role of all the others taking part in a certain activity. A game is an organised activity governed by a set of rules. Mead’s term for all others involved in a group activity is the ‘generalised other’. More generally, the generalised other is the form in which the individual confronts society.6 Closely related to the concept of the ‘generalised other’ is Mead’s distinction between the ‘I’ and the ‘me’. Both the ‘I’ and the ‘me’ are selves, or rather, belong to the self, as phases of the undivided self. ‘The “I” is the response of the organism to the attitudes of the others; the “me” is the organized set of attitudes of others which one himself assumes’ ([1934] 1962: 175). This process of relating one’s own organism to the others in the interactions that are going on, in so far as it is imported into the conduct of the individual with the conversation of the ‘I’ and the ‘me’, constitutes the self. (Mead [1934] 1962: 179) The ‘I’, then, is the spontaneous element in action. In most cases the ‘I’ is aware of the ‘me’ and acts according to its strictures, but it sometimes happens that it acts entirely on its own, as when we are surprised by our own actions. The ‘I’ exists in the specious present. As soon as an act is completed and becomes part of the past, as soon as we can reflect upon it, it sinks down into the ‘me’. The ‘me’ is the conventional, the habitual, the institutional element in action. The ‘me’ sets limits to the actions of the ‘I’ and is thus the means for the exercise of social control in the individual. The ‘me’ is then, it would seem, the internalised generalised other.7 Mead’s theory of the self could be interpreted as implying an individualist and intersubjectivist theory of society. This is the interpretation made by the symbolic interactionists. But it is not the only possible interpretation and it is hardly the correct interpretation. In the recent literature about Mead and symbolic interactionism, it has been argued convincingly that Mead’s social behaviourism was not individualistic. According to Lewis and Smith (1980: ch. 5),

130

Society as subjectively meaningful interaction

Mead was a social realist, who saw society as an objective reality sui generis. As Jeffrey Alexander has pointed out, Mead saw symbolic structures and social institutions as, in a sense, prior to the actions of individuals (see Alexander, 1987: 205–14). This view is shared by Wiley (1994: chs 2 and 6), who argues that Mead had a semiotic theory of the self, which means that it is irreducible to the subjective, or psychic, level. It may be added that Mead frequently referred to society as a whole, and not just to a meaningfully integrated whole, but also a functionally integrated whole. The implication is that also the method of social psychology must be holistic: We are not in social psychology, building up the behavior of the social group in terms of the behavior of the separate individuals composing it; rather we are starting out with a given social whole of complex social group activity, into which we analyze (as elements) the behavior of each of the separate individuals composing it. We attempt, that is, to explain the conduct of the individual in terms of the organized conduct of the social group, rather than to account for the organized conduct of the social group in terms of the conduct of the separate individuals belonging to it. For social psychology, the whole (society) is prior to the part (the individual), not the part to the whole; and the part is explained in terms of the whole, not the whole in terms of the parts. (Mead [1934] 1962: 7) This is a perfectly clear statement of methodological holism, taken from Mind, Self, and Society, and yet Mead has been interpreted as an individualist by the symbolic interactionists. According to Anselm Strauss, for instance, Mead’s social psychology is a form of ‘socialized individualism’. But this interpretation is possible only on the basis of a certain interpretation of the concept of the ‘generalised other’. It is possible only if the generalised other, that is society, is situated in the self. This interpretation is far from self-evident, but it is the interpretation made by most ‘symbolic interactionists’. According to Strauss ([1956] 1964: xxiii), ‘The generalized other is society’s representative in the individual’. Mead, although undoubtedly its most important progenitor, is not the creator of symbolic interactionism. Mead’s ideas found their way to the sociologists mainly through the influence of Ellsworth Faris and, above all, through Herbert Blumer (Fischer and Strauss, 1979: 459). Of these, the former was closer to Mead’s social behaviourism (Lewis and Smith, 1980: 170f, 187–9).8 The real architect of symbolic interactionism is, I suggest, Herbert Blumer. It was Blumer who coined the term ‘symbolic interactionism’ and who turned Mead’s social psychology into a ‘sociological’ theory of society; ‘society as symbolic interaction’ (Blumer, 1969: ch. 3).9 But Blumer’s symbolic interactionism is clearly different from Mead’s social behaviourism, in important respects. Above all, it is certainly more individualistic.10 In a presentation of social psychology as a discipline (1937), Blumer recognises, besides the instinct and stimulus-response approaches, a third important

Society as subjectively meaningful interaction

131

view of human nature, represented by a group of social psychologists ‘who may be conveniently labelled “symbolic interactionists”’. The theory of society ascribed to this group by Blumer is, in my terminology, typically ‘intersubjectivist’ (p. 153). A third view of human group life is that held by those social psychologists whom we have termed the symbolic interactionists. They, also, recognize that the life of human groups presents itself in the form of a body of customs, traditions, institutions, and so on, but they do not regard these forms of culture as consisting merely of so many ways of acting. Instead, they believe that these forms of culture consist of common symbols, which are mutually shared and possessed by the members of the groups. Individual ways of acting are alike because these individuals are guiding their behavior by a symbol that they share in common. Thus, individuals wear clothing, in accordance with the custom of their group, because each of them shares the common understanding that he is supposed to wear clothing. In the same way, any custom, folkway, or way of acting common to a group of individuals is traceable back to their common symbol or understanding. (Blumer, 1937: 158f) Contemporary symbolic interactionism is sometimes divided in two branches; the Chicago school, associated with the name of Herbert Blumer, and the Iowa school centred around Manfred H. Kuhn (Manis and Meltzer, 1967: vi).11 Of these schools, it is undoubtedly the Chicago school, including names such as Everett C. Hughes, Tamotsu Shibutani, Anselm Strauss and Howard S. Becker which can make the most legitimate claim to calling itself ‘symbolic interactionist’ (Charon, 1979: 289).12 It is also the Chicago school which is most relevant for my purposes, since it was within this school that Mead’s social psychology was turned into an individualist and intersubjectivist theory of society.13 Having said this much, some qualifications are necessary. All Chicago interactionists do not adhere to an intersubjectivist theory of society, nor do Blumer and his followers explicitly deny the existence of social wholes. It is rather a matter of most of them positively fostering an individualist and intersubjectivist theory of society. In his article ‘Society as Symbolic Interaction’, Blumer postulates ‘that human society is made up of individuals who have selves’ (1969: 82). From this point of departure, he goes on to attack sociological thought for reducing human beings to organisms responding to various forces acting upon them, whether in the form of ‘social system’, ‘social structure’, ‘culture’, ‘status position’, ‘social role’, ‘custom’, ‘institution’ or whatever. The main fault with traditional sociological theory, then, is that it seems to deny or, at least, to ignore the fact that individuals have selves. Blumer recognizes two fundamental sociological views: symbolic interactionism, which lodges social action in individuals and sees society as consisting of acting people, and traditional sociology, which ‘lodges social action

132

Society as subjectively meaningful interaction

in the action of society or in some unit of society’, and which tends to view human society in terms of social structure or social organisation.14 The same message is repeated in the article on the ‘Sociological Implications of the Thought of George Herbert Mead’. Blumer renews his attack on traditional sociology for resorting to ‘societal factors, such as cultural prescriptions, values, social roles, or structural pressures’, thereby missing ‘the central point that human interaction is a positive shaping process in its own right’ (1969: 66). Against the structuralist view of traditional sociology, Blumer posits Mead’s view of society as an ongoing process of social action. Mead’s scheme definitely challenges this conception. It sees human society not as an established structure but as people meeting their conditions of life; it sees social action not as an emanation of societal structure but as a formation made by human actors; it sees this formation made by human actors; it sees this formation of action not as societal factors coming to expression through the medium of human organisms but as constructions made by actors out of what they take into account; it sees group life not as a release or expression of established structure but as a process of building up joint actions … accordingly, it sees society not as a system, whether in the form of a static, moving, or whatever kind of equilibrium, but as a vast number of occurring joint actions, many closely linked, many not linked at all, many prefigured and repetitious, others being carved out in new directions, and all being pursued to serve the purposes of the participants and not the requirements of a system. (Blumer, 1969: 74f) The same points are repeated and expanded upon in Blumer’s introductory essay to his Symbolic Interactionism. In opposition to a ‘structuralist’ conception of society, Blumer insists that ‘human groups or society exists in action and must be seen in terms of action’. More specifically, ‘a society consists of individuals interacting with one another’. Even more specifically, such interaction in human society is characteristically and predominantly on the symbolic level’ (1969: 6–7). This is the view of society as symbolic interaction. The necessary precondition for this view, however, is intersubjectivity. In addition, therefore, Blumer suggests that the nature of an object, including social objects consists of the meaning that it has for the person for whom it is the object … The meaning of objects for a person arises fundamentally out of the way they are defined to him by others with whom he interacts … Out of a process of mutual indications common objects emerge – objects that have the same meanings for a given set of people and are seen in the same manner by them. (Blumer, 1969: 11)

Society as subjectively meaningful interaction

133

Concerning joint or collective action, the action of groups, institutions, organisations and social classes, Blumer takes the view that they ‘consist of individuals fitting their lines of action to one another … The joint action of the collectivity is an interlinkage of the separate acts of the participants’ (1969: 16f). Blumer ends his introductory essay by drawing the methodological implications of the symbolic interactionist view of society. Being a subjectivist theory of society, the methodology proper to that theory is also subjectivist. In order to understand social life, it is necessary that the social scientist sees the actions of people, the objects towards which these actions are directed and the situation in which the action take place, in the same way as the acting individuals themselves. It is also necessary that the social scientist analyses the process in which human action is formed or constructed and refrains from explaining human action in terms of antecedent conditions or causes. Concerning the activity of organisations, symbolic interactionism ‘seeks explanation in the way in which the participants define, interpret, and meet the situations at their respective points’ (Blumer, 1969: 58). Symbolic interactionism, then, is Herbert Blumer’s interpretation of George Herbert Mead’s social psychological theory of the self and the view of society it suggests. Typical for this interpretation is the view of society as an ongoing process of symbolic interaction or communication, together with an insistence that society is continually constituted and reconstituted by the actions of individuals. A typical representative of this view is Tamotsu Shibutani who sees society as a ‘communicative process’ based upon consensus in the form of shared meanings (1961, passim; 1962: 134ff). This consensus is not such as to give rise to anything like a stable social structure. On the contrary, Shibutani underscores the transient character of society. Society consists of the recurrent adjustment and cooperation of associated persons through which action patterns of all kinds are formed, sustained, modified, evaded, or contravened. Sometimes the coordinated activities become highly organized, but there are also transient forms of interaction. All this suggests that human society might best be regarded as an on-going process, a becoming rather than a being. Society might be viewed most fruitfully as a succession of events, a flow of gestural interchanges among people … In this sense society can be said to exist only in the give and take among human beings. (Shibutani, 1961: 174f) Another illustration of the symbolic interactionist view of society is Anselm Strauss’s image of society as a ‘negotiated order’. Strauss, at first takes over Shibutani’s view of society as a ‘communicative process’ (Strauss [1969] 1977: 148ff, 162), but later, while investigating the organisation of work in the hospital, develops his own vision of the social order.15

134

Society as subjectively meaningful interaction In short, the bases of concerted action (social order) must be reconstituted continually; or as remarked above, ‘worked at’. Such considerations have led us to emphasize the importance of negotiation – the process of give-andtake, of diplomacy, of bargaining – which characterizes organizational life. (Strauss et al., 1963: 148)

Shibutani’s and Strauss’s views of society seem to me like new wine in old bottles. They are, in all essentials, new versions of the old theory of society as a social contract. What is new, is the emphasis upon change and renewal. People are constantly engaged in ‘signing’ new contracts. It is the theory of society as an ongoing social contract. This is the reason why consensus over rules does not give rise to a stable structure. When professionals are brought together and enjoined to carry out their work in the same locale, concepts of structure (formal or informal) as relatively set systems of norms and expectations are inadequate to explain resulting activity. The activity of interacting professionals is, we submit, largely governed by continual reconstitution of bases of work through negotiation. (Strauss et al., 1964: 375) The notion of ‘negotiated order’ was initially developed by Strauss and his colleagues in order to capture the nature of work organisation in the hospital, but was extended in its use to cover the nature of social organisation generally. Society becomes an arena on which individuals meet and carry out their complex negotiations. Pushing our logic to its extreme, we might even argue that the very idea of ‘nation’ or ‘society’ is only a fiction and that, if the sociologist subscribes to this common-sense fiction, rather than viewing a nation or society as an exceedingly complex arena, he may fall into the deadly trap of merely studying the fiction as if it were a fact. (Strauss et al., 1964: 377) Admittedly this is an extreme example. Symbolic interactionism, I have said, is individualistic not so much by explicit denial of the existence of social wholes, as by a positive fostering of the alternative view of society as an intersubjective community based on shared meanings. There are also many symbolic interactionists who do not present any general picture of society at all, and some who do not deny the utility or even the truth of a holist approach to society, but who have chosen to concentrate on the more ‘microscopic’ processes of face-to-face interaction, thereby unwittingly contributing to the spread and maintenance of the intersubjective theory of society. An obvious example of this kind of attitude is Erving Goffman, who is usually included among the symbolic interactionists, even if he did not include himself in this category.

Society as subjectively meaningful interaction

135

Goffman has, in his various studies, focused consistently on face-to-face interaction, especially in the form of so-called ‘encounters’ or focused gatherings, using the models of the theatre and the game as his main analytical instruments. Most well known is the model of the theatre and the dramaturgical approach, which he used in his path-breaking study of The Presentation of the Self in Everyday Life (1959).16 It is not at all that Goffman denies the existence of social structures; quite the contrary. He explicitly affirms their existence and also discusses their relation to the kind of ‘situated activity systems’ and the kind of social interaction he is interested in (Verhoeven, 1985). I think it is fair to say that Goffman’s main concern is with human behaviour as a manifestation of the ‘degrees of freedom’ there are within social structures. A particularly clear example of this is his discussion of ‘role distance’ in Encounters (1961: 85ff), which deals with the relative autonomy of the individual with respect to social structure. Sometimes, Goffman’s focus is on the autonomy of actors, who are then depicted as strategically rational, more or less, in the manner of rational choice. The most obvious example of this approach is his book with the title Strategic Interaction [1969] 1970. At other times his focus is on social action as a manifestation of social structure. The essays assembled in Interaction Ritual (1967) exemplify this Durkheimian view of social life. Both approaches are used in Relations in Public (1971), where Goffman points to the problematic nature or concept of ‘individual’ and casts doubt on the idea of the individual as the unit of analysis in sociology. The individual turns out to be different things in different systems of activity (pp. 23ff). Goffman, then, is an individualist, if at all, in practice only, but not always in practice, and not at all in principle. The following disclaimer comes from the ‘Introduction’ to his Frame Analysis (1974), but is typical for his position: This book is about the organization of experience – something that an individual actor can take into his mind – and not the organization of society. I make no claim whatsoever to be talking about the core matters of sociology – social organization and social structure. Those matters have been and can continue to be quite nicely studied without reference to frame at all. I am not addressing the structure of social life but the structure of experience individuals have at any moment of their social lives. I personally hold society to be first in every way and any individual’s current involvements to be second; this report deals only with matters that are second. This book will have weaknesses enough in the areas it claims to deal with; there is no need to find limitations in regard to what it does not set about to cover. (Goffman, 1974: 13) Recent symbolic interactionism seems to go in several directions. Some parts are more individualistic, others more structuralistic (Fine, 1990). If we accept that Blumer is the founder of ‘symbolic interactionism’, we may call the individualistic tendency ‘orthodox’ symbolic interactionism. This tendency unites around some version of the intersubjectivist theory of society. In his introductory contribution to the first reader on symbolic interactionism Arnold M. Rose

136

Society as subjectively meaningful interaction

depicts society as ‘a network of interacting individuals – with its culture – the related meanings and values by which individuals interact’ (1972: 13). In the introductory contribution to another reader on symbolic interactionism Bernard N. Meltzer suggests that ‘human society rests upon a basis of consensus, i.e., the sharing of meanings in the form of common understandings and expectations’ (1967: 8). The clearest and most elaborated statement of symbolic interactionism as an intersubjectivist theory of society is probably to be found in Joel M. Charon’s Symbolic Interactionism (1979: ch. 11). Charon bases his view of society mainly on the writings of Blumer, but also on those of Shibutani, Strauss and Meltzer. Society is characterised by two things: symbolic interaction and cooperation. ‘Society, then, is defined here as individuals in symbolic interaction with each other, aligning their acts, and acting cooperatively to resolve problems in situations’ (p. 161). The year after Charon’s book was published, there appeared another book with the same concise title, Symbolic Interactionism (1980), by Sheldon Stryker, but with a different message. Stryker tried to launch a more structuralist version of symbolic interactionism. In order to do so, he had to return to the pragmatist roots of symbolic interactionism and to replace Blumer by Ralph Turner, as the most important figure in recent symbolic interactionism. The main interest of Turner has been in a theory of collective behaviour, but he has also made an important contribution to sociological role theory (Turner, 1956; 1962; 1978). Like Goffman, Turner has been interested in the difference and interrelation between role and person, and, especially, in the process of role-taking, first anlysed by Mead. I have nothing to object to Stryker’s attempt to create a more structuralist tradition within symbolic interactionism – the conditions are at hand – but the fact remains that there is a more well-known individualist tradition in symbolic interactionism, associated with Herbert Blumer, Anselm Strauss, Tamotsu Shibutani and others. This tradition has created an individualist theory of society which, like that of the early Simmel, is both intersubjectivist and interactionist. The combination of these elements, may be represented as in Figure 5.1. (Horizontal arrows represent intersubjectivism and vertical arrows represent interactionism).

Figure 5.1 Society according to symbolic interactionism

Society as subjectively meaningful interaction

137

As has been noticed by two symbolic interactionists, Chad Gordon and Kenneth J. Gergen, there are certain affinities between symbolic interactionism and the phenomenological sociology of Alfred Schutz. According to the latter, ‘the cardinal feature of the social world is its intersubjectivity. This view emphasizes the shared-in-common and mutually sanctioned set of expectations and interpretative categories within a culture’ (Gordon and Gergen, 1968: 33).

Phenomenological sociology [S]ociety as such is a concept, an abstraction – What exists in reality are individuals in whose minds society exists as a factor determining certain types of behavior. If the mental attitude no longer exists, society does no longer exist either. If people were not aware of each other’s existence, society would not exist, even if all the same people were still in existence … Thus, society is an attitude in the mind of the individual which is subject to X changes each second. It is unstable and undetermined, although it may appear constant and concrete on the surface during long periods, or made to appear this way by social theorists. (Landheer, 1952: 22) This is one of the clearest statements of the intersubjectivist theory of society I have seen. It is written by a phenomenological sociologist, who is also a methodological individualist, or so it seems. Landheer writes: ‘The individual has historical and logical priority in regard to the group; or quite simply, a group develops out of individuals because no group can exist otherwise while the individual can, at least theoretically’ (p. 38). Two methodological rules follow from this ontological thesis: (1) ‘Social science deals with processes of change which must be explained in terms of the individual’ (p. 38), and (2) ‘Social science deals with those changes in the individual which occur in a plurality of individuals and which form, consequently, the basis for what is termed social patterns’ (pp. 38f). According to Landheer, ‘the individual is the basic unit of social science, although the changes in the individual may in turn be influenced by social processes’ (p. 39). Landheer, then, is both an ontological and a methodological individualist.17 As such he is typical of phenomenological social science. In this section I am going to substantiate this claim, by a presentation of the founder of phenomenological sociology, Alfred Schutz. As we have seen in chapter 3 (pp. 80–5), phenomenology is the name of a philosophical school, founded by Edmund Husserl. Other philosophers associated with the phenomenological movement are Max Scheler, Karl Jaspers, Martin Heidegger, Jean-Paul Sartre, Maurice Merleau-Ponty and Aron Gurwitch. This list of names reveals a close, but controversial, relationship between phenomenology and existentialism. Sociologists, inspired by phenomenology, include, besides Schutz, himself, Maurice Natanson, Thomas Luckmann, Peter Berger, John O’Neill, Kurt H. Wolff, Edward A. Tiryakian and, more recently, those who call themselves ‘ethnomethodologists’.18

138

Society as subjectively meaningful interaction

Schutz claims to draw his ideas on the foundations of the social sciences from the work of Husserl. This claim is not uncontested, but very difficult to assess, due to the diverging interpretations of the development of Husserl’s own thought.19 The most radical critique comes from Barry Hindess (1973a: 5ff; 1977: 49–77), who argues that Schutz’s claim to base his phenomenology upon that of Husserl is totally unfounded. That, in fact, Schutz’s phenomenology is a serious distortion of Husserl’s views. According to Hindess, the basic premise and project of Schutz is instead to be found in the methodology of Max Weber. This project is to reduce the world of objective mind to that of the actions of individuals. As such, Schutz’s ‘phenomenology’ is a continuation of the humanism and individualist idealism of the German Geisteswissenschaften tradition. I believe that the accusation of a distortion of Husserl’s views is considerably exaggerated, if not entirely unfounded, but there is little doubt about Schutz’s place in the tradition of German individualist idealism, a fact which is readily acknowledged also within the phenomenological camp. What Hindess does not seem to realise, however, is that also Husserl, especially the later Husserl, was close to the German Geisteswissenschaften tradition (see pp. 82–5).20 Schutz’s phenomenological sociology is based on the ideas of the later Husserl (Schutz [1932] 1972: 31–44), ideas which Schutz knew well from his frequent discussions with Husserl himself (Schutz, 1940: 164ff; 1959: 86ff).21 I will not enter the debate about the relationship between Schutz’s phenomenological sociology and Husserl’s philosophical phenomenology, but accept as a fact that there is something called ‘phenomenological sociology’ and that Schutz is its founding father and central figure. First, however, I will draw attention to some ideas and notions of Husserl which have been important for the phenomenological sociology of Schutz. Schutz’s ontological and methodological individualism was grounded before he became acquainted with the work of Edmund Husserl. The first influence in this direction, probably came from his teacher in economics, the methodological individualist Ludwig von Mises. In the 1920s Schutz was a participant in the ‘Mises seminar’, where the sociology and methodology of Max Weber was a favourite topic of discussion (Wagner, 1983: 11ff; Prendergast, 1986). It is possible to see both Schutz’s first book The Phenomenology of the Social World (1932) and Mises’s first treatment of philosophical topics in Epistemological Problems of Economics (1933), as outcomes of these discussions. Both works are encounters with the ideas of Max Weber. In the first phase of his intellectual development Schutz was a Weberian. He was, especially impressed by the first part of Economy and Society, where Weber lays the conceptual foundation for his individualist and subjectivist approach to sociology (Wagner, 1983: 14). Schutz adopted this approach, himself, and remained a subjectivist methodological individualist for the rest of his life. In his Preface to the posthumously published The Structures of the Life-World (1973), Schutz’s co-author Thomas Luckmann makes the following authoritative statement about Schutz: ‘He shared Max Weber’s methodological individualism and

Society as subjectively meaningful interaction

139

realized the strategic importance of an adequate theory of human action for the methodology of social science’ (p. xix). Alfred Schutz’s theory of the social world and the method of its study is laid down in all essentials in his The Phenomenology of the Social World (1932). The central problems of this work are set by the interpretive sociology of Max Weber and his predecessors. In the first paragraphs of his Phenomenology, Schutz makes clear that the fundamental problem of the social sciences is that of the relationship between individual and society. Is society prior to the individual, so that apart from the social whole the individual does not exist at all? Or should we put it quite the other way and say that the individual alone exists and that social organizations, including society itself are mere abstractions – ‘functions’ of the behavior of separate individuals? (Schutz [1932] 1972: 4) In trying to answer these questions and improve upon the answers given by Weber, Schutz appeals first of all to the philosophy of Husserl, but also to that of Henri Bergson. Schutz makes clear, however, that in grounding his analysis of Weber on the phenomenology of Husserl, he leaves aside all problems of transcendental phenomonology and stays at the level of phenomenological psychology (Schutz [1932] 1972: 43f).22 There are, in particular, two elements of Weber’s methodology which Schutz wishes to improve upon. First, there is Weber’s analysis of the subjectively intended meaning of action. According to Schutz, Weber is not absolutely clear about whose subjective meaning, the actor’s or the observer’s, he is talking about (ch. 1). Weber also fails to make the important distinction between because motives and in order to motives, the first referring to the conditions in the past which make an individual act in a certain way and the latter referring to what the individual wants to achieve with his action in the future, the goals of his projected action (pp. 86ff). Second, there is Weber’s notion of ideal type, which Schutz analyses as a matter of common sense and of scientific typifications of differing degrees of anonymity (pp. 176ff). There is, however, one element of Weber’s methodology which Schutz accepts without reservations; his methodological individualism. we frequently use sentences in which ideal types like ‘the state’, ‘the economy’, ‘the nation’, ‘the people’, or perhaps the ‘working class’ appear as grammatical subjects. In doing this, we naturally tend to personify these abstractions, treating them as if they were real persons known in indirect social experience. But we are here indulging in an anthropomorphism. Actually these ideal types are absolutely anonymous … From the sociological point of view, therefore, the term ‘state’ is merely an abbreviation for a highly complex network of interdependent personal ideal types. (Schutz [1932] 1972: 198f)

140

Society as subjectively meaningful interaction

According to Schutz, the starting-point for the social sciences is to be found in the intersubjective world of ordinary life, but this is only the starting-point. The social scientist does not stay in this intersubjective world, he/she makes it the object of study, and this study is objective. The social sciences aim at an objective investigation of the intersubjective world of ordinary life, or in Schutz’s own words: ‘All social sciences are objective meaning-contexts of subjective meaningcontexts’ (p. 241). An excellent summary of the main themes of The Phenomenology of the Social World can be found in Schutz’s article on ‘The Social World and the Theory of Social Action’ (1949).23 I will quote extensively from this article, since, in my opinion, it is a superbly clear and concise statement of the intersubjective theory of society and its methodology, but also because, written in 1940, it reveals clearly the influence of Weber and of Ludwig von Mises on the thinking of Schutz, as well as the influence of Schutz on the thinking of Friedrich von Hayek. Schutz attacks those social scientists who admit that social phenomena consist of the activities of human beings, but who nevertheless deny that it is necessary to go back to the subjective activities of human beings for their description and explanation. He admits that, on a certain level, social science can proceed without entering into the problems of subjectivity But then – and this is an important point – this reference to the subjective point of view always can be performed and should be performed. As the social world under any aspect whatsoever remains a very complicated cosmos of human activities, we can always go back to the “forgotten man” of the social sciences, to the actor in the social world whose doing and feeling lies at the bottom of the whole system … The safeguarding of the subjective point of view is the only sufficient guarantee that the world of social reality will not be replaced by a fictional non-existing world constructed by the scientific observer. (Schutz, 1960: 207, 209) In contrast to the world of natural things stands the world of social things. I cannot understand a social thing without reducing it to the human activity which has created it and, beyond it, without referring this human activity to the motives out of which it springs. I do not understand a tool without knowing the purpose for which it was designed, a sign or a symbol without knowing what it stands for, an institution if I am unfamiliar with its goals, a work of art if I neglect the intentions of the artist which it realizes. (Schutz, 1960: 211f) ‘Summing up, we come to the conclusion that social things are only understandable if they can be reduced to human activities; and human activities are only made understandable by showing their in-order-to or because motives’ (p. 214).

Society as subjectively meaningful interaction

141

Social relations consist of the intersubjective adjustments of individual’s motives in their interaction with each other. It can be proved that all social relations as they are understood by me, a human being living naively in the social world which is centered around myself, have their prototype in the social relation connecting myself with an alter ego with whom I share space and time. My social act, then, is oriented not only to the physical existence of this alter ego but to the other’s act which I expect to provoke by my own action. I can, therefore, say that the other’s reaction is the in-order-to motive of my own act. The prototype of all social relationship is an intersubjective connection of motives. (Schutz, 1960: 215) In 1940 Schutz also wrote a review of Talcott Parsons’s recently published The Structure of Social Action (1937) on the request of Friedrich von Hayek and intended for publication in Economica. Before sending the review to Hayek, Schutz sent it to Parsons for a reaction, which turned out to be such that he decided to abstain from publication. The review is now published (Schutz and Parsons, [1940–1] 1978), together with the correspondence it occasioned. Obviously Parsons and Schutz did not understand each other, despite their common interest in the sociology of Max Weber. There are several possible reasons for this. One reason may be that Parsons was a neo-Kantian, whereas Schutz was a phenomenologist. Another reason may be that Parsons was not very interested in a philosophical foundation, whereas Schutz was convinced that it is necessary. A third reason is probably that, despite their common point of departure in Weber’s theory of action, they were moving from there in opposite directions: Parsons in the direction of a holistic structural-functionalism; Schutz in the direction of a more firm individualist foundation of social theory. The main point, made by Schutz ([1940] 1978: 25ff), is that Parsons’s approach is too objectivistic, but lacks an adequate subjectivist foundation, especially a theory of motives, which is necessary to all social science. A main part of the review consists of a summary of Schutz’s own attempt to provide this foundation (pp. 33ff). ‘Summing up, we come to the conclusion that social things are understandable only if they can be reduced to human activities; and human activities can be made understandable only by showing their in-order-to or because motives’ (p. 53). Parson’s reaction was negative, and one possible reason for this is that he was already on his way to developing an even more objectivistic theory of the social system. More recently, Jürgen Habermas has combined the subjectivist approach of Schutz and the objectivist approach of Parsons in his theory of society as both life-world and system (Habermas [1981b] 1987). Schutz’s later writings are elaborations of the views put forward in The Phenomenology of the Social World, with only minor modifications, inspired mainly by his reading of William James and the symbolic interactionists. Schutz now recognises the ‘existence’ of multiple realities or sub-universes; the world of dreams, of ‘imageries and phantasms’, the world of art, the world of religious

142

Society as subjectively meaningful interaction

experience and of science, but of these worlds the world of daily life is paramount. All other worlds are derived from, and refer back to, the intersubjective life-world within which we work and think and which is pre-given to us all (Schutz, 1945a: 549ff; 1955: 186–93). This intersubjective world of everyday life is a world of meaningful objects created by individuals in their interaction with one another. ‘Thus, in these reciprocal acts of positing meaning, and of interpretation of meaning, my social world of mundane intersubjectivity is built; it is also the social world of Others, and all other social and cultural phenomena are founded upon it’ (1940: 182). Social objects, such as nations, governments, markets, prices, etc. and cultural objects, such as books, tools, works of art, etc. are meaningful phenomena created and maintained by individual human beings. According to Schutz, however, social objects – collectivities and institutions – ‘are as such not entities within the province of meaning of everyday reality but constructs of common-sense thinking which have their reality in another subuniverse of ideal relations’ (1955: 198). These ideal relations have their locus in the minds of individuals. Schutz’s idealism is an individualist idealism and he is careful to dissociate himself from Durkheim’s notion of a ‘collective consciousness’ and also from ‘Husserl’s conception of the collectivity as a subjectivity of a higher order’ (1959: 92). Of special importance for the social sciences is Schutz’s view that all social relations derive from the ultimate social reality of interaction in face-to-face relationships. The related phenomenon of social role is reduced to the typical expectations people have of each other’s behaviour.24 Turning now to the reality of ‘scientific contemplation’, we find that Schutz refers to the concepts of social science as concepts of the ‘second degree’, as concepts referring to an already conceptualised world (1953: 3; 1954: 267ff).25 We also find that, according to Schutz, these concepts do not refer to concrete human beings, but to ideal types in the form of ‘puppets’ or ‘homunculi’ (1945a: 572; 1960: 219). The concepts of social science, like those of common sense, are subjected to the postulate of subjective interpretation; a variant of methodological individualism. According to this postulate, concepts such as ‘savings’, ‘capital’, ‘business cycle’, ‘unemployment’ and ‘monopoly’ are intellectual shorthand for human actions. Correctly understood, the postulate of subjective interpretation as applied to economics as well as to all the other social sciences means merely that we always can – and for certain purposes must – refer to the activities of the subjects within the social world and their interpretation, motives, relevances and so on. (Schutz, 1953: 27) If there is a central theme of Schutz’s theory of society, it is intersubjectivity (cf. Rogers, 1983: ch. 8). The life-world we all inhabit and experience, is an intersubjective world we share in common. It has been suggested, by Prendergast (1986: 3, 11), that the origin of this theme, in Schutz’s theory of society, should be sought in his early attachment to the Austrian School of Economics, which,

Society as subjectively meaningful interaction

143

according to Schutz, lacked, but needed, an adequate understanding of intersubjectivity. In the phenomenology of Husserl, Schutz found a theory seriously concerned with the problematic fact of intersubjectivity. In the natural attitude we take it for granted that we live in an intersubjective world, shared, to some degree, by all of us. In his last book on The Crisis of European Sciences, Husserl called the common-sense part of this world, the life-world. The main challenge, for Husserl, however, was to provide a transcendental constitution of intersubjectivity. His main attempt to do so was in Cartesian Meditations (see pp. 83f ). By the end of his life, Schutz voiced serious objections to Husserl’s treatment of transcendental intersubjectivity (Schutz [1957] 1970). I neglect the details and turn to the main conclusion: according to Schutz, it is simply impossible to constitute an intersubjective world, or community, from the transcendental ego, since ‘reciprocal understanding and communication already presuppose a community of knowledge’ (p. 72). Many unsettling questions arise concerning the transcendental ego. The transcendetal ego, we recall, is a Leibnizian monad, ‘[b]ut how can my full monad in its concretization enter into a transcendental we-relationship with yours? (p. 76). Is there such a thing as a transcendental we? ‘[I]s it conceivable and meaningful to speak of a plurality of transcendental egos?’ (p. 77). ‘Are the Sumerians and the pygmies of the African bush, who are unknown to me, actually constituted in my meditating ego? Do I constitute Socrates or does he constitute me?’ (pp. 81f). As a result of these considerations we must conclude that Husserl’s attempt to account for the constitution of transcendental intersubjectivity in terms of the operations of the consciousness of the transcendental ego has not succeeded. It is to be surmised that intersubjectivity is not a problem of constitution which can be solved within the transcendental sphere, but is rather a datum (Gegebenheit) of the life-world. It is the fundamental ontological category of human existence in the world and, therefore, of all philosophical anthropology. As long as man is born of women, intersubjectivity and the we-relationship will be the foundation of all other categories of human existence. The possibility of reflection on the self, discovery of the ego, capacity for performing the epoché, and the possibility of all communication and of establishing a communicative surrounding world as well, are founded on the primal experience of the we-relationship … It can … be said with certainty that only such an ontology of the life-world, not a transcendental constitutional analysis, can clarify that essential relationship of intersubjectivity which is the basis of all social science – even though, as a rule, it is there taken for granted and accepted without question. (Schutz [1957] 1970: 82) When Schutz died in 1959, he was engaged in the project of creating such an ontology of the life-world. The project was finished by his student Thomas Luckmann and published as a joint work called The Structures of the Life-World (1973: 19). In this work, there are some openings towards objectivism and

144

Society as subjectively meaningful interaction

structuralism, but since it is partly written by Luckmann, it is difficult to know whether these openings really reflect Schutz’s views. Since they point in the direction of the views expressed by Berger and Luckmann (1966), they might be the contribution of Luckmann, more than of Schutz. I conclude, therefore, with words written by a Popperian (objectivist) methodological individualist: Of the several forms of individualism, which is a basic schema in the social sciences, the phenomenological approach is one of the most significant and extreme. The overriding aim is to interpret all sociological happenings in relation to the individual experiences of individual people. (Wisdom, 1973: 257) The main idea of the phenomenological view of society is that of intersubjectivity. Unlike symbolic interactionism, it is almost exclusively concerned with intersubjective meaning, but hardly at all with social interaction. The view of society contained in phenomenology, may be represented like this (the continuous horizontal arrows indicate that intersubjectivism is more important than interaction, which is represented by broken arrows):

Figure 5.2 Society according to phenomenological sociology

Existentialism Existentialism first arose in Germany, and it is common to see Karl Jaspers as the founder of the movement. The most important forerunners are Sören Kierkegaard and Friedrich Nietzsche. Another important figure in the early history of the movement was Martin Heidegger. Today we think of existentialism as mainly a French movement of thought associated, above all, with names such as Jean-Paul Sartre, Simone de Beauvoir and Maurice MerleauPonty. Existentialism developed in close connection with the phenomenology of Edmund Husserl. Because of this, it is sometimes called ‘existential phenomenology’. Maurice Merleau-Ponty, above all, is a phenomenological philosopher, but also Jean Paul Sartre was heavily indebted to Husserl. Equally important, however, is the French heritage. Existentialism is, like phenomenology, a philosophy of consciousness and, like the latter, it takes its

Society as subjectively meaningful interaction

145

point of departure in the cogito of Descartes. Another important source of inspiration is the early philosophy of Henri Bergson. The influence of Bergson is most obvious in the case of Gabriel Marcel (1889–1973), the first French existentialist philosopher, who was also a Catholic, interested, above all, in the prospects of Christian freedom and morality in the modern world. Marcel was the first to introduce existentialism in France, but it was Jean Paul Sartre who made it the most popular philosophy in post-war France. Jean-Paul Sartre was an atheist, with a different attitude to the world, but he shared Marcel’s focus on the freedom of the individual subject. Sartre started as a phenomenological philosopher, addressing various problems in Husserl’s analysis of consciousness. In the latter half of the 1930s, he wrote some minor works, where he criticised Husserl’s analysis of the transcendental ego and laid the foundation for a phenomenological psychology of emotions. The phenomenological basis of existentialism is evident also in Sartre’s first magnum opus Being and Nothingness (1943), which bears the subtitle: An Essay on Phenomenological Ontology, but now he orients himself, also to Heidegger and Hegel. Ontology means a theory of being and, according to Sartre, there are two realms of being: ‘being-in-itself ’ and ‘being-for-itself ’. Being-in-itself is the realm of non-conscious being, or of things, passive and inert. Being-for-itself is the realm of consciousness, of activity and freedom. Having established these two realms of being, Sartre goes on to consider their relation. Like Heidegger, he conceives of it as the ‘being-in-the world’, on the part of being-for-itself. Since only human beings have consciousness, this relation takes the form of ‘man-in the world’. According to Sartre, the characteristic attitude of man-in-the-world is interrogation, to pose questions. And to questions there are two possible replies: yes and no. The very possibility of a negative reply creates ‘nothingness’. ‘Man is the being through whom nothingness comes to the world’ ([1943] 1956: 24). Now, if being is what is, nothingness is what is not, but which could be; nothingness is possibility. It is up to you and me to realise the possible. ‘Man’s relation with being is that he can modify it’ (p. 24). Existentialism is a philosophy of freedom. Human beings are free to choose, not only this or that, but their own lives, or essences. This freedom in the face of an open future of possibilities, however, creates anguish. But since anguish is not a pleasant feeling, the immediate reaction is flight from freedom ([1943] 1956: 40ff). This reaction is a manifestation of what Sartre calls ‘bad faith’. Bad faith is a form of self-deception. We delude ourselves into believing that we must do all the things we are expected to do. We renounce ‘being-for-itself ’ and enter ‘being-in-itself ’. According to Sartre, the traditional sociological picture of social life, as the enactment of social roles, is a life in the attitude of bad faith (pp. 59f). Existentialism, then, is a form of radical individualism. This becomes even more evident when Sartre turns to an analysis of ‘being-for-others’. On this point, he sides with Husserl’s monadology and solipsism, against Hegel’s holism and Heidegger’s collectivism ([1943] 1956: 223–52). The view of society that emerges is Hobbesian. If I am free to pursue my own project, it is only natural

146

Society as subjectively meaningful interaction

that my freedom should clash with that of Other. In asserting my freedom, I try to enslave Other and Other tries to enslave me. ‘Conflict is the original meaning of being-for-others’ (p. 364). The reason for this situation is that each is the limit to the freedom of the other. ‘From the moment that I exist I establish a factual limit to the Other’s freedom. I am this limit, and each of my projects traces the outline of this limit around the Other’ (p. 409). In the end, this destructive relation gives rise to hate, first of Other, and eventually of all others (pp. 410–12). As Sonia Kruks has pointed out, this bleak picture of the human condition has much in common with Hobbes’ stature of nature, but without the escape of a social contract. The world would be Hobbesian not only in the sense of being fundamentally conflictual, but in the sense of being necessarily random, unstructured and anarchic. For the main features of Hobbes’ state of nature are not only fear and conflict, but lack of stability, of order, of institutions, of common linguistic meaning – of all those regularities that permit human culture to develop and which are made possible for Hobbes only by the contract to end the state of nature. (Kruks, 1990: 76) Sartre goes on to discuss and reject Heidegger’s idea of Mitsein and Durkheim’s idea of a collective consciousness (p. 414). His conclusion is that ‘the experience of the We-subject is a pure psychological, subjective event in a single consciousness … It is a question only of a way of feeling myself in the midst of others’ (p. 425). Being and Nothingness did not satisfy the Marxist intellectuals of the French communist party, who saw it as a manifestation of individualism and subjectivism. Sartre, who was sympathetic to the communist cause, and supported the party, felt obliged to clarify his position. This he did in the short essay on The Humanism of Existentialism (1947), which is the most accessible presentation of the latter doctrine. In this essay, he complains, like virtually every founder of a doctrine, that the word ‘existentialism’ has become ‘so stretched and has taken on such a broad meaning, that it no longer means anything at all’ ([1947] 1965: 33). Nevertheless, what all existentialists have in common, ‘is that they believe that existence precedes essence, or if you prefer, that subjectivity must be the starting point’ (p. 34). This mean that human beings make themselves and must assume full responsibility for what they make of their lives. ‘Subjectivism means, on the one hand, that an individual chooses and makes himself; and, on the other, that it is impossible for man to transcend human subjectivity’ (p. 37). The main message of existentialism, then, is that we are free to choose our own lives. ‘If existence really does precede essence, there is no fixed human nature. In other words, there is no determinism, man is free … condemned to be free’ ([1947] 1965: 41). So far, there is nothing that goes beyond the message of Being and Nothingness, but Sartre goes on to take some small steps in a more collectivistic direction. A first step, I believe, is his suggestion that in making yourself,

Society as subjectively meaningful interaction

147

you ‘at the same time create an image of man as we think he ought to be’ (p. 37). In this way, we all contribute to the production and reproduction of society and of humanity. if I want to marry, to have children; even if this marriage depends solely on my own circumstances or passion or wish, I am involving all humanity in monogamy and not merely myself. Therefore, I am responsible for myself and for everyone else. I am creating a certain image of man of my own choosing. In choosing myself, I choose man. (Sartre [1947] 1965: 37) This is really a piece of social constructionism, which reminds of ethnomethodology and of Anthony Gidden’s theory of structuration. The point Sartre is making is that social phenomena are, in Gidden’s terminology, ‘recursive’, they exist only in and through the actions, by which they are reproduced. An important difference is that, whereas Giddens believes that human beings are able constantly to create society only with the aid of social structures already there, if only as memory traces, Sartre believes that ‘man, with no support and no aid, is condemned every moment to invent man’ ([1947] 1965: 37; my italics). Even so, Sartre rejects solipsism and I feel that there is a certain ambiguity on this point. Sartre rejects the individualistic subjectivism of Descartes and Kant on the ground that ‘we reach our own self in the presence of others’ (p. 51). Others are the condition of our own existence. ‘Hence, let us at once announce the discovery of a world which we shall call intersubjectivity; this is the world in which man decides what he is and what others are’ (p. 53). The message of Sartre’s social constructionism is that we are responsible for the kind of community we live in and recreate, but there is always the possibility of creating another one, more to our liking; and if you want to do it by means of collective action you are free to do so. Existentialism is a humanism, but is Marxism a humanism? Sartre thought so and many other Marxists thought so too, but, not all of them. In France, there soon developed a structuralist version of Marxism, which denied that Marxism is a humanism and went as far as to reject all forms of subjectivism and humanism.26 Sartre would soon abandon his early version of existentialism, too, and move in a more Marxist direction, but he never moved as far as Althusser in denying the human subject. Far from it. His final view of society is presented in his second magnum opus, Critique of Dialectical Reason (1960). In this work, Sartre recognises society as an objective reality, made up of groups, organisations and institutions. These objective structures are part of the situation in which human subjects act. Life in society is conceived of as dialectic between human subjects and objective structures, much like the view of Berger and Luckmann in their The Social Construction of Reality (see pp. 161f). Sartre’s move from existentialism to Marxism is usually explained in terms of his allegiance to the French communist party. Sartre was not the only existentialist to move in a more structuralist direction, however. Before him, Simone de

148

Society as subjectively meaningful interaction

Beauvoir and Maurice Merleau-Ponty had already taken existentialism in this direction. Could it be that Sartre was simply following their example? (Kruks, 1990: 16–18, 83ff). The second volume of Simone de Beauvoir’s classic, The Second Sex (1949), begins with the famous statement: ‘One is not born a woman, but rather becomes, a woman’ ([1949] 1988: 295). This statement is in line with the orthodox existentialist thesis that existence precedes essence, but the continuation is less orthodox: ‘No biological, psychological, or economic fate determines the figure that the human female presents in society; it is civilization as a whole that produces this creature, intermediate between male and eunuch which is described as feminine’ (p. 295). According to de Beauvoir, a woman does not have the freedom to choose herself, she is the victim of a situation created and maintained by men. The culture and social institutions, which constitute patriarchy offer no room for escape. ‘Marriage is the destiny traditionally offered to woman’ (p. 445), and it leads to subordination and to ‘work within the home’, which ‘gives her no autonomy’ (p. 475). Because of her more structuralist view of society, Sonia Kruks has suggested that de Beauvoir was closer to Merleau-Ponty than to Sartre (Kruks, 1990: 111), but I believe that she was more of a structuralist than either of them. MerleauPonty was, above all, a phenomenologist, taking his point of departure in Husserl’s idea of life-world and, like Husserl and Schutz, he entertained an intersubjectivist theory of society, or so it seems to me.27 Two things tell against this interpretation of Merleau-Ponty, however. First, Merleau-Ponty is sympathetic to structuralist analysis in general and to that of French anthropology in particular, and structuralism is not normally seen as compatible with individualism in any form. If, however, as in Merleau-Ponty, structuralism is seen mainly as a method or a form of analysis, but not as an ontological thesis about social reality, the problem can be made to disappear. If, also, structure is seen as entering social reality only through the lived experience of individuals, structuralist analysis becomes compatible with an intersubjectivist theory of society (see Merleau-Ponty, 1974: 116, 120). Second, Merleau-Ponty is also sympathetic to Marxian social analysis. This is no less of a problem. Marxism is even more difficult to reconcile with an intersubjectivist theory of society. But also this difficulty is, somehow, overcome by Merleau-Ponty. It is done by concentrating exclusively on the philosophical anthropology of the young Marx. But, whereas the later Sartre interpreted this anthropology as based on a dialectic of subjective meaning and objective social reality, Merleau-Ponty conceives of Marx as a champion of intersubjectivism and uses him against Durkheim. Marx, unlike Durkheim, would not even agree to speak of a collective consciousness whose instruments are individuals … If it is neither a ‘social nature’ given outside ourselves, nor the ‘World Spirit’, nor the movement appropriate to ideas, nor collective consciousness, then what is, for Marx, the vehicle of history and the motivating force of the dialectic? It is man involved in a

Society as subjectively meaningful interaction

149

certain way of appropriating nature in which the mode of his relationship with others takes shape; it is concrete human intersubjectivity, the successive and simultaneous community of existences in the process of self-realization in a type of ownership which they both submit to and transform, each created by and creating the other. (Merleau-Ponty, 1974: 177f) Merleau-Ponty’s view of society, then, would seem to be a brand of the intersubjectivist theory of society. Existentialism did not make much of an impact on social science. At least not for a start and not positively. The main impact is probably negative, but as such it was far from negligible. The existentialism of Jean-Paul Sartre was the main target of attack for the French structuralists, who have conquered the world, since the 1960s. The sociologist, Pierre Bourdieu, for instance, starts his main theoretical works with a critique of Sartre’s individualism, subjectivism and voluntarism (Bourdieu [1972] 1977: 73–6; [1980] 1990: 42–7). Bourdieu was more favourably disposed towards the philosophy of Merleau-Ponty.28 Among the most outspoken representatives of existential phenomenology in sociology is Edward A. Tiryakian.29 In his version, existentialist-phenomenological sociology becomes a hospitable theory, able to assimilate virtually all of traditional sociology. Not only Weber, Simmel and Mead, which makes sense, but also Durkheim, Sorokin and Parsons (Tiryakian, 1965), which is more difficult to understand. Most phenomenologists obviously find it necessary to relate their views to Durkheim’s notion of ‘collective consciousness’. The reason for this is not hard to find. Durkheim denied the possibility of reducing social facts, to psychological facts, and this seems to imply a rejection of the intersubjectivist theory of society. If the collective consciousness is a reality sui generis, it is presumably irreducible to the intersubjective social reality of phenomenology. Schutz and Merleau-Ponty were right, from a phenomenological point of view, to reject Durkheim’s notion of a ‘collective consciousness’. Berger and Luckmann accepted it (see pp. 161f ), but in doing so, went far beyond Schutz’ phenomenological foundation for the social sciences. Tiryakian represents a third reaction. He accepts the idea of a ‘collective consciousness’, but reduces it to the ‘we-pole’ of intersubjective consciousness; the ‘form of intersubjective consciousness which constitutes any and every community’, that is the commonly shared life-world (1965: 180–2; 1973: 192ff). In making this reduction, Tiryakian is true to phenomenology, but hardly to Durkheim. For Tiryakian, as for Schutz and Merleau-Ponty, the central tenet of a phenomenological social science is the intersubjectivist theory of society. ‘Above all, it [existential phenomenology] is an orientation that seeks to find the structure of social phenomena in their meanings, meanings which are grounded in the experience of subjects’. The primary application of existential phenomenology to sociology, therefore, is that of ‘sensitizing us to the nature and fundamental role of intersubjectivity in the structure of social action’ (Tiryakian, 1973: 209–21).

150

Society as subjectively meaningful interaction

Ethnomethodology Ethnomethodology is an Anglo-American movement, like symbolic interactionism. Its founder is Harold Garfinkel. At least, it was Garfinkel who coined the term ‘ethnomethodology’. Before he did, however, he was a pupil of both Parsons and Schutz. Since ethnomethodology is usually considered to be a development of phenomenology, it would seem that he sided with Schutz against Parsons, even though he wrote his dissertation for the latter. Be that as it may, ethnomethodology is, at least to some extent, a result of Garfinkel’s critical encounter with the structural-functional theory of his teacher Talcott Parsons.30 According to Garfinkel, ethnomethodology ‘is an organizational study of a member’s knowledge of his ordinary affairs, of his own organized enterprises, where that knowledge is treated by us as part of the same setting that it also makes orderable’ ([1968] 1974: 18).31 Among the many members and sympathisers of the ethnomethodological movement are Egon Bittner, Aaron V. Cicourel, Harvey Sachs, Emmanuel Schlegloff, David Sudnow, D. Lawrence Wieder, Don Zimmerman, Melvin Pollner, Thomas P. Wilson, Alan Blum and Peter McHugh. Ethnomethodology, as indicated by the name, is primarily a methodological approach to the study of social life. As such, it is, however, based upon certain assumptions about the nature of social life. It is with ethnomethodology’s (implicit) view of society, rather than with its methodology, that this section is concerned. Ethnomethodology is often classified as being part of or, at least, an outgrowth of the phenomenological movement, even its most vital part.32 An exception is Mary F. Roger (1983: ch. 7), who points out the important differences there are between these movements. Most important, ethnomethodology is much less concerned with subjective meaning than is phenomenology, but more concerned with actions, or practices. It has also been argued that ethnomethodology shows close affinities with symbolic interactionism (Denzin, 1969; Alexander, 1985: 43, 51; 1987: 272ff). If this is so, it ought to be individualistic and intersubjectivistic.33 This conclusion has been contested, however. While no one would deny that ethnomethodology is heavily influenced by the phenomenology of Schutz, the affinities with interactionism have been denied by members of the ethnomethodological movement (Zimmerman and Wieder, 1971). It has also been argued that ethnomethodology is close to hermeneutics, ordinary language philosophy and even French structuralism, and, therefore, not individualistic and subjectivistic.34 I do not deny that ethnomethodology is infected by ordinary language philosophy, hermeneutics and even structuralism, but not enough to make it immune to individualism and subjectivism. I would like to argue, instead, for the more important similarities between ethnomethodology and symbolic interactionism. Ethnomethodology, like symbolic interactionism is highly critical of structural-functional sociology with its ‘oversocialized conception of man’ (Wrong, 1961). Blumer’s critique of traditional sociology is echoed in Garfinkel’s reference to the ‘man-in-the-sociologist’s-society’ as a ‘cultural dope’ (1967: 68). Ethnomethodology goes even further than symbolic interactionism in viewing

Society as subjectively meaningful interaction

151

society as a process (rather than as an order). ‘Where others might see “things”, “givens” or “facts of life”, the ethnomethodologist sees (or attempts to see) process: the process through which the perceivedly stable features of socially organized environments are continually created and sustained’ (Pollner, 1974: 27).35 Society, although constantly reconstructed or reconstituted, is never there as something ‘tangible’. It has a transient or, to borrow a term from Habermas, an ‘occasional’ character (Habermas [1981b] 1987: 130). ‘The basic position is that social structures, conventionally defined as patterned social relationships, become visible and viable only as practical features of concrete moments of human existence’, or in other words: society is ‘the world as it happens’ (Boden, 1990: 190). To conclude: according to ethnomethodology, ‘Social reality is constantly created by the actors; it is not a preexisting entity’. This is the exact opposite of Durkheim’s holistic view of social facts, but similar to that of symbolic interactionism. Finally, it would be somewhat odd if ethnomethodology did not exhibit important similarities with symbolic interactionism, since it is a development of Schutz’s phenomenology, which is certainly close to symbolic interactionism in many respects (cf. Wagner, 1983: 73f, 136–40). Against Durkheim, Garfinkel argues that social facts are accomplishments. They are ‘accomplishments of the concerted activities of daily life’. But for concerted action to be possible, there must be some rationality or accountability, some common knowledge of these accomplishments or the way they are achieved. This common knowledge is the topic (and resource) of ethnomethodological study. ‘Ethnomethodological studies analyze everyday activities as member’s methods for making those same activities visibly-rational-and-reportable-for-allpractical-purposes, i.e., “accountable”, as organization of commonplace everyday activities’ (Garfinkel, 1967: vii). This double character of everyday activities, of being both accomplishments and ‘accountable’, is called with one of ethnomethodology’s most cherished terms, their reflexivity. The second most important term of ethnomethodology is indexicality. By ‘indexicality’ is understood the property of member’s talk and conduct of being dependent for their meaning and truth upon (1) the biography and present state of the speaker or agent and (2) upon the linguistic and social context in which talk and conduct take place. Ethnomethodology, then, becomes ‘the investigation of the rational properties of indexical expressions as contingent ongoing accomplishments of organized artful practices of everyday life’ (Garfinkel, 1967: 11). Ethnomethodology, like both symbolic interactionism and phenomenological social science, finds the basis of social order in member’s shared meanings or common understandings. Garfinkel is anxious to make clear, however, that these common understandings are not of substantive matters, but of member’s methods for making their practical actions accountable, i.e., rational for all practical purposes. Common understandings have an operational structure. Garfinkel also attacks sociologists for taking the social order for granted, as a point of departure, instead of asking how social order is possible. He finds an exception in Alfred Schutz, however, and inspired by him, goes on to investigate the routine grounds of everyday activities, that is, ‘how the structures of

152

Society as subjectively meaningful interaction

everyday actitivies are ordinarily and routinely produced and maintained’ (Garfinkel, 1967: 38). Garfinkel’s solution to the problem of order is not as radical as many ethnomethodologists would have it. It is, in fact, the typical answer, not only of the intersubjectivist theory of society, but of sociological role theory in general. Social order is seen as based upon people’s expectations of each other’s actions and upon the ability of competent members of a language community to comply with these expectations. Earlier the argument was made that the possibility of common understanding does not consist in demonstrated measures of shared knowledge of social structure, but consists instead and entirely in the enforceable character of actions in compliance with the expectancies of everyday life as a morality. Common sense knowledge of the facts of social life for the members of the society is institutionalized knowledge of the real world. Not only does common sense knowledge portray a real society for members, but in the manner of a self fulfilling prophecy the features of the real society are produced by persons’ motivated compliance with these background expectancies. Hence the stability of concerted actions should vary directly with whatsoever are the real conditions of social organization that guarantee persons’ motivated compliance with this background texture of relevance as a legitimate order of beliefs about life in society seen ‘from within’ the society. (Garfinkel, 1967: 53) Ethnomethodology’s claim to originality, to having effected a radical revision of the problem of common understandings, rests upon two distinctions: (1) ‘the distinction between the social world as topic of, and resource for inquiry’ and (2) the related distinction between a ‘normative’ and an ‘interpretive’ paradigm in sociology. While traditional sociology treats common understandings, especially rules, as resources used in their explanations, ethnomethodology turns them into the topic of inquiry. The social order is turned from something taken for granted into a problem. This alternative conception of social inquiry hinges on ‘the occasioned corpus of social features’. By use of the term occasioned corpus, we wish to emphasize that the features of socially organized activities are particular, contingent accomplishments of the production and recognition work of parties to the activity. We underscore the occasioned character of the corpus in contrast to a corpus of member’s knowledge, skill and belief standing prior to and independent of any actual occasion in which such knowledge, skill, and belief is displayed or recognized. The latter conception is usually refered to by the term culture. (Zimmerman and Pollner, 1971: 94) What distinguishes ethnomethodology (and phenomenology) from traditional sociology is its treatment of rules. According to traditional sociology (and linguis-

Society as subjectively meaningful interaction

153

tics) rules are accepted as given. Social order (and language) is seen as a matter of following these rules. According to ethnomethodology, things are much more complex. Talk and conduct, far from being a simple matter of following clear-cut rules, pose tremendous problems of application in concrete situations. The operationalisation of rules into criteria for use almost always ends with an et cetera clause. The application of rules, therefore, involves an important element of ad hocing and glossing practices (Garfinkel, 1967: 18–24). This difference between ethnomethodology and traditional sociology is the basis of the distinction between an ‘interpretive’ and a ‘normative’ paradigm in sociology (Wilson, 1971). The distinction between an interpretive and a normative paradigm is genuine and important. As far as I can see, the interpretive paradigm is largely coextensive with what I call ‘the intersubjectivist theory of society’. This is why I disagree with those ethnomethodologists who, like Zimmerman and Wieder, exaggerate the differences between ethnomethodology and symbolic interactionism and even classify symbolic interactionism as belonging to the normative paradigm (Zimmerman and Wieder, 1971: 286–8), but tend to agree with those ethnomethodologists who, like Wilson and Cicourel, see the important continuities between symbolic interactionism and ethnomethodology. According to Wilson, ethnomethodology belongs, together with symbolic interactionism, to the interpretive paradigm in sociology. Typical features of this paradigm are the view of social interaction as an interpretive, rather than as a rule-governed, process and the view of complex social phenomena as ‘patterned arrangements of interactions among individual actors’ (Wilson, 1971: 66). Thus, social organization is not treated as an objectively existing structure. Rather, the question is raised how it is that the members establish repetitiveness, stability, regularity, and continuity over space and time as features of their social world that are taken by themselves and anyone else as objective matters of fact rather than as creatures of fantasy or whim. (Wilson, 1971: 78f) Needless to say this view of social organisation has certain consequences for ethnomethodology’s view of social roles. Drawing upon symbolic interactionists such as Goffman, Turner and Blumer, Wilson emphasises role-taking as an interpretive process, rather than role behaviour as conformity to norms. Cicourel, who like Wilson is much influenced by Turner, emphasises role-taking and rolemaking as modifying and creative elements of role behaviour, but also follows Shibutani and Strauss in their view of society as a negotiated or constructed order.36 A corollary of the processual and occasional view of society is the ‘nominalist’ view that only individuals exist, but not institutions or other social wholes. On this view, to treat ‘social things’ as if they existed is to reify social reality.37 Wilson (1971: 58f), consequently, adheres to individualism as an ontological thesis about society (but not to psychological reductionism), while Cicourel (1981: 58–61)

154

Society as subjectively meaningful interaction

takes the view that macro-phenomena (concepts) can be, and should be, understood and analysed as aggregates of micro-situations (concepts). Pointing out these similarities between ethnomethodology and symbolic interactionism is not to deny their dissimilarities. Symbolic interactionism is closer to traditional sociology and its interest in norms and roles, while ethnomethodology is closer to hermeneutics, ordinary language philosophy and structuralism, and their interest in language. There has been within sociology as a whole an increasing interest in language, and ethnomethodology is one of its most significant manifestations. What are the implications of this ‘linguistic turn’ for the question of the individualism and subjectivism of ethnomethodology? I think it is fair to say that the main thrust of the linguistic turn in the human sciences has been holistic. There is not, however, a necessary relation between an increasing interest in language and a holistic theory of society, or a holistic methodology. It all depends upon the view taken of language as a social phenomenon. My impression is that the view of language underlying ethnomethodological investigations of its uses is individualistic.38 The linguistic turn of sociology has taken two principal forms: (1) language has been seen as a phenomenon analogous or similar to society and (2) language has been seen as constitutive of social phenomena (Giddens, 1979: 4; KnorrCetina, 1981: 2–7). Ethnomethodology has followed both these routes, but mainly the second. There are several sources of the lingustic turn in the human sciences: hermeneutics, structuralist lingustics and ordinary language philosophy. What is the relation of ethnomethodology to these traditions? To begin with hermeneutics, it is easy to see certain superficial similarities between this tradition and ethnomethodology, but hard to find any deeper kinship between them. Above all, it is difficult to find any sign of direct influence of hermeneutics upon ethnomethodology. Hermeneutics might, for the present purpose, be understood in the crystallised form of the hermeneutic circle. As a matter of fact, there are two distinct but related circles. The first circle is temporal and connects understanding and pre-understanding. The second circle expands and contracts in the context of meaning and connects part to whole; word to sentence, sentence to text and social action to social system. It is only when applied to the relation between social action and social system that the hermeneutic circle implies a holist methodology (Udehn, 1987: 220–6). Ethnomethodology has not, however, made such use of the hermeneutic circle. Its main similarity with hermeneutics lies in stressing the importance for understanding of pre-understanding. But this is not incompatible with individualism or subjectivism. It is intersubjectivism over time.39 Another similarity between hermeneutics and ethnomethodology can be found in their emphasis on the contextuality of talk and conduct – but more about that below. The similarities to French structuralism are even more superficial. On closer inspection, they boil down to little more than a common interest in language, but from different perspectives. It is admitted that French structuralism and

Society as subjectively meaningful interaction

155

ethnomethodology rely on different theories of language. While the former relies on Ferdinand de Saussure and is interested in language as a system or structure (language), the latter relies primarily on English ordinary language philosophy and is interested in the use of language (parole).40 As a general observation, I would say that ethnomethodology tends to be averse to all kinds of structuralism, including linguistic structuralism (see, e.g., Douglas, 1971: 31ff and Zimmerman and Wieder, 1971: 107ff). There is one exception to this; Cicourel’s cognitive ethnomethodology. This version of ethnomethodology is explicitly formulated as similar, in certain respects, not to French structuralism, but to another member of the structuralist family; Chomskyan linguistics. Chomsky’s distinction between surface structure and deep structure has a direct counterpart in Cicourel’s distinction between the surface rules of the normative order and the interpretive procedures used by members when applying the surface rules to concrete situations. With this notion of ‘interpretive procedures’, Cicourel provides one answer to the ethnomethodological quest for something universal, invariant and trans-situational amidst the otherwise haphazard nature of social reality. Interpretive procedures are commonly shared and socially learned cognitive schemes operating upon the surface rules of the normative order and providing a ‘sense of social structure’. The key word here is sense, so it would seem that Cicourel is safely anchored to the individualist and subjectivist side (Cicourel, 1974: 99ff; see also KnorrCetina, 1981: 6f). The linguistic theory (theories) most obviously to be found behind ethnomethodology’s interest in language is that of English ordinary language philosophy. The influence of this philosophy can be found most expressly in ethnomethodology’s Wittgensteinian talk about social practices and in its primary concern with the contextuality of talk and conduct. Does not talk about social practices imply a transcendence of subjectivism and does not a concern with the contextuality of talk and conduct lead to a transcendence of both subjectivism and individualism? Not necessarily. To begin with the second question, it is true that, on a certain analysis, a concern with contextuality leads to holism, but I cannot find that ethnomethodologists go that far in their analysis. It is also true that ordinary language philosophers, such as Peter Winch and John R. Searle, have advanced arguments, based upon the contextuality of social action against individualism and subjectivism. But these are exceptions. In the main, ordinary language philosophy is individualistic and subjectivistic (Strawson, 1970: 4–9), and so, I believe, is ethnomethodology. Ethnomethodology’s term for contextuality is ‘indexicality’. Or, perhaps better, indexicality is one form of contextuality. If we look a little bit closer at the ethnomethodological analysis and use of ‘indexicality’, we find little to suggest that it is anything but subjectivistic. The notion of ‘indexicality’ goes back to Husserl, but the immediate source of Garfinkel’s use of this term is the philosopher Yehoshua Bar-Hillel. According to him, indexical sentences are such as contain tensed verbs or expressions like ‘I’, ‘you’, ‘here’, ‘there’, ‘now’,

156

Society as subjectively meaningful interaction

‘yesterday’, and ‘this’. Such sentences are dependent for their meaning and truth upon the pragmatic context of their production. By ‘pragmatic context’ BarHillel understands ‘the context which the producer might have had “in his mind”’ (1954: 366, 371). According to Bar-Hillel, then, indexicality goes together with a subjectivist theory of meaning. What matters is the subject’s own ‘definition of the situation’. This is also the way most, if not all, ethnomethodologists understand ‘indexicality’. The Zimmerman–Pollner–Wieder group, which among ethnomethodologists is most concerned with the problem of indexicality, is also the most subjectivistic.41 Garfinkel’s and Sack’s analysis of indexicality might seem a little more difficult to reconcile with individualism and subjectivism. Garfinkel and Sacks take off from Bar-Hillel, and as long as they follow him there is no problem to do so. According to Garfinkel and Sacks (Garfinkel, 1967: 4f; Garfinkel and Sacks, 1970: 347–50), a characteristic feature of indexical expressions is that their denotation is relative to the speaker, or user. If this is the reason why they oppose indexical to objective expressions, it is hard to see why their view of indexicality is anything but subjectivistic. Problems begin when they start talking about activities being organisationally situated and category-bound (Garfinkel, 1967: 11, 32–4; Sacks, 1972: 221–4). It is, supposedly, this kind of talk, which has led to the suggestion that ethnomethodology is an expression of methodological situationalism, but not of methodological individualism (Knorr-Cetina, 1981: 7–15). This suggestion is based on a misunderstanding. Methodological individualism, far from failing to refer to ‘interaction in social situations’ is explicitly stated in just those terms. Methodological individualism, then, is not characterised by a neglect of interaction, or of the social situation in which it takes place, but by the way it conceives of interaction and the social situation. The distinguishing feature of the strong version of methodological individualism is that it sees the social situation as consisting of other individuals, but not of social institutions, or social structure. In this, there is basic agreement between ethnomethodology and methodological individualism. As we have already seen, ethnomethodology does not accept the social order as something given, to be used by the social scientist as a resource for making explanations. To do this is to be guilty of reifying social reality; of turning a mere epiphenomenon into something having causal efficacy. Karin Knorr-Cetina also mentions an argument by Maurice Mandelbaum (1955) – similar to those of Winch and Searle – to the effect that the contextuality of social action implies that reference to a social action is also, at least implicitly, reference to the institutional context in which it takes place. She also makes the observation that while it is the case that micro-sociological approaches, including ethnomethodology, make use of institutional concepts, they have not taken notice of the holistic implications of this phenomenon (Knorr-Cetina, 1981: 12f; cf. also Zimmerman, 1978: 10). The closest ethnomethodology has come to Mandelbaum’s argument is, probably, Sacks’s analysis of categorybound activities. Category-bound activities, according to Sacks, are such activities that ‘are taken by members to be done by some particular, or several particular, categories of members’ (Sacks, 1972: 222). Activities are tied to cate-

Society as subjectively meaningful interaction

157

gories of members by norms and these norms provide the basis for our observation and description of these same activities. ‘Crying’, for instance is done by babies, but not by ‘big boys’. Sacks’s main interest, however, is in the sequential ordering of activities, especially conversations. A standard example is that of saying ‘Hello!’ as a conventional form of ‘greeting’, tied to certain individuals and situations by norms; these conventions and norms being also the basis for categorizing a token of ‘hello’ as an instance of ‘greeting’ (pp. 224–8).42 Certain similarities notwithstanding, Sacks does not go as far as Mandelbaum in his argument. Mandelbaum’s decisive argument is not that actions, and descriptions of actions, are governed by rules, or even that members, therefore, use holistic concepts – methodological individualism can assimilate that – but that institutions make up social systems, so that reference to certain social actions implies reference to social systems (see Udehn, 1987: 220–31). Garfinkel’s and Sacks’s writings are also replete with talk about ‘routines’, ‘practices’ and ‘social structures’. This terminology – and also more substantial considerations – has led some commentators to draw the conclusion that ethnomethodology has abandoned subjectivism for a more objectivist approach, directed at the analysis of language.43 This conclusion finds support in Garfinkel’s and Sacks’s definition of ethnomethodology’s central notion of ‘member’. The notion of member is the heart of the matter. We do not use the term to refer to a person. It refers instead to a mastery of natural language, which we understand in the following way … We offer the observation that persons, because of the fact that they are heard to be speaking a natural language, somehow are heard to be engaged in the objective production and objective display of common-sense knowledge of everyday activities as observable and reportable phenomena. We ask what it is about natural language that permits speakers and auditors to hear, and in other ways to witness, the objective production and objective display of common-sense knowledge, and of practical circumstances, practical actions, and practical sociological reasoning as well. What is it about natural language that makes these phenomena observable-reportable, that is accountable phenomena? (Garfinkel and Sacks, 1970: 342) Before discussing the issue of Garfinkel’s and Sacks’s alleged objectivism, a comment on their use of the word ‘social structure’: when Garfinkel and Sacks use this word they usually refer to structures of everyday activities as, for instance, the sequential ordering of conversations, but not to social structure as normally understood by sociologists, involving relations between individuals. This use of the term ‘social structure’, as more or less synonymous with ‘regular’ or ‘patterned behaviour’, does not conflict with methodological individualism. Concerning Garfinkel’s and Sacks’s objectivism, I venture the suggestion that it is, largely, a matter of terminology. This might seem too rash, but there certainly is a problem of double talk involved, at least, in the case of Garfinkel. If practical

158

Society as subjectively meaningful interaction

actions are routinely performed, in what sense are they ‘accomplishments’? If practical actions are objective phenomena, why this obsession with the problem of making them accountable, i.e., understandable, intelligible? And is there really anything about natural languages that make practical actions accountable? At other times you get the impression that the whole problem of making practical actions accountable arises, for ethnomethodology, because of the limitations of natural languages, especially their indexicality. Garfinkel, for instance, talks about the ‘essential incompleteness’ of any set of written instructions, while, according to Garfinkel and Sacks, indexical expressions are ‘obstinate nuisances’ to logicians and linguists (Garfinkel, 1967: 29; Garfinkel and Sacks, 1970: 349). Is it not the case, therefore, that members’ methods for making their actions accountable have to be some kind of commonly shared, extra-linguistic interpretive rules or procedures, as in the case of Cicourel, or else, a complete mystery? (see Garfinkel, 1967: 25–31, 38ff, 53ff, 262ff).44 There is also the fact that Garfinkel’s writings abound, not only in objectivist talk, but in subjectivist talk as well. Talk about ‘common understandings’, ‘expectancies’ and ‘definitions of the situation’ is not easily reconcilable with an objectivist view of society and an objectivist methodology. As a matter of fact, ethnomethodology is also highly critical of methodological objectivism, at least as manifested in traditional empiricist sociology. Being a radical movement, it criticises traditional empiricist sociology for not being empiricist enough (Hindess, 1973a: 9ff; Collins, 1985: 205–11). The main charge is that traditional empiricist sociology has not taken seriously enough the problematic, because subjective, nature of their data, and what follows from this in the form of limitations of their measurement (Cicourel, 1964: 7–38). Different cures have been suggested, from ceasing to do traditional empiricist sociology altogether, to suggestions of the repair of its data. Connected to this charge is a second, for our purposes even more interesting one. If the data of empirical sociology are subjective, they are, necessarily, also individualistic. The rates and measures arrived at by the statistical method of sociologists and officials, therefore, must not be mistaken for social facts about society. Once we follow the ‘disembodied numbers’ back to their sources to see how they were arrived at and what, therefore, they represent, we find that they are based on the most subjective of all possible forms of activity. This is especially true in the case of suicide statistics, which are the result of coroners’ evaluations of the ‘intentions’ of the actors involved. (Douglas, 1971: 6f)45 The address of this critique is, of course, Emile Durkheim’s famous study of suicide. I will not now go into any detailed discussion concerning the correctness of this critique – I think it contains an element of truth, while misrepresenting the position of Durkheim – only note that it raises some important questions about the use of statistical techniques in social research in general, and in empiricist social research in particular. Summing up the discussion in this section, it seems that the ethnomethod-

Society as subjectively meaningful interaction

159

ological movement started as a continuation of phenomenology. If so, it would seem to be safely anchored to the subjectivist tradition of social thought. As Rogers (1983: ch. 7) has argued convincingly, however, ethnomethodology is much less concerned with subjective meaning than is phenomenology, and much more concerned with action, or practice. A possible reason for this is that ethnomethodology is also influenced by the later philosophy of Ludwig Wittgenstein. Nevertheless, I believe that it would be wrong to conclude that ethnomethodology takes an objectivist approach to society, or even to language. The influence from phenomenology is too strong: The phenomenological approach remains within the limits of the analysis of consciousness. This is why Cicourel and Garfinkel do not take the obvious step from analysis of the lifeworld … to linguistic analysis. They are not able to recognize the obvious rules of the grammar of language games in the structure of consciousness. It is easy to show the systematic basis for this incapacity in the work of Schutz; the trail leads directly to Husserl. (Habermas [1970] 1988: 116) In view of these considerations, I risk the conclusion that ethnomethodology is, indeed, the ‘Californian way of subjectivity’ (Gellner, 1975). Ethnomethodology has met with much resistance from mainstream macrosociologists. A common critique is that ethnomethodology is individualistic and subjectivistic. This critique has been vehemently rejected by some of its adherents, who suggest that it is based on a serious misunderstanding of what ethnomethodology is really about. According to Sharrock and Anderson (1986: 48ff, 99ff), for instance, it is not the concern of ethnomethodology to criticise sociology, but to engage in a different type of foundational investigation, which leaves sociology as it is.46 ‘Popular sociological opinion to the contrary, ethnomethodology does not contradict Durkheim’s famous proposal that we should treat social facts as things, that we should recognize social structures as external and objective, environments capable of constraining our conduct’ (Sharrock and Andersson, 1986: 48). Garfinkel, himself, has defended ethnomethodology against the argument of Alexander, but his defence does not lend unambiguous support to Sharrock and Andersson. For [Parsons’s] The Structure of Social Action, Durkheim’s aphorism is intact: ‘The objective reality of social facts is sociology’s fundamental principle’. For ethnomethodology the objective reality of social facts, in that, and just how, it is every society’s locally endogenously produced, naturally organised, reflexively accountable, ongoing, practical achievement, being everywhere, always, only, exactly and entirely, member’s work, with not time out, and with no possibility of evasion, hiding out, passing, postponement, or buy-outs is thereby sociology’s fundamental phenomenon. (Garfinkel, 1991: 11)

160

Society as subjectively meaningful interaction

One obvious way to read this quotation is as a statement of an individualist alternative to Durkheim’s and Parsons’s holistic theory of society. But even if this reading is wrong, there is abundant evidence to show that ethnomethodology comprises a view of society, which is, in the main, radically individualistic, at least implicitly (see Collin, 1997, ch. 1). From phenomenology, it inherited an intersubjectivist view of society, but like symbolic interactionists, ‘the ethnomethodologists emphasize the interactional activities that constitute the social facts’ (Coulon, 1995: 50, see also 71ff). In my opinion, ethnomethodology is even more focused on action, or practices, than is symbolic interactionism and, therefore, an even more radical form of micro-sociology (cf. Collins, 1981b: 81–3).

Figure 5.3 Society according to ethnomethodology

Social constructionism A recent vogue in the human sciences is called social ‘constructionism’, or ‘constructivism’. In a broad sense, ‘social constructionism’ means simply that social phenomena are human creations, rather than natural phenomena, or ‘essences’. In this somewhat trivial sense, virtually all human sciences, and sociology, in particular, are forms of social constructionism. It has always been a fundamental thesis of the human sciences that society is made up of ‘conventions’, or ‘customs’, or social ‘institutions’, words that imply that society is human-made. What distinguishes recent social constructionism from this broader contructionism of all human sciences, with the possible exception of economics, is that it sees social phenomena as cultural; cognitive and/or linguistic, constructions. Social phenomena are constituted by our thinking and our discourse about them.47 Social constructionism, in the above sense, is not the same type of rationalist constructionism that Hayek objects to in his writings. The latter type is based on the belief that it is possible to construct society intentionally and rationally according to a preconceived plan. This is not at all the belief of recent social constructionists, who agree with Hayek that most social phenomena are unintended consequences of human actions. Actually Hayek, himself, was a ‘social’ constructionist in the recent sense of this term. His phenomenological view that social phenomena are constituted by people’s beliefs about them is the central pillar of, at least, one form of social constructionism.

Society as subjectively meaningful interaction

161

Above all, it is a central pillar of the main classic of social constructionism; The Social Construction of Reality (1966) by Peter L. Berger and Thomas Luckmann. The intellectual roots of this work are to be found mainly in the intersubjectivist tradition in social science, discussed in this chapter, but with an important dose of objectivism and structuralism added to it. Berger and Luckmann’s theory of society is a synthesis of ideas taken from Weber, Mead, Durkheim and Marx, but built mainly upon a foundation laid by the phenomenology of Schutz. According to Berger and Luckmann, society is a human product. This is fully in line with theoretical individualism and subjectivism. But it is also the case that human beings are social products. This is a more doubtful argument, from the point of view of an individualist theory of society. But, of course, it all depends upon the meaning of the word ‘social’. According to Berger and Luckmann, society is an objective reality, possessing structure, and consisting of functionally integrated institutions based upon division of labour ([1966] 1971: 69, 79–82, 95f, 134–7). This is not an intersubjectivist theory of society. It is not even an individualist theory of society. Intersubjectivity, which was so important to Schutz, plays no important role at all in Berger’s and Luckmann’s analysis. Instead, they speak of society as an objective reality, which is irreducible to the subjective reality of individuals ([1966] 1971: 150–4, 183). It may be added that the particular branch of social constructionism, most influenced by Berger and Luckmann; the new institutionalism in the theory of organisation is decidedly holistic, even if some of its main representatives do recognise the need for suitable microfoundations. These are to be found in the theories treated in this chapter, or in theories akin to them, but not in the theory of rational choice.48 More specifically, Berger and Luckmann recognise two sides of society, one subjective and one objective, standing in a dialectical relation to each other. This view is not strictly individualistic. Following Roy Bhaskar (1979: 40), I suggest the following graphic representation of Berger and Luckmann’s view of the relation between individual and society.

