Toward an Austrian theory of the self

Abstract One of the key distinguishing features of Austrian economics is subjectivism. Subjectivism has been understood as the foundation for why individuals are different from each other, and as a basis for individual agency, including the ability of individuals to remake themselves and the world around them. Individualist subjectivists emphasize the imaginative and creative potential of individuals, as well as the dynamic and open character of the self. This paper argues that this dominant understanding of subjectivism fails to account for why individual perspectives are heterogenous in the first place, it overestimates individual agency, and informs a misguided notion of individual freedom, understood as independence from other wills and perspectives. A different theory of the self can be constructed based on Austrian contributions, one which suggests that meanings and beliefs form endogenously in the process of social development. This perspective sees individual preferences, self-understanding, and even ‘the self,’ as emerging from the division of labor and other social relations. The paper’s main contribution is to develop a causal-genetic theory of the self, which can explain why individuals grow more heterogenous as society becomes more complex. Given that this theory of the self is to some extent only latently present in Austrian thinking, I reinforce it at points with elements from the work of George H. Mead, particularly his theory of the emergence of mind. This alternative theory of the self has the further virtue of creating congruence between the evolutionary and gradual theory of institutional change and the Austrian theory of the individual.