Methodological individualism

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Methodological individualism is the theory that social and economic phenomena can be explained by reference to the actions of individuals rather than groups or collectives. Based on this theory groups and collectives are not entities which can act in and of themselves but only through the action of the individual members of which they are composed. Methodological individualism is one of the core concepts of the Austrian School of Economics, and while the term was coined by the Viennese economist Joseph Schumpeter,[1] the idea was developed earlier by the founder of the school Carl Menger. Menger's formulation of this position is revealed by a quote of his published in 1889: "There is no economic phenomenon that does not ultimately find its origin and measure in the economically acting human and his economic deliberations".[2] The development of this idea by Menger in the late 19th century was in direct contrast to the dominant theories of the German economists of the day, who at the time considered institutions such as "the people", "the economy", and "the nation" to be entities in their own right whose actions were influenced by factors over and above the action of individuals.[3] Methodological individualism on the other hand does not deny the outright existence of collectives such as nations, economies, or classes, rather just denies that the action of such entities can be explained by anything other then the actions of their individual members.


Methodological individualism is sometimes abused to say, in responses to suggestions that the libertarian movement should take a certain action, "The problem is that what is good for 'the movement' is irrelevant because we are individuals making decisions. We do not work as a unit or hive mind. So while 'the movement' might achieve change in the ways you suggest, it does not indicate what individuals should or could do." This is fallacious reasoning (specifically, the fallacy of misplaced concreteness) because to say that "the movement should do x" is the same as saying "the individuals in the movement should do y." Or, given that there is usually a division of labor, it is like saying, "Individual A should y; individual B should do z; etc."

Such phraseology as "the movement should do x" is just a shorthand. Obviously, movements act by means of their individuals taking certain actions;[4] this is common knowledge, so it should not be necessary to state it the long way. As long as the shorthand does not lead to fallacious thinking, its use is okay.

There is no hive mind, but we are not totally uninfluenced by one another's actions either. Libertarians (e.g. Mises,[5] Rothbard[6]) have often pointed out that the masses do not think and analyze all that much, but mostly rely on intellectuals to think for them. However, there are a lot of intellectuals out there with competing theories about what are the best policies and strategies, and the masses pick whichever ideas sound like they will further their interests the most. In some cases, these ideas have been revolutionary ideas that led to successful revolutions.


  1. Schulak EM and Unterkofler H. "The Austrian School of Economics A History of Ideas, Ambassadors and Institutions", 2011, page 15.
  2. Menger Carl, "Nationalökonomische Literaturin Österreich", 1889, page 2-4
  3. Schulak EM and Unterkofler H. "The Austrian School of Economics A History of Ideas, Ambassadors and Institutions", 2011, page 15.
  4. Mises, Ludwig von. "I and We". Human Action. "The We cannot act otherwise than each of them acting on his own behalf. They can either all act together in accord; or one of them may act for them all. In the latter case the cooperation of the others consists in their bringing about the situation which makes one man's action effective for them too. Only in this sense does the officer of a social entity act for the whole; the individual members of the collective body either cause or allow a single man's action to concern them too." 
  5. Mises, Ludwig von. "The Individual and Changing Features of Human Action". Human Action. "Common man does not speculate about the great problems. With regard to them he relies upon other people's authority, he behaves as "every decent fellow must behave," he is like a sheep in the herd. It is precisely this intellectual inertia that characterizes a man as a common man. Yet the common man does choose. He chooses to adopt traditional patterns or patterns adopted by other people because he is convinced that this procedure is best fitted to achieve his own welfare. And he is ready to change his ideology and consequently his mode of action whenever he becomes convinced that this would better serve his own interests." 
  6. "Resistance to Liberty". For a New Liberty. "In all societies, public opinion is determined by the intellectual classes, the opinion moulders of society. For most people neither originate nor disseminate ideas and concepts; on the contrary, they tend to adopt those ideas promulgated by the professional intellectual classes, the professional dealers in ideas."