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action. The specificity of economics is that it focuses in on those meaningful modes of behaviour termed ‘economic’ that is, those having to do with the production and exchange of goods and services.

The subjective theory of value has, in the economic literature, tended to be joined with the notion of ‘methodological individualism’. This latter notion is a highly vague and ambiguous one, serving different methodological purposes in different Austrian thinkers, in non-Austrian neoclassical economics, and in the Popperian theory of the social sciences. All in all, it is a somewhat unfortunate term since it tends to imply that the proper way of understanding various social ‘wholes’ (to use Hayek’s term) is to view them simply as a resultant of the conscious intentions of individual subjects, atomistically conceived (Hayek, for his part, never attempted to do such a thing). The attempt to make sense of social ‘wholes’, such as a particular economy or a particular polity—in terms of the subjective intentions of individual, isolated agents (‘Robinson Crusoes’)—is one aspect of what phenomenological hermeneutics refers to as ‘subjectivism’, and which it sees as being simply the obverse (indeed, the perverse) side of modern, mechanistic objectivism.

RICOEUR’S CRITIQUE OF SUBJECTIVISM

One useful function that hermeneutics could possibly serve in this regard would be to caution us against equating human purposive action in the realm of the ‘economic’ with conscious decisions and intentions. This seems to me to be a possible danger in the ‘subjectivist’ approach—on a par with the danger of conceiving of human action in purely individualist terms. ‘Intentions’, hermeneutics tells us, are often not open to introspection but must be interpreted. This is one of, if not the main theme in the hermeneutical theory of Paul Ricoeur. He would maintain, for instance, that there is more in human praxis than filters through to explicit consciousness, such that the goal of understanding human

action cannot be reduced to grasping the self-conscious meaning-intentions of the human actors. In the case of textual interpretation, for instance, the hermeneutical goal is not, as an objectivist like Hirsch would maintain, getting at the intention of the author; for Ricoeur the meaning of a text, at least a good one, always surpasses the meaning intended by the author.11

For phenomenological hermeneutics, meaning itself is something that must be ‘de-subjectivized’. Perhaps ‘subjectivism’ is not the best term for economists to use. It seems to me that in fact one of the main thrusts of the work of Mises’s most famous student, F.A.Hayek, which emphasizes the role of social institutions and the kind of unarticulated knowledge embedded in social practices, was to effect a kind of Ricoeurian decentring or désaissisement of the conscious ego (the same ‘ego’) of which Mises (1963, p. 44) speaks.12 The object of economics may, like all the other human sciences, be meaning, but meaning is not reducible to subjective intentions. Meaning is always the meaning of human action, but, as Hayek himself strenuously insisted, it often is not the result of human design.

WHAT IS HERMENEUTICS? 39

One consequence of this is that the distinction between knowledge ‘from the outside’ and knowledge ‘from the inside’—which in the older, preGadamerian hermeneutical tradition paralleled the distinction between the natural sciences and the human sciences—may be somewhat misleading and inappropriate.13 It would certainly be such if Ricoeur is right, and it is indeed the case that meaningintentions are not always open to direct inspection, and thus cannot simply be described ‘from within’, but must be deciphered and interpreted, as it were, ‘from without’.

Understanding or ‘knowledge’, hermeneutics maintains, is always intersubjective.14 The implication of this for economics would be that the meaningful patterns of human action it studies are not to be made intelligible in terms merely of the action on the part of isolated individuals. The notion of ‘methodological individualism’, while it does have some methodological usefulness,15 stands in need of refinement. I have never understood why it is that economists show such a penchant for explaining social ‘wholes’ in Robinson Crusoe terms—as if somehow this strange, pitiful character epitomized the essence of mankind and embodied in himself alone the essence of society, as if the ‘economic’ were to be found in a society consisting of only one member (that is, a society which is a nonsociety). As a hermeneuticist, I feel very uneasy when an economist friend of mine says: ‘institutions are merely complexes and patterns of individual acts, no more [my italics], there is nothing over and above the actions of individual people…. [I]nstitution[s] consist solely of a complex pattern of individual actions’ (Block 1980, p. 405).

As was mentioned, the notion of methodological individualism is widely shared by economists. However, it is perhaps worth noting that Hayek employs it in a distinctly non-empiricist and non-Popperian way. In fact, in his case, it served a properly hermeneutical purpose in that it had for its effect to reinstate the inter-subjective as an irreducible realm. Only in the light of the intersubjective does methodological individualism make good sense. Consider for instance these words of Hayek:

One curious aspect of this problem which is rarely appreciated is that it is only by the individualist or compositive method that we can give a definite meaning to the much abused phrases about the social processes and formations being in any sense ‘more’ than ‘merely the sum’ of their parts, and that we are enabled to understand how structures of interpersonal relationships emerge, which make it possible for the joint efforts of individuals to achieve desirable results which no individual could have planned or foreseen.

