Couze Venn on Foucault’s analysis of neo-liberalism: Implications for the present
In this special feature, Couze Venn analyses Michel Foucault's conception of neoliberalism as located within an integral part of his analyses of the relationships between power, governmentality and political economy.
From laissez-faire to neo-liberal ‘framework’
Image: Michel Foucault. Source: Britannica.com.
The critical reading of neoliberalism which Foucault developed in The Birth of Biopolitics elaborates a perspective which enables us to better understand the global world today from the standpoint of the possibility of overcoming present conditions. As such it is both prescient – being the edited version of lectures he gave in 1978-79 – and a challenging renewal of critical theory at a moment when contemporary societies face fundamental crises arising from the limits that the global world is approaching regarding climate change, the depletion of basic resources and economic growth. One should locate it as an integral part of his analyses of the relationships between power, governmentality and political economy, and thus part of the series of lectures from Society Must be Defended (2003 [1975]) which re-examines power in terms of the multiplicity of the relations of force that can be coded as ‘war’ or ‘politics’ and which political economy reconstituted in terms of biopolitics.
Foucault’s approach is clear when at the start of his detailed interrogation of neo-liberalism, he asserts that ‘Neo-liberalism is not Adam Smith; neo-liberalism is not market society; neo-liberalism is not the Gulag on the insiduous scale of capitalism’ (BB: 131). This assertion is meant to distinguish his position from three approaches to neo-liberalism, namely, the economic point of view that it is ‘no more than the reactivation of old, secondhand economic theories’ (BB: 130), the sociological point of view that ‘it is just a way of establishing strictly market relations in society’ (ibid), and the political point of view which claims neo-liberalism to be ‘no more than a cover for a generalized administrative intervention by the state’ (ibid.). This distinction marks a point of departure from conventional left analyses whilst opening up a position that shifts the gaze to genealogy, to conditions of possibility and to the practices constitutive of actual state of affairs. So, for him ‘The problem of neo-liberalism is rather how the overall exercise of political power can be modeled on the principles of a market economy ... to discover how far and to what extent the formal principles of a market economy can index a general art of government’ (BB: 131). The answer leads Foucault to a study of the transforations in classical liberalism that were necessary for neo-liberalism to become the new framework for this reordering of modern society.
The first of these was ‘that of dissociating the market economy from the principle of laissez-faire’ (BB: 131). Much is at stake here which is unpacked in the lectures partly through a genealogical analysis of the emergence of classical political economy towards the end of the 18th century and its role in the reconstitution of the rationality underlying governmental action, and partly through reconstructing the steps whereby ordo-liberals in Germany, then neo-liberalism in America and in Britain and France, depart from key aspects of the discourse of liberalism. The first of these shifts for Foucault was the foregrounding of competition, rather than laissez faire, as organizing principle framed by the recognition that competition was not a ‘primitive and natural given, [but] ... a structure with formal properties .. that assured, or could assure, economic regulation through the price mechanism’ (BB: 131). The thinking for early neo-liberals and German ordo-liberals of the Freiburg School was that laissez-faire ‘naturally’ lead to monopolies and thereby the elimination of competition, which introduces distortions that disrupt the price mechanism as theorised by classical political economy (BB: 134). So, on the one hand, a permanent vigilance was needed, and, on the other hand, related to vigilance, the need to establish the ‘rules of the game’ to ensure that competion could operate as regulating mechanism allowing the market to determine the ‘true’ price and the rational allocation of resources. In any case the argument was that for concentration to turn into monopoly, there needed to be ‘the support of the state, laws, courts, public opinion’ (Foucault, citing Rustow, BB: 136). An important point is made here, taken up on several occasions, which underlines the fact that ‘laissez-faire’ itself is not ‘natural’ but requires conditions which a state must put into place, including laws, say about property and ownership, the framework of transactions, the regulation of labour and so on. Foucault’s analysis refers to the Walter Lippmann Colloquium of 1939 at which key thinkers of ordo-liberalism, associated with the Freiburg School (Ropke, Rustow, Hayek, von Mises in particular), debated the way forward for liberal capitalism in the light of the failures of laissez-faire exemplified in the great crash of 1929 and the critiques of liberal capitalism which people like Schumpeter had been elaborating.