Figure 5.4 Berger and Luckmann’s dialectic of individual and society

It is clear that Berger and Luckmann differ from Austrian methodological individualism, which only admits of causal arrows leading from individuals to society. In the view of the Popperian philosopher J.O. Wisdom, Berger and Luckmann’s approach is closely allied to Popper’s ‘situational individualism’

162

Society as subjectively meaningful interaction

(Wisdom, 1973: 263). The problem with this view is that Popper’s so-called ‘situational individualism’ is a creation of Wisdom, himself. Popper, as we shall see, advanced two separate methodologies: methodological individualism and institutionalism, which he never joined and could not join without changing his methodological individualism, so as to make it compatible with his institutionalism. This was achieved, instead, by his pupil Joseph Agassi, who created institutional individualism. Situational individualism is, I believe, more or less, identical with institutional individualism. After this short digression, is it possible to pass judgement on Wisdom’s suggestion? Yes, I believe, it is possible to see Berger and Luckmann’s theory of society as compatible with the weak version of institutional, or situational individualism, but not with the strong version of methodological individualism, as formulated by Popper. Social constructionism today is an influential position in many areas of the human sciences, but especially in sociology and social psychology. The areas most influenced by social constructionism are, probably feminism, sociology of science, the theory of organisations and the theory of the personality, or self. I believe that the most fertile use of social constructionism has been in feminism, where it has been part of a struggle against patriarchy, or male dominance (cf. Hacking, 1999: 7ff). I have already quoted the famous words of Simone de Beauvoir: ‘One is not born, but rather becomes a woman’. This statement captures the ‘kernel’ – it would be wrong to use the word ‘essence’ – of social constructionism. The question remains, of course, how one becomes a woman, and on this point opinions diverge. The early Sartre would probably have maintained that human beings of the female sex chose to become women. De Beauvoir suggested that they had little, or no choice at all, to escape from being ‘women’ in the traditional sense. It is possible to divide also recent social constructionism into two main streams: one flowing from the interactionist and intersubjectivist tradition I have treated in this chapter, the other from French structuralism and post-structuralism.49 A good illustration of the difference between these strands of social constructionism is provided by two influential feminist works: S.J. Kessler and W. McKenna, Gender. An Ethnomethodological Approach (1978) and J. Butler, Gender Trouble. Feminsim and the Subversion of Identity (1990). In the former work, the authors approach the social construction of gender in an ethnomethodological manner, as a matter of gender attribution in the everyday interaction between members of society. In the latter work, the theoretical framework is provided by structuralism and post-structuralism and the social construction of gender is the work of culture and discourse, even if Butler has to find a place for agency in order to make room for the possibility of change. As expected, sociologists have tended to prefer the objectivist and structuralist version of social constructionism, whereas social psychologists have tended to follow the subjectivist and interactionist version (see, e.g. Sarbin and Kitsuse (eds), 1994). Most common is, perhaps, to attempt some kind of synthesis, or via media, between the two versions. Kenneth J. Gergen and Vivien Burr, for instance, opt for a methodology that avoids the pitfalls of both methodological individualism and social holism. The former suggests that we should concentrate

Society as subjectively meaningful interaction

163

on social relationships, rather than on autonomous individuals or social wholes (Gergen, 1994: 214ff). The latter makes a distinction between ‘bottom-up’ and ‘top-down’ conceptions of society. According to the first, which is that of methodological individualism, individuals determine society, while in the latter society determines individuals. both top-down and bottom-up conceptions of the relationship between the individual and society are problematic for social constructionism. The topdown view leaves discourse as a side-effect of social structure, and it therefore cannot be the focus for social change. The bottom-up view, worse still, cannot accommodate any kind of social constructionism, since the individual is taken to be logically prior to the social. The individual is a ‘given’ from which society arises, and which therefore cannot be said to be constructed by that society. This methodological individualist view has all the attributes fiercely contested by social constructionists. It is humanistic and essentialist, claiming for the human being an essential nature, a coherent, unified self, and the capacity to make self-originated choices and decisions. (Burr, 1995: 96f) This argument to the effect that methodological individualism is contested by social constructionism is weakened by a narrow conception of the former. While it is true that there is a radical version of methodological individualism, which takes the individual as prior to society, this is not the only version. In fact, the most well-known methodological individualists – Weber, Mises, Hayek and Popper – do not at all defend this radical version of methodological individualism, represented by the theory of the social contract and the theory of general equilibrium in economics. On the contrary, they agree that human individuals are social beings, as suggested by Burr, and as implied by the individualistic theory of society discussed in this chapter. Finn Collin is much closer to the truth when he suggests that the constructivist ‘claim that social facts are determined by what agents think … points in the direction of an individualist approach to social research’ (1997: 229). He also observes that, at first sight, there is ‘much in social constructivism to please a methodological individualist and nothing to offend him’ (p. 230). His conclusion, however, is that social constructionism is not a reductionist form of methodological individualism. We have seen that there are both individualistic and holistic versions of social constructionism and, also, that there are many attempts, either to combine the two, or to dissolve the dualism. I will end this chapter by a brief mention of two such attempts, by two well-known sociologists, who seem to take a similar approach: Pierre Bourdieu and Anthony Giddens. Pierre Bourdieu characterises his own work as ‘constructivist structuralism’ or ‘structuralist constructionism’ (1989: 14). Like Berger and Luckmann, he maintains that there are two sides to society: one subjective, phenomenological side and one objective, structuralist side, both dialectically related ([1972] 1977: ch. 2; [1980] 1990: 25ff). However, if Berger and Luckmann leaned most towards the

164

Society as subjectively meaningful interaction

former, I think it is fair to say that Bourdieu leans more towards the latter.50 It should also be pointed out, as a possible difference between them, that Bourdieu rejects a dualistic interpretation of the objective and subjective sides of society. Bourdieu also addresses the issue of methodological individualism versus holism, both of which he rejects, as the expression of a mistaken conception of the relation between individual and society (Bourdieu and Wacquant, 1992: 126f). Or rather, there is no such relation at all, since individual and society are not two distinct realities. There are only social individuals related to one another. The position of Bourdieu, therefore is that of methodological relationism (1985: 16ff; Bourdieu and Wacquant, 1992: 228ff). Anthony Giddens shares Bourdieu’s negative attitude towards dualisms, like individual–society, subject–object and action–structure. His own way out is the so-called theory of structuration, which owes more to ethnomethodology than to phenomenology. Like Garfinkel, Giddens sees society as chronically produced by knowledgeable individuals (1979; ch. 2; 1984: xxff, ch. 1). In Giddens’s terminology, human activities are ‘recursive’. That is to say, ‘they are not brought into being by social actors but continually recreated by them via the very means whereby they express themselves as actors’ (1984: 2). It seems to me that Gidden’s theory of society is strictly individualistic. However, this does not lead him explicitly to embrace methodological individualism. He criticises Popper, for assuming that it is possible to state methodological individualism, without making clear what is to be understood by the term ‘individual’. If we assume, however, that the individual is a social agent, then, the collective is implicated in the individual and two methodologies become possible: (1) methodological individualism, which focuses on strategic conduct, while neglecting the institutional aspect of action and (2) institutional analysis, which focuses on the rules and resources that are reproduced by individuals, but neglects the deliberations of individuals themselves (Giddens, 1979: 94f). Institutional analysis is not structuralism, however. Giddens (1984) objects strongly to the traditional sociological structuralism of Emile Durkheim (pp. 169ff) and Peter Blau (pp. 207–13). But, once again, he is not led by this to embrace methodological individualism, or is he? The methodological individualists are wrong in so far as they claim that social categories can be reduced to descriptions in terms of individual predicates. But they are right to suspect that ‘structural sociology’ blots out, or at least radically underestimates, the knowledgeability of human agents, and they are right to insist that ‘social forces’ are always nothing more and nothing less than mixes of intended or unintended consequences of actions undertaken in specifiable contexts. (Giddens, 1984: 220) This is a very weak opposition to methodological individualists, since most of them would readily admit that a full individualist description of society is not possible. The important thing for most methodological individualists, the Popperians, in particular, is explanation, not description.

Society as subjectively meaningful interaction

165

It seems to me, that Giddens, like Bourdieu, wants to tread some via media between a radical methodological individualism and traditional sociological structuralism, but ends up closer to the former than to the latter. Today, there are many self-proclaimed methodological individualists, who adopt a more structuralist position than does Giddens in his theory of structuration.

Conclusion The theories discussed in this chapter are united by taking an intersubjectivist and interactionist approach to society. They differ, however, in the extent to which they emphasise either the (inter)subjective, or the (inter)active element as constitutive of society. Phenomenology focuses on the intersubjective nature of society. Ethnomethodology is most concerned with the actions, or practices, which constitute society. Symbolic interactionism, finally, seems to attach equal weight to subjective meaning and interaction. According to Hans Joas ([1980] 1885: Ch. 9), it is the advantage of symbolic interactionism over phenomenology, that it explains how intersubjectivity arises in symbolic interaction, instead of taking it as given to phenomenological analysis. The theories discussed in this chapter differ from mainstream sociology, which tends to conceive of society as an objective reality made up of cultural objects, social institutions and social structures. The theories dicussed in this chapter conceive of (reduce) culture to intersubjectively shared meanings and social structure to social interaction. To the extent that culture and social structure can be said to exist, at all, they are epiphenomenal. What is real are the thoughts, feelings, desires and actions of individual human beings.

Figure 5.5 A mapping of some sociological theories in a two-dimensional space

166

Society as subjectively meaningful interaction

A final note of caution: it is not the case, that all representatives of the theories discussed in this chapter actually deny the existence of objective culture and social structure, but I agree with Jeffrey Alexander that, even if they do not, they nevertheless tend to treat them as residual categories in their theories and to introduce them in an ad hoc manner, without theoretical grounding (Alexander, 1985: 27).

6

Positivism in philosophy and social science

As we have seen (p. 27), the term ‘positivism’ was coined by Auguste Comte, who was not a methodological individualist. Nor were the other positivists among the classical sociologists, with the possible exception of Herbert Spencer. This indicates that there is not a necessary connection between these two doctrines. More recent positivist social science, however, is more indebted to British empiricism and the logical positivism of the Vienna Circle. This influence works in a more individualistic direction.

Positivist philosophy By ‘positivism’, I understand a philosophy with two basic characteristics: (1) Methodological monism, which is the doctrine that the method of all sciences is one and the same. More specifically, methodological monism means that the social sciences must use the same method as the natural sciences. (2) Empiricism, which means that all knowledge ultimately derives from observation, or experience. From the very beginning, positivism was advanced as an alternative to metaphysics and this remained an essential feature of this philosophy. In the case of logical positivism, the demarcation of science from metaphysics was made with the help of the empiricist criterion of verifiability. Methodological individualism sometimes looks like just another variant of the empiricist attack on metaphysics: a bit less radical than phenomenalism and, perhaps, also than physicalism, but, nevertheless, motivated by the same kind of epistemological considerations. It could be argued that flesh and blood human beings are the only directly observable entities in society – if we exclude human artefacts such as buildings, machines, books, etc. – while social wholes and collectives are not in the same way directly given to the senses.1 It would seem, therefore, that empiricism implies or, at least suggests, methodological individualism.2 This relation is asymmetric, however, and does not hold the other way around. Methodological individualism does not imply empiricism and, as a matter of fact, few of the most well-known advocates of methodological individualism have been empiricists. As we have seen in previous chapters, most of them have been hermeneuticians, neo-Kantians, phenomenologists and existentialists. As such, they have adopted a subjectivist version of methodological individualism, which

168

Positivism in philosophy and social science

conflicts with the physicalism and behaviourism of philosophers.3

most empiricist

British empiricism In the history of philosophy, empiricism has been mainly a British affair. The beginning is in the Middle Ages with William of Ockham and Roger Bacon. In the Renaissance, there was Francis Bacon, sometimes conceived of as the ‘father of empiricism’, because of his advocacy of induction. On the threshold to the Enlightenment, Thomas Hobbes defended a kind of empiricism, which incorporated an important deductive element from Descartes’s rationalism. British empiricism culminated with the contributions of the three Enlightenment philosophers, John Locke, George Berkeley and David Hume. After them, John Stuart Mill was an important bridge between seventeenth and nineteenthcentury empiricism. Mill, once again, introduced an important element of deduction in his empiricist methodology, which makes it very close to that of the logical positivists. Common to the most important British empiricists is that they believed that all knowledge derives from sense perception and that sense perception is atomistic. Knowledge is built out of simple ideas of sense-data. These simple ideas are combined into complex ideas, by a psychological mechanism of association. All complex ideas are ultimately collections of simple ideas of sense-data. Complex ideas of social wholes and collectives, in their turn, are collections of ideas about particulars, that is about individuals. In the nineteenth century this analysis is turned into the idea that social wholes and collectives are logical constructions of individuals – a view which is congenial to most methodological individualists. The idea of logical constructions goes back to Bertrand Russell, who suggested in Our Knowledge of the External World (1914) that matter, physical objects, when analysed, turn out to be logical constructions out of sense-data (see also [1914] 1926: 106).4 It is not that Russell denies the existence of physical objects. His point is rather that if we can construct them logically out of sensedata, there is no need to assume that they exist except as logical constructions. Russell’s method of analysis or logical construction, then, is used to serve the maxim called Ockham’s razor: ‘Entities are not to be multiplied without necessity’, or in Russell’s version; ‘Wherever possible, logical constructions are to be substituted for inferred entities’ (p. 112). But the method of logical construction is also a method of justification, since, in a way, our belief in the existence of physical objects is justified to the extent that it is possible to replace them by logical constructions out of sense-data (Pears, 1968: 37f; Ayer, 1971: 40; 1972: 11). The reason Russell calls physical objects logical constructions is that they can be analysed as series of classes of appearances or sense-data, and series and classes are things that belong to logic ([1914] 1926: 111, 128; [1917] 1963:

Positivism in philosophy and social science

169

114–18, 97, 106f). Explaining how it comes that a chair, for instance, can be a series of classes of sense-data, Russell says: A chair presents at each moment a number of different appearances. All the appearances that it is presenting at a given moment make up a certain class. All those sets of appearances vary from time to time … So you get a series in time of different sets of appearances, and that is what I mean by saying that a chair is a series of classes. (Russell [1918] 1972: 134) Russell’s theory of logical constructions cannot be understood unless you are already acquainted with his theory of definite descriptions, his theory of knowledge and his logical atomism. What follows is an extremely compressed presentation of some of Russell’s main ideas, which, of course, fails to do justice to this epoch-making contribution to twentieth century philosophy. Russell’s theory of descriptions was advanced, for the first time, in his famous article ‘On Denoting’ (1905), as an attempt to come to grips with denoting phrases, such as ‘the present King of France’, which lack denotation. How can a denoting phrase, which lacks denotation have a meaning? Russell’s answer is ‘that denoting phrases never have meaning in themselves, but that every proposition in whose verbal expression they occur has a meaning’ (p. 480). The basic idea of the theory of definite descriptions is to replace the original proposition by a propositional function, in which the denoting phrase does not occur, and, then, to expand it into an existential statement to the effect that what is described exists. (Russell held that descriptions imply an assertion that the described objects exist.) Take the proposition ‘the present King of France is bald’, replace it by the propositional function ‘x is now King of France and x is bald’, and expand it into the existential statement: ‘There is exactly one x, such as x is now King of France, and x is bald’. After this transformation, the problem with denoting phrases lacking denotation is solved. Since there is no present King of France, the expanded existential statement is simply false ([1917] 1963: 164f; [1918] 1972: 99–112; 1924: 148). In his exposition of the theory of descriptions, Russell uses as examples ordinary names, such as Scott, Bismarck, London, etc., as if they really had denotation. But these names are used only for the purpose of illustration. Ordinary names are really descriptions, or rather, abbreviations for descriptions; truncated descriptions. They are what Russell calls, ‘incomplete symbols’ ([1917] 1963: 156–8; [1918] 1972: 56, 100, 111f). But if ordinary names are really descriptions, what is left? The only logically proper names that Russell permits are ‘I’ and ‘this’, or ‘this’ and ‘that’, and the only things they can name are sensedata ([1917] 1963: 162; 1924: 56). The reason why logically proper names can only denote sense-data, but not objects in the external world, must be sought in Russell’s theory of knowledge, in his empiricism and scepticism.5 According to Russell’s empiricism, all our knowledge derives, ultimately, from ‘knowledge by acquaintance’. ‘Every proposition

170

Positivism in philosophy and social science

which we can understand must be composed wholly of constituents with which we are acquainted’ ([1917] 1963: 159; see also [1912] 1951: 46–59). Among the things with which we are supposed to be acquainted, particular sense-data are most important, but we also know universals in this way. Sense-data are such things as colours, noises, shapes, etc., but not as universals, only the particular noise etc., which is the immediate data of my senses right here and right now. While the particular yellowness-of-this is a sense-datum, the yellowness that we know through acquaintance with several yellow objects is universal.6 In his theory of knowledge, Russell admits of sense-data being complex, but according to his logical atomism, particulars, qualities and relations are simple objects ([1917] 1963: 155; [1918] 1972: 129). Simple objects are such objects as cannot be symbolised otherwise than by simple symbols, and simple symbols are those symbols whose parts are not symbols ([1918] 1972: 48f). Logically proper names, then, are symbols for particulars, while predicates are symbols for qualities, and verbs, sometimes single, sometimes whole phrases, are symbols for relations. Combinations of simple objects (particulars, qualities, relations) make up atomic facts, and the propositions expressing these atomic facts, containing only simple symbols (logically proper names, predicates and verbs), are called atomic propositions (pp. 53–5). A language built up according to these strictures is a logically perfect language. In a logically perfect language there will be one word and no more for every simple object, and everything that is not simple, will be expressed by a combination of words, by a combination derived, of course, from the words for the simple things that enter in, one word for each simple component. (Russell [1918] 1972: 52) The criterion of simplicity, then, is language, and it must not be assumed that the objects of simple symbols are simple in an absolute sense. When I speak of ‘simples’, I ought to explain that I am speaking of something experienced as such, but known only inferentially as the limit of analysis … A logical language will not lead to error if its simple symbols … all stand for objects of some one type, even if these objects are not simple. The only drawback to such a language is that it is incapable of dealing with anything simpler than the objects which it represents by simple symbols. (Russell, 1924: 158) We have seen that Russell’s theory of descriptions leads to the elimination of ordinary names, such as Scott, Bismarck, London, etc. Such names are abbreviations for descriptions, and the things they name can be reduced through the analysis of facts which are apparently about those things ([1918] 1972: 47). It has been argued by A.J. Ayer that Russell’s theory of descriptions leads to the elimination of bare particulars and, therefore, of logically proper names as well (Ayer, 1971: 43–7; 1972: 104–106). According to Ayer, ‘We are left with descrip-

Positivism in philosophy and social science

171

tive signs, which stand for properties or groups of properties at various logical levels; with demonstrative signs, which are neither names nor predicates but signals, which simply do the work of orientation’ (1971: 47). I think this conclusion is correct, as evidenced by the development of Russell’s later philosophy. Logically proper names, we have seen, are symbols for particulars, as distinct from qualities and relations. Characteristic for these bare particulars (or particular particulars, as distinguished from general particulars), according to Russell, is that they stand entirely alone and are entirely self-subsistent, much as the old notion of ‘substance’, except that they persist through a very short time ([1918] 1972: 56f; 1924: 158). Logically proper names, then, are ‘words which do not assign a property to an object, but merely and solely name it’ ([1917] 1963: 162). Now, according to Russell, the simplest imaginable fact is the possession of a quality by some particular thing, as expressed by the proposition ‘This is white’ ([1918] 1972: 53). It is hard to see how the name ‘this’ can have any denotation as distinct from the quality white (and all other qualities possessed by this particular thing). It would seem that the substance of an object, the bare particular is exhausted by an enumeration of all facts about it. If so, logically proper names, like ordinary names, appear as abbreviations for descriptions. The function of names becomes demonstrative rather than denotative. Names become signals used to point out groups of qualities, while their original task is taken over by descriptions. ‘Logically proper names’, in the original sense, have become dispensable (see Ayer, 1971: 43). In his later writings, Russell follows the logical implications of his theory of descriptions and his logical atomism and drops the commitment to a belief in the existence of particulars. Things have no substance behind or distinct from their qualities. They are nothing but bundles of coexisting qualities. The main reason for taking this view is that ‘we experience qualities but not the subject in which they are supposed to inhere’ ([1940] 1973: 89–93; 1959: 120–7). But if particulars are abolished, logically proper names must go with them, since only particulars can have names. Russell knows this, of course, but chooses to change his theory of names, since he is doubtful about the possibility of inventing a language without names. This new theory is very liberal. ‘For our purpose, unless reason should appear to the contrary, we may accept as a name whatever would ordinarily be considered as such: Tom, Dick and Harry, the sun, the moon, England, France, etc.’ ([1940] 1973: 89–91). Russell was not interested in the logical construction of social phenomena out of individuals. His primary interest was in the logical construction of any kind of complex entity out of sense-data. He did use, as one of his stock examples of a complex entity, ‘Rumania’, but he never attempted its reduction to individuals. Nor, for that matter, did he attempt its reduction to sense-data, although he did hold that it was so reducible. It was probably John Wisdom who made it a main preoccupation among British analytical philosophers to logically construct social collectives, especially nations, and among nations, especially England, out of individuals. According to Wisdom, when speaking about social collectives, such as nations, or institutions,

172

Positivism in philosophy and social science

such as the Church, we are either speaking indirectly about individuals, or about something over and above individuals. He finds the first alternative both more ‘attractive’ and less ‘objectionable’, and concludes that collectives, such as nations, are logical constructions of individuals. ‘For if we have said all there is to be said about Tom, Dick and Harry, including of course statements about their interrelations, we have said all there is to be said about England, even if none of our statements mention England’ (1933b: 176). It is possible, therefore, to substitute statements about individuals for statements about nations. The latter can be translated or reduced by way of definition to the former. ‘If a nation is reducible to its nationals (and it is) then statements about nations, i.e. predicates applicable to nations are definable in terms of predicates applicable to their nationals’ (p. 10). Wisdom’s examples of logical construction – and this has become tradition – are all, or nearly all, about acts of hostility between nations. His first example is ‘England declared war’, which is translated, without any claim of exactness, as ‘Englishmen had selected a man (Minister for War) who decided that they should fight’ (1931: 192). The motive for this aggression was presumably that ‘Every Englishman fears a Frenchman’, which is substitutable for ‘England fears France’ (1933a: 44ff). But confronted with such a fearful enemy as France, you need allies. Consequently, according to Wisdom, ‘Every nation invaded France’, which is rendered ‘Every group of individuals with common ancestors, traditions and governors forcibly entered land owned by Frenchmen’ (1934: 77). But why should we substitute statements about individuals for statements about nations? In the case of Wisdom, as in that of Russell, the answer must be sought in his empiricist epistemology. Philosophy is analysis and analysis is ostentation; the substitution of more ostensive for less ostensive sentences. Now, according to Wisdom, sentences about individuals are more ostensive than are sentences about nations. This is so, because individuals are, in Wisdom’s terms, (epistemically) more ‘fundamental’ or ‘ultimate’ than are nations. But most ultimate are sense-data. Another way of expressing this is to say that facts about individuals are (epistemically) ‘primary’ relative to facts about nations, but ‘secondary’ relative to facts about sense-data (1931: 212–16; 1933a: 187–9, 195–9; 1934: 75ff). Unlike Russell, however, Wisdom seems quite satisfied to accomplish the logical construction of nations out of individuals, and doesn’t bother much to achieve the further reduction of individuals to sense-data. The idea of logical constructions was adopted by Alfred J. Ayer in his bestseller Language, Truth and Logic (1936) where he denies that they are fictitious objects. For while it is true that the English State, for example, is a logical construction out of individual people, and the table at which I am writing is a logical construction of out of sense-contents, it is not true that either the English State or this table is fictitious, in the sense in which Hamlet or a mirage is fictitious. (Ayer, 1936: 74)

Positivism in philosophy and social science

173

Ayer was a philosopher with one leg in the tradition of British empiricism and the other leg in logical positivism. His book Language, Truth and Logic was generally conceived of as an introduction to the latter and contributed significantly to its great success. As we shall see in the next chapter, Ayer is also the source of the idea amongst some Popperian methodological individualists that collective entities are logical constructions. Logical positivism Logical positivism is the name of the philosophy of the Vienna Circle. It is so called, because it combines logical analysis of language with a positivist, or empiricist, theory of knowledge. To the original Vienna Circle belonged a number of famous philosophers, such as Moritz Schlick, Otto Neurath, Rudolf Carnap, Kurt Gödel, Herbert Feigl, Gustav Bergmann and Friedrich Waismann. Close to the Vienna Circle were many other important philosophers, such as A.J. Ayer, Gustav Hempel, Hans Reichenbach, R.B. Brathwaite and Ernest Nagel. The logical positivists also counted the early Wittgenstein, Bertrand Russell and Karl Popper as their allies, but none of them accepted the invitation to join the movement. The main objective of the logical positivists was to put an end to metaphysics in science and philosophy. By metaphysics was understood every statement that cannot be reduced to immediate sense experience. The implication for social science was that concepts and laws, which do not refer directly to the observable features of human beings, are suspect and must be abolished, or redefined in terms of facts about individuals (cf. Hempel, 1969a). Already in the pamphlet that constituted the Vienna Circle, it was stated that concepts, such as ‘folk spirit’, should be dropped and replaced by concepts referring to ‘groups of individuals of a certain kind … The object of history and economics are people, things and their arrangement’ (Neurath et al., 1929: 315). The most ambitious, not to say heroic, attempt to construct the world, logically, out of immediately given sense-data, or ‘elementary experiences’ was made by Rudolf Carnap in his The Logical Structure of the World (1928). By logical construction, Carnap understands ‘explicit definition’ in a broad sense, including, most importantly, definitions in use. An explicit definition is such that all statements about the object (or concept) defined (definiendum) can be eliminated and replaced by statements about the elements in terms of which it is defined (definiens) ([1928] 1969: 5–10, 61ff). The objective of logical construction, according to Carnap, is the reduction of all objects to those that are epistemically basic (pp. 78ff). As the basic elements of his system Carnap chooses ‘elementary experiences. But even more fundamental is the basic relation ‘recollection of similarity’, out of which they are constructed. ‘Recollection of similarity’ is the basic undefined concept with which Carnap wants to construct the whole world (pp. 98ff, 122ff). Of special interest from the point of view of the present investigation is Carnap’s treatment of ‘cultural objects’. The logical construction of cultural

174

Positivism in philosophy and social science

objects, according to Carnap, rests upon the relations of manifestation and documentation. The manifestation relation is that between a cultural object and its (psychological) manifestations in the persons who are its ‘bearers’. The documentation relation is that between a cultural object and its representation in physical objects, in artefacts, works of art and written documents. Of these relations, the manifestation relation is primary in that documentation is reducible to manifestation (Carnap [1928] 1969: 39–41). It is the thesis of Carnap that ‘every cultural object is reducible to its manifestations, that is, to psychological objects’. In other words: ‘In principle, all statements about cultural objects can be transformed into statements about psychological objects’ (pp. 89–92). Despite this possibility in principle, Carnap admits of certain difficulties when it comes to actually carrying out the logical construction of cultural objects from its psychological manifestations. We have to rest content, therefore, with an indication of the general form of such logical constructions. Carnap makes a distinction between primary and higher cultural objects. Primary cultural objects are ‘those objects whose construction does not presuppose the construction of other cultural objects’, but which ‘are always constructed on the basis of their manifestations … i.e., on the basis of those psychological events in which they are actualized or become apparent’ (Carnap [1928] 1969: 230). As an example of a primary cultural object, Carnap mentions the custom of greeting, which is said to consist in the disposition on the part of the members of a society to act at a certain time in a certain way in a certain type of situation (p. 231). It would seem that Carnap understands, by ‘primary cultural objects’, the institutionalised behaviour of individuals. The higher cultural objects are simply the remaining ones, but most important among them are groups and organizations. The higher cultural objects are constructed on the basis of the primary ones, sometimes together with psychological and physical objects. As an example of a higher cultural object, Carnap takes, not surprisingly, that of the state. The object ‘state’ could perhaps be constructed in the following form: a relational structure of persons is called a ‘state’ if it is characterized in such and such a way through its manifestations, namely, the psychological behavior of these persons and the dispositions toward such behavior, especially the disposition, on the part of some persons, to act upon the volitions of other. (Carnap [1928] 1969: 231f) Carnap’s claim that all objects in the world are reducible, in principle if not in practice, to the recollection of similarity between elementary experiences is advanced as an epistemological thesis, but supposed to be metaphysically neutral. It is a thesis about the empirical, but not the metaphysical, reality of objects. Applied to cultural objects, it says that they are called real if their manifestations belong to real psychological objects, otherwise they are called unreal (Carnap [1928] 1969: 275).

Positivism in philosophy and social science

175

In The Logical Structure of the World, Carnap chooses a phenomenalist or ‘autopsychological’ basis for his system. Later, under the influence of Neurath, he comes to adopt a physicalist position. According to physicalism, all scientific sentences are translatable into the universal physicalist language, i.e. to sentences about physical occurrences in space and time. Applied to the social sciences, physicalism says that all its sentences (insofar as they are about people or groups of people, including organisations and institutions) can be translated into sentences about the movements of physical bodies in space and time (Carnap, 1931: 434, 451f; [1932/33] 1959: 165ff). Among the logical positivists, Otto Neurath has written most extensively about the social sciences, especially sociology. There is nothing to suggest, however, that Neurath should have been a champion of an epistemological reduction programme implying methodological individualism (Hempel, 1969a: 165–74). Like the methodological individualists, Neurath repudiated, as metaphysical, concepts such as ‘folk spirit’, ‘spirit of a nation’, ‘spirit of the age’ and the like (1944: 4). But not because they are holistic. His main charge against these concepts is that they are idealistic, something which they share with individualist concepts such as ‘mental’, ‘personality’, ‘soul’, ‘motives’, etc. (Neurath [1931a] 1973: 325, 332, 356f; [1931/32] 1959: 289, 299). Neurath, then, is not an enemy of collectivism and holism. Amongst social scientific theories, his sympathies are clearly with Marxism, and he also suggests that his own ‘aggregational program’ has a metaphysical counterpart in the holism of J.C. Smuts (Neurath, 1944: 20).7 Neurath’s arch-enemy is idealism in every conceivable form, including the method of Verstehen (1930/31: 121; 1931a: 356–8; [1931/32] 1959: 295). The alternative to idealism is physicalism, which is the modern form of materialism and in social science roughly takes the form of behaviourism. According to physicalism, unified science, including of course the social sciences, deals exclusively with physical occurrences in space and time.8 Now, it might be thought that physicalism implies methodological individualism. At times, Neurath also expresses himself in a way indicating that he subscribes to ontological individualism. ‘Peoples, states, age groups, religious communication, all are complexes built up of single individuals’ (Neurath [1931a] 1973: 386). But this does not imply any commitment to methodological individualism. Neurath’s Marxist leanings make him critical towards the individualism of economic theory and to prefer, instead, an institutionalist theory, using holist and collectivist notions such as ‘classes’, ‘states’, ‘feudalism’, ‘slavery’, ‘tribes’, etc. ([1931a] 1973: 366, 389–403; [1931/32] 1959: 306–15). ‘The sociologist is completely unimpeded in his search for laws. The only stipulation is that he must always speak, in his predictions, of structures which are given in space and time’ ([1931/32] 1959: 301). Of some relevance is Neurath’s frequently expressed opinion that it is often easier to predict the behaviour of groups and collectives than to predict the behaviour of single individuals.9 Nor does Neurath advocate any radical empiricist reduction programme. His one and only requirement for statements to be scientific is that they be stated in the universal ‘slang’, or ‘jargon’, of physicalism. He makes the demand that all

176

Positivism in philosophy and social science

scientific statements, or predictions made on their basis, must be compared with, or ‘assayed’ by, observation statements, but even so, he denies a privileged status to observation reports expressed by protocol sentences. Neurath denounces as a metaphysical fiction an ideal language constructed out of pure atomic sentences. There are, according to him, no immediate and atomic experiences, which can serve as basic elements of the system. Nor are there any atomic sentences which are primitive relative to other sentences, which can serve as primitive protocol sentences, and which are exempted from verification. All sentences of the universal slang of unified science are on an equal footing. There is no way of taking conclusively established pure protocol sentences as the starting point of the sciences. No tabula rasa exists. We are like sailors who must rebuild their ship on the open sea, never able to dismantle it in dry-dock and to reconstruct it there out of the best materials. Only the metaphysical elements can be allowed to vanish without trace. Vague linguistic conglomerations always remain in one way or another as components of the ship. If vagueness is diminished at one point, it may well be increased at another. (Neurath [1932/3] 1959: 201) This metaphor was later to become famous, and the view of scientific theory it discloses has won wide acclaim. The modern, more elaborated, version is the socalled ‘holistic view of scientific theories’, suggested by Willard van Orman Quine (1961: 40–2). Some version of this holistic view of scientific theories is today accepted by most philosophers of science. It is even assimilated as a part of the so-called ‘standard’ (Hempel, 1970), ‘orthodox’ (Feigl, 1970), or ‘received’ (Suppe [1973] 1977: 16ff), view of scientific theories, which represents the last stage in the development of logical positivism. According to this view, scientific theories consist of axiomatic, or hypothetico-deductive, systems of scientific concepts and laws, more or less general. At the top of the system, there are primitive (undefined) terms and axioms. From these axioms are deduced laws of lesser generality, called theorems. At the bottom of the system, some terms are operationally defined, by means of some measurement procedure. One of the most clear and succinct statements of the logical positivist orthodoxy, by a social scientist, is Hans Zetterberg’s On Theory and Verification in Sociology (1963).10 In this work, it is assumed that the primitive or undefined terms of sociological theory are such as denote individual human beings and their actions. Pareto and Weber, as well as most contemporary social theorists, have assumed that the building blocks of sociological definitions are terms that denote human beings and their actions. The rationale for this choice is found in a suggestive analogy between the position of ‘action’ in all modern sociological theorizing, and the position of ‘primitive terms’ in any taxonomy. The sociologists say that all social events consist of combinations of human beings and their actions. The logicians say that all terms of a theory can ultimately be defined by combinations of primitive terms. It

Positivism in philosophy and social science

177

therefore, seems useful – at least as a first approximation – to assume that the primitive terms of sociology should be words that denote human agents and their actions. (Zetterberg, 1963: 52f) The analogy, pointed out by Zetterberg, may be suggestive, but it is not at all compelling, until supplemented by the empiricist requirement that primitive terms must refer to observables. This requirement is implicit in Zetterberg’s real reason for choosing as primitive, terms denoting human beings and their actions. The real reason is that only human beings and their actions are observable. Zetterberg, thus, complains about Rousseau’s notion of a volonté générale, that ‘we do not know any constellation of observables that define it’ (Zetterberg, 1963: 54). The same holds for any sociological conception which does not represent a combination of observable human beings and their actions. Thus, as social theorists, we are well advised to select primitive terms that stand for actors and types of actions. Since these primitives then are used as building blocks, which in various combinations furnish more complex terms, we are assured that even very complex ideas – e.g., property, institution, feudalism, or class – will remain on this side of metaphysics. (Zetterberg, 1963: 54) Zetterberg’s advice concerning choice of primitive terms, provides an excellent illustration of how empiricism, when applied to social phenomena, becomes identical with epistemological individualism and lends support to methodological individualism. Logical positivism, in a narrow sense, never exerted much direct influence upon the social sciences. Probably more influential, at least in sociology, was its American kin, the doctrine of operationalism. According to its founder, the American physicist P.W. Bridgman, to know the meaning of a term we must know the conditions of its use, and this implies ‘an analysis of activity of one sort or another, or in other words, an analysis of operations. From this point of view, meanings are operational’ (1938b: 116). Originally confined to physical concepts, Bridgman extends the range of applicability of operational analysis to social concepts (1938a: 8). Among the social concepts analysed by Bridgman is that of the ‘state’ (not surprisingly, in Bridgman’s example, it declares war). Like the methodological individualists, Bridgman objects to ‘the idea of the “State” as something intrinsically different from and superior to the people that compose it’ (p. 133). Especially abhorrent is the idea of the state as an organism or superperson, endowed with a consciousness of its own. While admitting that the state, like the individual, has to take unique action (declaring war), the action of the state is nothing but the action of its individuals;

178

Positivism in philosophy and social science some one man gives an order and certain other men individually pull the triggers of their rifles. The authority of the State derives from the superior force which a single man or group of men can exert by procuring united action by a strategically situated group of men, each acting as an individual. The state effectively is the single man or group of men who takes the forceful action. (Bridgman, 1938a: 134)

Despite Bridgman’s declaration that ‘Operational analysis really does make a difference’ (1938a: 199), I find it difficult to figure out exactly whereof this difference consists. This difficulty does not become less when later on he accepts the personification of society and the state as convenient ways of speech, and even finds it legitimate and harmless to ‘talk of society demanding this or that, or doing this or that, quite in the conventional and convenient way’ (p. 211). The main problem with Bridgman’s argument is that he does not provide any clear example of an operational analysis of a social concept.11 Especially confusing is Bridgman’s remarks about ‘verbalism’. On the one hand, ‘verbalism’ stands for lack of operational meaning. On the other hand, verbal operations are recognised as important in the operational specification of meaning. But what is the difference between ‘verbalism’ and verbal operations? There is a strong element of verbalism in our use of the concept of state. We generalize and abstract certain aspects of the joint behaviour of groups of people, and then cover this complicated combination with a single word. An enormous amount of circumlocution is thereby avoided, so that the single word thoroughly justifies itself economically in everyday usage, particularly if the situation calling for the word arises frequently. But from the point of view of analysis and comprehension we have merely messed things up by throwing so many points of view into a single word. (Bridgman, 1938a: 136) This passage is perfectly clear if taken in isolation, but in conjunction with much else Bridgman has to say on the subject, confusion is bound to arise. Take for instance the following passage: I think one must have been struck on analyzing these various social concepts to observe how many of the operations which gave them meaning were verbal operations, and how much of our concern that a concept should be rational was a concern that we should be able to substitute it in familiar ways into common verbal forms. (Bridgman, 1938a: 138) What is needed, I believe, is a distinction between an intensional and an extensional context, and a more consequent upholding of the separation between common-sense verbalism and scientifically relevant verbal operations.

Positivism in philosophy and social science

179

Positivist social science I understand ‘positivist social science’, broadly, as social science based on a belief in the fundamental similarity between the social and the natural sciences, as these are depicted by positivist and empiricist philosophers. My use of this term is motivated solely by convenience – more specifically, my need for a rubric – and does not at all reflect any wish, on my part, to label social scientists ‘positivists’, or to say anything essential about positivist social science. My only interest is to find manifestations of methodological individualism within this important research tradition in social science. For the purposes of this section, I divide positivist social science in two parts: one empirical and one theoretical. The empirical part is ‘empiricist’, in the sense that it is based on the belief that all knowledge about society derives from observation. The theoretical part is based on the belief that social phenomena can only be explained by covering laws of varying generality, organised as hypothetico-deductive systems, in according with the ‘orthodox’ view of scientific theories. Systematic empiricism It was argued above (p. 167) that methodological individualism follows naturally from a radical empiricist epistemology. This might lead us to expect that empiricist social science is largely individualistic. As we shall see, this is not really the case. At least not in a way that satisfies all methodological individualists. The philosophical background of empiricist social science can be found in pragmatism, logical positivism and operationalism, but above all, in British empiricism. Most influential have been those who are seen as representing the scientific outlook, such as Francis Bacon and John Stuart Mill, and later, those who developed the statistical version of the scientific outlook, such as Francis Galton, Karl Pearson and R.A. Fisher. The important role played by statistics in social scientific empiricism, has motivated the name ‘systematic empiricism’.12 It is true that empiricist social science is characterised, above all, by the use of statistical techniques, but this is historical accident more than logical necessity, as witnessed by the ethnomethodological critique of systematic empiricism for not being empiricist enough. According to some critics, the main cause of the dominant position of this particular form of empirical investigation is the need on the part of the administration of nation-states to know and control the population living, as subjects of state, on its territory.13 But while empiricism in social science does not necessarily resort to the use of statistical methods of investigation, the use of statistical techniques does not necessarily imply a commitment to empiricist epistemology. Statistical techniques are used by empiricists and nonempiricists alike, but assigned a different role in the research process by the more theoretically inclined social scientist than by the empiricist. While, according to a radical systematic empiricism, the resources of social science are exhausted by statistical analysis, theoretical social science tends to assign to statistics a more modest role in the research process. When, in this section, reference is made to

180

Positivism in philosophy and social science

‘empiricist social science’, this term should be understood in the sense of ‘systematic empiricism’. Among the resources and techniques used by systematic empiricism are the experiment, the utilisation of official statistics in the form of census data and, most important, the survey. The experiment is, of course, the ideal weapon of causal and, therefore, scientific analysis. Due to the limited possibility of controlling and manipulating social phenomena, however, and the ethical problems involved in the control and manipulation of human beings, the experiment has turned out to be of limited value to the social sciences. Experiments are only possible with small groups of people and have, therefore, been used primarily in psychology and social psychology. Much ingenuity has been spent on the attempt to develop research designs that simulate the experiment, or otherwise capture its logic. Nevertheless, real experimental analysis, because of its limited applicability to large-scale social phenomena, tends to be individualistic (see Coleman, 1969a: 99f). The subsequent discussion concerns the census and the survey but not the experiment. Among the social sciences, systematic empiricism first gained ground in sociology, where it still has its strongest hold, but later spread to political science in the form of behaviouralism. In economics, systematic empiricism is known as ‘econometrics’ and has gained little or nothing from sociology, but was rather ahead of sociology in assimilating regression analysis as an important tool of research (Coleman, 1969a: 91; Halfpenny, 1982: 40). Anthropology is interested in cultures where census data are rare and the survey not the most suitable method for gaining information. Empirical anthropology relies, instead, on the less systematic method of participant observation. In what follows, there will be a concentration upon systematic empiricism in sociology, but it is assumed that the conclusions have a more general application. There are two radically opposed views concerning the relation of systematic empiricism to methodological individualism. According to one view, systematic empiricism, in social science, is a largely holistic enterprise, because its units of analysis, are typically large-scale social phenomena at the macro-level. According to another view, systematic empiricism tends to be individualistic, because its unit of observation is typically individual human beings; their attitudes, opinions and beliefs, etc. The first view dominated in the early history of social science, when methodological individualists, such as John Stuart Mill, Carl Menger and Gabriel Tarde, criticised social theorists, like the statistician L.A.J. Quetelet and the historian Henry Buckle, for being too much macro-oriented and for mistaking statistical regularities and correlations for social laws.14 Statistical regularities and correlations are empirical generalisations, not laws. As such, they describe, but do not explain.15 In order to explain social phenomena, you need causal laws and the only causal laws in social life are psychological; or, if this is too narrow, at least, they are laws about individuals. According to most methodological individualists, there are no social laws, at least, no causal social laws. Since only individuals exist, only individuals can be causes of social phenomena.

Positivism in philosophy and social science

181

The symbol and personification of macro-oriented systematic empiricism is Emile Durkheim (Little, 1991: 189f; Rosenberg 1988: 118ff), as he appears in his classic study of Suicide (1897). Impressed by its stability over time, Durkheim argued that the suicide rate ‘is not simply a sum of independent units, a collective total, but is itself a fact sui generis, with its own unity, individuality and consequently its own nature – a nature, furthermore, dominantly social’ ([1897] 1951: 46). As we have seen in chapter 2 (pp. 29f ), Durkheim was not the first to be impressed by the stability of many statistical measures, but more than any other he used this fact as proof that there are social facts, irreducible to facts about individuals. There seems to be a certain ambiguity in Durkheim’s view of the suicide rate, however. If he were really suggesting that the suicide rate itself is a social fact sui generis, then, his view would be open to serious objection. But he is not (see below). The suicide rate, as a statistical measure is, of course, a fact about a population of individuals. As Friedrich von Hayek has pointed out, statistical collectives are not social wholes. Statistics is concerned with the properties of the elements of ‘collectives’ (Hayek, 1955: 61–3). In a similar vein Ludwig von Mises ([1957] 1985: 260) maintains that social, or mass phenomena, as measured by statistics, ‘are not things standing outside and above individual phenomena. They are not the cause of individual phenomena. They are produced either by the cooperation of individuals or by parallel action’.16 It is necessary, therefore, to make a clear distinction between a macro-approach that is based upon the set-element or class-member relation, and one that is based upon the whole-part relation. Statistics deals with the former relation. A typical feature of this relation is that facts about the set (collective) are arrived at by aggregation of facts about the elements. No statistical fact about a collective, therefore, is a social fact sui generis. Statistical facts are facts about numbers, large or small, of elements. This leads immediately to the following conclusion: no macro-theory which deals with relations between aggregated data, whether of the first, second or any order is holistic relative to its elements. A corollary of this conclusion is that systematic empiricism is not holistic only because it deals with the relations between aggregated data.17 No statistical information about the elements can explain to us the properties of the connected wholes. Statistics could produce knowledge of the properties of the wholes only if it had information about statistical collectives the elements of which were wholes. (Hayek [1942–4] 1955: 62) This leads us back to the ambiguity in Durkheim’s view of the suicide rate. On closer inspection, it turns out to be, not so much the suicide rate per se, as its explanation, which is, and must be, social (cf. Hacking, 1990: 177). Durkheim’s point was that psychology is not enough to explain the relative stability of the suicide rate over time, its variability between cultures, societies and different strata of the population, and its sensitivity to social disruptions. ‘The conclusion from all these facts is that the social suicide-rate can be explained only sociologically’

182

Positivism in philosophy and social science

(Durkheim [1897] 1951: 299). It may also be pointed out that Durkheim was perfectly aware of the phenomenon of spurious correlation. This is evidenced by his statistical analysis of the so-called ‘egoistic suicide’ ([1897] 1951: chs 2–3) and by his explicit statement: Concomitance can occur, not because one of the phenomena is the cause of the other, but because they are both effects of the same cause, or indeed because there exists between them a third phenomenon, interposed but unnoticed, which is the effect of the first phenomenon and the cause of the second. (Durkheim [1895] 1982: 152) Durkheim’s conviction that the suicide rate can only be explained sociologically was not supposed to be limited to this particular phenomenon. Rather, the study of suicide was an attempt to demonstrate the validity of a general methodological principle stated by Durkheim two years earlier ([1895] 1982: 110): ‘The determining cause of a social fact must be sought among the antecedent social facts and not among the states of the individual consciousness’. The difference between the methodological individualists and Emile Durkheim, then, is not that the latter saw, statistical regularities, per se, as social facts, sui generis. The difference is that the individualists believe that an explanation of statistical regularities and correlations, must be psychological or, at least individualistic, while Durkheim believed that they must be sociological, that is in terms of social facts such as social institutions and social structure. According to the second view, mentioned above (p. 179), the problem with systematic empiricism is not that it is too holistic, but that it is too individualistic. It is a common view, held both by its critics and by its defenders, that systematic empiricism has a strong individualist, atomist and subjectivist bias.18 The individualist bias is due to the fact that much official statistics and most survey research take the individual as its element and basic unit of observation. The atomist bias is due to the further fact that official statistics and survey research usually study the individual in isolation, without taking into account his interaction with other individuals. The subjectivist bias, finally, concerns only survey research and is the result of its traditional preoccupation with the opinions, attitudes and beliefs of individuals. The charge of individualism did not appear until the advent of the survey and this is probably no coincidence. The survey tends to be more individualistic, or, at least more subjectivistic, than official statistics. One reason for this is the development of various instruments of measurement, which have been an important ingredient in systematic empiricism, especially for its claim to being a Science. There is little doubt that the tendency to accept only operational definitions, as scientifically legitimate, has contributed to pushing systematic empiricism further in the direction of subjectivist individualism.19 The reason is, probably, that the easiest ‘operation’ available to the social scientist is to ask

Positivism in philosophy and social science

183

human individuals who they are, what they own and what they think about various matters. According to George A. Lundberg (their most influential spokesman in sociology) operational definitions consist of ‘words clearly designating performable and observable operations subject to corroboration’ ([1929] 1942: 89). Lundberg, himself, was not a methodological individualist, however. He was an instrumentalist and, as such, rather liberal about the use of collective concepts in sociology; if only as a convenient construct, and as long as they prove useful ([1929] 1942: 80–112). From this point of view, he criticised the psychologism of Floyd H. Allport (Lundberg, 1939: 163–73). The most ambitious attempt to provide operational definitions of the concepts of sociology is by Stuart C. Dodd, who takes as his point of departure the so-called ‘S-theory’, according to which, ‘Every quantitatively recorded societal situation can be expressed as a combination of indices of time (T), of space (L), of population (P), and of the many characteristics (I) of people or their environment’. Or expressed in a simple formula: S=(T:I:L:P) (Dodd, 1942: 58f; see also 1939: 628). You need but little imagination to see that this point of departure makes for an individualist sociology. While it seems undeniable that systematic empiricism has an individualist bias, it is difficult to estimate the exact extent to which it is individualistic. Several factors complicate the attempt to classify the results of systematic empiricism into those that are individualistic and those that are holistic. First of all, there is the fact that even though the individual is usually the basic unit of investigation, this is not always the case. In econometrics, for instance – paradoxically, since economics is usually considered the most individualistic of the social sciences – the basic units of research are usually the household and the firm. A second complication is that even in those cases where the individual is the basic unit of research, it might be that he/she can only be described in terms that make implicit reference to the institutional setting and the social structure in which he/she acts. Thus, it has been argued that any study of voting behaviour makes implicit reference to the political system (Udehn, 1987: 220ff). It could also be argued that the classification of individuals according to social background implies some notion of ‘social structure’ (Lukes, 1973: 121). It is nowadays generally agreed that all data are theory laden or theory impregnated, and the data of systematic empiricism is no exception to this rule. It could be, therefore, that the data about individuals generated by systematic empiricism are impregnated with ‘social theory’ that is holistic. On the other hand, systematic empiricism, to the extent that it relies on any articulated theory at all, tends to assume a subjectivist theory of social structure, so, that even when it uses concepts with a holist ring, such as ‘social role’ and ‘social status’, these concepts are defined in terms of the expectations and rankings of individuals, that is, in individualist terms. Confronted with the charge of individualist bias, leading representatives of systematic empiricism sought a remedy in the development of new techniques for doing justice to the structural and collective features of social life.20 One expression of this ‘structuralist’ and ‘collectivist’ tendency in systematic empiricism was the introduction of so-called multi-level research, that is, research

184

Positivism in philosophy and social science

which aims at an integration of the level of individuals with that of groups and other collectives (van den Eden and Hüttner, 1982). Among the most important spokesmen of multi-level research – and of systematic empiricism in general – is Paul F. Lazarsfeld, who, in collaboration with Herbert Menzel, developed a wellknown classificatory scheme for properties of individuals and of collectives (Lazarsfeld, 1968: 617–24; Lazarsfeld and Menzel, 1969). Lazarsfeld and Menzel distinguished between absolute, relational, comparative and contextual properties of individuals, and analytical, structural and global properties of collectives. This classification, Lazarsfeld and Menzel point out, is purely formal (1969: 510f). As such, it is not altogether adequate for addressing the substantive issues involved in the combat between individualists and holists. Of special interest, for our purpose, is the classification of properties of collectives into analytical, structural and absolute. Analytical properties are obtained by aggregation of properties of individuals and are, therefore, individualistic. ‘Structural properties’ of collectives would seem, by their very name, best suited for catching the idea of ‘social structure’, but appearances are deceptive. These properties are exemplified, most typically, by the concentration of choices revealed by sociometric analysis. The study of these popularity and friendship structures belong, most naturally to the province of social psychology, and have little or nothing to do with the kind of structural analysis advocated by methodological holists. The global properties of collectives alone, are not based upon information about individuals. Examples of global properties of collectives are the presence of certain social institutions, such as a school, an army, or a certain type of government. The recognition of the existence of global properties of collectives opens the way to truly structural, hence holist, analysis of society. It remains to be seen, whether multi-level research takes that direction. Hitherto, it has suffered from the lack of an adequate conception of ‘social structure’, and so, remained largely individualistic (van den Eden and Hüttner, 1982: 60ff). The most popular view among those doing multi-level research, seems to be that structural analysis consists of so-called ‘contextual propositions’, explaining the behaviour of individuals in terms of properties of the collective or group.21 The main problem with this view is that it does not discriminate between the different kinds of collective properties – analytical, structural and global – mentioned by Lazarsfeld and Menzel, and, in fact, tends to be directed mainly at the analytical and, to some extent, the ‘structural’ properties of collectives (van den Eden and Hüttner, 1982: 60ff). What Peter Blau at first called ‘structural effects’, for instance, is no more than the effects of the commonly shared values of individuals and of the interaction between individuals (Blau, 1960: 178–93). It should be pointed out, however, that Blau soon developed a more holistic concept of ‘social structure’ (1974; 1977), and that Lazarsfeld came to realise that what many sociologists have in mind when speaking of social structure is the global, as distinguished from the aggregative, properties of collectives (Lazarsfeld, 1970b: 312). Among the problems facing multi-level research, are the so-called ‘fallacies of the wrong level’.22 These fallacies are the various mistakes you could commit

Positivism in philosophy and social science

185

when making inferences from results obtained at one level of research to that of another level. Most well known is the ‘ecological fallacy’, first notified by W.S. Robinson (1950: 351–6). Put simply, the ecological fallacy consists in drawing conclusions from results obtained at the collective, or group level about the properties or behaviour of the individuals making up that collective or group. Thus, it does not follow from the fact that there is a high correlation between the percentage of the population that is black and the percentage of the population that is illiterate that blacks are more often illiterate than are other ethnic groups making up the entire population. It might be thought that ecological correlations, because of their seeming ‘irreducibility’, point to the existence of social facts sui generis, but this is not necessarily the case. Far from being irreducible social facts, ecological correlations are sometimes spurious, and this is why inference from the collective to the individual level may be invalid. But, whether spurious or not, ecological correlations are between analytical properties of collectives and, as such, are based upon data about individuals.23 The argument of this section has been that systematic empiricism, even when it engages in multi-level research, has a strong individualist bias, due to the fact that it usually takes the individual as its element and basic unit, and, for the remainder is based upon aggregation of facts about individuals. This argument has force only with respect to a radical systematic empiricism, which stops at the level of fact-finding and empirical generalisation. As soon as systematic empiricism leaves this extreme position, however – as the large majority of empirical social scientists do – and asks for a theory with which to explain these facts, the problem shifts into that of determining whether this theory is individualistic or not. It seems a fair contention that even when systematic empiricism has sought some theory to explain its statistical findings, it has looked primarily in the direction of social psychology, that is, in an individualist direction (van den Eden and Hüttner, 1982: 39–53; Bryant, 1985: 168–73). But how is it that opinions about the nature of systematic empiricism are so divided? How is it possible that some believe it is a paradigm of holism and others that it is much too individualistic? The reason, I suggest, is that there are two forms of individualism (introduced in the presentation of Schumpeter above (pp. 106f)): substantive and procedural methodological individualism. Systematic empiricism, to the extent that it is at all individualistic, is a form of procedural methodological individualism: it often takes the individual, as its point of departure, or unit of observation. Its unit of analysis, however, is usually some macrophenomenon. It differs from the procedural methodological individualism, discussed by Schumpeter, however. While the latter is a theoretical procedural methodological individualism, that of systematic empiricism is, not surprisingly, an empirical procedural methodological individualism. As we have seen, methodological individualists have always complained that statistical, and other forms of, empirical generalisations fail to explain. This critique has been most common in economics, where it takes the form of a requirement that macroeconomics must be provided with microfoundations (see

186

Positivism in philosophy and social science

pp. 234ff ), but it has been a recurrent phenomenon in political science and sociology, as well. But methodological individualists have not been alone in this. Social scientists of a more holistic persuasion have been no less emphatic about the need for theory (see, e.g. Adorno, 1957 and Willer, 1967). What distinguished the latter from the former, then, was not the need for theory, but the kind of theory they believed was needed. For a long time, it was taken for granted that a theory is a body of concepts and law-like statements that are used to explain empirical regularities. As time passed, however, it became painfully obvious that the social sciences do not produce an abundance of generally accepted laws, as do some of the natural sciences. This is probably one of the reasons social scientists have, recently, suggested a reorientation of social science, away from the focus on laws, to a search for social mechanisms.24 A pioneer in this reorientation is the philosopher Mario Bunge, who has advocated a turn to mechanisms, for deaf ears, since the 1960s (Bunge, 1997). According to him mechanisms are needed to open the black boxes of positivist science and to provide genuine causal explanations of phenomena, described in a ‘kinematical’ manner, for example statistically. It may be pointed out that Bunge adopts neither individualism, nor holism, but accepts both microreductive (bottom-up) and macro-reductive (top-down) explanations. He calls his approach systemism.

Figure 6.1 Mario Bunge’s methodological systemism Source: Bunge (1997: 441)

In the more recent development of social science, there are, at least, two different approaches to social mechanisms. The first approach is the so-called critical, or new, realism in social science, stemming from the work of Rom Harré and Roy Bhaskar, but the latter, in particular (Bhaskar, 1979: ch. 2).25 Bhaskar rejects both the macro-reductionist collectivism of Durkheim and the microreductionist individualism of Weber. He also rejects the dialectical view of Berger and Luckmann (see pp. 161f). His own suggestion is that both individuals and society exist, but in a symbiotic, rather than a dialectical, relation. ‘Society is both the ever-present condition (material cause) and the continually reproduced outcome of human agency’ (p. 43).

Positivism in philosophy and social science

187

Figure 6.2 Roy Bhaskar’s transformational model of the society/person connection Source: Bhaskar (1979: 46)

As is often pointed out, Bhaskar’s model has much in common with Anthony Gidden’s theory of structuration (see pp. 164f ). I agree that there is a similarity, in that both maintain that society is constantly created, but there is also an important difference. While for Giddens the creative aspects is in focus, Bhaskar conceives of structuration as reproduction and transformation of existing structures, with causal powers. In the end, therefore, Gidden’s theory of structuration is a theory of action, where structure appears only as an epiphenomenon, whereas Bhaskar’s theory is a form of structuralism. Other philosophers and social scientists belonging to this research tradition, include Russel Keat, John Urry, Ted Benton, Andrew Sayer, Jeffrey C. Isaac, Margaret S. Archer and Derek Layder. In this theoretical tradition, which has important roots in Marxism, the causal, or generative, mechanisms used to explain social phenomena and empirical generalisations are, typically, social structures. A comprehensive treatment of the individualism-holism issue can be found in Archer (1995), who also offers an interesting alternative to both Giddens and Bhaskar (without mechanisms). Her main point, with which I agree, is that, for the purposes of social science, we do need a dualistic approach to the relation between individual action and social structure. Among critical realists, Sayer (1984), and Pawson (1989: ch. 6), in particular, have tackled the problems with systematic empiricism. The second branch of the new turn to social mechanisms is decidedly individualistic, and engaged in an attempt to provide social science with microfoundations. The ‘social’ mechanisms identified are those of acting individuals. The approach of this branch is similar to that of Floyd Allport (see pp. 66f ), except that the latter was a behaviourist and called his mechanisms ‘psychological’. The recent call for mechanisms in social science is based on rational choice and other forms of intentional action. Important sources of inspiration for this individualistic approach are Raymond Boudon ([1977] 1982; 1979a; 1979b) Thomas Schelling (1978), Jon Elster (1983a: Part I; 1985: 5ff; 1989a: ch. 1) and James Coleman (1986c; 1990c: ch. 1). I will return to Boudon, Coleman and Elster in chapter 10. Here I will draw attention to the contribution

188

Positivism in philosophy and social science

of Hedström and Swedberg, which is, to a large degree, aimed at systematic empiricism. In a first article, Hedström and Swedberg (1996b) argue that there is an unfortunate gap between theory and empirical research in sociology, and also that this gap can be filled by rational choice. They make the common observation that statistical correlations and other empirical generalisations are descriptive, not causal, but require a causal explanation. Such explanation, they suggest, is best understood as being in terms of the mechanisms that have produced the correlation (p. 136). Unfortunately traditional sociological theory has not been very successful in providing such causal mechanisms. The hopes of Hedström and Swedberg go, instead, to rational choice, which has the advantage, over much traditional sociology, in being (1) analytical, (2) based on methodological individualism and (3) providing intentional explanations of observed phenomena (pp. 129ff). The upshot is that rational choice produces deeper and more fine-grained explanations of empirical generalisations (p. 141). Hedström and Swedberg introduce the notion of social mechanism in their first article, but make it the main topic of a second article (1996b), which also includes a new critical discussion of statistical variable sociology (pp. 291–3). The most important features of Hedström’s and Swedberg’s social mechanisms seem to be the following (p. 287): (1) the idea of generative mechanisms differs from Hempel’s famous covering-law model of causal explanations; (2) generative mechanisms are invariably at the micro-level of macro-phenomena. My interest is in the second feature, which is a manifestation of methodological individualism. The third article by Hedström and Swedberg is their ‘Introduction’ to Social Mechanisms (1998), which is something of a manifesto for a turn to individualistic mechanisms in social science. This introduction is largely a restatement of the arguments in their previous two articles, which I will not repeat here. Following Coleman, Hedström and Swedberg use the following illustration of different types of mechanism:

Figure 6.3 Hedström and Swedberg’s typology of social mechanisms Source: Hedström and Swedberg (1996b: 297)

Positivism in philosophy and social science

189

The first type of mechanism, mentioned by Hedström and Swedberg, is called situational mechanism. It is exemplified by the ways in which the social situation shapes the desires, or interests, beliefs and opportunities of individuals. The second type of mechanism is called individual action mechanism and refers to the way individuals’ beliefs and desires generate actions. The third type of mechanism is called transformational mechanism and it depicts how interaction between individuals gives rise to collective outcomes. Of these mechanisms, the second and third are most individualistic, while the first, seems to imply a holistic element. I feel that there is a certain ambiguity surrounding the situational mechanism. While the arrow runs from the macro-level to the micro-level, Hedström and Swedberg maintain that there are no macro-level mechanisms (1996b: p. 299). This is odd, since it implies that the mechanism lies in the effect rather than in the cause. It would seem that Hedström and Swedberg follow Watkins and Elster, rather than (the later) Popper and Coleman, since they maintain that ‘the elementary “causal agents” are always individual actors’ (p. 11), which implies that social institutions can in principle, if not always in practice, be explained in terms of the actions of individuals (p. 12). It is worth noticing that one of the most renowned empirical sociologists, John Goldthorpe (1996; 1998), has recently turned to rational choice and methodological individualism, for reasons similar to those of Hedström and Swedberg, and inspired by the same people, especially Raymond Boudon. This means, among other things, that he sees the approach of generative mechanisms as the most promising way of providing a causal explanation of the results of statistical investigations (Goldthorpe, 2000: 149ff ). Goldthorpe is not very explicit about methodological individualism, but he denies being an ontological individualist (1998: 167). The main thing is rational action theory, which is a less restricted version of rational choice, inspired mainly by Max Weber’s verstehende sociology and Raymond Boudon’s cognitivist model (see pp. 306ff ). The important thing in rational action theory is to understand the meaning individuals attach to their actions; the motives and reasons they have for acting in certain ways. These motives may be utilitarian, but they could also be of a more normative kind. An example of this can be found in his and Richard Breen’s explanation of educational differentials in terms of class differences in resources. Cultural explanations in terms of social norms are considered less important than instrumental rationality, but not devoid of ‘some explanatory significance’ (Breen and Goldthorpe, 1997: 297–300). Positivist social theory The first and main example of an individualist theory in social science is economics. It is not at all surprising, therefore, that social scientists, who are methodological individualists, but not economists, should use economics as a model for their own theoretical endeavours. As we have seen in chapter 4, this was the case with Max Weber. Now, economics is a theory of exchange. At least, it is seen as a theory of exchange, or catallactics, by those economists who have

190

Positivism in philosophy and social science

been most eager to declare themselves methodological individualists. It is only natural, therefore, that social scientists, opting for an individualist theory of society, should develop a theory of social exchange. The main example, I believe, is the sociologist George Caspar Homans.26 Homans’s theory of exchange 27 Homans seems to be fond of writing his own intellectual biography. As he is one of the most influential sociologists in the second half of the nineteenth century, sociologists have every reason to be grateful for this idiosyncrasy. From the four autobiographical writings Homans has produced, we may extract the following facts about his professional and intellectual career.28 Homans came to sociology by chance. He was advised by his tutor in English literature, his original subject, to attend a course on the Italian economist and sociologist Vilfredo Pareto held by the biochemist and historian of science, L.J. Henderson at Harvard. Thus becoming expert on Pareto, he wrote An Introduction to Pareto (1934) together with the lawyer J.P. Curtis. Circumstances conspired to make him a sociologist and this is what he eventually became, if not intellectually, then at least professionally. At Harvard, Homans became acquainted with the anthropologist Elton Mayo and through him, with the writings of Malinowski and Radcliffe-Brown. Being convinced that it is the nature of individuals that determines the nature of society, rather than the other way around, Homans was suspicious of functionalism from the very beginning. Homans recognizes three kinds of statement in which the word ‘function’ appears: The first kind of statement said that one institution in a society was a function of another in the sense that the two were interrelated … The second kind of functional statement said that an institution was functional for members of a society in the sense of meeting their needs … The third kind of functional statement said that an institution was functional for a society in the sense of helping to maintain society as a going concern. (Homans, 1962: 23f) The first statement was made by both Malinowski and Radcliffe-Brown, the second, especially by Malinowski, and the third only by Radcliffe-Brown. That is why Homans came to accept Malinowski’s functionalism, which he calls ‘individualistic’, but reject Radcliffe-Brown’s which is ‘societal’ (Homans 1983: 12).29 When Homans in his next work, English Villagers of the Thirteenth Century (1941), set out to seek his own roots, he did so with the conscious aim, and despite his doubts about it, of applying functionalist analysis to this historical material. While working on the English Villagers, however, Homans came into contact with an intellectual current very different from functionalism, P.W. Bridgman’s operationalism. The influence was indirect and came from the anthropologists Eliot Chapple and Conrad Arensberg, who wanted to define the chief concept of

Positivism in philosophy and social science

191

anthropology in terms of the order, frequency and duration of interactions between men. Homans felt that interaction was not enough to grasp the content of social life and added sentiment and activity. This conceptual scheme; ‘interaction’, ‘sentiment’ and ‘activity’ was set out for the first time in the last chapter of English Villagers and became the analytical tool of his next main work, The Human Group (1951: 33–44). Behind Homans’s conceptual scheme lay, besides the impact of operationalism, a conviction he had gained through his critical reading of anthropological literature, that ‘human nature is the same the world over’. The ultimate explanatory principles in history, anthropology and sociology, therefore, are psychological propositions, propositions about men as men (1951: 443). In his last work, the autobiographical Coming to My Senses (1984: 329, 351), Homans says that he reached this conclusion before the Second World War, and was turned into a methodological individualism already at that early stage of his career. He also invokes the support of John Stuart Mill, who had adopted the same approach in his A System of Logic (see pp. 43–9). It is possible that Homans had already turned into a methodological individualist in the 1930s, but there is much even in The Human Group (1951), which is hard to reconcile with this position. Above all, there are many remnants of the organicist influence of the philosopher Alfred North Whitehead (pp. 6–10, 86–8, 272–6), which do not fit methodological individualism. Even so, The Human Group marks a definite change of direction in Homans’s work, from an earlier preoccupation with social institutions to his later concentration on elementary or sub-institutional behaviour in small groups. Connected with this change was Homans’s introduction of the distinction between the internal and the external systems (pp. 90, 109f). The latter would eventually be turned into the given, or boundary, conditions of Homans’s theory of exchange (Homans, 1962: 272f; 1961: 230f). The Human Group was published in the same year (1951) as Talcott Parsons’s, even more influential, The Social System. Being a work of a totally different inspiration, it is only natural that Homans should have felt challenged. Most provocative to Homans was Parsons’s claim to have produced a sociological theory. Homans read the philosophers of science, especially R.B. Braithwaite, later also Ernest Nagel and Carl G. Hempel and learned that a theory consists of propositions stating relationships between properties of nature. The job of a scientific theory is to explain, and in order to be able to do this job, scientific propositions must be general. Scientific explanation is the deduction, or derivation, of lower-order generalisations from higher-order generalisations under specified given conditions. Now, the trouble with Parsons’s ‘theory’ is that it does not consist of propositions, but of concepts. It is a conceptual scheme, not a scientific theory and the problem with most sociological propositions, including Homans’s own propositions in The Human Group is that they are not general enough. Homans is forced, therefore, to go outside the field of sociology in order to find the most general propositions. He finds them in economics and, especially, in the behaviourist psychology of B.F. Skinner.30

192

Positivism in philosophy and social science

This is a bit odd, since the behaviourist view of man is diametrically opposed to that of economics. While the latter depicts man as an autonomous being making choices, behaviourism regards her/him as an automaton reacting passively to his environment. The difference could not be greater it would seem, and yet, when it comes to application, they turn out to be very much alike. They are both based on motivational assumptions of a hedonist or utilitarian origin, even if expressed in somewhat different languages. The terminology of ‘reward’ and ‘punishment’, however, occur in both. But while behaviourism and rational choice agree that men seek to maximise their rewards, rational choice assumes that they do so by free choice, while behaviourism insists that they do so automatically as a result of their previous learning histories. Since social scientists, in contradistinction to some psychologists, are ignorant of the biographies of the people they investigate, reference to their learning histories becomes a matter of mere faith in behaviourist doctrine, but of little consequence for actual research. Even behaviourist social science tends to treat men as if they acted purposively (see Homans 1961: 12–14; 1970a: 317–24). Behaviourism originated as a psychological theory, or perhaps we should say methodology. It was first advanced by John B. Watson, very much as a reaction to the introspective psychology prevalent in the beginning of the twentieth century. Watson wanted to get rid of all ‘psychical’ concepts such as ‘soul’, ‘mind’, ‘consciousness’, etc., referring to an inner ‘man’, and replace them with concepts referring to the objective behaviour of individuals, notably those of ‘stimulus’ and ‘response’. Behaviourism, according to Watson, has the twin purpose of prediction and control of human behaviour. To predict the behaviour of an individual we must know the way he/she has been conditioned from earliest childhood. To control his behaviour we must be able to control his environment (Watson, 1913: 158–77; 1924/5: ch. 1). Behaviourism soon found out that there is a gap between stimulus and response and tried to fill this gap with an intervening variable. This intervening variable, however, was not a very satisfactory solution since it seemed to reintroduce what behaviourism wanted to avoid, that is, reference to some mysterious force within the human organism. B.F. Skinner, the leading representative of contemporary behaviourism, solves the problem, not by invoking some intervention between stimulus and response, but by looking beyond the response. Skinner rejects the stimulus-response model and replaces it by a model centering on contingencies of reinforcement: the when and where and how of reinforcement (1965; 1969). If behaviourism is used to explain social, and/or cultural, phenomena, it turns into a form of methodological individualism and it seems that Skinner approves of such use. At least, he is an ontological individualist. A species has no existence except as a collection of individuals, nor has a family, tribe, race, nation, or class. A culture has no existence apart from the behavior of the individuals who maintain its practices. It is always an individual who behaves, who acts upon the environment and is changed by the

Positivism in philosophy and social science

193

consequences of his action, and who maintains the social contingences which are a culture. (Skinner, 1974: 204).31 Behaviourist psychology is Homans’s solution to the problem with Parsons’ so-called ‘theory’. Instead of concepts, it generates general laws. The result is Homans’s theory of exchange, first presented in ‘Social Behavior as Exchange’ (1962: ch. 17) and, more fully, in Social Behavior: Its Elementary Forms (1961: 51–82). It consists of five propositions and reads like this: 1

2 3 4

5

If in the past the occurrence of a particular stimulus-situation has been the occasion on wich a man’s activity has been rewarded, then the more similar the present stimulus-situation is to the past one, the more likely he is to emit the activity, or some similar activity, now. The more often within a given period of time a man’s activity rewards the activity of another, the more often the other will emit the activity. The more valuable to a man a unit of the activity another gives him, the more often he will emit activity rewarded by the activity of the other. The more often a man has in the recent past received a rewarding activity from another, the less valuable any further unit of that activity becomes to him. The more to man’s disadvantage the rule of distributive justice fails of realization, the more likely he is to display the emotional behavior we call anger.

This theory is, with minor modifications,32 Homans’s main contribution to sociological theory. In his later writings, Homans is satisfied to demonstrate the fruitfulness of his theory and to defend it against alternative approaches, both in its specific form as a behaviourist theory of exchange and, more generally, as an example of psychologistic reduction and of methodological individualism. Homans for the first time proclaims himself a psychological reductionist in a paper from 1953 (Homans, 1962: ch. 16), but later denies being a psychological reductionist, on the ground that there are no general sociological propositions to reduce (1964a: 817; 1967b: 83–6; 1969: 15f). His explicit commitment to methodological individualism is of later date and seems to replace his commitment to psychological reductionism. According to Homans, however, methodological individualism entails psychological reductionism. Homans’s individualism, like Schumpeter’s (see pp. 105f), is pragmatic and strictly methodological. It lacks every connection with ontological individualism and so, does not deny the existence of institutions and other social wholes. Being pragmatic in character, Homans’s methodological individualism is also free from dogmatism. The issue of individualism versus holism is scientific and cannot be settled by philosophical argument (see Homans, 1967b: 83–6; 1980: 19–21). This does not prevent Homans from expressing definite opinions about social structure, however; opinions that are typical for methodological individualists. If, according to Homans, there is such a thing as social structure at all, it is only as

194

Positivism in philosophy and social science

certain patterns of interaction among people (1975: 54). Concerning Peter Blau’s notion of ‘structural effect’, Homans suggests that it is better called ‘collective effect’, since ‘it concerns the influence of a collection of individuals – but if a collection, still individuals – on another individual’ (p. 56). But ‘Why should things recognizable as social structures exist at all?’. Homans’s answer to this fundamental question by Raymond Boudon is as follows: I have tried to show how relatively enduring structures, a status-system for instance, can be created and maintained by the actions of individuals, actions of course taken under the influence and constraint of the actions of other individuals. That is, I have tried to explain the properties of certain simple structures using as general propositions the propositions of behavioral psychology. (Homans, 1975: 64) Homans’s work was widely read and much debated, but he seems to have attracted few immediate followers, at least in the USA.33 Among later applications of behaviourist psychology to sociological problems in the USA, there is reason to mention John H. Kunkel’s attempt to explain social change, especially economic growth, with the help of behaviourist learning principles (Kunkel, 1970). The most significant contributions to a theory of social exchange, after Homans, were made by Richard M. Emerson, Peter M. Blau and James C. Coleman. But all of them took a more structuralist approach to social exchange, than did Homans. Most holistic was Blau, who was never a methodological individualist, but who became ever more dedicated to structuralism.34 James Coleman will be treated at length in chapter 10. Here I concentrate on Richard M. Emerson. Emerson appeared on the sociological scene in 1962, with a seminal article on ‘Power-Dependence Relations’. A fundamental thesis of this article is that power is a property of social relations, or social structure, not of actors (pp. 32ff). From the very beginning, then, Emerson takes a more structuralist approach than Homans and he does not give up structuralism when turning to the theory of social exchange (Emerson, 1969; 1972a; 1972b). According to Emerson, Homans’s psychological reductionism suffers from two serious shortcomings: first, it conceives of society as the sum of individual behavior, or more accurately, it fails to offer a conception of society; and second, the overwhelming burden of ‘explanation’ falls upon ‘given conditions.’ In short, it takes as ‘given’ the very conditions sociology seeks to comprehend: the structure surrounding ‘behaving persons,’ and lawlike changes in that structure. (Emerson, 1972a: 41) A third shortcoming of Homans’s theory of exchange is its exclusive concern with dyadic relations. This is, of course, a serious limitation of any sociological theory and it was an important step forward, when Emerson generalised the

Positivism in philosophy and social science

195

theory of social exchange so as to apply also to social networks (1972b). From then on, Emerson and his colleagues were mainly concerned with experimental research on relations of power in exchange networks (Cook and Emerson, 1978; Cook, Emerson and Gillmore, 1983). In the meantime, a parallel development took place around the so-called elementary theory of David Willer and his colleagues. Taking their point of departure in classical structuralist sociology (Willer and Andersson, 1981; Willer, 1992), rather than in social exchange theory, they arrived at an approach similar to that of Emerson and his followers. In a well-known article from 1988, Markovsky, Patton and Willer criticised the analysis and results obtained by Cook, Emerson and Gilmore. This led to a further exchange between the two groups of researchers, but despite the disagreement between them, there was a general feeling that both groups were united in a common project: that of creating a new field of social research. The name of the new field became ‘network exchange theory’ (see Bienenstock and Bonacich, 1997). This new version of social exchange theory is different from that of Homans in two important respects: it includes a distinctive structuralist element and it has replaced behaviourist psychology by rational choice. The latest development seems to be the use of game theory to analyse the exchange between individuals in power relations (Willer, 1992; Willer and Skvoretz, 1997; Markovsky, 1997). This transformation of social exchange theory has led to a rapprochement with two other theoretical traditions in the USA: the network theory of Harrison White and followers, and the rational choice based theory of social exchange developed by James S. Coleman.35 The former tradition is characterised by a strong commitment to structuralism, which leaves little room for individualist microfoundations (White, Boorman and Breiger, 1976; White, 1992: 3, 298, passim; Wellman and Berkowitz (eds), 1988). An exception is Mark Granovetter, who makes frequent use of rational choice as a microfoundation in his analyses of networks (1973; 1978). The second tradition is more individualistic, but does not neglect social structures, as did Homans (see, e.g., Burt, 1982). Coleman, himself, is committed to methodological individualism, but, as we will see in chapter 10, it is a weak form of individualism, including also an important structuralist element. Coleman’s methodological individualism is, I believe, identical with the structuralindividualism defended by some Dutch sociologists (see p. 199). Network exchange theory is closer to Coleman’s theory of exchange than to the network theory of Harrison White. Like the former, it combines action theory and structuralism. There is a certain ambiguity on this point in the Emerson approach.36 According to Cook (1991: 32): ‘The goal was to construct a theory of social exchange in which social structure is the dependent variable’ (see also Cook, 1987: 214). Support for this claim can be found in Emerson (1972b: 58). But there is also abundant evidence that both Emerson and Cook use social structure as independent variable. This is fundamental to the theory of power dependence, which sees power as a function, or effect, of the position

196

Positivism in philosophy and social science

individuals occupy in social structure. Thus social structure is both dependent and independent variable: Structure is conceived, according to exchange theory, as the interconnection of various positions in an exchange network. Framed this way, exchange theory can illuminate not only the behavior of actors, but the structures that emerge as the result of these exchange relations. Furthermore, by focusing on a given structure or social institution, exchange theory provides an explanation both for the behavior of actors within structures and for structure itself. (Cook, O’Brien and Kollock, 1990: 160) Homans’s original theory of social exchange was individualistic and psychologistic. Network exchange theory differs from Homans’s theory by introducing a structural element in the theory. Indeed, for many sociologists working in this tradition, the structuralist element is the more important and most of them seem to reject methodological individualism. Karen Cook has argued that Emerson’s approach is, at least, not a radical methodological individualism. If it is, at all, individualistic, it has to be a form of structural-individualism, since its main characteristic seems to be that it links micro and macro or, better, action and structure (Cook, 1987; 1991; Willer, 1992).37 Perhaps, it would qualify as methodological individualism in the sense of political scientist David Knoke (1990), who defends an approach to political networks, akin to the general approach of James Coleman, which ‘requires that a structural theorist embrace a genuine methodological individualism’ (p. 27). German Verhaltenstheorie Homans’s theory of exchange was brought to Germany by the Polish sociologist Andrzej Malewski, who was more interested in the behaviourist foundation than in the idea of exchange. Like Homans, Malewski wanted to integrate social science under the edifice of the most general of all theories about human behaviour. Not only sociological theories, but also economics, and certain psychological theories, such as Festinger’s theory of cognitive dissonance, are on a lower level of generality, and can be explained by, or reduced to, behaviourist psychology. According to Malewski ([1964] 1977: 148 [my translation]), ‘Behaviourism is the psychological foundation of all behavioural sciences’ (Die Verhaltenstheorie ist das psychologische Fundament für alle Wissenschaften von menschlichen Verhalten). The most influential representatives of behaviourist social science in Germany, however, were Hans J. Hummell and Karl-Dieter Opp. Their behaviourism was part of a more inclusive programme of reducing sociology to psychology. For this reduction to be possible, it is necessary to make clear what is meant by the terms ‘psychology’, ‘sociology’, and ‘reduction’. ‘We wish to characterize as psychological all statements about and all concepts concerning absolute

Positivism in philosophy and social science

197

properties and relations of individuals, and all statements and concepts concerning relations of individuals and things.’ ‘We wish to call sociological all statements and concepts concerning properties and relations of collectivities and concerning collectivities and things or collectivities and individuals’ (Hummell and Opp, 1968: 206f). Reduction, can be achieved in two ways: by a definition of sociological terms by psychological terms, and by a derivation of sociological hypotheses or theories from psychological hypotheses and theories. By a combination of definition and derivation Hummell and Opp arrive at four different possibilities: (1) neither definability nor derivability; (2) definability but not derivability; (3) derivability but not definability; and (4) both definability and derivability. The thesis which Hummell and Opp set out to test is the fourth one; that sociological terms are definable by psychological terms and that sociological hypotheses or theories are derivable from psychological hypotheses and theories. After a systematic and thorough investigation, which I have discussed and criticised elsewhere (Udehn, 1987: 167f ), Hummell and Opp find their thesis corroborated; sociology is reducible to psychology (1968: 220–3; 1971: 1–12; Opp, 1977a). Reduction, however, is not to be regarded as an end in itself. Its justification lies in the wholesome effects it has on the development of social science, i.e., sociology: reduction is supposed to lead to more general theories, stated in more precise terms and more easily testable, and, therefore, to an integration and accumulation of our knowledge (Hummell and Opp, 1968: 220–3; 1971: 81–6). Hummell and Opp at first make no mention of ‘methodological individualism’, but later recognise a close kinship between their psychological reductionism and Joseph Agassi’s ‘institutional individualism’ (Hummell and Opp, 1971: 8). Still later, they become sceptical about the label ‘reductionism’ and suggest that ‘methodological individualist’, or simply ‘individualist’, is a better characterisation of their programme (Hummell, 1973a: 64f; Opp, 1979: 4, 47, 109). The individualist research programme, according to Opp (1972: 6 [my translation]), consists in ‘the explicit use of individualistic theories to explain and predict social facts and to bring practical problems closer to a solution’ (unter expliziter Anwendung individualistischer Theorien soziale Sachverhalten zu erklären, vorauszusagen und praktische Probleme einer Lösung näherzubringen). Opp’s individualist research programme, which is influenced by structuralindividualism, differs from Hummell’s and Opp’s psychological reductionism, above all in the following respects. (1) It aims at explaining social facts rather than reducing sociological hypotheses and theories. There is, on the whole, a shift of emphasis from definition to explanation (Opp, 1979: 1–3, 6, 20). Explanation is not possible, however, without a previous definition, or ‘Rekonstruktion’, of collective concepts occurring in the explanation (p. 147). (2) The rules of co-ordination (Koordinationsregeln), referred to by Hummell and Opp as the means by which to provide the bridge between sociological and psychological theories, are replaced by transformation functions. Like rules of correspondence, transformation functions may be analytic or empirical (Hummell and Opp, 1968: 208f; 1971: 13ff). (3) The ‘requirement’ of definability is replaced by the reconstruction thesis (Rekonstruktionsthese), which says that

198

Positivism in philosophy and social science

collective concepts can, but must not, be reconstructed by individualist concepts denoting individuals and their properties (Opp, 1979: 116, 150). Neither Hummell’s and Opp’s psychological reductionism, nor Opp’s individualist research programme, says anything about the kind of psychological or individualist theory to be used in the attempted reduction, or reconstruction, of sociology. Several alternatives are possible, but Hummell and Opp finally settle for B.F. Skinner’s behaviourist learning theory as the most promising alternative. Other theories that are mentioned include Leon Festinger’s theory of cognitive dissonance and different versions of the so-called ‘theory of balance’. The behaviourist research programme then is a sub-programme (Teilprogram) of the individualist programme. According to Opp (1972: 15–30; 1973: 39–45; 1977b), it consists of the following claims or theses : 1

2 3

4

5

6

Singular social phenomena can be explained by hypotheses in learning theory. (Singuläre soziologische Ereignisse sind mittels lern-theoretischer Hypothesen erklärbar). Learning theory and sociology are in competition. (Hypothesen der Lerntheorien stehen mit soziologischen Hypothesen in einer Konkurrenzbeziehung). Learning theory explains singular social phenomena better than does sociology. (Lerntheoretische Hypothesen können soziologische singuläre Ereignisse zutreffender erklären als soziologische Theorien). Learning theory is superior to sociology with respect to truth, empirical content and precision. (Lerntheoretische Hypothesen sind soziologischen Theorien bezüglich ihres Wahrheitsgehalts, ihres Informationsgehalts und ihre Präzision überlegen). Learning theoretical hypotheses are better than sociological theories for solving pratical problems, if the latter are at all useful for that purpose. (Hypothesen der Lerntheorie sind für die Lösung praktischer Probleme besser geeignet als soziologische Theorien, sofern diese ebenfalls anwendbar sein). The use of Skinner’s theory of learning in sociology leads to faster progress in this discipline than does the use of other theories of learning and other social psychological theories. (Die Anwendung der Skinnerschen Lerntheorie in der Soziologie führt zu einem grösseren Erkenntnisfortschritt in der Soziologie als die Anwendung anderer Lerntheorien und die Anwendung anderer sozialpsychologischer Theorien).

