7 Methodological individualism and invisible hands
Richard Cornuelle’s call to understand associations
In his arresting article, “New Work for Invisible Hands,” Richard Cornuelle (1991), student of Ludwig von Mises and the person who in 1965 brought the phrase “the independent sector” into our discourse with Reclaiming the American Dream, observed that the collapse of the Soviet Union confirmed “that the invisible hand of the market is a more reliable organizer of the economic life of nations than the visible hand of the state” (1991, 1). There was nothing remarkable in that observation, except that, as a student of Mises, that collapse had for decades been viewed as inevitable. What was remarkable was that Cornuelle continued by noting that, despite the theoretical sophistication of Mises and his circle that had led to that accurate prediction, there remained a “lack of a coherent, comprehensive vision of voluntary community beyond the market” (1991, 4). He rightly thought that this inability to understand properly the character of associations was a consequence of an overly “individualist emphasis, a suspicious aversion to any kind of communal activity beyond the commercial” (1991, 4). The challenge Cornuelle raised in that article was the need to understand better the character of what he called “voluntary community” – those associations about which Tocqueville had written so compellingly in Democracy in America ([1840] 2012), the tradition of which Cornuelle had sought to revive with the publication of Reclaiming the American Dream. Like Tocqueville, Cornuelle knew that associations were necessary for liberty and its preservation; but could those who had understood so well the significance of free markets both for the economic life of the nation and the liberty of the individual suspend that suspicious aversion and tackle the “unsettled questions” of the “less familiar territory” of the character of associations beyond the commercial firm?
A theory of community, whether natural (where membership is dependent upon recognition of the primacy of the primordial criteria of birth or location) or voluntary, involves numerous complications. There is the analytical tradition of the conceptual and historical dichotomy between the earlier, tradition-bound, local, face-to-face community (Gemeinschaft) of individuals with putatively little individuality and the modern, territorially extensive society (Gesellschaft) of individuals putatively exclusively pursuing their self-interest. Whether or not this still influential dichotomy, initially formulated in 1887 by Ferdinand Tönnies (2001), is theoretically antiquated and, thus, heuristically of questionable use, is one of the problems circling around the various chapters of this book. This kind of bifurcation appears to leave little place for modern associational life. The related problems of how one is to understand what Cornuelle referred to as that overly “individualist emphasis” in the analysis of human action, the very terms “individual” and “interests,” and the character of spontaneous orders beyond that of the market place, for example, language groups, the “republic of science” as described by Michael Polanyi (1962, [1951] 1998), and perhaps even nations (as distinct from national states) quickly come to the fore. Once they do, that vexing theoretical postulate of human action, methodological individualism, surfaces as a problem.
Human action is the action and reaction of individuals; thus the analysis of any social relation must begin with the individual – hence the principle of methodological individualism (Schumpeter 1909; Arrow 1994; see Hodgson 2007). This does not necessarily mean, however, as a recent analyst of this long acknowledged problem rightly observed (Davis 2002), that the motivation for action is entirely a product of, and confined to, the mind of the individual. Of course, we know that the actions of individuals are often coordinated, markets being one obvious example. However, the problem before us comes into greater focus when we concern ourselves not only when individuals act in response to one another in the buying and selling of goods and services, but also when they act “in concert with” one another. How are we to understand this kind of coordination, expressed by the ubiquitous use of the pronoun “we” (Davis 2002; Shils 2006)? Can concerted action be adequately accounted for if we adopt an overly “individualist emphasis,” that is, by an assumption that the orientation of the mind of the individual is solely a consequence of the individual’s pursuit of only his or her advantage? Is there an ambiguity of our understanding of “advantage” or “interest” that has to be clarified if the variety of human actions (if variety there be) are to be understood? If two persons together do something, is it in some way different than if each only does it for himself or herself? Is such concerted action something analytically different from the reciprocal action typical of commercial exchanges? These are but a few of the complications facing the challenge that Cornuelle put before us, the formulation of a theory of the social processes of associational life.
The more one ponders what might be meant by the term “community,” the number of complications only increases such that one begins to wonder if a comprehensive theory of the social processes of associational life is possible. Max Weber’s ([1921] 1978) formulation of the ideal types of social action (instrumental rational, value rational, affectual, and traditional) and legitimate domination (rational, traditional, and charismatic) should be seen as his recognition that the categories “community” and “society,” the forms of action that they imply, their formulation as a conceptual dichotomy, and their historical periodization were too simplistic to account adequately for human action; they had to be differentiated. Herman Schmalenbach ([1922] 1977) reached a similar conclusion in his differentiation of community (Bund) by noting that the intense and highly integrative attachments characteristic of the category “community” were to be observed not merely in the tradition-bound village as described by Tönnies, but also in, for example, the religious sect that often had no territorially (or temporally) local referent and even friendship. In fact, Adam Smith had already noted in The Theory of Moral Sentiments ([1759] 1982, 191–192) that the heuristic utility of the dualism between community and society is found to be decisively wanting when confronted by the occasional, community-like outbreaks of patriotic enthusiasm of modern societies, specifically when one chooses to sacrifice oneself in war (Grosby 2011). Recognition of complications of this kind led Talcott Parsons and Edward Shils (1951) to further differentiate human action through their formulation of the “pattern variables”; and shortly thereafter Shils ([1957] 1975) introduced another characterization of the types of social relation as primordial, personal, sacred, and civil.
Greater familiarity with this tradition of investigation into human action might keep the analyses of those economists (for example, Arrow, Davis, Hodgson) who have rightly recognized some of these complications from being unproductively diverted by those obfuscating descriptions of action like the temporally flat categories “interaction” or “structure,” as if the social relation was devoid of meaningful referents, by pondering the individual as a participant in various, temporally deep symbolic complexes as traditions or “culture” (see Freyer [1927] 1998; Popper 1979; Shils 2006). By not indulging characterizations of action like “interacting,” the analyst would recognize that the individual’s participation in a tradition can, depending upon the social relation, contribute not merely or even primarily to the calculation of advantage, as if traditions were only accepted constraints on optimization, but also to the self-understanding of the individual – a self-understanding that may overlap with the self-understanding of other individuals, the recognition of which by those individuals is a crucial factor in the constitution of the social relation of a “we.” This participation and its bearing on self-understanding is especially likely for non-commercial associations, because, unlike in the market place where criteria irrelevant to economic exchange are usually ignored, the significance of properties recognized in others (for example, one’s nationality, religion) as arising from participation in a tradition is maintained, thereby having a bearing on actions and relations (Knight 1935a; 1935b). Furthermore, the phenomenon of participation may be key to understanding better what otherwise appears to be the paradoxical activity of when one acts for the benefit of others, when the individual has an interest in acting disinterestedly.