There is an interesting history in the background to this shift, which Foucault’s genealogy reconstructs, partly in Birth of Biopolitics and partly in Security, Territory, Population. Its main lines concern the attempt by the Physiocrats in the 18th century to ground state rationality in the economy rather than in a notion of the power of the Prince or sovereign power, and Adam Smith’s arguments against the assumptions of the Physiocrats, particularly the assumption that the state must be able to have perfect knowledge of the market and its operations in order to act as arbiter. Smith for example argued that such perfect knowledge was not possible, given the complexity of market transactions, and the new spatial geography of commercial activity, which by the eighteenth century was colonial and global (Venn, 2006). The debate therefore was about the role of the state, a topic which has remained central for political economy ever since. For Smith, only the market itself could regulate itself, as if naturally, through the principle of the ‘invisible hand’, that is to say, a process whereby although the individual decisions of participants in the market are motivated by private interest alone, unconcerned by the common interest or general good, nevertheless things work for the benefit of all, as if an invisible hand were guiding the transactions to ensure this outcome (Smith, 1812: 352, 354, BB; 278, see Venn, 2009). Foucault later points out that the presumption of an ‘invisibility’ masking a kind of providential power ensuring the general interest as ultimate outcome implies that, for liberal political economy, the collective benefit must not be an objective for either the individual or the state (BB: 279-280). It is this laissez-faire assumption of naturalism – which can be thought of as the theological underside of liberalism – that ordo-liberals reject, though neo-liberals, especially in the USA, continue to uphold the principle of non-intervention by the state, or at least the minimal state, on the assumption that the market will naturally arrange things for the best.
For early neo-liberals, the recognition that the state has a role to play, if qualified and reconstituted, limited to establishing the ‘framework’, but within the rationality of the market, focussed attention on social policy. The state for European neo-liberals must intervene at the level of civil society, not as ‘counterweight’ to the effects of inequality (BB: 142), but to socialise some elements of consumption such as medical and cultural goods, or to effect transfers in the form of family allowances and thus to prevent open conflict and ensure growth, which would finance more generous social policy (BB: 142). So, the principle limiting state intervention is that there should be ‘no transfer of income from some to others’ (BB: 143), that is, no redistribution strategy - as in what the ordo-liberals call a ‘socialist social policy’ – because social policy should aim for a ‘vital minimum’and must operate through ‘privatization’ and the individualisation of risk (BB: 144). Foucault then remarks that ‘there is only one true and fundamental social policy: economic growth’ (BB: 144). I shall return to this at the end regarding the implications for a future economy that would need to be based on no aggregate growth.
For now, it would be useful to examine the other elements of the neo-liberal regulation of society according to the model of the market which Foucault foregrounds, particularly, competition, enterprise society, homo oeconomicus or enterprise man, law. These shifts signal the following distinctions between classical liberal capitalism and neo-liberal order: ‘not so much the exchange of commodities as the mechanisms of competition ... Not a supermarket society, but an enterprise society. The homo oeconomicus sought after is not the man of exchange or man the consumer; he is the man of enterprise and production ... It is a point of intersection of a whole series of things’ (BB: 147).
Enterprise society
The claim about the institution of an enterprise society based on competition rather than exchange is quite central in his analysis, though the dichotomy which he inserts between enterprise and consumer society or a Sombartian society on ‘the model of mass society, of the society of consumption, of commodities, the spectacle, simulacra, and speed’ presents some problems in the light of what has developed since 1979. It is clear that this dichotomy fails to take account of the affiliations and trade between consumer society and enterprise society, exemplified in Fordism. For instance, such a polarity cannot consider the underlying forces at work in what Stiegler (2008) characterises as the ‘libidinal economy of capitalism’, that is to say, the idea that ‘Capitalism needs to control conducts and in order to achieve this, it develops techniques of capture or captation (captation)’ (2008: 12), by a whole series of techniques that include the recruitment of libidinal energies for the satisfaction of basic drives – again Fordism and the car industry in America nicely illustrates the point. Stiegler explains that this capture of the individual requires the aestheticisation of objects of consumption and the reduction of humans to commodities through new mechanisms of individuation (Stiegler, op. cit: 33 ff). So, consumption does not become secondary, but cashes out an economy of desire that underlies both enterprise man and consumer culture. This is a complex issue that I cannot pursue here, though it is important to note it as an aspect of the engagement with Foucault’s perspective on neo-liberalism.