(Hayek 1972, pp. 151–2)

Thus, far from standing for some kind of atomistic individualism (as it does in the case of many economists), Hayek’s methodological individualism is, in effect, a defence of what might be called the hermeneutical priority of the

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‘social’. This is fully apparent when one considers that for Hayek the ‘compositive’ approach of methodological individualism is to be contrasted to the ‘resolutive’, analytical approach which according to him characterizes the natural sciences. The latter approach is one which, in accordance with the traditional mechanistic-empiricist-positivist way of proceeding, decomposes complex wholes into simple parts and which seeks to explain the whole (e.g., an organism, an economy) in terms solely of the interactions between its (supposed) constituent parts—the ontological prejudice at work here being that the ‘parts’ are more real than the whole. From a hermeneutical point of view, it could be said that the whole point of methodological individualism is, or should be, not to reduce the whole to the sum of its parts but to remind us that these irreducible ‘wholes’ are nevertheless not things—to be explained causally—but are, rather, interpreted objects and are not understandable apart from the categories of human understanding and agency (it goes without saying, of course, that only individuals understand and act).

One thing that the interpretive approach has emphasized is that human action cannot properly be understood if the trans-subjective dimension of human existence is not also recognized; if, in other words, we do not recognize a ‘category’ beyond those of the merely ‘objective’ and ‘subjective’. Charles Taylor, a prominent hermeneutical writer and associate of Ricoeur, has spoken out persuasively on this score:

what we are dealing with here is not subjective meaning…but rather intersubjective meanings. It is not just that of the people in our society all or most have a given set of ideas in their heads and subscribe to a given set of goals. The meanings and norms implicit in these practices are not just in the minds of the actors but are out there in the practices themselves, practices which cannot be conceived as a set of individual actions, but which are essentially modes of social relation, of mutual action.

(Taylor 1979, p. 48)

Thus it seems to me that posing the methodological problem in terms of individualism versus collectivism or universalism, as Mises does (1963, pp. 41– 2), may give rise to unnecessary difficulties. To ask: ‘Which is prior, the individual or society?’ may be to ask a misleading question—even if the question is not posed in a merely temporal sense (which Mises does not do) but in an ontological-epistemological sense (which he does appear to do). A properly dialectical approach might well be more fruitful. It is quite true, as Mises says, that ‘The life of a collective is lived in the actions of the individuals constituting its body’ (Mises 1963, p. 42). Even Ricoeur (with the Marxians particularly in mind) said that: ‘The only reality, in the end, are individuals who do things’ (Ricoeur 1985, p. 216). And yet it is equally true that the individual achieves meaning in his own life and an understanding of himself only through his practical preflective engagement with others and his participation (on a level

WHAT IS HERMENEUTICS? 41

before any self-conscious awareness) in society. The question, ‘Which is prior, and which is to be explained in terms of the other, the individual or society?’ is an epistemological-foundationalist question which we, in a post-foundational age, would perhaps be best not to raise in the first place.

In Mises the question of methodological individualism is tied up with the question of the individual’s relation to the meaning of his own action. When discussing methodological individualism he also says: ‘It is the meaning which the acting individuals and all those who are touched by their action attribute to an action, that determines its character (Mises 1963, p. 42). What Ricoeur has termed the ‘hermeneutics of suspicion’—the deconstructive work of Marx, Nietzsche, and Freud—has taught us to be suspicious of the accounts that individuals may give of their own actions. In fact, as Ricoeur concedes to the hermeneutics of suspicion, ‘consciousness is first of all false consciousness, and it is always necessary to rise by means of a corrective critique from misunderstanding to understanding’ (Ricoeur 1974, p. 18).16 If we have legitimate reasons to be suspicious of statements of intention (in the interpretation of either actions or texts), there are also good reasons for doubting that, as Mises puts it: ‘If we scrutinize the meaning of the various actions performed by individuals we must necessarily learn everything about the actions of collective wholes’ (Mises 1963, P. 34).

If economics is indeed a social science, it ought to avoid overprivileging the individual (the ‘subjective’); its object is not so much subjective meaning and intention as it is intersubjective patterns of action. In this context, Mises can once again serve as an example. It seems to me that Mises’s discussion of the ‘I and We’ in his magnum opus is an unfortunate weak point in his overall philosophy. Mises simply assumes that the I is something given and indubitable. In a sense, of course, it is. Descartes was right: No one can legitimately doubt their existence. Mises’s version of Descartes’ cogito, posed in terms of the praxeological Ego, would run: ‘I act, therefore I am’. The trouble with the I which is open to direct introspection (‘from the inside’) is, as Ricoeur would say, that it is a completely empty I. In other words, I exist, no doubt about it, but who or what exactly am I? This question, Ricoeur maintains, cannot be answered descriptively (the I is not something ‘observable’) but only through a roundabout process of deciphering interpretation. He writes:

the celebrated Cartesian cogito, which grasps itself directly in the experience of doubt, is a truth as vain as it is invincible…. [T]his truth is a vain truth; it is like a first step which cannot be followed by any other, so long as the ego of the ego cogito has not been recaptured in the mirror of its objects, of its works, and, finally, of its acts…. Thus reflection is a critique…in the sense that the cogito can be recovered only by the detour of a decipherment of the documents of its life.

(Ricoeur 1974, pp. 17–18)