Methodological Individualism

In the Preface, Hayek writes:

Schumpeter was very much a “master of his subject”, in contrast to the “puzzlers” or “muddlers” which follow their own distinct ideas; he also showed a strong receptivity to the dominant opinions in his environment and the prevailing fashion of his generation. Nowhere does this show more clearly than in the still entirely Mengerian chapter of his early book, now translated into English for the first time, and regarded as the classic exposition of a view which he later abandoned. Many of his students will be surprised to learn that the enthusiast for macro-economics and co-founder of the econometric movement had once given one of the most explicit expositions of the Austrian School’s “methodological individualism”. He even appears to have named the principle and condemned the use of statistical aggregates as not belonging to economic theory.

That this first book of his was never translated is, I believe, due to his understandable reluctance to see a work distributed which, in part, expounded views in which he no longer believed. His reluctance to keep his brilliant first book in print, much less having is translated, can probably be explained by his awareness that his own distinct opinions emerged only in his second book on the Theorie der Wirtschaftlichen Entwicklung (Theory of Economic Development), which came out four years after the first. Though the author may later no longer have been prepared to defend the ideas of his first work, they are certainly essential enough to the understanding of the development of economic theory. Indeed Schumpeter made a contribution to the tradition of the Austrian School which is sufficiently original to be made available to a wider public. I regard it as a very meritorious effort that Mr. Michiel van Notten had devoted his skill to publishing a faithful translation of that part of Schumpeter’s first work which marks a distinct milestone in the evolution of opinion on the important subject of individualism.