One connection though can be highlighted: it is the conceptualisation of the human individual in terms of homo oeconomicus, or enterprise man, that is, the idea that the new ‘economic man’ is the individual who, in Gary Becker’s view, ‘accepts reality’ by modulating his conduct so that it is ‘sensitive to modifications in the variables of the environment and which responds to this in a non-random way’, that is, according to calculations of an economic kind (BB: 269). Neo-liberal homo oeconomicus is man as entrepreneur of himself, and also as ‘human capital’, someone who can convert the ‘huan capital’ into an income stream; the worker in this vocabulary becomes a ‘machine-stream ensemble’ (BB: 225). This essential figure of neo-liberal doctrine is intelligible if one ‘absolutizes a certain notion of economic interest or choice’ (McNay, 2009: 61); furthermore, he is ‘the author of irreducible, atomistic and non-transferable choices that first emerges in English empiricist philosophy ... it is distinct, for example, from the subject of rights who lies at the heart of the social contract’ (McNay, 2009: 61). Foucault’s conclusions from Becker’s and other neo-liberal universalisation of liberal capitalist market rationality is that behavioural techniques can be devised, using the psychological sciences, to observe, analyse and control individual responses to changes in the environment. Thus, ‘homo oeconomicus appears as ‘someone manageable, someone who responds systematically to systematic modifications artificially introduced into the environment. Homo oeconomicus is someone who is eminently governable’ (BB: 270). This government of conduct has increasingly been institutionalised in a host of changes aimed at reconstituting the ‘environment’, including through the financialisation of social insurance systems, savings, and social welfare (Lazzarato, 2009). Foucault interestingly speaks of this politics as an ‘environmental technology’ (BB: 261, see also Massumi, 2009). Furthermore, the ‘generalization of forms of “enterprise” by diffusing and multiplying them as much as possible’ throughout the social body (BB: 148), is congruent with the marketization of social policy through an ‘audit culture’. The latter reduces social goods to the calculable, that is, it reduces them to the status of commodities whose value is circumscribed within the accounting practices developed to suit business rationality and calculation. This amounts to the elimination of an autonomous public sphere, as well as the constitution of civil society as part of the market (Lazzarato, 2009, Venn, 2009). Incalculable values like generosity, friendship, the dignity of life, that is, everything that makes life worth living, simply do not compute within this system; they are left to the domain of the private, although the latter is itself ‘colonised’ by what Stiegler (2008) calls ‘capitalist libidinal economy’.
A juridical-economic order
One of the key transformations in the aims of governmentality that neo-liberalism introduces is the downgrading of the strategy of normalisation and disciplining which had been central for liberal biopolitics (BB: 260); instead, government seeks to control conduct through ‘environmental technologies’, the establishment of the ‘framework’, and the control of the ‘rules of the game’. One could argue here that Foucault neglects the role of the media in relaying or taking over the objectives of normalisation previously ensured by different governmental mechanisms (see Stiegler work generally). Nevertheless, Foucault’s analysis points to an important displacement in the technologies that frame individual and agents behaviour once it is recognised that liberal capitalism and the so-called laissez-faire economy are not the result of a natural order, but ‘the result of a legal order that presupposes juridical intervention by the state’ (BB: 161). This means that ‘the economic must be considered as a set of regulated activities from the beginning’ (BB: 163). The apparatus for this regulation is an ‘economic-juridical ensemble’ (ibid.). So, law comes to occupy a new place within the rationality of government, not as principle of limitation of state power, as with the tradition of the Rule of Law or l’Etat de droit as it was understood in the nineteenth century (BB: 168, ff). Law instead establishes the ‘rules of the game’ consistent with idea that ‘the economy must be a game ... a set of rules which determine the way in which each must play a game whose outcome is not known by anyone. The economy is a game and the legal institution which frames the economy should be thought of as the rules of the game’ (BB: 173). It is a position advocated by F. Hayek in The Road of Serfdom, that key figure in American neo-liberal thought, associated both with the Chicago School and Freiburg, who opposed the model of state planning in its various forms – as the Welfare State, the New Deal, or socialism.