Implicit in this vantage point of participation is that the self, the individual, cannot be taken for granted, as if the mind is homogeneous in its seeking of an advantage accruing to that individual; rather, the mind participates in a multitude of different symbolic complexes. To be sure, as Arrow noted, while information (conveyed by those complexes) “may be supplied socially (as an externality), to be used it has to be absorbed individually” (1994, 8). In this regard, the principle of methodological individualism is rightly maintained: the “socially supplied information” – what has philosophically been characterized as “objective knowledge” (Popper 1979) or “objective mind” (Freyer [1927] 1998) or “objectivations” (Shils 1981) – must be grasped by the individual. However, with the concept of participation, the existence of that information or knowledge or mind is acknowledged, and, in contrast to the implication of the term “interaction,” brought to the fore; but in no way does doing so imply a “group mind,” for the individual must “absorb” (grasp or accept, even if only tacitly) that “information.” Thus, as Hans Freyer ([1927] 1998, 206) felicitously observed, there is a “natural liberalism of the social situation”; for that participation never effaces the consciousness of the individual qua individual, even in a tradition-bound, highly integrated community (see Plessner [1924] 1999). But if so, as surely seems to be the case, we must then further acknowledge that because the mind of the individual participates in various symbolic complexes or traditions that are, in fact, heterogeneous, that is, there are a plurality of qualitatively different spheres of life (not only commercial, but also familial, artistic, even simply playful), then our very idea of the individual becomes problematic; for the mind (and actions) of the individual is now not merely an arena for the pursuit of advantage but also a dimension of potential, even unavoidable, moral dilemmas. An investigation into human action must analytically account for the existence of these dilemmas.
The idea of participation may go some distance in accounting for the “shared” motivation among individuals when they act as members of a group. Nonetheless, the relation between the individual and the “we” requires further clarification. The problem is complex; there are different ways to approach it. Let us continue by returning to the contrast between community and society, Gemeinschaft and Gesellschaft, in Hayek’s writings on law.
Further complications: the rule of law
In “Freedom and the Economic System,” F. A. Hayek ([1939] 1997, 203) noted that the particular vision of social justice that is unavoidably conveyed by social planning requires a reversal of the historical tendency by which moral and legal rules have become formal and general. The generality of the law (general laws applicable to all), the equality before the law (laws must be the same for all), and the certainty of the law – these formal criteria of the “rule of law,” necessary for individual freedom, subsequently analyzed by Hayek in The Political Ideal of the Rule of Law (1955) and The Constitution of Liberty (1960) – are undermined by central planning as it ineptly attempts to direct, in an unified manner, all individual activity in the service of a conception of public welfare that would, by preferentially treating some in contrast to others, putatively compensate for the place of chance in life, for example, familial affection and resources, or the unequal distribution of talent, or the greater initiative and ambition of one individual when compared to another, or new discoveries, or impersonal market forces, etc. In other words, the consequence of such an attempted compensation necessarily entails a view of the public welfare or social justice of a more comprehensive moral system at the expense of the freedom of the individual made more likely by the formal and general framework of law. Hayek thought that the attempt to implement such a vision represented for human civilization a disastrous step backwards: it was the road to serfdom, for
the development of human civilization has been a movement from more to less comprehensive moral systems, from the member of a primitive tribe, whose daily life is a succession of acts regulated by a firmly established ritual, to the individual in the feudal society, whose fixed status determines the claims on life to which he is entitled, down to our times … towards a life in which a constantly widening area [is] governed by individual tastes and preferences.
([1939] 1997, 203)
For there to be a widening area in which individual taste and preference can be pursued and expressed, moral and legal rules necessarily have to be formal and general.
In Hayek’s analysis, we come across that familiar conceptual motif discussed above; for the recognition of a historical development from a more to a less comprehensive moral system was by no means unique to Hayek. It had become and still is a commonplace of sociological and legal observation, for example, Tönnies’ contrast between the earlier Gemeinschaft and today’s Gesellschaft, Durkheim’s ([1893] 1997) distinction between mechanical and organic solidarity, Maine’s ([1861] 1970, 165) formulation of a historical move from status to contract, and Gierke’s ([1868] 1990, 113) admission that one of the greatest deeds of history was the emancipation of the individual as a result of the destruction of the medieval corporations. Thus, Stadtluft macht frei. The subsequent, welcomed refinements to what was and continues to be too often a simplistic dichotomy between the forms of action and attachment of antiquity and the middle ages, on the one hand, and those of modern life, on the other – by Weber in his formulation of multiple types of legitimate authority and different kinds of rationality; by Frank Knight ([1947]1982, 85), with his observation of the “fundamental error” of an excessive individualism that overlooks the fact of “some sort of family life, and far beyond that, some kind of wider primary-group and culture-group life, of a considerable degree of stability, must be taken into account as they are, as data”; and by Parsons and Shils’ (1951) “pattern variables” – do not gainsay some merit to Hayek’s argument. Nevertheless, there remain complications – complications that have to do with what Hayek (and, before him, Michael Polanyi) characterized as “the central theoretical problem of all social sciences” (1945, 528), namely, how to describe the existence of orders that have arisen not out of conscious direction but spontaneously. Our problem here is a better understanding of social phenomena of this kind beyond that of the market, and determining in what ways they have a bearing on human action.