Hummell and Opp have done a great deal to clarify Skinner’s behaviourist learning theory, and to turn it into a programme adapted to sociological questions. They have also made great efforts to show that their programme works. I will not go into details about this work, but limit myself to a mention of their treatment of social structure. As a point of departure Hummell and Opp adopt the orthodox sociological view of social structure as a set of relationships between social roles, or positions (1971: 40–4). According to Opp, however, the concept of role is of little theoretical fertility, if used in addition to the concept of ‘expectation’, by which it is defined. More precisely, a role is a set of expectations somehow perceived to

Positivism in philosophy and social science

199

belong together. The only fertile use Opp can find for the concept of ‘role’ is in answer to the question: Under what conditions will certain expectations be perceived to belong together? Typical for any answer to this question is that the role – or the criterion used to sort out the bundle of expectations constituting that role – appear as an independent variable (Opp, 1972: 174ff; 1973: 133–46). Hummell uses a somewhat broader concept of ‘social structure’, or ‘social system’, which includes also the unintended consequences of human action. In compliance with methodological individualism, he proposes a strategy of research, which explains the social processes at the molar level in terms of individuals, acting at the molecular level (Hummell, 1973a: 65). Like many methodological individualists before, Hummell affirms the reality (in a sense) of social collectives and institutions, but demands their explanation in terms of individuals (Hummell, 1973b: 138f, 150). Anticipating the structuralindividualists, Hummell recommends the synthetic explanation of the systemic effects of the actions of many individuals (1973a: 71f). In the 1980s German Verhaltenstheorie merged with the so-called ‘structuralindividualist research programme’, residing mainly in Holland. Among the leading figures of structural-individualism are Siegwart Lindenberg, Reinhard Wippler and Werner Raub. Influenced by Homans, Coleman, Hummel and Boudon, the structural-individualists have as their main objective, the explanation of the unintended, composite, or collective, effects of the actions of individuals.38 Their aim is to develop an explanatory micro-sociology – rather than a descriptive macro-sociology – and to use it for the explanation, mainly of macro-phenomena, but also of micro-phenomena. The explanation of macrophenomena is achieved, materially, by providing a causal mechanism and, formally with the aid of so-called ‘transformation functions’, or ‘transformation rules’, turning laws about individual behaviour into statements about aggregate effects (Lindenberg, 1977; Raub and Voss, 1981: 88ff). Structural-individualism differs from German Verhaltenstheorie in being less, if at all, individualistic. As indicated by the name, it is both individualistic and structuralistic – if such a unity of opposites is possible. I believe that it is, but it is not methodological individualism as originally conceived. It is a weak form of methodological individualism, which is considerably less vulnerable to critique than the original strong version (see Udehn, 1987: 202ff). I will return to structural individualism in chapter 10, which deals specifically with rational choice sociology. Structural-individualism, at first, differed from German Verhaltenstheorie in being neutral with respect to behavioural assumptions. The tendency, however, has been to replace behaviourism by rational choice. Today it seems that all structural-individualists have adopted rational choice as the individualist part of structural-individualism.39

7

Popperian methodological individualism

Methodological individualism was until quite recently – before the renaissance of Austrian Economics – most often associated with the name of Karl Popper. This, as we have seen, is not because he was its inventor. Nor is it, as we shall see, because he has very much to say about it that is entirely new. Popper did bring about a major change in methodological individualism by advocating institutionalism, but he did not integrate this element in methodological individualism, himself. One reason methodological individualism used to be more often associated with Popper than with the Austrians, is that, being a philosopher himself, Popper was more widely read among philosophers. Another reason is that, in the decades after the Second World War, he was probably also more widely read by social scientists, than were Weber, Mises and Hayek, whose influence was largely confined to their own disciplines of economics and sociology. Today this is no longer true. Interest in the philosophy of Karl Popper has been on the wane among social scientists for some time, while interest in Austrian Economics has increased. My conjecture is, however, that we will soon see a revival of interest also in the philosophy of Karl Popper.

Karl Popper Popper, then, was not an ‘Austrian’ in his methodology for the social sciences. He was, however, an Austrian by birth and, what is more, he was a student of Ludwig von Mises and a friend of Friedrich von Hayek. This fact alone makes for a certain continuity between Austrian and Popperian methodological individualism. More important, however, is the fact that Popper read an early version of The Poverty of Historicism at Hayek’s private seminar in London in 1936. In his ‘Intellectual Biography’, Popper also tells us that Hayek ‘saved his life’ twice. First, by helping him to find a publisher for The Open Society and Its Enemies (1945) and by writing most encouragingly about it. Second, by offering him a readership at the University of London, tenable at the London School of Economics, and by publishing ‘The Poverty of Historicism’ as an article in Economica (1944–5), for which Hayek was then acting editor (Popper, 1974a: 95; 1976: 120). When Popper takes up the subject of methodological individualism in The Poverty

Popperian methodological individualism

201

of Historicism, it is with direct reference to Hayek, but ironically, in a chapter entitled ‘The Unity of Method’. Now all this, I believe, is not only true for the natural, but also for the social sciences. And in the social sciences it is even more obvious than in the natural sciences that we cannot see and observe our objects before we have thought about them. For most of the objects of social science, if not all of them, are abstract objects; they are theoretical constructions. (Even ‘the war’, or ‘the army’ are abstract concepts, strange as this may sound to some. What is concrete are the many who are killed; or the people in uniform, etc.). These objects are the result of constructing certain models (especially of institutions), in order to explain certain experiences – a familiar theoretical method in the natural sciences (where we construct our models of atoms, molecules, solids, liquids, etc.). (Popper, 1944–5, III: 80; see also 1957: 135) Popper is here, more or less, repeating the view of Weber and Hayek, that the objects of social science are models or theoretical constructions. The ontological status of social objects remains obscure, however. Their being theoretical and abstract does not preclude the possibility that they refer to something real. But Popper certainly gives the impression of denying that social objects are real. What he has to say about social objects – and about the models of natural science – comes suspiciously close to an instrumentalist view of scientific concepts. This is surprising, since Popper in various contexts has appeared as an energetic defender of a realism in science (cf. Johansson 1975: 98f ). The impression of instrumentalism remains after reading the following passage, where Popper makes his first mention of methodological individualism. That we are very often unaware of the fact that we are operating with theories, and that we mistake our theoretical models for things is true, but this is a kind of mistake which is only too common. This use of models explains and at the same time destroys the claims of methodological essentialism … It explains them, for the model is of an abstract or theoretical character, and we are liable to believe that we see it, either within or behind the changing observable events, as a kind of permanent ghost or essence. And it destroys them because our task is to analyse our sociological models carefully in descriptive or nominalist terms, viz., in terms of individuals, their attitudes, expectations, relations, etc. – a postulate which may be called ‘methodological individualism’. (Popper, 1944–5, III: 80; see also 1957: 136) In this quotation, Popper mentions the doctrine of ‘methodological essentialism’, which he rejects. Opposed to methodological essentialism is ‘methodological nominalism’, which he advocates. By ‘essentialism’, Popper means conceptual realism, or the thesis that there are universals. Nominalism, as we have seen in

202

Popperian methodological individualism

chapter 4 (pp. 109f ), is the doctrine that there are only particulars. By adding the word ‘methodological’ before ‘essentialism’ and ‘nominalism’, Popper wants to avoid the metaphysical issue involved and replace it by the methodological issue of how best to achieve the objects of scientific investigation.1 He suggests that scientists should not concern themselves with asking essentialist questions, such as ‘what is matter?’, or ‘what is the nature of man’ and the like, but ask, instead, ‘how does this piece of matter behave?’ or ‘how do people act in a certain type of situation?’2 Popper, thus, rejects the use of real definitions in science. It is not entirely clear to me why methodological nominalism is supposed to imply methodological individualism. A corollary of anti-essentialism is that we should not be interested in the meaning of words. One of Popper’s favourite sayings is that ‘words do not matter’. There is nothing to be gained in precision, or otherwise, from definitions. In defining a word, term, or concept, what we do is to substitute several words for one word, thus introducing new words which are left undefined. The attempt to clarify the meaning of words by way of definition, therefore, leads to an infinite regress.3 Most early adherents of methodological individualism dissociated themselves from psychologism; the doctrine that social science is reducible to psychology. But Popper is more careful, than his predecessors, to distinguish the two doctrines – probably because he is anxious to avoid subjectivism. To this end, Popper always mentions ‘interaction’ or ‘relations’ in his statements of methodological individualism. If it only mentioned ‘attitudes’, ‘expectations’, or some other ‘psychological propensity’, it would be altogether indistinguishable from psychologism (see, Popper, 1944–5, III: 86–8; 1957: 152–9). In order to develop a methodology that is a real alternative to psychologism, Popper makes use of two methodological strategies: ‘situational logic’ and ‘institutionalism’. Situational logic is a generalisation of the method of theoretical economics; the science usually cited as the very prototype, or paradigm case, of methodological individualism. Briefly stated, situational logic consists in constructing models of action, based on assumptions about the ends, or goals, of people and about the situation in which they act, and then to ask what their actions would be on the fundamental assumption that they act rationally to achieve these ends. Now, it is a much debated issue, whether the method of theoretical economics rests on assumptions of a psychological nature or not, but Popper’s standpoint is that it does not. ‘I should like to mention, in passing, that I consider neither the principle of methodological individualism, nor that of the zero method of constructing rational models, as implying the adoption of a psychological method’ (1944–5, III: 82; cf. 1957: 142). What Popper means by ‘institutionalism’ is not perfectly clear, but he seems to use the term ‘institution’ in a broad sense, to cover every man-made social arrangement, from organisations, such as universities and other schools, to language and writing (1944–5, III: 87f; 1957: 154ff). A certain ambiguity is created by the fact that Popper suggests that we need both ‘studies, based on methodological individualism, of … social institutions’, and ‘individualist and

Popperian methodological individualism

203

institutionalist models of such collective entities as nations, or governments, or markets’ (p. 154). If institutions are to be studied with an individualist method, why do we need models of collective entities that are both institutionalistic and individualistic? This ambiguity remains when Popper concludes his own institutional analysis of progress. I believe that this analysis is typical, and that the human or personal factor must be generally the irrational element in most, or all, institutional social theories. The opposite doctrine which teaches the reduction of social theories to psychology, in a similar way as we try to reduce chemistry to physics, is, I believe, based on a misunderstanding. It arises from the false belief that this ‘methodological psychologism’ is a necessary corollary of a methodological individualism – of the quite unassailable doctrine that we must reduce all collective phenomena to the actions, interactions, aims, hopes, and thoughts, of individuals. But we can be individualists without accepting psychologism. The ‘zero method’ of constructing rational models is not a psychological, but rather a logical method. (Popper, 1944–5, III: 88; cf. 1957: 157f) What exactly is the ‘human or personal factor’, if it is not ‘the actions, interactions, aims, hopes and thoughts of individual men’? Popper returns to the topic of methodological individualism in The Open Society and its Enemies (1945), where he once again separates it from psychologism and even defends the autonomy of sociology. Concerning his conception of institutionalism, we are, however, still left very much in the dark. Against psychologism, Popper says that ‘the defender of an autonomous sociology can advance institutionalist views’ (Popper [1945] 1966: vol 2, 89ff). Popper, then, is a defender of an autonomous sociology and the view he advances is that no action can be explained in terms of motives alone, but that a reference to the environment is also needed. ‘In the case of human actions, this environment is very largely of a social nature; thus our actions cannot be explained without reference to our social environment, to social institutions and to their manner of functioning’ (p. 90). To this, the psychologist might counter that social institutions are man-made and, therefore, to be explained in terms of the psychological factors responsible for their creation and development. This was how some earlier methodological individualists saved methodological individualism from the threat of collectivism. But, for Popper, who rejects psychologism, this is no solution. Or is it? Psychologism, after all, has one praiseworthy aspect: its sane opposition to collectivism and holism, its refusal to be impressed by Rousseau’s or Hegel’s romanticism – by a general will or a national spirit, or perhaps, by a group mind. Psychologism is, I believe, correct only insofar as it insists upon what may be called ‘methodological individualism’ as opposed to ‘methodological collectivism’; it rightly insists that the ‘behaviour’ and the ‘actions’ of collectives, such as states or social groups,

204

Popperian methodological individualism must be reduced to the behaviour and to the actions of human individuals. But the belief that the choice of such an individualistic method implies the choice of a psychologistic method is mistaken (as will be shown later in this chapter), even though it may appear very convincing at first sight. (Popper [1945] 1966: 91)

Popper now admits that methodological individualism seems to imply psychologism, but promises to show that it does not. He advances three arguments against psychologism. The first argument is that it ‘is forced to adopt historicist methods’, and ultimately, ‘to operate with the idea of a beginning of society’. This is so, because a psychological explanation of social institutions must start with a state where there were no social institutions, since only in such a state can psychological factors alone be responsible for the rise of new social institutions. Psychologism, according to Popper, is a form of the historical and methodological myth of the social contract; the idea that society can be explained in terms of a pre-social human nature (p. 93). Second, Popper repeats Hayek’s argument that social institutions, far from being ‘explicable in terms of needs, hopes, or motives’, are usually ‘the indirect, the unintended and often the unwanted by-product of [human] actions’ (p. 93). Popper’s third argument against psychologism is that social science makes use of the method of situational analysis, based upon the ‘logic of the situation’ (p. 97). Popper ends his defence of the autonomy of sociology by, once again, reminding us of the healthy aspect of psychologism; its methodological individualism. Also we must not overlook the great merits which psychologism has acquired by advocating a methodological individualism and by opposing a methodological collectivism; for it lends support to the important doctrine that all social phenomena, and especially the functioning of all social institutions, should always be understood as resulting from the decisions, actions, attitudes, etc., of human individuals, and that we should never be satisfied by an explanation in terms of so-called ‘collectives’ (states, nations, races, etc.). The mistake of psychologism is its presumption that this methodological individualism in the field of social science implies the programme of reducing all social phenomena to psychological phenomena and psychological laws. (Popper [1945] 1966: 98) The problem with Popper’s arguments against psychologism is that they seem to hit methodological individualism too. Popper’s main argument, implies the adoption of an institutionalist method, but this suggestion does not work as long as Popper insists that also institutions must be analysed by an individualist method. In Popper’s later writings on the methodology of the social sciences, the theme of methodological individualism recedes into the background and finally disappears altogether. After The Open Society and Its Enemies it is not even

Popperian methodological individualism

205

mentioned by name. The idea behind it appears, however, in some of the articles assembled in his Conjectures and Refutations [1962] 1968. In ‘Prediction and Prophecy in the Social Sciences’ (1948), Popper sums up the argument of The Poverty of Historicism. Methodological individualism is mentioned as the only sound alternative to collectivism, and collectivism as one of two ‘naive theories of society which must be disposed of before we can understand the function of the social sciences’. The first is the theory that the social sciences study the behaviour of social wholes, such as groups, nations, classes, societies, civilizations, etc. These social wholes are conceived as the empirical objects which the social sciences study in the same way in which biology studies animals or plants. This view must be rejected as naive. It completely overlooks the fact that these socalled social wholes are very largely postulates of popular social theories rather than empirical objects; and while there are, admittedly, such empirical objects as the crowd of people here assembled, it is quite untrue that names like ‘the middle-class’ stand for any such empirical groups. What they stand for is a kind of ideal object whose existence depends upon theoretical assumptions. Accordingly, the belief in the empirical existence of social wholes or collectives, which may be described as naive collectivism, has to be replaced by the demand that social phenomena, including collectives, should be analysed in terms of individuals and their actions and relations. (Popper [1962] 1968: 341) The second naive theory of society recognised by Popper is the conspiracy theory of society, the theory that behind everything that happens in society there is the will of some individual or group of individuals. This theory is also criticised in ‘Towards a Rational Theory of Tradition’ (1949), where Popper repeats and develops his ideas on social institutions, taking what may be characterised as a moderate rationalist position. His main argument against a radical political rationalism is the same as Hayek’s: ‘that nothing ever comes off exactly as intended’ (Popper [1962] 1968: 124). As with Hayek, this fact also sets the task for the social sciences. It is the task of social theory to explain how the unintended consequences of our intentions and actions arise, and what kind of consequences arise if people do this that or the other in a certain social situation. And it is, especially, the task of the social sciences to analyse in this way the existence and functioning of institutions (such as police forces or insurance companies or schools or governments) and of social collectives (such as states or nations or classes or other social groups). (Popper [1962] 1968: 125) Popper here makes a distinction between institutions and collectives. The meaning of this distinction, although possible to guess, is not immediately

206

Popperian methodological individualism

obvious. Above all, I find it difficult to understand the classification of states as collectives. I would classify it as an institution, or organisation, if I had to choose. Popper makes the further distinction between institutions and traditions. The notion of ‘institution’, according to Popper, rests upon that of ‘social function’. What characterises a social institution is that it fulfils a social function, whereas traditions simply are. This is interesting, because functional analysis would not normally be considered compatible with methodological individualism. Institutions and traditions have much in common; among other things that they must be analysed by the social sciences in terms of individual persons, their actions, attitudes, beliefs, expectations, and interrelations. But we may say, perhaps, that we are inclined to speak of institutions wherever a (changing) body of people observe a set of norms or fulfil certain prima facie social functions (such as teaching, policing, or selling groceries) which serve certain prima facie social purposes (such as the propagation of knowledge, or protection from violence or starvation), while we speak of traditions mainly when we wish to describe a uniformity of people’s attitudes, or ways of behaviour, or aims or values or tastes. Thus, traditions are perhaps more closely bound up with persons and their likes and dislikes, their hopes and fears, than are institutions. They take, as it were, an intermediate place, in social theory, between persons and institutions. (Popper [1962] 1968: 133) The addition of the term prima facie before those of ‘social function’ and ‘social purpose’ should probably be interpreted as an attempt to eliminate the suspicion that Popper’s institutionalism is infected by functionalism. More interesting however, is Popper’s separation of persons and institutions. For, what are institutions made up of ? The methodological individualist is, I believe, obliged to say: persons. But an alternative answer is to say that social institutions are made up of functions, roles, or positions.4 In the 1950s, Popper is occupied mainly with preparing the English edition of Logic der Forschung and does not write anything about the methodology of the social sciences. When he returns to this subject in the 1960s, the theme of methodological individualism has almost disappeared. The few scattered remarks there are about anything resembling methodological individualism are consistently ambiguous. Institutionalism, however, remains important, but most important is situational analysis, which is now launched as the method of social science (see Hedström, Swedberg and Udehn, 1998). ‘Situational analysis’ is Popper’s final name for a methodological tool which he had earlier called ‘logical’ or ‘rational’ reconstruction, the ‘zero method’, the ‘logic of the situation’ and ‘situational logic’. It is a method for constructing models in social science, based on the assumption that people act rationally in the pursuit of their ends. If we know people’s ends, the situation in which they act when seeking these ends and assume that they act rationally, i.e., choose the adequate means for attaining their ends, then, we can explain why they acted as

Popperian methodological individualism

207

they did. A problematic feature of Popper’s situational analysis is the status of the rationality principle. Popper denies that the rationality principle is psychological, or even empirical. According to him it is not a theory or a testable hypothesis, but a principle a priori. It is false, however, and therefore not valid a priori. But although false, it is a good approximation to reality. The principle of rationality is an integral part of most theories in social science. These theories are tested as wholes, but in case of falsification, Popper suggests as a methodological rule that we keep the rationality principle and treat our analysis of the situation as refuted (Popper [1963–4] 1994: 169f, 177f). How does this square with Popper’s famous principle of falsifiability. I do not intend to answer this question, but I would like to suggest that the origin of Popper’s position is John Stuart Mill and ultimately Auguste Comte; more specifically, his method of inverse-deduction, which was borrowed by Mill (see pp. 29, 47). According to Popper, himself, situational analysis is the method of marginalist economics. As such, it has much, but not everything, in common with Max Weber’s ideal type of purely rational action (cf. Jacobs, 1990). Situational analysis is also the inspiration behind Spiro J. Latsis’ critique of ‘situational determinism’ as the dominating research programme within economics (Latsis, 1972; 1978). More recently, it is discussed by John Goldthorpe as one version of rational choice in social science (1998). And, indeed, Popper’s ‘situational analysis’ seems to be another name for rational choice. It is possible, however, to conceive of situational analysis in a less restricted way. Among Popper’s pupils and followers, only J.W.N. Watkins seems to equate situational analysis with rational choice, while Joseph Agassi, Ian. C. Jarvie and John O. Wisdom appear to take a more broad view of this method. But how individualistic is situational analysis. That, I suggest, depends upon what is included in the situation. In his contribution to a symposium arranged by the German Sociological Association in Tübingen in 1961, Popper claims that situational analysis is an individualistic method. But he also makes the following curious statement: ‘Institutions do not act; rather only individuals act, in or for institutions. The general situational logic of these actions will be the theory of the quasi-actions of institutions’ (Popper [1962] 1976: 333).5 Whatever is that supposed to mean? One interpretation is that the ‘quasi-actions of institutions’ means normative action, which may be part of social roles, or not. In Popper’s recently published lecture on ‘Models, Instruments and Truths’ (1994), already referred to, Popper mentions social institutions as the most important element of the situation, besides the physical environment. In fact, I propose to use the name ‘social institution’ for all those things which set limits or create obstacles to our movements and actions almost as if they were physical bodies or obstacles. Social institutions are experienced by us as almost literally forming part of the furniture of our habitat. (Popper [1963–4] 1994: 167) Popper, then, conceives of social institutions as objective and thing-like, very

208 Popperian methodological individualism much like Emile Durkheim (see p. 34). This might be an indication that he no longer adheres to methodological individualism. At least, he does not mention this principle in his lecture. In Popper’s latest work (from the middle of the 1960s and onwards), methodological individualism has disappeared altogether. It is not even alluded to in his Intellectual Autobiography (1974a), and the reason is not hard to find. Popper’s theory of an autonomous world of objective ideas, capable of acting back upon individuals and their subjective ideas is hardly compatible with the original Austrian version of methodological individualism.6 Popper’s theory of an autonomous world of objective ideas is part of an ontological theory stating that there are, at least, three distinct worlds in the universe, each of which exists as an autonomous part of reality. They are (1) ‘the world of physical objects or physical states, (2) the world of states of consciousness, or mental states, or perhaps behavioural dispositions to act’ and (3) ‘the world of objective contents of thought’ (Popper [1968] 1972: 106). Popper discusses World 3 mainly from an epistemological point of view, but it is clear that his theory about three worlds has implications also for the methodology of the social sciences. To World 3 belong, first of all, such things as scientific theories and arguments, but also tools, institutions, traditions, works of art and values (Popper, 1972: 113; see also 1976: 187, 195). What Popper calls world 3 is what many social scientists call ‘culture’. According to Popper, then, culture, or at least part of it, belongs to world 3. This world, although man-made, transcends individual human beings and acts back upon them. Admitting that world 3 originates with us, I stress its considerable autonomy, and its repercussions on us. Our minds, our selves, cannot exist without it; they are anchored in world 3. We owe to the interaction with world 3 our rationality, the practice of critical and self-critical thinking and acting. We owe to it our relation to our task, to our work, and its repercussions upon ourselves. (Popper, 1976: 196) Popper’s theory of three worlds is a theory of emergent evolution. As such, it belongs in the holistic tradition.7 An important element in the theory of emergent evolution, including Popper’s version of it, is that each level in the hierarchic structure of the world is irreducible to the level ‘below’, but exerts a causal influence upon it. Popper calls it ‘downward causation’. In this ‘downward causation … the whole, the macro structure, may qua whole, act upon a photon or an elementary particle or an atom’ (Popper, 1977: 19). But there is also a downward causation from society to individuals: The most interesting examples of downward causation are to be found in organisms and their ecological systems, and in societies of organisms. A society may continue to function even though many members die; but a

Popperian methodological individualism

209

strike in an essential industry, such as the supply of electricity, may cause great suffering to individual people. (Popper, 1977: 20) What has been said so far concerns only ontological individualism. It remains to show that Popper’s theory of three worlds has implications also for methodological individualism. Central to Popper’s methodology of the social sciences and to his theory of objective knowledge is the idea of situational analysis. By this is understood ‘a certain kind of tentative or conjectural explanation of some human action which appeals to the situation in which the agent finds himself ’ (Popper, 1972: 179). From the very beginning, Popper has maintained that this situation is largely made up of social institutions. What is new, in his theory of three worlds is that social institutions are conceived of as belonging to a reality distinct from individual human beings. According to the original version of methodological individualism, institutions do not belong in the situation, at least not if they are conceived of as belonging to an autonomous reality ‘above’ individuals, capable of acting back upon them. According to Austrian methodological individualism, institutions should be analysed and explained as the result of the actions of individuals, but not as a cause of human action. According to Popper, however, human action and thinking is, at least partly, caused by social institutions. According to the Austrian view, institutions exist only as ideas in people’s minds. According to Popper, they exist in an autonomous world of objective ideas ‘over and above’ individuals. Popper’s theory of world 3 may be seen as a ‘secularised’ version of the theories of Plato and Hegel, as he admits himself (Popper, 1972: 106, 125f), and it is no less incompatible with original methodological individualism. Popper’s theory does not depict society, culture, or history, as some kind of super-person, or semigod, situated over and above human beings and deciding their fates, or standing behind the scene pulling the strings of human marionettes, but it does say that social institutions, are part of a reality, separate from individual human beings. As such, it is the expression of a view of society, which methodological individualists were always eager to combat: the hypostatisation of society as an entity independent of individuals. Popper’s theory of a world of objective thought contents belongs clearly in the holistic tradition. As Popper observes, himself, it has certain similarities to Plato’s theory of forms and to Hegel’s theory of objective spirit. It may be added that it has some similarities to the Marxist theories of objectification, alienation and reification. More obviously, it resembles the later Dilthey’s theory of objective mind, Durkheim’s theory of collective consciousness, Cassirer’s theory of symbolic forms and, perhaps, most obviously, Georg Simmel’s theory of objective mind and objective culture. It has also much in common with structural-functionalism and with the theory of culture prevalent in social anthropology, the most holistic of the social sciences. To sum up and conclude, Popper’s methodological individualism has much in

210

Popperian methodological individualism

common with that of Weber, Mises and Hayek. Like his precursors, Popper advances methodological individualism in direct opposition to the naive belief of collectivism or methodological essentialism that social objects exist apart from the models used to construct and to analyse them. In a nominalist, or instrumentalist, fashion Popper holds that social objects are abstractions, or theoretical constructions. Only individual human beings are concrete objects. Methodological individualism is stated as the principle that social phenomena (collectives, institutions, traditions) should be (a) analysed in terms of, (b) reduced to, or (c) understood as resulting from the attitudes, expectations, actions, interactions and relations of individuals. In particular, it is the task of social theory to explain the existence and functioning of institutions and social collectives in terms of the intended and unintended consequences of the social actions of individuals. One important difference between Popper and the Austrians is that he is much less interested in the meaning of concepts, including collective concepts. For Popper, methodological individualism is not at all about the meaning of collective concepts. It is about the explanation of social phenomena. Another difference is that Popper, more explicitly than his Austrian predecessors, advances methodological individualism as a categorical imperative, valid a priori and universally applicable to the social sciences and to history. Methodological individualism is stated, by Popper as the ‘postulate’, ‘demand’, or ‘unassailable doctrine’ that social phenomena ‘should’, or ‘must always’ be analysed, or understood, in terms of individuals, etc. The main difference between Popper and the Austrians, however, is that Popper rejects the subjectivism of the latter. Methodological individualism is no longer a corollary of an intersubjective theory of society. According to Popper, subjectivism leads to psychologism and, ultimately, to a genetic concern with the origins of society. In order to avoid this predicament, Popper adopts institutionalism. What is more, institutions are conceived of as objective elements of social reality, not as ideas in the minds of individuals. This creates a tension in Popper’s social science methodology which is not easily resolved (cf. Bunge, 1996b: 533; 1999: 107f). I have argued that methodological individualism and institutionalism, as stated by Popper, are irreconcilable doctrines. Institutionalism is an addition to methodological individualism, which does not fit in; a young cuckoo which eventually replaces methodological individualism as the substantive part of Popper’s social science methodology. I believe that Popper, when fully appreciating the consequences of his commitment to institutionalism, silently dropped methodological individualism, while retaining institutionalism and situational analysis as the main elements of his social science methodology. Nevertheless, the tension between individualism and institutionalism in Popper’s thought leads his followers in somewhat different directions. J.W.N. Watkins stays on the individualist side, while Joseph Agassi and I.C. Jarvie try to sit on the fence, but finally come down on the institutionalist side. This is also where Popper eventually lands with his theory of the objective mind.

Popperian methodological individualism

211

J.W.N. Watkins J.W.N. Watkins was a student of Popper, and became his successor, as professor in philosophy, at the London School of Economics. He has probably written more about methodological individualism than any other adherent of this doctrine. The reason for this is, I believe, that it fell to his lot to defend methodological individualism against its critics during the height of the debate in the 1950s. Because of the many critical attacks, Watkins was forced to attempt a clarification of the doctrine of methodological individualism and to state it in a way less vulnerable to critique. A result of this is that Watkins has provided more explicit statements of methodological individualism than any other adherent of this principle. Watkins’s first treatment of methodological individualism is in the article ‘Ideal Types and Historical Explanation’ (1952a), where he presents Weber’s ideal type as a forerunner of the principle of methodological individualism (as we have seen, Weber not only launched the ideal type, but was a spokesman of methodological individualism as well). Watkins’s methodological individualism is derived from the fact that All social phenomena are, directly or indirectly, human creations. A lump of matter may exist which no one has perceived, but not a price which no one has charged, or a disciplinary code to which no one refers, or a tool which no one would dream of using. From this truism I infer the methodological principle which underlies this paper, namely, that the social scientist can continue searching for explanations of social phenomena until he has reduced it to psychological terms. I am not, of course, denying that such things as a long-term price movement will partially determine other events, which will be partially in terms of it. I only assert that it too is, in principle, explicable, and explicable in terms of individual attitudes towards things and other people. To sum up my argument so far; An understanding of a complex social situation is always derived from a knowledge of the dispositions, beliefs, and relationships of individuals. Its overt characteristics may be established empirically, but they are only explained by being shown to be the resultants of individual activities. (Watkins, 1952a: 28f) According to Watkins, then, his individualism is a methodological principle, which may be inferred from the truistic ontological thesis that social phenomena are human creations. But is it really a methodological principle? Watkins says that the social scientist ‘can’, ‘in principle’ reduce social phenomena to psychological terms. This looks more like an epistemological thesis. A methodological principle is a rule telling us not what we could, but what we should do. This epistemological thesis is about explanation, and (with the possible exception of Menger) Watkins is first, among the methodological individualists discussed so far, to formulate it as implying a reduction to psychology. It may also be noted

Popperian methodological individualism

212

that the psychological factors Watkins invokes in order to explain social phenomena are ‘dispositions’ in the sense of Gilbert Ryle (Watkins, 1952a: 35–40). It may be recalled that Gilbert Ryle introduced his notion of ‘disposition’ as a way of avoiding mentalistic language and as part of a behaviourist analysis of ‘mental’ phenomena (Ryle [1949] 1963: 301–11). Presumably, Watkins’s use of the term ‘disposition’ – and despite his frequent use of the term ‘attitude’ – is motivated by a similar wish to break with the subjectivism of Austrian methodological individualism. Watkin’s first statement of the principle of methodological individualism gave rise to questions concerning its exact status. He replies that he had first thought that it was analytic, and for three reasons: (1) because it is entailed by the truism that ‘social things’ are created by ‘personal attitudes’, (2) because the social scientist and the historian have ‘direct access’ only to concrete individuals and (3) because it appeared ‘invulnerable’. Watkins now gives up his belief in the analyticity of the principle of methodological individualism and changes its status ‘from a rule to an aspiration’ (Watkins, 1952b: 186). In a revised and expanded version of his ‘Ideal Types and Historical Explanation’ (1953), can be found a restatement of methodological individualism, together with a statement of its opposite; methodological holism. This principle [methodological individualism] states that social processes and events should be explained by being deduced from (a) principles governing the behaviour of participating individuals and (b) descriptions of their situations. The contrary principle of methodological holism states that the behaviour of individuals should be explained by being deduced from (a) macroscopic laws which are sui generis and which apply to the social system as a whole, and (b) descriptions of the positions (or functions) of the individuals within the whole. (Watkins, 1953: 729) Watkins has now settled for a strictly methodological version of methodological individualism. The epistemological thesis that social phenomena can, in principle, be explained in terms of individuals, is replaced by the methodological principle that they ‘should’ be thus explained. This means that Watkins has also reverted to his original belief concerning its status: Methodological individualism is a rule, not just an aspiration. Watkins gives two reasons for accepting methodological individualism and rejecting methodological holism. 1

Whereas physical things can exist unperceived, social ‘things’ like laws, prices, prime ministers and ration-books, are created by personal attitudes. (Remove the attitudes of food-officials, shop-keepers, housewives, etc., towards ration-books and they shrivel into bits of cardboard.) But

Popperian methodological individualism

213

if social objects are formed by individual attitudes, an explanation of their formation must be an individualistic explanation. 2

The social scientist and the historian have no ‘direct access’ to the overall structure and behaviour of a system of interacting individuals (in the sense that a chemist does have ‘direct access’ to such overall properties of a gas as its volume and pressure and temperature, which he can measure and relate without any knowledge of gas-molecules). But the social scientist and the historian can often arrive at fairly reliable opinions about the dispositions and situations of individuals. These two facts suggest that a theoretical understanding of an abstract social structure should be derived from more empirical beliefs about concrete individuals. (Watkins, 1953: 729)

Methodological individualism is no longer entailed by any self-evident truth about society and the invisibility of social structures, but is supported by an ontological (1) and an epistemological (2) thesis, respectively, and it is no longer analytical. ‘The principle whose status I have been trying to elucidate is a methodological rule which presupposes the factual assertion that human social systems are not organisms’. And, while there is no counter-evidence to this assertion, ‘one cannot assert a priori that it is true’ (1953: 730f). Methodological individualism, then, has an ontological basis, and this basis, according to Watkins, is ‘the assumption that society is not some kind of organism, but really consists only of people who behave fairly intelligibly and who influence each other, directly or mediately, in fairly comprehensible ways’ (p. 732). The epistemological argument used to support methodological individualism is of unmistakable empiricist origin. Watkins’s talk about ‘direct access’ very much resembles Bertrand Russell’s notion of ‘knowledge by acquaintance’, and he quotes, with approval, A.J. Ayer’s statement that ‘the English state … is a logical construction out of individual people’ (p. 730). In response to some critical observations by May Brodbeck (1954), Watkins sets out to clarify his ideas on the principle of methodological individualism, but, unfortunately, achieves the contrary; increasing confusion. His first attempt at clarification is intended to defuse any criticism to the effect that social events are the result, not only of individual activity, but of the physical environment as well. I will begin by reformulating the principle. It is based on the metaphysical commonplace that social events are brought about by people. Speaking loosely, one can say that climate, famine, the location of minerals and other physical factors help to determine history, just as one can say that alcohol causes road accidents. But speaking strictly, one should say that alcohol induces changes in people who drink it, and that it is the behaviour of some of these affected people, rather than alcohol itself, which results in road accidents … Thus the fact that physical causes operate in society does not

214

Popperian methodological individualism invalidate the assumption on which the principle of methodological individualism rests. For they operate either by altering (and sometimes destroying) people, or through people’s ideas about them. In either case it is people who determine history, however people themselves are determined. Now if social events like inflation, political revolution, ‘the disappearance of the middle classes,’ etc., are brought about by people, then they must be explained in terms of people; in terms of the situations people confront and the ambitions, fears and ideas which activate them. In short, large-scale social phenomena must be accounted for by the situations, dispositions and beliefs of individuals. This I call methodological individualism. (Watkins, 1955a: 58)

So far, Watkins has only achieved a restatement of his earlier version of methodological individualism, but with an ambiguous relation to its ontological basis. The ambiguity consists in the fact that he, on the one hand, argues that it is ‘speaking loosely’ to say that physical factors help to determine history, and, on the other hand, says that the situation helps to explain social phenomena. Unless, of course, Watkins intends by the ‘situation’ only other individuals. But even so, he runs into trouble, since also other individuals exert only an indirect influence upon the actions of a particular individual. So, it would seem, Watkins will either have to admit ‘loose speaking’ in the explanation of social phenomena, or else, omit any mention of the situation in his statement of methodological individualism. Watkins also breeds confusion by seemingly changing methodological individualism from a principle concerning the explanation of social phenomena into a thesis about the meaning of concepts. When, in his polemic with Brodbeck, he goes on to discuss the relation of concepts such as ‘group climate’ and ‘cohesiveness’ to the principle of methodological individualism, it turns into a thesis about the meaning of holistic concepts. I do not see how such concepts can be meaningful and yet involve no reference to individuals. If ‘The Jewish race is cohesive’ does not mean that, for instance, Jews usually marry Jews, live in close communities, share religious rituals, etc., if it does not refer to Jewish people (whose behaviour can be observed), then I do not see how it can be tested or have any empirical content. (Watkins, 1955a: 61) Concern with concepts seems to be a temporary aberration, however. Watkins’s final word on this matter is decidedly against a preoccupation with the meaning of concepts. I should have realized, when I insisted that all large-scale happenings are, in principle, individualistically explainable, that there are many social methodologists who concern themselves with the uninteresting question of

Popperian methodological individualism

215

analysing sociological concepts rather than with the interesting question of ways of explaining what those concepts describe, and that these methodologists would naturally tend to mis-read me as insisting that all sociological concepts are individualistically analysable. (Watkins, 1959b: 243) As we saw in the previous quotation, this is exactly what Watkins insisted in his reply to May Brodbeck. The statement in the last quotation is more typical of Watkins, however, and more in keeping with the ‘spirit’ of Popperian philosophy, which certainly does not recommend any preoccupation with the meaning of concepts. Another thing to notice about this quotation, is that Watkins has returned to his initial formulation of methodological individualism as an epistemological thesis: social phenomena are said to be individualistically explainable, in principle. Watkins’s last extensive treatment of methodological individualism is in ‘Historical Explanation in the Social Sciences’ (1957b), where it undergoes still another change. Methodological individualism now becomes an ontological, or metaphysical, thesis about the ultimate constituents of the social world. According to this principle [methodological individualism], the ultimate constituents of the social world are individual people who act more or less appropriately in the light of their dispositions and understanding of the situation. Every complex social situation, institution, or event is the result of a particular configuration of individuals, their dispositions, situations, beliefs and physical resources and environment. (Watkins, 1957b: 105f) The reason why Watkins changes his formulation of methodological individualism from a strictly methodological rule to an ontological thesis may be that he has come to feel that it is too strong a demand to put upon explanations in social science and history, that they must all be in terms of individuals. This guess derives some support from Watkins’s recognition of so-called ‘half-way’ explanations. There may be unfinished or half-way explanations of large-scale social phenomena (say inflation) in terms of other large-scale phenomena (say, full employment); but we shall not have arrived at rock-bottom explanations of such large-scale phenomena until we have deduced an account of them from statements about the dispositions, beliefs, resources and inter-relations of individuals. (Watkins, 1957b: 106) The difference may seem unimportant, but there is undoubtedly a weaker claim involved after the substitution of ‘rock-bottom explanations’ for merely ‘explanations’. The reason is that this allows for the use of so-called ‘half-way

216

Popperian methodological individualism

explanations’ in social science and history; if only in the interim, while awaiting the ‘rock-bottom explanation’ of large-scale social phenomenon in terms of individuals, their dispositions, beliefs and interrelations. The recognition of half-way explanations illustrates the difference between epistemological and methodological individualism. The epistemological fact that social phenomena are explainable and/or definable in terms of individuals, does not imply the methodological rule that they should be explained in this way. In this article, Watkins introduces a still weaker version of methodological individualism and contrasts it with sociological holism. If methodological individualism means that human beings are supposed to be the only moving agents in history, and if sociological holism means that some superhuman agents or factors are supposed to be at work in history, then these two alternatives are exhaustive. (Watkins, 1957b: 106) This version is weaker than his earlier versions, because it is possible to agree with Watkins that human beings are the only moving agents in history, and yet to deny that human beings are the only constituents of social reality, or the only causes of social events. Watkins’s weakening of methodological individualism is the result of his encounter with the anthropologist Leon Goldstein, who accused him of breeding confusion by using two different principles of methodological individualism; one truly methodological and one ontological (Goldstein, 1958). Watkins answers that he has distinguished these two principles from the very beginning, and so, denies being guilty of confusion. What he does not mention, however, is that he originally reserved the name ‘methodological individualism’ for the strictly methodological principle, while later using this name also for the ontological thesis. This is unimportant. More important is the fact that Watkins now makes a synthesis of the two, so that methodological individualism comes to comprise both versions: ‘(1) Human beings (together with their material resources and environment) are the only causal factors in history. (2) Explain all social events in terms of human factors’ (Watkins, 1959a: 320). Watkins did return to methodological individualism in an article on Hobbes from 1976, where he restates and rejects his position in the 1950s. This retrospective statement is perhaps the most clearly worded formulation there is of the original, strong version of methodological individualism. In order not to miss, or misinterpret, anything in this careful and authoritative statement of methodological individualism, I quote it in full: Let S be any (human) society, institution, or social process, and let an Ipredicate be a one-term predicate that is predicable of individual people; that is to say, it always makes sense, though it may be false, to predicate any I-predicate of any individual. I-predicates can designate physical, psychological, and psycho-physical properties of individuals. Thus ‘tall’, ‘ambitious’

Popperian methodological individualism

217

and ‘weary’ are all I-predicates. Let an R-predicate be a relational predicate which designates a relation either between individuals (‘a is a cousin of b’) or between an individual and a thing (‘a owns this house’) or between individuals and things. There is no restriction on the type of relation that an R-predicate can designate – it may be spatial, physical, biological or social – provided that it is a relation into which individual people can enter. Then my old position can be restated thus: 1

An adequate description of S will essentially involve predicates – say Spredicates – that are neither I- or R-predicates.

2

However, the explanans of an adequate explanation of the formation of S, or of the subsequent functioning of S or of changes in S, will essentially involve only I- and R-predicates. If S-predicates still figure in our explanans we have an ‘unfinished’ or ‘half-way’ explanation: we could proceed to a deeper explanans containing no S-predicates.

3

Moreover, explanations of the formation of properties designated by the I-predicates in our explanans for S will in turn essentially involve Ipredicates but not S-predicates. (Watkins, 1976a: 710)

Despite the apparent clarity of this statement of methodological individualism, it involves one important ambiguity. The notion of an ‘R-predicate’ begs a fundamental question in the metaphysical issue of individualism versus holism: What is the nature of social relations? Are they external, or are they internal. Only if they are best conceived of as external relations is it possible to accept Watkins’ statement as an adequate explication of methodological individualism. I will return to the matter of internal versus external relations in a sequel to this work on social holism. For the time being I merely notice that Watkins no longer (or at least in 1976), subscribes to this version of methodological individualism. He still believes, though, ‘that the right way to explain social phenomena is to exhibit them as the (largely unintended) resultants of the activities of interacting individuals’ (p. 712). I suggested in the introduction to this section that Watkins tried to clarify the principle of methodological individualism in reply to its critics. I do not think he was altogether successful in this endeavour. There were too many shifts in his position. Paradoxically, however, Watkins has done us a service, by failing to state methodological individualism unambiguously as one single principle. By failing to do so, he has called our attention to the fact that what people have called ‘methodological individualism’ is really a number of distinct, but interrelated, theses and principles. Strictly speaking, methodological individualism is a rule telling us to explain social phenomena in terms of individuals, etc. This rule is supported by the epistemological thesis that such explanations are possible in principle and the

218

Popperian methodological individualism

ontological thesis that social phenomena are caused by individuals and nothing else. Since Watkins is an adherent of the covering-law model of scientific explanation, methodological individualism can also be stated as a principle about laws. Social phenomena can, and should, be explained by being deduced from individualist laws and initial conditions. There are no irreducible social laws governing the behaviour of collectives. Methodological individualism has, finally, been stated as a principle concerning the meaning of concepts, but Watkins finds this version less interesting. Watkins is a bit uncertain about the status of methodological individualism. He first believed that it is an analytical principle, valid a priori, then changed its status from a rule to an aspiration and back again to a rule, justified mainly by philosophical (epistemological and ontological) arguments. As distinguished from Popper’s categorical version of methodological individualism, which admits of no exception, Watkins’s version allows for half-way explanations in terms of macro phenomena.

Institutional individualism Methodological individualism has also been defended by some other Popperians and, especially, by Joseph Agassi and Ian C. Jarvie. They have both done a great deal to clarify and develop certain ideas in Popper’s philosophy of the social sciences. They have made explicit what was only implicit and they have developed what was embryonic. Above all, they have tried to bring together Popper’s methodological individualism with his institutionalism. But in attempting this, Agassi and Jarvie reached for the impossible. As stated by Popper, methodological individualism and methodological institutionalism are irreconcilable doctrines. In their hands, therefore, methodological individualism eventually turned into something else, which Agassi called ‘institutionalistic individualism’. Joseph Agassi In his highly suggestive article ‘Methodological Individualism’ (1960), Joseph Agassi declares that his aim is ‘to defend institutionalistic individualism’, which he considers ‘to be Popper’s great contribution to the philosophy of the social sciences’ (p. 244). Institutionalistic individualism is a via media between psychologism and holism, which combines the reasonable elements in both doctrines, while rejecting what is untenable (p. 248). Another important part of Popper’s social science methodology is situational logic (p. 264), or, what today goes by the name of ‘rational choice’. According to Agassi, the combined use of individualism, institutionalism and situational logic is the characteristic mark of all serious work in social science and history. I agree that Popper’s institutionalism, combined with situational logic, is an important contribution to the methodology of the social sciences. I also agree that it represents a via media between psychologistic individualism and the extreme view that wholes have aims and interests of their own. I even agree that

Popperian methodological individualism

219

this methodology may be conceived of as a form of individualism. But it is not compatible with Austrian methodological individualism and it is not compatible with Popperian methodological individualism, as stated by Popper, himself, and by Watkins. Institutionalism and methodological individualism are traditionally opposite views,8 and, as Agassi eventually realises, they remain opposites also in the writings of Popper and Watkins. Agassi’s institutionalistic individualism, therefore, is really a new version of methodological individualism. Before realising this, however, Agassi gets entangled in the same contradictions as Popper, himself. The main thesis of Agassi’s article is that the controversy between holism and individualism has been based upon the implicit assumption that ‘if “wholes” exist, then, they have distinct aims and interests of their own’, and that Popper has developed a via media between the two traditional views, by rejecting this assumption. According to Agassi, Popper ‘asserts that “wholes” do exist (though, of course, not in the same sense in which people exist), but they have no (distinct) interests’ (1960: 247f). As we have seen, the belief that holism implies that wholes have aims and interests of their own does, indeed, loom large in the writings of methodological individualists. It is not at all that common among holists themselves and Popper’s combination of institutionalism and situational logic is not the only via media between psychologism and the view that wholes have aims and interests of their own. But it is one possible alternative to these doctrines. Thus … not the aims of institutions but rather their existence affects the individual’s behaviour; the existing institutions constitute a part of the individual’s circumstances which together with his aims determine his behaviour … While according to psychologistic individualism only material conditions may be considered as relevant circumstances, according to Popper the existence of institutions may be considered as relevant circumstances too. (Agassi, 1960: 247) This is a fair characterisation of Popper’s institutionalism, but it differs from his methodological individualism, by including institutions in the relevant circumstances. Indeed, if institutions are ‘wholes’ affecting the behaviour of individuals, the term ‘institutional individualism’ looks very much like a contradictio in adjecto. According to Agassi, then, Popper’s ‘institutional individualism’ differs from psychologist individualism, by allowing us to take institutions for granted and using them to explain the behaviour of individuals (1960: 261–3). But it differs also from Popper’s methodological individualism, and Agassi, like Popper, has great difficulty separating the two. According to Agassi, psychologistic individualism entails the view that ‘all statements about societies and social institutions … should be viewed as shorthand assertions about many individuals’ (p. 246). But this does not make psychologist individualism different from Popper’s methodological individualism. According to Popper, methodological individualism is equal to the analysis of sociological models in nominalist terms (see pp. 201f ),

220

Popperian methodological individualism

and nominalist definitions are ‘shorthand symbols … introduced to cut a long story short’ ([1945] 1966: vol. 2, 14). Agassi also says that the individualist’s acceptance of institutional analysis amounts to this: ‘He does not deny that the behaviour of an individual is constrained and influenced by social factors provided that we can explain such constraints and influence as results of choices of other individuals’ (Agassi, 1960: 245). On this view, institutionalism ‘accords with the classical individualistic idea that social phenomena are but the interactions between individuals’ (p. 267). This seems to me a fair account of methodological individualism, but closer to psychologism than to institutionalism. Instead of taking institutions for granted, the individualist is now supposed to explain them as the result of the choice of other individuals or, in other words, as the result of interaction between individuals. Institutions have disappeared from view. They have dissolved into the theory of ‘psychologistic individualism’ that ‘society is the sum-total of individuals’ interactions’ (p. 264), or in Popper’s words ‘the product of interacting minds’ ([1945] 1966: vol. 2, 90). If Agassi is able to find a difference between psychologism and methodological individualism, this is only because, at times, he conceives of psychology as individual psychology (1960: 246). Methodological individualism ‘does not accord with the classical individualistic-psychologistic idea that this interaction depends on individuals’ aims and material circumstances alone’ (p. 267). A strange view, this classical psychologist individualism. To see society as the sum-total of individuals’ interactions, and yet, to deny that individuals, when interacting with each other, affect each other’s behaviour. Agassi eventually comes to express serious doubts about the correctness of his earlier interpretation of Popper’s methodological individualism and its relation to psychologism. In reply to J.O. Wisdom’s criticism that Popper’s methodological individualism seems reductionist even in Agassi’s interpretation of it, Agassi now says that he does not know how Popperian it is. He agrees with Wisdom ‘that Watkins’s formulation of methodological individualism is reductionist, as Hayek’s and Keynes’s (I was not aware that Keynes ever formulated methodological individualism, or even accepted it). ‘Popper himself, I now tend to agree with Gellner is unclear about matters and so is free for all’. Also, ‘I do not mean to reaffirm the position I held in 1960, and I do not know whether today I will at all endorse methodological individualism’ (Agassi, 1972: 326). This last statement notwithstanding, Agassi did reaffirm his earlier position. In a new article, now with the title ‘Institutional Individualism’ (1975), Agassi repeats the views of his ‘Methodological Individualism’, but without ascribing those views to Popper and without designating them ‘methodological individualism’. Still later, Agassi (1977: 290ff) drops the notions of ‘methodological’ and ‘institutional individualism’ altogether. He now prefers to discuss the issues involved in terms of ‘psychologism’ versus ‘collectivism’ and of the reducibility of sociology to psychology. Agassi’s own position is that of anti-reductionism, a position which he ascribes to Hayek and Popper. If we are to believe Agassi, Hayek has come to realise, with Popper, that reductionism is not a viable option.

Popperian methodological individualism

221

‘And so the edge of his psychologism is gone; indeed if we follow Popper we have to admit that the edge of all reductionism is gone’ (p. 292). In a recent article, written in celebration of Popper’s Open Society, Agassi has apparently grown weary of the attention paid to the lack of clarity about institutions in Popper’s methodology, ‘let us not spend time on efforts to clarify a text beyond a reasonable limit. Investments in clarification of texts can prove them not acceptably clear; efforts to clarify them should yield some return’ (Agassi, 1997: 510). Since it is my aim, in this book to clarify the meaning of ‘methodological individualism’, I hope that I am excused, if I have tried to reach some clarity about Popper’s institutionalism, but I agree with Agassi, that it is really not possible: ‘Popper’s theory of the autonomy of sociology renders institutions real in some sense. He was unclear about this. So it is better left alone. We have thus reached a limit on reading Popper on individualism in all respects save responsibility’ (Agassi, 1997: 510). Agassi (1977: 298, note 62) refers to Ian C. Jarvie’s Concepts and Society (1972) as the clearest statement of the diverse contemporary views regarding individualism. This may be, but, in my opinion, Jarvie does not succeed in his attempt to reconcile Popper’s methodological individualism with his institutionalism and his theory of world 3, without removing the inconsistencies. Ian C. Jarvie Ian Charles Jarvie entered the intellectual scene as an astute defender of Popper’s methodological individualism, guaranteeing that all statements about social classes could be ‘reduced to individualist terms’. This guarantee is based upon a firm belief in nominalism and, therefore, valid for all social wholes or collectives. To the question: ‘Why is the soldier more ontologically “real” than the Army?’, Jarvie replies: ‘Simply because “Army” is merely a plural of soldier and all statements about the Army can be reduced to statements about the particular soldiers comprising the Army. The Army has, then, no “being”, there is no “Ghost in the machine” ’ ( Jarvie, 1959: 57).9 Jarvie’s first explicit statement of methodological individualism is a restatement of Watkins’s final version. It comprises ‘the metaphysical theory … that human individuals are the only causal factors in society’, and the consequent ‘axiomatic methodological prescription: “Explain all social events in terms of human factors”’ ( Jarvie, 1961: 12). In his first book, The Revolution in Anthropology (1964b), Jarvie changes sides from Watkins to Agassi. He now argues that institutions must be reckoned among the determinants of human behaviour and, therefore, enter explanations of social action. Popper’s great discovery is that aims and ideal types are not enough to explain action; circumstances, material and institutional, are required in the explicans. Institutions are, so to speak, a third force in the society and their

222

Popperian methodological individualism existence and importance is the reason sociology is autonomous with respect to psychology. ( Jarvie, 1964b: 113)

The immediate impression created by this statement is that Popper’s ‘great discovery’ conflicts with the premiss of methodological individualism, as stated by Jarvie above. It could be, of course, that the material and institutional circumstances are included in the ‘etc.’, but this is not likely. Institutions do not belong to the same category as human decisions aims and actions. Also, matters of some importance do not belong in the et cetera. Another conflict, in my view, is that between Jarvie’s view of institutions as a ‘third force’ in society, and his earlier view that individuals are the only causal factors in society. This conflict too, can be made to disappear; if you admit of forces that are not causes. But this is even more unlikely. Recognising institutions as social forces is tantamount to suggesting that they are causal factors in social life. Another thing to notice about Jarvie’s version of methodological individualism, is that it has turned from a principle about the explanation, or analysis, of social phenomena – which it was always before Agassi – into a principle about the explanation of human behaviour, or action. The premiss of methodological individualism now is ‘that all human behaviour must be explained in terms of human decisions, aims, actions, etc’ (p. 111). An important consequence of this change becomes apparent in Jarvie’s review of Robert Brown’s Explanation in Social Science. It is an important metaphysical issue to decide what we are prepared to explain, and in what terms we are prepared to explain it. Social events can be explained in terms of other social events, individual decisions can be explained in terms of social events, and so on. But the key metaphysical question is whether social action can be explained other-than-individualistically. ( Jarvie, 1964a: 70) Jarvie’s ‘methodological individualism’, now, is an extremely permissive one. It does not deny the existence of social wholes, nor does it prohibit explanations of social events and individual decisions in terms of social wholes. Its restrictions concern only the explanation of action, which must be in terms of the aims of individuals, since only individuals have aims. But not even social actions can be explained in terms of aims alone. Material circumstances and social institutions are part also of the explanation of social action. Compared to the claims of universal applicability, made by earlier adherents of methodological individualism, Jarvie’s statement represents a dramatic reduction of its intended scope. Jarvie’s main complaint against Brown’s book is that it does not treat the important holism–individualism issue. To make up for this deficiency, he gives his own account of this important problem in the metaphysics and methodology of the social sciences.

Popperian methodological individualism

223

Holism is that view of society which claims that there are autonomous social wholes with aims; individualism is the position that only human individuals have aims. These two positions clash in a whole series of ways. Holists tend to be interested in the broader picture, historical patterns, wars, revolutions, hydraulic civilizations, and the like. Individualists may treat of these things, but they also look at the minutiae of day-to-day social behaviour, and always their explanations are in principle reducible to those involving typical individuals acting to realise certain ends in a situation composed of other individuals and of institutions and traditions, or to macro-effects of many individuals so acting, or to unintended effects of individuals so acting. Holists tend to look for social wholes and to use them as explicans; individualists tend to put social wholes in the category of explicanda. What is explanation for one is problem for the other. ( Jarvie, 1964a: 69) The first two sentences in this quotation reproduce Agassi’s idiosyncratic rendering of metaphysical holism, as implying that wholes have aims of their own. The last two sentences state the assumed methodological corollary of this view. I believe it is an important observation that holists use social wholes as explanans and individualists put them in the explanandum (I use another, more common, terminology than Jarvie). I also believe that this observation suggests a reasonable explication of methodological individualism as the principle that the explanans (that which explains), in a social scientific explanation, must refer solely to individuals and their interaction and material circumstances, but not to social wholes. The problem with Jarvie’s account of the holism–individualism issue is that there is a gulf between the metaphysical and the methodological problems involved. It is true that holists tend to put social wholes in the explanans, but this does not, in the least, imply that wholes have aims of their own. It implies only that they exist and make a difference. If it is correct, as Jarvie suggests, that holists put social wholes in the explanans, then his own version of ‘methodological individualism’ is holistic. I have already quoted Jarvie to the effect that ‘institutions are irreducible wholes’, and that they ‘are required in the explicans’. There is a way out of this dilemma, but the costs are high: ‘To try to prevent misunderstanding I should stress that individualism includes institutions as irreducible wholes. Individualism is not the view that only individuals exist; it is the view that only individual aims exist’ (1964a: 70, note 1). To maintain that ‘individualism includes social wholes as irreducible wholes’ looks very much like a contradiction in terms. Jarvie is aware that his interpretation of methodological individualism may appear unorthodox. When he returns to this subject in Concepts and Society (1972), it is with much precaution, since ‘some ideas in this book may be thought to be incompatible with methodological individualism’ ( Jarvie, 1972: xii). One such idea, no doubt, is that ‘among the cardinal realities facing the individual … are his social surroundings, especially institutions’, and that ‘these are as concrete

224

Popperian methodological individualism

and as real as his physical surroundings’ (p. xiii). What, then, is methodological individualism? Well, it is ‘not a reductionism that would eliminate all but individuals from sociological explanation’ (p. 157). In order to clear up this ‘misunderstanding’, Jarvie invokes J.O. Wisdom, who has made another attempt to reconcile Popper’s institutionalism with his methodological individualism.10 John O. Wisdom Wisdom’s point of departure is the problem that Popper’s methodological individualism ‘looks like’ a reductionist theory and, therefore, as incompatible with his institutionalism. According to Wisdom, however, reductionist individualism and institutionalism are but two poles in Popper’s methodology and the contradiction between them is merely apparent. ‘In fact, Popper’s view allows a place to both poles, and (assuming that this is not an inconsistency, and I hold it is not) the first task is to dissect the thesis and present it free of apparent contradiction’ (Wisdom, 1970: 272). Wisdom’s solution to the problem of apparent contradiction is something called ‘situational individualism’ (p. 290). According to this position, social wholes are ‘partially’ or ‘distributively’, but not ‘globally’, or ‘collectively’, reducible to individual activities. The ‘reductionist’ programme aims at dispensing with all institutional wholes after the ‘reduction’ is carried out. Now Popper is fully aware, I think, that this is impossible, for you can dispense with one or even more institutional wholes, but only in an institutional setting … [Popper’s] view involves a partial reduction, in which any one institutional whole is ‘reducible’ though not all such wholes at once. That is to say, when any given institution is ‘reduced’ to the aims of individuals, this is effected only at the cost of introducing some other whole, which in turn can be reduced but only at a similar price … Thus, with ‘reduction’ in this form, whatever whole is ‘reduced’, some whole is always left over ‘unreduced’. This I take to be Popper’s position. (Wisdom, 1970: 274) If this is, indeed, Popper’s position, he certainly does not say so in his own writings about methodological individualism. The position Wisdom ascribes to Popper is more of a reconstruction than of an interpretation. As such, it may have some merits of its own, but it is uncertain if it qualifies as a version of Popperian methodological individualism. The problem with Wisdom’s reconstruction is that like Buridan’s ass, it cannot decide which alternative to choose. The result is that it is incompatible both with Popper’s methodological individualism and with his institutionalism. Wisdom’s analysis hinges, in part, on a faulty interpretation of Popper’s use of the notion of ‘unintended consequences’. He suggests that, according to Popper, both actions and institutions have unintended consequences (p. 275).11 This is most probably wrong. According to Popper, only the actions of individuals can

Popperian methodological individualism

225

have unintended consequences. This becomes clear when Popper contrasts his own analysis of unintended consequences to that of Marx. For Marx is a methodological collectivist. He believes that it is the ‘system of economic relations’ as such which gives rise to the unwanted consequences – a system of institutions which, in turn, may be explicable in terms of ‘means of production’, but which is not analysable in terms of individuals, their relations, and their actions. As opposed to this, I hold that institutions (and traditions) must be analysed in individualistic terms – that is to say, in terms of the relations of individuals acting in certain situations, and of the unintended consequences of their actions. (Popper [1945] 1966: vol. 2, 323f, note 11) I do not believe this is a correct interpretation of Marx’s view, but the important point, for my present purposes, is that Popper denies that institutions, as such, have unintended consequences. Popper admits that institutions may have unintended consequences. But not in addition to the unintended consequences of the actions of individuals. According to Popper’s methodological individualism, institutions are the actions of individuals. Even the unintended consequences of the actions of individuals are actions of individuals. They are actions of other individuals (or some natural event). Popper, then, does not hold that both actions and institutions have unintended consequences. But neither does Wisdom, it would seem: Thus the independent power of every institution lies in the capacity to produce unforeseen unintended consequences; but these are the results only of individual intentions, so that nothing over and above the individual intentions and their consequences is needed for building up the content of institutions. Thus Popper can maintain a position with two poles, which are apparently incompatible, namely individualism and institutionalism. (Wisdom, 1970: 276) I am unable to see that Wisdom has succeeded in removing the apparent incompatibility. How, if the unforeseen unintended consequences are the results only of individual intentions, can it be an independent power of institutions to produce them? Wisdom is correct to ascribe the following thesis to Popper: (1) institutions cannot be reduced to the aims or purposes of individuals. Wisdom’s mistake is to jump from this thesis to the conclusion that Popper adheres also to (2) ‘institutions can never be expressed wholly in terms of individuals’, and also to (3) ‘the idea of an institution or of society as an independent source of power’. In the early writings referred to by Wisdom, Popper, far from holding (2), repeatedly insists that institutions must be reduced to individuals (see pp. 201, 207f). As to (3), it is not only absent from Popper’s early writings, but it is hard to see that it follows even from Wisdom’s ‘situational individualism’. If, as it says, any one, that

226

Popperian methodological individualism

is every, social whole, though not all at once, can be reduced to the aims of individuals, how can they have an independent power of their own? It is equally difficult to accept Wisdom’s argument that a collective, but not a distributive reduction, ‘would render social wholes mere epiphenomena of individual activities’ (p. 290). Wisdom’s situational individualism seems to be an epistemological thesis and, as such, ontologically neutral. The apparent ontological implication of situational individualism, moreover, seems absurd. According to situational individualism, reduction is a relative matter. Every social whole can be reduced, but only at the cost of leaving some other social whole unreduced. If this thesis has any implication for the ontological status of social wholes at all, it seems to be this: social wholes are sometimes epiphenomena and sometimes not, depending upon what we choose to reduce and what to leave unreduced in each particular distributive reduction. By suggesting that social institutions are partially, or distributively, reducible to individuals, Wisdom’s situational individualism is incompatible also with Popper’s institutionalism, at least as part of his theory of world 3. There is no doubt, whatsoever, that social institutions, according to this theory, are altogether irreducible to the thoughts and actions of individual human beings.12 I find it hard to make sense of Wisdom’s situational individualism. It is not clear to me if he is an institutional individualist, like Agassi and Jarvie, or an original methodological individualist, like Watkins, admitting of half-way explanations. His argument that all institutions are reducible, just not all at once, may be interpreted as a claim about the merely practical impossibility of complete reduction.

Conclusion Popper did not, himself, make any radical break in his statement of methodological individualism. But this is not to say that he was a mere epigone of his predecessors. Far from it. Popper did introduce some new elements in his version of methodological individualism. In particular, he broke with the subjectivism of the Austrians. Most important, however, Popper was a methodological institutionalist, in addition to being a methodological individualist, and this turned out to be of considerable importance for the further development of methodological individualism. The simultaneous adoption of two traditional opposites, created a tension in his social science methodology, which he never solved, himself. It was eventually solved by his disciple Joseph Agassi, who created a new version of methodological individualism out of two originally distinct elements in Popper’s methodology: methodological individualism and institutionalism. He called it ‘institutional individualism’ and it differs from the original Austrian version of methodological individualism, by assigning an important explanatory role to objectively existing social institutions in social scientific explanations. Institutional individualism is, I believe, incompatible with methodological individualism, as stated by Popper himself, but it is, I also believe, true to the spirit of his methodology of the social sciences, including his institutionalism, his situa-

Popperian methodological individualism

227

tional logic and his theory of World 3. For this reason, and also because, it was defended by most of his followers, I conceive of institutional individualism as ‘Popperian institutional individualism’.

Figure 7.1 Popperian institutional individualism

As I have already suggested in the previous chapter, we may call the original version of methodological individualism, the strong version and Popperian institutional individualism a weak version. The main difference between them is that the latter, but not the former, admits of social institutions in the explanans, or antecedent, of social scientific explanations (arrows from S to I in Figure 7.1). It should be added, that arrows turned downwards represent, not only a transition from macro to micro, but an explanation of the actions of individuals in terms of real social institutions. There is, therefore nothing half-way about such explanations. They are as rock-bottom as those in terms of individuals.13 In my opinion, Popper’s main contribution to social science methodology was his institutionalism and his situational logic, which may be seen as an early attempt to launch rational choice as a general approach in the social sciences. The suggested combination of institutionalism and rational choice, has, indeed, developed into one of the most vigorous research programmes in contemporary social science (see chapters 9 and 10).

8

Economics: the individualist science

The ever-present intellectual puzzle that confronts economic study is how to explain the social result in terms of individual actions. (Kuznets, 1963: 52) It is usually thought that mainstream economics is the purest exemplar of methodological individualism. (Arrow, 1994: 2)

Economics is, and always has been, considered the most individualistic of the social sciences (Hausman, 1992: 97f; Bicchieri, 1993: 9).1 It would not be correct, however, to maintain that all economics is individualistic. More precisely, the claim should be that orthodox, or mainstream, economics is individualistic (Himmelweit, 1977: 22ff). In addition, there are the remnants of some heterodox research programmes, such as Marxism and institutionalist economics, which are clearly and explicitly holistic – except for the recently emerging ‘analytical Marxism’, which is a rational choice theory based on methodological individualism (see pp. 309–18). There is also a waning ‘neo-Ricardian school of economics’, which is presumably not individualistic.2 Finally, there is macroeconomics, which is hard to classify along the individualist-holist axis. The prevailing opinion, however, is that macroeconomics must be provided with solid microfoundations in order to qualify as a strictly individualist theory (Janssen, 1993). More exactly, then, the claim should be that mainstream microeconomics is individualistic, or believed to be so (Nelson, 1986; 1989). According to Lawrence A. Boland (1982: 13ff), individualism is one of two related, but autonomous, methodological rules on the hidden agenda of neoclassical economics – the other is inductivism. But neoclassical economics is not just individualistic, it is guided by the rule of psychologistic individualism. This rule says that an explanation is not to be considered successful until all exogenous variables of a comparative statics model have been reduced to psychological states and natural constraints. Non-individualist factors, e.g., institutions, are only allowed among the endogenous, i.e., explained, variables in the model. Institutional constraints may be considered temporarily fixed, but not exogenous (see also Boland, 1986: 9–11).

Economics: the individualist science

229

By saying that neoclassical economics is based on psychologistic individualism, we are saying specifically that neoclassical theories or analyses must permit only two types of exogenous variables: natural constraints and psychological states. Of particular concern is the psychologistic individualist requirement that no social institution that appears in our explanations must be allowed to play the role of an exogenous given. (Boland, 1982: 49) In a later work, Boland (1992: 24f) makes the further distinction between those exogenous variables, which are included in the model and those exogenously given conditions which do, or may, influence the endogenous variables, but which are treated as fixed and included in the ceteris paribus. The difference between exogenous variables and exogenous conditions is of course relative to the model used by the economist, or to the particular specification of that model. Exogenous conditions may be further divided into those, which are considered ‘exogenously fixed by a prior maximization process’, e.g., institutions, and those which are exogenously given, e.g., natural constraints. According to the pychologistic individualism of neoclassical economics, only psychic states of individuals are permitted as exogenous variables. Social institutions may appear as exogenously fixed conditions, but it is part of the neoclassical programme to turn them into endogenous variables in a more inclusive neoclassical model.3 Methodological individualism is closely associated with equilibrium analysis and is most clearly expressed in the theory of general equilibrium (see below), but Boland’s explication is in terms of the comparative static methodology of Marshall, where the distinction between endogenous and exogenous variables is most clearly visible. What is static, and treated as exogenously fixed, in the short run is variable in the long run. If, for instance, social institutions have to be treated as exogenously fixed in the short run, they may, nevertheless, be seen as endogenous in a long-run general equilibrium. Methodological individualism is saved (Boland, 1986: 43ff). I believe that Boland’s psychologistic individualism provides a good explication of the individualist aspirations, if not always of the practice, of neoclassical economists.4 As he suggests, himself: ‘While almost all neoclassical theorists openly accept the requirements of methodological individualism, few seem fully aware of the complexity of the requirement. Moreover, they are unaware of the conflicts between their tools of analysis and their commitment to methodological individualism’ (Boland, 1986: 10). As we shall see, this quote from Boland is a fair statement about economists. The recent development of economic theory gives us reason to believe that Boland is correct also to maintain that this version of methodological individualism is too strong. But, according to Boland, there is another, weak version of methodological individualism, called ‘institutional individualism’ (Boland, 1982: 32–7). As we have seen in chapter 7, the roots of this version are in the methodology of Karl Popper, but it was his pupil Joseph Agassi, who stated it most clearly. Lawrence Boland, who was once a student of Joseph Agassi, picked it up and brought it to

230

Economics: the individualist science

bear on economics. The simple idea of institutional individualism is to permit social institutions among the exogenous variables of economic models and to accept them as exogenous variables and conditions, without insisting upon their endogenisation in some more comprehensive model. It may be argued that this was the position really taken by Marshall, but it seems to have few adherents among contemporary economists, who tend to prefer psychologistic individualism. I have discussed economic theory until the early 1930s in earlier chapters. In this chapter, I am going to discuss modern microeconomics, which, for my purposes, is economic theory from about 1935 to the present day. But even within modern microeconomics there is a division between two approaches: (1) The neoclassical approach going back to Leon Walras and Alfred Marshall. This approach focuses on economic equilibrium and favours a mathematicalfunctional method. (2) The Austrian approach going back to Carl Menger, Eugen von Böhm-Bawerk and Friedrich von Wieser. This approach denies that the market is ever in equilibrium and emphasises instead its character of competitive process. It uses a ‘causal-genetic’ method. Of these approaches the neoclassical is by far the most influential today, but it is above all among Austrian economists that one finds the defenders of methodological individualism. Both approaches are individualistic, but the Austrian approach is generally considered ‘more’ individualistic. It always focuses on the individual decision-maker, especially the entrepreneur, in its analysis of economic life. In addition, there are some more or less distinct schools, such as the Chicago School and the Virginia School, also called Public Choice, which are both individualistic. I have already discussed Austrian Economics at considerable length in chapter 3, and I am going to discuss the Chicago School and Public Choice in the next chapter.

Macroeconomics and microfoundations In 1936 John Maynard Keynes published The General Theory of Employment, Interest and Money. The result is sometimes described as the ‘Keynesian revolution’ (Samuelson, 1946: 187; Klein, 1947). It was the beginning of macroeconomics. Keynes’s book belongs to that category of famous books, which all talk about, but few have actually read. One reason for this is, no doubt, that it is ‘an exceedingly difficult book’ (Hicks, 1937: 147).5 I do not claim to fully understand Keynes’s General Theory – if such a thing is possible – but I hope that my brief presentation is not too wide off the mark. Keynes set out to criticise what he called ‘the classical theory’, which included both classical and neoclassical economics, but especially the theory – as distinguished from the methodology – of Alfred Marshall.6 His own theory was launched as a ‘general’ theory, including the classical theory as a special case, ‘only realised when the propensity to consume and the inducement to invest stand in a particular relationship to one another’ (Keynes [1936] 1973: 28). The main point, made by Keynes against the classical theory was that it wrongly assumes that full employment is the normal state of affairs, while voluntary

Economics: the individualist science

231

unemployment is abnormal and bound to disappear in the long run. According to Keynes, an economy with substantial involuntary unemployment may very well be in a state of equilibrium and as to the long run, we are all familiar with Keynes’s most famous expression: ‘in the long run we are all dead’. This implies a denial of Say’s law, according to which supply creates its own demand. It is a common belief that Keynes’s explanation of involuntary unemployment was in terms of sticky wages (see Leijonhufvud, 1969: 14f). For psychological and institutional reasons, it is difficult to lower money wages. The (classical) way to achieve full employment, therefore, is largely blocked and the result is unemployment. This was not Keynes’s main point, however. The main difficulty with the classical view is that it does not reckon with individuals’ incentive to liquidity, which interferes with their propensity to consume (Keynes, 1937: 234f). If people prefer to save their money, instead of spending it on consumption goods, there will be a decrease in effective demand, with harmful effects on investment and, ultimately, on employment. It is not that individuals actually hoard money, but that their inclination to do so affects the rate of interest. Keynes gives several summary statements of his theory, but the most succinct can be found in his article ‘The General Theory of Employment’ (1937), which is a reply to some critics: The theory can be summed up by saying that, given the psychology of the public, the level of output and employment as a whole depends upon the amount of investment. I put it in this way, not because this is the only factor on which aggregate output depends, but because it is usual in a complex system to regard as the causa causans that factor which is most prone to sudden and wide fluctuation. More comprehensively, aggregate output depends on the propensity to hoard, on the policy of the monetary authority as it affects the quantity of money, on the state of confidence concerning the prospective yield of capital assets, on the propensity to spend and on the social factors which influence the level of the money-wage. But of these several factors it is those which determine the rate of investment which are most unreliable, since it is they which are influenced by our views of the future about which we know so little. (Keynes, 1937: 221) Two elements of his system were picked out by Keynes himself (1937: 222f) as most heterodox. (1) He was among the first to insist upon the importance of individuals’ expectations about the future for their decisions to consume, save, or invest. (2) He was also first to highlight the psychological law behind the so-called ‘multiplier’; the fact that individuals do not spend all of their income on either consumption goods, or capital goods, but may have a preference for liquidity. The multiplier is the ratio between increases in income and investment and it is important because it tells us something about the total effect on economic activity of an investment. A multiplier close to unity will make the wheels go round.

232

Economics: the individualist science

Another, more systematic, mode of summary presentation can be found in the original version of The General Theory, where Keynes divides the elements of the economic system in those ‘we usually take as given’, those ‘which are the independent variables’ and those ‘which are the dependent variables’ (Keynes [1936] 1973: 245). This Marshallian way of presenting his theory suits my purposes well, since it casts some light upon the issue of methodological individualism.

