Methodological Individualism

12 Backgroundthe last sixpence, the sum covenanted for? What have I to do with themmore?’ – Verily Mammon worship is a melancholy creed.(Carlyle [1843] 1965: 148f)Carlyle was a conservative, but he was cited with approval by Marx andEngels 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, socialistcritique of captalism in the nineteenth century. This is even more obvious in thewritings of John Ruskin (1819–1900), who was also a conservative, but exerted astrong influence on the guild socialists. Ruskin took a more scholarly approach toeconomics than did Carlyle, and made a detailed, if not very pertinent, critiqueof 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 principlesof the organisation of labour and of the distribution of its fruits. Politicaleconomy, therefore, ought to be a moral science, rather than a catallactics, ortheory of exchange (Ruskin, 1857–62). 4In the critique of political economy by Carlyle and Ruskin are mixed theoretical,political and moral considerations. Economics is both theoretically andmorally individualistic and by moral individualism, is understood self-interest.This is typical of the nineteenth century. Usually, no distinction was madebetween theoretical and methodological considerations on the one hand, andpolitical, economic and moral considerations on the other hand (cf. Sowell,1974: ch. 1 and Vanberg, 1975: ch. 1). As we shall see, the term ‘methodologicalindividualism’ was introduced to make the distinction between methodologicaland political individualism. 5The view that classical economics was individualistic is not a story made upby its critics, however. As we have already seen, it is common among defenders ofmethodological individualism to trace the origin of this doctrine to the ScottishEnlightenment and this tradition included Adam Smith, the acknowledgedfounder of classical economics and, therefore, the father of economic science.But were Adam Smith and the other classical economists methodologicalindividualists? There is no clear answer to this question, for several reasons. Firstof all, the classical economists, before John Stuart Mill, did not engage verymuch in methodological discussion and not at all systematically (Sowell, 1974:112). By the time of John Stuart Mill, however, classical economics had becomeindividualistic. Smith, however, was not a radical individualist, like Mill, and itwas only later that his model of the market as a spontaneous order was turnedinto a paradigm of strong methodological individualism. In the theory ofgeneral equilibrium, first suggested by Walras and more recently developed byArrow and Debreu (among others), we find an economic theory without anysocial institutions.The individualism of classical economics was more political and economicthan theoretical and methodological. The classical economists favoured a freemarket with limited government, but their view of society was not radically individualisticand they did not advocate an individualistic methodology. Their