While it is widely and rightly recognized that, when compared to the past, life today enjoys a “constantly widening area governed by individual taste and preference,” the precise character, or variety, of that taste and preference is sometimes not considered. Although there is indeed wider latitude for the individual to pursue his or her taste and preference, for example, the choice of profession, or occupational mobility, and so forth, the question is, how distinctive is that individual pursuit? Perhaps this complication will come into sharper focus if we approach it through the lens of law. When doing so, the problem becomes whether or not the formality and generality of the law – consistently applied throughout the land such that we have equality before the law throughout a society (the rule of law necessary for individual liberty) – results paradoxically in a “flattening” of the expression of individual taste and preference by severely restricting, if not eliminating, the freedom of the individual to participate in any association of “special law.” In other words, shall we take liberty to include not merely the wider latitude for the individual to pursue his or her tastes and preferences, but also freedom of association and especially freedom to participate in an association with its own rules and laws that may very well exist in tension with the formality and generality of the law of the land? And if so, what is the nature of the relation between such private associations with both other associations and especially the state? What are to be the limits of the idiosyncratic rules and laws of that association? Today, two examples (in fact, it seems as if the only remaining examples) of such associations are the natural association of the family and the voluntary association of the religious corporation. This problem deserves acknowledgment and discussion, even if it may be legally possible to address it with some degree of success, specifically, through some kind of basic law, for example, a version of the Bill of Rights. We shall return to this complication when we consider whether or not an association has rights and duties of its own, that is, whether or not a corporation has a “personality.”
Returning to Hayek’s analysis of the rule of law, how unequivocal has the movement from more to less comprehensive moral systems been? Perhaps the persistence of various traditions with their attendant attachments indicates that the movement cannot have been unequivocal; but if so, what has been its character? How are we to evaluate the “unevenness” of the movement? We know, for example, that nations and the patriotic attachment to them persist. How are we to judge this persistence? Are we to conclude that this persistence represents an evolutionary “residue”: the continuation of an atavistic attachment that over time will disappear? Or should we be reluctant to draw this conclusion because we lack the evolutionary perspective of several hundred thousands of years? Should we instead consider the possibility that individual liberty, the generality and formality of the law that it requires, and the relatively less comprehensive moral system that provides greater scope for individual taste and preference all presuppose, in fact, a comprehensive moral system, a number of cultural (and even national) traditions; and that, without those traditions, it will be difficult to sustain freedom? If so, then we will face complications in our understanding of human action and attachment because we must take into account the influence of the culture (traditions) of what still is, albeit different from the past, a comprehensive moral system on the decisions and actions of the individual – what in the German tradition of the Geisteswissenschaften is called Bildung, the “cultivated character” of the individual.
This complication in our understanding of individual action in modern society was also raised, it seems to me, by Adam Smith ([1759] 1982, 188–193) in his recognition that at times human action is guided not by utility but by our sense of propriety, which may at times thwart even our desire for self-preservation.1 But what are the sources of that sense of propriety, and what is their bearing on human action? This sense of propriety is not the creation of any particular individual; rather, the individual absorbs (to use Arrow’s characterization) the meaning of what is right and wrong, as well as innumerable other meanings and symbolic complexes, through the individual’s participation in the different, changing traditions of a society’s culture. If there is merit to this line of deliberation, then we, once again, appear to face the likelihood of a differentiated, problematic constitution of the “self,” where consideration of the advantage accruing to the individual of a particular action can be intermingled with other considerations of, for example, propriety, of conceptions of right and wrong. To resort to a spatial metaphor, the constitution of both the self and one’s image of one’s own self is multi-layered.
Putting aside for the moment this problem of the influence of traditions or culture on individual action – what Karl Popper (1979, 106–190) called the relation of “World 3” (the products of the human mind) and “World 2” (the subjective experience of the individual) – one faces the historical fact that the uniformity of the law, specifically its formal and general character, rests upon the consolidation of the sovereign state with a centralized judicial system. Two further complications arise from this historical fact. The first, analyzed so well by Tocqueville ([1840] 2012) that we need not explicate it here in any detail, is the extent to which one corollary of this consolidation is the helplessness of the individual vis-à-vis the state; for the existence of meaningful “intermediary” associations, especially those that encourage mutual aid, has been largely undermined precisely because of the monopoly of the state in promulgating law. As the French revolutionary convention, echoing Hobbes’ ([1651] 1962, 245) earlier denunciation of independent associations as “worms in the entrails of a natural man,” declared on August 18, 1792, “A state that is truly free ought not to suffer within its bosom any corporation, not even one dedicated to public instruction.” And so, as Maitland ([1903] 1936, 230) characterized the result, “the absolute state faced the absolute individual.” To Maitland’s conclusion about this historical development we add that if there is to be assistance to the individual, it is not to be from the mutual assistance of the independent association of which the individual is a member, but only from the state, undertaken in the name of what is now understood as “public welfare” – a conception of public welfare (or in today’s idiom, “social justice”) defined, needless to say, by the state.
The second complication arising from the consolidation of the modern state is that since the rule of law, so necessary for the freedom of the individual, posits equality before the law of the land, it becomes increasingly unavoidable to set into motion the development of a conception of the public welfare of what is no longer a formal association of individuals but now a territorial community of law. If so, as the historical record indicates, then there are profound, albeit assuredly submerged, paradoxes lurking within Hayek’s analysis of the rule of (formal) law in the constitution of liberty. Thus, it is precisely here, especially in light of these previously alluded to complications, that we encounter the attractiveness and forcefulness of Richard Cornuelle’s (1991, 3) call for a better understanding of those associations that are “neither commercial on the one hand nor governmental on the other.” Cornuelle’s attention to these particular kinds of associations is significant; for the state has, for the most part, not been overly troubled by individuals joining together for the pursuit of economic gain, hence, partnerships, limited liability corporations, joint stock companies, and so forth. However, especially where the tradition of Roman law is dominant, as on the European continent, with associations of a different kind, the state has been far less tolerant, precisely because the existence of such independent associations represents a challenge to what actually is the relatively comprehensive moral system of the state. This is merely to observe that the associations of “special law” have been swept aside. Thus, taking modest steps to address Cornuelle’s call for a better understanding of the voluntary social process will also require addressing the legal complications raised here.
Corporate personality: mysticism or reality?