Figure 8.1 The elements of the economic system according to Keynes Source: Keynes ([1936] 1973: 245)

In Figure 8.1, it appears that Keynes was not committed to methodological individualism. The given elements of the economic system include many institutional and social structural elements and Keynes makes it perfectly clear that they do influence the independent variables, even though relegated to the ceteris paribus. Of the independent variables, the first is psychological, the second technical and the third institutional. It might be added that the institution of money, while not mentioned explicitly by Keynes, plays an important role in his argument. We may agree with Klein (1947: 103) that, on the view of Keynes, ‘the causal forces are found outside the price system in the psychology, expectations,

Economics: the individualist science

233

habits and institutions of the population’. It would seem, therefore, that Keynes’s theory fails to qualify as an exemplar of strict methodological individualism. It is still possible that it passes as an example of institutional individualism. There is some evidence, however, to suggest that Keynes, himself, saw his own theory as even more holistic. In the preface to the French edition (1939) of The General Theory of Employment, Interest and Money, Keynes explains why he calls it a ‘general’ theory. I mean by this that I am chiefly concerned with the behavior of the economic system as a whole – with aggregate incomes, aggregate profits, aggregate output, aggregate employment, aggregate investment, aggregate saving rather than with the incomes, profits, output, employment, investment and saving of particular industries, firms or individuals. And I argue that important mistakes have been made through extending to the system as a whole conclusions which have been correctly arrived at in respect of a part of it taken in isolation. (Keynes [1936] 1973: xxxii) This is a somewhat idiosyncratic use of the term ‘general’, with respect to scientific theories. On the other hand, it is a perfectly adequate characterisation of a ‘macrotheory’, in the most usual sense of that term. But Keynes seems to go one step further and suggest that his macrotheory is also a holistic theory, or a theory about the system as a whole. This interpretation is supported by his critique of theories that draw conclusions about the system as a whole from knowledge about the parts taken in isolation.7 Keynes’s holism is not absolute, however, and did not prevent him from basing some of his arguments about the behaviour of the economy as a whole, upon assumptions about the psychology of individuals. It may be argued, therefore, that Keynes did provide ‘microfoundations’ for his macroeconomics. Two things should be noticed about the role of these macrofoundations, however: (1) Keynes’s General Theory depends upon these psychological assumptions only partly and loosely, not wholly and precisely. There is no exact logical relation between them, such that the former is deducible from the latter. While it is possible to argue, then, that Keynes provided ‘microfoundations’, in a sense, he was far from achieving a microreduction, and even denied that it is possible to do so. This, I believe, follows logically from his holism. Thus, it is wrong to maintain, as does J.W.N. Watkins (1952a: 33–6; 1953: 734–7), that Keynes was a methodological individualist. At least he was not a methodological individualist in the strong sense suggested by Watkins, himself. (2) Keynes’s ‘microfoundations’ was not neoclassical. On the contrary, Keynes derided the neoclassical view of economic man and assumed more ‘animal spirits’ instead. Keynes’s basic psychological assumption concerns the propensity to consume, which in its turn is subject to a preference for liquidity, or a propensity to hoard (Keynes [1936] 1973: 89ff, 194ff). Keynes was probably more interested in practical than theoretical matters.

234

Economics: the individualist science

The main purpose of his General Theory was to find a cure for economic depressions. We do not know today exactly what Keynes, himself, suggested, and what was added by his followers, the ‘Keynesians’, but it is certain that he saw an important role for government, in stimulating consumption and investment. ‘The central controls necessary to ensure full employment will, of course, involve a large extension of the traditional functions of government’ (Keynes [1936] 1973: 379). Keynes’s theory made a revolution, but it also met with much resistance and critique. Because of the policy implications and political use of Keynes’s ideas, the critique has usually been a mixture of theoretical, methodological and political elements. It is not by accident that you find, among the most energetic critics, economists of a libertarian persuasion; members of the Austrian, Chicago and Virginia School of Economics.8 I am most interested in the methodological critique, because it is to a large extent a manifestation of methodological individualism. The main gist of this critique is that theories about aggregates – whether empirical or theoretical – are incomplete and in need of individualist microfoundations. This type of critique is older than that directed at Keynes. It goes back, at least, to Carl Menger, who criticised Gustav von Schmoller and the other members of the ‘Younger’ German Historical School, for attempting to turn their (collectivistic) historicalstatistical approach into the only method of economics, when, in fact, it is only one of several, equally legitimate, approaches (Menger [1871] 1976: 35ff; 1884; 1889). Of these, however, the individualistic theoretical approach is Menger’s preferred alternative. Menger’s view of the use of statistics was adopted and developed by Friedrich von Hayek (1931: 3ff; 1933a: ch. 1), who used it first against the theory of business cycles and later against Keynesian macroeconomics and econometrics. Hayek saw all theories of aggregates and averages as essentially incomplete and in need of individualistic underpinning. There can, for instance, be no ‘direct causal connections between the total quantity of money, the general level of all prices and, perhaps, also the total amount of production’ (Keynes [1936] 1973: 245). For none of these magnitudes as such ever exerts an influence on the decisions of individuals; yet it is on the assumption of a knowledge of the decisions of individuals that the main propositions of non-monetary economic theory are based. It is to this ‘individualistic’ method that we owe whatever understanding of economic phenomena we possess; that the modern ‘subjective’ theory has advanced beyond the classical school in its consistent use is probably its main advantage over their teaching. If, therefore, monetary theory still attempts to establish causal relations between aggregates or general averages, this means that monetary theory lags behind the development of economics in general. In fact neither aggregates nor averages do act upon one another, and it will never be possible to

Economics: the individualist science

235

establish necessary connections of cause and effect between them as we can between individual phenomena, individual prices, etc. (Hayek, 1931: 4f) This was written before the publication of The General Theory, but it hits the latter as well and Hayek repeated the argument with explicit address to Keynes. In retrospect, it seemed to Hayek that the chief significance, and fault, of The General Theory was that it contributed to the rise of macroeconomics and econometrics at the expense of microeconomics.9 A view, closely akin to that of Hayek, was expressed by Tjalling C. Koopmans in his critique of a book by two institutional economists: Arthur F. Burns and Wesley C. Mitchell. The title of the book was Measuring Business Cycles (1946) and Koopman’s main point was that it consisted of ‘Measurement without Theory’ (1947). With an analogy, much used by economists, Koopmans maintained that Burns and Mitchell represent the ‘Kepler stage’, but fail to reach the ‘Newton stage’, of economics. I do not know how well Koopmans’s arguments hit the target, but he was certainly correct to maintain theory is needed even for the choice of relevant measures. More interesting from my point of view, however, is the fact that Koopmans is certain that the needed theory must be of a certain kind. By ‘economic theory’, Koopmans means, ‘in this context the theoretical analysis of the aggregate effects of assumed patterns of economic behavior of groups and individuals’ (p. 164). It is clearly implied, by Koopmans, that the ‘Newton stage’ of economics is reached when aggregate phenomena are explained ‘with reference to the underlying economic behavior of individuals’ (p. 165). Koopmans’s article gave rise to a controversy between Rutledge Vining and himself, which moved the focus of attention from empirical research versus theory to holism versus individualism. For some social scientists, these controversies are coextensive, perhaps even identical, but for most defenders of holism in social science, including Keynes and Vining, they concern different issues. Thus, for Vining (1949a), it is not necessary that the dynamics of the economic system be explained in terms of individuals. I believe that in our discussions of trade fluctuations, national and international, we deal with the behavior of an entity that is not a simple aggregate of the economizing units of traditional theoretical economics. I think that we need not take for granted that the behavior and functioning of this entity can be exhaustively explained in terms of the motivated behavior of individuals who are particles within the whole. It is conceivable – and it would hardly be doubted in other fields of study – that the aggregate has an existence apart from its constituent particles and behavior characteristics of the particles. (Vining, 1949a: 79)

236

Economics: the individualist science I believe that much of the statistical regularities that are to be observed in population phenomena involves the behavior of social organisms that are distinctly more than simple algebraic aggregates of consciously economizing individuals. I think that in a positive sense the aggregate has an existence over and above the existence of Koopmans’s individual units and behavior characteristics that may not be deducible from the behavior of these component parts. (Vining, 1949a: 80f)

Vining expressed himself in a way open to obvious objection and Koopmans was quick to seize the opportunity of mounting a counter-attack: I cannot understand the meaning of the phrase ‘the aggregate has an existence apart from its constituent particles and behavior characteristics of its own not deducible from the behavior characteristics of the particles’. If a theory formulates precisely (although possibly in probability terms) the determination of the choices and actions of each individual in a group or population, in response to the choices and actions of other individuals or the consequences thereof (such as prices, quantities, states of expectation), then the set of these individual behavior characteristics is logically equivalent to the behavior characteristics of the group. Such a theory does not have an opening wedge for essentially new group characteristics. Any deus ex machina who should wish to influence the outcome can only do so by affecting the behavior of individuals. (Koopmans, 1949: 87) Koopmans goes on to affirm the existence of essentially social phenomena, such as fads, fashions, power struggles and price wars, but maintains ‘that such social phenomena are necessarily acted out by individuals as members of groups’ (p. 87). This argument, alone, does not establish the necessity or, even, the desirability of building a theory of group behaviour on the foundation of individual behaviour, but Koopmans (p. 87) provides three other arguments to this effect. The third argument is motivated by policy considerations and irrelevant for my purposes. Two arguments remain: (1) There is no possibility of establishing the relevant aggregate behavior separately from the behaviour of individuals. This is in distinction from physics, where Boyle’s law was established for the aggregate behaviour of molecules prior to its derivation from the kinetic theory of gases. (2) Unlike physicists, who know atoms and molecules only indirectly, economists have direct knowledge of individual human beings, themselves included. In a footnote Koopmans makes an interesting point which is typical for methodological individualists, especially the Marshallians. Institutions may be accepted as exogenously given in a particular analysis, but these institutions may, in turn, be explained in terms of rational choice.

Economics: the individualist science

237

It is true that the choices of individuals are restrained by a framework of institutional rules enforced or adhered to by the government, the banking system and other institutions. These rules … can to some extent be taken as given for the analysis of economic fluctuations. In a deeper analysis, these rules and the changes in them would need to be explained further from choices by individuals interacting, in various degrees of association with each other, through political processes. (Koopmans, 1949: 87) As we will see in the next chapter, what Koopmans refers to as a ‘deeper analysis’ is what the new institutionalism in economics, and public choice in particular, has attempted over the last fifty years. The exchange between Vining and Koopmans is revealing in several ways: first, it includes some standard formulations of holism and individualism in social science. Second, it uses some standard arguments in the defence of each respective doctrine. Third, it is typical of the debate between holists and individualists in that the protagonists tend to express themselves in certain standard idioms and then to engage in unproductive and, often, deliberate misunderstandings of each others’ views on the matter. Thus, it is standard among social holists to maintain that social wholes have an existence apart from, or over and above, individual human beings. It is no less common for individualists to deny that there is anything over and above individuals. While holists insist that there are other units of analysis than individual human beings, such families, firms and economic systems, individualists retort that our knowledge of such units can only be derived from knowledge about individuals. Comparing the above statements of Vining and Koopmans, there is little doubt that Koopmans is most in the right. Thus, Koopmans is no doubt correct to insist that group behaviour is equivalent to the behaviour of individuals in groups, but this is probably not what Vining wanted to deny. In his final rejoinder to Koopmans, Vining dismisses his first argument as being little more than a tautology.10 No issue would be involved over the triviality that in moving a house one must move the constituent bricks; but no one would contend that from the properties of individual bricks one could infer all the properties of the house being constructed. There is more to the developing house than can be learned from the bricks. Whether or not this is the case with regard to human beings and the structural and functional characteristics of evolving societal forms is not a matter of logic, but rather a matter of fact. (1949b: p. 92) The heart of the matter, I believe, is the so-called ‘aggregation problem’ (cf. Hartley, 1997: 132–46; 182ff). While Koopmans admits that ‘the mathematical derivation of aggregate equations from individual behavior equations’ is difficult

238

Economics: the individualist science

and maybe impossible with present mathematical tools, he does not seem to believe that there are any principal problems involved (Koopmans 1949: 87). Vining, on the other hand, maintains that social wholes have structural and functional properties that may make the obstacles to aggregation insurmountable or, rather, that there is more to macroanalysis than aggregation (Vining 1949a: 79ff).11 Hayek’s and Koopmans’s critique of macroeconomics and econometrics, then, concerns the so-called aggregation problem, or how to derive relations between aggregates from the (rational) behaviour of individuals or, at least, to establish some kind of logical bridge between them. This problem beset Keynesian macroeconomics from the very beginning and it is, of course, a manifestation of the individualistic quest for microfoundations (see Klein, 1946a: 93; Arrow [1951] 1968: 641f).12 The Keynesian theory has been severally attacked by some economists because it is couched in terms of aggregate concepts like total consumption, employment, income, etc. These aggregative concepts, it is argued, get away from the more fundamental economic concepts of the individual and are thus misleading. But the aggregative or macro approach is not only labeled as misleading; it is also labeled as incorrect. For example, economists ask how can there be a stable relationship between total community consumption and total community income unless the distribution of income within the community is taken into account? (Klein, 1947: 56f) For most economists, it was a matter of course that Keynes’s general theory had to be provided with neoclassical microfoundations. Indeed, ‘[t]he fact that one cannot understand macroeconomics without providing microfoundations thus seems to have become one of the unspoken assumptions held by economists’ (Hartley, 1997: 124) and in most cases the choice of foundation was Walrasian (Solow, 1989: 29). The result was a ‘neoclassical’, or ‘neo-Walrasian’ synthesis, represented by economists such as John R. Hicks, Oscar Lange, Lawrence R. Klein, Paul A. Samuelson and Don Patinkin (Weintraub, 1979: ch. 4; Feiwel, 1985: 7–16). The origin of this development was an article by Hicks, where he emphatically denied that there is a big difference between Keynes’ system and the ‘classical’ theory. According to Hicks, whatever Keynes theory is, ‘it is not the General Theory. We may call it if we like, Mr. Keynes’s special theory. The General Theory is something appreciably more orthodox’ (Hicks, 1937: 152). It was Hicks, who introduced the well-known IS-LM diagram, for purposes of comparison between ‘classical’ theory and Keynes’s theory.13 According to Hicks, Keynes’s ‘general theory’ is but a special case of a more general theory, which might be represented by two curves: IS (representing the relation between Income and interest, which must be maintained in order to make saving equal to investment) and LM (representing the relation between Income and interest corresponding to a given amount of money). The economic system is in equilib-

Economics: the individualist science

239

rium where the two curves intersect (that is, where the investment rate equals the money rate). Hicks adhered to Keynes’s view that liquidity preference is the main cause of unemployment. This view was soon to be challenged by Franco Modigliani in another famous article (Modigliani, 1944). Modigliani followed Hicks in using the IS-LM apparatus in his restatement of Keynes’s theory. He also agreed with Hicks, that Keynes’s theory is not the General Theory he claimed himself, but a special case, called by Modigliani (p. 56), the ‘Keynesian case’. When it comes to an explanation of this case, however, Modigliani takes exception to Hicks’s analysis. The main cause of underemployment equilibrium is rigid wages, not liquidity preference (pp. 65ff). The liquidity-preference theory holds only in a limiting case of the more general theory of rigid wages (p. 76). Modigliani, himself, did not ascribe this general theory to Keynes, but for some reason it has turned into a common belief that Keynes explained unemployment equilibrium in terms of rigid, or sticky, wages. By the end of the 1960s some economists began to question the mainstream synthesis of neoclassical economics and Keynes’s general theory on the ground that it was based on a misrepresentation of the latter. Robert Clower (1965) described the mainstream synthesis as ‘the Keynesian counterrevolution’ and Axel Leijonhufvud (1967; 1968) argued that it is necessary to make a distinction between ‘Keynesian economics’ and the ‘economics of Keynes’. A careful reading of Keynes, himself, made it clear to Leijonhufvud that ‘the propositions, prescriptions, and opinions frequently advanced as “Keynesian” bear little relation to Keynes’s views’ (Leijonhufvud, 1969: 9).14 An important issue was whether Keynes’s theory is a special case of neoclassical economics, as Hicks and Modigliani maintained, or if (neo)classical theory is a special case of Keynes’s general theory, as he suggested himself, and as Clower and Leijonhufvud maintained. I tend to believe that neither view is entirely correct. At least, I do not believe that either theory can be seen as a special case of the other in the same sense as Newtonian mechanics is said to be a special case of Einstein’s theory of relativity. For this to be the case, it must be possible to deduce one theory from the other, within certain boundary conditions. But the prevailing opinion, today, is that the neoclassical synthesis has failed to achieve the logical integration necessary to build Keynes’s macroeconomics on the foundation of neoclassical microeconomics.15 Despite the critique by Clower and Leijonhufvud, the neoclassical synthesis was a great scientific and political success until the 1970s, when it suddenly ceased to fit the facts and to work properly as an aid to policy. Two rivals appeared on the scene, promising to provide a remedy: the monetarist ‘CounterRevolution’ of Milton Friedman (1970a) and the new classical ‘Rational Expectations Revolution’ of Robert E. Lucas and Thomas J. Sargent (Miller, 1994).16 The main message of both revolutions was that the neoclassical synthesis is not neoclassical enough and, in fact, fails to provide adequate microfoundations. Instead of providing microfoundations for Keynesian macroeconomics, they wanted to drop Keynes altogether and build a new

240

Economics: the individualist science

macroeconomics directly on neoclassical foundations. Both monetarism and the ‘new classical economics’ are based on the neoclassical assumptions of maximising behaviour and equilibrium. The main contention of Friedman is that equilibrium will always be restored in the long run (Friedman, 1970b: 223ff).17 This is the first article of faith of Chicago economics. Lucas and Sargent agree that equilibrium is the telos of the economic system, but their main contribution was on the behavioural side, where the assumption of rational behaviour is turned into the assumption of rational expectations. In the framework, first suggested by Lucas (1972: 103), ‘all prices are market clearing, all agents behave optimally in light of their objectives and expectations, and expectations are formed optimally’ (see also Lucas, 1975: 1113). The idea of rational expectations was first introduced by John F. Muth, who maintained that the expectations of economic agents are based on the same information as those of economists and are, therefore, essentially the same as the predictions of economic theory (Muth, 1961: 316). Or, in the version of Lucas and Sargent ([1979] 1981: 307): ‘agents are assumed to make the best possible use of the limited information they have and to know the pertinent objective probability distributions’. The adoption of this assumption has important policy implications. Economic agents are supposed to take government policy into account when forming their own expectations about the future and act accordingly. Much that government decides, therefore, turns out to be futile, because undone, or counteracted, by the adaptive responses of economic agents, at least if government policy is based on Keynesian macroeconomics. But not everything! Some measures, on the part of government, are unanticipated, and these measures are the true causes of business cycles. ‘All aggregate output movements in the models studied above result from movements in a single monetary-fiscal shock to aggregate demand’ (Lucas, 1975: 1139). The most serious fault with Keynesian econometric models, according to Lucas and Sargent, is that they base predictions on the future behaviour of economic agents on their past behaviour, even when government intervention leads to a change in the rules of the game (Lucas, 1976; Sargent, 1980). The economy is treated like a hydraulic machine, which can be manipulated by government, without any strategic behaviour at all on the part of the individuals comprising the economic system. On a more principal level, then, the fault with Keynesian macroeconomics is that it lacks microfoundations, in the form of the postulate that agents act rationally in their own interest (Lucas and Sargent, 1979 [1981]: 299–302). A problem with the new classical economics is that, on closer inspection, it looks suspiciously like the worst kind of holism. It has been common in macroeconomics to make use of so-called representative agents – first introduced by Marshall – and the new classical economics is no exception. Put simply, a representative agent is a representative of the economy as a whole, or some market. The aggregate economy is treated as if it were an individual agent. Not only is this procedure, dubious in itself, it is flagrant violation of methodological individualism. And yet, it is often used as a way of providing microfoundations

Economics: the individualist science

241

for macroeconomics. As such it is, of course, pure humbug (cf, Kirman, 1992; Hartley, 1997; Kinkaid, 1997: 93f). To treat the economy as a whole, as if it were an individual is no less holistic, and no less problematic, than to invoke national interests, folk souls, collective consciousness, social needs and the like. Some twenty years after the revolution of Lucas and Sargent, new classical economics is in the same position as Keynesianism was in the 1970s. Few seem to believe in it any more. There even seems to be, at the present moment, a return to more Keynesian ideas in macroeconomics. Be that as it may, it has been suggested by leading macroeconomists that what economics needs most of all is macrofoundations for microeconomics, rather than the reverse (Solow, 1989: 32; Colander, 1993). As we shall see in the next section, Solow is not alone. A number of conclusions can be drawn from this treatment of macroeconomics: 1

2

3

Keynes’s macroeconomics does not lack microfoundations, but according to orthodox neoclassical economists, Keynes’s animal spirits are the wrong microfoundations. They appear ad hoc, incomplete, hard to formalise and, therefore, ill suited for the task of deriving macroeconomics from the microfoundation. Keynes macroeconomics does not follow deductively from his psychological assumptions. The latter only support the former to some degree. Even if Keynes’s macroeconomics has its own microfoundations, this theory is not an example of strong methodological individualism. In addition to psychological assumptions, it relies on assumptions of a more institutional, even holistic nature. It may still be the case that Keynesian macroeconomics qualifies as an example of institutional individualism. The problem of providing Keynesian macroeconomics with Walrasian or, more generally, neoclassical microfoundations has not been solved and cannot be solved, because they include incompatible theoretical elements. They only way to achieve a reconciliation would be by modifying one, or both, theories. As a matter of fact, most Keynesians did modify Keynes, so as to make it compatible with neoclassical microeconomics. Demonstrating the dependence of all macroeconomics on microeconomic principles is essential for the fulfilment of the (methodological) individualist requirements of neoclassical economics. However – and this is not widely pointed out – this ‘necessity’ presumes that microeconomic theory, in the form of general equilibrium theory, is a successful individualist programme. (Boland, 1982: 80)

General equilibrium theory The theory of general equilibrium is at the heart of theoretical economics and considered by many as its crowning achievement. The first to use the term ‘equilibrium’ in economics seems to have been the Scottish social philosopher James

242

Economics: the individualist science

Steuart in 1769, but the origin of the idea is better traced to his more wellknown fellow-countryman and contemporary Adam Smith (Arrow, 1968: 376; Milgate, 1989).18 In particular, it is the notion of a ‘natural price’ that foreshadows the modern idea of economic equilibrium. More generally, however, it is the famous invisible hand, which suggests the existence of an equilibrium in an individualistic, or free market, economy (see Arrow and Hahn, 1971: vi–vii, 1f). It was Adam Smith, who first realized the need to explain why this kind of social arrangement does not lead to chaos. Millions of greedy, self-seeking individuals, in pursuit of their own ends and mainly uncontrolled in these pursuits by the state, seem to ‘common sense’ a sure recipe for anarchy. Smith not only posed an obviously important question, but also started us off on the road to answering it. General Equilibrium Theory as classically stated by Arrow and Debreu (1954) is near the end of that road. (Hahn, 1981: 123) In the first place, then, the economic theory of general equilibrium is a theory of social order. Arrow (1968: 376) mentions two aspects of the notion of general equilibrium, as used in economics: (1) determinateness – ‘that is, the relations that describe the economic system must form a system sufficiently complete to determine the values of the variables’ – and (2) balance of forces. In the impressive history of the theory of general equilibrium, Bruno Ingrao and Giorgio Israel (1990), the authors claim (p. 3) that the ‘invariant paradigmatic nucleus’, or ‘core’ of this theory can be identified as ‘the aim to demonstrate the existence, the uniqueness, and the global stability of the equilibrium’ (see also Arrow, 1968). In the second place, Adam Smith also seemed to suggest that this order is a social optimum or, at least, highly beneficial to the members of society. This is a more controversial statement, whether attributed to Smith, or not. In the third place, the theory of general equilibrium, as first conceived by Adam Smith, is usually considered ‘individualistic’, in both a methodological and a political sense. This is also a matter of controversy. Paul Samuelson, for instance, seems to deny that Adam Smith’s invisible hand was entirely individualistic. In summary: these individualistic atoms … are not isolated from other atoms. Adam Smith, who is almost as well known for his discussion of the division of labour and the resulting efficiency purchased at the price of interdependence, was well aware of that. What he would have stressed was that the contacts between the atoms were organized by the use of markets and prices. (Samuelson, 1966: 1411) The origin of the idea of economic equilibrium, then, lies in classical economics. A more explicit version of the theory of economic equilibrium did not appear, however, until the marginalist revolution and the development of neoclassical economics. There are two forms of this theory: (1) the theory of

Economics: the individualist science

243

general equilibrium developed by Leon Walras and (2) the theory of partial equilibrium advanced by Alfred Marshall. In the former all economic agents and, therefore, all markets are in equilibrium. In the latter, equilibrium between supply and demand is limited to a particular branch, or market. There is also a difference of methodology between Walras and Marshall. The former starts from a model of the economy, made up of extremely simple elements, and goes on to construct successively more complex and realistic models of the economy. I assume that this methodology is in the Cartesian tradition, as is that of Austrian Economics. Marshall, on the other hand, took his point of departure in the real economy and, then, went on to construct models of increasing abstraction, using the famous ceteris paribus; the assumption that things, not in the model, remain constant. This leaning on empirical reality may reflect a certain influence of the German Historical School on Marshall’s methodology. In the terminology of Hayek (see p. 117), we might say that Walras’s method is ‘synthetic’, while Marshall’s method is ‘analytic’. When Joseph Schumpeter coined the term ‘methodological individualism’, and used it to designate the actual procedure of theoretical economics, he intended, first of all, the theoretical economics of Leon Walras. This may seem a bit odd, since, of the three makers of the marginalist revolution, Walras was, by far, the least interested in the human individual. If Walras’s theory is ‘individualistic’ – as it is – this is largely by implication, and it seems to have escaped his own notice. Walras’s theory of general equilibrium is presented as a huge system of mathematical equations, representing the working of a lifeless mechanism. Human beings can be fathomed as the deus ex machinae, who make the wheels turn around, but they do not enter the scene. Walras divided economics in to pure economics, which is a science, applied economics, which is an art, and social economics, which is an ethical theory (Walras [1874] 1984: 58ff). Pure economics is the theory of prices and of the allocation of scarce resources, or social wealth. Applied economics is a theory of industry and the production of wealth. Social economics, finally, is the theory of institutions and of the distribution of wealth. According to Walras, only social economics is a moral science, based on the assumption that individual human beings are persons with a free will and self-consciousness. His own theory of pure economics, however, he conceived of as a natural science of things. Since buyers on the market are price takers, ‘any value in exchange, once established, partakes of the character of a natural phenomenon, natural in its origins, natural in its manifestations and natural in essence’ (p. 69). Walras’s pure economics, then, is a theory based on an extremely thin and atomistic conception of the human individual, but this does not imply that Walras was a programmatic methodological individualist. Unlike pure economics, social economics is a theory of institutions (Walras [1874] 1984: 63) and there is nothing to indicate that Walras conceived of it as an individualistic theory. In this section my concern is with the theory of general equilibrium as developed by Walras and, more recently, by economists such as Kenneth Arrow,

244

Economics: the individualist science

Gerard Debreu, Lionel W. McKenzie and Frank H. Hahn. I hope that no serious injustice is done to economic theory, if I concentrate on the Arrow–Debreu model of general equilibrium, and if I rely on Arrow as my main guide to the subject. As suggested by John Geanakoplos (1989: 57), ‘The Arrow–Debreu model of general equilibrium is relentlessly neoclassical; in fact it has become the paradigm of the neoclassical approach’. He goes on to suggest that ‘[t]his stems in part from its individualistic hypothesis’ (p. 57). As we shall see later, the alleged individualism of general equilibrium theory is somewhat problematic. Even Kenneth Arrow, himself, has come to express doubts about the purity of its individualism. At the beginning of his career, however, he had no such doubts and suggested a general (mathematical) model for the social sciences, which he described as the ‘individualistic viewpoint’. I have suggested in chapter 2 that Adam Smith’s invisible hand of the market is one paradigm of methodological individualism. At least it was turned into one by the marginalist economists; most explicitly by Carl Menger, but implicitly also by Leon Walras. Arrow’s model for the social sciences is the clearest statement of this paradigm I have seen. Because of this, I will quote at some length: In most mathematical and, generally, in most deductive studies in the social sciences, the starting point is the behavior of the individual. Each individual is conceived of as acting in the way determined partly by his psychology and his physical surroundings and partly by the actions of others. If there are n individuals, we may denote the actions of individuals i by Ai , and the nonsocial determinants of his behavior by Pi. Then the actions of the first individual may be described by a symbolic equation, A1 = f (P1,A2,…,An). There is one such equation for each individual. Together they constitute n equations in the n variables A1,…, An. In general, these may then be solved to express the actions of all individuals in terms of the data P1,…,Pn. Therefore, given the reaction of each individuals to his total (social and other) environment, as expressed in relations of type (1), and given the nonsocial environmental factors, which we may term exogenous, we can determine the behavior of society in the sense that we can determine the behavior of any individual in society. (Arrow [1951] 1968: 640) From this individualistic viewpoint, then, the actions of each individual is seen as the result of (1) his/her psychology, (2) the physical surrounding and (3) the actions of other individuals. The behaviour of groups is explained by aggregating the behaviour of individuals. In this early paper by Arrow, there is no special reference to general equilibrium theory, but there is little doubt that Arrow has this theory in mind when explicating the individualistic viewpoint in social science. This belief is confirmed by an article written some eight years later and five years after the

Economics: the individualist science

245

famous 1954 article on the existence of equilibrium in a competitive economy. With specific reference to this theory, he writes: ‘In this individualistic framework, every relevant variable, except those classified as exogenous for the whole economic system, is the result of a decision on the part of some one individual unit of the economy’ (Arrow, 1959: 42).

Figure 8.2 The methodological individualism of general equilibrium theory

The economic general equilibrium theory is, of course, an extreme simplification. This has always been pointed out by its critics: institutionalists, Marxists, Austrians and Keynesians. But it is readily acknowledged also by its creators (see, e.g. Arrow and Hahn, 1971: vi; McKenzie, 1989: 28f). Social institutions, such as property rights and other laws, the state, the firm, the family and money, are ignored, or treated as exogenously given. But simplification is not, itself, a problem. Science proceeds by simplifying complex reality. Nevertheless, there is a growing feeling, even among economists working in this field, that general equilibrium theory is, indeed, in trouble and that part of the trouble is that it is too far removed from reality (Hahn, 1981). According to one critic, General-equilibrium analysis is still remarkably backward in examining how a system works under a given institutional organization, since it is not seriously concerned with observing, formulating and analyzing these customs and rules. The antiquated theory that prices are fixed at the point where demand and supply coincide is still being used as hitherto, or else all we have is a plethora of new models and new theories based on ideas which assume crude institutional arrangements conceived from highly superficial observations. Since this is the state of affairs even with the market, other institutions are all disregarded in the mock-up created by the generalequlibrium theorists in spite of the fact that institutions such as banks, the central bank, labour unions, the government and capitalists’ organizations play a highly significant role in the actual economy. (Morishima, 1984: 65) I am a dilettante in this field, but the main problem seems to be a failure of this theory to account satisfactorily for the three related phenomena of disequilibrium, time and uncertainty. In what follows, I am going to mention some of the limitations and problems connected with the economic theory of general equilibrium, not because of any intention, on my part, to criticise this theory – economists, themselves, do this much better – but because it casts doubts upon

246

Economics: the individualist science

the alleged individualism of economics, or, at least, upon one particular version of methodological individualism. A first crack in the wall of general equilibrium theory was detected by Arrow already in the 1959 article quoted above. In this article, it is argued that ‘there exists a logical gap in the usual formulations of the theory of the perfectly competitive economy, namely that there is no place for a rational decision with respect to prices as there is with respect to quantities’ (p. 41). The reason is that individuals are assumed to be price takers. Arrow’s first inclination, naturally, was trying to fill the gap. But thirty-five years later, the problem remains and now it is seen as a devastating blow to the prevailing assumption that standard economic analysis conforms to the strictures of methodological individualism. It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals. Our behavior in judging economic research, in peer review of papers and research, and in promotions, includes the criterion that in principle the behavior we explain and the policies we propose are explicable in terms of individuals, not of other social categories. I want to argue today that a close examination of even the most standard economic analysis shows that social categories are in fact used all the time and that they appear to be absolute necessities of the analysis. (Arrow, 1994: 1) Arrows first example of a social category in economics is the prices faced by economic agents in the theory of competitive equilibrium. ‘What individual has chosen prices?’ The answer is none. There is no explanation of the formation of prices in terms of individuals. But, according to Arrow (1994: 4): ‘They are determined on (not by) social institutions known as markets, which equate supply and demand’. Prices thus presuppose the social institution of the market. It is not clear whether Arrow conceives of prices, themselves, as making up a social institution. To do so is not unusual, however (Schumpeter, 1909: 217; cf. Boland, 1982: 50f), as evidenced by the following statement in a well-known textbook: ‘In the traditional models of microeconomics, prices in an impersonal marketplace constitute the institutional framework’ (Kreps, 1990a: 5).19 But there are other social institutions that cannot be entirely ignored in economic theory. The most obvious, perhaps, is money. In general equilibrium theory, money plays no role, but in real economies, prices are money prices, and economic theory cannot afford to neglect this simple fact, as, of course, it does not. But, then, the problem arises of how to give an individualistic explanation of the social institution of money. This problem was faced already by the first consistent methodological individualist among economists; Carl Menger, who attempted exactly this: to explain the origin of money in terms of individuals alone (see pp. 90f ). Other social institutions, hard to ignore in economics, are households and firms. Economic theory is often stated in terms of ‘individual agents’, which are mainly of two sorts: buyers and sellers (Walras [1874] 1984), or consumers and

Economics: the individualist science

247

producers (Arrow and Debreu, 1954). Behind those labels, however, you usually find the household and the firm (Arrow, 1968: 377).20 In fact, even in economics, the unit of the theory of production is not really the individual but the firm, which is an operating organization of individuals. Similarly, the unit of consumption is really the household, not the individual consumer. (Arrow [1951] 1968: 640) This simple fact is made an explicit part of the theory of general equilibrium by Arrow (1968: 382) and by Arrrow and Hahn (1971: 18): ‘Demand and supply decisions are taken by two kinds of agents: households and firms’.21 On closer scrutiny, then, the ‘individual’ agents of economic theory are really collective agents. How does this square with methodological individualism? The apparent answer would seem to be: not at all (Udehn, 1987: 185).22 There are two ways out of this dilemma for the methodological individualist. The first is to stretch the notion of an ‘individual’ so as to include households and firms (see Khalil, 1997). This way out has been suggested by Marteen C.W. Janssen. it is clear that the claim that economics is based on a form of individualism only has a chance to survive potential criticism if a broad notion of ‘individual’ is taken: as households and firms are treated as basic concepts in economics, the position that economic theory is non-individualistic would be a trivial one if the notion of ‘individual’ was taken in a more narrow sense. ( Janssen, 1993: 10) I find this solution question-begging and a bit desperate. I agree, of course, that it is possible and, even, necessary to treat collectivities as unitary actors, or ‘individuals’, for many purposes in social science, but this does not save methodological individualism (Hindess, 1984; 1986: 115–19; 1988: 44–8). Methodological individualism was always about individual human beings. The second way out is more consistent with original methodological individualism. It is to reduce all collective action to the actions of individual human beings. According to Armen A. Alchian and William R. Allen, the first postulate of economics says that ‘The Unit of Analysis Is the Individual’. This means that The actions of groups, organizations, communities, nations, and societies can best be understood by focusing attention on the incentives and actions of members. When we speak of the goals and actions of the USA, we are really referring to the goals and actions of the individuals in the USA. A business, a union, or a family may be formed to further some common interest of the constituents, but group actions are still the results of decisions of individuals. Therefore, do not ask ‘Why does the U.S. government make the decisions it does?’ or ‘Why does General Motors do this?’ or ‘Why does a union do that?’ Ask instead, ‘Why does a decision maker decide as he

248

Economics: the individualist science does?’ The principles of economics are based on postulates about responses of individuals to changes in the environment. (Alchian and Allen [1964] 1967: 14)

There is a certain ambiguity here. Should we understand the above postulate only as a reminder that collectives are made up of individuals and their actions, or as an injunction actually to carry out the reduction. I suspect that most economists are satisfied with the first, ‘ontological’ solution, but there are also attempts to explain the actions of firms and households as the outcome of the actions of individuals. It is also part of general equilibrium theory that individuals exchange with each other things called ‘commodities’ or ‘goods’. Rights of property and contract are not always mentioned, but they are implied by the various statements of this theory. Arrow and Debreu (1954: 270) write that economic agents ‘possess’, or ‘hold’, assets, or commodities. Debreu (1959: ch. 5) says explicitly that his theory of equilibrium applies to a ‘private ownership economy’. Arrow and Hahn (1971) assume that consumption ‘goods are owned by individuals and households’ and that goods of higher order are also ‘private commodities’. Certain property rights are, thus, assumed by the theory of general equilibrium and it might be argued that also the state is assumed, since property rights are, in all market societies, instituted and defended by the state.23 So far, I have concentrated on the institutional element in the presuppositions of general equilibrium theory. (This element turns it into an example of institutional individualism). But there is also the problem that, even with the aid of this institutional framework, general equilibrium theory really fails to provide an individualistic explanation of prices and the allocation of resources (Janssen, 1993: ch. 7). Arrow and Debreu proved the possible existence of an equilibrium, but the aim of general equilibrium theory is also to demonstrate uniqueness and stability. To achieve these aims has proven much more of a problem (Kirman, 1989: 127; Ingrao and Israel, 1990: 360f).24 Starting with the latter, it is safe to say that no real economy is ever exactly in a state of equilibrium and there is little reason to assume that it is necessarily stable, in the sense that it always converges to some equilibrium. An obvious question, then, is how the economy gets from disequlibrium to equilibrium. ‘The attainment of equilibrium requires a disequilibrium process’ (Arrow [1987a] 1990: 27). It can be argued, therefore, that the theory of general equilibrium is in need of disequilibrium foundations (Fisher, 1983: ch. 1). Leon Walras tried to solve this problem by introducing an auctioneer,25 adjusting prices and quantities until the market is cleared. Walras’s auctioneer, however, is a mythical figure, solving the problem in the typical manner of a deus ex machina (Leijonhufvud, 1968: 390). If taken literally, however, an auctioneer is a social institution and, as such, a Trojan horse in any individualist theory of the economy (see Mirowski 1981: 596). There are, of course, more recent attempts to model the adjustment process, but according to Fisher (1989: 37) there is still a ‘lack of a satisfactory theory about the disequilibrium behaviour of agents’ (see also Arrow, 1987: 203).

Economics: the individualist science

249

Ingrao and Israel (1990: ch. 12), go further and argue that attempts to solve the problem of achieving global stability has come to a dead end. In this situation, ‘[t]he only way possible is a thorough re-examination of the theory’s basic hypothesis, i.e., a true paradigmatic revolution’ (p. 362). Since I am not an economist, myself, I do not know what such a revolution might involve, but according to one economist, Lawrence C. Boland, it most probably involves some institutional element incompatible with ‘psychologistic individualism’. According to the latter doctrine, only psychological states and natural constraints, but not social institutions, are permitted as exogenous variables. But disequilibrium implies that, at least, one individual is not maximising, and the explanation for this has to be some institutional constraint upon behaviour. The typical way out for neoclassical economists is to accept disequilibrium and social institutions in the short run, and/or on a local level, but to claim that equilibrium is achieved in the long run, and/or on a global level. (See Boland, 1982: ch. 3; 1986: passim.) The problem of uniqueness is no less serious. In a number of papers from the 1970s, Hugo Sonnenschein, R. Mantel and Gerard Debreu showed that in an economy where all individuals have well-behaved excess demand functions, almost anything can happen (Hartley, 1997: 190–3).26 General equilibrium, theory, therefore, is not in such a state as to be able to provide secure microfoundations for macroeconomics (Rizvi, 1994). It is probably much worse: According to, at least, one mainstream economist, Alan Kirman (1989), the theory of general equilibrium is really empty: ‘The Emperor has no Clothes’ (Kirman, 1989). As a sociologist, I am not competent to assess the validity of this judgement, but I note that Kirman blames methodological individualism, or the ‘individualistic approach’, for the alleged failure. The root of the problem is that general equilibrium theory starts from isolated individuals acting independently of one another. In order to obtain uniqueness and stability, however, we must assume that the behaviour of individuals is orderly: If we are to progress further we may well be forced to theorise in terms of groups who have collectively coherent behaviour … The idea that we should start at the level of the isolated individual is one which we may well have to abandon … It is clear that making assumptions on the distribution of agents characteristics amounts, in some sense, to making assumptions about the organization of society. (Kirman, 1989: 138) The main root of trouble is that the real economy is ‘in time’, whereas general equlibrium theory is ‘out of time’, to borrow two expressions from John Hicks ([1976] 1982). In a real economy individuals have to base their decisions upon expectations about an irremediably uncertain future. Reaching equilibrium, in this situation, is a bit like trying to hit a moving target without knowing its trajectory. Equilibrium becomes a matter of making the expectations of all individuals consistent, but this task may very well be impossible (cf. Hollis, 1987:

250

Economics: the individualist science

112). Only the future can tell. But in the meantime we have to conclude that general equilibrium theory is plagued by the problem of indeterminacy, in the form of multiple equilibria (Arrow [1987a] 1990: 33–5; 1987: 211). One way to address the problem of indeterminacy is by a theory of knowledge, or learning. If individuals behave in certain ways, this may be because they have learned to behave in these ways. This is the way forward suggested by Arrow (1989: 21f). But knowledge is predominantly social knowledge and, therefore, problematic from the individualistic point of view. As Arrow points out (1994: 7), ‘Technical and other knowledge exists in social form: books or universities’. To this extent, at least, exogenously given knowledge is incompatible with methodological individualism. Arrow refers to Lawrence A. Boland for an illuminating discussion of individualism with special regard to the implicit problem of knowledge (Arrow, 1994: 3, note 1). It may be added that Boland has also been explicit about the need to introduce a theory of knowledge, or learning, in economics (Boland, 1982: ch. 4; 1986: part III; 1992: part II). Like Arrow, he discusses technical knowledge embodied in institutions and argues, convincingly I believe, that it cannot be made compatible with the neoclassical programme of treating all social institutions as endogenous variables (Boland, 1992: ch. 8).

Game theory This individualistic viewpoint, as we may term it, is explicit in the main tradition of economic thought and is completely accepted in the von Neumann–Morgenstern game theory. (Arrow [1951] 1968: 640) It is a common opinion that game theory is a typical example of methodological individualism (Harsanyi, 1968; Elster, 1982). As we shall see below, however, there are also those who doubt that game theory is necessarily individualistic. As in the case of general equilibrium theory, this divergence of opinion can be explained as due to the existence of two versions of methodological individualism; one weak, the other strong, which is a major source of confusion. When Arrow and Debreu constructed their model of general equilibrium in 1954, they borrowed from the mathematics of game theory, as developed by von Neumann and Morgenstern ten years before (Arrow and Hahn, 1971). Even so, the impact of game theory on economics has been less and much later than the Arrow–Debreu model of general equilibrium. Actually, game theory became an important tool in political science, before it became prevalent in economics. The classic treatise on game theory, John von Neumann’s and Oscar Morgenstern’s Theory of Games and Economic Behavior (1944), was written by a mathematician and an economist, but was intended to be of use also in sociology. The economist Oscar Morgenstern was trained in the Austrian School and this is sometimes used to explain the individualistic nature of game theory

Economics: the individualist science

251

(Leonard, 1992: 55; Mirowski, 1992: 136f). The evidence for this suggestion lies mainly in the nature of game theory itself, but there is also the following statement by von Neumann and Morgenstern ([1944] 1953: 7): ‘We believe that it is necessary to know as much as possible about the behavior of the individual and about the simplest forms of exchange’. Indeed, Kenneth Arrow seems to believe that game theory is more individualistic than the economic theory of competitive equilibrium. ‘The current formulation of methodological individualism is game theory’ (Arrow, 1994: 4). The reason for this is that, in game theory, ‘prices never appear as objective phenomena; they are only subjective, that is expectations held in the agents minds’ (p. 5). This is clearly in conformity with the Austrian version of methodological individualism. In another respect, however, game theory is less individualistic than is orthodox economics. As we have seen, the point of departure of marginalist economics – Austrian Economics, in particular – was the isolated individual engaged in economising. The main problem of neoclassical theory of the market is, of course, to explain interaction, in the form of exchange, but this makes no difference for economic man. In the neoclassical theory, individuals interact only anonymously and impersonally on the market, and without considering the rational choices of other individuals. Even when acting on the market, the individual acts as an ‘isolated individual’ engaged in a ‘play against nature’. This is most clearly seen in the case of the equilibrium theory of Walras and Pareto, in which ‘participants face fixed conditions and act like a number of Robinson Crusoes – solely bent on maximizing their individual satisfactions, which under these conditions are again independent’ (von Neumann and Morgenstern [1944] 1953: 15).27 It was the main business of game theory to challenge this Robinson Crusoe model and replace it by a social exchange model. In the former, ‘Crusoe is given certain physical data (wants and commodities) and his task is to combine and apply them in such a fashion as to obtain a maximum resulting satisfaction’ (von Neumann and Morgenstern [1944] 1953: 9). In the latter, the problem is different, because the participant ‘must enter into relations of exchange with others’ (p. 10). ‘This would justify assuming rational behaviour on the part of others as well’ (p. 31). In this situation, simple utility-maximisation is not possible, because ‘all maxima are desired at once – by various participants’ (p. 11). The difference between Crusoe’s perspective and that of a participant in a social economy can also be illustrated in this way: Apart from those variables which his will controls, Crusoe is given a number of data which are ‘dead’; they are the unalterable physical background of the situation … Not a single datum with which he has to deal reflects another person’s will or intention of an economic kind – based on motives of the same nature as his own. A participant in a social exchange economy, on the other hand, faces data of this type as well: they are the product of other participants’ actions and volitions (like prices). His actions will be influenced by his expectations

252

Economics: the individualist science of these, and they in turn reflect the other participants’ expectations of his actions. (von Neumann and Morgenstern [1944] 1953: 11f)

The distinction made by von Neumann and Morgenstern, between a Robinson Crusoe model and a social exchange model, has been elaborated by later game theorists, using a different terminology. John C. Harsanyi, for instance, makes the distinction between ‘individual decision theory’ and the ‘theory of rational behaviour in a social setting’, including game theory. ‘The proposed basic difference between decision-theoretical situations and game situations lies in the fact that the latter involve mutually interdependent reciprocal expectations by the players about each other’s behavior; the former do not’ (Harsanyi, 1977: 10). In the terminology of Jon Elster, traditional economics worked with the assumption of ‘parametric rationality’, and game theory with the assumption of ‘strategic rationality’ (Elster, 1979a: 68f; 1979b: 18f, 117f). It goes without saying that rationality is more problematic in a strategic than in a parametric environment. Not surprisingly, therefore, game theory is plagued by the same difficulty as the economic theory of equilibrium: the existence of multiple equilibria (see, e.g. Kreps, 1990c: 507ff; 1990b: 95–107). The suggested solutions are also the same: determinacy is provided by invoking social institutions in the form of norms and conventions (Mirowski, 1986; Ferejohn, 1991: 298f). ‘In short, game theory offers the lesson that methodological individualism can only survive by expanding the notion of rational agency. The challenge is whether there are changes of this sort which will preserve the individualist premise’ (Hargreaves Heap and Varoufakis, 1995: 33). It is a bit surprising, therefore, that Arrow should have come to the conclusion that game theory is the current formulation of methodological individualism (see above). As Arrow notes, himself, the problem of multiple equilibria is found in game theory no less than in the theory of general equilibrium. Indeed, it is arguable that game theory is the main source of indeterminacy in contemporary microeconomics (Cowen, 1998: 137–44). There is, however, also another possible entry for social institutions in game theory: the rules of the game (cf. Janssen, 1993: 35). Game theory is a mathematical theory, and as such it has no need for social institutions. A game is defined in terms of players, pay-offs, strategies, moves and so on. But mathematics says nothing, at all, about social reality. In real life, however, most games are social situations created by institutional and structural constraints.28 Von Neumann and Morgenstern ([1944] 1953: 23–5) hint at the embeddedness of games in social organisation, but are not very explicit about it. Later game theorists are more explicit on this point, however. Harsanyi (1977: 88), for instance, maintains that social situations, analysed as game situations, include the following ‘rules of the game’: 1

The social conventions observed by the players (e.g., legal or moral rules).

Economics: the individualist science 2 3

253

The laws of nature (e.g., the physical, chemical, and biological laws governing the performance of the human body and of material equipments used). The initial distribution of resources (e.g., bodily strength, economic resources, military equipment) among the players – including the initial distribution of information, technological knowledge, and practical skill.

Martin Shubik, similarly, makes clear that my basic approach to economics is through the construction of mathematical models in which ‘the rules of the game’ derive not only from the economics and technology of the situation, but from the sociological, political, and legal structure of society as well. Private ownership of land, the rights of various public or private groups to tax, and the existence of certain financial institutions are examples of legal and social features that may require delineation in a particular model. Similarly, rigid prices, a class structure that sets money lenders and merchants apart from aristocrats, priests, and peasants, and the redistribution of economic goods by appeals to social justice or time-honored custom are non-economic factors that may be present to some degree and that should be reflected in any realistic model. (Shubik, 1982: 10) Thus, it would seem that many, or most, real game situations are constituted by social institutions. This seems to be Arrow’s conclusion too. In real-life games, ‘the rules of the game are social’. The reason is that ‘individual behavior is always mediated by social relations’ (Arrow, 1994: 5).29 Therefore, if general equilibrium theory fails to satisfy the conditions of methodological individualism, game theory does too. In a recent book on game theory by Shaun P. Hargreaves Heap and Yanis Varoufakis (1995), the issue of methodological individualism appears as problematic, but unsettled. They argue that game theory makes a clear separation between individual choice and (social) structure – something which methodological individualists like. But it is not without problems, since methodological individualists, would also like to explain social structures as the outcomes of previous choices of individuals. According to Hargreaves Heap and Varoufakis (p. 32), it is a characteristic mark of all methodological individualists that they see social structures, as ‘merely the deposits of previous interactions’ (see also Field, 1979: 55; 1984: 698ff). the individualist will want to claim that ultimately all social structures spring from interactions between some set of asocial individuals; this is why it is ‘individualist’. These claims are usually grounded in a ‘state of nature’ argument, where the point is to show how particular structures (institutional

254

Economics: the individualist science constraints on action) could have arisen from the interaction between asocial individuals. (Hargreaves Heap and Varoufakis, 1995: 32)

It is obvious that, Hargreaves Heap and Varoufakis, like Arrow, conceive of ‘methodological individualism’ in the original, strong sense of that term, prevalent in economics. In contrast to this view, Janssen (1993: 35–40) argues that game theory is the main example of methodological individualism, exactly because it explains the aggregative outcome of interacting individuals in an institutional environment. But that is, because he conceives of methodological individualism as ‘institutional individualism’, in the sense of Agassi and Boland.

Conclusion In the beginning of this chapter, I quoted Lawrence A. Boland, who suggested that neoclassical economics is guided by a methodological rule of psychologistic individualism. This means that only psychic states and natural constraints are allowed as exogenous variables. If there are any social institutions among the exogenous variables, they must be reduced to psychic states and natural constraints. We have seen that this rule does indeed govern the work of neoclassical economists, but we have also seen that it is constantly violated. Social institutions pop up everywhere, if not as explicitly stated exogenous variables, so at least as exogenously given conditions. The new institutional economics, which is the subject of the next chapter may be seen as an attempt to deal with this problem. We have also seen, however, that some eminent economists, such as Kenneth J. Arrow and Alan Kirman have begun to doubt the desirability and even the possibility of methodological individualism. Economic theory has recently been plagued by fundamental indeterminateness in the form of multiple equilibria. One way out of this impasse may be to introduce determinateness in the form of social institutions. This is the solution to ‘the problem of order’, suggested by Talcott Parsons in The Structure of Social Action ([1937] 1968: ch. 2–3).

9

The new institutional economics

In the theories of general equilibrium and of games, social institutions are treated as exogenously given and neglected. The Marshallian methodology of comparative statics, used, above all, in the analysis of partial equilibrium is a bit more complex. In comparative statics, social institutions are often treated as exogenously fixed, for the purposes of short-run analysis. But it is assumed that they are the result of an earlier process of constrained maximisation, which means that they may be turned into endogenous variables in a model of longrun equilibrium. According to Lawrence A. Boland (see pp. 228–30), this is not just an assumption, but a goal, if distant, on the ‘hidden agenda’ of neoclassical economics. The ambition of neoclassical economics is to turn all social institutions into endogenous variables, leaving only psychic states and natural givens as exogenous variables in economic analysis. This methodological individualism, I believe, is clearly manifested in some of the contributions to the new institutional economics. But Boland also recognised another, less demanding version of methodological individualism, which, following Joseph Agassi, he called ‘institutional individualism’. In this form of methodological individualism, social institutions are accepted as exogenous variables and conditions in economic models, without any requirement that they must be endogenised. As we shall see, this more moderate position is also common among representatives of the new institutional economics. According to the traditional division of labour in the social sciences, social institutions used to be the province of anthropology, political science and sociology. Today, this division of labour is no longer very clear-cut. One of the most significant developments in recent economics is the emergence of a new institutional economics.1 It is possible to see this development as a response to some of the problems and limitations of traditional microeconomics (Demsetz, 1966: 61). According to the new institutionalists, the main problem with orthodox economics is its lack of realism, and the remedy is to bring back in all the social institutions left out of analysis by the theories of general equilibrium and of games. But the new institutional economics is also an attempt to use some of the tools of the economic approach to phenomena outside the traditional scope of economics. Because of this, the new institutional economics is

256

The new institutional economics

also a manifestation of, what has been called, ‘economic imperialism’ (Tullock, 1972; Stigler, 1984; Udehn, 1992). Before turning to the new institutionalism, I will say a few words about the old institutionalism and, especially, about the differences between the new and the old institutionalism in economics. I will also say a few words about the differences between the new institutionalism in economics and the new institutionalism in sociology and political science. The old institutionalism in economics is in many ways the North American counterpart of the Historical School in Germany (Hutchison, 1984: 21f). Like the latter, it engaged in largely descriptive investigations of social institutions and their role in economic life. Its most well-known representatives include, Thorstein Veblen, John R. Commons, Wesley C. Mitchell and Clarence Ayres. The old institutionalism was most vital in the beginning of this century, but is still alive. More recent adherents are Allan G. Gruchy, Warren J. Samuels and Marc R. Tool. The new institutionalism in economics started in the 1960s – although its roots are older – and includes names like Ronald H. Coase, Armen A. Alchian, Harold Demsetz, Douglass C. North, Andrew Schotter, and Oliver E. Williamson. New institutionalists are usually dismissive of the contributions of the old institutionalists to economics, and tend to emphasise their own allegiance to the main assumptions of mainstream economics: both classical (see, e.g. Coase, 1984) and neoclassical (Eggertsson, 1990: 3–32). It may even be argued that, except in political matter, the new institutionalism is closer to Marxism than to the old institutionalism. At least they share a sense of the importance of property rights (Eggertsson, 1990: 33, note 1).2 In a comparison of the old and the new institutionalism, Malcolm Rutherford (1994) suggests that they might be distinguished in terms of the following dichotomies: ‘formalist versus anti-formalist; individualist versus holist; rational choice versus behaviourist; evolutionary or invisible-hand versus collectivist; noninterventionist versus interventionist’ (p. 5). While arguing that these differences are often exaggerated and that they are sometimes larger within than between the two traditions, Rutherford nevertheless reaches the conclusion that the old institutionalism is largely anti-formalist, holist, behaviourist, collectivist and interventionist, while the new institutionalism is formalist, individualist, rationalist, evolutionary and non-interventionist (173–6).3 For my purposes, the important points are that the old institutionalism is holistic and behaviouristic. Consequently, it is of no further interest in a book about methodological individualism. According to Rutherford, however, it is not as simple as that. Following Agassi and Boland, he makes the distinction between psychologistic and institutional individualism (1994: 36–50). With the help of this more differentiated view of the matter, it is possible to argue that the old and new versions of institutionalism meet on the common ground of institutional individualism. My interest is nevertheless limited to the new institutionalism, because it originates in an individualist tradition. I agree with Rutherford that the work of the new institu-

The new institutional economics

257

tionalists in economics belongs in both categories; institutional as well as psychologistic individualism. But while the ambition is usually to stay within the latter, strong version of methodological individualism, most of their work ends up in the former, weak version of this principle. At least, this is what I will try to show in this chapter. It is often maintained that institutionalism is the traditional approach in political science (see Udehn, 1996: 2f). The roots of this institutionalism can be traced back to Aristotle’s famous comparative analysis of constitutions in The Politics. When we turn to the new institutionalism in modern political science, however, it is important to distinguish, at least, two branches: (1) One rational choice branch, which has much in common with the new institutionalism in economics. This branch will be discussed in the next chapter. (2) Another, sociohistorical branch, has more in common with the old institutionalism in economics and political science and also with the new institutionalism in sociology. In contrast to the new institutionalism in economics, it sees institutions as irreducible and fairly stable entities, capable of moulding the behaviour of individuals (March and Olsen, 1989: 16ff). As such it is different from individualistic approaches to politics. Like political science, traditional mainstream sociology used to be institutionalistic. Emile Durkheim, for instance, suggested that ‘sociology … can be defined as the science of institutions, their genesis and functioning’ ([1895] 1982: 45) and Talcott Parsons says much the same thing in The Social System (1951: 36–51). What is usually called ‘the new institutionalism’ in sociology is, in my opinion, not as different from the old institutionalism, as some of its adherents wish to maintain (Powell and DiMaggio, 1991: 11–33). There is a certain shift of focus from structure to culture, but it is not dramatic. Closely connected to this shift is another one, from a normativist to a cognitivist conception of social institutions. A third difference is that, whereas the old institutionalism was a general approach to social phenomena, the new institutionalism is largely confined to the theory of organisations. Among the things that unite the old and new versions of institutionalism in sociology are a pronounced anti-rationalism and antiindividualism.4 For this reason, also the new institutionalism in sociology is very different from that in economics (Powell and DiMaggio, 1991: 2–11; Sjöstrand; 1993). To come back to the new institutionalism in economics. As we have already seen, it is supposed to be a formalist and individualist rational choice approach. Considering its roots in microeconomics, this is not at all surprising. It should be noted, though that the roots of the new institutionalism in economics are not to be found in the theory of general equilibrium, but in less orthodox approaches. The most orthodox and most influential source of the new institutionalism in economics is the Chicago School, which brought property rights and transaction costs into economic analysis. The Chicago School is largely Marshallian and focuses on maximising behaviour and partial, rather than general, equilibrium. But there is also the important exception of Armen Alchian, who suggested that the assumption of maximising behaviour might be replaced by that of selection.

258

The new institutional economics

Another important source is the Virginia School of Public Choice, which extended economics to political institutions and political decision-making. Its methodology is based on the three assumptions of self-interest, exchange and methodological individualism. A third source is Austrian Economics. It differs from the Chicago and Virginia Schools in several respects. Although arguably the most important source of methodological individualism and rational choice in modern social science, it has recently become less dependent on both these assumptions. At least this is the case with Friedrich von Hayek’s evolutionary theory of rule systems. Richard N. Langlois (1986a: 1) has identified four different strands in the New Institutional Economics: (1) the evolutionary theory of Nelson and Winter (2) the modern Austrian school, as influenced by F.A. Hayek, (3) the transaction-cost economics of Ronald Coase and Oliver Williamson, and (4) the property rights literature of Armen Alchian and Harold Demsetz, which is also inspired by Coase. This list is far from exhaustive, but it includes those theories which, I guess, most people would recognise as manifestations of the new institutional economics, and, among these, the third and the fourth are probably the most self-evident candidates of inclusion. Be that as it may, Langlois, himself, is most favourable to the evolutionary alternatives and, especially, to the Austrian version of evolutionary institutionalism (1986a: 4ff; 1986b: 247–53). My interest is not in the new institutionalism, per se, but in its putative individualism. From this point of view, I have found it most fruitful to concentrate on those strands of the new institutional economics, which I have not discussed before. This means that I will make only brief mention of the Austrian version of evolutionary economics at the end of this chapter. Before getting on with this task, it might be wise to say something about the concept of ‘institution’. An institution is either defined as a ‘pattern of behaviour’, or as the rule(s), or norm(s) prescribing this, or that, pattern of behaviour. My view is that neither definition is sufficient, by itself, but both are necessary and sufficient. An institution, then has two aspects: one behavioural and one normative. A rule that nobody follows is not an institution and a pattern of behaviour, without a normative element, is a bodily movement, or an individual habit, but not a social institution. The most important sources of the new institutionalism in economics are two seminal papers by the Chicago economist Ronald Coase. In ‘The Nature of the Firm’ (1937), he took issue with the fundamental assumption, underlying mainstream economics, that co-ordination of economic activities takes place only with the help of the price mechanism. If this is so, why is an organisation, such as the firm, necessary? ‘Our task is to attempt to discover why a firm emerges at all in a specialised exchange economy’ (p. 390). The answer to this question is that the price mechanism is not without costs. First, there are costs of discovering what the prices are. Second, there are ‘costs of negotiating and concluding a separate contract for each exchange transaction which takes place on a market [which] must also be taken into account’. Coase calls them ‘contract costs’ (pp. 390f). In addition, there is a fundamental uncertainty about the size of these

The new institutional economics

259

costs.5 For all these reasons, it might, for certain purposes, be better to replace the price mechanism with organisation; the vertical co-ordination, or integration, of economic activities by an entrepreneur. In ‘The Problem of Social Cost’ (1960), Coase set out to challenge the standard economic analysis of externalities, by Arthur C. Pigou. According to the latter, externalities, not included in any calculation of costs, invariably leads to social costs, which call for intervention by the state. Against this view, Coase first argues that, in the absence of any costs for market transactions, negotiations between parties would lead to the maximisation of social welfare, irrespective of the initial distribution of rights (pp. 2ff). This is the so-called ‘Coase theorem’. But, since transactions are far from being costless, the Coase theorem is not valid in a real economy. In a real economy, therefore, the nature and distribution of property rights is of fundamental importance and do affect social welfare (pp. 15ff). Nevertheless, economists are wrong to assume that it is always efficient to set a price on externalities. If, for instance, this policy leads to the closing down of businesses producing externalities, it might very well lead to an inefficient social outcome. The important point of Coase’s first article is that there are costs of transaction, the important point of his second article is that property rights matter. In both cases, the message is that economics should study real economic systems and this includes, most importantly, taking social institutions into account (Coase, 1988b: 23ff; 1992). What does this mean, in terms of methodological individualism?6 Coase does not, as far as I know, discuss methodological individualism explicitly, but my impression is that he could not be a strong methodological individualist. It is possible to interpret his theory of the firm as an example of strong methodological individualism, where social institutions (the firm) is explained in terms of the (maximising) behaviour of individuals, but it would not be his own interpretation, since transaction costs depend upon another institution: law. ‘As I came to realize when I wrote “The Problem of Social Cost,” all these interrelationships [between the costs of transacting and the costs of organizing] are affected by the state of the law, which also needs to be taken into account in the analysis’ (Coase, 1988b: 47). What Coase says about institutions, leads in the direction of institutional individualism. It is pretty obvious that Coase sees social institutions as causal factors, with a strong direct effect on economic behaviour and an indirect effect on traditional economic variables such as resource allocation and on wealth and its distribution. Integration in a firm, for instance, ‘creates a different institutional setting, and our problem is to discover what effect this has on economic behavior’ (Coase, 1988b: 31; see also Coase, 1978: 208; 1992: 718). This is institutionalism, not individualism. It should also be pointed out that Coase never made explicit use of the assumption of maximising behaviour and in his later writings explicitly denies that it is needed in economic analysis (1984: 231). The only assumption that is needed is that individuals respond to relative costs and benefits. The emergence of the firm, for instance, is not a matter of utility maximisation, but of ‘adaptation to

260

The new institutional economics

the existence of transaction costs’ (1988a: 7). Coase does not say if he conceives of adaptation as a result of rationality or selection, but both are common in the new institutionalist literature on organisation and property rights. A common consequence of rejecting the assumption of maximisation, seems to be that the analysis ends in crude functionalism (cf. Granovetter, 1985: 488f): institutions exist because they are beneficial – as if a social maximiser had been part of the process and settled for the most efficient one (cf. Field, 1984: 694). One example is provided by the following statement by Coase: ‘Markets are institutions that exist to facilitate exchange, that is, they exist in order to reduce the cost of carrying out exchange transactions’ (Coase, 1988a: 7). Coase’s ideas are the sources of two important branches of the new institutional economics: the economic theory of organisation, especially the firm, and the theories of property rights and of law. Both of them are based on the idea of transaction costs. But Coase was not alone. In ‘The Nature of the Firm’ (1937: 398ff), Coase refers to Frank Knight’s discussion of uncertainty, in Risk, Uncertainty and Profit (1921), as the reason for the existence of entrepreneurs. Coase (1988b: 20) denies, however, that Knight was the source of his own ideas on the nature and emergence of the firm.7 In any case, Knight was an important figure in Chicago by the time Coase arrived there a second time in the 1950s and the similarity of their ideas may be part of the explanation why Coase was saved from oblivion. In Chicago, he found likeminded people, who were receptive to his ideas. A brief look at the social institutions treated by the new institutional economics reveals that they fall largely into two classes: social organisations and general rules of the game. I will divide my presentation of the sub-field of neoinstitutional economics according to this classification.

Social organisations The economies of modern industrialised society can more appropriately be labelled organisational economies than market economies. Thus, even market-driven capitalist economies need a theory of organisation as much as they need a theory of markets. (Simon, 1991: 42) For a long time, neoclassical economics was presented as if the actors on the market were individual human beings and economics, consequently, a theory about individuals. In actual fact, however, the market, like the rest of society, is made up of organisations, and little else (cf. Ahrne, 1990; 1994). Neoclassical economics, therefore, is really about organisations, such as the household, the firm and, less obviously, the state. As I have already suggested (p. 247), this is a flagrant violation of methodological individualism. Adherents of this principle, therefore, have tried to escape this embarrassing situation in various ways and/or tried to belittle the significance of this violation.

The new institutional economics

261

Although in modern economics, collections of individuals are sometimes treated as ‘entities’ for analytical purposes (examples of ‘the household’, ‘the firm’, and even occasionally ‘the state’ spring to mind) the ultimate unit of analysis is always the individual; more aggregative analysis must be regarded as only provisionally legitimate. In other words, the economist is always sensitive to the possibility that the holistic treatment of groups of individuals may mislead greatly, or involve overlooking dimensions of reality that are extremely important. (Brennan and Tullock, 1982: 225) As I have already shown in chapter 4, this individualist perspective has been advocated most explicitly by the Austrian School. Later on in this chapter, we will see that it is a constitutive element also of the Public Choice approach of the Virginia School. Members of the Chicago School are, perhaps, a little bit less explicit about it (see, however, Alchian and Allen [1964] 1967: 14), but, I believe, no less committed to the principle of methodological individualism. The ambition of many Chicago economists is apparently to analyse all social phenomena, as if they were markets, where individuals contract with one another in order to maximise their utility. Social organisations are typically seen as frozen, or crystallised, markets, where individuals are parties to long-term contracts. I interpret this approach to social organisations as a manifestation of methodological individualism. According to a recent book on this subject, the new institutional economics is based on three basic assumptions: methodological individualism, utilitymaximisation and individual rationality. The first is stated thus: 1 Methodological individualism: An entirely new interpretation is given to the role of individual decision makers. Methodological individualism emphasizes that people are different and have different and varied tastes, goals, purposes, and ideas. Hence, the implication is that ‘society,’ ‘the state,’ ‘the firm,’ ‘political parties,’ and so on are not to be understood as collective entities that behave as though they were individual agents. The organization or collectivity per se is no longer the main focus. Rather, it is thought that a theory of social phenomena must start with and base its explanations on the views and behaviors of the individual members whose actions give rise to the phenomena being studied. (Furubotn and Richter, 1997: 3; see also 1991: 4) In this section I am going to take a broad view of organisations, as including not only firms, but also households and states (cf. Ahrne, 1990; 1994). The household The words ‘economy’ and ‘economics’, derive from the Greek word oikos, which means household; and the first texts on economics were about this topic. I will

262

The new institutional economics

make a short digression on the Greek theory of the household, as a relief to contemporary economic theory. The first Greek work on the household is the Oeconomicus, written as a Socratic dialogue by Plato’s contemporary Xenophon (426–354 BC ). It is a treatise on the art of estate management (1979: 363), but not very interesting from a theoretical point of view. 8 A second work in this genre is the Oeconomica, attributed to Aristotle, but, according to authoritative opinion, not written by him. It is a treatise both on housecraft and statecraft, but my present interest is in the first. According to Oeconomica, the household is older than the state and consists of ‘(1) human beings, and (2) goods and cattle’ (1962: 329). The human part of the household is made up of woman, man and children, and often enough also of slaves. It is the task of women to look after the house and of men to defend it. With respect to children, ‘[it] is the mother who nurtures, and the father who educates’ (p. 333). There is no need for the author to add that it is the task of men to be the head, or master, of the household. This is self-evident and, therefore, taken for granted: ‘There are four qualities which the head of household must possess in dealing with his property’ (p. 339; my italics). The first duty of women is to obey their husbands in everything, except what happens inside the house. This is the will of the Gods (pp. 402f). The duty of men is to care for their wives, in order to secure their ‘agreement, loyalty and devotion’ (p. 411), or in other words, their submission. In this way, both husband and wife are ‘guardians of the common interest’ (p. 413). The Oeconomica ends by imprinting on us the importance of unity of mind, invoking the support of Ulysses: ‘For, says he, there is no greater blessing on earth than when husband and wife rule their home in harmony of mind and will’ (p. 417). Aristotle also wrote about economic matters and mainly about the household. Unlike the author of Oeconomica, however, Aristotle recognised two types of economic activity: household management and money-making (The Politics, 40ff), the former consisting of production of goods for use (use-value), the latter of exchange of goods in the form of trade (exchange-value). Money-making in the form of commerce and, especially, the taking of interest was deemed unnatural and morally unacceptable. This Aristotelian view on this matter was adopted by the Catholic Church and became the ruling dogma throughout the Middle Ages. In Ancient writings on household management, then, there is absolutely no doubt that the head of the house is a man.9 It is the duty of the husband to command and the duty of his wife, children and slaves to obey. ‘For the male is more fitted to rule than the female, unless conditions are quite abnormal, and the elder and fully grown more fitted than the younger and undeveloped’ (Aristotle, Politics, pp. 49f). Since it is assumed as self-evident that men are superior to women in intelligence and virtue, it is also the duty of the husband to educate both his wife and his children. ‘For the rule of free over slave, male over female, man over boy, are all natural’ (p. 52). Ancient writings on economics, then, are not just about household-management, they are also about patriarchy, and as such paradigmatic examples of ‘ideology’ in a Marxist sense.