The example of this new technology of conduct in action is the way it is applied to crime and delinquency. In developing this example, Foucault says that for neo-liberal thought, crime is defined as ‘any action that makes the individual run the risk of being condemned to a penalty’ (Foucault, 2008: 251, citing Becker). Crime is any action punishable by the law; for the person who commits a crime, it is what ‘puts him at risk of punishment’. For the new economic man, whose actions are framed within market rationality, a crime in the end is an action which carries the risk of known costs, or ‘negative externalities’, which he may choose to avoid. According to this logic, law, in setting the rules of the game, has a prohibitive function, operating in terms of calculations of costs and benefits; it functions to balance the ‘the curves of the supply of crime and negative demand’ (BB: 256). Law in this doctrine does not have a reformative or moral function; good penal policy would simply have the effect of limiting the supply of crime. Law thus, as part of a juridico-economic order within the scope of market rationality, acts to constitute environments; it is an element of the framework. One could reconstitute the notion of security which was a central element of liberal or biopolitical governmentality (Foucault: 2007) within this different logic, such that technologies like surveillance, prohibitions, drastic punishments and so on can be seen as mechanisms to increase the cost of criminal acts.
This new functioning of law as part of a juridico-economic complex has another crucial implication which I’d like to highlight, namely, the devaluation of the subject of rights. For instance, current neo-liberal and the new right’s campaign against human rights and legislation introduced to protect them is perfectly consistent with the universalisation of market rationality and the fact that the principles underlying human rights radically undermine the primacy of the market and economistic calculations of gains and losses. There is a fundamental, quasi ontological, incompatibility at the level of universal principles and visions of social order between the two positions; this issue raises complex political and ethical issues that require careful clarification.
Zero-sum games, growth, invisibility
Foucault’s analysis of neo-liberalism makes better sense when one considers it in the light of the genealogy of power which he develops through Society Must be Defended and Security, Territory, Population, the lecture series which precede The Birth of Biopolitics. The points I would like to highlight focus on the question of the interrelationships linking inequality, zero-sum games, growth and the assumed ‘invisibility’ of the general interest. Together these linkages throw a new light on neo-liberal capitalism as it operates on the global scale. Foucault makes it clear in these texts that economies generally are zero-sum games, that is, games of winners and losers whereby the rich becomes richer by dispossessing others of the wealth the former accumulate. This game of inequality had been taken for granted almost as an inevitable condition of existence in most societies; in Europe its rejection finds a basis in principles of equality and liberty asserted in radical Enlightenment thought – say, the assertion of the fundamental equality of all in Revolutionary France and in revolutionary thought (e.g. Tom Paine’s The Rights of Man). For Foucault, inequality typically arises from an original dispossession through conquest and/or subjugation. It was legitimated by appeal to the ‘discourse of race war’ (Foucault, 2003) supporting an ‘us’ versus ‘them’ situation whereby the ‘other’- usually the subjugated groups - is placed outside the responsibility or concern of the sovereign (2003: 70-74); its other side is a ‘counterhistory of dark servitude and forfeiture’ (2003: 73). Foucault argues that the post-Westphalian settlement which constituted a new Europe after1648, and the territorialisation of the state as nation-state which followed, together with shifts in state power from being grounded in the wealth of the sovereign to the wealth of the nation and population, made possible a different discourse about wealth and its growth. In this new model of the state and its economy, this conditioned the emergence of a ‘science of police’ as an ensemble of techniques for the amplification of the productive capacities of the population, and was thus a condition for political economy (Foucault, 2007). After the Physiocrats, Adam Smith could think of the possibility of a non-zero-sum economic game in Europe, provided there be a ‘globalization of the market’ and provided the enrichment of Europe be ‘brought about as a collective and unlimited enrichment’ (BB: 55). Europe as economic subject on a world scale required ‘the world for its unlimited market’; it is on this condition that ‘Europe is now in a state of permanent and collective enrichment through its own competition’ (BB: 55). The fact of colonial possessions and dispossessions is absolutely vital for this new economy, as Smith recognised (see Venn, 2000, 2009; also Polanyi, 2001) - though Foucault does not pursue this aspect of the shifts that prepare the ground for liberal capitalism, and thus neo-liberalism. When we take account of these condition for the triumph of liberal capitalism, we discover that the economic game globally remained a zero-sum game, and one could argue, has remained so ever since (Venn, 2009).
The other aspect of liberal political economy which has remained a central determinant of its success in spite of liberal capitalism being a zero-sum game is the necessity of growth to sustain its social policy, as Foucault pointed out, and I noted earlier. For neo-liberalism, growth, and not redistribution or state investments in social capital, is envisaged as the the only mechanism that ‘should enable all individuals to achieve a level of income that will allow them the individual insurance, access to private property, and individual or familial capitalization with which to absorb risks’ (BB: 144). Growth was supposed to allow a wider section of the population to become relatively ‘affluent’ and partake in a consumer culture. Keynesian economic management, the Welfare State and the New Deal for a while realised this ambition. Structural imbalances in the 1970s, arising from complex factors and historical conditions, provided the neo-liberals with the occasion to re-assert the primacy of market rationality against interventionist social and economic policy.