In his inaugural address, “The Nature of Human Associations” (Das Wesen der menschlichen Verbände), upon assuming the Rektorat of the University of Berlin in 1902, Otto von Gierke ([1902] 1935, 139–157) rightly observed that the character of the unity of associations was not only a problem for social philosophy but also necessarily a legal problem; for if associations have some kind of independent existence, whether they arise spontaneously or already exist, their ongoing activities are distinct from those of the state. The question then arises of whether, in fact, they have their own, autonomous rules and principles by which their activities are regulated. Thus, Gierke’s problem is two-fold: (1) the philosophical problem of the nature of those associations that arise from the initiative and formative powers of its own members, and (2) the problem of how the independence of these associations should achieve, or necessarily implies, legal expression. In other words, does such an association have rights and duties specific to its own character? (To take one recent example that clarifies the problem: does a university have its own rules for hiring and promotion that are specific to the purpose of its existence – the teaching and discovery of truth – or must those rules be in accord with or even determined by the relatively comprehensive moral system of the state? This problem was the subject of Edward Shils’ (1997, 177–233) “Jefferson Lectures” of 1979.) At stake in determining what it means for an association to have an “independent existence” is the very character of associational life; for only those associations that arise out of the initiative of its members are capable of satisfying the aspirations of those members.
Now, one need not entertain this problem and its implication at all if associations are viewed as merely a combination of individuals, each of whom keeps his or her contractual obligations and where the law recognizes the inviolability of the property of the individual. In this case, the “legal person” is and can only be the individual. Insofar as the law has to recognize various corporate bodies because, for example, they own property, the “personality” of the association is a “legal fiction,” a persona ficta as formulated in the tradition of (the reception of) Roman law; the association has no substantive, autonomous existence; it has no rights of its own; it has no “life” of its own. Thus, there is the state and the individual. In such a state of affairs, as Maitland ([1903] 1936, 228–229) rightly noted, “all that stands between the state and the individual has but a derivative and precarious existence,” for “if the personality of the corporation is a legal fiction, it is a gift of the prince,” that is, of the sovereign state (for example, the requirement to be granted a charter by the state). Even so, the state may very well seek to facilitate a division of labor of the tasks to be performed, even encouraging the existence of numerous local associations to carry out those tasks, perhaps out of a concern for a more efficient delivery of some service. However, the very nature of those tasks will not and cannot be in dispute once decided upon by the sovereign; for to proceed otherwise runs the risk of undermining the formality and generality of the law of the sovereign authority, the jurisdiction of which is understood to hold sway throughout the land.
At issue here is whether the state is the sole creator of law, or whether there are other sources of law; in other words, whether the acceptable array of human action is determined by the state or it is left to individual initiative. There are obviously many complications of considerable significance here contained in the possibility of different sources of the objectives of human action and especially the heterogeneous directions they might take. But rather than pursuing these complications in an investigation of their consequences on the nature of sovereignty, even though implied by Cornuelle’s call for a better understanding of voluntary community, let us return to Gierke’s and our problem of the nature of the independent association.
The problem has now become whether or not an association is legally a “person” who, as such, has rights and duties. Or is it the case that only the individual is legally a person because only the individual is a free-willing creature who, as such, has rights and duties? If the latter is the case, then when we look upon an association, all that we should observe is a sum of individuals who stand in relation to, or “interact” with, one another. Thus, insofar as an association has some rights and duties or, for example, can sue and be sued as if it were a person, it is actually a fictitious person called into existence for a legal reason. However, note well that in the preceding observations the reality of the facts has forced these formulations: “insofar as the law has to recognize various corporate bodies” and “an association … called into existence for some legal reason.” There is manifestly a necessity of the law to recognize an association when it owns property; but how is this necessity to be understood? Is it possible that we face a reality more complicated than what limiting action to the individual takes for granted? Cornuelle’s theoretical problem can now be reformulated: can it be that an association has “personality”?
Pollock and Maitland (1898, 488) thought that the crux of the problem of “corporate personality” was that:
for more or less numerous purposes some organized group of men is treated as a unit which has rights and duties other than the rights and duties of all or any of its members. What is true of this whole need not be true of the sum of its parts, and what is true of the sum of its parts need not be true of the whole … One of the difficulties that beset us at this point is that we are tempted or compelled to seek the aid of those inadequate analogies that are supplied to us by the objects which we see and handle. First we picture to ourselves a body made up of men as a man’s body is made up of members. Then we find ourselves rejecting some of the inferences which this similitude, this crude anthropomorphism, might suggest … But all that is proved by the collapse of such analogical reasoning is that the social organization differs from, if it also resembles, that organization which the biologist studies; and this should hardly need proof.
Having granted the crude anthropomorphism of the use of the term “personality” in the phrase “corporate (or associational) personality,” the fact remains that associations own property, act legally, usually have a representative, and many of their members act together. These characteristics, as well as others, convey rights and duties. If those rights and duties flow from the very nature of the association, why must they be granted? In other words, do various “we”s have independent existence? To generalize upon the problem of these observations, how are we to understand our ubiquitous use of the pronoun “we” instead of only “I”?
This problem of understanding “we” is, once again, the task before us when confronted by Richard Cornuelle’s call for a better understanding of voluntary association. Cornuelle was by no means the first to see a need for a better understanding of associations out of a concern for liberty – an understanding that would not fall prey to an emphasis of an excessive individualism that, in fact, appears to misrepresent the reality of our existence. As mentioned above, Knight clearly saw the problem, although he did not pursue it; and obviously Gierke and Maitland forcefully did, too, by bringing to the fore what was for them the reality of “corporate personality.” Edward Shils also struggled theoretically with the problem throughout his life, and pointedly so in a paper written a few years before his death, “Collective Self-Consciousness and Rational Choice” (Shils 2006, 195–216). This is how Cornuelle’s call was formulated earlier by Gierke ([1902] 1935, 143) in the latter’s following observation and rhetorical questions:
We should have to endure [corporate persons] even if they were phantoms. Is it not, however, possible that their tough resistance [to being dissolved into individuals] demonstrates that they are by no means ghostly shadows, but living creatures? That law, when it treats organized associations as persons, is not disregarding reality, but giving reality more adequate expression? Is it not possible that human associations are real unities which receive through legal recognition of their personality only what corresponds to their real nature?
