In this paper we delineate two distinct conceptions of individuals within the Austrian tradition: (1) autonomous subjective individuals and (2) rule-following agents who draw on their institutional environment. Both can be traced back to Menger's work, but over time the approaches have grown apart. The first approach was developed by Mises, Shackle (and Buchanan) and Rizzo, the second tradition by Hayek, Lachmann and Koppl and Wagner. We connect the second approach to Clark and Chalmers work on the extended mind and active externalism in psychology, while we argue that the first tradition is rooted in a now outdated subjective cognitivism. The active externalism also known as ‘4E cognition’: embodied, embedded, enacted, extended cognition, is congruent with Hayek’s work in (cognitive) psychology ‘The Sensory Order’ and the perspective he developed on the epistemic character of markets and other social structures. We argue for the superiority of this conception of the individual that follows from the second approach, and address the concern that this might come at the expense of methodological individualism as it is traditionally understood.

Note: Joint work with Blaž Remic