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The Impossibility of a Complete Methodological Individualist: Reduction When Knowledge Is Imperfect

  • David M. Levy (a1)

F. A. Hayek is uniquely responsible for his fellow economists grasping the importance of the decentralization of knowledge: as Hayek shows in his pathbreaking “The Use of Knowledge in Society,” knowledge nowhere exists as a coherent whole and to pretend otherwise is a most serious error. Hayek also shares responsibility for the popularity of a strong form of the methodological individualist research program which asserts that since collectives as such have no impact on the choices of individuals, investigators ought to purge any reliance on collectives from our analysis.

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1. Hayek F. A., Individualism and Economic Order, Chicago, 1948.

2. Hayek F. A., Prices and Production, London, 1935, p. 4: “… [we ought not to] try to establish direct causal connections between the total quantity of money, the general level of all prices and, perhaps, also the total amount of production. 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 nonmonetary economic theory are based. It is to this ‘individualistic’ method that we owe whatever understanding of economic phenomena we possess …” One would presume that Hayek's quotation marks acknowledge an older literature. Cf. Vanberg Vicktor, Die Zwei Soziologien, Tubingen, 1975, who finds that Joseph Schumpeter coined the phrase and used it as the title of a 1908 article.

3. Hayek F. A., The Counter-Revolution of Science, Indianapolis, 1979, p. 64. Also, ibid., p. 95.

4. Dray W. H., “Holism and Individualism in History and Social Science,” The Encyclopedia of Philosophy, edited by Edwards Paul, New York, 1967, volume 4, pp. 5358 considers the claim that only individuals “really exist” an ontological claim which he finds denied by no one. I owe this reference to Buchanan.

5. My point is related to a very old consideration which Vanberg recalled to my attention. Even if we (as scientists) have very little warrant to assert that the Devil exists, we cannot a priori deny the reality of belief about the Devil. If beliefs and knowledge are important to explain choice, it is probably a good idea to take them as they are, not as they would be if we were allowed to replace the strange terms with those with which we are more familiar. While the Devil may not exist, “the Devil” certainly does.

Rowley points out that more recently Hayek has been criticizing such terms as “social justice” on the grounds that no one knows what they mean in some contexts. This will be discussed a little later.

6. Hayek , Prices and Production, pp. 45: “In fact, neither aggregates nor averages do act upon one another, and it will never be possible to establish necessary connections of cause and effect between them as we can between individual phenomena, individual prices, etc. I would even go so far as to assert that, from the very nature of economic theory, averages can never form a link in its reasoning …” Hayek repeats his views on economic aggregates in Counter-Revolution, pp. 109–10: “Most of the economic statistics which we ordinarily meet, such as trade statistics, figures about price changes, and most ‘time series,’ or statistics of the ‘national income,’ are not data to which the technique appropriate to the investigation of mass phenomena can be applied.”

7. If I read Dray's essay “Holism” correctly, this “reductionist” thesis is the weakest of the theses of methodological individualism in controversy: that is, methodological collectivists deny that establishing this “reductionist” thesis will establish the less obvious assertions which some methodological individualists make. Obviously, if the least restrictive thesis can be refuted, considerable doubt will be cast upon the more debatable claims.

8. See Quine W. V. O., From a Logical Point of View, 2nd edition, New York, 1961, pp. 21, 150–51 and in Word and Object, Cambridge, 1960. pp. 141–51 in terms of “referential opacity.” Chisholm Roderick M., Perceiving: A Philosophical Study, Ithaca, 1957, p. 171 describes the “third mark” of intentionality this way: “We can now say of certain cognitive sentences — sentences using ‘know,’ ‘see,’ ‘perceive,’ and the like in one of the ways which have interested us here — that they, too, are intentional. Most of us knew in 1944 that Eisenhower was the one in command; but although he was the man who was to succeed Truman, it is not true that we knew in 1944 that the man who was to succeed Truman was the one in command.” [I have removed Chisholm's parathentical notational marks.]

9. Aristotle, Politics, trans. H. Rackham, I.i.11–12: “Thus also the city-state is prior in nature to the household and to each of us individually. For the whole must necessarily be prior to the part… if each individual when separate is not self-sufficient, he must be related to the whole state as other parts are to their whole …”

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Economics & Philosophy
  • ISSN: 0266-2671
  • EISSN: 1474-0028
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