Clearly, we must proceed with care in addressing Gierke’s questions. We acknowledge that an association of individuals cannot be the same as an individual. Thus, Maitland ([1903] 1936, 225) was obviously correct when he observed that “not all legal propositions that are true of a man will be true of a corporation.” As but one example of how the corporation has to be different from a natural person, Maitland continued by observing that a corporation can neither marry nor be given in marriage. In seeking to take up Cornuelle’s problem we must not lose sight of the elementary necessity of distinguishing between the individual (and the individual’s mind) and the association, for otherwise we might wrongly drift into some mystical variant of a “group mind.” Nonetheless, I think that Maitland (and Gierke before him) was correct to insist that “if there is to be group-formation, the problem of personality cannot be evaded” (230). And here, albeit in a legal idiom, is, again, Cornuelle’s problem. It may very well be that “the word ‘collectivity’ is the smudgiest word in the English language” (237), still “if n men unite themselves in an organized body, jurisprudence, unless it wishes to pulverize the group, must see n+1 persons” (235). If there is merit to Maitland’s assertion, then the nature of this “n+1” should be explained in a manner that does not avoid the difficulties of the explanation through recourse to either descriptive evasions, as in the use of the word “collectively,” or a doctrinaire reliance on an individualist emphasis that, in effect, dissolves the association. To proceed, we must return to that postulate of human action, methodological individualism.
The social relation and methodological individualism
We may not know precisely what we mean when we use terms like “culture” or “tradition,” but let us take for granted that these terms do, in fact, refer to some kind of social phenomenon. The phenomenon has over the years been described in various ways, depending upon the analyst, as “spirit,” “psychic forces,” “symbolic configurations,” “World 3,” “objective mind,” and so forth. Whatever these terms actually refer to, we know that the creation and continued existence of the phenomenon occurs in and through individuals. Thus, we reaffirm the principle of methodological individualism. A group does not feel pleasure and pain; only individuals do. However, here is the complicating question: isn’t it the case that the actions of individuals are often influenced by their involvement with or membership in an association that is organized around propositions and goals specific to that association?
Gierke formulated what I take to be the modest claim of an affirmative answer to this question in the following way:
We feel ourselves to be self-sufficient beings, but we also feel ourselves to be parts of a whole which lives and acts within us. Were we to think away our membership in a particular people and state, a religious community and a church, a professional group, a family, and numerous other societies and associations, we should not recognize ourselves in the miserable remainder. When we think over all this, it becomes clear that it is not a matter merely of external chains and bonds which bind us, but rather a matter of psychological relations which, reaching deep within us and integrating us, form constituent elements of our spiritual being. We feel that part of the impulse which determines our action comes from the community which permeates us.
([1902] 1935, 150)
The facts of our existence, in particular the evidently irrepressible urge of the individual to form and to participate in associations, require assent to the general point of Gierke’s above observations. That urge is just as characteristic of human action as is the individual’s calculation and subsequent pursuit of his or her own self-interest in the commercial relations of the market. In fact, the merit of Cornuelle’s call and his earlier work, Reclaiming the American Dream, is the recognition that one expression of the individual’s value of independence and self-propulsion is the formation and continuing existence of independent associations. Even so, certainly necessary is more careful formulation of the consequences of that urge than what appears in Gierke’s above observations about “psychological relations”; for the continuing existence of “a whole which lives and acts within us” and “the community which permeates us” to which he refers is dependent upon the assent, at times tacit, and subsequent action of the individual. If that assent ceases then the association and the principles around which it is formed cease to exist. Thus, given that the creation and continued existence of an association can only occur through the actions of individuals, Gierke’s formulations mask the problem of how we are to understand the “sharing” between individuals such that the association exists. Does “sharing” involve a more complicated process than some kind of simultaneous convergence of (or adjustment to) the pursuit of any number of individuals’ interests?
Before turning our attention to this “sharing” and its bearing on the principle of methodological individualism, let us make clear that those “psychological” or “spiritual” relations that Gierke and so many others have referred to can be understood to be “invisible hands.” As is well known, Adam Smith in The Wealth of Nations employed the expression “invisible hand” to account for the unintended result benefiting society at large arising from the individual’s striving to better his or her own condition. However, James Otteson is surely correct when he observes an invisible hand in relations that are not commercial:
Our strong desire for mutual sympathy of all our sentiments leads to reciprocity and mutual sympathy, thereby creating an invisible-hand mechanism that Smith thinks generates commonly shared standards of behavior and judgment, indeed, a commonly shared system of morality. It is an invisible hand because the agents in question do not intend to create a shared system of morality – they intend only to achieve mutual sympathy here, now, with this person. In so doing, however, they (unintentionally) create the behavioral habits, precedents, and protocols that will generate and maintain a shared system of expectations and sentiments, with their correlated judgments, reproaches, and praises.
(2011, 39)
If this is so, then another way to understand the problem Cornuelle has set before us is to give the achievements of these truly invisible hands – the mechanism and its shared standards – their due.
We must employ the plural “hands” because, unlike the calculation of the price mechanism to signal preferences, desires, and the supply of objects to satisfy those preferences and desires, the objects of our sympathy are often incomparable, that is, they are not susceptible to being substituted for one another. Moreover, it is precisely because those “spiritual” objects – the meanings or symbolic configurations – are invisible (or not measureable) that there has been a tendency to dismiss them as mystical. However, to do so is incorrect. Thus, the entire problem before us can be reduced to this seemingly straightforward question, “Is human action sometimes influenced by numerous ideas, many of which are incommensurable?” If one answers this question with a “no,” that is, action is to be understood as a behavioristic calculus of preference, the pressing nature of Cornuelle’s problem of accounting for associations beyond the commercial dissolves.
Since we answer “yes” and assert that the action of the individual can be influenced by ideas, let us return to the problem of understanding the “sharing” of various meanings, conveyed by ideas, that takes place in associations. It is the case that life exists in actions that are individually centered. This is merely to recognize the self-dependency or the self-centeredness of every individual action. This recognition is why it makes sense to speak of the personality of the individual; and why, consequently, in the legal sphere, there has been skepticism about the existence of the “corporate personality” of an association. And it is this recognition of the facts of human experience that accounts for our acceptance of the methodological obligation to analyze any association, any social relation, as individually self-dependent actions. Moreover, this “natural liberalism of the social situation,” this individual distinctness of all action, is an essential and permanent character of the human being, qua human. We, thus, reject any historical analysis that views the individual at some earlier time as being so immersed in a community (Gemeinschaft) that he or she might be lacking the capacity to express his or her own will, the capacity to say “no” to any given situation, to any association to which he or she might have been a member. This is not to deny, as previously observed, that there have been times, such as those we designate as “modern,” when the exercise of that capacity has been easier, even welcomed or expected. Even so, in historically earlier periods, the individual is “neither abrogated nor effaced, only immersed, but, in fact, detachably immersed” in a social relation (Freyer [1927] 1998, 107). There is, once again, a natural sovereignty of the individual.