The new institutional economics

263

The idea of economics as the science of household management survived well into the eighteenth century. It was held, for instance by Adam Smith’s teacher Francis Hutcheson (see Finley, 1973: 17ff). This is really not surprising. The household remained the most important economic organisation for thousands of years. If we are to believe Max Weber ([1922] 1978: 375–80; 1927: 115ff), it remained so until the rise of modern rational capitalism and it remained a locus of patriarchy, resting on traditional authority. By the time of Adam Smith, production had moved more and more from the household to the capitalist enterprise and economics was turned into a theory of the market. The focus of attention was still on production, however, which means that the household disappeared from economic analysis, if not from historical reality. In reality, the household had turned increasingly into a unit of consumption and it is as such that it reappears in neoclassical economics. The household is a unit of consumption, represented by a utility function. Unlike Aristotle and Weber, neoclassical economics did not at all concern itself with the internal organisation of the household. It was conceived of as a unity and with few exceptions, treated as such until Gary Becker turned the wheel around and reinstated the household as a unit of production in economic theory. One exception was Paul Samuelson (1956), who reacted to the way social indifference curves are commonly used in economic analysis. The family, for instance is not a monolith, but a group of different individuals, with different preferences (pp. 8–12). Since most ‘individual’ demand is really ‘family’ demand, the argument can be made that such family demands have been shown to have none of the nice properties of modern consumption theory. However, if within the family there can be assumed to take place an optimal reallocation of income so as to keep each member’s dollar expenditure of equal ethical worth, then there can be derived for the whole family a set of well-behaved indifference contours relating the totals of what it consumes: the family can be said to act as if it maximizes such a group preference function. (Samuelson, 1956: 21) The main attempt to open the black box of the household, has been made by Gary S. Becker, as part of his programme of ‘economic imperialism’. This programme is based on the belief that ‘the economic approach provides a valuable unified framework for understanding all human behavior’ (Becker, 1976: 14). The heart of the economic approach to human behaviour is the ‘relentless’ and ‘unflinching’ use of the ‘combined assumptions of maximizing behavior, market equilibrium and stable preferences’ (p. 5). Becker’s attempt to use the economic approach to analyse the household has led, not only to theories of marriage and of the family, but also to a new theory of consumer behaviour. A first element in this new theory is a theory of the allocation of time (Becker 1976: ch. 5). In order to consume, most people have to work and the time spent at work is inversely related to the time spent on

264

The new institutional economics

consumption. Hence, the necessity to allocate time between them. If economics is a theory of the use of scarce resources, as some maintain, time must be included. For human beings, at least, nothing is so inexorably scarce as time. Running out of money is one thing, running out of time is another, much more definite thing. A second element in Becker’s theory of consumption is altruism (Becker 1976: chs 12–13). Members of a household care for one another, which implies that their utility functions are interdependent, not separate. In particular, parents care for their children. This means that they share in their children’s joys and derive pleasure from everything that benefits them. They even derive pleasure from helping them out when they get into self-inflicted trouble, a phenomenon which follows from the ‘rotten kid’ theorem: ‘if a head [of the family] exists, other members also are motivated to maximize family income and consumption, even if their welfare depends on their own consumption alone’ (p. 270). The ‘head’ of a family is that member, man or woman, ‘who transfers general purchasing power to all other members because he [sic] cares about their welfare’ (p. 253). An advantage with this way of looking at the household is that it may be represented by one single utility-function. A third element in Becker’s theory of consumer behaviour is that he conceives of the household as a unit of production; an organisation on a par with the firm, which may be described by a production function. This does not mean, however, that the modern household is a unit of production in the same sense as the Ancient household. The modern household does not produce ordinary consumer goods, but ‘commodities’, like health, longevity, prestige, style, or distinction, sexual pleasure, etc. An important ingredient in Becker’s theory of the family is the household production function. It is assumed that households use their resources in a way that maximises this function and from this assumption a number of conclusions follow about, for instance, the division of labour and demand for children in the family. I will not go further into the many interesting and sometimes controversial results of Becker’s analysis, but point to one of its most controversial features. Even if Becker, himself, denies it ([1981] 1991: 14), his analysis is biased by the common utility-function towards consensus, whereas in real life, family life is often a hotbed of conflicts (cf. Nelson, 1996: 60ff). Opening the black box of the family does not suffice to achieve a fully individualistic analysis of it The assumption of one single utility-function for the household has been seen as a violation of methodological individualism, and, of course, it is no less problematic than the use of a social indifference curve. The typical solution to this problem is game theory, which is in this respect, at least, more individualistic. An important representative of a more individualistic approach to the household is Pierre-André Chiappori. THE USUAL APPROACH of household desicion making derives household behavior from the maximization of a unique utility function. This ‘neoclassical’ formalization, however, can be critizised on the ground that it

The new institutional economics

265

somehow contradicts the basic requirements of methodological individualism. Indeed, since the household consists of several members, its behavior should be analyzed as the result of several individually rational decisions. That is to say, each member should be characterized by his (her) own utility function; and the ‘collective’ household decisions should be analysed within a formal framework which would model the interactions between members. (Chiappori, 1988: 63) There is already a large literature around Chiappori’s individualistic model of collective labour supply in the household, but this is not my business. I notice, though, that many contributions to this literature make a point of its individualism. What I have not noticed, however, is any reference to power and patriarchy. On the contrary, Chiappori assumes, like Becker, ‘that internal decision processes are cooperative, in the sense that they systematically lead to Pareto-efficient outcomes’ (Chiappori, 1992: 438).10 The firm So too in private industries, the man in authority – bailiff or manager – who can make the workers keen, industrious and persevering – he is the man who gives a lift to business and swells the surplus. (Xenophon, 426–354 BC )11 According to Max Weber, modern rational capitalism is characterised, above all, by the ubiquity of the modern profit-making enterprise.12 This type of enterprise first arose in the West, as did rational capitalism (Weber [1922] 1978: 165). Its most typical feature is that it engages in profit-making based on capital accounting ([1922] 1978: 71–4, 90f). Weber did not say that enterprises maximise profit, but he did observe that those enterprises that fail to make a profit will go out of business (Weber, 1904–5: 54f). This is an echo of Marx’s suggestion that capitalists are forced to accumulate in order to stay in business, but it also foreshadows the more recent idea of Alchian that market competition selects those firms that are most rational in their pursuit of profit. Another important feature of the capitalist enterprise, according to Weber, is that, like the state, it is organised as a bureaucracy. Unlike a market, a bureaucracy is made up of relations of authority (Weber [1922] 1978: 220ff). Weber goes even further and maintains that the model of the capitalist enterprise is military discipline – a particularly effective form of authority ([1922] 1978: 1155f). It should be mentioned here that Weber made the important distinction between economic power and authority, as two forms of domination (Herrschaft) ([1922] 1978: 941ff). Economic power is ‘domination by virtue of a constellation of interests’ and authority is ‘power to command and duty to obey’ (p. 943). The first form of domination springs from ownership and control of resources, which can be used to affect the incentives of other people, who are excluded from the

266

The new institutional economics

use of these resources. The second form of domination is a right and, therefore, effective in the long run only if legitimate, i.e., if people in subordinate positions accept it. The relation between superior and subordinate in a capitalist enterprise is a relation of authority, even if it is entered into because of an asymmetry of economic power (944f). What the employer buys from the employee is the right to command the latter during his/her hours of work. I mention Weber’s influential view of authority because the phenomenon of authority is something of a touchstone for an economic theory of organisation. Much has been written about the capitalist enterprise and its development since Weber. One of the most discussed ideas in this literature, is that capitalism in the twentieth century is different from earlier forms of capitalism, because of the separation of ownership and management in the modern corporation (Bearle and Means, 1934). This development casts some doubts on the assumption, made in economic theory, that firms maximise profits. While it is reasonable to assume that owners of firms are motivated primarily by profitmaximisation, it is not equally obvious that managers share this interest. If managers maximise their own utility, this will usually lead to a deviation from profit-maximisation. More recently, the sociologist James Coleman has argued that the modern corporation is the most characteristic feature of our age: indeed, that the modern corporation pervades society and dominates our life. Over the last two hundred years, or so, there has been a great transformation from primordial types of social organisation, like the family, to rational organisations, with an entirely different structure. Whereas the former is made up of persons, the elements of the latter are positions, or offices. Behind this transformation lies a certain development of law, which made it possible. Of pivotal importance is the idea of legal, or juristic, persons, which gave rise to the existence of corporate actors. (See Coleman, 1991b; 1993a.) Our knowledge of the firm derives mainly from sociologists, economic historians, business historians and unorthodox economists. For a long time, orthodox economics did not, at all, contribute to this knowledge. Neoclassical economics used to take the profit-maximising firm as exogenously given and treated it like a black box. No attention whatsoever was paid to the inside of the firm; to the individuals that make it up and do the acting. It is largely due to the rise of the new institutional economics that the firm has become an important topic of modern neoclassical economics. The main origin of the neo-institutional theory of the firm is in the pathbreaking article by Ronald Coase about ‘The Nature of the Firm’ (1937). It was not until the 1960s, however, that it attracted the attention of economists and turned into a classic. I have already mentioned the key idea of transaction costs that Coase used to explain the emergence of firms on the market and will not engage in unnecessary repetition. I will turn, instead, to the further development of the economic theory of the firm. The closest descendant of Coase’s theory of the firm is the transaction costs economics of Oliver E. Williamson, who also coined the term ‘new institutional

The new institutional economics

267

economics’ (1975: 1).13 According to Williamson, firms, or hierarchies, arise as attempts to economise on transaction costs. In certain circumstances, it becomes economically rational to replace external market transactions with internal authority relations. More precisely, this is the case when (1) bounded rationality and uncertainty make it difficult to specify future contingencies in a contract and when (2) the pairing of opportunism and small-number relations make transactions risky. It may be noted that markets and hierarchies only represent two extreme types of governance structure, with many hybrid forms in between (Williamson, 1975: 106ff; 1979: 245ff; 1993: 86ff). It may also be noted that these governance structures are subject to change and, therefore, call for a process analysis (Williamson, 1988: 71f 76–88; 1995: 215ff). But these complexities are not my concern here. The explanation Williamson gives for the emergence of the firm and, more generally, for the existence of different types of governance structure rests on certain assumptions about human beings and the environment in which they act. There are two behavioural assumptions: (1) bounded rationality and (2) opportunism.14 Following Herbert Simon, Williamson replaces the assumption of maximising behaviour with that of bounded rationality. People have a limited capacity for calculation and are, therefore, unable to maximise in most situations. Instead, they do the best they can, something Simon calls ‘satisficing’. People with bounded rationality are still intendedly rational and they do economise on scarce resources. At times, it would even seem that Williamson suggests that satisficing is maximising (cf. Elster, 1979a: 73f), as when bounded rationality becomes part of the optimisation problem involved in the choice of governance structure (Williamson, 1979: 245f), but this is probably not what he intends. Bounded rationality represents a second level of rationality, between the strong level of maximisation and the weak level of process rationality, represented by Alchian, and Nelson and Winter. On this second level, people learn by their mistakes and adapt consciously to new circumstances. The second behavioural assumption is that some people are liable to opportunism, which means self-interest with guile. They lie and try to mislead one another in various ways, when such behaviour is in their own interest. Opportunism is an important source of uncertainty in economic transactions and, therefore a main source of these costs, themselves. In addition to the above behavioural assumptions, there are three assumptions concerning the situation in which people act. The basic unit of analysis in Williamson’s transaction costs economics is not the individual, but the transaction. The dimensions used to describe transactions are (1) uncertainty, (2) frequency and (3) asset specificity.15 High values on these dimensions, creates a situation with high transaction costs in which firms are likely to arise. Uncertainty should not be mistaken for mere complexity and it is not a result of bounded rationality. Uncertainty as a property of the environment, means that it is impossible to foresee what is going to happen, even if we were ‘lightning calculator[s] of pleasures and pains’ (Veblen, 1898: 389). There are things we simply

268

The new institutional economics

cannot know and which no amount of information can reveal the probability of. Whether this depends upon limited knowledge or indeterminism is not important. It is for God to be omniscient. For human beings knowledge will always be limited. Frequency, of course, is a matter of how often partners transact with one another. It goes without saying that only frequent transactions are candidates for becoming internalised in a firm. Asset specificity, finally, means that transaction partners invest in technology and knowledge that is tailor-made to fit a specific transaction partner, but which has few, or no, other uses. In this situation, we need an economics of ‘idiosyncrasy’ and ‘small numbers’. One implication is that it is costly to switch to other transaction partners and that partners to such transactions, therefore, become dependent upon one another. In the extreme case you get a situation of bilateral monopoly. To summarise: according to Williamson, firms, or hierarchies, are likely to occur because people are boundedly rational and opportunistic and in situations characterised by uncertainty, frequency of transactions and asset specificity. It is pretty obvious that Williamson’s transaction costs economics is not an example of strong methodological individualism. In Markets and Hierarchies (1975) the development of hierarchies takes place in the setting of the market (p. 20). Later, Williamson becomes more concerned to compare different governance structures. In one way, this means that they become endogenised, since they appear as the result of the economising behaviour of individuals, but in another analytical role they turn into exogenous variables, or antecedents. The comparison between different governance structures is in terms of their effects.16 In Williamson’s most recent writings, the holistic element is even more pronounced. He now appears as an advocate of ‘discrete structural analysis’ (Williamson, 1993: 76ff; 1995: 221ff), which is to all intents and purposes a typically holistic enterprise. Coase’s and Williamson’s transaction cost analysis is probably the most influential economic theory of the firm in contemporary social science. One reason it seems congenial to many non-economists is, probably, that it sees firms as hierarchies, made up of relations of authority. This is a familiar view of organisations in sociology, business administration and political science. But it is not equally congenial to orthodox economists. Members of the Chicago School, for instance, have been unwilling to accept this particular argument of Coase and Williamson. In Chicago, everything must be explained in terms of utilitymaximisation and market equilibrium. In this perspective, there is no place for authority. From this point of view, it is also dubious to assume that firms engage in profit-maximisation. Following a suggestion by Gary Becker, Armen Alchian (1965) suggested that the assumption of profit-maximisation should be replaced by that of utility-maximisation, together with appropriate constraints on the opportunity set. A further step in the development of an economic theory of the firm was taken by Alchian and Demsetz in their well-known article ‘Production, Information Costs, and Economic Organization’ (1972). The main thesis of this article is that a firm is, essentially, a long-term contract between employer and

The new institutional economics

269

employee, not some relation of authority, or disciplinary power. The relation between an employer and an employee is no different from that of a customer and his/her grocer. Like an employer with her employee, the customer can command the grocer to do certain things in exchange for money payment (pp. 777f). Firms emerge (1) when it is efficient to use team-production and (2) when it is economical to estimate the marginal productivity of the various inputs (p. 783). Of particular importance, in the approach of Alchian and Demsetz, is the problem of monitoring employees and of metering their productivity. In the words of Alchian (1979: 251f) alone: ‘a firm is essentially a contractual arrangement for reducing the costs of detecting and monitoring (adjusting rewards appropriately) joint production performance’.17 Alchian and Demsetz do not reject the transaction cost approach of Coase and Williamsson, but they do find it wanting in precision (Alchian and Demsetz, 1972: 783f). Alchian, in particular, is sceptical: ‘A host of activities are encompassed by the rubric “transaction costs.”’ Also, ‘[t]he answer, “high transaction costs” is merely the name for whatever it is that leads to the “firm”’ (Alchian and Woodward, 1987: 110). This is close to suggesting that explanations in terms of transaction costs are tautological. This is denied, however, by Steven Cheung (1983: 6–9), who attempts a specification of the notion of ‘transaction costs’. He does not, however, defend the idea that firms are characterised by authority. It is not quite correct to say that a ‘firm’ supersedes ‘the market.’ Rather one type of contract supersedes another type. Coase’s main concern is a type of contract under which an input owner surrenders a delimited set of rights to use his input in exchange for income. He is therefore directed by a visible hand of a price mechanism. It takes remarkable insight to see that as this type of contract increases there will be fewer product markets. (Cheung, 1983: 10) Demsetz later turned to the much discussed problem of the separation between ownership and control in the modern corporation. The main thrust of his argument is that the suggested difference of interest between managers and owners is much exaggerated. In his typical Chicago manner, he ‘view[s] the ownership structure of the firm as an endogenous outcome of a maximising process in which more is at stake than just accommodating to the shirking problem’ (1983: 377). The general problem, addressed by Demsetz, is, of course, that of the relation between principal and agent, which has generated a literature of its own within the economic theory of the firm. One of the most cited articles is Michael C. Jensen’s and William H. Meckling’s ‘Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure’ (1976), which is of particular interest, since it is a manifestation of methodological individualism. As a point of departure, Jensen and Meckling (1976: 306) observe that the firm is traditionally treated as a ‘black box’ in economics. Their own theory of the firm is based, largely, on the contractual view of Alchian and Demsetz, but they are more explicitly individualistic: ‘It is important to recognize that most

270

The new institutional economics

organizations are simply legal fictions which serve as a nexus for a set of contracting relationships among individuals’ (p. 310). From this point of view, there is really no difference between things that take place within firms and things that take place between firms. Viewing the firm as the nexus of a set of contracting relationships among individuals also serves to make it clear that the personalization of the firm implied by asking questions such as ‘what should be the objective function of the firm’, or ‘does the firm have a social responsibility’ is seriously misleading. The firm is not an individual. It is a legal fiction which serves as a focus for a complex process in which conflicting objectives of individuals (some of whom may ‘represent’ other organizations) are brought into equilibrium within a framework of contractual relations. In this sense the ‘behavior’ of the firm is like the behavior of a market; i.e., the outcome of a complex equilibrium process. We seldom fall into the trap of characterizing the wheat or stock market as an individual, but we often make this error by thinking about organizations as if they were persons with motivations and intentions. ( Jensen and Meckling, 1976: 311) The agency relationship is a (contractual) relation between two (or more) parties, such that the agent is hired, or appointed, to act on behalf of the principal. The so-called agency problem is the problem of making the agent act in the best interest of the principal. The paradigmatic agency relationship is that between employer and employee, but there are many others. It is possible and common, for instance, to see the relation between government and citizens as a relation between principal and agent. In economic theory, the problem of agency is solved by creating the right kind of incentives for the agent, subject to agency costs, of course. In recent agency theory, therefore, the prevailing view seems to be that the firm is best viewed as an ‘incentive system’ (Holmström and Milgrom, 1994). In other words: ‘Firms are complex mechanisms for coordinating and motivating individual’s activities’ (Holmström and Roberts, 1998: 75).18 There is, at least, one more economic theory of the firm that demands our attention: the property rights theory advanced by Oliver Hart and his associates. To some extent, this theory represents a return to the ideas of Coase and Williamson. Thus, transaction costs and incomplete contracts are considered important for the emergence of firms. Because there are such things as transaction costs and incomplete contracts, it may be advantageous to gain residual rights of control over the assets of suppliers. According to Hart et al., ownership means control, and control is the ability to exclude others from use of an asset. The firm is seen as a set of property rights. The defining characteristic of a firm is ownership of non-human assets, such as machines, inventories, buildings, cash, patents, copyrights, etc. The reason ownership of non-human assets is considered most important is that it leads indirectly to control over human assets.19

The new institutional economics

271

An important idea underlying the analysis is that a key right provided by ownership is the ability to exclude people from the use of assets. We have argued that this authority over assets translates into authority over people: an employee will tend to act in the interest of his boss … In the absence of any nonhuman assets, it is unclear what authority or control means. (Hart and Moore, 1990: 1150) In the issue between Coase and Williamson, on the one hand, and Alchian and Demsetz, on the other, concerning the importance of authority in firms, Hart takes a middle position. On the one hand, ‘Coase’s view that firms are characterised by authority relations does not really stand up’ (Hart, 1989: 157). Also a customer in a grocer’s shop can tell the grocer what to do as party to a contract. On the other hand, he agrees with Coase and Williamson that ‘the employer has much more leverage over his employee than the customer has over his grocer’ (Hart, 1989: 164). The reason is that much more is at stake for the employee than for the grocer’s customer.20 As a sociologist, my own view of this matter, is that Hart goes too far in reducing authority to control. Authority is not just control, it is the right to exercise control. I agree with Alchian and Demsetz that there is an element of control in all contracts, but this element has to do with rights and obligation, not simply with control. It is closer to the truth to say that there is an element of authority also in the ownership of physical assets, than to say that there is no authority in relation between employer and employee. It is common to see the purpose of an economic theory of the firm as that of suggesting an answer to the essentialist question: ‘What is a firm?’ (see, e.g. Grossman and Hart, 1986: 691; Hart and Moore, 1990: 1120). Different answers have been provided, but few of them very convincing. To suggest that a firm is a nexus of contracts is not very helpful since it fails to tell us in what respect a firm differs from a market. And, indeed, this seems to be the main purpose in mind of those advocating this view (Alchian and Demsetz, 1972; Jensen and Meckling, 1976). The firm is reduced to a nexus of contracts between individuals and, therefore, no different from a market. Or, if there is a difference, it is only a difference of degree. What is gained by this reduction is that you make the firm amenable to economic analysis, according to the strictures of methodological individualism. The loss involved in this analysis is that it conflicts with the common sense view that firms are, indeed, different from markets. And this common sense view is true, even if there are many forms of interaction in between firms and markets. An important observation, in this connection, is that principal-agent models – contrary to the express purpose of Jensen and Meckling to do exactly this – fail to open the black box of firms. A typical feature of principal-agent models is that they treat both the principal and the firm as black boxes. The owners of the firm are treated as a homogenous group, represented by the abstract figure of a principal, whereas employees are represented by the more concrete personage of the manager (see Holmström and Tirole, 1989: 87). Principal-agent theory, then,

272

The new institutional economics

does not tell us anything about the internal organisation of the firm (Hart, 1989: 1759). Another attempt to cast light on the inside of the firm was made by Holmström and Milgrom (1994), who view it as an incentive system. As a definition of the firm, however, this view is even less helpful than to see the firm as a nexus of contracts. Incentives are everywhere and, in no way specific to firms. If you want to know what a firm is, therefore, you have to look elsewhere for an answer. This is not to say, of course, that incentives are not important in firms. To provide employees with an efficient system of incentives is vitally important for every firm, and more so if the environment is highly competitive. To suggest that a firm is a set of property rights is potentially more illuminating, even if the problem of distinctiveness remains. Not only firms have property rights in physical assets. The idea that ownership of physical assets may lead to authority over human assets seems to be a step in the right direction. The overwhelming majority of firms own physical assets and control human assets. If we add that they are engaged in production of goods and services for the market, we have probably mentioned the most essential characteristics of firms. The state The state emerged earlier in history than did the firm, or modern corporation. According to Max Weber ([1922] 1978: 327ff, 336f, 1094ff; 1927: 338ff), once again, this is not a mere accident, but a ‘necessary’ chronological order, since a rational state administration is a precondition for the development of modern, rational, capitalism. Rational capitalism cannot work without some predictability, and in modern society only the state can guarantee the order that makes for predictability. Similar thoughts have been advanced, more recently, by Douglas North, who is one of a few neoclassical economists, to have developed a theory of the origin of the state.21 The state never figured prominently in mainstream economics. For a long time, the state was treated as exogenously given and ignored. One exception was the theory of public finance, another welfare economics. In the new institutional economics, however, more attention is given to the state, if not always explicitly. Most interest in the state is shown by Public Choice theory, but it is implicit in various theories about parts of the state, such as government and bureaucracy. Before getting into the economic theory of the state, it may be useful to make a distinction between (1) theories of the origin of the state, (2) theories of the working of the state and (3) normative theories of the proper tasks of the state. Normative theories are not my concern, but it is not always easy to separate the positive and normative in economics. Type 1 and type 2 theories often merge with type 3 theories. The obvious example of a merger between 1 and 2 is the theory of the social contract (Hardin, 1997: 33). The merger of 2 and 3 is often a consequence of the concept of ‘efficiency’, as used in economics. I think it is possible to say something about methodological individualism already at the outset. My hypothesis is that type 1 and type 3 theories tend to be

The new institutional economics

273

individualistic, whereas type 2 theories are almost necessarily institutionalistic. After all, to analyse the working of the state presupposes that its exists as an institution. I am not going to support this hypothesis by any survey of economic theories of the state. I will resort, instead, to the less reliable method of case study. My case is James Buchanan, who is both one of the most explicit methodological individualists and one of the main theorists of the state, among economists. James Buchanan started his career, as an economist, in the field of public finance. This is a type 2 theory of the state, which tends to be institutionalistic, with intellectual roots in the organic theory of the state. As I suggested at the beginning of chapter 3, methodological individualism is largely a response to this theory, and James Buchanan is no exception. Already in his first writings, he took a stand, for an individualistic, and against an organismic, theory of the state. In the first, ‘the state is represented as the sum of its individual members acting in a collective capacity’ (Buchanan, 1949: 496).22 ‘The state has no ends other than those of its individual members and is not a separate decision-making unit. State decisions are, in the final analysis, the collective decision of individuals’ (p. 498). This view of the individual as the basic unit of all decision-making, lies at the heart of Buchanan’s methodological individualism in all his writings.23 In The Calculus of Consent, the individualistic theory of the state is stated like this: Having rejected the organic conception of the State and also the idea of class domination, we are left with a purely individualist conception of the state. Collective action is viewed as the action of individuals when they choose to accomplish purposes collectively rather than individually, and the government is seen as nothing more than the set of processes, the machine, which allows such collective action to take place. This approach makes the state into something that is constructed by men, an artifact. (Buchanan and Tullock [1962] 1965: 13) Buchanan’s methodological individualism is most clearly visible in his theory of the social contract, which exhibits the typical ambiguity with respect to the positive/normative distinction. It is my feeling that the positive element is strongest in Buchanan’s earlier works, but vanishes altogether in his constitutional economics (see p. 281). In The Limits of Liberty (1975), which is not exactly an early work, there is an individualistic theory of the origin of the state, which is a version of the theory of the social contract. ‘Almost by definition, the economist who shifts his attention to political process while retaining his methodological individualism must be contractarian’ (1989a: 82). Buchanan is not only a methodological individualist, however, he is also an institutionalist and this element is there almost from the beginning. Already in the early days of the Virginia School, around 1960, ‘[t]here came to be an increasing awareness of the importance of the institutional setting and of institutional constraints for the operation of an economy’ (Buchanan, 1986: 11). This institutionalism is stated most explicitly and emphatically by Buchanan in the articles included in What Should Economists Do? (1979b):

274

The new institutional economics The essential subject matter for the economist consists of human behaviour in social institutions, not of human behavior in the abstract. The tendency of economic theorists to overlook this simple fact provoked the reaction of the American institutionalists, a reaction which surely was misguided in its emphasis, but which, nonetheless, pointed to a serious deficiency in the evolution of economic science. (Buchanan, 1979b: 134)

Buchanan’s institutionalism, then, differs both from that of mainstream theoretical economics and from the old institutionalists. It differs also ‘from that which the habitual political scientist adopts’. As I have tried to indicate, the shift in thinking is a simple one. It involves only the shift from the organizational entity as the unit to the individual-inthe-organization. Instead of trying to examine the institutions of politics as organizations, the whole approach involves trying to examine the interactions among individuals as they carry out assigned roles within these institutions. (Buchanan, 1979b: 157) This passage might equally well have been written by a traditional sociologist. ‘Role’ is not a concept normally used by economists, nor is the statement that ‘Institutions matter’ (Buchanan, 1979b: 282), even if Buchanan invokes Adam Smith to support this claim in economic theory. Also the following statement looks more like a piece of orthodox sociology than of orthodox economics. The institutions (economic, geological, legal, political, social, technological), which define the sizes of community within which an individual finds himself, impose external bounds on possible behavior. Parallel to these external constraints there are also internal limits or bounds on what we may call an individual’s moral-ethical community. (Buchanan, 1979b: 225) What finally distinguishes Buchanan from a traditional sociologist is rational choice and methodological individualism. In his view, institutionalism is not incompatible with methodological individualism. On the contrary: ‘If we adopt the methodological imperative that all choice analysis be reduced to inquiry into individual behavior, the importance of institutional constraints becomes evident. The feasible choice options open to the individual are, in part, determined by the institutional setting’ (1989b: 42). Stated even more emphatically: ‘rational choice precepts dictate totally different behavior in divergent institutional settings’ (p. 43). To repeat, ‘methodological individualism, does not imply or require that individual choice behavior is invariant over changes in the institutional settings’ (1989b: 38). ‘[T]here is no difficulty at all in analyzing individual choice behavior under differing institutional settings, and in predicting how these

The new institutional economics

275

varying settings will influence the outcomes of the interaction process’ (1988: 105). It is pretty obvious, I believe, that Buchanan is an institutional individualist, in the sense of Joseph Agassi and Lawrence Boland. Like Marshall’s comparative statics and Popper’s situational analysis, Buchanan’s version of rational choice relies on ‘situational determinism’ (Latsis, 1972; 1976) in the form of institutionalism.24 The most typical social institution, however, is not the organisation of the state, but the rules it creates, enforces, and, above all, obeys (Brennan and Buchanan, 1985). Actually the two belong very much together. According to North (1981: 21), for instance, ‘[o]ne cannot develop a useful analysis of the state divorced from property right’. The most important rules, of all, are those laid down in the constitution. For this reason, Buchanan has created a new branch of economics, which he calls ‘constitutional economics’, and which is his most original contribution to economic theory. Rules, of various sorts, including those of constitutions, are the topic of the next section. Before I turn to this topic, however, a brief note on another type of organisation. Interest groups Interest groups seem to be fitting objects for an economic theory of groups, or organisations. Common wisdom seems to suggest that interest groups are voluntary organisations created by individuals in order to be able, better to further the common interest. This fits well with Ludwig von Mises’s individualistic view that ‘society is concerted action, or cooperation’ for a common purpose (Mises [1979] 1966: 143). Somewhat paradoxically, it is also a theory that the economist Mancur Olson ascribes to sociologists and political scientists, and a theory he sets out to punctuate. According to Olson’s famous argument, rational, self-interested, individuals will not pursue collective interests, unless rewarded, for doing so, or punished, for not doing so (Olson, [1965] 1971). I have treated interest groups, at great length in an earlier book, and little would be gained from entering that interesting topic here. Precious little has been said about methodological individualism in connection with interest groups.25 Like the rest of the new institutional economics, theories of interest groups treat social institutions either as endogenous or exogenous variables. Both patterns are richly represented in the literature. Economic theories of collective action, including that of Mancur Olson, typically conform to the first pattern. Public choice theories of rent-seeking, and similar theories, such as Gary Becker’s theory of pressure groups (Becker, 1983; 1985), treat interest groups as exogenous variables and conform to the second pattern.26 Conclusion I have looked at the theories of organisation put forward within the new institutional economics. It is pretty obvious, even from a cursory glance, that social

276

The new institutional economics

institutions are treated both as endogenous and exogenous variables. It is my impression, though, that economists differ in their reaction to this fact. For some, exogenous institutions are a problem, since they violate the requirement of strict methodological individualism. This attitude is common, if not ubiquitous, in the economic theories of the family and the firm. For others, such as Oliver Williamson and James Buchanan, exogenous social institutions are not a problem, but rather a solution to many problems in economics. It might be argued, however, that no theory of social organisation can be entirely free from exogenous social institutions. If we believe, for instance, that no social organisation is likely to emerge in an environment totally free from social rules, it follows that all theories of social organisation, will include at least one type of social institution among its exogenous variables, or conditions, namely social rules.

Social rules There are many kinds of social rules, from the informal codes of etiquette, or manners, to the formal rules of written law. Economists are, for obvious reasons, most interested in those rules that regulate market transactions, viz., the closely related laws of property and contract. But not exclusively. There is also a more general theory of ‘law and economics’ and a theory of the most fundamental of all laws: the constitution. Property rights The neo-institutional theory of property rights started with Armen A. Alchian’s article ‘Some Economics of Property Rights’ (1961), which was an attempt to analyse and compare different types of property rights. This project was continued by Harold Demsetz (1964; 1966; 1969), who followed Coase in criticising welfare economics for seeing all negative externalities as a loss of welfare that should be remedied. The mistake of this ‘nirvana approach’ is to compare the existing market economy with an ideal that does not exist and could not exist. A more reasonable approach would be to compare different existing institutional arrangements, with different property rights and different transaction costs. The dominating concern in these early contributions to the theory of property rights is to compare different institutional arrangements with respect to their effects. This is institutional individualism and, as such, wanting from the perspective of the more orthodox methodological individualism, prevailing in Chicago at that time. Milton Friedman, who was one of the dominating figures in Chicago at that time, expresses this view in the following manner: ‘On our approach these [institutional conditions] too, are to be regarded as resultants of an economic equilibrating process, not as physical data’ (Friedman, 1956: 13). In line with this view, there is the early attempt by Demsetz (1967), to explain also the emergence of property rights. Demsetz’s thesis is that ‘property rights develop to internalize externalities when the gains of internalization become

The new institutional economics

277

larger than the costs’ (p. 350). This happens when new technology and new markets create a change in economic values. New property rights, then, seem to be the result of rational choice. But actually Demsetz takes an agnostic attitude: I do not mean to assert or to deny that the adjustments in property rights which take place need be the result of a conscious endeavour to cope with externality problems. These adjustments in property have arisen in Western societies largely as a result of gradual changes in social mores and in common law precedents. At each step of this adjustment process, it is unlikely that externalities per se were consciously related to the issue being resolved. (Demsetz, 1967: 350) Another attempt to explain the emergence of property rights was made by Steven N. S. Cheung (1969). His particular example was the choice of contractual arrangement between tenants and landowners in Asian agriculture and, especially in pre-communist China. His main thesis was that the particular form of these contracts is a function of two variables: transaction costs and risks. Parties to such contracts choose arrangements that minimise transaction costs and disperse risks between them. Cheung, admits, however, that ‘some level of law enforcement by legal authorities is taken for granted’ (p. 41). This is institutional individualism, once again.27 A third attempt to provide an economic explanation of the emergence of property rights was made by Douglass C. North and Robert Paul Thomas. Their project was an ambitious one; amounting to nothing less than trying to explain The Rise of the Western World (1973; see also 1970; 1971). The analytical tools they used were those developed by the new institutional economics, and especially by Steven Cheung. Their main argument was that efficient property rights, rather than new technology, was the main factor behind the rise of the West. Their story, although fairly simple, is nevertheless too complex to be told here. One part of it is the change in the relative prices of land and labour, which resulted in the development of private property in land and free labour. Another part is the invention of new institutions, such as the joint-stock company, forms of insurance and international financial markets, which made it possible to economise on transaction costs. This, latter, part was a necessary condition for the emergence of market society. The explanations suggested by Demsetz, Cheung, and North and Thomas may be interpreted as neoclassical attempts to endogenise property rights (Pejovich, 1972: 310), as suggested by Milton Friedman above. As such, they may also be interpreted as manifestations of methodological individualism. I have shown, in the cases of Demsetz and Cheung, that things are not quite that simple. But what about North and Thomas? In their general model of institutional change, North and Thomas make use of a distinction between two types, or levels, of institutions:

The new institutional economics

278

There are the fundamental institutions that specify the basic ‘ground rules’ such as the underlying ‘constitutional’ basis of property rights and basic decision rules with respect to political decision-making, and then there are the secondary institutional arrangements which may be created without altering the basic institutions. (North and Thomas, 1970: 10; see also Davis and North, 1970: 133) It is clear from this quotation that an explanation of secondary institutional arrangements must always treat the fundamental institutions, either as exogenous variables, or as exogenous givens. Such explanations, therefore, are examples of institutional individualism, manifest or latent. But what about the explanation of fundamental institutions? In North’s and Thomas’s explanation of the growth of the Western World, the decisive change in the ground rules was a result of cumulative changes in the secondary institutions: The essential key to our essay is that cumulative changes in secondary institutions ultimately led to a restructuring of fundamental institutions in Western Europe over this period, in such a way that individuals in the society were now encouraged to strive for greater productivity in their undertakings. (North and Thomas, 1970: 10) I conclude that also in the case of North and Thomas endogenisation of some institutions is achieved only by treating other institutions as exogenous variables. In the early 1970s, the property rights paradigm had become established and it was time to summarise the results of the growing literature. According to Alchian and Demsetz (1972: 17) three questions have been suggested: ‘What is the structure of property rights in society at some point in time? (2) What consequences for social interaction flow from a particular structure of property rights? and, (3) How has this property right structure come into being?’. Of these, the first question has no obvious relevance for the issue of methodological individualism, the second question implies institutional individualism and the third question may be answered either in a strictly individualistic, or in an institutionalist way. It depends on the nature of the exogenous variables; whether they comprise only facts about psychic states and natural environment, or whether they include also facts about institutions other than those explained. Law Property rights are a species of the genera law. They are extremely important, of course – especially for economic activity – but, nevertheless, are just one type of law among others. The economic theory of property rights may be conceived of as a special case of a more general economic theory of law. Such a theory has been developed by Richard A. Posner, among others. Posner, himself, calls this branch of theory ‘Law and Economics’, as distinguished from ‘New Institutional

The new institutional economics

279

Economics’ (Posner, 1993). His argument is that there is a considerable overlap, but not an identity, between the two. His main reason for seeing a difference is that both Coase and Williamson seem to reject the assumption of utilitymaximisation. This may be, but I still believe that both Coase’s and Williamson’s theories belong in the broad category of rational choice theories and, therefore, that the similarities are more important than the differences. Since I also believe that the main branch of the new institutional economics; what Eggertsson has called ‘Neoinstitutional Economics’, is best understood as a rational choice theory of social institutions, I conceive of them as really belonging in the same category as Posner’s economic theory of law, which also relies on a ‘redefinition of economics as rational choice’ (Posner, 1981: 3). Posner’s most systematic study, Economic Analysis of Law (1972), covers a vast ground and there is no possibility of going into the details of his analysis. My way out is to concentrate on the approach, which is the same, irrespective of subject matter. Posner’s approach is essentially the economic approach of Gary Becker, but owes a lot also to Milton Friedman. ‘Economics, the science of human choice in a world in which resources are limited in relation to human wants, explores and tests the implications of assuming that man is a rational maximizer of his ends in life, his satisfactions – what we call his “self-interest” ’ (Posner [1972] 1977: 3). This approach is applied to a large number of legal phenomena, all of which are ‘shown’ to be economically efficient for society as a whole. Posner’s reasoning comes out clearly in his discussion of the morality of common law: The view of the common law as a system for promoting economic law as a system for promoting economic efficiency will strike many readers as an incomplete – if not severally impoverished – theory of common law, particularly in its disregard of the moral dimension of law. Surely, it will be argued, the true purpose of law, especially of those fundamental principles embodied in the common law of England and the USA, is to correct injustices and thereby vindicate the moral sense. In fact, there appears to be no fundamental inconsistency between morality and efficiency. Moral principles – honesty, truthfulness, trustworthiness (for example, keeping promises), selflessness (for example consideration for others), charity, neighbourliness, avoidance of negligence and coercion – serve in general to promote efficiency. That such principles have survived … for thousands of years suggests they are traits that by and large enrich rather than impoverish the society that cultivates them. (Posner [1972] 1977: 185) What immediately strikes the eye, in this quotation, is that Posner seems to have jumped from individual utility-maximisation to social efficiency as the main explanatory principle. It may be added that the word ‘jump’, in this case, is particularly fitting, since Posner leaves out the steps that would take us from the former to the latter. It is not at all clear how individual utility-maximisation leads

280

The new institutional economics

to social efficiency. The only clue is Posner’s suggestion that moral principles have survived because they are efficient. But, as several commentators have observed (Field, 1981: 184f, 196; Granovetter, 1993: 22ff), this is a functional explanation and, as such, scientifically dubious, unless supplemented by an account of the mechanism that make functional (efficient) principles survive.28 Posner’s Economic Analysis of Law is notorious for its absence of such mechanisms.29 In his well-known article ‘A Theory of Primitive Society, with Special Reference to Law’ (1980) – also included as chapters 6 and 7 in his second most important work, The Economics of Justice (1981) – Posner’s functionalism is even more explicit, but he also goes some way to meet the criticism directed at this doctrine. Posner closes his discussion of primitive law in the book by asking two questions: ‘First, if it is true, as I have argued, that the legal and other social institutions of primitive society are economically rational or efficient, what mechanism drives primitive society to this surprising result?’ (p. 204). No less surprising than this result is the note Posner attaches to his question: ‘I emphasize once again that, in suggesting that primitive people are economically rational, I am not making any statement about their conscious states. Rational behavior to an economist is a matter of consequences rather than intentions and in that respect resembles the concept of functionality in traditional anthropology’ (p. 204, note 72; cf. 1980: 5). This is a controversial statement, to say the least, since rational choice is usually conceived of as a form of intentional explanation. If consciousness and intentions are not involved, the most obvious alternative is selection, and this is presumably what Posner really has in mind: efficient institutions survive because they are best adapted to the environment. One reason selection is a possible mechanism is that primitive societies and their environment are so stable. When the rate of change is slow societies have time to develop efficient adaptations (1980: 53; 1981: 205). The second question, Posner addresses is this: what factors are treated as exogenous (not possible to change) and what factors are treated as endogenous (possible to change)? He admits that in his analysis, both of common law and of primitive law, a background of other institutions is treated as exogenous. The efficiency of the endogenously adapting institutions, therefore, is relative to the exogenously fixed background institutions (Posner, 1981: 205f). More important, for my purposes, is that Posner, thereby, seems to relinquish any pretensions to being a strong methodological individualist. The question is, whether he is a methodological individualist at all? For my purposes, the most important point is that Posner’s analysis seems to be, neither rational choice, nor methodological individualism. Rational choice is a form of intentional action, but Posner renounces the assumption of conscious intention on the part of actors. In its stead, he talks about adaptation, but without specifying the mechanism at work. In the absence of such a specification, Posner’s analysis ends in an untenable form of functionalism: social institutions are said to survive, because they are efficient for society as a whole. But absent a mechanism of selection, or some other form of adaptation, such

The new institutional economics

281

functional explanations presuppose the existence of a social maximiser and this is, of course, holism, not methodological individualism. Constitutions Posner’s treatment of law in ‘primitive society’ was part of an attempt to explain ‘The Origins of Justice’, which is the title of Part Two of The Economics of Justice. A possible motive for such an endeavour would be to make a clean sweep of exogenous institutions, in order to satisfy the demands of strict methodological individualism. As we have seen, this does not seem to be Posner’s motive, but there are others. To seek the historic origin, not of this or that institution, but of all social institutions, is one way to achieve a complete endogenisation. Another route is more logical and consists in the attempt to endogenise the logically and constitutively most fundamental social institution; that social institution upon which all other institutions ultimately rest, the ‘ground rules’ of North and Thomas. More often than not, these routes coincide: the most fundamental social institution is also assumed to be the first. This is the typical procedure in the theory of the original social contract. Another name for the most fundamental social institution is the constitution of a society. I will end my treatment of the economic theory of property rights and other laws with a mention of constitutional economics – a branch of economics, which is the creation of James Buchanan. According to Buchanan (1990: 12–15), constitutional economics, like the rest of economics, is based on methodological individualism. As I have argued in an earlier work Udehn (1996: 176–84), however, James Buchanan’s constitutional economics is really a normative theory, and the methodological individualism it is based on is really ethical individualism. Sine this interpretation finds support in Buchanan, himself (1989b: 62), I assume that it is correct, and since this is a work on methodological individualism, I leave Buchanan’s constitutional economics to the political philosophers (cf. Brennan and Hamlin, 1995).

Evolutionary economics In the early stages of social science, especially anthropology and sociology, evolutionism was among the most important theoretical currents, but holism was the rule and individualism the exception. Also economics had its brand of evolutionism; the institutional economics of Thorstein Veblen, which was holistic. But also neoclassical economics had some advocates of a more evolutionary approach (Langlois, 1986a). The main example is the Austrian Economics of Carl Menger, but there was also Joseph Schumpeter and Alfred Marshall. Among the later Austrians, it is mainly Friedrich von Hayek, who has maintained the evolutionary legacy of Menger. In the 1950s evolutionism also popped up in the utilitarian Chicago School of Economics. I have already mentioned Armen Alchian’s famous article ‘Information, Uncertainty

282

The new institutional economics

and the Allocation of Resources’ from 1950. The main impetus to a new evolutionary economics, however, was given by Richard R. Nelson and Sidney G. Winter, with the publication of An Evolutionary Theory of Economic Change in 1982.30 Is the evolutionary branch of institutional economics individualistic? Not if methodological individualism is equated with rational choice. As we have seen (p. 257), the Chicago version of evolutionary economics replaced rational choice by natural selection. Since I do not accept this equation of methodological individualism with rational choice (see p. 288), the question remains and it raises another question: What does methodological individualism mean in the case of evolutionary theory? There is an obvious answer to this question: in order to comply with the principle of methodological individualism, the unit of adaptation, or selection, must be the human individual. But this answer is not sufficient. It is also necessary, I believe, that the environment is made up of nature and other individuals, but not of social collectives and/or wholes. The second criterion is, necessary, in order to exclude functionalism. If a social institution, develops and survives, because it contributes to the social system as a whole, we have clearly to do with a case of social holism, not of methodological individualism. If we consider the case of Hayek in the light of these considerations, we reach the conclusion that his evolutionary theory is not in accordance with methodological individualism. I have argued earlier (Udehn 1987: 207f) that Hayek moved away from methodological individualism, in a more holistic direction, from the 1950s and onwards. The first signs of this change of direction is in an article ‘On Degrees of Explanation’ from 1955 (in Hayek, 1967). In this article, Hayek argues that the social sciences differ from physics, in that they deal with complex phenomena, which permit only of ‘explanation of the principle’. Examples of theories providing such explanations, according to Hayek, are General Systems Theory and Cybernetics. I do not want to suggest guilt by association, but since these theories are generally considered holistic (Phillips, 1976: ch. 4; Udehn, 1987: 89f), we might at least suspect a move in the direction of holism. In ‘The Theory of Complex Phenomena’ (1964), Hayek goes further in the holistic direction, by arguing that social science has to deal with persistent structures, made up of systematically connected elements. This makes it necessary to refer to the relative position of these elements, when explaining their behaviour. Hayek’s holism is most clearly expressed in ‘Notes on the Evolution of Systems of Rules of Conduct’ (1967), and in his last book: The Fatal Conceit (1988), where it is part of a theory of cultural evolution. Hayek makes a distinction between systems of rules which govern the conduct of individuals and ‘the order or pattern of actions which results from this for the group as a whole’ (1967: 66). There is no holism implied in this distinction, but, then, Hayek goes on to suggest that we must reconstruct the overall order before we shall be able to discover the functions of the rules of individual conduct and also that the

The new institutional economics

283

overall order of a group as a whole interacts with the environment (p. 70). This is beginning to smack of holism.31 The overall order of actions in a group is in two respects more than the totality of regularities observable in the actions of the individuals and cannot be wholly reduced to them. It is so not only in the trivial sense in which a whole is more than the sum of its parts but presupposes also that these elements are related to each other in a particular manner. It is more also because the existence of the whole cannot be accounted for wholly by the interaction of the parts, but only by the interaction with an outside world both of the individual and of the whole. (Hayek, 1967: 70) Hayek also defends a kind of sociologism, in the form of accepting social norms and social orders as exogenously given, against various individualistic attempts to explain their emergence. The alternative explanation he proposes is typically functionalist. This implies a sort of inversion of the relation between cause and effect in the sense that the structures possessing a kind of order will exist because the elements do what is necessary to secure the persistence of that order. The ‘final cause’ or ‘purpose’, i.e., the adaptation of the parts to the requirements of the whole, becomes a necessary part of the explanation why structures of the kind exist: we are bound to explain the fact that the elements behave in a certain way by the circumstance that this sort of conduct is most likely to preserve the whole – on the preservation of which depends the preservation of the individuals, which would therefore not exist if they did not behave in this manner. (Hayek, 1967: 77) This is full-blown functionalism of the most objectionable type, at least from the point of view of methodological individualism: to explain the emergence and continued existence of social institutions in terms of their contribution to the preservation of the social whole. As the methodological individualist J.W.N. Watkins has pointed out (1976), this type of functionalist explanation is vacuous without the specification of some mechanism of selection. Another methodological individualist, Victor Vanberg (1986: 81–9), has pointed out that Hayek’s theory of cultural evolution is based on group selection and, therefore, incompatible with methodological individualism (see also Sugden, 1993: 397–403). Jack J. Vromen (1995) has defended Hayek against the charge of holism, by arguing that his unit of selection is social order, rather than the group. His argument rests on the following presupposition: ‘One order can be replaced by another in various ways, many of which are in accordance with the individualistic notion that individuals, and not groups of individuals, are responsible for the emergence, maintenance and alteration of rules’ (p. 172). Vromen believes

284

The new institutional economics

that a reinterpretation of Hayek’s theory of cultural evolution along the lines of this truism – or tautology? – can make it consistent with his methodological individualism (p. 173), but I do not think so. Vromen goes on to suggest that the problem with Hayek’s evolutionism is not group selection, but his organicism (p. 174), as if the two were independent. He also suggests that Hayek’s organicism derives from that of Menger, which was of a holistic and functional type. As we have seen, this is, indeed, the case with Hayek’s organicist evolutionism, and this is the reason it conflicts with his methodological individualism, but Menger is much more critical of organicism and he does contrast it with the atomistic approach, which is the source of Hayek’s methodological individualism (Menger [1883] 1963: 122ff). The conclusion is that the conflict between Hayek’s cultural evolutionism and his methodological individualism remains. It is arguable that the evolutionism of Carl Menger was more individualistic than that of Hayek. At least, he did more to specify the mechanism at work in his main example: the evolution of money. This example, I have suggested (pp. 90f ), is a paradigm of an individualist (invisible-hand) explanation of the emergence of a social institution. It is commonly agreed that money is a convention, in the sense of David Hume and David Lewis (1969), that is, a social institution, which is arbitrary, but in the interest of all. Contemporary social scientists have the advantage, over Menger, of being able to use the tool of game theory to explicate and explain social conventions, as games of co-ordination. Important contributions, to the game theoretic literature on the emergence of social institutions include Ullmann-Margalit (1977), Schotter (1981), Axelrod (1984) and Sugden (1986). The evolutionary use of game theory raises the same questions about methodological individualism, as does game theory, generally. Since I have discussed game theory in the previous chapter, I leave the matter with repeating my conclusion: the explanatory use of game theory in social science will typically imply exogenously given social institutions. ‘For evolutionary game theory, social structure comes in the form of the organization or social environment that does the selecting of strategies’ (Kinkaid, 1997: 138). What about the Chicago branch of evolutionary economics? Does it obey the strictures of (strict) methdological individualism? The answer is simple and short: it does not. The unit of selection is the firm, not the individual. In his classical article ‘Uncertainty, Evolution, and Economic Theory’ (1950), Armen A. Alchian argued that economics do not need the dubious assumption that firms are engaged in profit-maximisation. In a world of pervasive uncertainty and incomplete information, it is really impossible to maximise. Instead, firms adapt, imitate and use trial and error, in order to survive. And those firms that succeed in making a profit are the survivors. Rationality is replaced by selection. This argument would prove to be of crucial importance for the emergence of the new institutional economics. First of all, because it was eventually picked up by its evolutionary branch, but also because it led to rethinking profitmaximisation. Most Chicago economists accepted Alchian’s critique of profit-maximisation

The new institutional economics

285

and his emphasis on incomplete information, but suggested various ways to retain the assumption of maximisation (Demsetz, 1996). Milton Friedman (1953: 22) absorbed ‘natural selection’ in his own approach of maximisation, with the help of instrumentalism. Natural selection makes firms behave as if they maximised profit. George Stigler (1961) agreed that information is incomplete and costly to acquire, but included these costs in the maximisation problem. Individuals will search information to the point where these costs equal the benefits derived from this information. Stigler obviously does not reckon with uncertainty, in the more fundamental sense of Frank Knight (see p. 121). Gary Becker, at first, also wanted to do without maximisation (1962), but eventually decided that the economic approach is based on the assumptions of maximising behaviour, market equilibrium and stable preferences (1976: 5). In the end, most Chicago economists, including Alchian himself (see Alchian and Allen [1964] 1967: 14), settled for global utility-maximisation, rather than selection. Even if firms do not maximise profit, it might still be the case that its employees maximise their own utility. The reason for this, I believe, is methodological individualism. Whereas profit-maximisation is associated with firms, utilitymaximisation is associated with individuals. A third important contribution to evolutionary neoinstitutional economics is An Evolutionary Theory of Economic Change (1982), by R.R. Nelson and S.G. Winter, which draws on both the Austrian and Chicago contributions, but most of all on Schumpeter. In this book, it is neither the group, nor the firm, which is the unit of selection, but habits, or routines. It was argued by Winter already in 1964 that the Chicago version of evolutionism lacks a counterpart of the gene; a mechanism that preserves and reproduces successful behaviour. In Nelson and Winter (1982), routines are launched as the social analogue to the biological gene. As I have already mentioned, this is a break with methodological individualism, if this principle is equated with rational choice. Another possible break with methodological individualism is that Nelson and Winter try to build a macrotheory of ‘industry behavior, as contrasted with individual firm behavior’ (p. 36). They do recognise the need for microfoundations, however, and this is where the routines come in. So, what are routines? Routines, according to Nelson and Winter (1982: 96ff), are capabilities of organisations and, as such, contrasted with skills, which are capabilities of individuals. Nelson and Winter make a distinction between individuals and organisations, which is typical of sociological holism. It is rather clear, I believe, that they conceive of routines as social facts, in a sense similar to that of Durkheim (see pp. 34–6), even if they are not sociological reductionists, like the latter. ‘To provide a plausible account of the relations between the capabilities of an organization and the capabilities of individual organization members, giving both the “reductionist” and the “holistic” viewpoints their due, is a major conceptual undertaking – and one that orthodoxy has not seriously attempted’ (p. 63). I believe that this declaration is a fair description of what Nelson and Winter actually do, except that there is more emphasis on the “holistic” viewpoint. To me this suggests the following conclusion: if the evolutionary theory of

286

The new institutional economics

Nelson and Winter is individualistic at all, it represents a very weak form of methodological individualism, where the institutional and structural elements predominate. As they themselves suggest, this is something the (methodologically individualist) orthodoxy has never attempted. More recently, Ulrich Witt (1987) has tried to build an evolutionary economics on methodological individualism, but there are signs indicating that he has, since his first attempt in this direction, become more sceptical about the possibility of an individualistic evolutionary economics, (see, e.g. 1991: 92). Another evolutionary economist, Geoffrey Hodgson (1988: ch. 3; 1998: 175–7), claims that the new institutional economics is inspired by methodological individualism, but fails to follow its precept. The attempt to explain all social institutions in terms of individuals, leads to an infinite regress (see, also Udehn, 1987: 227–31). This critique, which derives from Karl Popper (see p. 204), hits only the strong, psychologistic, version of methodological individualism, not the weak version of institutional individualism.

Conclusion The new institutional economics is Janus-faced. It includes both an attempt to endogenise all social institutions and a practice of treating social institutions as exogenously given to analysis. It is possible to conceive of the new insitutionalism in economics as a return to the type of social theory that existed before the rise of neoclassical economics. The attempt to endogenise all social institutions usually takes the form of some version of the theory of the social contract, while those who accept social institutions as exogenous variables and conditions are closer to the Scottish Enlightenment and the classical political economy of Adam Smith (see chapter 2).

Figure 9.1 Social institutions as endogenous variables

The attempt to achieve a complete endogenisation of social institutions, however, seems to be a Sisyphus work. The endogenisation of one institution is achieved only by treating other institutions as exogenously given, and there is no end to it (cf. Wisdom, pp. 224–6). This predicament of those who adopt the psychologistic version of methodological individualism is avoided by those who adopt Popper’s institutionalism, or the position called ‘institutional individualism’

The new institutional economics

287

by Joseph Agassi and Lawrence Boland. It is my impression that the latter position is the more common among new institutionalists in economics, but this is just an impression.

Figure 9.2 Social institutions as endogenous and exogenous variables

10 Rational choice individualism

Among the more noteworthy developments in recent social science is the upsurge of a theory and/or methodology called ‘rational choice’. This would not be my business, however, were it not for the fact that rational choice is launched as a form of methodological individualism. Sometimes it is even treated as the only form of methodological individualism (Janssen, 1993: 26). This view, which is most common among economists (Sproule-Jones, 1984: 169), is not adopted in this book. As I hope is evident from previous chapters of this book, there are other forms of methodological individualism than rational choice (Van Parijs, 1981: 302–4; Elster, 1989a: 105: Vanberg, 1994: 7). In an earlier treatise on methodological individualism (Udehn, 1987), I even expressed doubts concerning the purity of rational choice, or ‘situational logic’, as a form of methodological individualism. It seemed to me that rational choice is much more permissive concerning the explanatory use of social institutions and social structure than is the original principle of methodological individualism. My first response to this situation was to deny that rational choice is necessarily individualistic. It all depends upon the entities used in a rational choice explanation. If social institutions, social structure, or some other type of social entity, enters the explanandum, or, better, the antecedent, of a rational choice explanation, then it is not compatible with the principle of methodological individualism. I did suggest a second route, however, in the form of a distinction between a strong and a weak version of methodological individualism. Today I prefer this second route and conceive of rational choice theory as one form of methodological individualism. My reason for this, is that this view of the matter seems to have emerged victorious, at least among political scientists, sociologists and analytical Marxists. Indeed, rational choice stands out as the most vital form of explicit methodological individualism in contemporary social science. It should be noted at the outset, however, that not all agree that rational choice is necessarily a form of methodological individualism (Farmer, 1982; Satz and Ferejohn, 1994), not even all rational choice theorists, themselves do so, as we saw in chapter 8. The first, and still the main, field of application of rational choice outside economics is in political science. I have dealt with this field of application, to some extent in the previous chapter and, at great length, in Udehn (1996). Since

Rational choice individualism

289

I prefer not to repeat myself more than necessary, I will be extremely brief here. I do not think any injustice is done to political science, however, by brevity since it is my impression that the big issue in political science has been rational choice, not methodological individualism. Most political scientists seem to take it pretty much for granted that rational choice is individualistic, but without going into much detail about its exact meaning and intent (cf. Ward, 1995: 79). It may also be noticed that rational choice entered political science mainly in the form of game theory, which I have already discussed in chapter 8. The first really comprehensive use of game theory in political science was, by William H. Riker and Peter C. Ordeshook, in An Introduction to Positive Political Theory (1973). The basic assumption of their approach was that of rationality and, as a corollary, that of individualism. ‘What we insist upon … is that collectivities, regularities about people in them, and the common goals and values of collectivities can be understood only by understanding the individual persons who make up the collectivities. And in this sense our method is individualistic’ (p. 37). In Game Theory and Political Theory (1986), Ordeshook begins with two assumptions: ‘methodological individualism and purposeful action. Methodological individualism holds that we can understand social processes and outcomes in terms of people’s preferences and choices’ (p. 1). This means that groups do not act, except by means of their members. ‘The assumption of methodological individualism is but a reminder that only people choose, prefer, share goals, learn and so on, and that all explanations and descriptions of group action, if they are theoretically sound, ultimately must be understandable in terms of individual choice’ (p. 1). Six years later, Ordeshook (1992) has replaced the assumption of purposeful action with the much more narrow assumption of ‘individual action motivated by self-interest’ (p. 175). According to Ordeshook’s interpretation of rational choice, this means that ‘political institutions are the product of the selfinterest of those who establish them’ (p. 177). It does not seem, however, as if Ordeshook suggests that all institutions must be treated as endogenous, since he also mentions the constraints they impose on human behaviour (pp. 186f, 191f). William H. Riker is much more clear on this point. In a paper delivered at the Public Choice Society (Riker, 1988), he makes a forceful plea for taking social institutions much more seriously than economists usually do. He is especially dissatisfied with the Chicago economists mechanical use of utility-maximisation, but also with the work of James Buchanan. To take social institutions seriously, according to Riker, is among other things to see their role in the selection of equilibria. ‘What particular one [equilibrium] is arrived at … is mainly a matter of the constraint imposed by institutional arrangements, which are, therefore, as important for outcomes as the desires, tastes, and values of the participants (p. 252). I believe that most political scientists share Riker’s view of the importance of social institutions. The work of Kenneth Shepsle, for instance, is based on the assumption that ‘institutions do matter’ (1989: 131). It is my impression that most uses of rational choice in political science are based on this assumption and

290

Rational choice individualism

for a very good reason. Political action typically takes place in an institutional context of well-defined legal rules. On the basis of this extremely brief survey, I draw the unwarranted conclusion, that most rational choice individualists, among political scientists, are institutional individualists in the sense of Agassi and Boland; they see the necessity of treating social institutions as exogenous variables in their models of political activity. A different view seems to be taken by Robert Grafstein (1991: 262ff), who argues that Shepsle’s institutionalism, despite appearances to the contrary, fails to go beyond the state of nature, typical of social contract theory. Because methodological individualism is hard to give up, many theorists, as we have seen, find that the best way to accommodate this effect is to pack all the institutional details, the regularities of behavior variously called norms, or rules, into the heads of the participants. Acting on this knowledge, participants continually reinforce the institution – that is, reproduce the behavioral patterns associated with it. The institution as such does nothing. (Grafstein, 1991: 266) It is clear that by ‘methodological individualism’ Grafstein means psychologistic individualism and also that he believes that rational choice institutionalism in political science exemplifies this type of individualism, rather than the institutional individualism of Agassi and Boland. This interpretation of methodological individualism can be found also in Satz and Ferejohn (1994), who draw the conclusion that rational choice is not necessarily individualistic. Having argued that rational choice derives most of its explanatory power from a consideration of the social environment of the acting individuals, they suggest a marriage between rational choice and structuralism, which is not individualistic, or reductive. A different route has been taken by some sociologists, who share the belief of Satz and Ferejohn in the fertility of joining rational choice and structuralism, but who nevertheless conceive of this approach as a version of methodological individualism. Obviously it is very different from the original version of methodological individualism, since it includes an important holistic element in the form of social structure. It has been called structural individualism.1

Rational choice sociology There has been much more resistance to rational choice in sociology than in political science. The reason for this is, no doubt, that sociology emerged partly as a reaction to rationalism in social theory. The roots of sociology are mainly in Romanticism and most of the early sociologists were critical of the theory of the social contract, of utilitarianism and of economic theory. Although not all of them. Herbert Spencer was an individualist and rational choice plays some part in his sociology, even though he is known to sociologists mainly as a founder of

Rational choice individualism

291

functionalism. Some may think of Vilfredo Pareto, who was both an economist and a sociologist, and certainly a promoter of rational choice. But not in sociology. Pareto is actually the source of the common idea that economics is about rational action and sociology about irrational action (Samuelson, 1947: 90). The real pioneer of rational choice in sociology was Max Weber. We have already seen, in chapter 4, that Weber wanted to import methodological individualism from economics to sociology. We have also seen (pp. 95–7) that Weber was something of a pioneer of rational choice in economics. It remains to point out that Weber intended to assign a central role to rational choice also in sociology. It is true that instrumentally rational action is only one of four types of action in Weber’s sociology – the others are value-rational, affectual and traditional action – but it is the most important, and for two reasons: first, the historical development of the West has been such that instrumentally rational action is now the dominant type of action in our culture. Second, as I have already indicated, instrumentally rational action is methodologically primary. When trying to understand an action, we should always start by assuming that we have to do with rational action. Only if we fail to account for an action by assuming that it is instrumentally rational, should we turn to other types of explanations: that it is due to emotion, tradition or intrinsic values (Weber [1922] 1978: 4ff). Weber’s rational choice sociology was no success story. Talcott Parsons at first wanted to build sociology on a theory of action, but emphasised values more than instrumental rationality, and soon turned in the direction of systems theory. Another neglected attempt to create a rational choice sociology was made by the economist John C. Harsanyi, who also recognised it as a form of methodological individualism and raised it against Parsons’s functionalist sociology. The road to success, according to Harsanyi, is the use of game theory together with his own, new, concept of ‘rationality’, which yields determinate solutions for all game situations and, therefore, for most social situations. Social institutions and practices, for instance, can be explained in terms of the balance of power among individuals (Harsanyi, 1962; 1966b). Harsanyi recognised two opposite theoretical approaches in the social sciences: the relationistic approach, which is individualistic, and the functionalistic approach, which is collectivistic. Since Harsanyi favoured the former, he set out to show its superiority to the latter. He chose to demonstrate its superiority with respect to social phenomena, such as social status, social values and social institutions (Harsanyi, 1966a: 357f; 1968: 305f). Social status is, besides economic gain, the most important incentive and motivating force of social behaviour. A person has high social status in a group if all or most other members of the group show deferential behaviour towards him. The other members of the group show deferential behaviour towards a certain member of the group if they attach special importance to his activities within the group. Social status, thus, is a form of power relationship; as such, it depends upon the ability to influence other people through rewards and/or punishments. The ultimate explanation of social status, according to Harsanyi, is in terms of a

292

Rational choice individualism

person’s ability to deal out rewards and punishments (1966a: 359–69; 1968: 316–21). Social values play an important role in the functionalist and conformist approach represented by Talcott Parsons. According to Harsanyi, the most important defect with this approach is that it cannot explain social change. By contrast, the rationalistic approach can account for both stability and change. Social values, their stability and change, are explained, in all essentials, in terms of the self-interest of individuals. When it serves the self-interest of a sufficiently large number of individuals to change their values, and when the pressure for conformity is not too strong, then there will be a change in social values (Harsanyi, 1969: 513–15, 526–32). Like social values, social institutions are explained by Harsanyi in terms of an incentive for people to change their behaviour ‘[A]s a result of certain changes in the society or in its natural environment or in its relations with its external social environment, some people have decided that their interests would be better served by a new type of institutional arrangement’ (Harsanyi, 1969: 532). Accompanying this individualist explanation of social institutions, Harsanyi proposes an individualist concept of ‘social function’. The ‘social function’ of an institution is defined as ‘all the benefits that various individual members of society derives from its operation’ (p. 532). The individualist concept of ‘social function’ is contrasted with the collectivist concept, according to which social institutions are explained in terms of their contribution to the maintenance of the social system as a whole.2 One particularly clear example of the use of a collectivistic concept of function is the theory of social stratification suggested by Davis and Moore. In their well-known (among sociologists, at least) article ‘Some Principles of Stratification’ (1945), they explained the universal fact of social stratification in terms of the functional necessity ‘faced by any society of placing and motivating individuals in the social structure. As a functioning mechanism a society must somehow distribute its members in social positions and induce them to perform the duties of these positions’ (p. 243). Harsanyi feels that there is something suspect about this explanation of social status in terms of the functional needs of society as a whole (Harsanyi, 1966; 1968), and so do I. His own explanation of stratification is unfortunately not an improvement upon that of Davis and Moore. By blurring their important distinction between social position and the status attached to it, Harsanyi ends up with a circular explanation of social status in terms of social status. The reason is probably that Harsanyi as an economist and methodological individualist lacks a concept of social structure.3 Such a concept was introduced in rational choice sociology by the sociologist James Coleman. James Coleman James S. Coleman was, until his premature death in 1995, the undisputed leader of rational choice sociology. At the end of his career, he also proclaimed himself

Rational choice individualism

293

a methodological individualist, but he was always careful to point out that his was a ‘form’ of methodological individualism, implying that there are other forms as well. I think this caution was very wise, because Coleman’s methodological individualism is of a peculiar kind, far removed from the original version of this doctrine (cf. Heckathorn, 1997: 8f). It is different, not only from the original strong version of methodological individualism, but also from Joseph Agassi’s weak version of institutional individualism. When Coleman (1994b) looks back upon his life as a sociologist, it appears – to the reader, if not to himself – as a constant attempt to unite holism and individualism. In the 1950s, he tells us, sociology was split in two: first there was theoretical sociology, which conceived of society as a system. On this holistic side of the split was also the tradition of community studies, which used the community as the unit of analysis. On the other side of the split, there was the survey method of empiricist sociology, almost exclusively focusing on the individual as the unit of analysis. In Coleman’s earliest vision of sociology, the unit of analysis was the social system but it should be investigated with the quantitative methods of empiricist sociology, rather than with the largely qualitative methods of community studies (pp. 30f). At this time Coleman was a holist, conceiving of himself as a ‘Durkheimian’ (1990d: 49; 1994b: 33). It was only some years later that Coleman detected rational choice and came to see it as the solution to the problem of analysing social systems in terms of individuals (cf. Swedberg, 1996: 315–7). In addition to rational choice, however, there has remained a holist side to Coleman’s work, in the form of a consistent structuralism. It is my thesis in this section, that Coleman never argued that the behaviour of systems could be explained in terms of individuals alone. Individuals are usually implicated in social structures and sociology can only advance by paying attention to this fact. Coleman’s vision of sociology is really a combination of rational choice and structuralism. The first clear expression of Coleman’s turn to rational choice individualism is probably in the article on ‘Collective Decisions’ from 1964. Inspired by George Homans’s individualist theory of exchange, he complains that ‘sociologists have characteristically taken as their starting-point a social system in which norms exist, and individuals are largely governed by those norms’ (p. 166). The main flaw with this procedure, according to Coleman, is that it leaves traditional sociological theory unable to answer what should be its central problem; the problem posed by Thomas Hobbes: Why is there not a war of all against all? In this paper, I will proceed in precisely the opposite fashion to that taken by the advocates of homo sociologicus. I will make an opposite error, but one which may prove more fruitful. I want to begin the development of a theory of collective decisions, and in so doing I will start with an image of man as wholly free: unsocialized, entirely self-interested, not constrained by norms of a system, but only rationally calculating to further his own interest. This is much the image of man held by economists, and with it the economists have answered one part of Hobbes’s question: how is it that although the

294

Rational choice individualism men who make it up are wholly self-interested, the economic system can operate with one man’s actions benefiting others. It was the genius of Adam Smith to pose an answer to this part of Hobbes’s question. (Coleman, 1964: 167)

Coleman’s own answer to Hobbes’s question is a theory of exchange, inspired, I believe, not only by Adam Smith and George Homans, but also by the public choice theory of James Buchanan and Gordon Tullock. Like the latter, he uses game theory to analyse a legislative game of vote trading. Like the latter, he also insists upon self-interest, rather than rationality, as the essence of economic man. Since then, Coleman remained convinced that assuming self-interest is a proper point of departure for social theory (see, e.g., Coleman, 1990c: 31f).4 Since then, Coleman also used to maintain that the central problem of sociology was to explain social phenomena in terms of individuals, rather than the other way around. His own efforts to solve this problem led him to develop two different, but related, theories: first, there is his general and individualistic theory of social systems. Second, there is his individualistic explanation of the emergence of rights and social norms. The basic elements of Coleman’s original theory of social systems are actors and resources, or events. Actors have interests in these resources and events and control over some of them. The basic theoretical ideas are (1) that individuals are self-interested and act so as to maximise the utility they derive from resources and events and (2) that in order to maximise this utility, they exchange control over resources and events with each other.5 Coleman’s theory of social systems is obviously a theory of exchange, borrowed from economics and public choice and, like the latter, it is individualistic. Indeed, it should be more individualistic, since economics is usually satisfied to treat firms and households as acting units. ‘For most purposes in sociology, we cannot assume purposive acting units at a level above the individual’ (Coleman, 1965: 105). The fundamental unit in Coleman’s analysis of systems of exchange is the acting individual, or person. Acting units larger than single persons are constructed entities and can only be justified if it is possible to show that the individuals composing the larger unit have unitary goals. The analysis of ‘already-formed units of social organization’, according to Coleman, ‘must begin with persons, and move up from there, or if, in an application, it begins at a level above persons, it must be ultimately analyzable into relations among persons’ (1975: 85f). In the early versions of Coleman’s theory of exchange, individuals have de facto control over resources and events, but no de jure control, or legal rights. They may also have control, or power, over other individuals, but no rights to command, or authority. Nor are there any social norms to regulate exchange between individuals. As we have seen, Coleman’s basic urge was to rid sociology of explanations in terms of norms and other social entities. Eventually rights and norms, and their derivatives authority and social capital, become important elements in Coleman’s social theory, but he retains the individualist inclination to explain their emergence and maintenance, rather than accept them as given to

Rational choice individualism

295

analysis. ‘The question for rational action theory is why and how does a norm arise and how is it maintained’.6 The same goes for rights and authority relations: ‘Just as a theory of rational action cannot take social norms as given, even though norms are found in all social systems, a theory of rational action cannot take authority relations as given, even though authority is found in all social systems’ (Coleman, 1992a: 142). It is my impression, however, that Coleman no longer believes in the possibility of making a clean sweep. His explanation of the emergence and maintenance of norms is not in terms of individuals alone. The emergence of social norms is subject to two conditions, each necessary and both sufficient. ‘Both conditions may be described as socio-structural’ (Coleman, 1990c: 241).7 The first condition is the existence of ‘externalities of an action which cannot be overcome by simple transactions that would put control of the action in the hands of those experiencing the externalities’ (Coleman, 1990c: 251). The second condition ‘is that under which the second-order free-rider problem will be overcome by rational holders of a norm’. ‘This condition depends on the existence of social relations among beneficiaries’ (p. 273). A similar observation concerns the modern paradigm of methodological individualism: the economic analysis of market exchange. According to Coleman (1984: 85), economic transactions and institutions depend upon the existence of trust between actors and since ‘trust is a relation between two actors’, it depends ‘not simply on the average level of trust, but on the social organization of trust’. The interesting consequence of this, for a rational choice theory of trust, is ‘the combination it involves of rational action theory and structural theory’ (Coleman, 1992a: 147).8 I have presented the individualist side of Coleman’s work and turn now to his holist side; his structuralism. As I have already indicated, this theme is there from the beginning, but it is most pronounced in two of his books: Power and the Structure of Society (1974) and The Asymmetric Society (1982).9 In these books, Coleman stresses the importance, for modern society, of the development of a new type of social actor: states, corporations, trade unions, parties, etc. The emergence of these actors onto the scene, has led to a complete transformation of social structure. Of special importance is their status as ‘legal’, or ‘juristic’ persons, with rights and duties of their own, which makes it possible to concentrate a previously unseen amount of power in these fictitious persons. A basic theme of Coleman’s books is that society, or the social system, must be conceived of as being made up of two elements: natural persons and corporate actors. Thus, we arrive at three different kinds of relations: (1) between natural persons, (2) between corporate actors and (3) between natural persons and corporate actors (Coleman, 1974: 87ff). The third type of relation, Coleman calls, asymmetric, since it involves actors, or persons, of different types and unequal in size and power (Coleman, 1982: 19ff). A corollary of the distinction between natural persons and corporate actors is that we must make a distinction between the former and the positions they occupy in corporate actors (1974: 36, 49; 1982: 14f). Now, these distinctions were never made by a methodological individualist before – only by methodological holists – and they provide the main reason for

296

Rational choice individualism

arguing that Coleman’s version of methodological individualism is different from all earlier versions.10 The main difference is that Coleman admits that corporate actors have interests of their own, interests which are distinct from the interests of the natural persons, who occupy positions in the corporate actors. Thus, ‘corporate actors are, in their actions, motivated towards purposes of their own – very often purely growth – for which membership benefits are viewed merely as constraints’ (Coleman, 1974: 29). If this is so, social structure enters rational choice explanations, not only as constraints upon action, but directly as a determinant of actors’ interests. It is a matter of social structure, not of personal aptitude, that households maximise utility, firms maximise profit, politicians votes and bureaucrats budgets – if this is, indeed, what they do. Coleman’s structuralism was not a temporary aberration from the individualist track, but a permanent part of his social theory. The arguments he put forward in Power and the Structure of Society and in The Asymmetric Society, are restated with equal force in Foundations of Social Theory (1990c: parts III and IV) and in his Presidential Address to the American Sociological Association in 1992 (Coleman, 1993a). In the latter (1993a: 7f),11 Coleman argues that positions, or offices, occupied by persons, not persons themselves, are the elements of the social structure of purposively constructed corporate actors. Therefore, relations within corporate actors, are between positions, not persons. This has always been the central idea of social holism (see Udehn, 1987: 83–97). The bifurcation of Coleman’s sociology into an individualistic and a structuralistic part is not my own fabrication. It is how Coleman, himself, describes his approach from an early date: ‘Thus the general characteristics of this approach are two: a model of a purposive actor … and a structural system of activities in which the actors are embedded’ (1965: 103). This approach reflects society itself: Individuals constitute one set of elements, each a purposive acting entity, each occupying positions or roles. The organization of roles, that is, the purposive social organization, is another type of element in society, with many of the same properties as actors that the individual has. (Coleman, 1971: 74) At the end of his career, Coleman still describes his approach in terms of two components: ‘One is rational action … and the other is social structure which provides the constraints, incentives, and contexts of action that bring about the transitions between micro and macro levels’. In order to distinguish his own approach from other approaches, he calls it the ‘rational-structural approach’ (Coleman, 1992a: 134). Because of his structuralist view of the social system, Coleman has become more critical of economic theory than he seemed in his programmatic 1964 article on ‘Collective Decisions’. Twenty years later, he is still maintaining that the central problem of social science is that of ‘moving from a model of individual behavior to a theory of the behavior of a system composed of those individuals’

Rational choice individualism

297

(Coleman, 1984: 86). But now he also maintains that this problem can only be solved by ‘taking social organization explicitly into account in making this transition, rather than assuming it away’ (p. 86). The problem with economics (and with much quantitative sociology) is that it ignores social structure. This is a pity, because introducing more social structure is the most promising avenue to scientific progress in economics. Rational choice sociology borrows some elements from neoclassical economics, but differs from the latter by taking social organization and social institutions seriously. ‘Neoclassical economics would either ignore such social structure altogether, or treat it as endogenous, while rational choice theory in sociology does not hesitate to regard prior social structure as exogenous in analysis of system functioning’ (Coleman, 1994a: 170). The hallmark of rational choice theory in sociology is the combination of an assumption of rationality on the part of individuals, but replacement of the assumption of a perfect market with social structure, sometimes regarded as endogenous and other times regarded as exogenous, which carries individual actions into systemic outcomes. (Coleman, 1994a: 167) According to his friend and college Gary Becker (1996: 378), ‘Jim makes a major advance’, relative to economics, ‘by incorporating social structure into the theory’. He also observes, however, that ‘Jim was not content simply to take social structure as given. He recognized that it was desirable to try to build up the structure from the interactions among the choices of individuals and other actors’. I believe I have shown conclusively that there is a structuralist, as well as an individualist, side to Coleman’s sociology. I will now turn to his methodological individualism and try to show that it is a new version of this principle, different from all earlier versions, including the institutional individualism of Agassi and Boland. Coleman’s methodological individualism is explicitly stated for the first time in a programmatic article in American Journal of Sociology in 1986. In the abstract of this article, he says that his programme for social research has two essential elements: The first is the use of a theory of purposive action as a foundation for social theory; this entails acceptance of a form of methodological individualism and rejection of holism. The second is a focus in social research and theory on the movement from the level of individual actions to macrosocial functioning, that is, the level of system behavior. (Coleman, 1986c: 1309) A first thing to notice is that Coleman refers to his methodological individualism as a ‘form’ of this doctrine, implying that there are other forms as well. A second thing is that his methodological individualism uses a theory of purposive

298

Rational choice individualism

action as the ‘foundation’ for social theory. Other expressions, used by Coleman, are that his form of methodological individualism ‘grounds social theory in a theory of individual action’ (p. 1309) and that ‘(p)urposive action of individuals can be taken as a starting point by sociologists’ (p. 1312).12 None of them rules out the use of institutions and social structure as determinants of action and, therefore, as co-determinants of system behaviour. A third thing worthy of attention is that Coleman’s foundation is a theory of ‘purposive action’. This is in distinction to methodological individualism based on other theories of action, or behaviour (cf. Coleman, 1979: 76). A fourth observation is that Coleman claims that his form of methodological individualism implies a rejection of holism. This is a highly debatable assertion, stated with no argument at all to support it. I maintain, to the contrary, that it is no more the case that all forms of methodological holism excludes reference to purposive action, than it is the case that all forms of methodological individualism excludes reference to institutions and social structure. Both positions are about equally contentious. A fifth point concerns the second element of Coleman’s programme. I suggest that the focus on the movement from individual behaviour to macro-social functioning at the level of system behaviour is fully in line with the original strong version of methodological individualism, but it is not common among methodological individualists to talk about ‘macrosocial functioning’ and ‘system behaviour’. Coleman returns to methodological individualism in Foundations of Social Theory (1990c) and in an interview with Coleman by Richard Swedberg in 1987, but published the same year as the former work (Coleman, 1990d). In Foundations, Coleman is even more cautious, and his methodological individualism less restrictive, than in the article from 1986. He repeats that he is suggesting a form, or ‘variant’, of methodological individualism, but adds that it is ‘a special variant’. No assumption is made that the explanation of systemic behavior consists of nothing more than individual actions and orientations, taken in aggregate. The interaction among individuals is seen to result in emergent phenomena at the system level, that is, phenomena that were neither intended nor predicted by the individuals. Furthermore, there is no implication that for a given purpose an explanation must be taken all the way to the individual level to be satisfactory. The criterion is instead pragmatic: the explanation is satisfactory if it is useful for the particular kinds of intervention for which it is intended. This criterion will ordinarily require an explanation that goes below the level of the system as a whole, but not necessarily one grounded in individual actions and orientations. (Coleman, 1990c: 5) Essentially the same view of methodological individualism emerges in the interview. Coleman now takes the somewhat odd view that ‘methodological individualism can work at more than one level’. Thus, ‘for some purposes, one could carry out an analysis of a system of action among firms as actors, without going down to the individuals within the firm … for some investigations, one would be,

Rational choice individualism

299

I think, justified in taking corporate actors as having all the properties of an actor’. Coleman is aware, of course, that this is not how methodological individualism is usually conceived: ‘True methodological individualism takes natural persons – the actions of natural persons – as the only starting point and looks at the system of action that occurs among these’ (Coleman, 1990d: 50). The most noteworthy element in Coleman’s methodological individualism, as stated in the above texts, is that it does not demand that we go down to the level of individual action when explaining the functioning of social systems. Another strange element is the idea that ‘interaction among individuals is seen to result in emergent phenomena at the system level’ (Coleman, 1990c: 5). This has always been a central tenet in the metaphysics of holism, but alien to all forms of atomism, including methodological individualism (see Udehn, 1987: 83–97). It could be, of course, that Coleman conceives of ‘emergence’ in some unorthodox way, but I do not think so. He maintains that rights and norms are supraindividual social entities, with an existence of their own, and irreducible to the level of individuals.13 This is social holism, pure and simple. I have found two other references to ‘methodological individualism’ in Coleman’s work. The first is in an article on ‘The Economic Approach to Sociology’ (1992a) and the second in ‘A Rational Choice Perspective on Economic Sociology’ (1994a). In the first, the economic approach to sociology is defined by a form of methodological individualism, stated, somewhat vaguely, as being characterised by the fact that ‘explanation involves the actions of individual actors’ (p. 133). ‘Its central defining property is that a foundation of rational action underlies all theoretical work’ (p. 134). This is in sharp contrast to the methodological holism of functionalism in sociology, which ‘introduces teleology at the level of social systems, implicitly treating the system as an actor acting purposively’ (p. 125 ; see also Coleman, 1992a: 135).14 In the second article, nothing new is added to his earlier explications, except that he now states methodological individualism explicitly in terms of his wellknown diagrammatic representation of the micro–macro relation in social theory (1994a), also introduced in Coleman (1986a), in his programmatic 1986 article in The American Journal of Sociology (1986c) and in Foundations of Social Theory (1990c).15

Figure 10.1 Coleman’s micro–macro scheme Source: Coleman (1986a: 347; 1986c: 1321f; 1990c: 5–10; 1994a: 166f)

300

Rational choice individualism

With the help of this diagram, Coleman identifies four types of explanations, or relations between variables, occurring in social theory. In type 2 relations, psychic states and/or individual behaviour are explained in terms of social structure or some other macro-social entity. In type 1 relations, actions of individuals are explained in terms of some psychic state; a drive, motive, or intention. In type 3 relations, the behaviour of the social system is explained in terms of the actions of individuals. Type 4 relations, finally, connect one macro-social state, or entity, with another. This relation, according to Coleman, represents methodological holism (1986c: 1321). Methodological individualism is represented by the remaining relations 2, 1 and 3, or macro–micro–macro (1986c: 1322; 1994a: 166f).

Figure 10.2 Methodological individualism according to Coleman Source: Coleman (1986c: 1322; 1994a: 166f)

It is obvious, I believe, that Coleman’s version of methodological individualism is not the psychologistic version. Type 2 relations imply that social phenomena may be part of the explanans and used as exogenous variables. Coleman’s scheme is, in fact, well suited to make the distinction between two distinct types of methodological individualism, which I have called the strong and weak versions of this principle (see pp. 195–9, 227). Before Karl Popper’s plea for institutionalism in social science, there was only the strong version of methodological individualism. This version is represented by type 1 and type 2 relations in Figure 10.2. According to the strong version of methodological individualism, methodological holism is represented by both type 2 and type 4 relations. With Karl Popper and his followers, however, came the so-called institutional individualism, which is, no doubt, a weak version of methodological individualism. It is significant that Hedström and Swedberg (1996: 297) call their first type a situational mechanism after Popper’s situational analysis, even if they do not seem to adopt his institutionalism. In one of his last writings, Coleman (1993b) takes the opportunity to clarify and somewhat amend his earlier position, as stated most fully in Foundations. In a reply to the structuralist sociologist Peter Blau, who criticised his analysis of vote trading, Coleman says that he agrees that social structure provides the incentives that leads to vote trading.

Rational choice individualism

301

But there is another question: Where does this structure, which provides the incentives that lead to vote-trading, come from? Obviously, from prior interdependent actions of individuals and corporate actors, whose interests and actions were shaped by the incentives and constraints provided by the social and political structure existing at that time. Thus structure at one time (macro-level) generates the conditions which together with existing interests shape the actions of actors (micro-level) that jointly procuce [sic] outcomes which modify the structure of a later time (macro-level) which generates conditions that again (through constraints and incentives) shape actions (micro-level) that jointly produce outcomes (macro-level) and so on. (Coleman, 1993b: 63) The novelty in this quotation is that Coleman adds a time dimension to his earlier structural individualism. In his own words, it ‘illuminates the complementarity of structure and action, as well as the alternation in time between the micro–macro and macro–micro’ (p. 63). Coleman’s original diagram can now be extended to take the following form (cf. Abell, 1996: 261):

Figure 10.3 Coleman’s micro–macro scheme extended in time

What this diagram shows is a never-ending dialectic of structure and rational action, which is similar to some other ‘dualistic’ approaches to the relation between individual action and social structure.16 The question is: What part do institutions and social structure play in the explanation of social phenomena? If we look for an answer in the writings of Coleman, we will find quite a number of distinct ways in which ‘society’ explains, first, the behaviour of individual and, second, the behaviour of social systems. As a first step, we may distinguish between an internal, or subjective, and an external, or objective, effect. Every individual living in society is socialised and internalises, in varying degrees, the values and beliefs prevailing in the society, or group, to which he/she belongs. In addition, individuals almost always confront ‘society’ as an external constraint upon their actions at the moment of action.

302

Rational choice individualism

Some sociologists, such as Weber, see society, entirely as a subjective reality, whereas others, such as Durkheim, insist that society is objective and external to individuals. Coleman recognises both aspects of society, and criticises the early Parsons’s approach to institutions, for being too subjective. ‘By refusing to define institutions in terms of structures, Parsons is not rejecting the structural or objective orientation to institutions, but wants, rather, to develop a theory based on the relation of the individual to social structure’ (Coleman, 1990a: 334). According to Coleman (pp. 337f), however, the important thing to be explained is the emergence of institutional structures; concrete structures of relations between individuals or, rather, between social positions (see above). These external constraints are conceived of, by the strong version of methodological individualism, as simply the actions and reactions of other individuals, but Coleman does not follow suit. He conceives of social structure as a distinct element in the explanation of social phenomena. The role of this element is obscured by the diachronic form of his diagram and also by the above quotation from Coleman. It might seem as if social structure comes into play only in type 2 relations and only the actions of individuals in type 3 relations. This is not the case. Social structure is at work also in type 3 relations. This is most clearly seen in Coleman’s discussions of economic theory.17 When ‘Introducing Social Structure into Economic Analysis’ (1984), Coleman argues for ‘taking social organization explicitly into account’ when making the transition ‘from a model of individual behavior to a theory of the behavior composed of those individuals’ (p. 86). This is clearly a type 3 relation. The same argument reappears in ‘A Rational Choice Perspective on Economic Sociology’ (1994a). Recapitulating the relations in his well-known diagram, he now maintains that the third relation consists of ‘the combination of the actions of individuals, in some institutional structure, to bring about systemic outcomes’ (Coleman, 1994a: 166). Both the institutions through which the micro-to-macro link takes place, and those through which the macro-to-micro link takes place, may be taken as exogenous in rational choice theory, in studying the effects of particular institutional structures on individual actions or on systemic outcomes (Coleman, 1994a: 171) Coleman’s most explicit statement to this effect is in his reply to some critical remarks by the structuralist sociologist Peter Blau: the ‘interdependence’ of this third step is something which Blau slides over, while it is essential to the theory. The interdependence consists of the particular institutional structure within which the actions must take place, the institutional structure that consists of constraints and incentives. It is one kind of institutional structure in an economic market, another in the American Congress, still another in the British parliament, and another in bureaucratic organization. (Coleman, 1993b: 63)

Rational choice individualism

303

Thus, there is no doubt that Coleman saw institutional structure as part also of type 3 relations. A more complete form of the Coleman diagram, therefore, would be the following:

Figure 10.4 Social structure as a determinant of individual action

The reply to Blau is interesting, because Coleman makes some amendments to his earlier position. From his 1964 article on ‘Collective Decisions’ to his Foundations, Coleman consistently maintained that it is more important to explain micro-to-macro, or type 3, relations than to explain macro-to-micro, or type 2, relations (1990c: 6; 1990b: 35). His main reasons for this is that this is the most difficult and the most neglected problem in social science, or, at least, in sociology (Coleman, 1986c: 1320ff; 1988: 174). In his reply to Blau, however, he admits that he made the opposite error of neglecting type 1 relations in The Foundations of Social Theory. ‘Were I writing the book over again, I would give considerably more attention to this macro-micro relation’ (Coleman, 1993b: 63). In the latest writings of Coleman, it is no longer possible to detect any preference for an individualistic rational action theory over structuralism. Since they are complementary, both are equally necessary and equally important. Concluding a discussion of existing and possible areas of application of ‘The Economic Approach to Sociology’, Coleman writes: In all four of these areas of application, the role of rational action theory is central. Also central, however, is structural theory. Rational action theory drives the phenomena, for it constitutes an engine of action for the actor. Its complement, structural theory, is necessary to translate the action from the micro level of actors to the macro level of systems of action. The resulting system of behavior is a consequence both of the ‘engine of action’ provided by rational actor theory and structures of interdependence of actor’s actions which generate system behavior from individuals’ actions. (Coleman, 1992a: 147) An interesting thing about this quotation is that Coleman now makes a distinction between rational action theory and structural theory. I believe that this distinction is sound, since there is nothing in a theory of rational action, or

304

Rational choice individualism

of rational choice, to suggest the idea of social structure. I also believe that it supports my suggestion that Coleman’s programme is really a combination of individualism and structuralism. Therefore, insofar as it is a manifestation of methodological individualism at all, it is best characterised as structuralindividualism. One important question remains: What is the difference between the institutional individualism of Popper’s followers and the structural individualism of James Coleman? Before suggesting an answer, I admit that it is possible to conceive of structural individualism, as a form of institutional individualism. This is so, because, in my view, as well as in Coleman’s, social structure is institutional structure, a direct or indirect, result of social institutions. What, nevertheless, makes structural individualism distinct is that social structure is something more than mere institutions. In institutional individualism, individuals act in a situation consisting of other individuals and institutions, which, in Gidden’s phrase, both ‘enable and constrain’ their actions. Actors may have heterogeneous desires and beliefs, but they do not necessarily, or typically, occupy positions and they have no relations that derive from their positions. Individuals interact and their actions are, therefore, interdependent, but there is no interdependence of the situations they face prior to interaction. Interdependence is a contingency of interaction. The behaviour of the social system is the aggregated result of the actions of individuals, or the resultant of their interaction. In structural individualism, on the other hand, actors are occupants of positions, and they enter relations that depend upon these positions. The situations they face are interdependent, or functionally related, prior to any interaction. The result is a structural effect, as distinguished from a mere interaction effect. In addition to natural persons, then, there are social positions and corporate actors made up of social positions. The behaviour of social systems is, at least in part, determined by the structure of those systems. The difference between institutional individualism and structural individualism can be illustrated by the examples of modern microeconomics and Coleman’s analysis of corporate actors. As we have seen above (pp. 245ff ), there is a growing awareness that microeconomics exemplifies institutional individualism, rather than the original, strong version of methodological individualism. Individuals are price takers and prices depend upon the institution of money. In addition, modern markets are possible only because of the rights of property and contract. Within this institutional framework, individuals interact and the result is new prices and a new allocation of resources. The process by which this takes place is usually described as ‘aggregation’, but as Coleman (1986a: 347; 1986c: 1321; 1987a: 154) observes, this is a misleading term: ‘for the phenomena to be explained involve interdependence of individual’s actions, not merely aggregated individual behaviour’ (1990c: 22). ‘[S]ocial structure is something other than the undifferentiated, fully communicating social structure that is assumed in the perfect market of neoclassical economics’ (1994a: 167). Since it is difficult to provide a positive explication of structural individualism, I suggest a

Rational choice individualism

305

negative one: structure is tantamount to a failure to solve the problem of aggregation, in economics, as elsewhere. When it comes to corporate actors, ‘Rights are held by functional parts of the organization, and then by positions in each of these parts’ (Coleman, 1994a: 173). Thus, according to Coleman, social structure is something more than institutions, in the sense of rules of individual behaviour. It is also more than the interdependent interaction which results from individuals following rules of individual behaviour. Social structure consists largely of corporate actors, constructed by some individuals with the help of rights and norms created by other individuals, but existing independent of each one of them, or at least of most of them. Corporate actors are made up of positions, which are independent of the individuals filling these positions. The social systems emerging from type 3 relations, therefore, cannot all be depicted as resulting simply from the actions of individuals acting in an institutional environment. It is the result of individuals acting in a structure of interdependent positions, existing prior to the interaction of individuals filling these positions (Type 6). According to Coleman (1991: 6) these constructed social structures may have unintended consequences. Thus it is not just that individual actions have unintended consequences, as in the idea of spontaneous order and in Elster’ supra-intentional causality (see below), but that there are systematic unintended consequences of social structures (see Coleman, 1992b: 266). An even more complete form of the Coleman diagram, therefore, would be like this.

