…to the extent that “Collectivism” means “somebody else controls everything and makes all the decisions, nominally in the best interest of everybody else,” it leaves a lot to be desired as a political philosophy.

You’re stating it in absolute terms when its a matter of degree and you’re conflating the popular ideology (collectivism) with its results (individuals with subsidized institution of coercion).

And I’m happy to argue that my imaginary state is both preferable to and more realistic than his.

No, complete red herring. I am not presenting this criticism as an argument for anti-statism, but as a criticism of collectivism explicitly as it is illogical and in practice results in “extreme forms of statism—state communism, fascism, and theocracy,” which I explicitly assumed were given as dangerous by the reader.

We can look at history and the current state of the world to see the degrees of individually voluntary human interaction vs. statism. It’s not hypothetical. And this equally applies whether you’re immediately in favor of liberal democracy of voluntary post-state society or whatever.

 Whakahekeheke keeps insisting that a hallmark of the state power or collective power is physical coercion. A state is typically defined as the entity that gets to do the physical coercion. Of course, it doesn’t follow that if you take away the state there will be less physical coercion. 

We all have some power of coercion, and non-state entities do engage in coercion. The hallmark of the state is not just coercion, but ideologically subsidized coercion. It is the legitimizing ideology of “the state” that drastically decreases the marginal cost of coercion for the individuals who control the top-down institution, making the state possible. Without such ideology, you do have less total coercion as coercion is expensive and mass coercion on the level of a state is cost-prohibitive. Once the ideological monopoly of the state is established, the marginal coercion reinforces the ideology and a circular system spins out of it. The ideology is key, which is why the ideology of collectivism is important.

When people band together and make a bunch of rules, they can hopefully avoid the worst of the fighting—or at least put safeguards to ensure that people who act in certain ways can avoid the fighting.

“People banding together and making a bunch of rules” is not the state. No state has ever been formed voluntarily based on people getting together and forming rules based on their individual self-determination. That is order emergent from individual interaction, not imposed top-down by an ideologically subsidized institution of coercion. That does happen but it’s not the state or the origin of any state. To equate the state to “everybody working together” is childish fantasy.

I can’t know what you value better than you do—but I might be able to provide you what you value better than you can.

Yep, sure, and your gift scenario is not in any way relevant to anything that has been said. Someone else may have the means to some good you value that you do not (obviously) and of course we often have sentimental value in an object because it was given to us by someone else or because it was a surprise or whatever. None of that means I can know what you value better than you know what you value. If I give you a gift that you would not have been able to get yourself or would have not valued otherwise, I still only know that you value it by your voluntary revelation of what you value. You may reject the gift, which doesn’t give me or anyone logical justification to force it on you under threat of death. I can guess, but I can’t know what you value better than you know what you value.

Actually, that’s not at all what Arrow’s Impossibility Theorem states. It states that under a certain set of assumptions, it is impossible to create a voting system that perfectly ranks everybody’s preferences.

No, voting was the particular mechanism Arrow used, but the proof was for all collective choice or what was called collective rationality:

“The root facts here are the incommensurability and incomplete communicability of human wants and values.  George Bernard Shaw long ago observed, “Do not do unto others as you would have them do unto you.  They may have different tastes.”  Social good, as in the determination of a just income distribution, is an abstraction of some kind from the individual values of the members of the society.  But this abstraction can only be based on interpersonally observed behavior…  As is by now well known, attempts to form social judgments by aggregating individual expressed preferences always lead to the possibility of paradox. Thus there cannot be a consistent meaning to collective rationality.”

- Kenneth Arrow, the Limits of Organization

Arrow is a subtle and modest guy, but what the proof demonstrates for voting is that even under ideal conditions of direct (not the oxymoron of “representative”) democracy, 100% participation, voter rationality, etc. the result does not get you to a substantive aggregation of individual values. Once you consider the real-world application of public choice economics to how voting actually works, it is clear that it represents little more than a dirty clusterfuck for coerced money and coercive power among special interests behind the backdrop of ignorant, irrational voters.

Economic Predictions

Orthodox Keynesians had their fundamental macroeconomic predictions fail as they holistically derived the impossibility of stagflation. Stagflation happened. They were discredited and split into New and neo-Keynesians (methodological individualists) and post-Keynesians (mathematical individualists).

Behavioral economists? You’ve got to be kidding.. behavioral economists haven’t made any significant macroeconomic predictions whatsoever. They don’t even try. Experimental economists, microeconomists, and public choice economists—i.e methodological individualists have. For example, USC economist Fred Foldvary in 1998 predicted a real-estate bubble fueled crisis would occur in 2008. Financial economist Peter Schiff wrote a book in 2006 detailing exactly what would happen and had been predicting it since 2002. Many other economists, such as Jeff Dunham, Marc Faber, Fred Harrison, Eric Janszen, Kurt Richenbacher, etc.  predicted the crisis in detail. All of them methodological individualists. (Also, FA Hayek won the Nobel prize in economics explicitly in part for predicting the Great Depression years in advance).

Axioms / Principles of Methodological Individualism

I. The first principles of logic (A=A, the law of identity, the law of non-contradiction, etc) are valid. You cannot dispute them without presupposing their validity in the articulation of your dispute.

II. Individuals are the basic unit of human society. You can have humans without collectives (eg. my state of nature, a hermit, etc.) but you cannot talk about collectives outside of what you know of them from individual action and interaction. Collectives are conceptual aggregations of / emergent from individuals. To dispute this, you would have to describe collectives without some explicit or implicit referential basis to them in terms of individuals.

III. When acting on any conscious decision, individuals act purposively. (Non-purposive behavior includes things like unconscious body movement and dreaming.) In other words, in choosing to act, they seek some means to some subjective end.  (That end can be absolutely anything, including the action itself.) Thus an individual action is a manifestation of intentionality in choosing X action over inaction and all other potential actions. If you make the conscious decision to take the action of disputing this axiom, you are contradicting yourself since such a denial would demonstrate purposive action.

IV. You are not a mind-reader. You cannot know a priori what someone else values (we do assume basic physiological needs, though people eg. suicidals or masochists may not value them), or the relative values they have for different things, or some cardinal level of value they project onto different options. Value is subjective. (Note this is not a claim about value formation. Subjective value may be formed completely by social norms or genetics or whatever. It is about how you can know about someone else’s values.)

V. Thus, subjective value is revealed marginally by (#2) individual human action, ie. (#3) the purposive actions taken reveal the conscious decision-making of the individuals, and thus their (#4) subjective value. However you only know their values insofar as they are revealed, and you only know them marginally, that is you only know they ordinally value X action over inaction and other potential actions. You do not know the cardinal proportion of value they gave to each of those options (and neither do they ie. I value X 50%, Y 20%, etc.). 

Add. This does not mean you can’t talk about collectives. You obviously can. However, the individual is the primary unit. Individual values may be formed by collective variables, but those collective variables are not the primary unit. We talk about collective variables (language, culture, market prices, community, society, law, etc.) by first acknowledging that they emerge from individual action and interaction, even if we cannot precisely describe the process of their emergence.