I wish these immediately above comments to be taken for granted. They are merely the starting point in addressing the problem of the nature of the independent association. But what of the sharing that makes the association possible, the consideration of the nature of what is shared, and the merit of Gierke’s and Maitland’s insistence on the existence of a “corporate personality” not merely as a legal status but as a reality justifying that status?
As a way into addressing these questions, consider this elementary example of a social relation between two individuals, where each, with their own interests and preoccupations, happen upon one another. These two individuals are “interacting,” as they have randomly encountered one another; there is no social relation. However, as one extends his or her hand to the other, these two individuals are no longer interacting. They are now “participating” in that custom of greeting and solicitude known as the handshake. There now exists a social relation – the association of greeting and its performance – between these two individuals. What are the components of this temporally episodic association? Firstly, there is the meaning of this custom of greeting that both individuals find. Where is the meaning found? It is located within the consciousness of each of many individuals who recognize and accept the meaning of the handshake as a tradition signifying acknowledgment between two individuals. Secondly, the material out of which the social relation is formed is the living, individual human beings who make actual the custom by performing it.
This is a most elementary form of association because it is one where there is no institutional embodiment of the meaning acknowledged and performed, for example, a court for law, or a university for the teaching and discovery of truth, or a sacred text and church for a religion; nor is there any differentiation among the members of the relation, for example, a representative of an association with its own rules and regulations – a corporation. Nonetheless, the methodological problem is clear even in this elementary example: on the one hand, the action and the decision to act are individually centered; and yet, on the other hand, there is a trans-individual meaning (the custom of the handshake) that is acknowledged and accepted by each of the individuals. If we do not take into account the reality, albeit an invisible reality, of this second factor – the existence of various trans-individual meanings and the goals they convey – then we misrepresent the nature of a great deal of human action; and, by doing so, we fall further prey to what Cornuelle, and Knight before him, characterized as an excessive individualism. Many associations exhibit the character of having an inter-individual meaning and trans-individual structure. Many associations, even the most temporally fleeting, are structures of participation.
The recognition of the existence of an inter-individual meaning in which the individual of an association participates does not point to some mystical group mind; but it does point to the problem of the place of tradition in the action of the individual. Consider what takes place when the mind of the individual encounters the achievements of another individual or group of individuals, for example, when a musician performs a musical score, or when one reads a book or teaches a course at a university or spreads the gospel – examples where the inter-individual meaning has, unlike the previous example of the custom of the handshake, been embodied in a physical form (a musical score or a book). Here, the achievement of another “pulls,” if you will, the individual up to heights that otherwise he or she would not have been able to achieve from merely his or her own experience. What takes place is not a phenomenon of group mind; and yet this previous achievement of another person exerts an influence on the actor, as the actor participates in the achievement, even, depending upon what is being done, creating a new achievement either by himself or with others. Moreover, another musician performing the same musical score, or another reader of the same book, or another missionary spreading the good news also participates in the same achievement. To be sure, this second person does not participate in exactly the same way as the first; nonetheless, there is an “overlap” of experience – an overlap that we can designate as “sharing.” Each of the individuals participating in this trans-individual meaning recognizes in the other individual this participation. The result of this recognition by each of the individuals about those other individuals is a bond of commonality between them. We shall later consider variation in the bond that leads to distinguishing an association from when an association becomes a community.
Yet again, none of this points to the existence of a group mind. The animation, if you will, of the meaning conveyed by the inanimate physical object, for example, a musical score or a book, is dependent upon the action of the individual. If that action does not take place or cannot take place because the individual is not capable of understanding the meaning conveyed by the object, for example, the inscriptions of a dead language that have not been deciphered, then that meaning does not become a part of the life of the individual. In this instance, the meaning is either dormant or, if you will, “dead”; and, as such, it is not capable of being “activated,” performed, that is, spoken and shared, hence, the phenomenon of the “dead language.” However, when the individual does involve himself or herself in that meaning, then the distinctiveness and even the scope of the initiative of the individual has to be qualified if we are to understand what takes place. Herein is the compelling reason to qualify – by no means to reject – the principle of methodological individualism.
Let us consider another, more complicated example of this “overlap” of experience in order to clarify the phenomenon of “sharing” implied by the existence of an association. Two individuals attend a performance of Mozart’s Don Giovanni. On the train ride home, having recognized that they both were at the opera, they talk about how they both were so favorably moved when they heard the tenor Luigi Alva sing “il mio Tesoro.” (They experienced an expansion of the self. Although a metaphor, perhaps the phrase “expansion of the self” is not merely a metaphor.) In the course of their conversation, they realize that they had many times seen one another at the neighborhood coffee shop. There was previously no relation between them at that coffee shop; but the following Saturday, when they do see each other, they sit down together to finish their morning coffee while discussing classical music. There is now a relation between them. Key to this new relation is that each of them now recognizes a similar property about the other, namely, their love of opera. They further discover that each of them has a child in the local high school and that they both are unhappy about the music appreciation and programs at that school. They, thus, both decide to form a parental arts association dedicated to raising money to improve musical education and opportunities at that school. A voluntary association has been formed around their shared appreciation for classical music and the task of improving appreciation for classical music, even though neither them, nor their children, sings or plays a musical instrument. And to further and appropriately complicate this example, frustrated by the state-mandated regulations at their children’s school, they turn to the local opera company to assist them more productively in promoting appreciation for classical music among otherwise culturally wayward teenagers.
