One must govern for the market, rather than because of the market. (121)We talk a lot these days about capitalism. We debate what it is, what it’s good for, why it needs to be overthrown, how it safeguards or threatens our liberty, how long it can last, how it’s gone too far. There’s no end to the debates we have about capitalism, for one simple reason: it defines the world we live in without, itself, being very defined.
Capitalism is one of the most successful ideas humans have ever had. The rise of market-centered societies and governance in the last 300 years has been a mini agricultural revolution for humanity. Capitalism’s combination of elite control and popular freedom has proven so stable as a form of social organization, so effective at sowing prosperity, that it has infiltrated even societies formed in explicit opposition to it. Far from being overthrown or “replaced,” capitalism is probably going to remain core to human society — and therefore a starting point for any critique of human society — for the next few centuries.
At the same time, we who live under capitalism know that something at the core of our society is rotten. This ‘greed is good’ thing has gone too far. Money confines more people than it frees. Is capitalism to blame? A lot of the cash-poor scholars I hang around seem to think so. Personally I don’t think it’s that simple.
After reading The Birth of Biopolitics, I feel like we amateur analysts need to understand more about the difference between capitalism and neoliberalism. The former, in my mind, is as descriptive as it is normative, as inevitable as it is a prescription. Neoliberalism, by contrast, is a synthetic construct. It is a specific program of the government that operates through constant government intervention. And to a large degree, it’s clear that what governs our present world isn’t capitalism, but neoliberalism.
Before we critique neoliberalism, we have to understand what it is and how it got to its place at the center of the modern Western approach to governance. This book traces that story.
Foucault doesn’t appraise capitalism or neoliberalism as systemic forces beyond an evident bemusement at the more eccentric claims of the latter. It’s clear he embarked on this study out of a fascination with how brazenly neoliberal principles were being applied in Western governments around the world in the post-war period. But as to the wisdom of running society this way, his analysis remains removed. Nor do these lectures get to the subject of biopolitics beyond showing how governmental theorists in the nineteenth century started to think it prudent to leverage the “bio” part of their populations — the animal spirits, we can say — into a better set of politics. That, honestly, is as far as I got with the word “biopolitics.” I still don’t know what it means.
This book is about the rise of neoliberalism. Obsessed with how a world on the precipice of Thatcherism and Reaganomics got so neoliberal, Foucault attempts to show that modern Western governance developed with liberalism at its core — first by using the market as a key indicator; then as a validator of government action itself; and eventually, with the help of a pronounced intellectual movement, as the end purpose of the government itself. He explains the utility of the market to European governments emerging out of feudalism, notably as articulated by the English Radicals, and then goes on to examine neoliberalism’s role in 20th century Britain, Germany, and America.
His analysis starts in the Middle Ages, when “judicial practice was a multiplier of royal power.” (8) The monarch’s relationship to his subjects was paternal and his power was absolute. But in the sixteenth century, a new type of rationality started to suggest that the art of governing could be seen as a rational enterprise oriented towards testable outcomes: prosperity, strength, etc. He calls this approach to governance raison d’État. It proposed that rather than a government unified with the totality of the realm, the government could be devoted to managing and serving the interests of the realm, for the goal of optimizing the outputs of those interests.
Crucial to this management style was not only distinguishing the state from the proceedings within its jurisdiction, but identifying where the state should not govern. Instead of a king who wrote unbounded law out of love, raison d’État asked for law that limited the reach of an empirical administrative bureaucracy.
Government’s limit of competence will be bounded by the utility of governmental intervention. The question addressed to the government at every moment of its action and with regard to each of its institutions, old or new, is: Is it useful? For what is it useful? When does it stop being useful? This is not the revolutionary question: What are my original rights and how can I assert them against any sovereign? The problem of English radicalism is the problem of utility. (40)The critical piece that enabled this focus on utility was the market.
Not only did market-based commerce end the zero-sum violence of mercantilism by creating wealth more effectively, it allowed the state to drop a plumb line into society. Raison d’État embraced the market, seen to be an expression of natural or objective truth, as a barometer of the state’s performance.
The market determines that a good government is no longer simply one that is just. The market now means that to be good government, government has to function according to truth. (32)Foucault calls this source of truth a “site of veridiction,” a framework used to arrange truth and thinking in a given setting. Veridiction is like a version of jurisdiction; one is the apparatus of what is true, the other of what is legal. They change with place and time, as ways of thinking change.
Raison d’État became the art of inscribing government limitations in law in such a way that optimized the market’s function. Government started to no longer deal directly with conditions in the realm, but with interests representing market entities on the ground. "Government is now to be exercised over what we could call the phenomenal republic of interests." (46)
Over time, the idea of government using the market to gauge its performance gave way to a reversal of priority: the system worked so well that the economy started to establish the legitimacy of the political state to begin with. Capitalism was so effective at delivering the qualities of life that we seek that “the economy produced legitimacy for the state that is its guarantor” — it “created consensus as a surplus product.” (84-5)
There is a permanent genesis, a permanent genealogy of the state from the economic institution. The economy produces legitimacy for the state that is its guarantor. (84)By the early 20th century, raison d’État had become the de facto ruling principle in Britain. A few decades later, it found its most hearty embrace in Marshall Plan Germany. Looking to found German society on something besides blood myths and revanchism, a group of thinkers publishing in the academic journal ORDO proposed market expansion as a way to legitimize the state. Foucault had a great line encapsulating this so-called Ordoliberalism that also showed off the dazzling phraseology that occasionally emerged from his knotted syntax:
History had said no to the German state, but now the economy will allow it to assert itself. Continuous economic growth will take over from a malfunctioning history. (86)What Foucault doesn’t say explicitly, but what must certainly be true, is that the Bretton-Woods embrace of this idea came as much from the fact that this system sent returns to American and British investors as from the promise that capitalism would ensure openness, prosperity, and legitimacy for the new government. Essentially, the market’s power to intertwine states (thus reducing the chances of aggression) while throwing off a kind of prosperity that elites enjoyed, is the reason raison d’État works. That’s what I think, anyway.
