Handbook on Contemporary Austrian Economics

8 <strong>Handbook</strong> on contemporary Austrian economics
with "the multiplicity of coexisting social units and their mutual antagonisms"
(1949, p. 43). Far from denying the relevance of social wholes,
Mises saw attention to individuals as the only way to study this because,
"The life of a collective is lived in the actions of individuals constituting its
body" (ibid., p. 42). Indeed:
Individuals and their choice-making activity serves as the beginning of the
Austrian analysis not because of a rejection of collective entities, but because it
is only by interpreting social entities as the composite outcome of individual activity
that we can come to understand their meaning and significance. (Boettke, 1995
p. 27; emphasis in original)3
Mises makes explicit mention of the ontological foundations of his
conception of methodological individualism: "it is always single individuals
who say We; even if they say it in chorus, it yet remains an utterance
of single individuals" (1949, p. 44). To paraphrase Jon Elster, one cannot
presuppose a purpose without identifying a person whose purpose we are
presupposing! But what is the basis for this concept of reality
As previously mentioned, both defences and critiques of methodological
individualism have been based on an assumption of shared methods
across scientific disciplines. Yet Frank Knight was just one of the broad
stream of economists influenced by the Austrians to argue that the social
sciences and the natural sciences are fundamentally distinct. We possess
so-called "knowledge from within" about economic activity; not through
observation, but through intuition - the intuition we possess as economic
actors. Economjc propositions are derived from our unique capacity for
self-awareness, coupled with an empathy that can relate that knowledge
to our fellow human beings. For Max Weber the concept of action was
important because of our interpretative access that creates an ability to
comprehend the underlying motives of other people. The fact that we can
appreciate the intentions and plans of others (and thus "fuse horizons"
with our subject matter) provides a source of knowledge entirely lacking
within the natural sciences. In alignment with the likes of John Watkins,
we - as individuals - have "direct access" to facts about individuals,
whereas any knowledge we might possess about social wholes must merely
be derivative (Udehn, 2002, p. 489).
According to Martin Hollis, rationalism provides an epistemological
unity of mankind and thus the possibility of univ~rsal beliefs (1994).
As Vincent Ostrom says, "We, as individuals, use our own resources as
human beings to attempt to understand others, presuming as Hobbes
did that there is a basic similitude of thoughts and passions characteristic
of all mankind" (1997, p. 105). Therefore, Hodgson (2007) is quite
correct to argue that methodological individualism isn't simply a neutral