Figure 10.5 Social structure as positions to be filled

A possible example of this Type 6 relation would be some forms of matching between individuals and a set of pre-existing social positions that are somehow filled by acting individuals. There is one more aspect of Coleman’s individualism that I would like to mention. Among the Austrians, methodological individualism was typically tied to a particular theory, like theoretical economics, or a particular research programme, such as Weber’s interpretive sociology, but there was no claim that all social theories must conform to this methodological programme. In contradistinction to this, the Popperian principle of methodological individualism was advanced as obligatory for all historians and social scientists. James Coleman

306

Rational choice individualism

seems to me closer to the Austrians. He does not say that all explanations in history and social science must conform to the principle of methodological individualism. Type 2 and Type 4 relations in Coleman’s diagram are considered permissible, despite being holistic. His argument is that type 2 relations should be supplemented by the neglected type 3 relations and that type 4 relations should be provided with microfoundations, consisting of a conjunction of type 1, 2 and 3 relations. Coleman’s methodological individualism, then is microfoundational, but not reductionist (see p. 336). He wants to supplement holistic explanations, not abolish them. Since he conceives of macrophenomena as real social phenomena, he does not believe that holistic explanations are half-way, in the sense of Watkins. They are half-way in the sense of being partial, but not in the sense of being not yet reduced. Raymond Boudon The main pioneer of rational choice sociology, besides James Coleman, is the French sociologist Raymond Boudon. He differs from Coleman mainly in being less of a structuralist, even if he wrote his first book on this subject (Boudon, 1968), and by being more interested in the subjective, or psychological, side of rational choice. His main source of inspiration is Max Weber (Boudon, 1984: ch. 2). Like the latter, he focuses on the subjective meaning of action, or on beliefs (Boudon, 1989). In the end, he is led, by this focus, to launch a cognitive model, as an alternative to rational choice (Boudon, 1996; 1998). More exactly, Boudon conceives of the cognitive model as more general than rational choice, but including rational choice as a special case. One reason the cognitive model is more general is that it includes action that is not self-interested and not even instrumental. Unlike Coleman, Boudon is not prepared to abandon homo sociologicus. Boudon’s homo sociologicus is not the one we are used to, however, but a close relative to homo economicus, differing from the latter mainly in being less rational (1981: 7, 155–63; 1982: 7–9, 153f). At first, Boudon based his version of rational choice on Herbert Simon’s idea of bounded, and subjective rationality; later on he relied more on Max Weber’s and Georg Simmel’s verstehende sociology (1989; 1994; 1996). Also unlike Coleman, Boudon is not particularly attracted by Hobbes’s problem of order. Like most social scientists, Boudon realises that, for explanatory purposes, at least, the social order must be accepted as given. According to Boudon, the ‘state of nature’ is but one of several legitimate paradigms in sociology (1982: 161f, 183–5).18 In an early article, Boudon (1975) recognises three basic paradigms in macrosociology: functionalism, neo-Marxism and interaction analysis. His own preference is for the third, which he also calls ‘analysis of the aggregation of actions’ (p. 398) and his main interest, at this time, was in the unintended, especially the perverse, consequences of interaction (1982). Characteristic for interactionist paradigm is situational logic and methodological individualism (1982: 201–5):

Rational choice individualism

307

This principle means (in the broad sense used here) that the sociologist must employ a method which considers the individuals, or individual actors, included in the system of interaction as the logical atoms of his analysis. To express the same principle in a negative manner, the sociologist cannot be satisfied by a theory which considers an aggregate (a class, a group, a nation) as the most elementary unit to which it will descend (Boudon, 1981: 36f) There are some oddities about Boudon’s methodological individualism. It ‘assumes’, for instance, ‘very strongly that one can state a proposition like “Germany prefers the costs of war to those of submission”, for the subject of the proposition designates a many-headed actor provided with a mechanism of collective decision-making – the German government’ (1981: 37). It would seem that Boudon uses the term ‘methodological individualism’ in a weak sense, indeed. This impression is strengthened by the fact that he finds examples of methodological individualism, not only in Tocqueville, Weber and Pareto, but also in Marx, Durkheim, Parsons and Merton (1981: 38; 1982: 7). Boudon returns to methodological individualism in his article ‘The Individualistic Tradition in Sociology’ (1987). This time, methodological individualism is given the following explication: To summarize: suppose M is the phenomenon to be explained. In the individualistic paradigm, to explain means making it the outcome of a set of actions m. In mathematical symbols, M = M(m); in other words, M is a function of the actions m. Then the actions m are made understandable, in the Weberian sense, by relating them to the social environment, the situation S, of the actors: m = m(S). Finally, the situation itself has to be explained as the outcome of some macrosociological variables, or at least of variables located at a level higher than S. Let us call these higher-level variables P, so that S = S(P). On the whole, M = M(m[S(P)]). In other words, M is the outcome of actions, which are the outcome of the social environment of the actors, the latter being the outcome of macrosociological variables. (Boudon, 1987: 46; see also 1984: 29ff) As far as I can see, this is in all essentials the same version of methodological individualism as that of James Coleman, but expressed in another language.19 In translation, M = M(m) corresponds to Coleman’s type 3 relation, m = m(S) corresponds to Coleman’s type 1 relation and S = S(P), finally, to his type 2 relation. A difference, which is not visible in the two representations of methodological individualism, is that Boudon attaches much more importance to m = m(S) than does Coleman to the type 1 relation. Also, being an explication of methodological individualism, Boudon’s symbolism lacks anything corresponding to Coleman’s type 4 relation, between two social, or macro-phenomena. This does not mean, however, that Boudon fails to pay attention to this relation. On the contrary, he recognises several paradigms

308

Rational choice individualism

besides the individualistic one, which engage in seeking macro-relations. The nomological paradigm, in particular, has, as its main objective, ‘to discover macrosociological regularities, or lawlike statements’ (p. 46). In most studies, belonging to this paradigm, ‘no effort will be made to relate the statistical relation between variables to their real causes; that is, the individual behaviors of which they are the outcome’ (Boudon, 1987: 62). Also the interpretive paradigm assumes that, ‘as soon as we leave the low levels illustrated by organization or small group studies and proceed to more complex levels, the individual actors can advantageously be forgotten’ (p. 47). For Boudon, as for Coleman, methodological individualism is another name for his advocacy of microfoundations, or ‘micro-explanation’. Like Coleman, Boudon regards statements concerning macro-phenomena as descriptive, and requiring micro-explanation.20 Behind his methodological individualism and his plea for micro-explanation, there are certain metaphysical beliefs about man and society. the more a sociologist is convinced that social facts are the product of individual actions, the less he will have an interest in searching lawlike regularities … individual action and the products of individual action constitute the only and ultimate reality which a sociologist has to deal with. A relationship between A and B can be nothing else but the product of individual actions, so that A will produce B or its opposite depending on the complex set of characteristics of the system of action. (Boudon, 1983: 14) In my view, these statements raise more questions than they answer, but they show the kind of considerations typically to be found behind an adherence to methodological individualism. Perhaps the ultimate motive behind Boudon’s methodological individualism is a wish to salvage some freedom on the part of the individual in the determination of his own actions (1981: 6–13, 163–66; 192: chs 1 and 7). As a matter of fact, I suspect that Boudon is guilty of a conflation of social holism with sociologism, or social determinism, which is typical of those who accept a considerable amount of holism, but who still want to identify themselves as methodological individualists. So what is the holistic element in Boudon’s methodological individualism? As we have seen, it assumes that the situation of individuals ‘has to be explained as the outcome of some macrosociological variables, or at least variables located at a higher level than S’ (Boudon, 1987: 46). What is hidden in this suggestion? One obvious candidate is social institutions: ‘By system I mean the outcome of the aggregation of a set of individual actions taken within a given institutional framework’ (1975: 400). Boudon’s methodological individualism, then, is really institutional individualism. But this is not all. Like Coleman, he conceives of the social system, or its structure, as a set of interrelated positions, independent of each individual, which is one step further removed from the strong version of methodological

Rational choice individualism

309

individualism. This becomes clear if we take a look at his explanation of the failure of short-cycle higher education in France. According to Boudon, the logic of the situation for those opting for higher education is similar to that of the prisoner’s dilemma. Faced with the choice between long- and short-cycle higher education, every student has an interest in choosing the former alternative. But if all do, some of them will come out worse than if they had chosen the short-cycle alternative (Boudon, 1982: 96–104). This consequence is the result of assuming, among other things, that students are equal and perceive themselves to be equal. By assuming, instead, that students from different classes, and their families, are different in important respects, we get a model which explains the unequal access to higher education for students with different social backgrounds. Besides differences in values and linguistic ability, Boudon draws attention to differences in the estimation of advantages, disadvantages and risks accompanying investment in higher education (Boudon, 1981: 135–42). Nevertheless, there has been an increase in the average level of education. A further problem is how to explain why this increase has not led to the expected increase in inter-generational social mobility. Boudon’s answer is in terms of a fixed stock of social positions to be filled. When the queue to the top positions gets longer, there is an increasing number of people whose claim to these positions becomes ineffective (Boudon, 1981: 67–75). This analysis indicates that Boudon is not only an institutional individualist, but a structural individualist, as well. And, indeed, there is lots of additional evidence to back the conclusion: Boudon is a structural individualist, like Coleman (cf. Hechter, 1983: 8).21

Analytical Marxism In the last twenty years, we have witnessed the birth of a somewhat odd creature. Quite a few, seem to look at it as something of a monster. I am thinking of Analytical Marxism, also called Rational Choice Marxism. The most scandalous fact about this approach to Marxism is that it endorses methodological individualism, or the claim that Marxism must be provided with microfoundations.22 How is it possible to turn a critic of methodological individualism (see p. 11) into a methodological individualist? Lots of Marxists believe that it is not at all possible and the critical literature is, by now, hard to survey.23 Fortunately, for me, I do not have to take a stand on this issue here. I am interested in the theory called Rational Choice Marxism, irrespective of its compatibility with the social theory of Marx. This means I can ignore the huge body of literature discussing the question whether rational choice and methodological individualism are compatible with Marxism, or not. My own view, stated without an argument to support it, is that it is possible to use rational choice in Marxist analysis, but not to reduce the latter to the former. Methodological individualism is, I believe, even harder to square with the basic assumptions of Marx’s social theory. The only version of methodological individualism, which is at all conceivable within

310

Rational choice individualism

a Marxist approach, is the structural individualism developed by rational choice sociology. With these provisos, I turn to a brief presentation of the most outspoken methodological individualists among rational choice Marxists: Jon Elster and John Roemer. Jon Elster The most influential case made for rational choice in social science is probably that of the Norwegian historian and philosopher Jon Elster. Like Harsanyi, Elster launches game theory as an alternative to functionalism within social science. In the case of Elster, however, it is not the functionalism of Parsons, but that of Marx and the Marxists, which is deemed deficient and therefore to be replaced by a more scientific approach. Elster’s main objection to functionalist explanation in social science is that it posits a ‘purpose without a purposive actor’, thus presupposing some kind of objective teleology. Institutions or behavioural patterns are explained by their beneficial consequences without being intended by anyone. Elster agrees, of course, that institutions may have beneficial consequences for some group in society without being intended by anyone, but this does not explain the existence of the institution unless the mechanism responsible for the maintenance of these institutions is specified. The defect with most functionalist explanations of social institutions is that they fail to specify the feedback mechanism whereby social institutions with beneficial consequences are maintained.24 Elster provides several examples of the illicit use of functionalist explanations in social science, especially in Marxist social science, and suggests that functionalism should be replaced by the rational choice approach, especially in the form of game theory. The rational choice approach, Elster claims, is the best among available approaches to human behaviour, and game theory is invaluable to the Marxist analysis of exploitation, class struggle and revolution.25 Contrary to the belief of many Marxists, Elster also claims that Marx himself used the rational choice approach. It is part of Marxian economics that capitalists move their capital to the industry where the highest profits can be found and that they innovate in order to survive. This surely presupposes rational action on the part of capitalists (Elster, 1983a: 165ff). Elster also gives some examples in order to demonstrate the utility of game theory for the analysis of class struggle (Elster, 1982: 465ff; 1985: 371ff). Like Coleman and Boudon, Elster justifies rational choice in terms of a quest for microfoundations. The ground for this seems to be justificatory, but not of the usual empiricist variety. Microfoundation is not a matter of observability, but of finding the causal mechanism at work. According to Elster, ‘To explain is to provide a mechanism, to open up the black box and show the nuts and bolts, the cogs and the wheels, the desires and beliefs that generate the aggregate outcomes’ (1985: 5). The need for microfoundations seems to be especially pressing within Marxism. ‘Without a firm knowledge about the mechanisms that

Rational choice individualism

311

operate at the individual level, the grand Marxist claims about macrostructures and long-term change are condemned to remain at the level of speculation’ (1982: 454). This is where game theory comes in. Game theory provides solid microfoundations for any study of social structure and social change … For Marxism, game theory is useful as a tool for understanding cases of mixed conflict and cooperation: cooperation in producing as much as possible, conflict over dividing up the product. Game theory can help understand the mechanics of solidarity and class struggle, without assuming that workers and capitalists have a common interest and need for cooperation. They do not. (Elster, 1982: 477f) Although optimistic about the future prospects of the rational choice approach, Elster has a keen sense of its limitations (Elster, 1979b: 112ff). In this, he differs favourably from many other defenders of the rational choice approach, such as Becker and Harsanyi. First of all, game theory is limited in its scope to the sphere of the intentional. But there are also fields in social life where causality reigns. There is, according to Elster, both a sub-intentional and a supraintentional causality, circumscribing the field of intentional action. ‘Subintentional causality’ refers to socialisation; the process in which our preferences and beliefs are shaped, while ‘supra-intentional causality’ refers to the causal interaction between intentional agents, i.e., when individuals act upon the belief that other people display traditional behaviour rather than rational action (Elster, 1978: 157–63; 1979b: 20, 83–8). He also admits that not all intentional action is rational, that it is subjected to structural constraints and usually takes place with less than perfect information. Nevertheless, ‘there is a hard core of important cases where the rational-choice model is indispensable’. This model, furthermore, is ‘logically prior to the alternatives, in the sense that the social scientist should always be guided by a postulate of rationality, even if he may end by finding it violated in many particular cases’ (Elster, 1979b: 116). This is Elster’s so-called ‘principle of charity’, which he borrows from the philosopher Ronald Davidson.26 Elster is not only a proponent of rational choice, but of methodological individualism as well, and he seems to share the common presumption that the two are inseparably linked.27 By ‘methodological individualism’, Elster means ‘the doctrine that all social phenomena – their structure and their change – are in principle explicable in ways that only involve individuals – their properties, their goals, their beliefs and their actions. Methodological individualism thus conceived is a form of reductionism’ (Elster, 1985: 5). Elster’s methodological individualism, as stated in this quotation, is the original, strong version of this doctrine. This is suggested by the fact that social phenomena appear only as that which is to be explained (explanandum), whereas that which explains (explanans), includes only individuals – their properties, goals, beliefs and actions. An even more clear statement to this effect is this:

312

Rational choice individualism The elementary unit of social life is the individual human action. To explain social institutions and social change is to show how they arise as the result of the action and interaction of individuals. This view, often referred to as methodological individualism, is in my view trivially true. (Elster: 1989b: 13)

The interpretation of Elster’s methodological individualism as a strong version of this doctrine gains additional support from his claim that it is a form of reductionism. The implication of this claim is that Elster is a psychologistic methodological individualist. ‘Many argue that sociology cannot possibly, or at least not today, be reduced to psychology. Since I insist that the individual human action is the basic unit of explanation in the social sciences, I am committed to this reduction’ (1989b: 74; see also 1993: 7). There is one thing, however, which makes for a weakening of Elster’s methodological individualism: the words ‘in principle’. Like J.W.N. Watkins (see pp. 215f), Elster admits of half-way explanations. Temporarily, at least, the social scientist can be satisfied with explanations at the macro-level. In some situations, it may even be harmful to make a premature attempt to reach rock-bottom (1983b 116; 1985: 6, 359). Elster’s methodological individualism is based on ontological individualism. This is evident from his attempts to clarify this doctrine. Methodological individualism, according to Elster, is not incompatible with the fact that ‘individuals often have beliefs about supra-individual entities that are not reducible to beliefs about individuals’. Nor is it incompatible with the fact that ‘[m]any properties of individuals, such as “powerful,” are irreducibly relational, so that accurate description of one individual may require reference to other individuals’ (Elster, 1982: 453). A second indication of strong methodological individualism is that he agrees with Weber and Hayek that the fact that people entertain holistic concepts, or beliefs, about society is not a threat to methodological individualism, since these beliefs are the beliefs of individuals. Or, in other words, the fact that methodological individualism does not hold in intensional contexts is not a problem, since it is enough for social science that it holds in extensional contexts (Elster, 1985: 6). This view suggests the intersubjectivist theory of society treated, at length in chapter 5. A third indication of strong methodological individualism is Elster’s ‘reduction’ of social relations to relational properties of individuals, which follows from the second one. In his reply to Michael Taylor, Elster says: Taylor’s main point is that my view does not allow structures as causes. By a structure he means a set of relations, e.g. relations of production, defined in abstraction from the specific relata. In his opinion, structures, thus defined, have causal efficacy. I disagree. I think beliefs (and, more generally, attitudes) about structures, thus defined, have causal efficacy, but as I say in the book, methodological individualism does not hold within intensional contexts. In

Rational choice individualism

313

extensional contexts, what has causal efficacy is a relation with its relata or, as I put it, individuals together with their relational properties. (Elster, 1986b: 67) This is a typical ingredient in an individualistic ontology, which makes for conceiving of social order as interaction, rather than structure (cf. Taylor, 1986: 5). On the basis of these clarifications of the doctrine of methodological individualism, I think it is safe to conclude that Elster is also an ontological individualist. This conclusion is supported by his view of social institutions as ‘essentially … collections of human beings’ (1993: 8). The clearest statement to this effect, however, is in a reply to Charles Taylor: Through the triple interdependence studied by game theory – between rewards (through envy and altruism), between choices and rewards (through general social causality), and between choices (through mutual anticipation) – the individual emerges as a microcosmos which sums up in itself the whole network of social relations. This in my view makes for a plausible explanation of the emergence of the norms of solidarity, though here as elsewhere their persistence may be better explained through the diffuse socialization processes in the family than by explicit considerations of this kind. (Elster, 1980: 218f) Elster, then, is not only a methodological individualist, but an ontological individualist, as well: that much is clear. But he is not committed to the most extreme version of methodological individualism, as exemplified by the theories of the social contract and of general equilibrium. He denies being an atomist and he conceives of human beings as social beings (Elster, 1993: 7). Elster’s idea of the individual as a microcosmos, suggests that his social ontology is closer to Leibniz’s monadology, which would not be a coincidence, since Elster once wrote a book on Leibniz (cf. Moggach, 1991). Compared to Coleman and Boudon, Elster is much more of an individualist. While the former are structural individualists, Elster is a fairly clear case of strong psychologistic individualism. It makes no explicit room for the treatment of social institutions and social structure as exogenous variables in social scientific explanations, at least not in rock-bottom explanations. The question remains if Elster makes more room for social institutions and social structure in other parts of his work. I think this is the case. I think it is possible to find at least traces of institutional and structural elements in his general model for explanations of human action. According to Elster, human action may be seen as the end result of two filtering processes. The first filter consists of structural (physical, technical, economic and institutional) constraints upon action. The set of possible actions remaining within these constraints is called, by Elster, the ‘feasible set’, by most others the ‘opportunity set’. The second filter consists of the human mind as the locus of choice. More specifically, it consists of the individual’s preferences and it

314

Rational choice individualism

functions so as to single out one alternative, within the feasible set, as the action to be taken.28 Exactly what belongs to the external constraints, limiting the alternatives, and what shapes preferences is hard to tell and a matter of dispute among adherents of rational choice.29 According to Elster, there are two alternatives to rational choice. The first is structuralism, which may be seen as a limiting case of rational choice, when there is only one, or a few, alternatives in the opportunity set. In this case, the individual has little or no choice. Elster interprets structuralism as implying an assumption of severe limits to choice, or of a strong social determinism. I do not think this is a fair interpretation of structuralism, but I leave this matter unsettled. It is certainly not the only one, as Elster admits, himself.30 For my present purposes, it suffices to point out that, according to Elster, there are structural constraints upon action, which enter rational choice explanations through the opportunity set. Elster finds another alternative to rational choice far more important. This alternative says that the mechanism realising one member of the feasible set is causal rather than intentional. This may be due to various obstacles to rationality, such as habitual behaviour, tradition, values, norms and roles. Elster agrees that action is causally influenced in this way, but not directly. Traditions, values and norms influence human action indirectly, through the preferences (Elster, 1979a: 76–8; 1979b: 114–16). I think there is some ground for this view in the case of values, but less so in the case of habits, traditions, norms and roles. In these cases, we come closer to the truth, if we conceive of them as constraints upon action, or as alternatives to rational choice.31 I believe that Elster is here committing a mistake which is the obverse of that commonly ascribed to Durkheim. While Durkheim was led, by his correct observation that social facts are external to each one of us, to the conclusion that they are external to all of us – which is a correct conclusion in one sense of ‘all’32 – Elster seems to be led, by the fact that values and norms are internalised, to the conclusion that they do not act as external constraints upon action. But this is an unwarranted conclusion. Even if it is true that values and norms, which we acquire in the process of socialisation, become internalised and act directly upon my preferences, the internalised values and norms of other people confront me as external constraints, in the form of expectations, sanctions and overt behaviour. The fact that all, or most, individuals, follow the institutional rules of a society, makes these rules external to all of them, only not all of them collectively.33 Nevertheless, even if Elster is right to suggest that ‘society’ influences peoples’ preferences rather than their opportunity sets, this is still a ‘social influence’, which seems to imply a break with strong methodological individualism, but ‘only if the causes of the attitudes and beliefs which cause action are themselves nothing but actions and properties of individuals’ (Taylor, 1986: 4). Elster is not crystal clear on this point. According to him, this social influence, suggests the idea of a general sociological theory, in which preferences and desires are explained endogenously as a product of social states to the generation of

Rational choice individualism

315

which they also make a contribution … which, needless to say, in the present state of the arts appear to be light-years away – would include (i) the explanation of individual action in terms of individual desires and beliefs, (ii) the explanation of macro-states in terms of individual actions, and (iii) the explanation of desires and beliefs in terms of macro-states. (Elster, 1983a: 86; see also 1983c: 141ff) As we saw above, Elster recognises two types of causality in human affairs: supra-intentional and sub-intentional causality. The explanation of desires and beliefs in terms of macro-states, mentioned in the quotation above, is a case of sub-intentional causality. The different forms of this type of causality can be subsumed under the general heading of ‘socialisation’. As such, it is fully compatible with the theory of society as subjectively meaningful action (see chapter 5) and does not imply any element of holism. But according to Elster, preferences are also shaped by class position and class interest (1982: 468ff; 1983c: 141ff; 1985: 460). This introduces a structural element, which is holistic. Paradoxically, then, sub-intentional causality seems to be more holistic than supra-intentional causality. The latter type of causality is a matter of the interaction between individuals, but there is nothing to indicate that this interaction is determined by structure. It is a peculiar feature of Elster’s ‘general sociological theory’ that it does not make room for structural constraints upon action (see Taylor, 1986: 3–5).34 It is possible, however, to read the following quotation as implicit recognition of such constraints: Simply to postulate causal relationships between macro-variables will not do. We may observe an empirical regularity … but we have explained nothing until we can show (i) how the macro-states at time t influence the behaviour of individuals motivated by certain goals, and (ii) how these individual actions add up to new macrostates at time t⫹1. (Elster, 1983a: 84; see also 1983b: 116) Elster’s general sociological theory seems to have much in common with the rational choice models suggested by Coleman and Boudon, except that it is much less structuralistic than that of Coleman and less structuralistic even than that of Boudon. This is rather surprising, considering the fact that Elster conceives of himself as a Marxist of sorts. Elster’s attempt to reinterpret Marx as a methodological individualist has been rejected by a majority of Marxists (and some others), who feel that this is going too far. The number of critical writings is by now enormous, and quite a lot deal with methodological individualism.35 It is quite understandable if Elster has grown tired of defending himself against all this critique. Whether for this, or for some other reason, Elster seems to have decided that methodological individualism is not a subject he wants to discuss any more. His recent contributions

316

Rational choice individualism

to methodology are about ‘social mechanisms’, which are now treated as separate from methodological individualism (Elster, 1998: 47). I will not make another contribution to the already immense number of critical writings on Elster’s attempt to make sense of Marx. First of all, because, I do not believe that I have anything of importance to add. Second, because I believe that Elster has done Marxism and social science a great service, irrespective of the ultimate validity of his interpretation, or reconstruction. I do believe, however, that it is possible to find examples in Elster’s work on Marx of interpretations, which are more in line with structural individualism than with psychologistic individualism. One example may be Elster’s suggestion that Marxist class theory ‘attempts to explain collective action in terms of the class position of the individuals engaged in it’ (1985: 336). Elster denies that this is a violation of methodological individualism. According to him it is only a convenient shorthand. This is a somewhat desperate methodological individualism by fiat. It is, of course, possible to claim, with equal right, that all holistic statements are shorthand for statements about individuals. John Roemer John Roemer is a Marxist economist, who has used the tools of neoclassical economics in order to create an ‘analytical’ Marxism. He is also a moral philosopher, who wants to get rid of exploitation. In both capacities, he has relied on methodological individualism as the proper method of investigation. In his first book, Analytical Foundations of Marxian Economic Theory (1981), Roemer’s main objective is to turn Marxian economics into a science, with the help of mathematics, deduction, equilibrium analysis and the microfoundations approach (p. 7). He notes that Marxism is a theory of class, rather than of the individual, and admits that it is possible to ‘build a model in which classes are the atoms of the system’, but chooses the individualist path: ‘The reason is this: that individuals act as members of a class, rather than as individuals should be a theorem in Marxian economics, not a postulate’ (p. 7; see also 1982b: 518). Roemer invokes Marx, himself, in support of this methodological individualism. In his next book, A General Theory of Exploitation and Class (1982a) Roemer focuses his attention on one particular topic of fundamental importance to a Marxist theory of history: exploitation. Once again he uses a neoclassical approach.36 In the model he uses, ‘both exploitation status and class position emerge endogenously as a consequence of individual optimization in the face of a constraint determined by one’s ownership of productive assets’ (p. 15). This is traditional methodological individualism, even if one institution, viz., ownership, remains exogenous. Roemer compressed his theory of exploitation to an article (1982c), where the individualist ambition appears even more clearly (p. 262f). Of those Marxists, who commented on Roemer’s article, at least one, Adam Przeworski, was enthusiastic about Roemer’s methodological individualism.

Rational choice individualism

317

In describing a society, Roemer begins with noting the set of techniques of production available to it and the distribution of wealth characteristic of it. Then he imputes objectives to individuals. This is what is given about a particular society and this is all that is given. He then shows that when individuals pursue their objectives, under the constraints of the technology and the structure of property, they will enter necessarily into class relations within [sic] one another and will produce a definite distribution of income. (Przeworski, 1982: 306) Przeworski then goes on to argue that the orthodox Marxist idea that individuals enter objective social relations and occupy positions in a social structure which is independent of particular individuals is a tautology.37 He ends his comments by joining in the pleas for a methodological individualism (p. 313). Roemer returns to the issue of methodological individualism in the programmatic anthology on Analytical Marxism (1986), but this time he observes a difference between the ‘hegemonic individualism’ of neoclassical economics and that of analytical Marxism. Whereas the former assumes fixed preferences, ‘Marxism … asserts that people’s preferences are in large part the consequence of social conditioning’ (p. 193). According to Roemer, it is the task of rational choice to develop a theory of endogenous preference formation. But this takes place in an existing social environment. Thus individuals are formed by society, and these individuals react rationally to their environments to produce tomorrow’s environment, which in turn produces individuals who think somewhat differently than before, and react in their environment to bring about yet another equilibrium. (Roemer, 1986: 196) This is the familiar chicken-and-egg history once again, and we may recall Popper’s argument, that the only way to get rid of the social environment is to push the regression back into the state of nature. This was the argument that led Popper to adopt institutionalism. Roemer chooses another path. He suggests that an individual’s preferences might be determined by her meta-preferences, which in their turn, are determined by the expectations of others, given the place she occupies in the social structure (1986: 198f). It seems to me that Roemer reintroduces social structure as an exogenously given variable in his account of preference formation. This impression is confirmed, by Roemer’s article on ‘Marxism and Contemporary Social Science’ (1989). This time, he seems more willing to admit the possibility of a non-reducible social determination of preferences. Methodological individualism, now, does not preclude explaining why individuals conceive of their interests as they do (that is, why they have the particular utility functions they have);

318

Rational choice individualism indeed, the Marxist explanation is that a person’s conception of his interests is moulded by his place in the economic structure. (Roemer, 1989: 278)

Structural individualism A somewhat paradoxical conclusion of this chapter is that, of the four methodological individualists discussed in this chapter, the two Marxists are least committed to structuralism. This is paradoxical because structuralism is often considered to be one of the most typical features of Marxism. Anyway, the main result of this chapter is that there has emerged a new version of methodological individualism that we may call ‘structural individualism’, with a term borrowed from the Dutch sociologists Reinhard Wippler (1978a) and Werner Raub (1982). Structural individualism is the weakest form of individualism, for the simple reason that it is a synthesis of individualism and holism. The term holistic individualism, suggested by Philipp Pettit, for a similar position (Pettit [1993] 1996: passim), is an alternative, but I have settled for structural individualism.38 To have reached structural individualism, we have come a long way from the most radical versions of methodological individualism in the theory of the social contract and the theory of general equilibrium, and also from the less extreme versions of methodological individualism advanced by J.S. Mill, Carl Menger, Max Weber, Friedrich von Hayek, George Homans, Karl Popper and J.W.N. Watkins. In their versions of methodological individualism no causal, or explanatory, power is attributed to social phenomena. In the two-level graphic representation I have used in this book, no arrows lead from the social level to the individual level. According to structural individualism, however, there are several distinct ways in which social phenomena influence individuals. Drawing upon the various representatives of structural individualism, I recognise the following types of influence:

Figure 10.6 Structural individualism

Arrow 1 represents the general influence of culture on individuals’ preferences and beliefs in terms of social structure. This explanation is holistic only if the social environment is conceived of as situated on the social level. While most

Rational choice individualism

319

structural individualists do that, many methodological individualists conceive of this influence as flowing from some individuals to other individuals. The most obvious example is the theory of society as subjectively meaningful action. I guess that also Elster would see it this way. Arrow 2 represents the influence of social structure on our preferences and beliefs. The way our preferences and beliefs are influenced by our own place in the social structure. This type of influence is more difficult to reduce to the individual level. This type of influence is acknowledged by Elster, but more clearly by John Roemer and most clearly by Michael Taylor and Adam Przeworski. Arrow 3 stands for another type of structural influence on our preferences and actions: that which has to do with our social roles. If I engage in the maximisation of profit, for instance, this is only because I am the manager of a firm. If I preach in a church, this is only because I am a priest. This type of influence is clearly recognised by James Buchanan and James Coleman, for instance. Arrow 4 represents the institutional, or structural constraints on the opportunity set. This type of influence is recognised by virtually all institutional and structural individualists. Arrow 5, finally, represents the structural determination of interaction; the way in which the interdependence of the social situations of a set of individuals produce structural effects. Among methodological individualists, this type of influence is most clearly and explicitly recognised by James Coleman, but I believe it is part also of Raymond Boudon’s version of structural individualism and of the structural individualism of the Dutch sociologists Reinhard Wippler, Werner Raub and Siegwart Lindenberg.

11 Why methodological individualism?

The simple answer to this question is that most methodological individualists adopt this doctrine because they believe it is good social science; indeed, that it is the best guarantee that our knowledge of society will grow. But why do they believe this? Isn’t it for social science itself to tell which methodology is best? Well, things are not that simple. All scientists have ideas about what is good science. These ideas are based, partly on experience and partly on a priori images of science. It is obvious, for instance, that methodological individualism is based on epistemological and ontological views about the nature of knowledge and of society; views which are not so much the result, as the precondition of research. There is one doctrine, in particular, which seems to be an important element in the justification of methodological individualism: the doctrine of reductionism. Many social scientists and philosophers of science conceive of methodological individualism as a particular case of reductionism, and many methodological individualists share this view. The reason for this is, most probably, that they believe that reduction is the highroad to scientific progress (cf. Kinkaid, 1997: ch. 1). Behind the adoption of methodological individualism, it is also possible to discern a complex of moral and political considerations. Even though the term methodological individualism was coined to make a distinction between methodological and political individualism and to prevent a confusion between them, there is little doubt that many methodological individualists adopt this doctrine for moral and/or political reasons, some of them explicitly so. What I am suggesting, then, is that there is some kind of relation between methodological individualism and certain other doctrines, such as epistemological individualism, ontological individualism, reductionism, ethical individualism and political individualism. Such relations between doctrines may be of several kinds.1 An important distinction is between logical and psychological relations. This distinction, although analytically clear, is not always clear-cut when applied to actual relations between doctrines. A first complication is that such relations are seldom those of entailment, but usually some form of weak implication. A second complication is that psychological association of ideas is often based

Why methodological individualism?

321

upon logical relations. Ideas become associated because they are logically related. In this chapter, I will first of all discuss methodological individualism as an instance of reductionism and the implication of this for the relation between methodological individualism and psychologism. Second, I will look at the more controversial question of the moral and political motives behind methodological individualism. Before I get on to my main tasks, however, I will briefly discuss the epistemological and ontological assumptions behind methodological individualism.

Philosophical background It is a commonplace today that science is based on epistemological and ontological assumptions about knowledge and society. A host of concepts developed in the philosophy of science, such as ‘paradigm’ (Kuhn [1962] 1970), ‘research programme’ (Lakatos, 1968; 1970) and ‘research tradition’ (Laudan, 1977), have been advanced, at least partly, in order to make that point. Methodology, being a set of rules, or principles for scientific research is the main vehicle for the impact of epistemological and metaphysical beliefs on science. As we have seen in previous chapters, methodological individualism is often backed up by epistemological and ontological beliefs. Indeed, methodological individualism is sometimes stated as a thesis about our knowledge of society and often as an ontological thesis about the nature of society. I will return to these two theses in the final chapter of this book. Here I will concentrate on the supportive role of epistemology and ontology, but if we conceive of ‘methodological individualism’ as including epistemological and ontological individualism, then, it would be more appropriate to talk about an ‘individualistic research programme’, or ‘research tradition’. I suggested in chapter 6 that methodological individualism looks very much like a version of the empiricist attack on metaphysics. I also pointed out, however, that few of the most influential methodological individualists have been empiricists. It is clearly possible, then, to be a methodological individualist without being an empiricist. I will now look a little bit closer at the epistemological beliefs of methodological individualists. Closest to being empiricists, among the more influential methodological individualists, are John Stuart Mill, George Homans and the Popperians. None of them, were radical empiricists, however. They all rejected inductivism. The Popperians, in particular, deny being empiricists, or positivists. Karl Popper, himself, takes pride in being a severe critic of logical positivism, who has fought a life-long struggle against the inductivism of empiricism and even allows himself to ask the rhetorical question: ‘Who killed logical positivism?’, without leaving any doubt about the right answer (Popper, 1976: 87–90). His pupils, Watkins and Agassi, have continued this fight by insisting that there is an inescapable metaphysical element in all science. No less hostile toward empiricism are Mises (Mises, 1957: 240–50) and Hayek ([1952] 1963: 165–94; 1978: 35–49). Mises has called positivism ‘the most

322

Why methodological individualism?

conspicuous failure in the history of metaphysics’ (Mises, 1943–4: 536), and Hayek is of a similar opinion. Mises and Hayek, as we have seen, belong to the Austrian School of Economics. A most characteristic mark of this school is its defence of a theoretical and deductive economics, and its critique of the inductivist gathering of facts advocated by the German Historical School of Economics. Finally, Weber has not expressed any opinion about empiricism that I know of, but his method of Verstehen has been a constant target for attack from positivist philosophers and sociologists. Despite the anti-empiricism of the main adherents of methodological individualism, there is a certain affinity between their own epistemology and that of empiricism. The philosophical roots of Weber’s methodology, as we have seen, are to be found in Kant and in neo-Kantianism, rather than in empiricism. When Weber holds that social concepts are theoretical constructions of the mind, this should be understood as an expression of a Kantian distrust in ‘things in themselves’. Though different in important respects – empiricism rejects the synthetic a priori, and also takes a more passivist view of the acquisition of knowledge – Kantianism and empiricism have this much in common: both reject conceptual and scientific realism in favour of an instrumentalist or conventionalist view of scientific concepts. The roots of Mises’s methodology are probably to be found both in Kantianism and phenomenology. Human action, according to him is a category embedded in the logical structure of mind, a presupposition of perception, apperception and experience. Praxeology, the theory of human action is both valid a priori and concerned with reality. This claim is usually interpreted as an expression of the Kantian synthetic a priori, but is probably based upon the apodictic certainty of phenomenological eidetic intuition (Wesenschau). Hayek’s philosophical influences, finally, are probably to be found, above all, in phenomenology, but he also admits a certain influence from logical positivism (Hayek, 1967: 268). These influences might seem incompatible, but also phenomenology has something in common with empiricism, especially with the phenomenalist or sensationalist brand of empiricism. They are both mainly concerned with the experience of individuals (or egos), the difference being that empiricists regard this as unproblematic, while phenomenologists see it as their main task to lay bare its a priori presuppositions (Föllesdal, 1972: 427). Another point of contact between phenomenology and empiricism is their respective attempts to constitute or construct the common world out of these experiences (Kaufmann, 1940: 138–42). When Hayek holds that social objects are ‘constituted’ or ‘constructed’ out of the actions of individuals, it is probable that he uses these terms in the phenomenological, rather than in the empiricist, sense. Popper shares the view that social objects are theoretical constructions. This view, however, appears to be inconsistent with his otherwise realist position. Methodological individualism also imposes special requirements on social science, which have no counterpart in Popper’s natural science methodology,

Why methodological individualism?

323

and which do not follow from his general epistemology and methodology (Wisdom, 1970: 294f; Johansson, 1975: 99). Popper’s famous criterion of demarcation between science and metaphysics is falsifiability, or testability ([1934] 1972: 40–2, 78ff). This criterion says nothing specific about the kind of entities that are allowed to enter scientific explanations, if only it is possible to deduce some testable conclusion from the theory or hypothesis. When turning to the social sciences, Popper obviously feels that this criterion is insufficient, and makes the much stronger demand that only entities of a certain kind; individual human beings, are allowed within the antecedent of its explanations. In Watkin’s terminology, methodological individualism is a material, and falsifiability a formal, methodological rule (Watkins, 1957b: 104–6). The former does not follow from the latter. Theories about social wholes and collectives may be as much open to falsification as are those about individuals, etc.2 What, then, could be the reason for laying down special and more restrictive rules for social science? Why is the invisibility argument thought to be important for the social sciences, but not for the natural sciences? I could think of one answer, but it is probably not the right one. In the natural sciences, it is possible to conceive of the entities occurring in its theories as material even if unobservable. It seems natural to believe, that if only we had a good enough microscope, we would be able to see such things as electrons and atoms, which are now unobservable (Harré, 1972: 90–5, 165ff; Shapere, 1977: 529f). In social science, things are different. Social phenomena are not material objects with a definite extension and shape. They are not ‘things’ in the ordinary sense of that word. Social phenomena lack the most typical characteristics of things; continuity in space and time and tangibility. We do not consider it as a possibility, that even if we had some such thing as a ‘macroscope’, we would be able to detect social phenomena except as complexes of individuals. Among the methodological individualists, typically empiricist arguments are most frequent in the writings of Watkins. Not only does he repeatedly point out that we only have direct access to individuals, he also argues that social concepts derive their meaning from reference to individuals, and seemingly subscribes to the idea that social objects are logical constructions out of individual people. This idea presumably also lies behind Jarvie’s contention that statements about collectives, such as classes and armies, can be reduced to statements about individuals (see p. 221). When asked to defend methodological individualism, adherents of this principle usually reply that, after all, society is made up of individuals and nothing else.3 It follows from this, that individuals and their actions are the only causes of social phenomena. This belief is often a matter of common sense, but it is sometimes based on a more sophisticated metaphysics. I will treat the metaphysical basis of methodological individualism in more detail in another book and limit myself to a mere mention of the most relevant doctrines here. Before the term ‘methodological individualism’ was coined by Joseph Schumpeter, the name for this principle was the atomist method. ‘Atom’ means

324

Why methodological individualism?

indivisible, and it was maintained by the Greek atomists that everything else is divisible, and made up of atoms. Applied to society, it is usually assumed that the atom is the human individual. All social phenomena are aggregates, collections, or complexes, of individual human beings. The term ‘atomism’ is often used, in social science, to denote the idea of an ‘isolated individual’, but this is not the only use of the term. When Carl Menger talked about an ‘atomist method’ and Max Weber conceived of the individual as the atom of analysis, they did not mean the ‘isolated individual’. In previous chapters we have seen that many methodological individualists reject ‘realism’ and invoke ‘nominalism’ in defence of methodological individualism. Indeed, in early sociology, methodological individualism was often called sociological nominalism, as opposed to sociological realism. Nominalism is the doctrine that only particulars exist. Universals are all in the mind. Applied to society, this means that only individuals exist, while social collectives are fabrications of the mind. A third doctrine, which is often mentioned in discussions about methodological individualism, is monadology. This doctrine derives from the German philosopher G.W. Leibniz and is a German counterpart of atomism. The monad, like the atom is the smallest part of the universe and indivisible. It differs from the atom by being endowed with a mind. This mind reflects, in itself, the whole of the universe and is, in this respect a microcosmos. It is clear that the intersubjectivist theory of society discussed in chapter 5 is influenced by Leibniz’s monadology. Also Jon Elster, seems to conceive of society as made up of monads (see p. 313).

Reductionism It is common to see methodological individualism as a form of reductionism and many methodological individualists accept this view. But not all, as we shall see. Very much depends upon the answer to the question: Reduction to what? A natural answer would be psychology, but some methodological individualists, e.g., Weber and Popper, deny that methodological individualism is identical with psychologism. In the case of Popper, this denial is based on his institutionalism, which is, indeed incompatible with psychologism. But it is still possible to maintain that the strong version of methodological individualism is identical with psychologism. Scientific reduction ‘Reduction’, as here understood, means elimination without remainder. The reduced theory (or science) is eliminated and replaced by, or incorporated in, the reducing theory (or science). This is how the term ‘reduction’ was originally used by philosophers of science. ‘After a theory has been reduced to another it becomes, in a sense, expendable. This is the heart of the matter’ (Bergmann, 1957: 166). Or, in the words of Kinkaid (1997: 14), the ‘root notion behind

Why methodological individualism?

325

reduction’ is ‘that one theory can in principle do all the explanatory work of another’.4 In the further development of the doctrine of reduction, however, suggestions have been made to use this term in a broader sense, to cover also cases which are not eliminations.5 Two kinds of reduction are commonly recognised: (1) Philosophical or epistemological reduction, which proceeds by the definition of the (non-logical) terms of one language by the terms of another language. The typical requirement of epistemological reduction is that the terms of the reducing language denote entities that are primary relative to the entities denoted by the terms of the reduced language. (2) Scientific reduction, which proceeds by the deduction or derivation of one theory (or science) from another theory or (science).6 Epistemological reduction has been treated in chapter 6 ( pp. 168–78). In this section our concern is scientific reduction. Kenneth Schaffner distinguishes four approaches to scientific reduction. They are: (1) the Nagel-Woodger-Quine paradigm; (2) the Kemeny–Oppenheim paradigm; (3) the Popper–Feyerabend–Kuhn paradigm; and (4) the Suppes paradigm (Schaffner, 1967:138f). Of these, the Suppes paradigm may be omitted, since, according to Schaffner, it can be shown to be a weaker form of the Woodger–Nagel–Quine paradigm (the Nagel paradigm, for short), ‘in fact so weak as it stands that it will not do as an adequate reduction paradigm’ (Schaffner, 1967: 145). Of the various approaches to reduction, Ernest Nagel’s is undoubtedly the most influential. Virtually all subsequent discussions about reduction take their point of departure in this approach. According to Nagel, reduction is formally a relation of logical entailment between two theories (or sciences). One theory, the secondary, is said to be reduced if it can be deduced or derived from another, primary, theory (Nagel, 1949: 119; 1961: 352). Nagel distinguishes two types of reduction. Homogenous reduction, where the primary and secondary theories (or sciences) are about the same type of phenomena, and where the secondary theory (or science) employs only such descriptive terms as occur also in the primary theory (or science), and with approximately the same meaning. Typical for homogenous reduction is that the primary theory is more general than the secondary theory and includes the latter as a special case, valid within certain boundary conditions. An example of a homogenous reduction is the explanation of Galileo’s laws for freely falling bodies – which apply to the boundary conditions obtaining at the surface of the earth – by Newtonian mechanics. The second type is heterogeneous reduction, where the primary and secondary theories (or sciences) are of qualitatively different kinds, and where the secondary theory (or science) employs descriptive terms, not to be found in the primary theory (or science). The most important case of heterogeneous reduction is microreduction, where the primary theory (or science) refers to entities and processes which are parts of the entities and processes referred to by the secondary theory (or science). Nagel’s primary concern is with heterogeneous reduction (1949: 102–4; 1961: 338–42). For reduction to be possible, certain formal conditions must be fulfilled. In the

326

Why methodological individualism?

case of heterogeneous reduction, where the primary and secondary sciences employ different vocabularies, there are two conditions, in particular, which are necessary for the reduction of the latter to the former. There is, first, the condition of connectability. A link must be postulated between those terms of the secondary science that do not occur in the primary science and the theoretical terms of the latter. Second, there is the condition of derivability, which says that all the laws of the secondary science must be derivable from the laws of the primary science and the postulated links between their respective vocabularies. Concerning the status of these links, Nagel leaves open, the question whether they are coordinating definitions or factual assumptions, or both (1949: 11ff; 1961: 345–58). These formal conditions are not enough, however, for a reduction to count as a scientific achievement. Above all, they fail to sort out genuine scientific reductions from merely philosophical reductions; that sort of linguistic exercise which uses definition as its sole means and proceeds by replacing the terminology of one theory, or language, with that of another. To these formal conditions, therefore, Nagel adds the non-formal requirement of independent empirical support for the theoretical assumptions of the primary science (1949: 123ff; 1961: 358–66). Kemeny and Oppenheim are critical of Nagel’s approach to reduction. They notice that of Nagel’s two formal conditions for reduction, that of derivability is really superfluous, since definability guarantees derivability. Not in the sense that the secondary theory is necessarily derivable from previously accepted laws of the primary science, but in the sense that, after definition, we are left with laws, the theoretical terms of which all belong to the primary science. This critique is unjust, since it ignores Nagel’s non-formal condition of reduction. Kemeny and Oppenheim meet the problem by advancing the requirement that the reducing theory must be at least as well systematised as the reduced theory. Another critique of Nagel’s approach is that it ‘ignores the fact that the old theory usually holds only within certain limits, and even then only approximatively’ (Kemeny and Oppenheim, 1956: 13). Kemeny and Oppenheim, therefore, drop the condition of derivability altogether, and instead centre on the capacity of the reducing theory to explain the same observational data as the reduced theory. One theory T2 is said to be reduced to another theory T1 when three conditions are fulfilled: (1) T2 has primitive terms not in T1; (2) all observational data associated with T2 can be explained by T1; (3) T1 is at least equally well systematised as T2 (p. 13). The Kemeny–Oppenheim approach to reduction must be deemed inadequate on several accounts. First, it is based upon the doubtful distinction between an observational and a theoretical language. Second, it is based upon an instrumentalist view of scientific theories that squares badly with the idea of ‘reduction’. Implicit in the notion of ‘reduction’ is that there is an asymmetric relation between primary and secondary theory. In the Kemeny–Oppenheim approach, asymmetry is afforded primarily by degree of systematisation. But since Kemeny and Oppenheim allow of ‘reductions’ where the primary and secondary theories are equally well systematised, we are left with the possibility

Why methodological individualism?

327

that both theories may be reduced to each other, the only difference being their vocabulary.7 An important point made by Kemeny and Oppenheim, however, is that actual scientific reductions are seldom strict derivations. This point has recurred in the later critique of Nagel’s approach to reduction, and especially, in the critique by Paul Feyerabend. According to Feyerabend, most cases taken from the history of science and cited as examples of reduction do, in fact, show that the ‘reduced’ theory is not derivable from, but inconsistent with, the ‘reducing’ theory. It is a matter of replacement rather than of inclusion. What can be derived from the primary theory is, at best, an approximation to the secondary theory (Feyerabend, 1962: 43–8). Confronted with this critique, Schaffner suggests a new approach to reduction, which retains the basic idea of Nagel while incorporating the critique of Feyerabend. According to Schaffner, what must be derivable from the primary theory is not the original secondary theory, but a corrected version of the secondary theory. The primary theory, furthermore, must be able to indicate in what respect the secondary theory is incorrect, and why it worked as well as it did. Reduction, then, becomes a combination of replacement and inclusion. Concerning the status of the connecting link between the terms of the primary and secondary theories, Schaffner suggests that they are synthetic identities (Schaffner, 1967: 144). This concludes my presentation of the different approaches to reduction. But there are also different types of reduction. Nagel mentioned two, homogeneous and heterogeneous reduction, and among heterogeneous reductions, especially those which involve phenomena that are microscopic relative to some other, macroscopic phenomena. Reductions of this type have become known as ‘microreductions’. Micro-reduction has been discussed by, among others, Oppenheim and Putnam (1958).8 According to them, the essential feature of a microreduction is that the objects dealt with by the primary science are parts of the objects dealt with by the secondary science. For their general concept of ‘reduction’, Oppenheim and Putnam rely on Kemeny and Oppenheim (see above). One advantage with micro-reduction is that it affords asymmetry to the Kemeny–Oppenheim approach. Another advantage, according to Oppenheim and Putnam, is that it helps to bring about the ideal of a unitary science, in the strong sense of unity of laws (Oppenheim and Putnam, 1958: 6–8). The idea of micro-reduction is part of a more comprehensive view of the universe as organised into a hierarchy of reductive levels, where each level is the proper domain of a scientific branch or discipline. The perfect reduction would be accomplished if all sciences could be reduced to the science dealing with objects at the lowest level, that is to physics. Oppenheim and Putnam entertain the possibility of realising this ideal as a working hypothesis. A first step in the realisation of this ideal is the reduction of theories about social groups to theories about ‘living things’, of which human beings is a sub-class. In support of their working hypothesis, Oppenheim and Putnam cite, not surprisingly, the examples of Mill, Weber and economic theory, but, more surprisingly, also Marx

328

Why methodological individualism?

and Veblen. It may also be noticed that they regard methodological individualism as the special form taken by their working hypothesis when applied to social groups. According to Oppenheim and Putnam, then, methodological individualism has everything in common with the idea of micro-reduction (pp. 9–18). One form of micro-reduction has been of special importance to the discussion about methodological individualism. According to May Brodbeck, the reduction of sociology to psychology is accomplished, and the promise of methodological individualism fulfilled, if a composition law can be found which explains the behaviour of groups from that of individuals. In addition to elementary laws telling how an individual acts in the presence of one or a few others, we must also have composition laws stating what happens under certain conditions, as the number of people he is with increases. The latter, of course, states how he behaves in a group … Given the composition laws, the reduction of sociology to psychology is a purely logical matter, following as it does from these composition laws jointly with the definitions. (Brodbeck [1958] 1968: 299) The idea of composition laws goes back to C.D. Broad and, more recently, to Gustav Bergmann. A composition law is a general principle that explains the behaviour of complex systems, or configurations, from the behaviour of their elements. The obvious example of a composition law is the well-known parallelogram law for vector addition, used in mechanics to explain the behaviour of complex systems from the behaviour of two-body systems in isolation. The notion of ‘composition law’ has also been used to explicate the concept of ‘emergence’. Emergence occurs in the absence of composition laws, or if a composition law should break down at a certain level of complexity, i.e., when the number of elements exceeds a certain limit. Emergence, in this sense, is relative to our knowledge of composition laws. A theory which is emergent today may become reducible tomorrow, as a result of the discovery of a new composition law.9 Reduction with the aid of composition laws has a lot in common with the claims of methodological individualism. (1) The paradigm case of a composition law is the parallelogram law of mechanics, and, according to Watkins, methodological individualism is the social science analogue of mechanicism (Watkins, 1957a: 104f). As we have seen in previous chapters, many methodological individualists, starting with John Stuart Mill, have stated their views of explanation in mechanistic terms. (2) Composition laws are elementaristic in the sense that they explain the behaviour of complex wholes from the behaviour of their elements. The elements need not be single objects, but may be systems of two or more objects. (3) Composition laws explain the behaviour of several objects in interaction. (4) Composition laws are additive, and so, falsify, where found, the problematic saying that ‘the whole is more than the sum of its parts’. I suggest

Why methodological individualism?

329

that we may conceive of composition laws in social science in terms of aggregation. Composition laws are those ‘laws’ that solve the so-called ‘aggregation problem’, while the statement that the whole is more, or other, than the sum of its parts is a claim that the aggregation problem cannot be solved.10 But is explanation with the help of composition laws really reduction? Not according to Bergmann. On his view, reduction is a relation of derivation between two theories, while explanation with composition laws involves only one theory (Bergmann, 1944: 67f; 1957: 162ff). According to Brodbeck, however, the reduction of sociology to psychology presupposes both (a) the definition of all social concepts by individualist concepts and (b) the explanation of the behaviour of individuals in groups from that of more elementary individual behaviour with the help of composition laws (Brodbeck [1958] 1968: 297f). One of these conditions seems to be redundant. The translation of all social concepts to individualist concepts, gives us a (trivial) terminological reduction even in the absence of composition laws.11 If, on the other hand, there are composition laws for every configuration of individuals, there is no reason to establish a connection with previous sociological theory. There is, however, the possibility of interpreting this case as ‘reduction’ in the sense of Kemeny and Oppenheim; the replacement, within a certain domain, of one theory by another theory. In the social sciences, where formalisation is rare, and derivation, therefore, difficult to achieve, it seems wise to admit of reductions that are not derivations, but the replacement of one theory by another, especially when the reducing theory is a micro-theory relative to the reduced theory. To conclude this discussion, I will quote Helmut Spinner on the epistemological and ontological assumptions behind reductionism, because I believe that he catches the ‘faith’ and ‘spirit’ of reductionism in a most telling way. The reductionist pattern of scientific development is a picture … of steady progress towards a unique set of explanatory principles or laws of ever-increasing generality, empirical content, systematicity, and comprehensiveness – a pattern of continuous, cumulative growth of knowledge resulting in the last resort in a nomological unity of science, physicalist or otherwise. (Spinner, 1973: 45) Also, the predominant logico-epistemological level-picture has been supplemented by, and based on, an ‘ontological’ doctrine. This additional ontological assumption postulates, in parallel with the logico-epistemological hierarchy of theories, a corresponding ontological hierarchy of reductive levels, based on a part-whole relation, in the order of the ‘things’ … Each of these levels constitutes a characteristic proper domain of some specific empirical science. (Spinner, 1973: 56) What about methodological individualism, then? Is it a species of reductionism? I believe that it is. As we have seen in previous chapters, methodological

330

Why methodological individualism?

individualism has been conceived of as a principle about the explanation of empirical laws, the definition of collective concepts, and the explanation of social phenomena (see also pp. 349–54). The first version, about the explanation of social laws, corresponds to Nagel’s approach to reduction. The second version, about the definition of concepts, corresponds to the scientifically trivial philosophical reductions, which we met with in chapter 6. The third version, about the explanation of social phenomena, finally corresponds roughly to the Kemeny–Oppenheim approach to reduction, especially as individualist theories are often held to be both formally and empirically superior to the holistic theories they are supposed to replace.12 It might be added that the strong version of methodological individualism is an instance of strong reductionism, while the weak version of methodological individualism is a case of weak reductionism. Some qualification must be made with respect to this conclusion. As Murray Webster (1973: 266) has pointed out, methodological individualism denies the possibility of social theory being anything but individualistic, and so, there seems to be nothing to reduce. Also George Homans occasionally denies that there are any social laws to reduce (Homans, 1969: 15–17), if not always (Homans, 1970a: 324f; 1983: 38–43). Most methodological individualists deny that there are genuine, causal, social laws, but accept the existence of empirical laws, or generalisations. It is still possible to be a reductionist about empirical social laws and this is exactly what many methodological individualists are. Another problem with reductionism in social science is that there are no theories, which have the formal properties, necessary for reduction to take the form of a strict derivation of one theory, e.g. sociology, from another theory, e.g., psychology, and yet many methodological individualists say that they are reductionists: J.W.N. Watkins, George Homans, Hummel and Opp, and Jon Elster. The explanation, must be that they use the term ‘reduction’ in a less demanding sense. Probably they intend something like this: whatever can be truly said about social phenomena can, in principle, be derived from statements about individuals and their actions. Most methodological individualists avoid this roundabout way, however, and go directly to social phenomena. For them methodological individualism is not a principle about reduction of social theories, but about the explanation of social phenomena. With these qualifications in mind, I still believe that methodological individualism is a form of reductionism. But why are some social scientists reductionists? A clue to an answer can probably be found in the first quotation from Spinner above. Reduction is, for some social scientists, the highroad of Science. This belief is clearly expressed by Jon Elster, who also believes that reduction has been achieved in the natural sciences.13 This is a surprising claim, however. The prevalent opinion of virtually all philosophy of science is that reduction, in the strong sense, has not been achieved in one single case, in the natural sciences,14 and it is reduction in the strong sense that Elster wants to see in the social sciences (see above). The recent discussions about reduction have been much influenced by the idea of supervenience, propagated most successfully by the philosopher Jaegwon

Why methodological individualism?

331

Kim. Supervenience has to do with the relation between levels in the reductive hierarchy, and especially between the brain and the mind, but also between individual and society. Applied to the former relation, supervenience means that if two individuals are exactly alike in their brains, they are also exactly alike in their minds, although the reverse does not hold. There may be multiple realisations of brain-states in the mind. Applied to the relation between individual and society, this means that there are many microfoundations of a certain macro-state, or event. There are many different ways in which to make a revolution, win an election, exert authority, marry, etc. At first Kim had reductionist ambitions with the concept of supervenience (1978), but pretty soon he was led to embrace holism (1984). The idea of supervenience is obviously relevant to the issue of methodological individualism, and it has been frequently used in arguments for and against methodological individualism. Since it is not my aim, here, to argue, either for, or against, methodological individualism, I will not go any further into the doctrine of supervenience and its uses, except to suggest that it was first used mainly in defence of methodological individualism, but later against it.15 Those methodological individualists who are reductionists, seem to believe that social science is reducible to psychology.16 Methodological individualism, then, would be identical with psychologism. Psychologism If methodological individualism is the principle that social phenomena must be explained in terms of the motives, beliefs and actions of individuals, then it looks psychologistic. As we have seen there are also some methodological individualists who accept this conclusion and many more commentators and critics, who also take it more or less for granted.17 But many methodological individualists deny the identity of methodological individualism and psychologism, and some of them emphatically so. How is this possible? I will take a brief look at the arguments of those methodological individualists, who have denied the identity of methodological individualism and psychologism, but before I do, a few words about psychology. First of all, there is psychology as a science, existing or potential. Scientific psychology may be divided in various ways. There is, for instance, physiological and mental psychology, individual and social psychology, experimental and nonexperimental psychology, explanatory and descriptive psychology, etc. There are also a number of different paradigms within each of these branches, which I will not try to enumerate here. Second, there is common sense, or folk psychology, consisting of the (psychological) beliefs people entertain about the minds and behaviour of themselves and others. For the social scientist, however, folk psychology is interesting, not so much as a contribution to psychological theory, but as an object of investigation. Since people act in accordance with their beliefs, these beliefs are of primary importance for all human sciences. Third, ‘psychology’ may mean this stuff itself; the totality of ‘psychic’, or mental

332

Why methodological individualism?

phenomena, including sensations, ideas, emotions, volition, etc., which is the domain, or possible object of investigation of psychology as a science. I return to the arguments methodological individualists have advanced against the view that methodological individualism is psychologistic and start with Max Weber. It would seem that Max Weber’s insistence upon explanation in terms of motives renders his methodology inescapably psychologistic, and yet, he tries hard to escape this conclusion.18 How can this be? The main answer, I believe, is that Weber, like his neo-Kantian friend Heinrich Rickert and many others at that time in Germany (see chapter 2), conceived of psychology as an experimental natural science; in the case of Weber, as psycho-physics, or behaviouristic reflex psychology. Above all in his early writings, Weber frequently refers to psychology as ‘experimental psychology’ or ‘psycho-physics’ (see Schluchter, 2000). His argument seems to be that the cultural sciences deal with meaningful phenomena and are, therefore, independent of scientific psychology as a natural science. The cultural sciences rely, instead, upon common sense or ‘vulgar psychology’.19 This does not mean, however, that the cultural sciences are, or will ever become, reducible to common sense psychology, or any other psychology for that matter. Weber’s decisive argument against psychologism seems to be that the cultural sciences have another subject matter and utilise another method than does psychology. The cultural sciences proceed by the construction of ideal types of action, not by an investigation of the psychic life of individuals. Economics and sociology in particular, make use of the ideal type of perfectly rational, or objectively correct, action, as distinguished from the concrete, usually irrational, actions of individuals.20 I do not find these arguments entirely compelling. In an earlier work (Udehn, 1987: 66f) I have rejected, as untenable, the view that scientific disciplines are constituted by their subject matter and, by implication, also the view that they are constituted by their method. I maintained that the ‘essence’ of a scientific discipline is its typical explanatory factors, and on this point Weber is perfectly clear: social phenomena are to be explained in terms of the motives of individuals; indisputably a psychological factor. Weber’s attempt to escape psychologism with the help of the ideal type is also far from convincing, even on his own account of this much debated methodological tool. There is a certain ambiguity about the epistemological status of the ideal type. According to Weber, it seems to be both a heuristic device and a hypothesis subject to verification.21 This will not do. Verification, if possible at all, is possible only with respect to hypotheses, but not with respect to heuristic devices.22 What is more, the verification of ideal types, according to Weber, takes place with the help of psychological experiments (Weber [1913] 1981: 157; [1922] 1978: 10). The use of ideal types, as such, therefore, is not incompatible with psychologism. It all depends upon what kinds of ideal types. The conscious effort to distinguish methodological individualism from psychologism had much to do with the attempt, among philosophers and social scientists in Weber’s Germany, to free themselves and their disciplines from any

Why methodological individualism?

333

influence from psychology (see chapter 3). In the case of Weber, it was an attempt to free economics and sociology from any dependence upon psychology. This is the background to Weber’s rejection of psychologism and it is a background he shared with the members of the Austrian School of Economics. By and large, the first generation of Austrian economists were psychologicists, Carl Menger and Friedrich von Wieser, in particular. The second generation, however, shared Weber’s attitude to psychology. They wanted to replace psychology with rational choice. According to Ludwig von Mises, for instance, theoretical social science takes the form of praxeology, or the general theory of human action. Praxeology is individualistic, but does not rely upon psychology. Mises gives two reasons for praxeology’s independence of psychology. First, psychology deals with the ‘inner’ aspect of action, what goes on in people’s minds, while praxeology deals with action as such, no matter what are the motives behind the action (1933: 3; [1949] 1966: 12). Second, praxeology has another method and another epistemological status than psychology. The latter is an ‘historical’ or ‘realistic’ science, while the former is strictly formal, like logic and mathematics (Mises, 1933: 10ff; [1949] 1966: 32ff). Mises’s first argument is easily dismissed as depending for its validity upon a much too restrictive delimitation of psychology. His second argument is more of a problem. It raises the highly controversial issue of the nature of praxeology, and of its most important branch: economics. Mises is, perhaps, the most wellknown exponent of the view that economics is a priori; that the propositions of economics are independent of empirical reality both in origin and for their validity (Mises, 1933: 23ff; [1949] 1966: 32ff; 1962: 1ff). If this means that the propositions of economics are analytic truths, economics is neither individualistic, nor psychologistic. Analytic statements do not explain anything whatsoever. Another possibility is that economics is an example of the Kantian synthetic a priori. If so it may not be empirical science, but its content might be ‘psychological’. Most likely, Mises’s praxeology is an eidetic science, in the sense of phenomenology. If so, Mises has the support of Husserl when rejecting psychologism, but it is far from obvious that Husserl succeeded in his attempt to free phenomenology from psychologism (see chapter 3). Friedrich von Hayek does not share Mises’s view about the epistemological status of economics, but he agrees that methodological individualism differs from psychologism. The task of psychology, according to Hayek, is to explain conscious action. The social scientist, on the other hand, takes conscious action as his data. His task is to explain the unintended consequences of the actions of many men (Hayek, 1955: 39). This argument carries some weight. Psychologists do not seem to be interested in large-scale social phenomena. But I do not believe that the occurrence of unintended consequences per se is sufficient ground for denying that methodological individualism is psychologistic. As I have already suggested, it is not the subject matter that decides the issue, but the explanations. What about Karl Popper then? As we have already seen, Popper is a critic of psychologism and a defender of an autonomous sociology. Unfortunately, Popper’s main argument against psychologism – that social science must take

334

Why methodological individualism?

account of institutions – is an argument also against methodological individualism, and cannot serve as an argument for a difference between these two doctrines. A second argument, that the social sciences use a ‘logical’ or rationalist, rather than a psychological method, was deemed untenable when used by Weber, and does not appear any more convincing in the case of Popper.23 A third argument, from the unintended consequences of men’s actions, was also rejected when advanced by Hayek. There remains a fourth argument against psychologism, to the effect that social phenomena cannot be explained in terms of human nature alone, but require mention of the environment or situation and the interaction between men as well for their explanation.24 This argument is based upon the tacit presupposition that psychologism is forced to explain social phenomena in terms of the human nature of isolated individuals.25 This is not an acceptable view of psychology, at least not of social psychology. It does not seem to be Popper’s view either. According to him, psychologism is the ‘theory that sociology must in principle be reducible to social psychology’ (Popper [1945] 1966: vol. 2, 88), or the doctrine that society is ‘the product of interacting minds’ (p. 90). Popper is equally confused about psychology and psychologism, as about methodological individualism. Among Popper’s followers, views about psychologism are divided. Predictably, all except J.W.N. Watkins, reject the view that methodological individualism is identical with psychologism, but since they are institutional individualists, this is perfectly understandable and is no threat to the thesis that the strong version of methodological individualism is psychologistic. J.W.N. Watkins, on the other hand, states methodological individualism as a psychologistic principle of explanation. Methodological individualism, he says, is the principle ‘that the social scientist can continue searching for explanations of social phenomena until he has reduced it to psychological terms’ (1952a: 29). He also ‘suppose[s] that social theories derive sociological conclusions from psychological premisses’, thereby stating the formal condition for reduction (p. 34). He goes as far in a psychologist direction as to suggest that social institutions are certain kinds of psychological dispositions and, as such, belong to man’s personality (p. 39). In his later writings on methodological individualism, Watkins retreats from his original position and denies that methodological individualism is psychologistic, but he is able to perform this manoeuvre only with the help of an absolutely impossible version of psychologism. It is supposed to be the view ‘that all large-scale social characteristics are not merely the intended or unintended results of, but a reflection of individual characteristics’ (1957b: 112). I conclude that despite arguments to the contrary, the strong version of methodological individualism, or individualist reductionism, is indistinguishable from psychologism. It is true that methodological individualists are usually interested in other phenomena than are psychologists. Usually, they are interested in large-scale, or macro-phenomena, which rarely catches the attention of psychologists. It might still be that their explanations are the same. If so, methodological individualists may be conceived of as large-scale psychologists. It is also true that methodological individualists rarely use psychological

Why methodological individualism?

335

assumptions borrowed from the science of psychology. They tend to invoke their own psychological principles of explanation borrowed from folk psychology, or developed in their own sciences. Economists, for instance, make use of assumptions of rationality and utility-maximisation and self-interest. These assumptions are not borrowed from the science of psychology, and so, many economists deny that economics depend on psychology. This is, of course, true, in a sense, but their own principles of explanation are also ‘psychological’ in content. A related reason why many social scientists deny being psychological reductionists is that they rely on very simple psychological assumptions, and sometimes on assumptions that only approximate the behaviour of individuals. But once again, this does not make the assumptions other than psychological. We might say that most individualistic explanations of social phenomena make use of thin psychological assumptions, as distinguished from the thick psychology of most explanations in the science of psychology (cf. Lindenberg, 1996). There are also important differences between methodological individualists, themselves, in this respect. As we have seen in the previous chapter, James Coleman advocates a thin psychology, whereas Raymond Boudon and Jon Elster advocate more thick descriptions of psychological mechanisms. I have argued that strong methodological individualism is psychologistic, but I have remained silent on the distinction between individual and social psychology, and for a very good reason. It is not at all easy to make this distinction. According to Jean Piaget (1973: 29): ‘Social psychology comes into all the general problems to do with psychology (differential psychology, personality, and so on), since man is essentially a social being’ (see also Harré 1986: 94ff and Margolis, 1986: 31ff). Following this suggestion by Piaget, we may conceive of individual psychology, as based on the idea of an abstract individual, with a constant human nature, and social psychology as based on the idea of the human individual as a social being. This makes it possible to argue that those versions of methodological individualism, which are based on the idea of a constant human nature, e.g., the theory of the social contract and the theory of general equilibrium, imply a reduction to individual psychology, whereas those versions that assume that individuals are social beings, e.g., Austrian methodological individualism, imply a reduction to social psychology. I have argued that strong methodological individualism is psychologistic, but is psychology necessarily individualistic in the strong sense? I take it for granted that individual psychology, if such a thing is possible, is individualistic in the strong sense, but what about social psychology? This branch of psychology has its roots both in psychology and sociology, but probably more in the latter (Allport, 1924b: ch. 5; Moscovici, 1972: 49). Partly as a consequence of this, it is possible to distinguish a sociological social psychology from a psychological social psychology (Farr, 1978: 510; Secord, 1986), the former being ‘top-down’, the latter ‘bottom-up’ (Margolis, 1986: 38–46). The latter is interested in the elementary processes of interaction between individuals, while the former focus on the effects of social structure upon consciousness and behaviour. With W. Peter Archibald (1976: 115–19), I believe that the split between a psychological and a

336

Why methodological individualism?

sociological psychology reflects the opposition between individualism and holism (see also Tajfel, 1972: 86ff and Doise, 1978: 28ff). The demarcation between individualism and holism, then, cuts right through the discipline of social psychology. This fact is reflected in most textbooks on social psychology, which tend to be a mix of psychology and sociology, rather than a clearly demarcated area of its own (Moscovici, 1972: 43–8). The distinction between a psychological and a sociological social psychology should not be confused with that between small group psychology and mass psychology. Number is not a variable that separates sociology from psychology. There is a sociological small group psychology, as well as a truly psychological mass psychology (cf. Sztompka, 1979: 100). The main bulk of contemporary social psychology is devoted to the study of small groups, but early social psychology was more interested in the psychology of nations, masses, crowds, publics and other collectives (see, e.g., Ginsberg, 1928 and Blumer, 1937: 144–6). Microfoundations In the recent development of methodological individualism, it has often been discussed as a case of microfoundation. The reason for this is probably ‘economic imperialism’. In economics, the clearest manifestation of methodological individualism has for a long time been the request that macroeconomics should be provided with microfoundations. When social scientists from other disciplines adopt the economic approach, they also adopt the view of methodological individualism as the demand that macro-theories must be provided with microfoundations in the form of rational choice (see chapter 10). But is the quest for microfoundations the same as reduction? It depends. In the case of economics, it is typically assumed that the proper microfoundations of macroeconomics are Walrasian. This assumption makes the quest for microfoundations in economics a case of strong reductionism. But it is not necessary to conceive of all macrofoundations in this way. The failure, so far, to provide macroeconomics with Walrasian microfoundations, may even make us doubt the very possibility of strong reduction in the social sciences, as in all sciences. An alternative would be to conceive of microfoundations as partial and more like a case of weak reduction. I think a strong case could be made for the view that a microfoundation is not the same as a reduction, in the original sense of elimination. The very word ‘foundation’ has a meaning different from the words ‘reduction’ and ‘elimination’. If we conceive of microfoundations in this ‘nonreductive’ way, they become fully compatible with institutional and structural individualism.26

Normative individualism I suggested above, that methodological individualism is based on certain epistemological and ontological assumptions. If we include these assumptions in the doctrine of methodological individualism, it is better conceived of as an individ-

Why methodological individualism?

337

ualistic research programme, in the sense of Imre Lakatos. According to Susan James (1984), however, there are deeper motives hidden behind the adoption of methodological individualism and holism respectively. Behind the methodological issue, there is an ontological issue, and this issue has important ethico-political implications. According to James (p. 56), this explains the heat of the controversy between individualism and holism, and the irreconcilability of the parties to the dispute.27 I agree that a full understanding of the debate between individualists and holists is not possible without an understanding of the moral and political issues involved. I do not agree, however, that the methodological issue is barren, or that it reduces to the ideological issue, as James (1984: 54ff) seems to suggest. I assume that the methodological issue is a real issue, open to rational discussion, even though it may never be ‘solved’ once and for all. I also assume that the methodological issue can be discussed independently from the ideological issue. To believe otherwise is to commit the naturalistic fallacy. Nevertheless I find it impossible to deny that there is some kind of connection between methodological and normative individualism. To claim that there is some kind of relation between methodological and normative individualism is of course problematic, if we believe, as I do, that there is a categorical distinction between facts and values. Even so I will make no attempt to clarify this relation, since I know that such an attempt would lead to a lengthy argument. I may invoke the support of methodological individualist, J.W.N. Watkins (1957a; 112–4; 1958; 314, 357f; 1957/8: 80f), however, who has argued that, besides analytical and empirical statements, there are in science a class of statements which are synthetic, but irrefutable and, therefore, metaphysical. To this class of statements belong, what he calls ‘haunted universe doctrines’. Such metaphysical doctrines play a regulative role in science, and in social science they often comprise, or suggest, moral and political ideas. Examples of haunted universe doctrines are, in natural science, determinism and mechanism, and, in social science, historicism and individualism. A problem with suggesting that methodological individualism is related to normative individualism is that the very term ‘methodological individualism’ was coined, by Schumpeter, to make the distinction between methodological and political individualism. Max Weber also made this distinction and maintained that the two doctrines are independent. More recently, Jon Elster has argued that nothing political follows from methodological individualism (1993: 7).28 Political individualism A first thing to suggest a connection between methodological and political individualism is the fact that the former was originally used by Menger as a weapon in the battle of methods (Methodenstreit), which was perhaps first of all a political battle (see, e.g. Alter, 1990; Cubeddu, 1993: 21ff). The second thing to suggest a connection is that, until quite recently, there was a very strong statistical correlation between methodological and political

338

Why methodological individualism?

individualism (see Buchanan [1962] 1965: 315). Today this correlation is probably not equally strong, but strong enough to suggest some kind of interdependency. Most methodological individualists have been, or are, ‘liberals’ in some sense of that term. John Stuart Mill was not only a forerunner to the methodological individualists, but one of the most important figures in the history of liberalism. Carl Menger was influenced by Mill, and a liberal himself, but with a certain leaning towards conservatism. Weber was also a liberal of sorts; a liberal in the German sense of that term, which is something rather different from a ‘liberal’ in the Anglo-American sense. Mises and Hayek are among the most important and energetic defenders of a classical or laissez-faire liberalism in our century (see, e.g. Mises [1927] 1978; Hayek [1944] 1962). Popper was, until the latest libertarian vogue, at least, the most well-known representative of neo-liberalism in our times. Popper was not a laissez-faire liberal, however, but saw the need for state intervention and the welfare state, as long as it restricts itself to ‘piecemeal social engineering’, but refrains from ‘utopian social engineering’ ([1945] 1966; 1957). More recently, methodological individualism has been advocated by members of the Chicago and Virginia Schools of political economy, all of whom seem to be political individualists. The most glaring exception to the ‘rule’ that methodological individualists are also political individualists is Analytical Marxism, but this exception is not enough to destroy the pattern. The question arises: Is the correlation between methodological and political individualism spurious, or is there some kind of connection between methodological individualism and liberalism? Many methodological individualists obviously believe that it is. According to Mises, liberalism is the application of praxeology; the science of human action, to social life. In some of his early writings Mises maintains that liberalism, because supported by science, is value-free, but in Human Action he concedes that ‘As a political doctrine liberalism is not neutral with regard to values and the ultimate ends sought by action’ ([1949] 1966: 154; see also 1943–4: 541–5). According to an already cited passage from Hayek, true individualism is primarily a theory of society, an attempt to understand the forces which determine the social life of man, but also ‘a set of political maxims derived from this view of society’ (Hayek, 1948: 6). The set of political maxims referred to is, of course, liberalism. But a similar relation exists between methodological and political collectivism. ‘The collectivist method … leads … directly to political collectivism; and though logically methodological and political collectivism are distinct, it is not difficult to see how the former leads to the latter’ (Hayek, [1942–4]; 1955: 91f). What then, more precisely, is the relation between methodological individualism and liberalism? First of all, it is not a relation of logical necessity. You may accept one of these doctrines without being logically compelled to accept the other. Let us say there is a certain ‘elective affinity’ between methodological individualism and liberalism. Both doctrines rely on a certain view of society, which

Why methodological individualism?