These examples and the earlier discussion lead us to recognize not only a more complex view of knowledge but also its corollary: a more complicated structure of the constitution of the self, as the individual participates in various, heterogeneous complexes of meaning. There evidently is a layered structure of consciousness, corresponding to the individual’s pursuit of his or her own preferences and tastes, the components of which co-exist in a shifting combination with various aspects of the individual’s self-understanding arising out of his or her decision to participate in correspondingly various meanings and goals. Thus, there is (1) individual consciousness; (2) individual self-consciousness, that is, the awareness of one’s self; and (3) a plurality of “we”s constituted around any number of heterogeneous, trans-individual meanings arising out of the individual’s attachments to goals and the individuals who share them that, in turn, have bearing on how one understands one’s self. This description is a restatement of Popper’s (1979) “three worlds,” except that I have shifted its emphasis away from “objective knowledge” to how the self, in particular, self-consciousness, is constituted.2 The self-dependency of all action, this “natural liberalism” conveyed by the principle of methodological individualism, forces us to take up what is now the problem of the constitution of the self. In other words, the principle of methodological individualism is to be viewed not only in terms of analyzing human action, but also in terms of understanding the development of self-understanding arising from the individual’s participation in different traditions. The methodological obligation to begin with the individual applies not only in the analysis of the relation of one individual to another, but also in the relation of the mind of the individual to objective knowledge or tradition.
Here, I have presented merely the barest of outlines of the problem. In doing so, I have no doubt about the behavioral primacy of the first two of the above layers of awareness. However, we are born into a world not of our own making in which we must find our way, often in collaboration with others; and when doing so, it is this third layer or component of consciousness, unevenly shared with others, which has an influence not only on our decisions and actions, but also on our understanding of the self. It is with this latter, complicated relation where one finds experiences of regret, honor, shame, heroism, patriotism, awe, and so forth: those sentiments of approbation involving what Smith characterized as a “sense of propriety distinct from utility” ([1759] 1982, 188). We add to Smith’s observation two considerations. First, the objects of approbation may differ qualitatively, for example, the experience of heroism when compared with that of awe, thereby indicating complexes of meaning that differ in kind and that, as co-existing, provide the potential for moral dilemmas. Second, bonds of commonality – the social relation of an association – between individuals are recognized by those individuals as a result of their participation in cultural complexes of meaning.
Of course, many associations revolve around utility – to achieve a common, practical goal, the pursuit of which may be limited in time or of an ongoing duration. In our previous example of the two opera goers, they both adopt the goal of improving appreciation for classical music among younger people. When the existence of the association is viewed as being limited to achieving a particular, practical, goal, it is easier to detach oneself from the association for any number of reasons, for example, if others join the association, making your contribution less necessary, or if the goal is achieved, and so forth. However, to return to our example, in addition to pursing the goal of improving appreciation for classical music, each of these individuals recognizes a property – a devotee of classical music – about the other that is also a part of their individual self-understanding. Thus, while they remain distinct individuals, there is also a bond of similarity between them arising from their participation in the tradition of classical music; and that bond of similarity is expressed in the nature of the association. In this case, since the association conveys a part of the individual’s self-understanding, the association is viewed not only as existing for the pursuit of that practical goal but also as an extension of the personality of the individual as a member of the association. As a result, the individual’s commitment to the association is likely to be stronger and more lasting. Moreover, there are other recognized properties shared with others that are perceived to have great existential significance far beyond the shared property of, in our example, being a devotee of opera. Examples of organizations of this kind are religious and patriotic associations. In these instances, the form of association is a community because the strength or intensity of the bond (that is, the individual’s attachment to the complex of meanings around which the community is constituted, to the goal conveyed by that complex, and to others who are perceived as sharing in that meaning and goal) of the community indicates that it is resistant to being substituted for another meaningful attachment.
The bearing of already existing complexes of meaning (traditions), as in our previous examples, the custom of the handshake, classical music, and clearly those that I have characterized as existential, is not to be confused with traditionalism. For a tradition to continue to exist, to be a part of life, it must be acknowledged, even if only tacitly, by each of a number of individuals. In the course of that acknowledgment, traditions undergo unpredictable changes in response to always different circumstances. Those circumstances include changes in how the individual understands himself or herself, how other individuals respond to those changing circumstances, and how individuals respond to one another. The attempt to frustrate these kinds of changes represents traditionalism. To attempt to do so is to undermine what Cornuelle (1991, 4) referred to as “the value of independence and self-propulsion” that includes the human propensity to experiment. Although rarely seen as traditionalism, this is what central planning represents, as it must frustrate not only individual initiative but also, above all, the exercise of that initiative with others in pursuit of always-changing goals not authorized by the state. Thus, Cornuelle’s observation of the need for a better understanding of community is also not to be seen as some variant of traditionalism; rather, it is recognition of the value of individual initiative in collaboration with others about matters which they understand best in response to problems that they understand best. In doing so, the individual, along with other individuals, will draw upon the resources at hand. Those resources include traditions and associations, already existing or newly created, that are organized around those developing traditions as bearers of shared, but also changing meaning. The phenomenon of sharing has these two components to it: the individual’s participation in this always-changing meaning, and the recognition by the individual that other individuals also participate in that meaning in pursuit of what is now a common goal.
Human action is the action of an individual, but usually that individual participates in changing traditions; and when he or she does, symbolic properties that are constitutive of the individual’s self-understanding are recognized in other participants of what is now a social relation. Sometimes, especially when the association is formed to pursue a specific goal for a limited amount of time, those recognized properties have little or no significance; they may be disregarded as being irrelevant to the specific goal being pursued by the association. Other times, however, the recognition of those properties is a referent (or one of the referents) around which the social relation is formed. In this latter instance, as Davis (2002) rightly observed, there is a “we,” and it is a “we” that expresses a part of the self-understanding of the individual.
While all action is purposive, and in this sense there is an interest being pursued, some action also involves, or is a consequence of, the self-understanding of the actor. Rather than rejecting methodological individualism as not being a useful heuristic principle (so, Hodgson 2007), accepting it as a valid proposition opens up the pressing problem of clarifying the relation between the mind of the individual and qualitatively different kinds of objective knowledge. That this problem is avoided by an excessive individualism, wrongly assumed to be exclusively characteristic of modern life, has been often acknowledged and recently so in interesting ways by the economists Arrow (1994) and Davis (2002), and by some theorists of public choice, for example, when Ostrom observed that “presuppositions of methodological individualism need to be related to communities of shared understanding as a fundamental element in a framework for the analysis of decision situations” (1993, 171). However, while rightly recognizing shared understanding as an “externality,” or that “individual behavior is always mediated by social relations” (Arrow 1994, 5) or “socially embedded” such that there are “shared intentions” (Davis 2002, 19), or “structured” (Hodgson 2007, 218–21), still avoided and thereby obfuscated are the phenomena of participation, the bearing of that participation and attribution on the understanding of the self, and the attribution of properties to others by virtue of which a relation of similarity is recognized.
