As someone with some contact with the Austrian economics community, I've often been involved in discussions about methodological individualism (often taking a "Me vs. Everyone Else" format). This issue came up again for me in glancing over Walter Block's essay, "On Robert Nozick's 'On Austrian Methodology,'" and I figured it might be worth trying to write up a post to spell out my take on this issue.
Basically, my issue with methodological individualism has been that if it's presented in a way that makes it plausible, it ends up sounding a whole lot like moderate holism. Here's what I mean:
Moderate holism, as I understand it, is the view that there are group phenomena, but that those group phenomena are the consequences of the activities of their components. So for example, when hockey players work together as a team, one cannot readily interpret their actions without making reference to the group phenomenon of the hockey game. The left defenseman holds the puck behind the net, waiting for a line change, then makes a crisp first pass up the ice to the center streaking across the red line. Confronted by the opposing team's "back-checking forwards as he crosses the blue line, he makes a drop pass to a pinching right defenseman, who fires the puck towards the net. The opposing goalie makes a sloppy kick save, sending the rebound into the slot, where the left wing is waiting -- an easy tap in goal. The red light goes on, the crowd cheers, and the goal horn blasts...it's all completely familiar (to us hockey fans, that is -- the rest of you can take a hike). But what we see in a hockey game is only comprehensible by understanding the social context in which the actions take place.
One might imagine someone who had never been exposed to sports before asking, "But why does everyone cheer when that black disk goes into that mesh enclosure?" or "Why did that man just skate into that other man and knock him over?" The answer would essentially be, "Because they're playing hockey." But when we explain hockey to someone, we don't talk about the individual players' biographies or the reasons why a bunch of people like to pay money to watch other people skate around wearing special clothes in a big building with a frozen lake inside. We make reference to a set of conventions that, in an important sense, are separate from the individuals who act out those conventions at any particular time. We say, "Hockey is a game where people form two teams and try to score points by putting a black disk in the other team's net. Many people who watch hockey a lot choose a team to root for from a group of teams called the National Hockey League, and care very much about the performance of their team relative to other teams in the league."
In order to attack this point of view, the methodological individualist might argue that actually, hockey can and should be understood as simply the sum of all individual events that embody the conventions of the game of hockey, as understood through reference to the points of view of each individual actor involved in the social situation. In other words, that when we make reference to the social convention of hockey, we're really just using lazy verbal shorthand for the collection of individual instances of events understood by participants to be "hockey games." Such a response, though, would need to answer to the fact that we understand what it means to be "playing hockey incorrectly." And we don't mean by this that someone else's way of playing hockey does not match our own. It embodies a belief in hockey as an "objective" set of conventions which is not open to the kind of pluralism that an individualistic theory would seem to have to accommodate. I'm not sure what could be said about this. Maybe there's a good response, though; if so, I'd love to hear it.
Another problem arises from the fact that it is comprehensible to talk about "the good of the team," as apart from the good of each individual player. For example, it could be that there's a badly performing hockey team that isn't going to make the playoffs. At the end of the season, the players all might very strongly desire to save their sense of dignity by playing as hard as they can, winning a few extra games before they start their summer break. But perhaps by doing so, they raise their team's position in the standings, meaning that the team doesn't get as good of a draft pick. Everyone on the team could be made better off by this, but the team might suffer anyway. Again, I don't know how one would respond to this problem.
The other way that the methodological individualist could respond would be to insist that actually, the existence of inherently social phenomena like hockey is perfectly compatible with methodological individualism. This seems to be the approach implicit in Block's discussion (though it's not clear to me that this is the case); he seems to found methodological individualism on the idea that only individuals act, and there is no "group mind" which controls group phenomena. Given that there's nothing that happens in hockey besides the things that are brought about by the individuals who are involved, someone like Block might point out that "See? There's no group-anything going on; there are just people in there!"
But as I understand the position, moderate holists don't need to suppose the existence of a "group mind" at all, and many of them (if not most or all) don't do anything of the sort. I mean, even Marx was content with the notion that "...circumstances are changed by men..." and presumably the methodological individualist would not want to claim Marx as part of her team (I don't say that because I have a problem with Marx; it's just that if Marx is a methodological individualist, then methodological individualism is a blatant misnomer). So as I see it, the plausible methodological individualist is actually holding a position which is pretty much identical to moderate holism. And because moderate holism explicitly accommodates social phenomena, and because methodological individualism is widely held to refer to a position which is incompatible with moderate holism, I don't see any reason for people to identify themselves that way.
So why do they do it? My theory is that it comes from being influenced by people like Mises, who were reacting to radical holists who did believe in the existence of a "group mind" (like Hegel). But since Mises wrote, philosophy has progressed, and I think it's become pretty clear that methodological individualism wasn't quite an appropriate way to look at the world (though not really because people like Mises were wrong; radical holism is still ridiculous, and for the reasons that the early methodological individualists understood). I think that if pressed, someone like Mises would have agreed that a completely reductionist way of understanding social phenomena is not appropriate. So I hope that the descendents of the methodological individualists can do the same.