339

is for the former a metaphysical presupposition, and for the latter a political ideal; a view of society as made up of autonomous agents interacting with each other (making contracts) for their mutual benefit.29 The actual society most closely approximating this ideal society – ‘ideal’ both in the epistemological and ethical sense of that term – is the free market society of early capitalism, if there ever was a free market society (cf. Weber, 1949: 44). It is no coincidence that orthodox economics is both the theory of that society and the most often cited example of methodological individualism (cf. Schotter, 1985: 1ff). Methodological individualism and liberalism also have an epistemological argument in common. Methodological individualism denies that we can have knowledge about society as a whole or as a totality. But if we cannot have such knowledge, then, central planning and ‘utopian social engineering’ become, if not impossible, then at least dangerous, since we are left in the dark as to the consequences of such large-scale political measures. Under these circumstances, a free market economy seems preferable to a centrally planned economy and, according to some methodological individualists, also to state interventionism and the modern welfare state.30 Humanism The supreme perfection of man is that he acts freely or voluntarily, and it is this, which makes him deserve praise or blame. (Descartes, Philosophical Writings, vol 1: 205) A basic idea of individualism, and of Western thought in general, is that of human freedom; the idea of man as an autonomous being capable of acting rationally in the pursuit of her own interests. Closely related to the idea of freedom is that of the dignity of ‘man’. Man alone among the creatures of the earth is free and rational, created in the image of God. This godlike nature of man is the ultimate source of his/her dignity. From the freedom and rationality of man follows his/her responsibility. From the dignity of man derives his/her natural and inalienable rights (Lukes, 1973: 43ff). This conception of man originates in Greek Antiquity and finds its most genuine expression in Renaissance humanism. In a secularised version, it is the dominant conception of man also in contemporary Western thought, commonsense included. Considering the privileged place it assigns to humankind, this view is better characterised as ‘humanism’ than as ‘individualism’. In order to distinguish this form of humanism from other forms, I will call it ‘individualist humanism’.31 Individualist humanism is not a necessary accompaniment to methodological individualism. It is possible to accept the latter without accepting the former, as witnessed by the existence of behaviourist methodological individualism (see pp. 190–9). We may speak, therefore, of a humanist individualism in addition to an individualist humanism. But if individualist humanism does not follow from

340

Why methodological individualism?

methodological individualism, the reverse appears to be the case. Methodological individualism seems to follow from individualist humanism. If man is fully autonomous, subject only to the limitations imposed by nature; his own, as well as that which surround him, it would seem that whatever happens in society is the result, immediate or mediate, of his wilful actions and, therefore, to be explained in terms of individuals etc., that is, according to the strictures of methodological individualism. Individualist humanism, then, seems to entail methodological individualism. But perhaps entail is too strong. Following Watkins, we may say that individualist humanism suggests methodological individualism. Additional light is thrown upon individualist humanism and its relation to methodological individualism if the above, positive statement of this doctrine is supplemented by a negative one. To what is individualist humanism opposed? Generally speaking, individualist humanism is opposed to every attempt to dethrone humankind from its elevated position as the crown of creation, or in the secularised version; to every doctrine, which reduces the human individual, by explaining away freedom, reason or mind. The human individual, as a free, conscious and rational being is threatened both from above and from below. From above, she is threatened by divine providence and predestination. If destined to carry out the divine plan, mere marionettes in the hands of God (or the Gods), individual freedom becomes but an illusion. The first expression of individualist humanism, therefore, was in the form of an opposition to all forms of theism. From above, the individual is threatened also by historical and social forces, apparently reducing him to a means for the ends of history, a cog in the social machine, or an organ in the social organism. Individualist humanism, therefore, is opposed to the doctrines of historicism, holism and collectivism. This is where individualist humanism joins forces with methodological individualism. But the threat may also come from below. Above all, humanism is a defence of the human individual against the recurrent attempts to reduce her/him to a piece of matter; a machine, a moving body, or an organism emitting responses to external stimuli. Individualist humanism, therefore, is also opposed to materialism, physicalism and behaviourism. As we have already seen, there is no necessary relation between methodological individualism and this aspect of humanism. As a matter of fact, however, methodological individualists have tended to also endorse this part of humanism. It has often been pointed out that methodological individualists, while being reductionists with respect to that which is above individuals (i.e. social phenomena) are usually emergentists with respect to the human individuals, or her/his mind (see, e.g., Brodbeck, 1954: 155). The relation between methodological individualism and individualist humanism is nowhere, more clearly visible, than in Isaiah Berlin’s essay ‘Historical Inevitability’ (1954). Berlin does not mention methodological individualism, but it is clearly present in his text. It is to Berlin that I owe the idea of illuminating individualist humanism by looking at its opposites. According to him, it is opposed to physicalism, scientism, historicism, holism, collectivism and

Why methodological individualism?

341

environmentalism. But Berlin takes the analysis one step further and asks what the doctrines opposed to individualist humanism have in common. He finds the common denominator in determinism. All these theories are, in one sense or another, forms of determinism, whether they be teleological, metaphysical, mechanistic, religious, aesthetic, or scientific. And one common characteristic of all such outlooks is the implication that the individual’s freedom of choice (at any rate here, below) is ultimately an illusion, that the notion that human beings could have chosen otherwise than they did usually rests upon ignorance of facts; with the consequence that any assertion that they should have acted thus or thus, might have avoided this or that, and deserve (and not merely elicit or respond to) praise or blame, approval or condemnation, rests upon the presupposition that some area, at any rate, of their lives is not totally determined by laws, whether metaphysical or theological or expressing the generalised probabilities of science. (Berlin, 1954: 58) In Berlin’s version, then, methodological individualism-cum-humanism is primarily a voluntarist thesis advanced against all forms of determinism. Berlin does not suggest, however, that we should give up determinism on the only ground that it turns freedom into an illusion. We should give up determinism because, for the time being, it is based upon mere speculation, and because the consequences of adopting it are too high a price to pay for mere speculation. If determinism should turn out to be true and in the end only science, if anything, can tell – we would have to radically change not only our conception of man, but our way of living. The change would be so dramatic as to be almost inconceivable. This is so, because our everyday life and our common-sense way of thinking is in a fundamental way based upon the tacit presupposition that ‘man’ is a free and responsible being (p. 69ff).32 Even history and social science are to a large extent based upon this presupposition. When describing and explaining actions in terms of character, purpose and motive, we automatically also evaluate them. The reason I have paid some attention to the views of Isaiah Berlin is that I find them representative of the views of most methodological individualists. Of the doctrines mentioned by Berlin as being opposed to individualist humanism, physical determinism has been criticised by Popper in his essay ‘Of Clouds and Clocks’, with the telling subtitle ‘An Approach to the Problem of Rationality and the Freedom of Man’. Popper calls physical determinism a ‘nightmare’, since it implies that Everything that happens in such a world is physically predetermined, including all our movements and therefore all our actions. Thus all our thoughts, feelings, and efforts can have no practical influence upon what

342

Why methodological individualism? happens in the physical world: they are, if not mere illusions, at best superfluous by-products (‘epiphenomena’) of physical events. (Popper, 1972: 217)

Popper’s aim is to show ‘how such nonphysical things as purposes, deliberations, plans, decisions, theories, intentions, and values, can play a part in bringing about physical changes in the physical world’ (Popper, 1972: 216). J.W.N. Watkins has even tried to show that indeterminism is the central theme, or unifying idea of Popper’s philosophy, and also that there is a ‘natural coalition’ between indeterminism and falsificationism, and opposed to this, another natural coalition between determinism and inductivism. While the latter coalition ‘depicts man as an induction machine nudged along by external pressures, and deprived of all initiative and spontaneity’, the former ‘gives him Spielraum to originate ideas and try them out’ (Watkins, 1974: 407). According to Watkins, then, the idea of the human individual as an autonomous being is part also of Popper’s epistemology. In his reply to Watkins, Popper says that he would prefer to see critical realism as the unifying idea of his philosophy, but admits that Watkins has made a brilliant case for his interpretation (Popper, 1974b: 1053). Scientism, the doctrine that the social sciences must use the same method as the natural sciences, has been criticised among methodological individualists, above all by Dilthey, Weber, Mises and Hayek. According to them, social phenomena differ from natural phenomena in being ideal (Gestige), subjective and meaningful. Therefore, they must be studied with the special method of interpretive understanding (Verstehen). We have already seen in chapter 4, how, in the case of Weber, Mises and Hayek, methodological individualism was the direct outcome of their subjectivist methodology. We might add that this is how methodological individualism has sometimes been interpreted; as a thesis about the subjective nature of social phenomena and the consequent ‘subjectivism’ of social science (Nagel, 1961: 535–46). In the case of Popperian methodological individualism, things are a little bit different. Popper himself is a defender of methodological monism, and so, does not accept any radical cleavage between the natural and social sciences. Above all, he rejects the idea of a subjectivist social science. According to Popper, subjectivism is out of place in all science, social as well as natural. But he also rejects scientism, arguing that this doctrine is based on a misunderstanding of the natural sciences. Understanding is not a specific method of social science, but the aim of all science. Popper admits, however, that there is a sense in which we can understand human phenomena, such as gestures, speech, actions and the products of mind, but not natural phenomena, such as solar systems, molecules and elementary particles. There is, according to Popper, also the method of ‘situational analysis’, peculiar to the social sciences, but without a counterpart in the natural sciences. Environmentalism, according to Mises, ‘is the doctrine that explains historical changes as produced by the environment in which people are living. There are two varieties of this doctrine: the doctrine of physical or geographical environ-

Why methodological individualism?

343

mentalism and the doctrine of social or cultural environmentalism’ (1957: 324).33 Of the latter variety, two in particular; sociology of knowledge and behaviourism, have been subjected to the criticism of methodological individualists. The trouble with sociology of knowledge is that it seems to imply that ideas are socially determined to an extent that makes free and rational discussion impossible or illusory.34 The most radical form of social or cultural environmentalism (and scientism, and determinism) is behaviourism. This doctrine depicts man as a passive or reactive being completely determined by his environment, but without consciousness, free will and reason. Behaviourism, therefore, is in obvious opposition to individualist humanism, and not only implicitly, but explicitly as well. According to B.F. Skinner (the foremost contemporary representative of behaviourism) individualist humanism is the main obstacle to the adoption of the scientific outlook, and of behaviourism in particular, in the study and running of human affairs. But in a future beyond freedom and dignity environmental contingencies now take over functions once attributed to autonomous man, and certain questions arise. Is man then abolished? Certainly not as a species or as an individual achiever. It is autonomous inner man who is abolished, and that is a step forward. (Skinner, 1974: 210) The behaviourist image of man must appear repulsive to anyone committed to the beliefs and values of individualist humanism. We should expect, therefore, an attitude of hostility towards behaviourism on the part of the majority of methodological individualists. This is also what we find. There is a tendency among (non-behaviourist) methodological individualists to dismiss behaviourism as too obviously wrong to be worthy of any serious consideration.35 More specifically, methodological individualists dissociate themselves from behaviourism on the following issues: most methodological individualists defend a mind-body dualism against the monism of behaviourism.36 Most methodological individualists defend an activist epistemology against the inductivism of behaviourism. Weber, Mises and Hayek, in particular, insist that social science is about human action, as distinguished from behaviour (see chapter 4). Most important, for my present purpose, methodological individualists reject behaviourism because, being deterministic, it explains away the unique in man; his consciousness, free will and reason, and because determinism is coupled with utopian dreams about a future society based on human engineering, dreams the behaviourist is alleged to share with the believers in holism, collectivism and historicism. Holism, collectivism and historicism; these are the doctrines methodological individualism was originally invented to combat. According to many methodological individualists, holism, collectivism and historicism are, not only erroneous, but dangerous. By suggesting that the race, nation, state or class has interests of its own, distinct from the interests of its members, and by suggesting also that this collective is destined to play a special role in history, this trinity of

344

Why methodological individualism?

doctrines has served as the intellectual foundation for fascism, nazism and communism, and as a legitimation of their crimes. This is the thesis of the methodological individualists (or some of them), and this is why Popper dedicates The Poverty of Historicism to ‘the countless men and women of all creeds and races who fell victim to the fascist and communist belief in Inexorable Laws of Historical Destiny’. Holism, collectivism and historicism are dangerous because they lead to a collectivist and historicist ethic, as opposed to the individualist ethic of our Western civilisation. This is the message of Mises’s, Hayek’s and Popper’s social philosophy and social science methodology. A collectivist ethic is an ethic which makes the interest of some collective the ultimate criterion of morality, of what is right and what is wrong. A collectivist ethic reduces the individual to a mere means for the ends of the collective. According to Mises ([1957] 1985: 59), collectivism ‘assign[s] to the concerns of the collective precedence over the personal wishes of the individuals’, and according to Hayek (1944: 111), ‘Once you admit that the individual is merely a means to serve the ends of the higher entity called the society or nation, most of those features of totalitarian regimes which horrify us follow of necessity’. A historicist ethic is somewhat different from a collectivist ethic, but with much the same consequences for the individual. A historicist ethic is based upon the belief that there is progress in history, that the society of tomorrow will be better than the society of today. The morally good, therefore, is that which helps bring about the society of tomorrow, a society that will come whether we like it or not, but with more or less suffering on the way. This historicist ethic has been ascribed by Popper to Marx. It is supposed to be a form of moral positivism: the doctrine that what is, is good and right, that, ultimately, might is right (Popper, [1945] 1966, vol. 2: 199–211). The intimate link between methodological individualism and individualist humanism is exhibited clearly in the writings of Joseph Agassi. In his articles on methodological and institutional individualism, methodological, metaphysical and ethical considerations are mixed to an extent that makes even an analytical separation of them difficult, if not impossible. According to Agassi, the central thesis of (methodological) individualism is that ‘only individuals have aims and interests’, also written as the thesis that ‘only individuals have aims and responsibilities’ (Agassi, 1960: 244, 248; 1975: 146, 155). The wish to avoid the seemingly deterministic implications of holism, collectivism and historicism is also an important motive for many recent methodological individualists. It is most obvious, I believe, in the case of Raymond Boudon, Jon Elster and Philip Pettit, who all reject sociological structuralism, but defend the freedom, or autonomy of human individuals.37 A particularly clear case of an intimate relation between methodological and normative individualism is the constitutional economics of James Buchanan. While aware of the distinction between methodological and normative economics, at times he suggests that his normative theory of constitutions is based on methodological individualism, when it is plain that it is rather based on

Why methodological individualism?

345

ethical individualism: a doctrine which assigns supreme value to individual human beings (see Udehn, 1996, 174ff).

Conclusion Among the motives, or reasons, for being committed to methodological individualism, three seem to be particularly salient: (1) a belief that reduction is the way of scientific progress; (2) the belief that only methodological individualism is compatible with humanism; and (3) the belief that methodological individualism goes together with political individualism. Among the methodological individualists, treated in this book, it is pretty clear that the positivists and rational choice individualists are most influenced by reductionism, while the Austrians, members of the Chicago and Virginia Schools in economics and, to some extent, the Popperians, are motivated by their political persuasion. Humanism seems to be an important motive for methodological individualists of all political persuasions. It is obviously important for the Popperians, but also for many sociologists and/or Marxists: Jon Elster and Raymond Boudon are, perhaps, the most clear examples.

12 Methodological individualism restated

In this last chapter, I will try to bring some threads together and, above all, to summarise the results of this investigation. The main result is that methodological individualism exists in a bewildering number of different versions.1 This situation has created a Babylonian confusion of tongues, which makes intellectual exchange extremely difficult, if not impossible. In order to discuss the pros and cons of methodological individualism – something I intend to do in a later work – it is necessary to keep at least the most important versions of methodological individualism apart. When Joseph Schumpeter coined the term ‘methodological individualism’, he did not use this term to denote any thesis about social reality, or the proper way to explain it. As I have interpreted him, he used it to designate the actual procedure of theoretical economics, which is to start from the wants of human beings. I have called Schumpeter’s individualism procedural methodological individualism, as distinguished from the far more common substantive methodological individualism. It is possible to make a further division of procedural methodological individualism, into one theoretical and one empirical variant, but there is not much point in it. Procedural methodological individualism is rare and not very interesting. The principally important thing is not where you start, but where you end. The most important version of methodological individualism, therefore, is the substantive version.

Strong and weak methodological individualism In the last decade some leading economists, such as Kenneth Arrow and Alan Kirman, have expressed serious concern about the state of economic science and, especially, about its crowning achievement, the theory of general equilibrium. They have also more than hinted at the suggestion that the problem with economics might be its methodological individualism. At the same time a number of leading sociologists, such as James Coleman and Raymond Boudon have expressed a similar concern about sociology. For them, however, methodological individualism appears not as a problem, but as the solution. How is this difference possible? A first answer might be sought in the history of the two disciplines. If

Methodological individualism restated

347

economics is the most individualistic of the social sciences, and sociology (together with anthropology) is the most holistic, then it seems reasonable to assume that the solution wfor their respective problems lies in a via media, or golden mean. The main answer to this puzzle, however, is that economists and sociologists mean entirely different things by ‘methodological individualism’. While both Arrow and Kirman think of the original strong version of methodological individualism, Coleman and Boudon think of a version far removed from this original. They defend, what I call, structural individualism. The doctrine of methodological individualism, then, ranges from versions which require that social phenomena must be fully explained in terms of individuals, to versions which require only that they are partly explained in terms of individuals. How large this individualistic part must be is not stated, and cannot be stated, at least not precisely, but it is possible to conceive of a version of methodological individualism, which assigns virtually all explanatory power to social institutions and social structure, and only a small fraction of it to individuals. There has been in the short history of methodological individualism a development from strong to weak versions of methodological individualism. The development has not been linear, but the tendency has been clear. From the extreme versions of methodological individualism, exemplified by the theory of the social contract and Walras’s theory of general equilibrium, to the Austrians, who conceived of human beings as social beings, to Popper, who introduced social institutions as objective constraints upon action and, finally, to the sociologists, who introduced social structure, made up of positions related to one another independently of their occupants. This is an originally holistic idea, which was banned by earlier methodological individualists. Presented in an order of descending individualism, the main versions of methodological individualism are these: 1 2

3

4

5

The theory of the social contract, which takes as its point of departure the natural (asocial) individual, living without social institutions in a state of nature. The theory of general equilibrium, which takes as its point of departure the isolated individual, without social relations interacting on the market, in the absence of social institutions and technology. Austrian methodological individualism, which also starts with assuming the isolated individual, or Robinson Crusoe, but which conceives of human individuals as social or cultural beings, attaching subjective meaning to their own actions and to human artefacts. Popperian methodological individualism, which accepts objectively existing social institutions in the explanans, or as exogenous variables, in the social scientific explanations. Coleman’s methodological individualism, which admits of social wholes, in the form of structures of interrelated positions, which exist independently of the particular individuals who happen to occupy these positions.

I suggest that we call versions 1 and 2, natural individualism, since nothing sociocultural enters the explanans, or exogenous variables, of its explanations. This

348

Methodological individualism restated

version is sometimes called ‘atomistic’ methodological individualism, but this designation is problematic, since it was used by the Austrians, who entertained another conception of the individual. In order to distinguish Austrian methodological individualism from 1 and 2, I suggest that we call it social individualism, to acknowledge it’s conception of the human individual as a social being, and of society as an intersubjective reality, like the theories discussed in chapter 4. I call Popperian methodological individualism, institutional individualism, as suggested by Joseph Agassi. Institutional individualism is the dominating version of methodological individualism, both in political science and in the new institutional economics, even if many economists cherish the dream of being able to endogenise all institutions. Borrowing a term from some Dutch sociologists, I call Coleman’s methodological individualism structural individualism. This form of methodological individualism is today common and perhaps dominant, among sociological and Marxist methodological individualists. The main divide goes between strong methodological individualism (1–3) and weak methodological individualism (4–5). It is in the move from 3 to 4 that at least one arrow, representing the direction of explanation and/or causality, changes direction from bottom-up to top-down. This is clearly the most decisive break with methodological individualism, as originally conceived. It is a move, which makes it difficult to continue talking about individualism and holism as opposite doctrines. A good illustration of this difficulty is the holistic individualism of Philip Pettit ([1993] 1996: 165ff). Somewhere in between the weak and strong versions of methodological individualism, falls that of J.W.N. Watkins, which seems to have many adherents, most notably, Jon Elster. According to this epistemological version of ‘methodological’ individualism, reduction is possible in principle, if not in practice. Because of the complexity of the social world and/or our limited knowledge about the mechanisms at work, it might be permissible and maybe inescapable to rest content with explanations in terms of macrophenomena: but only temporarily, while awaiting the growth of knowledge about the mechanisms which make full reduction possible. In the terminology of Watkins, explanations in terms of macro-phenomena are only ‘half-way’ and second to fully individualistic ‘rock-bottom’ explanations. I believe that this version of methodological individualism, even if it implies a weakening of the strong version is still a permutation of the latter. In the words of Watkins, methodological individualism has changed from being a rule to becoming an ‘aspiration’. Since half-way explanations deviate from the ideal of rock-bottom explanations, and are accepted only reluctantly, we may call this version of methodological individualism compromising individualism. Another form of ‘pragmatic holism’ is represented by the practice among methodological individualists to relax the requirement that the actor must be an individual human being. Many methodological individualists allow collective actors, such as firms, households, classes, nations, states and churches, in addi-

Methodological individualism restated

349

tion to individual human beings, in their models and explanations. This form of compromising methodological individualism – most common economics and game theory – is often considered unproblematic (see, e.g. Janssen, 1993: 10). Collectives are composed of individuals, and the decisions and actions of collectives are, ultimately, the decisions and actions of the individuals, out of which they are composed. This form of compromising methodological individualism illustrates a very common move on the part of methodological individualists. When confronted with arguments against methodological individualism proper, they frequently switch to ontological individualism. After all society is made up of human individuals, or is it not? I call this move the ontological twist. It is typical of compromising methodological individualism and it is possible, also, to see some versions of the intersubjective and interactionist theories of society as manifestations of this twist. If society is only in the minds of individuals and in the interactions between them, a reduction must be possible in principle. This form of reductive methodological individualism must be clearly distinguished from institutional individualism. In the latter version, there is nothing half-way about explanations in terms of social institutions. On the contrary, social institutions are conceived of as the most important exogenous, or explanatory, variables in social scientific explanations. According to institutional individualism, explanations in terms of social institutions are rock-bottom. A possible source of misunderstanding must be removed: institutional individualism does not imply a denial of the undeniable fact that social institutions are human creations. They are human creations, as much as are machines, houses, works of art, etc., but this does not imply that they are, in principle reducible, in the sense of strong methodological individualism.

Versions of strong methodological individualism In the previous section, I argued that the most important divide goes between the strong and weak versions of methodological individualism. I have also argued that only the original, strong version is obviously opposed to methodological holism. If we want to understand the opposition between individualists and holists, therefore, we should take our point of departure in the more controversial, strong version. Looking more closely at this version, however, soon reveals that it is not one but many. The strong version of methodological individualism itself is made up of quite a number of different versions. I will try in this section to reduce the partly linguistic, partly real, variety of different versions of strong methodological individualism to a minimal set, comprising, at least the most common and most important ones, and then, to attempt an explication of, what I consider, the single most important version of this doctrine. Methodological individualism has been formulated as a doctrine or principle about ‘collectives’, ‘collective wholes’, ‘collective phenomena’, ‘social institutions’, ‘social objects’, ‘social wholes’, ‘social events’, ‘social processes’, ‘social structures’, ‘large-scale phenomena’, macro-phenomena and ‘social phenomena’.

350

Methodological individualism restated

The last term, ‘social phenomena’, is wide enough to cover them all. In the category of social phenomena are included the ‘social actions’ of individuals – a notion that is not without problems2 – but I take it, as a matter of course, that methodological individualism applies to all actions of individuals, not just social actions. Since I am concerned only with the strong version of methodological individualism, I rule out the possibility of a holistic explanation of the actions of individuals (cf. Ruben, 1985: 151f). But methodological individualism has also been formulated as a principle about ‘collective concepts’ (Weber) and sociological ‘models’ (Hayek and Popper). Granted that scientific models are conceptual, we might suggest that methodological individualism is either about social phenomena or social concepts. These social phenomena, according to methodological individualism, are to be ‘analysed’, ‘understood’, or ‘explained’ in terms of, or ‘reduced to’, ‘constructed from’ or ‘constituted by’, something else. Most of these terms are vague, but can probably be reduced to those of ‘definition’ and ‘explanation’, denoting primary tasks of any science. By combination, we arrive at two versions of methodological individualism: it is either about the definition of social concepts or about the explanation of social phenomena. Of these two versions, the first is more common among the subjectivist methodological individualists, while the latter is considered more important, or all-important, by the Popperians (cf. Scott, 1960: 331–6).3 I have omitted, so far, all those formulations of methodological individualism which state that social phenomena ‘are’, are ‘constituted’, ‘created’, ‘produced’, ‘brought about’ or ‘caused’ by, or the ‘result’ of, something else. This latter group of verbs indicates that we have to do with an ontological thesis about the nature of social reality, rather than with any methodological rule about its investigation. We could even distinguish between an ontological thesis about the being, and an ontogenetic thesis about the becoming of social phenomena. According to the first, social phenomena are something. According to the latter, they are caused by something (cf. Sztompka, 1979: 303). It has been pointed out by several commentators and critics, and noticed also by Watkins and Agassi, that methodological individualism has been formulated both as a strictly methodological principle or rule about the study of social phenomena, and as an ontological thesis about the nature of social reality.4 The distinction between methodological rules and ontological theses might seem unimportant. According to Popper and his followers, ontology and methodology are mainly two modes of argument.5 I think the distinction is worth maintaining, however, since it is possible, both to be a methodological individualist without endorsing ontological individualism, and to endorse ontological individualism without accepting methodological individualism. It is possible to believe in the existence of social wholes, but to advocate an individualist social science.6 It could be argued, for instance, as we have seen some methodological individualists do, that we only have ‘direct access’ to the actions of individuals, and that social science, therefore, has to be individualistic. It is also possible, and more common, to believe that only individuals exist,

Methodological individualism restated

351

and yet, to deny the possibility of an individualist social science. It could be argued, for instance, that large-scale social phenomena are too complex for an individualist social science to be possible (see Udehn, 1987: 178ff). That we have to see social concepts as shorthand for individuals and to accept explanations that are, in Watkins’s terminology, only ‘half-way’ (Israel, 1971: 149f). ‘In the face of complexity, an in-principle reductionist may be at the same time a pragmatic holist’ (Simon, 1978: 86). To return to the strictly methodological principle of individualism, we are left with the most important question: In what terms are social concepts to be defined and social phenomena to be explained? In terms of individuals, of course, but this answer needs some qualification. The most common answer among methodological individualists is: in terms of the ‘actions’ of individuals. The term ‘behaviour’ has also been used. I will use the term ‘action’, but not in Weber’s restricted sense. I will use the term ‘action’ to denote behaviour, with or without a subjective meaning attached to it, and without entering any philosophical discussion about the relation between actions and bodily movements. There is behind action a whole bunch of psychic factors supposed to determine its course. There are ‘needs’, ‘motives’, ‘ideas’, ‘purposes’, ‘expectations’, ‘attitudes’, ‘decisions’, ‘intentions’, ‘beliefs’, ‘dispositions’ and ‘interests’, ‘desires’ and ‘preferences’. There has been a controversy among philosophers about the proper way to analyse action and its determinants. It is even controversial whether we can say anything about the ‘inner’ determinants of action at all. Both ‘dispositions’ and ‘intentions’ have been analysed in such a way as to become inseparable from action itself, but in different ways.7 Methodological individualism, although most of its advocates defend the view of the individual as a free agent, is best considered neutral in this controversy. Its main concern is not the analysis of action, but the analysis of social phenomena. While being aware of the difficulties of finding an adequate omnibus term for all the inner determinants of action, I will refer to them collectively as ‘psychic states’ of the individual. While Weber, Mises, Elster and Boudon focus on the inner determinants of action, Popper and his followers, Buchanan and Coleman emphasise the importance of the outer situation. This situation is partly physical, partly social. The physical part of the situation is not much discussed by the methodological individualists. Only Watkins and Agassi make explicit mention of the physical situation in their formulations of methodological individualism. According to Watkins, the physical situation consists of ‘material resources and environment’. But not all physical factors, influencing the actions of individuals, belong to the outer situation or environment. There are also those physical factors that belong to the individual her/himself, or her/his body, such as her/his biological needs and his health.8 The physical factors influencing the actions of individuals, then, can be divided into those that belong to their ‘physical environment’ and those that belong to their own ‘physical states’. It is to be noticed that reference to the physical situation is made only in that version of methodological individualism, which states something about the explanation of social phenomena. It is

352

Methodological individualism restated

uncertain, therefore, if reference to the physical situation is part also of that version, which states something about the definition of social concepts. The components of the social situation are even more of a problem. It most obviously consists of other individuals. But it has also been suggested that, in addition to individuals, it consists of institutions.9 I have already argued that the inclusion of institutions in the situation is incompatible with the original, strong version of methodological individualism. Since institutions are social wholes, even according to the methodological individualists themselves, to admit of them in the situation is to smuggle in holism through the backdoor. The social situation, according to strong methodological individualism, then, consists of other individuals. But these individuals are not mere figures in a landscape. Popper, in particular, has included the terms ‘interaction’ and ‘relations’ in his formulations of methodological individualism. While the incorporation of ‘interaction’ presents no problem, that of ‘relations’ does. Popper seems to use the terms ‘interaction’ and ‘relations’ interchangeably. This indicates that he considers social relations reducible to the interaction between individuals. At least, this is a plausible interpretation of methodological individualism. I believe that strong methodological individualism implies that social relations are reducible to the interaction between individuals (and their psychic states). What seems clear, however, is that strong methodological individualism can only assimilate certain views about the nature of social relations, but must oppose those views which are inextricably mixed up with a holistic view of society. To conclude, the terms in which social phenomena are to be explained, are: individuals, their physical and psychic states, actions, interaction, social situation and physical environment. Two additional points must be made before restating methodological individualism. First, methodological individualism is usually stated in the imperative, as indicated by the use of terms such as ‘should’ and ‘must’. But it has also been stated in the indicative, as witnessed by the use of the term ‘can’, sometimes with the addition ‘in principle’. It is only when stated in the imperative that methodological individualism can be regarded as a strictly methodological principle or rule. When stated in the indicative, as a general thesis, and with the important addition ‘in principle’, methodological individualism becomes an epistemological thesis rather than a methodological rule (see Scott, 1960; Rosenberg, 1988: 114f). Methodological individualism, then, has been stated at three different levels: (1) the methodological, (2) the epistemological and (3) the ontological (cf. Bunge, 1973: 167). Strictly speaking, there is a methodological version supported, but not entailed, by an epistemological and ontological thesis, respectively (Dray, 1972: 55–7). I have used the term ‘methodological individualism’ to refer to all versions of this doctrine, but sometimes, for the sake of clarity, (1) has been referred to as ‘methodological individualism’, (2) as ‘epistemological individualism’10 or ‘individualist reductionism’, (3) as ‘metaphysical’ or ‘ontological individualism’, and all three, but no one in particular, simply as ‘ individualism’ in social science and history. I have also referred to all all three versions of

Methodological individualism restated

353

methodological individualism together as the ‘individualistic research programme’. Second, methodological individualism, as we have seen, has been stated as a principle both about the definition of social concepts and the explanation of social phenomena. And yet, something important seems to be missing. Anyone, the least acquainted with the recent discussion about methodological individualism, knows that it has been largely concerned with the reducibility, or irreducibility, of social laws. This view is typical of positivist philosophers and social scientists, who conceive of scientific theories as hypothetico-deductive systems of law-like statements and who believe in the covering-law model of explanations. I suggest that John Stuart Mill, George Homans, Hans J. Hummel and Karl-Dieter Opp belong in this category. Also Watkins accepts the existence of social or ‘macroscopic’ laws, while denying that they are sui generis. This is tantamount to holding that social laws are reducible to psychological laws. Methodological individualism, then, is a principle or thesis about (a) the definition of social concepts, (b) the explanation of social phenomena and (c) the reduction of social laws.11 We are now in a position to attempt a restatement of methodological individ-

Figure 12.1 The individualistic research programme, or versions of strong methodological individualism

354

Methodological individualism restated

ualism, or the individualistic research programme, and arrive, by combining (1–3) with (a–c), at the following scheme: Of the three levels, at which methodological individualism has been stated, the ontological level is, in a sense, the most ultimate. The ‘basic question, and one that in a sense underlies all the others … is whether societies exist in their own right at all’ (Pratt, 1978: 108). But this is also the question less likely ever to be settled by argument. The epistemological level may also be considered more basic than the methodological one. ‘Must’ or ‘should’ presupposes ‘can in principle’. But it also presupposes can in practice, which, together with some other considerations, motivates a special treatment of methodological individualism. Of the three different versions (a–c) of methodological individualism, (b) and (c) must be considered scientifically more important than (a). The definition of concepts is, especially in social science, too much of a conventional matter, for an agreement about the right one to be possible. There is also the problem that definitions are of different sorts, and made for different purposes. The strongest version of methodological individualism would be the requirement that all social concepts must be reduced and entirely eliminated from social science (and history). Although sometimes made, this is an unlikely interpretation of the views of the methodological individualists. From Weber to Watkins, no one argued against the use of social concepts for descriptive purposes. But in a nominalist fashion they held that social concepts are shorthand for complexes of individuals. A more likely interpretation of the position of the methodological individualists is that they admit of social concepts for descriptive purposes, but forbid their use for explanatory purposes.12 Of versions (b) and (c), the former about the explanation of social phenomena is more general than the latter about the reduction of social laws.13 Version (b) and, in particular, (1b) also appears to occupy a privileged position as most important among the methodological individualists themselves. This version is Methodological Individualism.14 It is true that, on the deductivenomological or ‘covering-law’ model of scientific explanation, there can be no scientific explanation without laws. But while both explanation and reduction require the existence of individualist laws, reduction, in a strict sense, requires, in addition, the existence of social laws. The reduction of social laws has been discussed in chapter 11.

Explanatory methodological individualism I have suggested that version (1b) in Figure 12.1 is the most important. By ‘most important’, I mean first of all, that it is the principle defended by most methodological individualists, the Popperians, in particular. I will now turn to an explication of this version of methodological individualism, as stated in Figure 12.1: Social phenomena must be explained in terms of individuals, their physical and psychic states, actions, interactions, social situation and physical environment. The expression ‘explained in terms of ’ requires some clarification. We may recall Jarvie’s suggestion that individualists tend to put social wholes in the cate-

Methodological individualism restated

355

gory of ‘explicanda’ (explanandum), which presumably implies that they tend to put individuals, etc. in the ‘explicans’ (explanans).15 While based on a sound intuition, this suggestion will not do. As Danto correctly points out, on the deductive-nomological model of scientific explanation, nothing can be in the explanandum which is not already in the explanans. His own suggestion is that, for an explanation to satisfy methodological individualism, the initial conditions must be facts about individual human beings (Danto, 1965a: 277). While, no doubt, an improvement upon Jarvie’s suggestion, even this one is not altogether satisfactory. The notion of ‘initial conditions’ belongs to that of a ‘closed’ or ‘deterministic’ system. But in social science there are no closed systems. Besides initial conditions, there are the most important boundary conditions, which together with the initial conditions make up the antecedent conditions of an explanation (Hempel, 1965: 232, 246–51, 335ff). The following, extremely

Figure 12.2 Deductive–nomological explanations

simplified model of a deductive-nomological explanation may help to clarify matters. A first interpretation of the phrase ‘explained in terms of ’ is that it refers to the initial and boundary conditions of a deductive-nomological explanation. Methodological Individualism could then be rewritten: In any deductive-nomological explanation of a social phenomenon, the antecedent must refer only to individuals, etc.16 The most often cited examples of laws in social science are those of economics. It is not usual, however, to refer to the explanations of economics as hypothetico-deductive explanations, conforming to the covering-law model of scientific explanations. As we have seen in chapter 8 and chapter 9, methodological individualism has been explicated, by Lawrence Boland, in terms of endogenous and exogenous variables. Following Boland, I suggest the following alternative explication of strong Methodological Individualism: In any social scientific model, the exogenous variables and conditions must refer only to individuals, etc., but not to social institutions.

356

Methodological individualism restated

A problem with the first explication above, is that few social scientific explanations satisfy the criteria of a complete deductive-nomological explanation. Most explanations in social science (and history) are incomplete. They are, to borrow a term from Carl Hempel, mere ‘sketches’ of complete deductive-nomological explanations (Hempel, 1965: 423f; see also Brodbeck [1962] 1968: 381–5). Typical for many social scientific and historical explanations is the absence of any explicitly stated laws. But even in the absence of laws, it is often possible to recognise an antecedent and a consequent. Many social scientific explanations consist in the enumeration of a number of causal factors supposed to explain a certain social phenomenon. In that case, the antecedent is simply the sum total of these causal factors (cf. Little, 1998: ch. 10). Another problem with the covering-law explication is that many social scientific explanations are statistical, rather than deductive-nomological in form. In the case of statistical relationships between variables, it is customary to make the distinction between dependent and independent variables. In the case of statistical relations, I suggest the following explication of Methodological Individualism: In any statistical explanation of a social phenomenon, the independent variables must range over individuals, etc.17 The most serious problem with the covering-law explication of Methodological Individualism is the scarcity, or absence, of clearly stated and agreed upon laws in social science. There has been, in recent social science and philosophy, an emerging awareness of this predicament and different suggestions to meet it. The most interesting suggestion is to replace social laws by social mechanisms.18 As I have mentioned in chapter 6, one branch of the social mechanism approach is explicitly individualistic.19 There is no particular way to state strong methodological individualism, in terms of social mechanisms. It may be stated, as a modification of the original version of Methodological Individualism (1b) in Figure 12.1: Social phenomena must be explained by individualistic mechanisms; that is, in terms of individuals, etc. For many social scientists, ‘social mechanisms’ is another name for rational choice. I have treated a considerable number of rational choice theories in chapters 8, 9 and 10, and concluded that they tend to transgress the boundaries of strong methodological individualism. Most rational choice theories are, explicitly or implicitly, manifestations of institutional and structural individualism. In order to satisfy the strictures of strong methodological individualism, a rational choice explanation would have to satisfy the following condition: In any use of rational choice to then explain a social phenomenon, the description of the situation must be in terms of individuals, etc., but not of social institutions, or structures.

Notes

1 Introduction 1 See Wilhelm Dilthey’s Introduction to the Human Science ([1883b] 1988: 209–18) where the opposition between an atomistic/mechanistic and a holistic/organismic metaphysics is a main theme. See also F. Kaufmann (1958: 158): ‘For more than 2000 years the nature of the relation between social groups and institutions – particularly society and the state – and the individuals “forming” them has been one of the pivotal issues in social philosophy’. 2 See, e.g. Ryan (1975: 173). It would seem, however, that Ryan has changed his mind about this in Ryan (1991: 42) where he argues (against Jon Elster) that the issue between individualists and holists is an empirical matter (see also Tännsjö, 1990). 3 See also Runciman (1972: 30). 4 I find it interesting that Alan Ryan, who once thought that the battle between individualists and holists is a sham battle, has taken Elster to task for maintaining that methodological individualism follows from the truism that no system can work without individuals and no explanation neglect that fact. ‘But to be a holist is not to deny any of that. Rather, it’s to bet on the prospect of explaining social and economic phenomena by approaching them in a “system-down” rather than “individuals-up” perspective’. Thus, ‘there is a genuine parting of ways between non-truistic methodological individualism – that is, the research programme based on orthodox rational man analysis – and Marxism’ (Ryan, 1991: 42f). 5 See, e.g. Sensat (1988: 193ff) and Kinkaid (1997: 144). The reason this position has become common is probably the idea of supervenience, which confers some credibility on it. 6 It remains, of course, to show how the course of history is determined by the actions of individuals. This Hegel does not do, at least not in a way that would satisfy a methodological individualist (cf. Kinkaid, 1986: 509). 7 Examples of such question-begging statements of methodological individualism are M. Lessnoff (1974: 77) and Ryan (1975: 172ff). The most trivial of all individualistic reductions of society, however, is that of Hummel and Opp (1968; 1971). According to Ruben (1985: 152) ‘[i]t seems obvious that if social relations were to be included, the doctrine [methodological individualism] would be incapable of giving any sense whatever to the idea of the explanatory priority of the non-social over the social’. 8 I intend also to write a treatise about collectivism and holism within the next few years. 9 I am working on a manuscript about the history of the individualist theory of society before social science. The title of this work is not yet decided, but the manuscript will be finished in about a year. I conceive of it as companion volume to the present work.

358

Notes

2 Background 1 See, for instance, Pribram (1912: ch. 4), Vanberg (1975: ch. 1) and Infantino (1998: 41ff). 2 On the role of Robinson Crusoe in economics, see Novak (1962). 3 Some of the more important contributions to the critique of political economy in England, can be found in E. Jay and R. Jay (eds) (1986). 4 Ruskin’s main writings on economics are The Political Economy of Art (1857), Unto This Last (1862) and Essays on Political Economy (1862), all included in Ruskin (1857–62). The term ‘catallactics’ was introduced by R. Whately in his Lectures on Political Economy (1831), as an alternative to ‘political economy’. The point of the new term was to make clear that economics is a theory of the market, not of the household, or state. The term ‘catallactics’ has been picked up by many methodological and economic individualists, to make the same point and in order to avoid the collectivism implied by a science of household, or state, management of economic life. 5 Lorenzo Infantino, who makes the observation that there is no necessary link between methodological and political individualism (1998: 131), has nevertheless written a book in which the distinction between the two is constantly blurred. 6 For a more precise statement, see Sowell (1974: 39–41) where Say’s law is stated in the form of six major propositions. See also Blau (ed.) Jean Bapiste Say (1776–1832) (1991). 7 As Sowell (1974: 148) has pointed out, however, ‘no one more strongly defended abstract deductive reasoning than Karl Marx’. The implication is that the relation between abstract theory and individualism is far from necessary. 8 Public choice is the economic theory of politics, based on the assumptions of (1) selfinterest, (2) exchange and (3) individualism (see Udehn, 1996: 35). 9 Robert E. Prasch (1996) has argued that the origin of the a priori method in classical economics is to be found in Scottish common-sense philosophy, rather than in Descartes, which is commonly believed. I do not dispute the role of Scottish philososphy, but I think it would be wrong to disregard that of Descartes (and Galileo), as mediated by Thomas Hobbes. 10 The German term is ‘Historismus’. See, for instance, Troeltsch (1924) and Mannheim (1924), who both use the term Historismus in the second sense. 11 It may be pointed out that Berlin denies that Herder is guilty of metaphysical holism. ‘For Herder all groups are ultimately collections of individuals; his use of ‘organic’ and ‘organism’ is still wholly metaphorical and not, as in later, more metaphysical thinkers, only half metaphorical. There is no evidence that he conceived of groups as metaphysical ‘super-individual entities or values’ (Berlin, 1976: 198). 12 The distinction between an ‘Older’ and a ‘Younger Historical School’ comes from Schumpeter (1954: 807ff), who also mentions the ‘Youngest Historical School’, including Arthur Spiethoff, Werner Sombart and Max Weber (pp. 815ff). 13 Droysen’s critique of Buckle can be found in a famous review of the latter’s History of Civilization in England, published in 1862 and added as an appendix to his Historik in 1868 (Droysen [1858] 1977: 386–405). 14 See ‘Kunst und Methode’, added as an appendix to the 1868 edition of the Historik and translated as ‘Art and Method’ in F. Stern ([1956] 1970: 137–44). 15 It is common to see Henri St Simon and Auguste Comte as the founding fathers of sociology. Others, such as Small (1907), Sombart (1923), Swingewood (1970) and Eriksson (1993) argue that the roots of sociology are rather to be found in the Scottish Enlightenment. I have no reason to take sides in this debate. 16 Comte uses the term ‘spontaneous’ frequently to denote unintended social phenomena. It is also used in the title of chapter V in Book VI of The Positive Philosophy, which is ‘Social Statics, or Theory of the Spontaneous order of Human Society’. As far as I know, Comte was first to use the term ‘spontaneous order’ about

Notes

17

18

19

20 21 22 23

24 25

26 27

28 29

359

social phenomena (Aristotle used the term ‘spontaneous generation’, but not about social phenomena). Since Friedrich von Hayek did read Comte, it is, at least, possible that he picked up the term from him. Friedrich von Hayek, wrote two critical essays, which deal to a large extent with Comte: ‘The Counter-Revolution of Science’ (1941) and ‘Comte and Hegel’ (1951), both included in Hayek (1955). Comte is also a principal target of critique in Popper’s The Poverty of Historicism (1957). Comte’s advocacy of social engineering is most manifest in his early works (Comte [1819–26] 1974), written while appointed as secretary to St Simon. The main work from this period is ‘Plan of the Scientific Operations Necessary for Reorganizing Society’ (1822), which contains most of Comte’s later ideas in embryo. The best treatment of the role of statistics in the rise of social science that I know of is Ian Hacking’s The Taming of Chance (1990). It is a common, and probably correct, observation that the main impetus to the rise of systematic empiricism was the need on the part of state administrations for official statistics (Österberg, 1988: 18ff; Desrosières, 1991). See, however, John Goldthorpe (2000: 266–74), who does not at all share the opinion that Durkheim’s Suicide was a masterpiece. Spencer’s political views are most clearly expressed in the The Man Versus the State ([1884] 1982) and other essays included in the volume with this name. ‘I have very emphatically expressed my belief in a subjective science of the mind, by writing a Principles of Psychology, one half of which is subjective’ (Spencer [1864] 1984: 18). In his Reasons for Dissenting from the Philosophy of M. Comte, Spencer ([1864] 1984: 15) avoids the organism analogy and uses that of mechanism instead. In his later works, society is once again a social organism, but the analogy between the individual and social organism is played down. What they both have in common is that they are organised entities with mutual dependency among the parts (Spencer [1873] 1961: 52–4, 298ff; [1876] 1985, vol. 1: 437ff, 580f). See, e.g. Buchanan (1949) and Benn and Peters (1959: 290) on the contrast between individualism and organicism. See Taylor (1989; 1992: 137ff) and Gray (1985: 245f; 1996: ch. 13). Other examples are the American sociologist William Graham Sumner (see Sumner, 1992) and the English jurist Wordsworth Donisthorpe (1889), both of whom were influenced by Spencer. Sumner rarely used the term ‘social organicism’ but there is little doubt that he was an organicist, and even more of an evolutionist. Donisthorpe, on the other hand went farther in his organicism than Spencer. According to him, also the state is an organism (p. 2) and, like other, social organisms, it is endowed with a group mind (p. 276). Even so, he was a political individualist. If there is a debt to Spencer on the part of Hayek, it is unacknowledged. It has been argued by Paul (1988), that there is an even greater similarity between Hayek and Sumner, but Sumner is not even mentioned by Hayek. It should be mentioned that Durkheim was not an enemy of all versions of individualism. On the contrary, he was a strong supporter of Kantian individualism, with its idea of the autonomy of the individual and he was an equally strong supporter of the idea of human rights derived from Kantian individualism. This fact, casts strong doubts upon some interpretations of Durkheim, especially that of Philip Pettit ([1993] 1996: 112, 127ff), who suggests that Durkheim was a collectivist, who denied any autonomy to individuals. Distrust of psychology, subjectivism and humanism has turned into something of a trademark of that type of French structuralism, which conceives of Durkheim and the Swiss linguist Ferdinand de Saussure as its founding fathers. See, e.g. Durkheim ([1895] 1982: 39f, 45, 128f; [1897] 1951: 319f; [1898] 1974: 31; [1900] 1973: 16ff; [1911] 1974: 90–93).

360

Notes

30 For Pettit, the issue of individualism versus collectivism has to do with the question whether human beings are autonomous or subject to social forces from ‘above’; whereas, that of atomism versus holism, concerns horizontal relations between human beings; to what extent human beings are social beings. I agree with the conclusions that Pettit reaches; that collectivism is untenable and holism justified, as he understands these doctrines, but I have no use for this understanding, which is too much at odds with common usage of the terms ‘individualism’, ‘atomism’, ‘collectivism’ and ‘holism’.

3 Psychologism in early social science 1 See, e.g., Pandit (1971), Notturno (1985: ch. 2), Cussins (1987), Mohanty (1989) and Kusch (1995: 4ff). 2 Other important representatives of associationist psychology are David Hartley (1705–57), Thomas Brown (1778–1820) and Alexander Bain (1818–1903). 3 See, e.g., Ryan (1970: 156ff), Hollis (1972: 376f) and Oakley (1994: 185). 4 For Mill’s epistemological views, see A System of Logic, and especially An Examination of Sir William Hamilton’s Philosophy (1865), which is to a large extent a defence of British empiricism and associationist psychology against the more intuitionist view of Hamilton. It may also be mentioned that John Stuart Mill published a new edition of his fathers’ Analysis of the Human Mind in 1878, an act that could be interpreted as a sign of appreciation. 5 It is common to credit Auguste Comte with the invention of the term ‘social science’. According to P.R. Senn (1958) 1991, however, Mill used this term ten years before Comte, or in 1836. This claim has been contested by J.H. Burns (1959) 1991, who points out that Comte used the term science sociale already in 1822 and by G.G. Iggers (1959) 1991, who points out that it was used by Charles Fourier in 1808 and by Sismondi in 1803. 6 The idea that the association of ideas can take the form of ‘mental chemistry’ was suggested by James Mill in Analysis of the Phenomena of the Human Mind ([1829] 1878: 321). In the Preface to the second edition of this work, John Stuart Mill says (p. xi), that the idea originated in David Hartley’s treatise Observation on Man (1749), who was indebted to an otherwise forgotten thinker, Mr. Gray. As Infantino (1998: 72) points out, however, it was used by Rousseau in his ‘Geneva manuscript’, where it is associated with the holistic idea that the whole is not just an aggregate, but greater than the sum of its parts. The latter idea can be traced first of all to Leibniz, but goes further back to Greek Antiquity, where Sextus Empiricus denied, in his Outlines of Pyrrhonism (p. 189), that there is such a thing as a whole, on the ground that if wholes exist they must be other than their parts, which obviously they are not. Empiricus’ argument is clearly polemical, which means that the idea that wholes are other, or more, than their parts must be found somewhere else, probably in Aristotle. 7 More recently, Jon Elster (1999: 10–13) has turned to the treasure of folk wisdom, in the form of proverbs, as a source of knowledge about social mechanisms. 8 The term and the idea of axiomata media goes back to Francis Bacon (1561–1626). More recently, it has been used by the sociologist Robert Merton (1967: 56–9) as the source of his own idea of ‘theories of the middle range’. A closer look at the latter, however, reveals that theories of the middle range have little to do with Mill’s axiomata media. For one thing, they are not psychological. The real follower of Mill among sociologists is the psychologistic methodological individualist George C. Homans. 9 Mill’s reaction was not typical for a Briton, however. According to Hacking (1990: ch. 15), British philosophers and social scientists, generally, had little problem accepting the idea of statistical laws, since it was compatible with Hume’s conception of cause as constant conjunction. It was in Germany that the insight emerged in the middle of the nineteenth century that statistical regularities are not laws.

Notes

361

10 See, e.g. Mill’s review of de Tocqueville’s Democracy in America (Mill [1840] 1965), which contains many institutional explanations by Tocqueville, which Mill endorses, and also some entirely his own. Wilson (1998) has argued that Mill was a structuralist, rather than a psychologistic methodological individualism. This is farfetched and lacks support in Mill’s methodology. 11 It was Wicksteed ([1888] 1970: 45f), who introduced the term ‘marginal utility’, to replace Jevon’s ‘final utility’, in British marginalism. ‘Marginal utility’ was a translation of the German term ‘Grenz-nutzen’, which was coined by the Austrian economist Friedrich von Wieser (1884: 126ff). 12 On the term ‘catallactics’, see p. 358, note 4. 13 A summary statement of the main points made by Wicksteed in The Common Sense of Political Economy can be found in his article on ‘The Scope and Method of Political Economy in the Light of the “Marginal” Theory of Value and Distribution’ (1914). In this article Wicksteed mentions two assumptions, which are necessitated by the use of the differential calculus in the mathematical treatment of the theory of price: (1) the tastes, desires and resources of individuals are fixed and (2) that the amount of supply is also fixed (p. 784). The first of these assumptions, in particular, have since played an important role as one of the most distinctive marks of the economic approach to behaviour (see, e.g., Becker, 1976: 5; and Stigler and Becker, 1977), and in the division of labour between economics on the one hand and psychology and sociology on the other hand (see, e.g., Tullock, 1972). 14 On Marshall’s organicist leanings, see, e.g., Whitaker (1975: 107ff). 15 Pareto took the idea of indifference curves from Edgeworth (see p. 52), but unlike the latter he dropped the idea of utility: ‘I consider the indifference curves as given and deduce from them all that is necessary for the theory of equilibrium, without resorting to ophelimity [utility]’ (Pareto [1909] 1972: 119, note 4). 16 Völkerpsychologie was the joint creation of M. Lazarus and L. Steinthal, who saw it as a discipline studying the language, mythology, religion, customs and art of a people. They rejected the romantic concept of ‘folk soul’, but accepted that of ‘folk spirit’, which is simply another phrase for ‘culture’ (cf. Kalmar, 1987). 17 Völkerpsychologie is usually translated as ‘folk psychology’, but this is unfortunate, since this term is more commonly used to designate the psychological beliefs entertained by people, i.e. common sense. Völkerpsychologie, on the other hand, is a discipline that turns ‘folk psychology’ into an object of investigation. Needless to say, it has much in common with ethnology, social anthropology and sociology. 18 An important contribution to the development of functionalist psychology is John Dewey’s article ‘The Reflex Arc Concept in Psychology’ (1896), which launches a functionalist view of the psyche as an alternative to the behaviorist stimulus-response model. 19 In a later work on The Group Mind (1920), McDougall has turned into a holist arguing that the group mind is irreducible to the minds of individuals. This made him one of the main targets of attack for methodological individualists. 20 James Baldwin was an important figure in the early development of social psychology: he launched the idea of imitation as the most important mechanism of learning, independently of Tarde. 21 In a short comment made much later, Allport (1961) reflects on his 1924 critique of the group fallacy. He still believes that the fallacious idea of collective, or corporate, actors, in social theory is a serious problem and he does not admit of having changed his mind on that point. I see an important change of view, however. Whereas in 1924, Allport referred to social entities as aggregates and demanded a reduction of sociology to psychology, he now insists that groups are social wholes with an internal structure that explains collective, or corporate, action, and he says nothing at all about reducing sociology to psychology.

362

Notes

22 A difference between Allport and more recent advocates of microfoundations, is that the former seeks them in behaviourism, while the latter prefer rational choice. 23 Dilthey’s lived experience (Erlebnis) should not be conflated with the experience of the theory of knowledge. According to Dilthey ([1883] 1989: 50): ‘No real blood flows in the veins of the knowing subject constructed by Locke, Hume, Kant, but rather the diluted extract of reason as a mere activity of thought’. 24 Dilthey’s descriptive psychology was subjected to an effective critique by the experimental psychologist Hermann Ebbinghaus (1896), who argued that Dilthey did not know, or understand, the explanatory psychology he criticised and therefore exaggerated the differences between descriptive and explanatory psychology. He also accused Dilthey of misunderstanding the methodology of the sciences, in general and even his own descriptive psychology. Ebbinghaus’s critique did much to discredit Dilthey’s project of a descriptive psychology and to undermine his position in German academic life. 25 See, e.g., Rickman (1967: 37ff), Habermas ([1968] 1971: 145–48), Outhwaite (1975: 24–37) and Makkreel ([1975] 1992: chs. 7–8). See, however, Rickman (1979: 69), who tries to play down the importance of the shift from psychology to hermeneutics in the work of Dilthey. 26 Dilthey’s elementary acts seem to be similar to the ‘basic actions’ of ordinary language philosophy (see Danto, 1965b). 27 It has been argued by Backhaus (1998) that Simmel owed a lot also to Edmund Husserl. That, in fact, Simmel’s formal sociology should be interpreted as an ‘eidetic’ social science in the phenomenological sense (see p. 81). 28 Chapter 2 in Frisby (1992) is an article with the title ‘Georg Simmel and Social Psychology’, originally published in Journal of the History of the Behavioral Sciences, 20, 1984, 107–27, which is a main source on Simmel’s view of social psychology and its relation to sociology. According to Frisby, the early Simmel took a strong interest in psychology, and wrote several articles on this subject in the 1880s. 29 Simmel’s main work on this theme is The Problems of the Philosophy of History (1892) and ‘On the Nature of Historical Understanding’ (1918). One difference between Dilthey and Simmel is that the latter is more of a Kantian, as manifested in his critique of (Ranke’s) historical realism and his epistemological constructivism ([1892] 1977: 76ff; [1917–18] 1980: 149f). 30 It may be pointed out that behind Dilthey’s way of making the distinction between the natural and human sciences was a dissatisfaction with Kant’s view of psychology. In A Descriptive and Analytic Psychology, published in the same year as Windelband’s address, Dilthey is even more outspoken in his critique of Kant’s theory of knowledge and, especially, of its claim that epistemology is independent of psychology. According to Dilthey ([1894] 1977: 32): ‘it is evidently impossible to connect the spiritual data which form the matter of epistemology without relying on some idea or other of the psychic nexus. Absolutely no magical trick of a transcendental method can make possible what is in itself impossible. Utterly no legerdemain of the Kantian school can be of any help here’. I do not know, if Windelband had read this before his attack on Dilthey, but if he had, it is not surprising that he should feel provoked. 31 It is of some interest, for the purposes of this book, to notice that the methodological individualist Friedrich von Hayek is the author of the Preface to the English edition of this book (1962). He complains that Rickert’s dichotomy does not allow for a generalising social science, like economics, which is not altogether correct, since Rickert saw generalising and individualising as extremes on a continuum and explicitly recognised the generalising element in this discipline (p. 109). The following observation is, however, entirely justified: ‘Rickert was scarcely interested in and perhaps hardly aware of the existence of the kind of compositive or individualist theory that economics and possibly linguistics have developed in order to account for the appearance of regular structures not the result of deliberate human design’ (p. vi).

Notes

363

32 A summary of Husserl’s argument against psychologism can be found in Kusch (1995: 41–60). 33 Dilthey referred approvingly to Husserl’s Logical Investigations in his study ‘Der Strukturzusammenhang des Wissens’ (1905), published posthumously in Der Aufbau der Geschichtlichen Welt in den Geisteswissenschaften ([1926] 1958: 39ff). There is also a letter from Husserl to a student in 1927, which mentions a visit he paid to Dilthey in the winter 1905/1906. This was the time when ‘the first synthesis between my strivings and those of Dilthey occurred in the form of a personal conversation during my visit to his home …. That Dilthey identified my phenomenology with psychology as a human science and related it to his life-goal of a philosophical foundation of the human sciences made a tremendous impression on me’ (quoted from the Preface to R.A. Makkreel and J. Scanlon (eds) Dilthey and Phenomenology, 1987: ix). See also the ‘Introduction’ to Husserl’s lectures on phenomenological psychology in Paris 1925 (Husserl, 1977: 24f), where Husserl tells his audience about Dilthey’s enthusiastic reaction to Logical Investigations, but also about his initial suspicion against Dilthey’s work on descriptive psychology, which he did not read because of Ebbinghaus’s devastating critique. When he, eventually, did read it, he saw ‘that Dilthey was in fact right with his judgement which has so greatly astonished me, concerning the inner unity of phenomenology and descriptive-analytic psychology’ (p. 25). 34 That Husserl did know about Dilthey’s descriptive psychology is evident from the previous footnote. His critique of Dilthey’s ‘Weltanschauung philosophy’ led to a correspondence between them, where Dilthey first protested against being classed as a ‘historicist’ and ‘relativist’ and then paid his respect to Husserl, who answered in a conciliatory tone. The correspondence ended in mutual reverence. 35 It may be noted, though, that Husserl mentions a ‘general phenomenology’, which deals with objects as they present themselves to consciousness (1981: 12). 36 This quest for foundations has recently been much criticised by postmodernism/poststructuralism, especially by Jacques Derrida (1964), who argues that Husserl’s transcendental phenomenology is metaphysical, despite Husserl’s claim to the contrary. 37 Also important is the article on ‘The Origin of Geometry’ (written in 1936 and first published by H. Fink in 1939), where Husserl went far in acknowledging the dependence of phenomenology on the sciences of man: ‘The ruling dogma of a separation in principle between epistemological elucidation and historical, even humanisticpsychological explanation, between epistemological and genetic origin, is fundamentally mistaken, unless one inadmissibly limits, in the usual way, the concept of “history”, “historical explanation”, and “genesis”’ (Husserl 1981: 264). See also Jordan (1968) and Landgrebe (1977). It is this later work of Husserl and, especially the problematic concept of ‘Lifeworld’ (Carr, 1977; Gurwitch, [1967] 1978), which is the source of the sociological phenomenology of Alfred Schutz and Maurice Merleau-Ponty. While the former became acquainted with it through personal contact with Husserl in the early 1930s, the latter read in the Husserl Archives of Louvain about ten years later. 38 This reference is to the Vienna Lecture, which Husserl gave in 1935 and which is added as an appendix to The Crisis of European Sciences. 39 See also the Vienna Lecture (Husserl [1954] 1970: 296–98) and the Prague Lecture (Husserl, 1965: 188–90). 40 It might be added that Jaspers was a friend and admirer of Max Weber. Obviously, he was not led by his admiration to accept Weber’s neo-Kantian rejection of psychologism.

364

Notes

4 Austrian methodological individualism 1 Over the last decades, there has been a Renaissance for the Austrian School of Economics and the literature about it is by now enormous. On the historical and philosophical background of the Austrian School, see, e.g., Dolan (1976), Smith (1986), Parsons (1990) and Cubeddu (1993). On the German roots of the Austrian School, in general, and on Carl Menger, in particular, see especially Alter (1990), but also Streissler (1990) and Silverman (1990). According to one interpretation, inspired by Ludwig Lachmann (1970; 1990), and launched, especially, by Don Lavoie (1986; 1990), Austrian Economics may be seen as a hermeneutical enterprise (Selgin, 1988). For a serious critique of this view, see Albert (1988); for a mere dismissal, see Rothbard (1989). 2 The psychological basis of Menger’s marginalism was a theory of needs rather than of utility-maximisation. According to Alter (1990: 23ff) this reveals the roots of Menger’s economics in German Romanticism. It should be kept in mind, though, that Menger was consistently critical of the more holistic aspects of German thought (see, e.g. Milford, 1990) and was the first in the sphere of German economics to advocate methodological individualism (Streissler, 1990: 60f). 3 In his later writings, Menger dissociates himself from Bacon’s inductivism, because it does not lead to exact laws (Menger [1871] 1963: 60). 4 On The Battle of Methods, see Schumpeter ([1914] 1954: ch. IV), Ritzel (1950) and Bostaph (1976). 5 Böhm-Bawerk (1890) seems to agree that the Battle of Methods was between adherents of a historical-inductive and an abstract-deductive method, but preferred to talk, in the latter case, of an ‘isolating method’ (p. 249). See, however, Menger ([1894] 1935: 278–280), who denies that the Battle of Methods was about induction versus deduction, or even isolation. Atomism was the heart of the matter. According to Menger it was a clash between different views of the goals of research and of the tasks of economics, in particular. ‘The Austrian School defends theory based on scientific analysis – and this means to trace the complex phenomena of the economy back to the endeavours of economising human beings and to their psychological causes in order to achieve a deeper understanding of economic phenomena in their wider context – while criticising the Historical School as insufficient even as a practical science of economics’ (p. 280 [my translation]). 6 It is commonly believed that Menger’s idea of economics as an exact science derives from Aristotle (Kauder, 1958; Hutchison, 1973: 17ff; Smith, 1990) and this is most probably correct, but it should be added that this influence was equally probably mediated by the Aristotelian philosopher Franz Brentano, who was a contemporary of Menger in Vienna (see Smith, 1986: 8ff; Fabian and Simons, 1986). 7 Cf. von Wieser (1914: 162–6), Watkins (1976a: 711), O’Driscoll (1986) and Vanberg (1994: 146–51). 8 According to Hutchison (1988), ‘[t]he ferocity of the quarrel derived … from questions of priority and prestige. As Schumpeter put it, the issue was one of “Luftraum oder Herrschaft”, that is of empire-building and the capture of chairs and jobs’ (p. 528). 9 A morphological, or ‘anatomical’ orientation had been suggested, before Menger, by the holistic economists Wilhelm Roscher and Gustav Schmoller. More recently a morphogenetic approach has been defended by Margaret S. Archer (1985; 1988; 1995). In her work, this approach is best understood as a form of genetic structuralism. 10 The American sociologist Albion Small, for instance, characterised the Austrian School as ‘the attempt (about 1870) to reconstruct economics by appeal to psychology’ (Small [1924] 1967: ch. 12).

Notes

365

11 For those who want to go further in these investigations, it may be pointed out that the sources of Dietzel’s ‘economic principle’ are economists belonging to the German Historical School and especially Adolf Wagner. 12 See Menger ([1883] 1963: 93, 116f, 139ff, 208f; 1884: 77–79). 13 Cf. Harsanyi (1978): ‘When on the common-sense level we are speaking of rational choice, we are usually thinking of a choice of the most appropriate means to a given end … However, it has been an important achievement of classical economic theory to extend this common-sense concept of rational behavior so that it can cover not only choices among alternative means to a given end but also choices among alternative ends. Under this more general concept of rationality, our choices among alternative ends are rational if they are based on clear and consistent priorities and preferences. Formally this means that our choice behavior will be rational if it satisfies certain consistency requirements or rationality postulates’. 14 See Walther (1926: 5–10), Antoni (1940: ch. IV), Mommsen (1974: ch. 1) and Schluchter (1989: ch. 1). 15 See, e.g. Pfister (1928), Tenbruck (1959: 583–9), Cahnman (1964: 108–21), Burger (1976: 6, 140–53). 16 On Weber’s debt to Austrian Economics, see Tenbruck (1959: 583–9, 603–6), Therborn (1976: 290–5), Binns (1977: ch. 2), Jones (1977: 29ff), Clarke (1982: 197–212), Holton and Turner (1989: ch. 2), Schön (1987: 60ff), Hennis (1991: 29–31). 17 Some commentators see in Weber’s methodological essays little more than an unsystematic heap of polemical tracts, written as interventions in contemporary debates and occasioned by Weber’s wish to rebut faulty ideas on the part of his contemporaries (Tenbruck, 1959; Hennis, 1988: 157f). This view gains support from Marianne Weber’s biography of her husband, where it is suggested that methodology was not Max Weber’s main concern (Weber, 1926: 265, 308f). This is, of course, true, but does not imply that his methodology is unimportant. Weber saw methodology as a means to an end of substantive work – a self-evident view on the part of a historian and social scientist – but this does not imply that he saw it as unimportant (see Weber, 1949: 116). It is also true that Weber never systematised his methodology into a unified whole, but this does not imply that it lacks thematic unity. Tenbruck has recently changed his view of Weber’s methodology. He now believes that it is unitary and, what is more, that it is an important key to the understanding of Weber’s sociology (Tenbruck, 1986; 1989; 1994). I agree. 18 In the enormous literature on Weber’s methodology, his methodological individualism has been a relatively neglected subject. See, however, Runciman (1972: 24f), Torrance (1974: 145–5), Weiss (1975: 90–3); Holton and Turner (1989: 38–44), Albrow (1990: 135–40, 251–4) and Ringer (1997: 155–62). 19 It has been argued, though, that Weber did not follow Menger in his critique of the idea of a ‘national economy’. According to Hennis (1988: 117–125), Weber saw economics as a political science and, as such, inseparable from the nation state. The main evidence, for this view is Weber’s Inaugural Address on ‘The Nation State and Economic Policy’ ([1895] 1980), delivered when Weber was appointed to the Chair in political economy at Freiburg in 1895. It is true that Weber in this early lecture proclaimed that ‘political economy is a political science’ (p. 16). He also called himself a historian (p. 20) and a disciple of the German Historical School (p. 19). But he also said: ‘As an explanatory and analytical science, political economy is international’ (p. 15). This means that, already in 1895, he sided with classical and neoclassical economics, against members of the Historical School, on the intepretation of theoretical economics. 20 See G. Wagner and H. Zipprian (eds) Max Webers Wissenschaftslehre (1994), especially the contributions by Rehberg (1994) and Scaff (1994). 21 Weber seems to have appreciated the work of Othmar Spann, but it is difficult to see why. In his Roscher and Knies ([1903–1906] 1975: 253, note 49) and in an unfinished

366

22

23

24

25 26

27 28 29 30

31

32

Notes critical review of Simmel, probably written in 1908 (Weber, 1972: 162, note 5), Weber refers to Spann’s ‘perceptive criticism’ of Georg Simmel’s concepts of ‘society’ and of ‘sociology’. Weber’s appreciation is hard to understand, since from his point of view, one problem with Simmel’s concept of society is that it is not individualist enough (Simmel starts with interaction, not action), whereas for Spann (1905: 302–44, 427–60), the problem with Simmel is that he is too individualistic. Spann was a dedicated collectivist and holist, or in his own terminology, a ‘universalist’. Weber’s appreciation of Spann was not reciprocated. In his review of Economy and Society, Spann (1923) is dismissive of the whole project and ends by predicting that Weber’s life-work will not last. He couldn’t have been more wrong. This helps explain Weber’s critical stance towards Simmel’s sociology, which is a science of society (cf. Lichtblau, 1994), but it does not at all explain his seeming appreciation of Spann’s sociology (see note 2), which is also a science of society (Gesellschaftslehre). In his necrology over Max Weber, Schumpeter ([1920] 1991: 221) says that his personal acquaintance with the man was too limited for giving a portrait of him. What he offers, instead, is a hagiography, depicting Weber as a figure of almost superhuman qualities, both as a person and as a scholar. The picture is not entirely groundless. Weber’s scholarly achievements speak for themselves and testimonies by his contemporaries suggest that the person was no less impressive. His adversary Othmar Spann (1923: 770) describes Weber as ‘a demonic, restless man, with the ability of making a personal impact on other people’. Schumpeter conceived of sociology as the ‘theory of the reciprocal relations between individuals and groups of individuals in the social whole’ (1915: 556 [my translation]), alternatively as the ‘theory of social institutions and principles of social organization’ (Schumpeter, 1954: 103, see also 1954: 20f). Schumpeter’s sociological writings have recently been collected by R. Swedberg in J. Schumpeter (1991), The Economics and Sociology of Capitalism. The reason Schumpeter gives for this view, has much in common with Durkheim’s argument for the existence of social facts. The individual is born into an already existing objective class situation. ‘The individual belongs to a given class neither by choice, nor by any other action, nor by innate qualities – In sum his class membership is not individual at all. It stems from his membership in a given clan or lineage. The family, not the physical person, is the true unit of class and class theory’ (Schumpeter [1927] 1951: 148). ‘Around Christmas, 1903, I read Menger’s Grundsätze der Volkwirtschaftslehre for the first time. It was the reading of this book that made an “economist” of me’ (Mises, 1978: 33). In a later article (Mises, 1961: 125), Mises dismisses Weber’s distinction ‘between “social action” and other action’ as being ‘of little importance’. Support for this conclusion can be found especially in Mises ([1957] 1985: Part Three), but also in Mises (1942: 249–52; 1962: 45–51). There are other Austrians, such as Murray N. Rothbard (1962: 2, 435, note 6; 1979: 15–17, 57–61) and Ludwig Lachmann (1969), who have written about methodological individualism, but their discussions are largely exegetical and do not add anything of importance to the subject. In a note on page 38, Hayek writes: ‘It has long been a subject of wonder to me why there should, to my knowledge, have been no systematic attempts in sociology to analyze social relations in terms of correspondence and noncorrespondence, or compatibility and noncompatibility, of individual aims and desires’. When game theory developed as a systematic attempt in this direction, no sociologists were involved. But one of the pioneers was the Austrian economist Oscar Morgenstern. The Counter-Revolution of Science consists of three parts: (1) ‘Scientism and the Study of Society’, first published in Economica, 1942–4, (2) ‘The Counter-Revolution of

Notes

33

34

35

36

367

Science’, first published in Economica, 1941, and (3) ‘Comte and Hegel’, originally published in Measure, 1951. In his Discourse on Method, Descartes writes: ‘Finally it is almost always easier to put up with their [custom’s] imperfections than to change them, just as it is much better to follow the main roads that wind through mountains, which have gradually become smooth and convenient through frequent use, than to try to take a more direct route by clambering over rocks and descending to the foot of precipices’ (1985: 118). I do not know if this idea originates with Descartes, but it is clearly the idea of path dependence that he is hinting at. It is of some interest, for a sociologist, to know that Frank H. Knight translated Max Weber’s General Economic History into English in an edition that appeared as early as 1927. It was thus the first work, by Weber, to appear in English. Three years before the much more famous The Protestant Ethic and the Spirit of Capitalism. In Risk, Uncertainty and Profit, Knight does not seem to be aware of the gravity of the problem of rationality in situations of uncertainty. In a review article on Wicksteed’s The Common Sense of Political Economy, however, Knight implies that the existence of risks is not ‘compatible with rational economic choice’ and observes that risk-taking ‘cannot possibly be brought under economic principles unless, again, the risk is measurable and hence insurable, and very doubtfully even then; at least, I do not see how the principles of rational choice through quantitative comparison of increments can be applied to the desire to gamble, even in such a mechanical case as the roulette wheel, where the essence of the interest is ignorance as to whether the result will be a gain or a loss’ (Knight 1956: 111). In his autobiographical Against the Stream (1975: 6–16), Myrdal tells us that he started as a methodological individualist and ended as an institutional economist.

5 Society as subjectively meaningful interaction 1 As a reminder, we may point out that also some economists, belonging to the Austrian School, such as Ludwig von Mises and Friedrich von Hayek, adhere to this intersubjectivist theory of society. 2 See Lewis and Smith (1980), Alexander (1987: ch. 12), Joas (1987) and Wiley (1994). Of the four pragmatists, it is common to link Mead to Dewey, partly because they were friends, but according to Lewis and Smith (p. 6), it is possible to link Peirce and Mead, because both of them were conceptual and social realists and to distinguish them from James and Dewey, who were nominalists. Wiley accepts the view of Lewis and Smith, but goes on to argue that Peirce and Mead are united by a common theory of a semiotic self. 3 The influence of Adam Smith on Chicago sociology, is well known and partly mediated by Albion Small (1907), the founder of the Chicago School of Sociology, who traced the origins of sociology to Adam Smith. It is often pointed out (see, e.g. Stryker, 1980: 18; Fine 1990: 138 and Udehn, 1996: 99) that Cooley’s idea of a looking-glass self can be found in Adam Smith’s The Theory of Moral Sentiments ([1759] 1976: 206). It seems to be less well known that Mead’s ‘generalised other’ exhibits striking similarities to Smith’s ‘impartial spectator’ (Eriksson, 1988: 317f; Udehn, 1996: 100). The influence of German Romanticism and of Hegel on Cooley, Dewey and Mead is equally well-known, but more diffuse. 4 Joas (1987: 94) warns against reducing the Chicago School to epigons of German thought, but does not deny that there was an influence. Thomas and Znaniecki, for instance, were influenced by German Völkerpsychologie (pp. 96ff), and so was Mead, who took the idea of gesture from Wilhelm Wundt (Mead, 1964: 102; see also Joas [1980] 1985: 94–98). Between 1888 and 1891, Mead studied, first with Wundt and later with Dilthey and even started to write a dissertation under the latter’s direction

368

5

6

7 8

9

10

11 12

Notes (Joas, [1980] 1985: 17–20). The influence of Simmel on symbolic interactionism is well-attested and needs no further elaboration. In the case of Mead, I am certain that he was not a theoretical individualist. In the case of Cooley and Thomas, I am not that certain. See, for instance, Lewis and Smith (1980: 158–66, 187f), who argue that Cooley and Thomas were psychical interactionsists and social nominalists. The main source of Mead’s theory of the self is Mind, Self and Society (1934), especially part III, but see also the supplementary essay ‘The Self and the Process of Reflection’, based on a stenographic copy of Mead’s 1927 course in social psychology and complemented by notes made by one of his students in 1930. Other sources are the article on ‘The Social Self ’ (1913) and the texts from 1914, 1917 and 1927 (the first and third based on student’s class notes), published for the first time in The Individual and The Social Self (1982), The Philosophy of the Present ([1932] 1980: 68–90; the only book published in Mead’s own lifetime), Movements of Thought in the Nineteenth Century (1936: 360–85) and The Philosophy of the Act (1938: 89–91, 150–3, 374–6, 445–7). The concept of ‘generalised other’ does not appear in Mead’s early texts. The first appearance of this concept that I have been able to detect is in the article ‘A Behavioristic Account of the Significant Symbol’ (1922), in Selected Writings (1964: 246). On Mead’s theory of the ‘I’ and the ‘me’, see 1964: chs 12 and 13 (originally published 1912 and 1913); 1982: 46, 56f (lecture 1914) and 1934: 173–222, 273–81. Both Faris and Blumer gave courses in social psychology at the department of philosophy at the University of Chicago. While Faris gave an introductory course, however, Blumer replaced Mead as teacher of the main course. Since Blumer was a sociologist, the course in social psychology was eventually moved to the sociological department. The differences between Faris and Blumer are revealed by comparing Faris’s article ‘The Social Psychology of George Mead’ (1937/8) with Blumer’s article ‘Sociological Implications of the Thought of George Herbert Mead’ (1969: ch. 2). Such a comparison fully supports the view of Lewis and Smith on this matter. Blumer introduced the term ‘symbolic interactionism’ in his article ‘Social Psychology’ (1937: 153) to designate a group of social psychologists who, in contradistinction to the stimulus-response approach, ‘emphasizes the active nature of the child, the plasticity of this nature, and the importance of the unformed impulse’. In his Symbolic Interactionism (1969: 1), Blumer says that ‘[t]he term “symbolic interactionism” is a somewhat barbarous neologism that I coined in an offhand way in an article… The term somehow caught on and is now in general use’. By calling Blumer the ‘architect of symbolic interactionsim’ I polemise with Huber (1973: 275), who suggests that Mead was the architect and with Fischer and Strauss (1979: 485) who call Mead the ‘founding father’ of symbolic interactionism. As I see things, Mead was the most important progenitor, but not the architect, or founder, of symbolic interactionism. This is not just a quarrel about words. There are important differences between Mead and Blumer, which become obscured if Mead is tied too closely to symbolic interactionism. The differences between Blumer and Mead have been recognised by many commentators in the recent literature on symbolic interactionism. See, for instance, MacPhail and Rexroat (1979), Lewis and Smith (1980: 155, 170ff), Collins (1985: 198–204), Alexander (1987: 215ff) and Joas (1987: 84). See, however, Johnson and Picou (1985: 54ff), who reject the analysis of Lewis and Smith, and denies that there is any essential difference between Mead and Blumer. According to J.G. Meltzer and B.N. Petras (1973: 6ff), the Chicago School stresses verstehen, indeterminacy and process, while the Iowa School is characterised by empiricism, determinacy and structure. According to W. Skidmore (1979: 189), ‘it is not altogether clear whether or not Kuhn’s “self theory” is indeed symbolic interactionism’.

