Live from Detroit....
21 March 1979 American Neo-liberalism (II)
In this lecture, Foucault explains how neo-liberalists apply principles of a market economy to non-market relations. He begins with an overview of Gesellschaftspolitik (hear a pronunciation here) and continues with an explanation of how this applies to criminals and the penal system. Below you will find an outlines of the objectives set forth at the beginning of the lecture. This is designed to assist you in moving through the readings while recapping “sections” of the lecture and providing definitions of a few key terms. For those of you who would like to know who the heck Foucault is talking about (if you do not already), I have linked a few Wikipedia (I know, I know) pages to give you a general sense of the ideologies to which he refers. (Note: These links apparently did not copy)
Eucken: father of ordoliberalism. See his Wikipedia page here.
Ropke: father of German social market economy. See his Wikipedia page here.
Rustow: originated the term neoliberalism as a synonym for ordoliberalism. See his Wikipedia page here.
Muller-Armack: coined the term “social market economy” in 1946. Believed the economy had to serve humanity. See his Wikipedia page here.
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1. The application of the economic grid to social phenomena:
Social phenomena: non-market relationship that are not economic; relationships that operate in opposition to or are complementary to the market even though the economy is situated within this domain.
Gesellschaftspolitik (social policy/politics): a means for government to organize social processes in society without interfering with the effects of the market. Hear a pronunciation here.
Objectives: (a) avoid centralization; (b) encourage medium-sized enterprises; (c) support for “non-proletarian” enterprises (craft enterprises, small businesses); (d) increase access to property ownership; (e) try to replace individual risk with individual insurance; (f) regulate environmental problems.
2. Return to the problematic ordoliberal problematic: the ambiguities of the Gesellschaftspolitik. The generalization of the “enterprise” form in the social field. Economic policy and Vitalpolitik: a society for the market and against the market.
Ambiguities: Economic-ethical ambiguity of enterprise- (a) generalizing enterprise so it can be broken down; (b) individual’s life must be situated within multiple enterprises; (c) an individual’s life must be some sort of enterprise.
Function of the generalization of “enterprise”: Extending the economic model to social relations OR creating a “warm” work environment for the individual instead “cold” competition (allows individuals to feel good about their work rather than being alienated from it).
Vitalpolitik: a society for the market and against the market- a political and moral framework that allows for competition but does fragment the society
3. The unlimited generalization of the economic form of the market in American neoliberalism: principle of the intelligibility of individual behavior and critical principle of government interventions.
The unlimited generalization of the economic form of the market throughout the social body has numerous consequences according to Foucault. He concentrates on two: (1) As a function of intelligibility of individual behavior: a economical analysis of the non-economic- for example, applying a cost/benefit ratio to time spent in a relationship- a means to decipher non-economic social behavior in economic terms; (2) As a tool to critically asses government action (interventions) - scrutinizing every action of public authorities in terms of supply and demand rather than in terms of what is “right.”
4. Aspects of American neoliberalism: Delinquency and penal policy
Use economic considerations to calculate the cost of delinquency (how much does it cost a city/state/country to have criminals running free?).
5. Historical reminder: the problem of the reform of penal law at the end of the eighteenth century. Economic calculation and principle of legality. The parasitic invasion of the law by the norm of the nineteenth century and the birth of criminal anthropology.
Reformers sought to develop a penal system based on calculations of utility with the lowest possible costs. Laws were determined as the most economical solution for punishing people adequately (least costly and most effective for to assign punishment and deter criminal behaviors). The crime must be defined by the law so that in the absence of law, there is no crime. Penalties for the crime are set by the law. Penalties must be fixed in the law by degree of seriousness. Criminal courts can only apply predetermined penalties for the crime. The law enables the problem of penal practice to be connected to the problem of the economy
6. The neoliberal analysis: (1) the definition of crime; (2) the description of the criminal subject as homo economicus; (3) the status of the penalty as instrument of law “enforcement”. The example of the drugs market.
Definition of crime: “that which makes the individual incur the risk of being sentenced to a penalty” (p. 251) - adopted from the point of view of the criminal just as neo-liberals addressed work from the point of view of the laborer.
Criminal as homo economicus- economic behavior as a measure of individual behavior; allows the individual to be governed; can be seen as the interface of government and the individual. Criminal is anyone “who invests in an action, expects a profit from it, and who accepts the risk of loss” (p. 253) - The penal system does not deal with criminals but rather the supply of crime (by individuals).
