Individualism In Economic

Individualism In Economic

Individualism, in economic theory a name for the competitive method of industrial organization. Originated by the school of Saint Simon, who founded the opposing method of socialism. Individualism was taught in varying degree by John Locke, Bernard Mandeville, David Hume, Adam Smith, Edmund Burke, Alexis de Tocqueviue, Lord Acton and the classical economists in general. Individualism is the theory of society that human institutions can develop without a directing mind or deliberate design. Its opposite is the dirigiste, collectivist or rationalist theory that society is best moulded by 'social engineering' or central direction, planning or control, because men can discern and organize the 'public interest'. Economists of the individualist school claim that 'social engineering' makes the unrealistic assumption that man is rational, clear-sighted and concerned only for the public good; the individualist or competitive economic order assumes that if power is concentrated man will abuse it and therefore that concentration must be prevented because power cannot easily be disciplined. Power is broken up in a competitive order by dispersing the sources of goods and services among a number of suppliers.

The individualists envisaged that a competitive system would require a framework of law that would lead individual motives to serve the public good. Edmund Burke spoke of the need for 'well-constructed institutions in which the rules and principles of contending interests' would prevent one from prevailing over the others. Adam Smith, Jeremy Bentham, J. M. Keynes, Lord Robbins, F. A. Hayek and other economists were also concerned with the institutional framework required for, and the role of state acting in, a competitive society.

The classical economists argued for an individualist order because they thought that if man were to contribute his best to society he should be free to use his inherited or acquired faculties and to be guided by his concern for that part of it he knew and understood himself, his family, friends and any persons or purposes for which he cased to exert himself. The task of the classical economists was to devise institutions that would harness these immediate ends to serve human needs beyond individual vision. Their solution was the mechanism of the market, which they said would make the individual contribute 'to ends which were no part of his purpose'. Edmund Burke said that, if individuals were not allowed to associate spontaneously and without conscious central direction by one or a few human beings, 'everything about us will dwindle by degrees, until at length our concerns are shrunk to the dimensions of our minds'.

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Since then his writings have in turn been increasingly reinterpreted as a special case both by some followers and by some economists who had not wholly accepted his writings. The content of economics is in a state of change, and this site is therefore not a final statement of economic doctrine.

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