The consolidation of neo-liberalism over the last thirty years has proceeded through new dispositifs constituting the framework, namely, new technologies of the social, financial technologies working in tandem with the latter, and the alignment of state apparatuses with the objectives and vocabulary circumscribing the neo-liberal worldview. This development has ensured that prosperity, well-being, growth and capitalism have become correlated in most policy-makers and people’s minds and acquired the status of an unquestionable and fixed truth. The market is assumed to be a kind of self-regulating mechanisms equipped with a built-in, immanent ability to correct itself and ensure prosperity for the greatest number; the assumption is that in the long run the market does not fail. The correlation of prosperity and growth (Jackson, 2009) takes on a transcendent quality, in that only faith in the market guarantees it, a market posited as fundamental entity, working at an invisible level, reminiscent of Smith’s appeal to an ‘invisible hand’. For neo-liberalism, then, it is not the system that fails; failure has become individualised – itself an aspect of the model of enterprise society and enterprise man (2008: 227, 259, 261) – or pathologised, subject to new biopolitical techniques of control such as medicalisation, psychological reassignment, or punishment for individuals; on a world scale, failure is attributed to ‘underdevelopment’ and the pathologies of the ‘rogue’ state and kleptocracies. What the model of growth makes invisible is the fact that capitalism is a zero-game of winners and losers. One could recall in that respect that Foucault’s analysis underlined the artificial, constructed character of the market, enframed by dedicated apparatuses and laws, as the ordo-liberals well understood. The implication one can draw from this is that the critique of these assumed ‘natural’ links and the recognition that they are the effects of politico-legal and administrative artifice opens the way for constructing alternative and more equitable models of the economy.
So, it is clear that the appeal to the salutary mediation of something like an invisible hand, or some immanent regulatory power, to argue against the need for state intervention in the economy to ensure more equitable distribution of resources and opportunities is founded on keeping invisible the reality of inequality as being the direct result of a zero-sum economic game. The globalisation of neo-liberal doctrine by way of privatisation and liberalisation and trade agreements framed by the Washington consensus, and the intensification of dispossession through new financial instruments such as derivatives and the futures market, hedge funds acquisitions, ‘vulture’ funds, virtual capital creations through electronic technologies and the mathematics of chaos and probabilities, and through the inflation of managerial discursive capital and so on, has widened the gap between rich and poor, within and between states (Fan et al, 2009, Stiglitz, 2001, Wilkinson and Pickett, 2009, Jackson, 2009, Collins et al, 2008, Venn 2006).
Furthermore, the doctrine of growth has also been the source of serious damage to the environment threatening the life-support system of the planet. The drive for ‘unlimited enrichment’ can only result in the exhaustion of limited basic resources like agricultural land, forests, fresh water, oil, gas, coal, iron, aluminium, and all other critical minerals and material essential for an industrial world. The model furthermore reduces all value to only the values recognised by business accounting practice. The latter in any case cannot take account of the value of social capital or the value of the collective wealth which is eroded or depleted in the pursuit of unlimited growth based on the privilege of business interests. Were such costs to the common wealth – due to the effects of climate change, pollution, resource depletion, species extinction, etc - to be taken into account, one would have to reject both conventional (hegemonic) accounting practice and the model of growth, as Jackson (2009) establishes. Indeed, it would become clear that most existing practices of production and ways of life in wasteful economies are unsustainable in the medium term and eventually catastrophic. One could add that alternative models of prosperity exist, for instance by reference to the idea of capabilities as in the work of Amartya Sen and Martha Nussbaum which prioritise other values vital for human well-being: ‘physical and mental health’, ‘educational and democratic entitlements’, ‘trust, security, and a sense of community’, ‘ability to participate in the life of society’ (Jackson, 2009: 47, see also Venn, 2006). One could also propose other models based on the radical re-organisation of ownership and the redefinition of the idea of property, say, Arendt’s (2000), distinction between wealth and property, coupled to a non-anthropocentric and individualistic view of humans in relation to the rest of the living world (Venn, 2010). One may well ask: what happens when the limits of the useable world are reached? Foucault’s genealogy of neo-liberalism provides us with the historical perspective from which to view our situation as contingent, recent, particularistic, and destined to come to an end, one way or another.
References
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