Methodological Individualism

Psychologism in early social science 55neoclassical economists, at least in the long run, but he was not altogetherorthodox in his outlook. Marshall was less prone than other neoclassicaleconomists to engage in abstraction and insisted that economics is about realmen and women as members of society and not about an abstract economicman acting in splendid isolation (Marshall [1890] 1920: 12–23). More than otherneoclassical economists, Marshall took an interest in the German HistoricalSchool 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 Marshallrejected 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, ororganicist, rather than as individualistic (pp. 20f, 637). 14 Unlike the other Britishmarginalists, he also advocated a development of economic theory in a moreevolutionary direction (Foster, 1993).Marshall wished to play down the break with classical economics and accusedJevons for exaggerating discontinuity between classical and marginalisteconomics. He denied that value is altogether determined by utility and not at allby cost of production. ‘We might as reasonably dispute whether it is the upper orthe under blade of a pair of scissors that cuts a piece of paper, as whether valueis governed by utility or cost of production’ (Marshall [1890] 1920: 290). He alsorejected Jevons’s claim that the theory of consumption is the scientific basis ofeconomics. 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 themselvesin the use of money for their satisfaction. The existence of the measuringrod of money is the basis of economics as a science and the reason for its superiorityto the other social sciences. Marshall, then, might be seen as a progenitor ofthe idea of starting from revealed preferences, rather than from the psychologicalbasis of choice.Economics, then, is a science of action and of choice as manifested in the useof money on the market. But this does not mean that Marshall conceives of allaction as the result of deliberate choice.When we speak of the measurement of desire by the action to which itforms the incentive, it is not to be supposed that we assume every action tobe deliberate, and the outcome of calculation. For in this, as in every otherrespect, economics takes man just as he is in ordinary life: and in ordinarylife people do not weigh beforehand the results of every action, whether theimpulses 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 andcustom, but he also suggests that most customs have been adopted and survivebecause 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 historicaldevelopment from a society dominated by custom, to a society increasinglydominated by deliberate choice (Marshall [1890] 1920: 1–11, 602–23). A