Law enforcement- “the set of instruments of action which, on the market for crime, opposes the negative demand for the supply of crime” (p. 255). How law enforcement (dismantling drug networks) affected the drug market: (1) increased unit price of drugs (2) Reduced competition and strengthed monopolies (3) did not lessen demand (demand is inelastic). Law enforcement was a failure. From this failure, a policy of law enforcement according to market rationality results in policy that distinguishes between types or drugs and types of users.
7. Consequences of this analysis: (a) anthropological erasure of the criminal; (b) putting the disciplinary model out of play.
Erasure of the criminal- individual behavior can be interpreted as economic behavior and controlled as such. Distinctions between criminals and non-criminals are not important.
Dissolution of disciplinary model- using the economic system to regulate non-economic relations results in a society where differences and fluctuating processes are allowed to flourish and inventions come at an environmental rather than individual level.
28 March 1979 The Model of Homo Economicus
1. Its generalization to every form of behavior in American neo-liberalism.
The identification of the object of economical analysis with any rational conduct. Rational conduct is defined as the “optimal allocation of scarce resources to alternative ends” (p.269), which is an economic conduct. Rational conduct is sensitive to environmental variables and responds in a systematic (not random) way. Economics can be defined as “the science of the systematic nature of responses to environmental variables” (p.269). This definition allows economics to be integrated into behavioral techniques.
2. Economic analysis and behavioral techniques
Behavioral techniques do not distinguish between different types of behaviors but recognize how systematic responses to stimuli can be observed on the basis of which other behaviors can be introduced.
3. Homo economicus as the basic element of the new governmental reason appeared in the eighteenth century
An intangible element with regard to the exercise of power. The paradox= someone who pursues his own interest which converges with the interests of others; the person who must be left alone; the subject or object of laisser-faire government (Becker) ALSO appears as someone manageable; someone who responds systematically to artificially introduced stimuli.
4. Elements for a history of the notion of homo economicus before Walras and Pareto
Enabled a certain type of government to be determined according to principles of the political economy and in restriction, self-limitation, and frugal government
5. The subject of interest in English empiricist philosophy (Hume)
Empiricist philosophy introduces a subject of interest who is not so much defined by his freedom but by individual choices which are both irreducible (the endpoint of analysis) and non-transferable (based on personal preference).
6. The heterogeneity of the subject of interest and the legal subject: (1) The irreducible nature of interest in comparison with juridical will. (2) The contrasting logics of market and the contract
(1) Juridical will is formed as a result of interest as the empirical source of the contract. The legal subject is created when a person enters a social contract to protect interests from being threatened. We respect the contract not because it is the right thing to do but because it serves our interest. The subject of interest remains as long as the juridical structure (the contract exists). “Interest constitutes something irreducible in relation to the juridical will (p. 274).
(2) The subject of right and the subject of interest are not governed by the same logic. The subject of right is characterized by a dyadic relationship between possessing natural and immediate rights and their relinquishment. The subject of interest is never required to give up his interest. The market and the contract operate in opposite ways.
7. Second innovation with regard to the juridical model: the economic subject’s relationship with political power. Condorcet. Adam Smith’s “invisible hand”: invisibility of the link between the individual’s pursuit of profit and the growth of collective wealth. The non-totalizable nature of the economic world. The sovereign’s necessary ignorance.
An individual’s interest is dependent upon a finite number of things of which some are uncontrollable. However, the individual’s interest is linked to a series of positive effects for others. Everything that is advantageous to the individual will be advantageous to others as well. (Condorcet).
The individual in pursuit of his own interest often unintentionally promotes benefits for others. In this sense, he is led by an invisible hand to an end that was not his intention.
The collective good must not be an objective because it cannot be calculated by economic strategy. The sovereign must remain ignorant to the collective good so as not to make mistakes.
8. Political economy as critique of governmental reason: rejection of the possibility of an economic sovereign in its two, mercantilist and physiocratic forms
There is no sovereign in economics and no economic sovereign. Mercantilist policies provided for an administrative sovereign who would administer possible economic processes taking place between individuals, groups, and states- must have an economic sovereign. Physiocracy was a critique of all the administrative rules and regulations through which the sovereign exercise power over the economy. Physiocrats analyzed markets and proved that the government must not interfere with the mechanism of interest which allows commodities to flow where buyers are readily available and will pay the best price.
9. Political economy as a science lateral to the art of government
“Political economy is indeed a science, a type of knowledge (savior), a mode of knowledge (connaissance) which those who govern must take into account” (p.286). But economic science cannot be the science of government or rationality of government.
