Choice and the market

There is no clear point at which methodological individualism gives way to substantive individualism – when arguments framed in terms of people who act as if they are individuals give way to arguments that people really do act as individuals, and have to be responded to on that basis. Much of the methodology considered up to this point is prescriptive: it identifies not so much what people do, as what they would need to do in order to achieve certain effects. However, those prescriptions are often overlain with a further substantive assumption – the conviction that an individualist analysis tells us something about the way that people behave, and that it can be used in practice to develop policies with predictable outcomes. Taken together, the two positions establish the rationale for an increasingly wide range of public policies. The central principle, which I will leave until last, is the view that policy has to be individualised – conceived, designed and implemented in a way that responds to everyone according to their individual circumstances. This is often translated in practice, however, into a much narrower set of propositions: that

• • individual choice is realised most effectively through economic markets;

• • markets work most effectively if they are left alone;

• • the price mechanism is the best way to allocate scarce resources;

• • in circumstances where people cannot exercise choice through a conventional market, the best options will still be those which mirror market processes best.

Markets are held to emerge through the expression of individual choices – we use the word ‘market’ to describe the accumulated actions of producers and consumers. They are also the mechanism through which choice is expressed.