As capitalism made ever further inroads with elite political planning, it started to morph into something else: something far less organic and far more demanding that the state intervene actively to put the market in the DNA of every aspect of society. This is neoliberalism.
Neoliberalism reached its apogee in the US, with the Chicago school and the almost comical degree to which American conservatives apply market principles across absolutely every aspect of society.
In comparison with the ambiguity, if you like, of German ordoliberalism, American neo-liberalism evidently appears much more radical or much more complete and exhaustive. American neo-liberalism involves generalizing [the economic form] throughout the social body… This means that analysis in terms of the market economy or, in other words, of supply and demand, can function as a schema which is applicable to non-economic domains. (243)Here’s where it gets scary, and where we start to see the difference between capitalism — that “natural” (58) marshaling of animal spirits and natural principles — and neoliberalism.
In their analysis of human capital, the neoliberals tried to explain, for example, how the mother-child relationship, concretely characterized by the time spent by the mother with the child, the quality of care she gives, the affection she shows, the vigilance with which she follows its development, its education, and not only its scholastic but also its physical progress, the relationship she has with its eating, all constitute for the neoliberals an investment which can be measured in time. And what will this investment constitute? It will constitute a human capital, the child’s human capital, which will produce an income — the child’s salary when he or she becomes an adult. And what will the income be for the mother who made the investment? Well, the neoliberals say, it will be a psychical income; the satisfaction a mother gets… So, everything comprising the formative or educational relationship… can be analyzed in terms of investment, capital costs, and profit. (244)Holy shit! Even Foucault has to stop and laugh at these psychos.
Clearly, neoliberalism is not capitalism. It is a state-enforced religious practice — Wahhabist capitalism. I would venture Foucault’s definition of neoliberalism as this:
The problem of neoliberalism was not how to cut out or contrive a free space of the market within an already given political society, as in the liberalism of Adam Smith and the eighteenth century. The problem of neoliberalism is rather how the overall exercise of political power can be modeled on the principles of a market economy. So it is not a question of freeing an empty space, but of taking the formal principles of a market economy and projecting them onto a general art of government. (131)By contrast, liberalism looks positively humanist: “We find this idea at the center of the economic game as defined by the liberals, that actually the enrichment of one country, like the enrichment of one individual, can only really be established and maintained in the long term by a mutual enrichment.” (54) A far cry from equating people to enterprises — which are, of course, entities that capitalism dictates must sometimes be destroyed in a Schumpeterian cycle of creative destruction. Unlike human beings. Ideally.
So what basically happened, as far as I can tell from Foucault’s analysis, is that the market offered a healthy site of veridiction to statecraft until radical high priests demanded that the government start to exist for the market in the first place. That’s basically where we are now.
Furthermore, because the neoliberal agenda has become so unified with our present form of raison d’État, the government is widely presumed to be illegitimate as a default.
Originally, “the market’s role in the liberal critique has been that of a ‘test,’ of a privileged site of experiment in which one can pinpoint the effects of excessive governmentality and take their measure.” (320) But built into this approach — whose innovation of starting from “society” instead of “the state” was critical to creating a better state — demanded constant critique of government.
Liberalism is imbued with the principle: “One always governs too much” — or at least, one should always suspect that one governs too much. Governmentality should not be exercised without a “critique” far more radical than a test of optimization. It should not only question itself about the best (or least costly) means for achieving its effects, but also about the possibility and even legitimacy of its project for achieving effects. The question is always: Why, after all, is it necessary to govern? (319)So a critique established to push back on government power metastasized into a general “state-phobia,” one of my favorite Foucault coins. (76) Homo æconomicus, a thoroughly neoliberal idea, “is the one island of rationality possible within an uncontrollable economic process.” The government, therefore, really shouldn’t even try to govern.
The man of right, homo juridicus, says to the sovereign: I have rights, I have entrusted some of them to you, or: I have entrusted you with my rights for a particular end. Homo æconomicus does not say this. He also tells the sovereign: You must not. But why must he not? You must not because you cannot… because you do not know, and you do not know because you cannot know. (283)This is how we get from an Enlightenment-era embrace of the market as an empirical site of veridiction for the practice of government, to a wholesale rejection of the attempt to govern in the neoliberal era.
Reading this, I realized just how eccentric a church neoliberalism is. They are convinced that the market is so ordering and beneficial that the government should optimize for its functioning above all else — including the welfare of its people. Social outcomes are less important than protecting the process by which wealth is produced and the state’s legitimacy is founded.
This is a fairy tale. It would be easily discarded as pagan animal worship if it didn’t make so many elites rich. That’s one aspect of this whole equation Foucualt never really stepped into: explaining why this wacky superstition got to the place in our world that it has. But it’s not like we have to wonder.
One closing note. As I am not a grad student or an economic historian or a political theorist, I came at this book with a critical deficit of context. I’d never read his preceding series of lectures at the Collège de France, I’ve not read enough criticism to know just how warped his history is or what his true aims are, and I certainly have to take his word on the economic path of post-war Germany. But despite my many blind spots, I still was able to enjoy Foucault’s analysis. I’m pretty sure I took way less out of this book than someone would with the right supplementary context (not to mention a little more used to recondite French academic texts). But as it turns out, understanding the origins of state capitalism is right up my alley. And honestly, it could not be more timely.
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