GEOFFREY BRENNAN

RSSS, I.A.S.

AUSTRALIAN NATIONAL UNIVERSITY

CANBERRA, ACT 0200

July 1999

"(1) For constitutional economics, the foundational position is summarized in methodological individualism. (2) Unless those who would be participants in the scientific dialogue are willing to locate the exercise in the choice calculus of individuals, qua individuals, there can be no departure from the starting gate. (3) The autonomous individual is a sine qua non for any initiation of serious inquiry in the research program. (4) Individual autonomy, as a defining quality, does not, however, imply that the individual chooses and acts as if he or she exists in isolation from and apart from the community or communities of other persons with whom he or she may be variously associated. (5) Any form of community or association of individuals may reflect some sharing of values, and, further, any individual's formation of values may be influenced by the values of those with whom he or she is variously associated in communities. (6)The communitarian challenge to methodological individualism must go beyond the claim that individuals influence one another reciprocally through presence in communities. (7) The challenge must make the stronger claim that individuation, the separation of the individual from community is not conceptually possible, that it becomes meaningless to think of potential divergence between and among individual interests in a community. (8) Stated in this way, it is evident that methodological individualism, as a presupposition of inquiry, characterizes almost all research programs in economics and political science; constitutional economics does not depart from its more inclusive disciplinary bases in this respect.

The communitarian critique does not often appear in such blatant guise. For constitutional economics, in particular, the critique apparently leaves the individualistic postulates unchallenged, while either implicitly or explicitly asserting the existence of some supraindividualistic source of evaluation. Individual evaluations are superseded by those emergent from God, natural law, right reason, or the state. This more subtle stance rejects methodological individualism, not on the claim that individuation is impossible, or that individual evaluations may not differ within a community, but rather on the claim that it is normatively improper to derive collective action from individual evaluations. To the communitarian who posits the existence of some supraindividualistic value scale, the whole analysis that builds on a base of an individualistic calculus can only be useful as an input in schemes of control and manipulation designed to align individualised preferences with those orderings dictated by the overarching norms for the community."

James Buchanan 'The Domain of Constitutional Economics' Constitutional Political Economy Vol I No.1 (1990) p13-14.

In this extended quotation, Buchanan sets out the central elements of one of the hard-core features of ‘constitutional economics’, as he would identify that enterprise. The element in question is, of course, methodological individualism. My object in this brief paper is to elaborate and, I hope, clarify Buchanan's observations. I do so because, like him, I see methodological individualism as a core attribute of the economic way of thinking. And further, because it is an attribute that is often misunderstood or misinterpreted -- both by critics and (occasionally) practitioners of the ‘economic approach’. It is notable, for example, that while methodological individualism is regarded as de rigueur in economics and in constitutional economics specifically [so much so indeed, that without it, as Buchanan states in the second sentence of the epigraph "there can be no departure from the starting gate"] methodological individualism is equally regarded as total anathema in sociology and much sociologically informed political theory. Without wanting to diminish the significance of the differences in approach that these two broad traditions of analysis exhibit, it seems to me unlikely that disagreements over the propriety of methodological individualism are solely attributable to such differences: terminological confusion seems likely to play an important role. In other words, there may be rather less here in the way of genuine disagreement - and rather more of talking at cross-purposes. For that reason, some attempt at clarification seems called for. Here, I shall use the Buchanan quotation as a framework for this attempt.

In doing so, I recognize that the particular statement contained in the epigraph is by no means the only one Buchanan has offered on the question of methodological individualism and that the quibbles that I have about aspects of this particular statement may be regarded as slightly ‘unfair’ to Buchanan. My defence is two-fold: first that the statement provided purports to be a synthetic account of what methodological individualism entails, and is therefore brief and to the point; and second, that my interest here is not to evaluate Buchanan's account so much as to elaborate it. There can, I think, be little suspicion that, on this topic at least, my views and Buchanan's are very much in sympathy.

