Methodological Individualism

Austrian methodological individualism 123scarce means which have alternative uses’ ([1932] 1935: 17). It may be addedthat, 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 ofeconomics, or at least half of it. Robbins did not follow most of the Austriansand Frank Knight in conceiving of economics as a theory of exchange, or catallactics.Without this limitation, economics becomes a general theory of humanaction applicable to various social phenomena other than market exchange.Robbins was thus a precursor of theoretical economic imperialism, and alsomade some suggestions in this direction: ‘There is an important sense in whichthe subject-matter of political science can be conceived to come within the scopeof 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 itsdependence on psychological hedonism and turn it into a theory of rationalchoice. Economics does not in any way indulge in speculation about the psychological‘causes’ of human action. It takes people’s motives and wants as givenand treats them as data in its own theories. The psychological content ofeconomics boils down to two simple assumptions: (1) ‘that individuals canarrange their preferences in an order, and in fact do so’ (pp. 78f); and (2) ‘thateach final choice is consistent with every other, in the sense that if I prefer A to Band 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 ofthe possibility of interpersonal comparisons of utility. ‘There is no means oftesting 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 significanceof such a concept is as part of ethical theory, which must be clearlydistinguished from the positive theory of economics. ‘It is simply the accidentaldeposit 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 andSignificance of Economic Science (1932) and Gunnar Myrdal’s The Political Element inthe Development of Economic Theory (1929), even though they came to differentconclusions and Myrdal, eventually, took off in another direction. 36 Myrdal waseven more critical, than Robbins, of the dependence of early Britishmarginalism on utilitarian psychological hedonism and on the idea of ‘socialvalue’, or ‘social utility’, as a sum of the utilities of individuals. Such addition ofindividual utilities is only possible by the scientifically illicit procedure ofcomparing the utilities of different individuals.The utilitarian economists were individualists, but they were also radicals andsocial reformers. As such they had a strong inclination to develop their doctrinein a politically relevant direction. By adding the utilities of all members of