Conclusion
Even if it were possible for a central authority to understand well any number of problems confronting a society, it is better for local, voluntary associations to address them wherever possible. This is because the individuals of those associations will likely do so more energetically and effectively insofar as they understand that the problems being addressed, including those new problems that have unpredictably arisen as a consequence of addressing the original problem, directly impinge upon their lives and in ways that no central authority could foresee. This has been observed often enough.
What has not been often observed is that one reason why energetic involvement is likely is because addressing a perceived problem may have a bearing on how the individual understands himself or herself, as in our previous example, no longer as someone who merely enjoys attending the opera but now as someone who understands himself or herself as sharing in the responsibility for musical education. The understanding of the self may very well change as a result of both the individual’s involvement and the influence of other, involved individuals on one another. In this way, both new understandings, including understanding of the self, and new problems emerge. In these circumstances, it is not merely or even primarily a matter of a more efficient allocation of resources or maximization of advantage, but rather an expression of one’s developing understanding of the self, for example, donating to a university because a part of one’s self-understanding is as a graduate of that university. Moreover, over time, a greater involvement that includes collaboration with others in making the donation may result in changes in the donation, as how one understands one’s self and the university change. The benefits of such a donation do not accrue directly to the donor, except as some kind of “psychic reward.” But focusing on the reward to account for the action obscures both the development of one’s self-understanding and the attachment to others who share that understanding as factors in the decision. What has to be accounted for is not only the extension or expansion of the self in the social relation of the “we” but also how that extension or expansion may sometimes include physical objects as designated by the possessive pronouns “my” or “our,” as in my (or our) university.
All the more significant would this attachment to others (and physical objects) be when the association of which one is a member has emerged from one’s own initiative to create it or participate in it. It is here and only here where the dynamism of experimentation becomes possible, precisely because the association has arisen out of the initiative and subsequent, ongoing experience of each of any number of individuals by themselves and together. It is here and only here where responsibility (and the knowledge of what the responsibility entails) for one’s own environment becomes possible. However, note well that one’s (immediate) environment is also often a component of one’s understanding of the self. Thus, local knowledge is not only a necessary factor for the individual’s response to other individuals. It is that, but it may sometimes be more. It may be that the individual understands himself or herself in terms of the locality as a member not merely of a “we” but of a “we” constituted around the locality. In this case, local knowledge is not just crucially important for what economists, following Hayek (1945), refer to as the “knowledge problem.” Knowledge is not just between individuals, mediating their actions, for example, the price signals of the market or the perceived immediate changes in demand and supply or changes in taste. The local knowledge of the immediate environment may also be a part of the understanding of the self, which may, in turn, be perceived as a property characteristic of others as members of a local association; and, as such, membership in the local association, because it is perceived as an extension of the self, may elicit actions of loyalty and self-sacrifice, where the benefits of an individual’s actions accrue to others who are members of the association.
In considering these kinds of associations, we again encounter the problem of their relation to other associations and, above all, to the state, especially so when the association is independent precisely because it is substantively distinctive. By the use of the terms “substantive” and “distinctive,” I mean the degree to which the independence of the association indicates that it has its own orientation and regulations distinct from, and even possibly in tension with, those of the state.
In considering the problem of this relation, we can put aside the arguments over whether or not it is appropriate to use the term “personality” in the characterization “corporate personality” by turning our attention to what is actually at stake in those arguments: do associations have rights and duties specific to the purpose of the association? If they do, then the problem of their relation to the comprehensive moral system, even where the laws are formal and general, is posed. It seems to me that Cornuelle “backed into” this problem when he observed, “perhaps there needs to be a rigid, even constitutionally defined and protected doctrine of separation of the independent sector and the state” ([1965] 1993,194). Implicit in Cornuelle’s recognition of this need is that an association does indeed have its own “pre-political” rights and duties. By “pre-political” rights and duties, I intend merely to reformulate Cornuelle’s observation that independent associations have “a prior, more powerful moral franchise than the state” (193, my emphasis); that is, the “personality” of the association is not exclusively a matter of legal recognition. And if so, then, as Gierke realized, we again face the problem of Johannes Althusius’ Politica ([1614] 1995), of formulating a basic law of the land that allows for, by carefully adjudicating between, the expansive scope of individual freedom, about which Hayek wrote so compellingly, made more feasible by the formality and generality of the law, on the one hand, and the rights and duties of independent, voluntary associations with their “special laws,” on the other.
If, in fact, the formation and existence of associations do sometimes have a bearing on the self-understanding of the individual as a member of a “we,” and if that “we” has “personality,” then, once again, the dichotomy or dualism of the socially embedded individual of the (local) community and the socially unencumbered individual of the (territorially extensive) society is simply too crude. As conceptual categories of analysis, they remain useful; but they certainly cannot be easily segregated historically. Furthermore, they and their respective forms of action interpenetrate one another. The individual today not only pursues his or her own interests, the benefits achieved by doing so accruing directly to individual, but also understands himself or herself as a participant in the traditions of various associations. With the latter, the individual undertakes actions, the benefits of which sometimes accrue not to himself or herself but to the association or other members of the association. This is merely to state the obvious; but it is an obvious state of affairs that, as Cornuelle argued, has to be explained and, when doing so, by refusing to resort to tautologies or by being content with a flimsy explanation like “psychic reward.”
1 A more recent, similar recognition is Ostrom’s rejection of a methodologically doctrinaire reliance on utility: “Without commonly accepted standards of right and wrong, there is no basis for assuming autonomy to individuals to exercise responsibility for the actions they take in the governance of their own affairs and in relating to others. The use of extreme rationality assumptions runs the risk of stripping away and ignoring essential epistemic features that are constitutive of human affairs” (1993, 167).
2 The knowledge is “objective” because various meanings, for example, the significance of the handshake or a musical score, once created out of the flow of life achieve a relative independence. The independence is “relative” because the continued existence of the meaning, as a part of life, rests upon its acknowledgment by any number of individuals.
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