Notes

369

13 Manfred F. Kuhn, the leader of the Iowa School of Symbolic Interactionism, criticised Mead and Cooley for excessive subjectivism, and for failing in their relation between self and other (Kuhn, 1967: 171–84). 14 In ‘Parsons as a Symbolic Interactionist: A Comparison of Action and Interaction Theory’ (1974), J.H. Turner attempted a synthesis of symbolic interactionism and functionalism. In his ‘Comments on Turner’, Blumer declared that he sees ‘the joint act as primarily an “organization” of action’ (p. 59). The methodological implication is that ‘whereas symbolic interactionists would study the process of symbolic interaction, Parsons would study the products of this interaction’ (p. 61). In his reply to Blumer, Turner (1975) complained that symbolic interactionism has ‘few concepts and propositions to explain the operation of social processes at other than a micro level of interpersonal interaction’ (p. 65). Also, ‘it is not clear that interactionism has any concepts to describe emergent social structures’ (p. 66). Turner is, of course, perfectly correct in these judgements, but it is not necessarily a defect of a social psychological theory to lack such concepts, even if Mead thought so, and Turner thinks so, unless the adherents of such a theory claims that it is a comprehensive theory of society. Concerning Blumer, himself, it may be pointed out that he seems to have grown more individualistic over the years. In his early article on ‘Social Disorganization and Individual Disorganization’, a more holistic language is found. He writes, for instance, about people occupying different social positions. 15 On society as a negotiated order, see A.L. Strauss, et al. (1963: 147–69; 1964: 15f, 146–58, 293–315, 373–77). 16 The dramaturgical approach is used in The Presentation of Self in Everyday Life (1959) and in Frame Analysis (1974: ch. 5). The model of the game is used in the essay ‘Fun in Games’, in Encounters (1961: 17–81) and in Strategic Interaction (1970). 17 The statement that the individual may be influenced by social processes, does not alter this conclusion, since social processes have their basis in a plurality of individuals. 18 For an introduction to phenomenological social science, in general, and phenomenological sociology, in particular, see Natanson (1973) and Wolff (1979). For a more comprehensive treatment of phenomenological sociology and ethnomethodology, see Rogers (1983). 19 On the problematic relation between Schutz and Husserl, see Natanson (1968: 235ff; 1973: 23), Tiryakian (1965: 30). 20 See, especially, A. Gurwitch (1962: 71f), who argues that there is a close affinity between Dilthey’s descriptive psychology and the thought of the later Husserl, and since Schutz’s ideas are a continuation of those of the later Husserl, Schutz’s phenomenology can be seen as a fulfilment of Dilthey’s project of a descriptive psychology. See also M. Natanson, who writes (1968: 241): ‘To be sure, it is perfectly reasonable to take the book [Schutz’s The Phenomenology of the Social World] as a sympathetic corrective for certain philosophical inadequacies in Weber’s sociology; it is equally permissible to classify the work as an application of Husserl’s ideas to the field of the social sciences’. 21 It may be added that Husserl read Schutz’s Phenomenology of the Social World in the year of its appearance (1932) and called Schutz a ‘serious and thorough phenomenologist’ and ‘one of the very few persons who managed to penetrate to the deepest meaning of my life work, which, unfortunately, is accessible only under heavy difficulties’ (quoted in Wagner, 1983: 46). Husserl also asked Schutz to become his assistant. These facts make it highly unlikely that Schutz was guilty of serious misunderstanding of Husserl’s phenomenology. 22 In his later writings, Schutz takes his point of departure in Husserl’s idea of a lifeworld (see, e.g., Schutz, 1940: 178–86; 1945b: 82–5, 92–5; 1959: 93, 95).

370

Notes

23 All articles referred to in my presentation of Schutz’s phenomenological sociology, except ‘The Social World and the Theory of Action’, can be found in Alfred Schutz, Collected Papers I: The Problem of Social Reality (1962). 24 See Schutz, (1945a: 542–5; 1953: 11–14; 1955: 164–6, 193–207). 25 As we saw in chapter 3 (p. 69), the idea of ‘second-order concepts’ goes back to Wilhelm Dilthey, who intended roughly the same thing as Schutz by his ‘concepts of second degree’. Schutz does not refer to Dilthey, so it is impossible to say if he borrowed the idea of concepts of second degree from him. 26 I think, of course, of the structuralist Marxism of Louis Althusser and his followers. 27 Merleau-Ponty read the manuscript to Husserl’s The Crisis of European Sciences in 1939, and saw in it a break with Husserl’s earlier transcendental phenomenology. His own existentialist phenomenology is largely based on Husserl’s idea of a life-world. See Merleau-Ponty, ‘Phenomenology and the Sciences of Man’ (1947) and ‘The Philosopher and Sociology’ (1960) (both in Merleau-Ponty, 1974: 247–79; 95–110). 28 See Bourdieu (1990: ch. 1) for information on the intellectual scene in France in the 1960s. Bourdieu’s favourable attitude to Merleau-Ponty has probably much to do with the importance attached to the body in his main work Phenomenology of Perception (1945). As is well known, also Bourdieu attaches much importance to the body in his sociology. 29 See also Craib (1976), Douglas and Johnson, eds (1977) and Kotarba and Fontana, eds (1984). 30 On the relation between Garfinkel and Parsons, see Heritage (1987: 226–32). See also Sharrock and Andersson (1986: 23–38), who argue that Garfinkel did not intend to belittle the contribution of Parsons and never rejected it wholesale. See also Alexander (1987: 252ff), who suggests that Garfinkel was driven into a more radical rejection of Parsons by his more radical followers. It has also been maintained that ethnomethodology is the result of an unsuccessful attempt to create a synthesis of the incompatible theories of Parsons and Schutz (Rogers, 1983: 133–6), but this is probably to exaggerate the influence of Parsons on ethnomethodology. 31 Like Blumer, with regard to the term ‘symbolic interactionism’, Garfinkel refuses to take any responsibility for the use of the term ‘ethnomethodology’. While few would deny that Garfinkel is the origin, both of the term and the theoretical movement, it is also clear that it has developed in different directions and become increasingly heterogenous (see, e.g. Douglas, 1971: 32–5; Attewell, 1974: 182ff; Zimmerman, 1978: 6–8). 32 See, e.g., Habermas, ([1970] 1988: 109ff; [1981] 1984: 224–30); Mayerl (1973: 276), Wolff (1979: 532–40), Sharrock and Andersson (1986: ch. 1), and Collin (1997: 28) on the influence of phenomenology. See, however, Zimmerman (1978: 6–8), who wishes to play down the dependence of ethnomethodology on phenomenology. 33 My view that ethnomethodology belongs with both phenomenology and symbolic interactionism, as a version of the interactionist and subjectivist, or interpretive, theory of society, seems to be shared by Douglas (1971: 12ff), Habermas ([1970] 1988: 109ff; [1981] 1984: 124–30) and Knorr-Cetina (1981: 1ff). 34 See Giddens (1979: 172–8), Lemert (1979) and Bleicher (1982: 126–30). 35 On the ethnomethodological view of society as a process, see also Attewell (1974: 201–5). 36 See Cicourel (1964: 197ff; 1974: 13–28), Manning (1971: 244–51) and Zimmerman (1971). 37 See Attewell (1974: 196), Skidmore ([1975] 1979: 236f, 255–58), Collins (1981: 85f) and Bleicher (1982: 135f). 38 See Habermas ([1981] 1984: 92–117; [1981] 1987: 124–31) and Alexander (1987: 271ff). 39 On the role of pre-understanding for understanding in ethnomethodology, see Mehan and Wood (1975: 365–67). Bleicher (1982: 135f), who also notes the similarities between ethnomethodology and hermeneutics, nevertheless observes that, at a

Notes

40

41

42 43 44

45 46

47 48 49

371

certain point, they part company: ‘In contrast [to ethnomethodology], the hermeneutic paradigm has evidenced features of social existence, variously referred to as tradition, language, consensus, which underlies not only the diffused object of ethnomethodology but also the activities of the researcher’. See Cicourel (1964: 178ff) and Lemert (1979: 291). Lemert, who argues for a homology between ethnomethodology and French structuralism is also aware that the homology is weak and that ethnomethodology belongs mainly in the subjectivist camp. ‘Ethnomethodology remains largely a psycho-sociological micro-study’ (p. 290). It is also ‘true that there are many themes of ethnomethodology which partake of the more traditional humanistic idea that the relativity of social order is due to the freedom of the social self ’ (p. 292). Lemert (1979) advances the contrary argument, i.e., that the Zimmerman– Wieder–Pollner group is the least subjectivistic, since it takes the most extreme view of indexicality. Lemert’s interpretation is wrong, I believe, first of all in the interpretation of indexicality, but also because it fails to appreciate the radical subjectivism of Zimmerman–Pollner–Wieder’s views. See, especially, Zimmerman and Pollner (1971: 94f) and Wieder (1974: 169–72). Zimmerman (1978: 8–10) has argued that ethnomethodology is neither individualistic, nor subjectivistic. What the argument amounts to, however, is that ethnomethodology does not take its point of departure in the isolated individual, but is intersubjectivistic. See also Schlegloff and Sacks (1973: 262) and Turner (1970: 181–3). For an argument that comes closer to that of Mandelbaum, see Bittner (1965: 78f) and Wieder (1974: 162f). See, e.g. Giddens (1979: 173–8), Knorr-Cetina (1981: 18f) and Zimmerman (1978: 10f). The distinction between linguistic and extra-linguistic rules is, of course, a difficult one to draw, but Zimmerman (1978: 10f) definitely goes too far, when seemingly suggesting that linguistic rules are those rules that determine ‘the use of natural language expressions in interactive situations’. This view would turn virtually all social rules into lingustic rules. See Goffman (1983: 2, 24, 32) for a good analysis of the problem. For a discussion and critique of Douglas’s analysis of Durkheim’s theory of suicide, see Giddens (1977: ch. 9). See also Hilbert (1990), Button (1991), Sharrock and Button (1991: 138ff). See, however, Heritage, who maintains that Garfinkel stands squarely in the sociological tradition: ‘Garfinkel’s lifelong theoretical endeavours have been directed at a range of conceptual issues which have always been central topics of sociology. These issues – the theory of social action, the nature of intersubjectivity and the social constitution of knowledge – are complex and tightly interwoven’ (1987: 225). For an introduction and overview of social constructionism, see Gergen (1994) and Burr (1995). For critical, but nuanced, discussions, see Collin (1997) and Hacking (1999). This non-individualistic side of Berger and Luckmann has been developed into antiindividualism in the social constructionist theory of organisation. See, e.g., Meyer (1986), the various contributions to Thomas, et al. eds, (1987) and DiMaggio and Powell (1991). In a recently published volume, edited by Mary Brinton and Victor Nee (1998), the attempt is made to launch a more individualistic ‘new institutionalism in sociology’, based on rational choice. In the first chapter of this volume, Victor Nee concludes that ‘[m]ethodological holism in sociology has been an obstacle to acceptance of the choice-theoretic approach underlying the new institutionalist paradigm’ (p. 11). He goes on to maintain that ‘a form of methodological individualism represents a mainstream of modern empirical sociology’. This is a debatable claim, but it is not totally unlikely to be true. A growing number of sociologists now seem to adopt what I call structural individualism (see pp. 318f). In this

372

Notes

version of methodological individualism, individual action and social structure are two, equally important, elements in the explanation of social phenomena. If I understand Nee correctly, it is this weak version of methodological individualism, that he supports. At least, he reckons with ‘the reciprocal interactions between purposive action and social structure’ (pp. 4f). 50 Other important forerunners include Marx, the neo-Kantian sociologists Max Weber and, especially Georg Simmel, and the sociologists of knowledge, Max Scheler and Karl Mannheim. 51 Bourdieu’s main debt to phenomenology is to Maurice Merleau-Ponty and his analysis of the body.

6 Positivism in philosophy and social science 1 For an ‘empiricist’ interpretation of methodological individualism, see Brodbeck (1958), Nagel (1961: 535–40), Morgenbesser (1967: 163f), Lachenmeyer (1970: 213–16; 1971: 66ff), Addis (1975: 43f), Quinton (1975–6: 7–11), Papineau (1978: 17f), Hughes (1981: 42–7, 63) and Rosenberg (1988: 117f). See also Hund (1982: 271, 277), and Archer (1995: 33f), who argue (incorrectly) that methodological individualism is an outgrowth of British empiricism. See, finally, Danto (1965a: 266f) and Lukes (1973: 122f), who argue against the ‘empiricist’ interpretation of methodological individualism. 2 ‘Imply’ is too strong, since it is possible for an empiricist to be an instrumentalist defending methodological holism and collectivism, as a parsimonious way of analysing complex social reality. 3 It is, thus, typical that empiricist critics of Weber and Hayek, such as Brodbeck (1954: 141–54), Rudner (1954: 164–8) and Nagel (1961: 540–6) have been more troubled by the subjectivism, than by the individualism of their methodological individualism. 4 On logical constructions, see also Russell the articles ‘Mysticism and Logic’ (1914) and ‘The Relation of Sense-data to Physics’ (1914) in Russell ([1917] 1963). 5 See Urmson (1958: 43f); Pears (1968: 58f), and Ayer (1972: 58). 6 See Russell ([1917] 1963: 108–10, 153–5; 1912: 48). 7 It was J.C. Smuts who coined the term ‘holism’ in his Holism and Evolution ([1926] 1936), a work agreeing with the theory of emergent evolution, as suggested by Henri Bergson, C. Lloyd Morgan and others. On Neurath’s Marxist sympathies, see ([1931a] 1973: 345–53, 358–71; [1931/2] 1959: 306–15). 8 On physicalism and unified science, see Neurath (1930/31: 107, 116ff; [1931a] 1973: 324ff, 416f; 1931b: 621–23; [1931/2] 1959: 286ff). 9 See Neurath (1930/1: 121f; [1931a] 1973: 409–11; [1931/2] 1959: 303f; 1944: 26–8). 10 For a similar positivist view of social science by a philosopher see Rudner (1966). 11 We are told, however, that ‘[i]n finding the meaning of various social concepts the verbal form “What would happen – ?” is very useful’ (1938a: 137). Bridgman denies that operationalism implies quantification and would thus seem not to be responsible for the road taken by operationalism in sociology. 12 I have adopted the term ‘systematic empiricism’ from Willer and Willer (1973). An alternative term would be ‘instrumental positivism’, as suggested by Bryant (1985). On the origin and history of systematic empiricism, see also Obershall (1972), Bierstedt (1977), Halfpenny (1982) and Hacking (1990). An excellent treatment of the early stage of statistical sociology can be found in Goldthorpe (2000: ch. 12). 13 See, e.g., Mills (1959: chs 3 and 5), Österberg (1988: 18ff), Desrosières (1991). 14 Among methodological individualists, this view of systematic empiricism has been maintained by, among others, John Stuart Mill, Carl Menger, Gabriel Tarde, Floyd Allport, Friedrich von Hayek, Ludwig von Mises, Tjalling Koopmans and James

Notes

15

16 17

18

19

20 21 22 23 24

25

26

373

Coleman. Among micro-sociologists, Douglas (1974: 4–12) and Knorr-Cetina (1981: 1f) and Cicourel (1981: 51ff) have expressed a similar opinion. The first to make this argument clearly and persuasively was probably the German statistician Wilhelm Lexis (1837–1914). See Goldthorpe (2000: 283–6). It may be that Lexis was the source of the views of methodological individualists, like Menger and Tarde, on this matter. Mises invokes the sociologist Gabriel Tarde in support of his view of statistical measures. According to Tarde ([1890] 1962: 102), the regularities demonstrated by statistics are due to laws of imitation. A further corollary of this view is that macroeconomics is not holistic, merely by virtue of dealing with relations between aggregates. If macroeconomics is holistic – as we shall see in chapter 8, a controversial question – the reason for this is not that it deals with aggregates, but must be sought somewhere else. Among critics of systematic empiricism making this argument, see Adorno (1957: 70–3), Mills ([1959] 1970: 78–80), Phillips (1973: 38). Among representatives of systematic empiricism, making the same argument, see above all, Lazarsfeld (1962: 471; 1968: 623; 1970: 14f; 1973: 18). See also Boudon (1968: 29, 48), Coleman (1969a: 87; 1969b: 517), Galtung (1969: 25, 37ff, 148–52), van den Eden and Hüttner (1982: 12, 26, 55f) and Bryant (1985: 133, 140f, 150, 154–61). A note of caution: It is not a question of epistemological subjectivism. Systematic empiricism, in general, and operationalism, in particular, are of course objectivistic in an epistemological sense, as are all sciences concerned with measurement (see, e.g. Lundberg [1929] 1942: 45–79; 1939: 10–22). What I wish to say is that systematic empiricism has been much preoccupied with objective investigations of subjective phenomena, such as attitudes, opinions and beliefs. See, e.g., Lazarsfeld (1959: 67–73; 1970a: 17–35; 1970b: 310–15), Boudon (1968: 29ff), Coleman (1969a: 102–5; 1969b: 517–28), Galtung (1969: 25f). On contextual propositions, as an example of ‘structural’ analysis, see Lazarsfeld (1959: 69; 1968: 623f; 1970b: 313–15) and Coleman (1969a: 103f). For a survey of the fallacy of the wrong level, see Riley (1963: 703ff) and Galtung (1969: 45–8, 79f). See also Elster (1978: 97–106). Cf. Hummel and Opp (1968: 218f; 1971: 65–8) and Coleman (1969a: 102–5). The novelty of this reorientation should not be exaggerated. There has always been talk about mechanisms in social science and even before that, as far back as the rise of mechanism in natural science. My impression is that, until quite recently, the use of the term ‘mechanism’ was most common among holistic social theorists: functionalists, structuralists, institutionalists and system theorists. It has been very common, for instance to conceive of social institutions and organisations as social mechanisms. See, e.g., Lipset ([1959] 1963: 45) who calls democracy a social mechanism and Merton (1967: 44), who suggests that a role-set is a social mechanism. Interesting, in this connection is that the systematic empiricist, George A. Lundberg tried to launch the idea of mechanism, on a large scale, in his Foundations of Sociology (1939: 159ff). He uses ‘the word mechanism to describe that necessary and sufficient set of relations or circumstances by means of which any behavior whatsoever takes place, whether it be the jump of an electric spark, the thoughts of a human being … the milling of a mob, or the vote of a deliberative assembly’. Mechanisms, in this sense, include folkways, customs, traditions, mores and institutions. Rom Harré differs from the other realists in being more micro-oriented and more interested in psychology. He is not a methodological individualist, however, but wants to ‘steer a middle course between individualism and collectivism’ (1993: 12, 34ff). See also Harré (1979: 83ff) and Harré, Clarke and de Carlo (1984: 2, 6, 65ff). Theories of social exchange have probably played a more important role in social anthropology than in sociology (see, e.g. Davis, 1992). My neglect of these theories is

374

27

28

29 30 31

32 33 34

35 36

37

38 39

Notes not due only to the fact that I am a sociologist, myself, but is justified by the fact that theories of exchange in anthropology are not typically individualistic. Homans sometimes complains about his theory being called a theory of exchange (Homans, 1980: 20; 1983: 35). Since nothing important seems to be at stake I follow the common habit of calling Homans’s version of behaviourism a ‘theory of exchange’. Homans’s four autobiographical writings are ‘Autobiographical Introduction’ to Sentiments and Activities (1962), ‘A Life of Synthesis’ (1968), ‘Steps to a Theory of Social Behavior. An Autobiographical Account’ (1983) and Coming to My Senses. The Autobiography of a Sociologist (1984). On Homans’s critique of functionalism, see also Homans (1964a: 809ff; 1964b: 963–7 and 1967b: 64–70). ‘See, e.g., Homans (1964a: 811ff; 1964c: 221–31; 1969: 1–24 and 1975: 313ff). The second half of this statement exhibits an interesting similarity to many statements by ethnomethodologists, but it is one of very few similarities between these approaches. For one thing, ethnomethodologists would certainly disagree with the determinism of behaviourism. Much more than Parsons, behaviourism treats the human being as a ‘cultural dope’. See Homans (1964c: 11–31 and 1964d: 113–31), for a restatement of the original formulation. See Homans (1967a: 30–78) and (1974: ch. 2) for a somewhat modified version. See, however, the contributions to Burgess and Bushell (ed.) (1969) and Hamblin and Kunkel (ed.) (1977). His contribution to the theory of exchange is Exchange and Power in Social Life ([1964] 1986). ‘The implicit assumption [of this work] is that macrosociological theory rests on the foundation of microsociology. This is the assumption I have come to question’ ([1964] 1986: vii). The difference between Homans and Blau are clearly visible in their exchange over the relevance of psychology to the explanation of social phenomena (Homans, 1975a: 313–28; 1975b: 340–3; Blau, 1975: 329–39). The difference between Blau and Emerson emerge clearly in his contribution to Karen S. Cook (ed.), Social Exchange Theory (Blau, 1987), which brings out his doubts about the need for a microsociological foundation for structural macrosociology. The theory of networks, like that of social exchange, has strong roots in anthropology, which I neglect because of ignorance. See Scott (1991: ch. 2) for an account of the development of social network analysis. In his last contribution to a theory of social exchange, Emerson might seem to move back to a more psychologistic approach (cf. Turner, 1987: 225ff). His main concern, now, is to develop a theory of value, as the foundation of the theory of social exchange (Emerson, 1987). This appearance is probably deceptive, however, and merely reflects his wish to develop both the individualist and structuralist elements of his theory. See Haines (1988) and Mathien (1988) for a discussion of network analysis and methodological individualism. Both argue that network analysis is a form of methodological individualism, but not a radical or extreme form of this principle. Both observe that the focus of network analysis is on social relations, but this is not incompatible with methodological individualism. Haines argues that there are important similarities between network analysis and Giddens’s theory of structuration, but this a weak argument. Network analysis works with a dualistic view of individual action and social structure, whereas the main point of Giddens’s theory of structuration is to replace this dualism with a duality, which is something else. For a survey, see Wippler (1978c) and Raub (1982). See also Wippler (1978b). See, e.g. Lindenberg (1985a; 1985b; 1995), Opp (1978; 1985; 1988) and Wippler and Lindenberg (1987).

Notes

375

7 Popperian methodological individualism 1 This procedure may be seen as part of the early Popper’s strategy of replacing metaphysical issues with their methodological counterparts. In The Logic of Scientific Discovery (1934), Popper said that ‘not a few doctrines which are metaphysical, and thus certainly philosophical, could be interpreted as hypostatizations of methodological rules’ ([1934] 1972: 55). The ‘principle of causality’, for instance, was excluded ‘as “metaphysical” from the sphere of science’ and replaced by the corresponding methodological rule (p. 61). 2 See Popper ([1945] 1966: vol 1: 31–4, vol 2: 9–21; 1957: 26–34; 1962: 103–7). 3 See Popper ([1962] 1968: 18–21; 1972: 194–7; 1974a: 12–23; 1976: 17–31). There are times, however, when words do matter, even to Popper. Such is the case, for instance, when some members of the Frankfurt School call him a ‘positivist’. ‘A last word on the term “positivism”. Words do not matter, and I do not really mind if even a thoroughly misleading and mistaken label is applied to me. But the fact is that throughout my life I have combated the positivist epistemology, under the name of “positivism”. I do not deny, of course, the possibility of stretching the term “positivism” until it can be applied even to an opponent of positivism such as myself. I only contend that such a procedure is neither honest nor apt to clarify matters’ (Popper, 1970: 261). 4 The separation of persons (or individuals) is not accidental. In his contribution to Roads to Freedom: Essays in Honour of Friedrich von Hayek, Popper says (1969: 199) about situational logic, that ‘[i]t makes room for giving full weight … not only to individuals but also to institutions’ [my italics]. 5 Cf. also Popper ([1962] 1968: 350): ‘Democracy as such cannot confer any benefits upon the citizen and it should not be expected to do so. In fact democracy can do nothing – only the citizens of the democracy can act (including, of course, those citizens who comprise the government)’. 6 The incompatibility of Popper’s theory of objective knowledge with methodological individualism, as usually conceived, has been pointed out by several commentators. See, e.g. Ackerman (1976: 166–72), Ingram (1976: 134f), O’Hear (1980: 197ff), Chalmers (1985), Udehn (1987: 204–7) and Stokes (1997: 63). 7 On the theory of emergent evolution as a form of holism, see, e.g., Nagel (1961: 366ff), Phillips (1976: 32f;), Udehn (1987: 85ff) and Bunge (1996a: 258ff). 8 The earlier methodological individualists were in no doubt that individualism and institutionalism are opposite methodologies. This opposition was part of the Battle of Methods and it is confirmed by all Austrians, who lump together the German Historical School, American institutionalism and mainstream sociology, as approaches committed to a ‘realistic’, empirical investigation of social institutions as opposed to the individualism of theoretical economics. See, e.g., Schumpeter ([1914] 1954: ch. 4; 1954: 20f, 26f, 983–95, 864–77) and Mises ([1933] 1976: 4–12; [1949] 1966: 4; 1990: 210). The opposition between individualism and institutionalism is also obvious to the founder of the Chicago School of Economics, Frank H. Knight, who contrasts ‘the “institutional” view of economic activities’ with ‘the individualistic or contractual aspect’ (Knight, 1956: 18; see also 1935/6: 330). 9 The expression ‘Ghost in the machine’ is, of course, a reference to Gilbert Ryle’s The Concept of Mind (1949), where it is argued that the mind, or soul, is a ghost in the machine of the body, that is non-existent. 10 In a recent article on Popper’s situational logic, Jarvie (1998) defends Popper’s ‘institutional and situational individualism’ (p. 374) against the more radical individualism that he finds in contemporary rational choice. He refers to Jon Elster as one of his examples, and this is justified, since Elster is a reductive individualist (see pp. 310–16), but it is not justified as a criticism of contemporary rational choice as a whole. To a very large extent recent rational choice is ‘institutionalistic’, in the sense of Popper, and in some cases even ‘structuralistic’ (see chs 9–10).

376

Notes

11 See, however, Wisdom (1981: 10), where he says that ‘The Weber–Popper schema places enormous emphasis upon the unintended consequences of human actions’, but without mentioning institutions. 12 A year later, Wisdom has reached this conclusion, himself. ‘Elsewhere I have suggested the need to allow emergent properties that are in no sense reducible to individuals, their actions and aims, and their foreseeable unintended consequences… Such properties thus constitute a system over and above individuals. Although I put it forward as a development from, though inconsistent with, Popper’s “methodological individualism”, he would seem to have originated essentially the same idea, which he conceives of as the “third world”…, or alternatively shown that the “third world” is compatible with “methodological individualism”’ (Wisdom, 1971: 143, note 4). 13 Mario Bunge, who agrees that Popper’s methodological individualism is different from original methodological individualism suggests that ‘Popper’s social ontology may therefore be characterized as individholistic rather than as consistently individualistic’ (Bunge 1996b: 533; 199: 108).

8 Economics: the individualist science 1 There is a good reason for this. As we have seen in previous chapters, a majority of the founders and defenders of the principle of methodological individualism were economists and philosophers. John Stuart Mill, the most important forerunner of this principle, was both. Carl Menger, the first explicitly to advance methodological individualism, or atomism, was the founder of the Austrian School of Economics and one of the three founders of marginalist economics. Joseph Schumpeter, who introduced the term ‘methodological individualism’, was also an economist, and he used it to denote the method of theoretical economics. Ludwig von Mises and Friedrich von Hayek, who were the most consistent propagators of this doctrine, stand out as the most prominent representatives of Austrian Economics after Menger. The obvious exception, Max Weber, was a sociologist, but he was also a historian and an economist. As a sociologist, however, his aim was to create a sociology after the model of marginalist economics. Karl Popper, finally, was a philosopher, but he picked up methodological individualism from the Austrian economists, so there is really no break in the link between methodological individualism and economics. 2 The parallel existence of classical and neoclassical economics led Hollis and Nell (1975: 13) ‘to divide economic theory into two great mainstreams, one flowing from the pens of Marshall and Walras, the other from Ricardo and Marx … Marshall and Walras conceived the economy in the same way as a set of interrelated markets, in which households and firms meet as demanders and suppliers… Ricardo and Marx on the other hand, saw the economy as based on methods of production, controlled and operated by one class but worked by another’. 3 For a similar view of methodological individualism in economics, see Field (1979; 1984) and Mirowski (1981; 1986). 4 See, however, Janssen (1993: 14), who claims that ‘contrary to what Boland (1982) argues, economic explanations of individual behaviour (even neoclassical ones) do adopt institutions as primitive terms’. I think Boland is the more correct and, of course, he never denied that neoclassical economists sometimes use institutions as ‘primitive terms’. Boland’s argument is that there is ‘a hidden rule on the agenda’ of neoclassical economics not to accept social institutions as exogenous variables. 5 Other prominent economists attesting to the difficulties involved in trying to understand what ‘Keynes really meant’ include Frank H. Knight ([1937] 1960: 92), Paul Samuelson (1946: 190f) and Frank H. Hahn (1977: 25). 6 It has been maintained by Friedrich von Hayek that Keynes was not very well read in economics and knew little more than the theories of Alfred Marshall.

Notes

377

7 On Keynes as a methodological holist, see, e.g. Leijonhufvud (1968: 387–401). See also Winslow (1989), who gives references to other interpretations of Keynes as an organicist and methodological holist. 8 See, e.g., Hayek (1941: 373–6), Mises ([1952] 1974: chs 4 and 5), Friedman ([1962] 1982: ch 5; 1970a), and Buchanan and Wagner (1977). For a collection of critical views, see Hazlitt (ed.) (1960). Friedrich von Hayek occupies a special place among the libertarian critics of Keynes (because he was also his friend) and blends his critique of Keynes, the economist, with an almost hagiographic picture of Keynes, the person and intellectual (see Hayek, 1995). 9 See Hayek (1995: 231f, 60f, 241ff, 251f). Keynesian macroeconomics and econometrics have this in common; they both deal with aggregates. The difference between them is that Keynes’s theory is about theoretical aggregates, whereas econometrics is about statistical aggregates. This difference is clearly visible in the controversy between Keynes (1939) and Tinbergen (1940). According to Lucas and Sargent (1979: 296): ‘It is the fact that Keynesian theory lent itself so readily to the formulation of explicit econometric models which accounts for the dominant scientific position it attained by the 1960s’. 10 See also Hartley (1997: 176) ‘Of course only people act; of course there is no monster out there called aggregate output with a life of its own; of course explanations of aggregate activity may refer to the behavior of people’. Even Keynes ([1936] 1973) motivated his aggregate consumption function with a discussion of the objective and subjective factors influencing the propensity to consume (chs 8 and 9) and his aggregate investment function with a discussion of the expectations of entrepreneurs (ch. 12). However, this is a very different thing from an insistence that any model of aggregate activity must be rigorously derived from an individual’s optimisation problem. 11 The difference between Vining and Koopmans is, I believe, roughly the same as that between Keynes and Tinbergen, as reflected in the well-known debate between them (Keynes, 1939; 1940 and Tinbergen, 1940). 12 It may be noted that Klein (1946: 93f) sees no problem in the fact that, in economic theory, individual behaviour is really the behaviour of households and firms, while Arrow ([1951] 1968: 641) seems to admit that, really, it implies a collective basis of economics. 13 In Hicks’s original article (Hicks, 1937), the second curve was called LL. It was Alvin Hansen, who changed the symbolic representation of the diagram to IS-LM, in his A Guide to Keynes (1953). It may be noted that Hicks originally used the IS-LM diagram to represent the classical theory, of which Keynes’s theory is a special case (cf. Barrère, 1988: xviiif). It may also be noted that he later, when turning from equilibrium to more dynamic analysis, came to assign a rather limited role to IS-LM analysis (Hicks, [1980] 1982). 14 Clower and Leijonhufvud were not, of course, first to question the neoclassical synthesis. There had been many economists before them objecting to turning Keynes into a neoclassical economist. Among the more important is Cambridge economist Joan Robinson, who insisted that the Keynesian revolution was a break with Marshall and orthodox neoclassical economics (1962: ch. 4; 1971). 15 See Arrow (1974: 4), Weintraub (1979), Janssen (1993) and Hartley (1997: 194). 16 Actually there are, at present, at least seven different approaches to macroeconomics in contemporary economics (see Phelps, 1990): (1) The Macroeconomics of Keynes, (2) The Monetarist Tradition, (3) the New Classical School, (4) the New Keynesian School, (5) Supply-side Economics, (6) Neoclassical and Neo-Neoclassical Real Business Cycle Theory and (7) Non-Monetary Theories of Unemployment Fluctuations: The Structuralist School. 17 The role of maximising behaviour is not made explicit in Friedman’s monetarist theory, but is discussed in his famous essay on ‘The Methodology of Positive

378

18

19 20

21

22 23 24

25

26 27

Notes Economics’ (1953). His conclusion is that it is not really needed for standard economic theory to be true and may be replaced by a theory of selection, as suggested by Armen A. Alchian (1950). Bruno Ingrao and Giorgio Israel (1990: chs 1–2), trace the roots of Walrasian general equilibrium theory to France, rather than to Scotland. According to them, A.R.J. Turgot (1727–81) also used the term ‘equilibrium with respect to economic phenomena’ in a letter to David Hume in 1769–70. According to Walras ([1874] 1984: 69) prices are natural phenomena, in the sense that they cannot be affected by individuals exchanging on the market (cf. Mirowski, 1981: 595). Historically, the household has been both a consumption and a production unit, and the rise of the firm as the main production unit, is part of the development of capitalism. Thus, it is only in modern market economies that the household is only a consumption unit and the firm is the main production unit. It may be added that Arrow in (1968), saw more problems with the individualism of general equilibrium than the fact that its atoms are households and firms, not individuals. ‘It is perhaps interesting to observe that “atomistic” assumptions concerning individual households and firms are not sufficient to establish the existence of equilibrium: “global” assumptions … are also needed (though they are surely unexceptionable). Thus, a limit is set to the tendency implicit in price theory, particularly in its mathematical versions, to deduce all properties of aggregative behavior from assumptions about individuals’ (p. 382). See also Kincaid (1996: 250f; 1998: 93) and Hartley (1997: 184–6). On the market as a social institution, see Swedberg (1994) and Burns (1995). Serious objections to general equilibrium theory have been advanced from less orthodox economists, almost from the beginning. An important early critique was made by the Austrian economist Oscar Morgenstern (1935), who focussed on the paradoxes resulting from the assumption of perfect foresight. Not only is this an incredibly unrealistic assumption, implying that human beings are some kind of demi-gods, but, were it true, it would lead to ‘contradictions’, or paradoxes. In competition, mutual knowledge of one another’s plans for the future leads to complete indeterminism, since all actors would change their plans on the basis of this knowledge, indefinitely. Another weighty critique, similar to that of Morgenstern came from G.B. Richardson (1959), who observed that there is nothing in general equilibrium theory to suggest how the plans of the independent economic actors are co-ordinated. A third important objection was made by the game theorist, Martin Shubik (1975), who pointed to three major flaws in general equilibrium theory: ‘(1) It is independent of the number of competitors. (2) It is a totally static tightly coupled system. It is error free…. (3) It implicitly requires symmetric information’ (p. 546). What is new in the recent development of economic theory, is that the problems have been recognised by more mainstream economists, some of which have made important contributions to general equilibrium theory. Walras started his analysis of market exchange, by suggesting that ‘The markets which are best organized from the competitive standpoint are those in which purchases and sales are made by auction, through the instrumentality of stockbrokers, commercial brokers or criers acting as agents who centralize transactions in such a way that the terms of every exchange are openly announced and an opportunity is given to sellers to lower their prices and to buyers to raise their bids’ (Walras, [1874] 1984: 83f). He goes on to mention other markets, such as grain markets and fish markets, which are also highly competitive, but finally decides to use the Paris Stock Exchange as his preferred example for bringing out the details of his analysis. For a summary, see the survey by Shafer and Sonnenschein (1982). For a more extended critique of economic theory and of the theory of general equilibrium, in particular, see Morgenstern (1972).

Notes

379

28 See, e.g., Udehn (1987: 173), Willer and Skvoretz (1997: 5f) and Kinkaid (1998: 131–5). See also Hollis (1987: ch. 10; 1994: chs 6–8) for an argument to a similar effect. 29 A more obvious example would be the famous prisoner’s dilemma, which in the real game behind the name presupposes social institutions in the form of laws and prisons.

9 The new institutional economics 1 See Langlois (ed.), (1986), Hodgson (1988), Eggertsson (1990), Mäki, Gustavsson and Knudsen, eds (1993), Rutherford (1994) and Furubotn and Richter, eds (1997). 2 For a discussion of the relation between the New Institutional Economics and Marxism, see Heijdra, Lowenberg and Mallick (1988, 1991) and Dorman (1991). 3 It is generally agreed that the old institutionalism is holistic and the new institutionalism individualistic. See for instance, Dugger (1979) and Hodgson (1989: 250–253), who also agrees with Rutherford that the old institutionalism is behaviouristic. See also Wilber and Harrison (1978) who agree that the old institutionalism is both behaviouristic and holistic. 4 The main contributions to the new institutionalism in sociology are collected in Meyer and Scott (1983), Thomas, et al. (1987), Powell and DiMaggio (1991) and Scott and Meyer (1994). 5 Coase makes extensive reference to Frank H. Knight on the subject of uncertainty, which has immense importance for the emergence of the new institutional economics. 6 According to one commentator at least, it means a lot: ‘What I see as crucial in the new institutional economics theory is not so much the introduction of transaction costs as an assumption to be made in the calculation of the decisions, or even the preoccupation with institutions, for old style institutionalists also raised questions about the latter. The core of the theory lies in establishing the connection between both. With this aspect in mind, Coase’s now famous 1937 study extended methodological individualism – which also identified with the neoclassical theorists – to its ultimate consequences’ (Möschel, 1993: 89). 7 Frank H. Knight also wrote an article on ‘Some Fallacies in the Interpretation of Social Cost’ (1924), which vaguely anticipates some of Coase’s critique of Pigou in ‘The Problem of Social Cost’ (Coase, 1960). 8 For an interesting analysis of antique economics as a theory of household management and of male dominance, with special reference to Xenophon, see Foucault ([1984] 1985: Part Three, 141–84). 9 In Rome the head of the household, or household authority, was called paterfamilias. His authority was divided, by Roman law, into potestas over children and slaves, manus over wife and dominium over his possessions (see Nicholas, 1962, 65ff). 10 See, e.g., England and Kilborne (1990) for an approach, which includes power in the analysis of the family. 11 A large part (463–81) of the Oeconomicus is devoted to an amazingly timeless analysis of the ‘agency problem’. 12 See Weber ([1922] 1978: 222ff, 1095; 1927: 275ff) and Swedberg (1998: 49). 13 Trainn Eggertsson (1990: xii, 7–10) makes a distinction between the ‘new institutional economics’ of Williamson and the ‘neoinstitutional economics’ of Douglass North and others. The reason for making this distinction is that Williamson relies on Herbert Simon’s idea of ‘satisficing’ behaviour, rather than on maximising behaviour. 14 See Williamson (1975: 21–6; 1981: 553f, 571; 1985: 44ff; 1986: 173ff). 15 See Williamson (1979: 246–54; 1981: 555; 1985: 52–61; 1986: 179–84; 1988: 69–71; 1995: 225).

380

Notes

16 See Williamson (1985: 18, 29, 213ff; 1986: 171; 1988: 88; 1993: 75f, 96). 17 In a later work, Alchian and Woodward (1987: 113–15) complement the picture by stressing the importance of dependence and the temptation to ‘holdup’ it may create. Holdup becomes possible when a resource is dependent upon a specific use, but loses value when separated from this particular use. This is similar to Williamson’s ‘asset specicificity’ (see p. 268). 18 See also Levinthal (1988: 155ff) and Sappington (1991). 19 See Grossman and Hart (1986: 692, 716f), Hart (1989: 164) and Hart and Moore (1990: 1121). 20 I think it is possible to see a certain similarity to Marxism here. In the Marxian version of the argument, the fact that in capitalism, workers do not own their means of production, means that much more is at stake for them than for the capitalists. 21 Unlike most other economists, North (1981: ch. 3) does not remain satisfied with the theory of the social contract. He prefers a ‘predatory or exploitation theory’ (p. 21), which recognises the clash of interest between groups in society and the use of violence and ideology in the creation and maintenance of the state. 22 Another Public Choice pioneer, Anthony Downs (1957) rejects the individualist theory of the state. Confronted with Buchanan’s dichotomy between an organismic and an individualistic theory of the state, Downs rejects both. While the organismic theory is false, the individualistic theory is incomplete. The dichotomy between an organismic and an individualistic theory is ‘false’ (71). 23 See, e.g., Buchanan and Tullock ([1962] 1965) and Buchanan (1984: 13; 1989b: 25, 37; 1987: 304). 24 Also Becker wants determination by constraints, but does not include institutions among them. The following statement is probably directed at Becker and Friedman: ‘The emphasis on economy-wide rather than on individual constraints has been partly responsible for a serious omission in analysis’ (Buchanan: 1989b: 42). 25 See, however, Olson ([1965] 1971: 100–102), who accepts the individualist approach and criticises, as metaphysical, the idea that states, races, and classes can have ‘ “objective” needs and purposes beyond those of the individuals who compose them’. 26 Mancur Olson’s theory in The Rise and Decline of Nations (1982) is a more mixed bag, which conforms partly to the first and partly to the second pattern. 27 In another article, Cheung (1970) takes his point of departure in Coase’s discussion of externalities. Part of his analysis is the presentation of a model of a common fishing ground, with implications that ‘point to the possibility of a theory of property rights formation. Such a theory, however, is not intended here’ (p. 64). 28 See Giddens (1977: ch. 2) and Elster (1979b: 28–35; 1983a: 55–68). 29 According to Elster (1982: 455) ‘Posner and his school actually tend toward the Strong Functional Paradigm, which most sociologists have abandoned for the more subtle Main Paradigm’. As support for this claim, he cites the following ‘somewhat grotesque example’ (Elster, loc.cit), from Posner: ‘The economic case for forbidding marital dissolution out of concern for the children of the marriage is weakened if the parents love the child (as we have defined “love”), for then the costs to the child of dissolution will be weighed by the parents in deciding whether to divorce, and (assuming “full” love) they will divorce only if the gains to them from the divorce exceed the costs to the child – in which event the divorce will be welfare-maximizing. If, as suggested earlier, love is a factor of growing importance in the production of children, this might help to explain why the law is moving toward easier standards for divorce’ (Posner [1972] 1977: 106). 30 For a good overview of the evolutionary branch of the new institutional economics, see J.J. Vromen (1995). 31 My quotations are from Hayek (1967), but his view of cultural evolution is the same in Hayek (1982: 17–30) and also, if less explicitly in Hayek (1988: 11–37). An observation of some interest, from the point of view of methodological individualism, is

Notes

381

Hayek’s suggestion, in his last works, that the elements of society are individuals and organisations (1982: 46–8; 1988: 37f).

10 Rational choice individualism 1 Among political scientists, David Knoke is committed to a methodology which is both structuralist and individualistic and similar to the structural-individualism of sociologists (see Knoke, 1990: ch1). 2 It is common to attribute the individualist concept of function to the anthropologist Bronislaw Malinowski and the collectivist concept to his colleague A.R. RadcliffeBrown. 3 For a more detailed argument to this effect, see Udehn (1987: 171f). For a critique of Harsanyi’s explanation of social stratification, see also Foldes (1968: 334–7) and Brown (1973: 130–7). 4 Coleman is aware that the typical sociologist will object to this procedure, that homo sociologicus reenters the game in the form of socialised players, who have already internalised the norms of society, and that norms will enter the game also in the form of the rules of the game. His reply is that the player’s of games are socialised only in the sense of being rational and prudent agents, capable of estimating the long-term effect of conformity to norms (Coleman, 1990c: 179f). 5 Coleman’s theory of social systems, is developed in a large number of articles and books from about 1965 onwards. Some sources are Coleman (1966; 1972; 1973: 61ff; 1979). 6 Coleman (1992a: 137). See also (1987b: 133ff; 1990b; 1990c: 45ff; 241ff; 1990e). Coleman, himself, is of a slightly different opinion: ‘Most social theory not based on methodological individualism assumes the existence of social norms, and most theory that is based on methodological individualism disregards their existence altogether’ (Coleman, 1986b: 1326). 7 See also Coleman (1990b: 49ff) and (1990e: 254ff). 8 I believe, for instance, that it is possible to detect a certain change of view between the article on ‘Social Structure and a Theory of Action’ (1975) and ‘Rational Actors in Macrosociological Analysis’ (1979) and increasingly so in ‘Introducing Social Structure into Economic Analysis’ (1984) and ‘Psychological Structure and Social Structure in Economic Models’ (1987c). The change is complete in ‘The Economic Approch to Sociology’ (1992a). Social structure now appears as an irreducible phenomenon which cannot be entirely endogenized. 9 A very clear and concise statement of Coleman’s structuralism can also be found in an article on ‘Social Systems’ from 1971. Here Coleman makes the typically holistic distinction between persons and positions and argues that social organizations are made up of positions, or roles, not of persons. ‘The position has certain attributes, that is actions which its occupant should carry out and actions he can expect from persons in other roles. But the individual is merely the tenant of the role; the organization exists independently of him, just as an appartment building exists independently of its tenants’ (Coleman, 1971: 73). 10 Coleman relies for distinction between natural persons and corporate actors on the legal scholars, Otto von Gierke and F.W. Maitland. Both of these, but the former in particular, are among the arch-holists in the history of social thought. 11 See also Coleman (1991a; 1991b) and (1992c: 117). 12 The word ‘starting point’, sometimes used by Coleman (see also 1990c: 31), might be taken as an indication that his methodological individualism is procedural rather than substantive. My conjecture is that it is both. 13 See Coleman (1987b: 135; 1990b: 35; 1990c: 54, 241, 325; 1992b: 273, 281).

382

Notes

14 At other times, he characterises functionalism, not by teleology at the level of the social system, but by its failure to account for regularities in system behaviour ‘by the mediation of purposes or goals on the part of persons’ (Coleman, 1979: 75). 15 Coleman (1986c). See also (1986a; 1987a; 1990c: ch. 1). See also Abell (1996: 256ff) for a presentation of Coleman’s scheme. 16 On an abstract level, I think there are some similarities between Coleman’s approach and that of Berger and Luckmann, the networks analysis of Willer, among others, the structural individualism of Wippler, Raub and Lindenberg, the morphogenetic approach of Margaret Archer and, perhaps, Mario Bunge’s systemism. At the most abstract level, I can also see similarities between Coleman and Marx. 17 See, however Coleman (1986c: 1321), where also Talcott Parsons is accused of ‘disregarding the very structural configurations that are essential elements in determining the social outcome of a combination of individual actions’. That we have to do with a type 3 relation is clear from the sentence that follows: ‘This micro-to-macro problem is sometimes called by European sociologists the problem of transformation’. 18 According to Boudon, a ‘state of nature’ is characterised by the fact that individuals act without taking into consideration the effects of their actions upon other individuals, but often within an institutional context. This is an unusual view. A state of nature, as usually conceived, is characterised by the absence of social institutions. What Boudon calls a ‘state of nature’, is better characterised as a ‘Robinson Crusoe approach’, as exemplified by marginalist economics. 19 This is not surprising, since Boudon, himself, observes (1984: 33) that ‘[t]he explanation of M provided by Coleman … consists precisely of a clarification of the terms of M = M{m[S(M⬘]}. The explanation of M⬘, referred to is that of the dissemination of new products by Coleman and his colleagues. It may be noted that P has become M⬘ in this formula, but the meaning is the same. M means ‘macrosocial actions’. 20 See, e.g., Boudon (1975: 398ff; 1981: 121, 134ff; 1982: 197ff; 1988a; 1988b: 761ff; 1998). 21 See, e.g., Boudon, (1981: 12–27, 58–85, 145; 1982: 7, 154; 1984: ch. 4.) 22 See Daniel Little (1998: ch. 1), for a lucid and concise presentation of this approach to Marxism. 23 Among the more noteworthy contributions are Levine, Sober and Wright (1987), Sensat (1988) and Weldes (1989). 24 On the critique of functionalism, see Elster (1978: 121f; 1979b: 28–35; 1982: 454–63; 1983a: 55–68; 1985: 27–37; 1986b: 202–7). 25 See Elster (1982: 463ff; 1983a: 165ff; 1985: 8ff; 1986b: 207ff). 26 On the principle of charity, see Elster (1979a: 81f; 1979b: 116f, 154ff; 1983b: 117; 1989a: 35f). Elster’s principle of charity is similar to Weber’s proposal that we should always start with the ideal type of rational action and, then, treat concrete actions as deviations from this ideal type (Weber [1922] 1978: 6). 27 See Elster (1982: 453f, 462, 469, 473; 1983b: 111–13). That is to say Elster, seems to believe that rational choice is necessarily individualistic, not that rational choice is the only version of methodological individualism. In later writing, he takes explicit exception to the latter belief (see, e.g., Elster, 1989a: 105). 28 On the two-filter model of human action, see Elster (1978: 160; 1979a: 65–8; 1979b: 77, 113ff; 1982: 463f; 1985: 9). 29 According to G.J. Stigler and G.S. Becker (1977: 76f) preferences are stable and common to all people. According to Elster (1979a: 75–78; 1979b: 137–47), however, they change and differ between people. My guess would be that, in general, for those anxious to defend human autonomy the opportunity set must be large, and action explained mainly by preferences. 30 Elster quotes the following statement by A.S. MacFarland: ‘The structuralist would study the fence around the cattle; the behaviourist [read ‘rational choice’, LU] would study the activity of the cattle within the fence’. I believe that Macfarland’s image of

Notes

31 32

33

34 35

36

37 38

383

structuralism is, on the whole, more accurate than Elster’s image of strong determinism (see Elster, 1979b: 113f; 1982: 464; 1983b: 115–8; 1986a: 23). Elster would eventually reach the latter conclusion with respect to social norms. See, e.g., Elster (1989a: ch. 3). See, e.g. Durkheim ([1897] 1951: 313): ‘The force uniting the conglomerate multitude of individual cases, scattered over the face of the earth, must necessarily be external to each of them’ and ‘It is external to each average individual taken singly’ (p. 316; but do not ask me what kind of creature an ‘average individual taken singly’ is). See also E. Gellner (1956: 170f): ‘For any individual, the mores, institutions, tacit presuppositions, etc., of his society are an independent and external fact, as much so as the physical environment and usually more important. And if this is so for each individual, it does follow that it is so for the totality of individuals composing a society’. Elster recognises four possible types of interdependence in social life: ‘First the reward of each depends on the choice of all, through general social causality. Second, the reward of each depends on the reward of all, through envy or altruism. Thirdly, the decision of each depends on the decision of all: this is the specific contribution of game theory. Lastly, the preference structure of each depends on the actions of all, through socialization and similar mechanisms’ (1983a: 77; see also 1982: 464; 1985: 10; 1986a: 7). The relevant distinction for my present purposes is that between the first and third types of interdependencies. According to Elster, the first type is characterised by ‘intentional interaction between intentional beings’, whereas the third is ‘purely causal interaction between intentional agents’. This takes place when each agent acts upon unjustified assumptions about the behaviour of others, e.g., when each agent believes he is the only one who is adjusting to the environment, whereas all others merely follow habit, or tradition’ (1983a: 83f; see also 1978: 159; 1979a: 68f). Why unjustified? It seems as if Elster entertains something like an existentialist belief that social order is due to bad faith, concerning the behaviour of others. But is it not rather the case that the social environment is to a considerable extent really parametric, rather than strategic? See also Taylor (1988: 77–93), for a somewhat extended discussion of structuralism as an alternative to methodological individualism. See, for instance, the Symposium on his Logic and Society in Inquiry, 23, 1980: 139–232, the ‘Comments’ on his ‘Marxism, Funcionalism and Game Theory: The Case for Methodological Individualism’ in Theory and Society, 11, 1982: 483–539 and Symposion on his Making Sense of Marx in Inquiry, 29, 1986, 3–77. In his reply to Elster’s ‘Marxism, Functionalism and Game Theory’, he makes the somewhat curious statement that ‘Methodological individualism is the deductive method: it attempts to deduce historical observations from basic postulates on individual behavior that are sufficiently fundamental to be self-evident’ (Roemer, 1982b: 514). This does not mean that Przeworski rejects structural analysis. See the extended discussion of rational choice and methodological individualism in Przeworski (1990) for a clarification on this point. Pettit is also a structuralist, who has produced one of the most interesting cases against methodological individualism (Pettit [1993] 1996: ch. 5; see also Jackson and Pettit, 1992). Daniel Little, who also combines microfoundations with structuralism, feels that it is too holistic to be called methodological individualism. He prefers the term “‘methodological localism” in contrast to both holistic social science and methodological individualism’ (Little, 1998: 198).

11 Why methodological individualism? 1 See Laudan (1977: 54) for a taxonomy of the various cognitive relations, which can exist between two, or more, theories.

384

Notes

2 See, e.g. Mandelbaum (1955: 312), Thomas (1979: 32). Cf. Papineau (1978: 17f; 46–9). Methodological individualism has even been interpreted by Runciman (1972: 24) as a principle about the testability of laws, employing collective concepts, by reference to individual behaviour. There is no justification for this interpretation in the writings of leading methodological individualists. 3 Very often methodological individualists move from methodological to ontological individualism, without acknowledging the difference between the two, as if the latter entailed the former. I have called it the ‘ontological turn’ or ‘twist’ (p. 125). 4 See, also Addis (1975: 38), Radnitzky (1988: xv): ‘Reduction in the strong sense makes the reduced theory dispensable’, and K. Lennon and D. Charles (1992). 5 See, e.g., Sklar (1967), Schaffner (1967), Nickles (1973), Krüger (1976) and Smith (1992). The latter introduces the term ‘strong reduction’ (p. 22) to cover those cases which correspond to the ‘common’ meaning of ‘reductionism’. 6 On the distinction between epistemological, or philosophical, and scientific reduction, see Popper (1972: 290–5). Cf. Also Nagel (1949: 123; 1961: 358). 7 For a critique of Kemeny and Oppenheim, see, e.g., Hempel (1969b: 193), Sklar (1967: 113–7) and Nagel (1970). 8 See also T.R. Girill (1976a: 69; 1976b: 387), who maintains that micro-reduction is characterised by the occurrence of the parts in the explanans and the whole in the explanandum. Assuming that individuals are the parts of social wholes, this would be a good explication of methodological individualism. 9 See Broad (1937: 44ff) and Bergmann (1944: 212–4; 1957: 131ff). 10 See, e.g. Durkheim ([1895] 1982: 102) who says ‘[a] whole is not identical with the sum of its parts. It is something different, and its properties are different from those of its component parts’ and Smuts ([1926] 1936: 102), who suggests that ‘[i]t is very important to recognise that the whole is not something additional to the parts: it is the synthesis of parts in a definite structural arrangement...’ Durkheim’s view is echoed by Bergmann (1944: 217; 1957: 158–61), who suggests that the existence of elementaristic composition laws is one way of giving meaning to ‘additivity’ and ‘emergence’. The most penetrating analysis of the claim that ‘the whole is more than the sum of its parts can be found in Nagel (1961: 380–97). 11 It is a matter of controversy whether translation of concepts counts as reduction or not. The simple answer is that it depends upon what you mean by ‘reduction’. If you conceive of sciences as constituted by their vocabulary, translation is reduction, but if you believe that they are constituted by their theories, translation is not reduction. 12 See, e.g. Homans (1964a: 813–8; 1964c: 967–73; 1967b: 35–43) and Hummel and Opp (1968: 220–3; 1971: 81–6). The same claims on behalf of individualistic theories is made by virtually all advocates of microfoundations. 13 See Elster (1983: 23f ; 1985: 5f; 1989b: 73f; 2000: 24f). 14 See, e.g., Friedmann (1982: 20), the contributions to G. Radnitsky (ed.) (1987; 1988) and D. Charles and K. Lennon, eds (1992). See also Little (1991: 192) Kinkaid (1997: ch. 1) and Callender (1999). For a non-reductive view of inter-theoretic relations, see Darden and Maull (1977) and Maull (1977). 15 See, e.g., Macdonald and Pettit (1981: 119ff) and Pettit (1984), who uses the idea of supervenience to accept the ‘expressive autonomy of concepts’, but in defence of ontological and methodological individualism. See also Currie (1984), Levine, Sober and Wright (1987), Little (1991: 190–9) and Kinkaid (1986: 507–9; 1997: 70–4) who use supervenience to argue against methodological individualism. 16 See, e.g., Watkins (1952a: 29), Homans (1970a), Hummell and Opp (1968; 1971) and Elster (1989b: 74). This does not necessarily imply that social scientists can be replaced by psychologists. It might still be the case that social scientists differ from psychologists in terms of subject matter (see, e.g., Brodbeck, [1958] 1968: 297; Gibson, 1968: 106–11; Papineau 1978: 48; Lindenberg, 1996).

Notes

385

17 See, e.g. Brodbeck (1954: 148ff; [1958] 1968: 301f), Mandelbaum (1955: 305ff; 1957: 222f; 1977: 235ff), Gellner (1956: 174f; 1960: 514–16), Danto (1965a: 269ff), Putnam (1973–4: 135), Addis (1975: 42f), Vanberg (1975: 4), Mellor (1982: 51) and Pettit ([1993] 1996: 117ff). 18 Weber’s method of verstehen is deemed psychologistic by Runciman (1972: 74f), Outhwaite (1975: 46, 104) and Elster (2000: 26). According to Torrance (1974: 148) Weber was ‘pushed in a psychologist direction by [his] methodological individualism’. Weber’s relation to psychology and his rejection of psychologism, is a recurrent theme in Huff (1984). 19 See, especially, Weber ([1903–6] 1975: 101–20, 129–52, 172ff; 1908a; 1908b: 119–24; [1922] 1978: 7, 13, 19). 20 See Weber ([1903–6] 1975: 189f; 1908a: 29f, 32f; [1913] 1981: 154ff; [1922] 1978: 19; 1949: 74f, 88f). 21 In Weber (1949: 90), it is suggested that the ideal type is a heuristic device, but not a hypothesis, although it offers guidance to the construction of hypotheses. In Weber ([1903–6] 1975: 189f) and ([1913] 1981: 157), however, the ideal type has the status of a hypothesis. In Weber ([1922] 1978: 9–11, 18f), finally, the ideal type is both a heuristic device and a hypothesis. 22 See Hempel (1965: 166) and Vanberg (1975: 107f, 121). 23 See Popper ([1945] 1966: vol. 2, 97; 1957: 140–3; [1962] 1976: 102f). 24 See Popper ([1945] 1966: vol. 2, 90, 97; 1957: 153f; [1962] 1976: 101). 25 On this point, see, especially Lichtheim (1965). See also Lessnoff (1974: 106–8) and Vanberg (1975: 109ff). 26 See, e.g. Little (1991: 195–99; 1998: 10–13; 203) and Kinkaid (1997: 46–8). Cf. also Satz and Ferejohn (1994: 85). 27 On the connection between methodological and normative individualism, see Brodbeck (1954: 142), Burman (1979: 357), Blaug (1980: 49f), Heine (1983), Hodgson (1988: 70–2), Madison (1990: 47), Shand (1990: 2, 31f), Kingdom, (1992), Vanberg (1994: 1) and Kinkaid (1997: 2). 28 This does not prevent Elster from making the following statement: ‘From Stalin to the Red Guards this outlook [a speculative philosophy of history] has led to a disregard for individuals that goes far beyond the denial of methodological individualism’ (Elster, 1985: 117). 29 A good example of this affinity, is the constitutional economics of James Buchanan. This theory is based on the idea of unanimous consent, which is the political counterpart of economic exchange. According to James Buchanan, it is also based on methodological individualism. But, when used in the context of politics, methodological individualism transforms into political individualism, which, in its turn, is based on ethical individualism (see Udehn, 1996: 174ff). 30 This argument was advanced by Hayek in a number of articles in the 1930s (see, especially, ‘Socialist Calculation’, I–III, ‘Economics and Knowledge’ and ‘The Use of Knowledge in Society’, all in Hayek, 1948). A similar argument has been used by Popper (1957: 79f). 31 There is another kind of humanism, which sees the dignity of human beings in their achievements rather than in their freedom. Among these achievements are science and literature, works of art and social institutions. The latter kind of humanism tends to be holistic. 32 See also Strawson ([1962] 1968: 58–96) and James (1984: 70–5). 33 ‘The truth contained in environmentalism is the cognition that every individual live at a definite epoch in a definite geographical space and act under the conditions determined by his environment. The environment determines the situation but not the response. To the same situation different modes of reaction are thinkable and feasible. Which one the actors choose depends upon their individuality’ (Mises, 1957: 326).

386

Notes

34 For a critique of sociology of knowledge, from an individualist point of view, Mises (1933: 186–94; [1949] 1966: 4–7, 72–91; [1957] 1985: 122ff), Hayek ([1952] 1963: 192f; 1955: 76, 89, 180) and Popper ([1945] 1966, vol. 2: ch. 23). 35 According to Watkins (1970: 176f), behaviourism is not only inadequate when applied to human beings, but ‘unfair to rats’. Agassi (1977: 166) maintains that ‘vulgar behaviourism, like vulgar Marxism, is but an object of inquiry, not a target for any serious criticism’. 36 See especially Popper, who is the most energetic defender of mind–body dualism, or interactionism. His most elaborated argument can be found in Popper (1977). 37 See Boudon (1981: ch. 8; 1982: chs 1 and 7) and Elster (1978: 160; 1979a: 66–8; 1986a: 22f). On the normative element in Elster’s methodological individualism, see Warren (1988). Also Philip Pettit’s ([1993] 1996) individualism may be interpreted as a defence of human freedom, or autonomy.

12 Methodological individualism restated 1 It is very common, in the literature on methodological individuals, to make the distinction between methodological and ontological individualism. At least one commentator (Scott, 1960) has also made a distinction between methodological and epistemological individualism. Rajeev Bhargava (1992: ch. 1) distinguishes between ontological, explanatory and semantic individualism, and a variety of different forms of explanatory individualism. What Bhargava calls ‘semantic individualism’ has been discussed by Pettit (in Macdonald and Pettit, 1981: ch. 3) as a matter of the ‘expressive autonomy’ of institutions (see also Tiles, 1984 and Pettit, 1984). I conceive of semantic, or expressive individualism as a version of epistemological individualism. Since scientific theories have a linguistic form, I believe that semantics is part of epistemology. 2 According to Weber’s well-known definition, ‘[a]ction is “social” insofar as its subjective meaning takes account of the behavior of others and is thereby oriented in its course’ (Weber [1922] 1978: 4). According to Winch’s also well-known alternative, social action is rule-governed action, presupposing a social setting. (Winch, 1958: 116–20). 3 This interpretation of methodological individualism – as a principle of explanation – is favoured also by Philip Pettit in Macdonald and Pettit (1981: ch. 3) and by virtually all who interpret methodological individualism as a quest for microfoundations, especially those who identify microfoundations with rational choice. 4 The first to point out that methodological individualism is often stated as an ontological thesis was probably Goldstein (1958: 1ff; 1959: 240–1). On the distinction between methodological and ontological individualism, see also Koertge (1974: 198f); Ruben (1982: 1; 1985: 1ff) and Kinkaid (1996: 187–90; 1997: 13f). According to M. Bunge (1979: 15), ‘every theoretical view of society and, for that matter, of any concrete object, has two components: an ontological and a methodological. The former concerns the nature of society, the latter the way to study it’. 5 Empiricists, when faced with metaphysical, or ontological problems have typically turned them into epistemological, logical, or methodological questions. This is the only way to deal with them, when metaphysics is forbidden. The strategy of Popper is to transform ontological (and epistemological) problems to methodological ones. According to Popper ([1934] 1972: 55), ‘not a few doctrines which are metaphysical … could be interpreted as typical hypostatizations of methodological rules’. 6 See, e.g., Mises ([1949] 1966: 42ff), Hummell (1973: 138f), Homans (1980: 19) and Sztompka (1979: 299). 7 See Ryle (1949) for a classic analysis of dispositions. On intentions, see Anscombe (1968: 144–52) and MacIntyre (1972: 48–70).

Notes

387

8 According to Watkins (1955: 58) material circumstances influence social phenomena only indirectly. Lukes (1968: 124f) has divided facts about individuals in four classes: (i) genetic make-up; brain states; (ii) aggression; gratification; stimulus-response; (iii) co-operation; power, esteem; (iv) cashing cheques; saluting; voting’. See Ruben (1985: 128–30) for a comment on Lukes’s classification. 9 This is not to deny that institutions are, themselves, made up of actions of individuals. 10 Lukes (1973: 107–9) uses the term ‘epistemological individualism’ in a different way to denote ‘a doctrine about the nature of knowledge, which asserts that the source of knowledge lies within the individual’. 11 On methodological individualism as a thesis about the reducibility of social laws, see, e.g., Brodbeck (1954: 155; [1958] 1968: 286ff), Mandelbaum (1957), Martin (1972: 69), Brown (1973: 137), Addis (1975: 55–74) and Mellor (1982). 12 See especially Watkins (1957b: 107n; 1959c: 243). See also Danto (1965a: 275), D’Agostino (1979: 28), Flew (1985: 42–47), Perry (1979: 7–15; 1980; 62; 1983: 68). 13 The reason is that there might be explanations without laws. Historical explanations, for instance, rarely invoke social laws. In the recent discussion of methodological individualism, there has been strong arguments for explanations in terms of social mechanisms, which also make no use of laws. Actually, it is hard to find examples of generally accepted laws in the social sciences. 14 This is true especially of the Popperians. There are those, who see methodological individualism exclusively as a principle of explanation, e.g., Danto (1965a) Lukes (1968: 122), D’Agostino (1979: 28) and Flew (1985: 46). 15 Jarvie’s use of the terms ‘explicans’ and ‘explicanda’, instead of the more common explanans and explanandum, may suggest that we have to do with an ‘explication’ in Carnap’s sense of that term (1970: 8). But this is not the case. It is clear from the context that Jarvie intends the explanation of social phenomena, not the explication of social concepts. 16 This interpretation of methodological individualism has been suggested by Gellner (1956: 165), Lukes (1968: 129), D’Agostino (1979: 28), Opp (1972: 130; 1979: 9f). 17 This interpretation of methodological individualism can be found in Nozick (1977: 359), Opp (1979: 49, 65) and Lindenberg (1985a: 107). 18 There are different opinions among those advocating social mechanisms, about the relation of mechanisms to laws. While some accept social laws, but want to is to play down their importance, others deny their existence altogether. My own view, is that it is always possible to formulate statements about social mechanisms as laws, but there is little or no point in doing so. The deductive-nomological ideal has turned into a straight-jacket on social science, which we had better through away. Laws are always conditional and subject to the ceteris paribus. In other words, they are statements of tendency. In social life, the conditions are so many, that stating general laws seems rather pointless. It is better to look for causal mechanisms, in the absence of laws. 19 See, e.g. Elster (1989b: ch. 1; 1999: ch. I) and Hedström and Swedberg (eds) (1998).

Bibliography

Abell, P. (1996) ‘Sociological Theory and Rational Choice Theory’, pp. 252–73 in B.S. Turner (ed.) The Blackwell Companion to Social Theory, Oxford: Blackwell. Addis, L. (1975) The Logic of Society, Minneapolis: University of Minnesota Press. Adorno, T.W. (1957) ‘Sociology and Empirical Research’, pp. 68–86 in T.W. Adorno, et al. The Positivist Dispute in German Sociology, London: Heinemann. Agassi, J. (1960) ‘Methodological Individualism’, The British Journal of Sociology, 11, 244–70. —— (1972) ‘I – Listening in the Lull’, Philosophy of the Social Sciences, 2, 319–32. —— (1975) ‘Institutional Individualism’, The British Journal of Sociology, 26, 144–55. —— (1977) Towards a Rational Philosophical Anthropology, The Hague: Martinus Nijhoff. —— (1997) ‘Celebrating The Open Society’, Philosophy of the Social Sciences, 27, 486–525. Ahrne, G. (1990) Agency and Organizatiom: Towards an Organizational Theory of Society, London: Sage Publications. —— (1994) Social Organizations: Interaction Inside, Outside and Between Organizations, London: Sage Publications. Albert, H. (1988) ‘Hermenutics and Economics: A Criticism of Hermeneutical Thinking in the Social Sciences’, Kyklos, 41, 573–602. Albrow, M. (1990) Max Weber’s Construction of Social Theory, London: Macmillan. Alchian, A.A. (1950) ‘Uncertainty, Evolution and Economic Theory’, Journal of Political Economy, 58, 211–21. —— (1961) ‘Some Economics of Property Rights’, pp. 127–49 in Economic Forces at Work, Indianapolis: Liberty Press. —— (1965) ‘The Basis of Some Recent Advances in the Theory of Management of the Firm’, Journal of Industrial Economics, 14, 30–41. —— (1979) ‘Some Implications of Recognition of Property Right Transaction Costs’, pp. 233–54 in K. Brunner (ed.) Economics and Social Institutions, Boston: Martinus Nijhoff. Alchian, A.A. and Allen, W.R. (1964) University Economics, Belmont, CA: Wadsworth Publishing Company, 1967. Alchian, A.A. and Demsetz, H. (1972) ‘Production, Information Costs and Economic Organization’, American Economic Review, 62, 777–95. Alchian, A.A. and Woodward, S. (1987) ‘Reflections on the Theory of the Firm’, Journal of Institutional and Theoretical Economics, 143: 110–36. Alexander, J.C. (1985) ‘The “Individualist Dilemma” in Phenomenology and Interactionism’, pp. 25–57 in S.N. Eisenstadt and H.J. Helle (eds) Perspectives on Sociological Theory, vol. 1: Macrosociological Theory, Beverly Hills: Sage Publications. —— (1987) Sociological Theory Since 1945, London: Hutchinson.

Bibliography 389 Allport, F.H. (1924a) ‘The Group Fallacy in Relation to Social Science’, American Journal of Sociology, 29, 688–706. —— (1924b) Social Psychology, Boston: Houghton Mifflin Company. —— (1961) ‘The Contemporary Appraisal of an Old Problem’, Contemporary Psychology, 6, 195–6. Alter, M. (1990) Carl Menger and the Origins of Austrian Economics, Boulder: Westview Press. Anscombe, G.E.M. (1968) ‘Intention’, pp. 144–52 in A.R. Whyte (ed.) The Philosophy of Action, Oxford: Oxford Univerity Press. Antoni, C. (1940) From History to Sociology, London: Merlin Press, 1962. Archer, M.S. (1985) ‘Structuration versus Morphogenesis’, pp. 58–88 in S.N. Eisenstadt and H.J. Helle (eds) Perspectives on Sociological Theory, vol. 1: Macrosociological Theory, Beverly Hills: Sage Publications. —— (1988) Culture and Agency: The Place of Culture in Social Theory, Cambridge: Cambridge University Press. —— (1995) Realist Social Theory: The Morphogenetic Approach, Cambridge: Cambridge University Press. Archibald, W.P. (1976) ‘Psychology, Sociology and Social Psychology: Bad Fences Make Bad Neighbours’, The British Journal of Sociology, 27, 115–29. Aristotle (1962) The Politics, Harmondsworth: Penguin. Arrow, K. J. (1951) ‘Mathematical Models in the Social Sciences’, pp. 635–67 in M. Brodbeck (ed.) Readings in the Philosophy of the Social Sciences, New York: Macmillan, 1968. —— (1959) ‘The Role of Price Adjustment’, pp. 41–51 in M. Abramovitz (ed.) The Allocation of Economic Resources, Stanford: Stanford University Press. —— (1968) ‘Economic Equilibrium’, pp. 376–89 in D.L. Sills (ed.) International Encyclopedia of the Social Sciences, vol. 4, New York: Macmillan. —— (1974) ‘Limited Knowledge and Economic Analysis’, The American Economic Review, 64, 1–10. —— (1987a) ‘Economic Theory and the Hypothesis of Rationality’, pp. 25–37 in J. Eatwell, M. Milgate and P. Newman (eds) Utility and Probability (The New Palgrave), New York: W.W. Norton & Company, 1990. —— (1987b) ‘Rationality of Self and Others in an Economic System’, pp. 201–15 in R.M. Hogarth and M.W. Reder (eds) Rational Choice. The Contrast between Economics and Psychology, Chicago: University of Chicago Press. —— (1989) ‘The State of Economic Science’, pp. 11–22 in W. Sichel, (ed.) The State of Economic Science.Views of Six Nobel Laureates. Kalamazoo, MI: W.E. Upjohn Institute. —— (1994) ‘Methodological Individualism and Social Knowledge’, The American Economic Review. Papers and Proceedings, 84, 1–9. Arrow, K.J. and Debreu, G. (1954) ‘The Existence of an Equilibrium for a Competitive Economy’, Econometrica, 22, 265–90. Arrow, K.J. and Hahn, F.H. (1971) General Competitive Analysis, San Fransisco: Holden-Day, Inc. Attewell, P. (1974) ‘Ethnomethodology since Garfinkel’, Theory and Society, 1, 179–210. Axelrod, R. (1984) The Evolution of Cooperation, New York: Basic Books. Ayer, A.J. (1936) Language, Truth and Logic, London: Victor Gollancz. —— (1971) Russell and Moore, London: Macmillan. —— (1972) Russell, London: Fontana. Backhouse, G. (1998) ‘Georg Simmel as an Eidetic Social Scientist’, Sociological Theory, 16, 260–81. Bar-Hillel, Y. (1954) ‘Indexical Expressions’, Mind, 63, 359–79.

390

Bibliography

Barrère, A. (1988) ‘Preface: The Keynesian Project’, pp. xiii–li, in A. Barrère, (ed.) The Foundation of Keynesian Analysis, Basingstoke: Macmillan. Barry, B. (1989) Does Society Exist. The Case for Socialism (Fabian Tract 536), London: Fabian Society. Beauvoir, S. de (1949) The Second Sex, London: Picador Classics, 1988. Becker, G.S. (1962) ‘Irrational Behaviour and Economic Theory’, The Journal of Political Economy, 70, 1–13. —— (1976) The Economic Approach to Human Behavior, Chicago: Chicago University Press. —— (1981) A Treatise of the Family, Harvard, MA: Harvard University Press, 1991. —— (1983) ‘A Theory of Competition Among Pressure Groups for Political Influence’, The Quarterly Journal of Economics, 48, 371–400. —— (1985) ‘Public Policies, Pressure Groups, and Dead Eight Costs’, Journal of Public Economics, 28, 329–47. —— (1996) ‘In Memoriam James S. Coleman (1926–1995)’, pp. 377–9 in J. Clark, (ed.) James S. Coleman, London: The Farmer Press. Benn, S.I. and Peters, R.S. (eds) (1959) The Principles of Political Thought. Social Foundations of the Democratic State, New York: The Free Press. Berger, P.L. and Luckmann, T. (1966) The Social Construction of Reality, Harmondsworth: Penguin, 1971. Bergmann, G. (1944) ‘Holism, Historicism and Emergence’, Philosophy of Science, 11, 209–21. —— (1957) Philosophy of Science, Westport: Greenwood Press. Bergson, H. (1889) Time and Free Will. An Essay on the Immediate Data of Consciousness, New York: Harper & Row, 1960. —— (1907) Creative Evolution, London: Macmillan, 1911. —— (1932) The Two Sources of Morality and Religion, Notre Dame, IN: University of Notre Dame Press, 1977. Berle, A.A. and Means, G.C. (1934) The Modern Corporation and Private Property, New York: Macmillan. Berlin, I. (1954) ‘Historical Inevitability’, pp. 41–117 in Four Essays on Liberty, Oxford: Oxford University Press, 1969. —— (1976) Vico and Herder, London: Chatto & Windus. Bhargava, R. (1992) Individualism in Social Science. Forms and Limits of a Methodology, Oxford: Clarendon Press. Bhaskar, R. (1979) The Possibility of Naturalism. A Philosophical Critique of the Contemporary Human Sciences, Brighton: Harvester Press. Bicchieri, C. (1993) Rationality and Coordination, Cambridge: Cambridge University Press. Bienenstock, E.J. and Bonacich, P. (1997) ‘Network Exchange as a Cooperative Game’, Rationality and Society, 9, 37–65. Bierstedt, R. (1977) ‘A Critique of Empiricism in Sociology’, pp. 43–54 in M. Bulmer (ed.) Sociological Research Methods, London: Macmillan. Binns, D. (1977) Beyond the Sociology of Conflict, London: Macmillan. Bittner, E. (1965) ‘The Concept of Organization’, pp. 69–81 in R. Turner (ed.) Ethnomethodology, Harmondsworth: Penguin, 1974. Blau, P.M. (1960) ‘Structural Effects’, American Sociological Review, 25, 178–93. —— (1964) Exchange and Power in Social Life, New Brunswick: Transaction Books, 1986. —— (1974) ‘Parameters of Social Structure’, American Sociological Review, 39, 615–35. —— (1975) ‘Comment’ on Homans, pp. 329–39 in R. Borger and F. Cioffi (eds) Explanation in the Behavioural Sciences, Cambridge: Cambridge University Press.

Bibliography 391 —— (1977) ‘A Macrosociological Theory of Social Structure’, American Journal of Sociology, 83, 26–54. —— (1987) ‘Microprocess and Macrostructure’, pp. 83–100, in K.S. Cook (ed.) Social Exchange Theory, Newbury Park: Sage Publications. Blaug, M. (ed.) (1991) Jean-Baptiste Say 1776–1832, Aldershot: Edward Elgar. Bleicher, J. (1982) The Hermeneutic Imagination. Outline of a Positive Critique of Scientism and Sociology, London: Routledge & Kegan Paul. Blumer, H. (1937) ‘Social Psychology’, pp. 144–98, in E.P. Smith (ed.) Man and Society. A Substantive Introduction to the Social Sciences, New York: Prentice-Hall. —— (1969) Symbolic Interactionsim. Perspective and Method, Englewood Cliffs, NJ: Prentice Hall. —— (1975) ‘Exchange on Turner, “Parsons as a Symbolic Interactionist”’, Sociological Inquiry, 45, 59–65. Boden, D. (1990) ‘The World as it Happens: Ethnomethodology and Conversational Analysis’, pp. 185–213 in G. Ritzer (ed.) Frontiers of Social Theory. The New Synthesis, New York: Columbia University Press. Böhm-Bawerk, E. von (1890) ‘The Historical versus the Deductive Method in Political Economy’, Annals of the American Academy of Political and Social Science, 1, 244–71. —— (1891) ‘The Austrian Economists’, Annals of the American Academy of Political and Social Science, 1, 361–84. —— (1896) ‘Unresolved Contradictions in the Marxian Economic System’, pp. 201–302 in Shorter Classics of Eugen von Böhm-Bawerk, South Holland, IL: Libertarian Press. Boland, L.W. (1982) The Foundations of Economic Method, London: George Allen & Unwin. —— (1986) Methodology for a New Microeconomics,The Critical Foundations, Boston: Allen & Unwin. —— (1992) The Principles of Economics. Some Lies My Teachers Told Me, London: Routledge. Bostaph, S. (1976) ‘The Methodological Debate Between Carl Menger and the German Historicists’, Atlantic Economic Journal, Vol. 6, 3–16. Boudon, R. (1968) The Uses of Structuralism, London: Heinemann, 1971. —— (1971) The Logic of Sociological Explanation, Harmondsworth: Penguin. —— (1975) ‘The Three Basic Paradigms of Macrosociology: Functionalism, NeoMarxism and Interaction Analysis, Theory and Decision, 6, 381–406. —— (1977) The Unintended Consequences of Social Action, London: Macmillan Press, 1982. —— (1979a) ‘Generating Models as a Research Strategy’, pp. 51–64 in R.K. Merton, J.S. Coleman and P.H. Rossi (eds), Qualitative and Quantitative Research: Papers in Honor of Paul F. Lazarsfeld, New York: The Free Press. —— (1979b) The Logic of Social Action, London: Routledge & Kegan Paul, 1981. —— (1981) The Logic of Social Action. An Introduction to Sociological Analysis, London: Routledge & Kegan Paul. —— (1982) The Unintended Consequences of Social Action, London: Macmillan. —— (1983) ‘Individual Action and Social Change’, The British Journal of Sociology, 34, 1–18. —— (1984) Theories of Social Change, Cambridge: Polity Press, 1986. —— (1986) ‘Individualism and Holism in the Social Sciences’, pp. 33–45 in P. Birnbaum and J. Leca (eds) Individualism: Theories and Methods, Oxford: Clarendon Press, 1990. —— (1987) ‘The Individualistic Tradition in Sociology’, pp 45–70 in J.C. Alexander, et al. (eds) The Micro-Macro Link, Berkeley: University of California Press.

392

Bibliography

—— (1988a) ‘Explanation, Interpretation, and Understanding in the Social Sciences’, pp. 236–58 in G. Radnitzky (ed.) Centripetal Forces in the Sciences, vol. 2, New York: Paragon House. —— (1988b) ‘Will Sociology Ever be a Normal Science?’, Theory and Society, 17, 747–71. —— (1989) ‘Subjective Rationality and the Explanation of Social Behavior’, Rationality and Society, 173–96. —— (1996) ‘The “Cognitivist Model”’, Rationality and Society, 8, 123–50. —— (1998) ‘Social Mechanisms Without Black Boxes’, pp. 147–71 in P. Hedström and R. Swedberg (eds) Social Mechanisms. An Analytical Approach to Social Theory, Cambridge: Cambridge University Press. Bourdieu, P. (1972) Outline of a Theory of Practice, Cambridge: Cambridge University Press, 1977. —— (1980) The Logic of Practice, Stanford: Stanford University Press, 1990. —— (1985) ‘The Genesis of the Concepts of Habitus and of Field ’, Sociocriticism, 2, 11–24. —— (1989) ‘Social Space and Symbolic Power’, Sociological Theory, 7, 14–25. —— (1990) In O