This semester at GMU, I am teaching two sections of international trade (Econ 385: International Economic Policy and Econ 390: International Economics). In both classes, I began with a lecture (reiterated in subsequent lectures) that the focus of analysis is the individual: the government does nothing. The decision-makers in government do something. Ford Motor Company does nothing. The CEO (or COO, or purchasing manager, etc) do something.
As such, these collective nouns (the government, the firm, the society, etc) can be useful shorthand so long as it is understood that the individual remains the focus of analysis. But they can also be highly misleading. In international trade, for example, nations do not trade. It doesn’t make sense to talk about China trading with the US or the US specializes in X and Croatia specializes in Y (even as a shorthand). Bobby in Boston buys a toothbrush from Li in Lanzhou. End of story. These transactions may be aggregated upward based on all the transactions that occur within some political boundary, but ultimately it is still individuals who trade.
When does it make sense to use a collective noun such as government or firm? When the action taken calls for collective action. In other words, when there is a margin being adjusted upon that the individual cannot adjust upon.
Perhaps an example will help. Consider two men trying to load a heavy box into a truck. The effort is not merely the summation of their two efforts. If Joe lifts and then Richie lifts, the box ain’t going anywhere. It is only through their combined efforts at the same time that the box is moved. The two men working as a team adjusts along a margin (moving the box into the truck) that individually they could not do alone.
So, it makes sense to refer to a collective noun as a collective noun when there is some effort going on that only the collectivity can achieve. Only Ford by its nature as a firm man design, manufacture, market, distribute and retail cars. It is the collective action taken by many individuals whose individual contributions are hard to separate from the collective goal; where anyone individually working alone would face costs too high to make the action occur. The team of Joe and Richie does and Joe and Richie cannot alone do. It makes sense to refer to them as a team.
The way international trade is discussed and taught is largely misleading if one is not careful about this subtlety. International trade remains, ultimately, a microeconomic event.