Although the term methodological individualism was coined by the economist and historian Joseph Schumpeter, he was not the first to identify this methodological device and principle of explanation in the social sciences. For example, prior to Schumpeter, the sociologist Max Weber referred to the individualistic method, and the intellectual historian Élie Halévy wrote of an individualistic hypothesis, which he defined as a “principle of explanation,” in which the individual human being serves as the basic unit of analysis in the social sciences.
According to Ludwig von Mises, methodological individualism views “all actions [as] performed by individuals”—or, in the words of Karl Popper, that social phenomena “should always be understood as resulting from the decisions, actions, attitudes, etc., of human individuals, and that we should never be satisfied by an explanation in terms of so‐called ‘collectives’ (states, nations, races, etc.).”
Methodological individualism does not claim that only the individual human being is real or that social phenomena do not exist. It simply holds that the individual human being alone is able to think, feel, and act. We can impute actions, purposes, and values only to individuals; when we apply these terms to society, we enter the domain of metaphor. But this does not mean that society cannot be said to exist in some fashion. Many things exist that neither think nor act nor feel.
Methodological individualism should not be confused with social nominalism. Nominalism is the doctrine that society and social phenomena exist in name only—that they are literally fictions (as Jeremy Bentham called them) that cannot be said to exist apart from individuals and their actions.
The writings of Herbert Spencer point up the differences between social nominalism and methodological individualism. To the question, is society “but a collective name for a number of individuals” whose existence is “merely verbal?” he replied, “no.” He regarded society as an “entity” with identifiable properties. Although Spencer was clearly a methodological individualist, this notion did not prevent him from maintaining that society is real in some sense. According to Spencer, society is a system of individual relationships. Institutions are recurring patterns of interaction with definite characteristics that can be identified and studied by the sociologist, apart from their concrete manifestations in particular cases. Social institutions are “real” in the sense that they reveal themselves to human consciousness as objective features of the external world. It is this objectivity that makes sociology and other social sciences possible.
Methodological individualism is typically contrasted with social holism, according to which social institutions are unique wholes that cannot be reduced to, that is, cannot be completely explained in terms of, the actions, beliefs, values, and so forth of individuals. Holism, according to a popular if somewhat loose definition, is the doctrine that a social whole is “more” than the sum of its individual parts—or, alternatively, that the whole is in some sense logically prior to the individuals that comprise it.
Holists have often compared social phenomena to the emergent properties of a chemical reaction. According to this argument from analogy, individual human beings are “atoms” that, when combined in a particular manner through interaction, produce social “molecules” (institutions) with new and unique characteristics.
In criticizing this view, which he dubbed “the chemical method,” John Stuart Mill wrote: “Human beings in society have no properties but those which are derived from, and may be resolved into, the laws of the nature of individual man.” However, Mill has been criticized by other methodological individualists for his defense of psychologism, which is the label given by Karl Popper to the view that all social phenomena can be explained in terms of the intentions, purposes, and motives of individual human beings.
Although psychologism rightly insists that we must reduce the actions and behavior of collective entities to the actions and behavior of individuals, it erroneously maintains that such explanations must be psychological (i.e., that they must ultimately refer to the conscious states and dispositions of acting agents). According to Popper, Hayek, and other methodological individualists, this error is serious because many social institutions were not consciously designed, but instead are the unintended consequences of human action.
Hence, Mill’s psychologism, although a species of methodological individualism, is but one variation of this approach. According to its critics, many of whom are methodological individualists, psychologism fails to take into account the many social institutions, such as money and language, that have developed spontaneously without conscious planning or foresight. To say that all institutions are the result of individual actions is not to say that these institutions are the product of deliberate planning or design. As Adam Ferguson put it in his book An Essay on the History of Civil Society (1767), many social institutions “are indeed the result of human action, but not the execution of any human design.”
We are largely indebted to Adam Ferguson, David Hume, Adam Smith, John Millar, and other luminaries of the Scottish Enlightenment for our understanding of unintended consequences and their role in the development of spontaneous, unplanned social institutions. It is scarcely coincidental that these sociological pioneers were methodological individualists. None would have seriously entertained the notion that social phenomena are reducible to anything more than the actions of individuals and their recurring relationships.
Modern social theory arose with the desire to explain the origin and development of undesigned institutions. In 1882, Carl Menger phrased “the most noteworthy problem of the social sciences” as follows: “How can it be that institutions which serve the common welfare and are extremely significant for its development come into being without a common will directed toward establishing them?”
Karl Popper has noted that an “action which proceeds precisely according to intention does not create a problem for social science.” In a similar vein, in The Counter‐Revolution of Science, F. A. Hayek has argued that modern social theory grew from a desire to explain the origin and development of undesigned institutions: “It is only insofar as some sort of order arises as a result of individual action but without being designed by any individual that a problem is raised which demands a theoretical explanation.”
The significance of the theory of spontaneous order for methodological individualism is that it offers a third alternative to the extremes of psychologism and holism. The methodological individualist can readily concede that some social institutions result from something more than individual actions—if by this we mean the intended outcome of such actions. We also may speak of institutions as possessing emergent properties—if by this we mean properties that emerged spontaneously, apart from the intentions or plans of individual actors.
It must be emphasized that methodological individualism is not a libertarian theory per se. It is simply a method of investigation in the social sciences. Although almost all ethical and political individualists have embraced methodological individualism, it also has been employed by philosophers and social theorists with different moral and political beliefs. Methodological individualism, however, is far more consistent with the economic, sociological, and political foundations of libertarianism than with any other social philosophy.
In modern sociology, the most influential proponents of methodological individualism have been Max Weber, Georg Simmel, Alfred Schütz, and other proponents of the interpretive and phenomenological schools of social theory. It also has been widely employed by modern economists, including Austrians such as F. A. Hayek and Ludwig von Mises, members of the Chicago School such as Frank Knight and Milton Friedman, and pioneers in Public Choice theory such as James Buchanan. Last, methodological individualism has been vigorously defended by Karl Popper and his followers, most notably J. W. N. Watkins.
Hamowy, Ronald. The Scottish Enlightenment and the Theory of Spontaneous Order. Carbondale and Edwardsville: University of Southern Illinois Press, 1987.
Hayek, Friedrich. The Counter‐Revolution of Science: Studies on the Abuse of Reason. Indianapolis, IN: Liberty Fund, 1980.
Menger, Carl. Investigations in the Method of the Social Sciences with Special Reference to Economics. New York: New York University Press, 1985.
Popper, Karl. The Open Society and Its Enemies. 2 vols. New York: Routledge, 2003.
Spencer, Herbert. Social Statics. Whitefish, MT: Kessinger, 2007.
Weber, Max. Economy and Society: An Outline of Interpretive Sociology. 2 vols. Los Angeles: University of California Press,1978.