A Reconsideration of Economic Individuality and Its Potential Application

ABSTRACT: Since the marginal revolution, the mainstream of economic theories has a methodological turn, changing its focus from social groups/classes to individuals and re-establishing the foundation of economic analysis on utilitarianism. The notion of “individual” in mainstream economics has been clearly defined as homo economicus, i.e. one self-interested human being, who acts to maximize its utility. After neo-classical economics became the dominant school in economic research, the analyses based on social groups or classes are considered to be heterodox. Thus, the methodology used by classical economists, including Smith, Ricardo, and Malthus, is regarded as lack of analytical rigorousness. Many economists believe that analyses based on social groups or industrial sectors should deepen their analyses and formulate their models on the so-called microfoundations.

This paper argues that the atomist individual conception in neo-classicaleconomics does not capture the essence of individuality, or etymologically the state of indivisible, because the neo-classical view ignores the social formation of individuality. If the economic individuality can be reconsidered and redefined in a broader sense, the communication between neo-classical economics and other social sciences may be improved. Individuation, or distinguishing one individual from others, has long been discussed in philosophy. By reviewing the philosophical tradition and empirical psychological studies, this paper adopts the concept of individuality developed by Benedict Spinoza in his Ethics, which argues that individuality can be conceptualized in terms of cohesive motions. Thus, not only home economicus but also a group of people can be analyzed as an individual, as long as the people in the group share some tendency to act in the same direction or in the similar way. For example, when researchers refer to “the middleclass”, they are discussing a group of people with somehow similarity in their behaviors. For the analytical purpose, “the middle class” can be considered as an individual. Furthermore, non-human objects, including social institutions such as laws, also can be viewed as individuals, when they exhibit confronting motion tendency against human individuals.

Re-conceptualizing individuality has some benefits: (1) Encourage economists to rethink about microfoundations. Recent empirical research in some areas of economic studies, such as behavioral economics, experimental economics, neuroeconomics, and evolutionary economics hasquestioned the traditional atomist individual conception. The philosophical discussion in this paper argues that economists do not always have to build their models on atomist individual. Instead, the concepts of sub-personal and supra-personal individuals may help economists to understand and utilize theories from other social sciences. (2) Encourage economists to understand behavioral patterns of non-human individuals, such as social institutions. The method of conceptualizing individual by motion does not limit to humans. By showing how atomistic individuals constructing a higher level individuality, this paper may enlighten economists to analyze non-human individuals by economic methods. (3) Encourage economists to explore encounters among individuals.

Although game theory is the dominant theory describing interactions among individuals in economics, it is incapable to show the complexity of interactions. Encounter, which has been frequently discussed postmodernism, can be introduced into economic analysis to describe the confrontation between individuals.