" Individual autonomyÖ.does not imply that the individual chooses and acts as ifÖ in isolation fromÖ.communities of other persons." (Epigraph, sentence 4)

Critics of methodological individualism are often inclined to point the economic approach as radically asocial. It therefore needs to be stated categorically that economics is a method of social analysis: the various applications of the economic method to the study of political processes and institutions are ineluctably 'social'. Sometimes it may seem otherwise. The exposition of rationality that economics offers, for example, is often conducted as if it dealt with Crusoe on his island (totally in isolation from Friday). The exposition in question focuses specifically on Crusoe’s calculus in deciding among his various possible activities (swimming to the shipwreck; fishing; coconut gathering; constructing tools and so on). And an elaborate account of this calculus may occupy a significant chunk (as Buchanan is inclined to argue, an excessive chunk) of the standard introductory ‘economic principles’ course. But, properly conceived, this account of rationality is only a piece of the specifically social analysis that is to follow - social analysis that is concerned with the many such "Crusoes" all interacting within the context of market institutions, and constructing thereby the network of interpersonal relations -- of specialisation, exchange and mutual accommodation -- that constitute the economic order. Perhaps it takes the typical economics-principles course too long to get to the point. Perhaps that course should begin with Reid's essay on the pencil, or Richard Scarry's children's book 'What Do People Do All Day?' or better still, the first few chapters of 'The Wealth of Nations'. Maybe the ideal course would begin with ‘exchange’ - and we should go on to elaborate the theory of demand and supply as elements of an analytically more sophisticated version of the exchange story. Perhaps some students might mistakenly come to think of the economy as a kind of Crusoe writ large - with the central problem being one of ‘allocating’ the ‘economy's resources’ to various activities, just as Crusoe does.

Doing so would certainly make it more likely that more students will "get the point. That is, they will come to see that social interdependence is the very essence of the picture of social phenomena (including the economy) that economics offers. Within that picture, all that "individual autonomy" is taken to mean is the idea that each individual controls her own actions - so that the actions of any individual agent, A, are not controlled by the intentions of some other entity’s (B’s) state of mind - whether B is some other individual, some group or some exogenous social force). The set of autonomous individuals, so understood, interact in social relations (including narrowly economic ones) in such a way that the actions of each are influence by the actions of all others. Precisely how they interact, the nature of their mutual influence, is the essential subject-matter of economics - or, at the very least, is an essential element in that subject-matter. None of the "autonomous" agents in any interesting economic setting is entirely independent of the actions of others.

It is useful here to distinguish between two possible mechanisms of interdependence - one form that operates broadly via the medium of prices; the other that operates via direct psychological influence. The former is the interdependence that is exemplified in the complex intersections of the market-place; the latter we might think of as arising via mechanisms like direct persuasion/argument, peer pressure and the like, which have traditionally been the province of the social psychologist. A neat way to distinguish the two forms of social interaction is by reference to a distinction, familiar in the economist's lexicon, between behaviour/action on the one hand and preference/motivation on the other. It is of the essence that, in the kind of interaction familiar to economists, agents can alter their actions without any change in preferences. That kind of action-adjustment is characteristic of price-response, and is the central feature of market exchange. I say to you: I shall do X if you do Y; and if the contract is agreed and the performance requirements are satisfied, I do do X, and you do do Y, without any change in the preferences of either party. To say this, is merely to rehearse a familiar Buchanan theme. And it is a further Buchanan theme that the range of such mutually satisfactory behavioural adjustments extends much more broadly than the formal market-place. Within many well-functioning marriages, for example, exchanges (typically implicit) of a similar kind go on: reciprocation is the oil of many social relationships which,.in the absence of such lubrication, would cease to function. Hence, the exchange-based 'sociology' of George Homans and Jim Coleman - to say nothing of the 'public choice' political theory of constitutional economics.

I have laboured the point here to some extent because, the way in which Buchanan juxtaposes the fourth and fifth sentences of the epigraph might be seen to suggest that "isolation from the community" is to be understood solely by reference to the absence of motivational influences. Whatever Buchanan exactly had in mind when writing, it would be more faithful to the Buchanan intellectual scheme as I understand it, to********************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************************s"