Methodology and policy prescription in economic thought: response to Mario Bunge. Parte 1

1

 

This paper is a response to Mario Bunge (2000) ‘Systemism: the alternative to individualism and holism’.  Bunge’s article makes a number of telling points and is evidence of a growing discomfort with the reductionism of the neoclassical school currently hegemonic within the discipline of economics.  The present paper is in agreement with much of the substance of Bunge’s article, seeking to correct and develop the line of thought he sets out.

 

Bunge’s thesis is, firstly, that there are three fundamental research approaches in the social sciences: the two most influential, individualism and holism, being fatally flawed, with only the minority approach of systemism offering a viable way forward.  Secondly, the relation between the three methodological approaches is mirrored by that between the three corresponding policy prescriptions associated with them: methodological individualism being associated with a policy individualism blind to social values, methodological holism with a policy centralism devoid of respect for the individual, and systemism with a mild form of intervention respectful of both individual and social values. 

 

I suggest in this paper that the relation between policy prescription and philosophical standpoint in political economy is more complex than Bunge implies.  In particular, there is more than one possible methodological underpinning for laissez-faire.  As well as writers such as Friedman and Lucas who fit Bunge’s pattern, more sophisticated proponents of laissez-faire, such as Smith and Hayek, base their policy prescription in a methodology quite divergent from the individualism Bunge describes. 

 

2

 

As the title of Bunge’s article implies, the two methodological approaches at the extremes of the continuum he describes are individualism and holism.  They are inadequate, he argues, because each manages to avoid the other’s error only by committing an opposite error of its own.  For Bunge, ‘holism’ is inadequate ‘because there are no relations without relata’; and ‘individualism’ so ‘because all individuals are interrelated’(147[1]): 

 

“Neither of the two most influential approaches to the study and management of social affairs is completely adequate … individualism is deficient because it underrates or even overlooks the bonds among people, and holism, because it plays down or even enslaves individual action.  By contrast, systemism makes room for both agency and structure.” (156‑157) 

Systemism, Bunge suggests, manages to synthesise the other two approaches, accepting the criticism each makes of the other.  Apart from being defined negatively with respect to individualism and holism, systemism is characterised by viewing the world from a systems perspective: ‘everything is either a system or a component of a system and every system has peculiar (emergent) properties that its components lack’ (147). 

 

Bunge thus rejects holism as ignoring the fact that the relations, of which our systems of relations consist, depend fundamentally upon the material properties of the relata, the substrate-level entities which are doing the relating.  But in doing so he is implicitly defining an anti-holist, or at least non-holist approach, which is shared by both individualism and systemism.  It is also the case that Bunge criticises individualism for failing to take into consideration the relationships between agents, and the emergence of properties at the macro, or system level.  But, again, in doing so he implicitly defines a non-individualist approach shared by both systemism and holism.  Bunge’s systemism thus lies at the intersection of the non-holistic and non-individualistic approaches.  It is the latter contrast, between individualist and non-individualist methodological approaches with which the present paper is mainly concerned.

 

On the basis of this methodological analysis, Bunge proposes a corresponding typology of policy recommendations.  He takes a clear stance on the relationship between methodology and policy:  those on the right of the spectrum of policy views, those advocating laissez-faire, are more likely to appeal to individualist methodological premises, while those on the left, those adopting a more interventionist stance, are more likely to invoke holistic underpinnings for their policy pronouncements.  He speaks of the ‘obsolete individualism of … Smith … [and] the neoclassical economists’ (147); ‘the cultural policy of liberalism, which is based on individualism, is one of benign neglect.  By contrast, the totalitarian cultural policy, which is based on holism, is one of censorship’ (150-151); ‘all market worshippers espouse individualism’ (151).  ‘The radical individualists oppose all social planning in the name of individual liberties … holists swear by top-down planning … they are likely to ignore their aspirations and rights [sc those of the common people].  In either case, the powerless individual, whether forsaken or corralled, has nothing to gain’ (153).  By contrast, ‘systemism takes into account social values (ignored by individualism) as well as individual values (ignored by holism)’ (157). 

 

There is much to be said for this account.  While there may not be a tight, one-to-one relationship between methodological standpoint and policy prescription, nevertheless, there certainly are policy implications of the choice between individualism, systemism and holism.  If, for example, one were to adopt a non-individualistic approach and recognise that the unintended collective outcomes of an unplanned, uncoordinated mass of individual self-seeking actions might have far from desirable features, then the obvious implication would be to see whether there is anything that could be done about it.  The individualist approach, on the contrary, says that, assuming individuals can be counted on to optimise, to do the best they can for themselves given the constraints they face, the aggregate outcome of those individual actions will also be in some sense the best available: state intervention in the economy is nugatory.

 

These two approaches can be illustrated by reference to Maynard Keynes and Robert Lucas.  Keynes, for example, clearly advocates a non-individualist, indeed a systems approach:

 

“I have called my theory a general theory.  I mean by this that I am chiefly concerned with the behaviour of the economic system as a whole …. And I argue that important mistakes have been made through extending to the system as a whole conclusions which have been correctly arrived at in respect of a part of it taken in isolation.” (Keynes, 1973: xxxii) 

Keynes sets out very clearly here what he takes to be the distinguishing feature of the two approaches: that, on the one hand, we can derive correct conclusions from the study of microeconomic phenomena ‘taken in isolation’, but that to extend those conclusions to macroeconomic phenomena leads to error, and, on the other, that the correct approach is (what we would now call) a systems approach, aiming to examine the behaviour of ‘the economic system as a whole’. 

 

Lucas, on the contrary, is a very clear spokesman for the trend in economics which favours an individualistic methodology, arguing strongly for ‘the reincorporation of aggregative problems such as inflation and the business cycle within the general framework of ‘microeconomic’ theory’ (Lucas, 1987: 107).  It is in his view quite illegitimate to regard macro phenomena as ‘the province of some other, different kind of Economic Theory [such as] Keynesian “macroeconomics”.’  Here we have a clear expression of the desire to reduce macroeconomics to microeconomics, and a characterisation of the Keynesian approach as ‘abandonment … of the only “engine for the discovery of truth” that we have in economics.’  

 

Both these passages cited occur in contexts – a preface to the General Theory, and the concluding paragraph of Models of Business Cycles, respectively – where the authors are standing back from the detail of the theories that they are presenting, and indicating what they regard as the underlying general features of their approaches.  What they choose to highlight in both cases is their selection of a individualist or anti-individualist methodological approach. 



[1] Unqualified page numbers refer to Bunge (2000).

The Journal of Socio-Economics 32 (2), 219-226.  Andy Denis

 

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