Political liberalism underwent drastic transformations at the height of the Cold War, recasting itself along rationalist lines to cope with the demands of an intensifying ideological struggle and nuclear arms race. The rationalist approach has since established itself as a dominating form of liberalism that is popularised and adopted widely across academic disciplines and governing institutions. This essay seeks to evaluate influences that the two key assumptions of rational choice theory, namely methodological individualism and instrumental rationality, exert on political liberalism. This essay argues that the underlying assumptions and logic of rational choice liberalism (or neoliberalism) erodes the public sphere by removing normative aspects of traditional liberal theory, and imposing a conception of agency that fails to capture the role of social facts such as morals and norms.
Under the rational choice framework, the subject of enquiry moves away from the social collective to individual members of society, thus prompting theorists to interpret social outcomes purely through an aggregate of individual choices and preferences. Amadae attributes the move as a reaction against a fear (shared amongst scholars such as Hayek and Buchanan) towards liberal democracy’s descent into totalitarianism in a Soviet or Fascist manner, and the subduing of individual rights under a tyranny of majority that is advanced under the name of a collective will. Emerging from these worries, rational choice theorists are committed to methodological individualism, which eliminates what Buchanan considers as the mystic and arbitrariness of a potentially imposing “general will”, by advocating for our sole focus on individual pursuit of private preferences.
However, to fully account for private preferences that individuals hold, one must enquire upon the origins of such choices. Arrow attempts unsuccessfully to bring in social aspects to individualist analysis by underpinning individual action and choices in relation to socially supplied knowledge (i.e. information about externalities and various social costs that uncoordinated collective action has caused). His analysis concludes that acquiring social knowledge is “very incompatible […] with rational choice” since it contradicts the assumption that information (i.e. preferences) are held private. Thus, liberalism is forced under the rational choice approach to methodologically neglect social and institutional factors, and is no longer concerned with the different ways individuals interpret, evaluate, judge and interact with social facts. Notably, as Hodgson points out, if social and institutional factors are taken into account and reflected on models as individual tastes or attitudes, we will have to explain these social and institutional factors in terms of other individuals. The role of social culture, for instance, may explain why a Brexiter supports UKIP, a nationalist party, instead of traditional political parties; but the social culture that the individual ascribes to is ultimately a category that is constituted and defined by how a collective of other individuals see themselves and act. These individuals are also equally influenced by various social and institutional factors. This infinite regress points to a duality between agency and structure that lies hidden within the individualist methodology, and the important connection and interaction between individuals and the socio-cultural and institutional environments they inhabit.
Methodological individualism recasts political liberalism with market sovereignty, and erodes the public sphere by denying the need for political decisions and common or group interests. It introduces liberalism to a new reliance on private economic market mechanisms, by which political outcomes are to be determined purely by the aggregate supply and demand of political preferences. As such, liberalism is no longer viewed as a normative and utopian project of universal liberty in which states and the social collective would advocate or promote, but a mere explanatory theory that accounts for the process of political engagement along individualistic lines. As a result, neoliberal theory has become primarily concerned about a political agent’s individual interest, rather than how and why liberal ideals of peace, liberty and cooperation are sustained collectively through public institutions such as governments and international organisations.
Rational choice theory holds that individual agents employ rational analysis as an instrumental means of achieving utility maximising ends. It served as a “reliable rational safeguard [… that] tame[d] the thermonuclear arsenals ordered by the politicians” during the height of the cold war, and has since become a prevalent way of decision making. The problem with this assumption, however, is that it reduces all political action to strategic interactions. By conceptualising human interaction as best strategic responses and a mere calculus of cost and benefit, rational choice liberalism neglects the way in which political agents reason and act in accordance to wider political, cultural and social contexts.
Liberalism’s normative essence remains crucial to motivating and accounting for active participation in society. As Jenny Stewart argues, liberalism as an explanatory theory weakens the liberal order. The more reliant a society is on the use of incentives and sanctions to put certain collective action in place, the less likely are they to be effective. Domestic politics and public policy is best conducted when members of society are supplemented with a wider range of reasons other than economic incentives to act accordingly even without as much regulations in place. A stronger sense of community and political ideal, for instance, seem to address Stewart’s worry. The success of student-led boycott movements that emerged against the National Rifle Association (NRA) in the US in 2018, demonstrates the extent to which moral reasoning shared by a collective becomes a more effective resource than pure economic incentives to shaking up political consensus or at least societal and collective inaction. Nevertheless, by neglecting the importance of intrinsic values of liberal theory, neoliberalism establishes itself as a theory that, ironically, can no longer account for acts of cooperative behaviour in liberal society without reference to a function of expected utility.
In the realm of international relations, traditional liberal theory holds the key to enforcing normative goals and visions of international peace. It is a political theory that is concerned with what the international order ought to be rather than what purely is. Norms in human rights protection and humanitarian intervention, for instance, are built and sustained through global institutions like the United Nations and international law. Individual state actors constitute both an institution and an agent in the production and evolution of these norms. Whilst humanitarian intervention is based upon ideals of humanitarianism and a normative justification to the value of human life, it is something that remains actively interpreted, understood and applied by state actors as they supply distinct meanings to these norms. Under the rational choice framework, it seems unclear as to why humanitarian intervention should be adopted if expected utility for such action falls below that of inaction. In fact, even if expected utility for inaction is greater that of intervention, this remains an empirical claim that does not conclude the case for inaction. Rational choice liberalism lacks the philosophical resources, which traditional liberal theory is equipped, to offer possible justifications and explanations on why and how agency interpret social norms and similar social facts.
To conclude, rational choice theory’s commitment to methodological individualism and instrumental rationality recasts political liberalism into a purely explanatory theory that no longer retains the normative goals and philosophical background of traditional liberal thought. The essay has shown that without these key aspects, neoliberalism is unable to capture the wider contextual factors that influence individual action in their models, limiting its ability to fully explain and defend political action on both the domestic and international level.
 S. M. Amadae, Rationalizing Capitalist Democracy (Chicago: University of Chicago Press, 2003), p.7.
 Ibid., p.3.
 James M. Buchanan, The Calculus of Consent (Indianapolis: Liberty Fund, 1999), p.17.
 Kenneth J. Arrow, “Methodological Individualism and Social Knowledge”, The American Economic Review, 84/2 (1994), p.8.
 Geoffrey M. Hodgson, “Meanings of Methodological Individualism”, Journal of Economic Methodology, 14/2 (1986), p.219.
 Eric Hobsbawm, “Democracy Can Be Bad for You”, New Statesman, 5 March 2001, p.26.
 Paul Erickson, et. al., How Reason Almost Lost Its Mind (Chicago: University of Chicago Press, 2013), p.2.
 Christian Reus-Smit, “The Strange Death of Liberal International Theory”, European Journal of International Law, 12/3 (2001), p.574.
 Jenny Steward, “Rational Choice Theory, Public Policy and the Liberal State”, Policy Sciences, 26/4 (1993), p.328.
 Jenny Edkins, ‘Humanitarianism, Humanity, Human’, Journal of human rights, 2/2 (2003), p.255.