The Origins of Neoliberalism

Insights from economics and philosophy

Giandomenica Becchio, Giovanni Leghissa

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781317909347
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Neoliberalism is a doctrine that adopts a free market policy in a deregulated political framework. In recent years, neoliberalism has become increasingly prominent as a doctrine in Western society, and has been heavily discussed in both academia and the media.

In The Origins of Neoliberalism, the joint effort of an economist and a philosopher offers a theoretical overview of both neoliberalism's genesis within economic theory and social studies as well as its development outside academia. Tracing the sources of neoliberalism within the history of economic thought, the book explores the differences between neoliberalism and classical liberalism. This book's aim is to make clear that neoliberalism is not a natural development of the old classical liberalism, but rather that it represents a dramatic alteration of its original nature and meaning. Also, it fights against the current idea according to which neoliberalism would coincide with the triumph of free market economy.

In its use of both history of economics and philosophy, this book takes a highly original approach to the concept of neoliberalism. The analysis presented here will be of great interest to scholars and students of history of economics, political economy, and philosophy of social science.

1 Foucault and beyond

Although Foucault was not a scholar who worked within the history of economic thought, his insights in the revolution that led to the emergence of neoliberalism seem to be persuasive. In the present chapter Foucault’s analysis is to be seen as a starting point, in the sense that other authors and other strains of contemporary critical theory will be considered in order to achieve a deeper comprehension of neoliberalism – or, better, in order to posit neoliberalism as a research object that can be defined and grasped in its autonomy and self-consistency.

Before offering an outline of what Foucault understands by neoliberalism, it is important to pay attention to the reasons that led him to shift his research to this subject. Then, the difference between his interpretation and the one provided by neo-Marxist or neo-Gramscian authors will emerge more clearly. The autonomy of the domain where the sovereign state acts will be outlined starting from some insights coming from the disciplinary domain of international relations. Finally, the global reach of neoliberal governmentality will be explained as a form of reduction of systemic complexity that draws its efficacy from the rude simplicity of its assumptions.

1.1 Foucault’s distinction between liberalism and neoliberalism

The difference between classical liberalism and neoliberalism is the object of the lectures he held at the Collège de France during the year 1978–79. Within these lectures he introduces the term biopolitics in his philosophical vocabulary – Birth of Biopolitics is in fact the title of the lecture (Foucault 2008). This notion is strictly intertwined with another important element we find in Foucault’s toolbox starting from the second half of the 1970s, namely the notion of governmentality. Asking rhetorically to his audience why an analysis of some scholars of the twentieth century who belong to the discipline of economics should provide an explanation of what biopolitics and governmentality are, Foucault answers that methodological reasons induced him to take that step. These reasons are strictly related to the question of how power structures arise and propagate within society. To better understand that point, a step back is necessary, namely to the lectures of the year before. The topics of the lectures Foucault held during the year 1977–78, Security, Territory, Population (Foucault 2007), was the birth of modern state. The reason for this detour becomes clear if we consider that Foucault’s aim was not only to provide a historical reconstruction of the shift from liberalism to neoliberalism through the grid of intelligibility offered by the notions of biopolitics and governmentality, but, above all, to show how the process of subjectivation that characterizes the rise of contemporary subjectivity depends on the performativity of a given set of discourses. What makes Foucault’s reconstruction so interesting for us is the fact that economics plays an essential role being the discipline that, more than others, has contributed – and is still contributing – to shape the frame within which individual paths of life cross the multifaceted trajectories of modern – and contemporary – power.

First of all, Foucault’s aim was to contest the idea that the state acts as a monolithic agency of power, as a source of interventions that governs the conduct of subjects – or citizens – through specific measures of control. Surely, not only the enforcement of law, but also the more general set of interventions whose aim is to guarantee the ordered development of societal intercourses requires the presence of the public hand – it requires, in other words, those kinds of intervention that Foucault designates through the notion of discipline. But what Foucault deeply contests is the idea that the state action can be always and mainly recognized and represented as a bundle of forces coming from ‘above’ and floating ‘down’ to the social structure taken as a whole. More precisely, what Foucault contests is the idea that it is possible to identify and isolate a clear line dividing the public sphere and society itself, whereas the latter is meant as the sphere within which individuals negotiate their own position in the face of the pervasiveness of public interference in order to preserve their freedom of action. In opposition to this way of conceiving state action, which reduces the latter to disciplinary power, Foucault suggests that the state – and this since its inception at the beginning of the modern era – should be seen as the central node of a broader network that includes a vast array of agencies the scope of which is the government of individual life. Politics being, according to Foucault, nothing but the art of governing people, the modern form of politics is peculiar not because the sovereign state imposed itself as the only institution that was allowed to make use of legitimate force within a given territory, but because the state succeeded in creating an interconnected and interrelated chain of local powers, distributed among the population in order to supervise and control each aspect of that which made the population grow and thrive or, conversely, fail and degenerate. The term ‘governmentality’ reveals its heuristic efficacy precisely by capturing the multifaceted and dispersed character of state action: it invites us to shift our attention from the traditional view of the latter, which rests on a top-down scheme, to a conception of power that underscores the autonomous creativity of those institutional agencies that take care of individual needs, prevent disruptive conflicts, ensure against collective risks. Further: Foucault points his – and our – attention to the ongoing character of governmental intervention, which he describes as flexible, changing, and always attentive to the corresponding features of collective needs and individual interests, which are fluctuating and varying as well. Thus, the effectiveness of governmental action cannot be measured by simply evaluating the long term results of each intervention, but it must be monitored step by step along the interdependency of governmental interventions and the manifold ways in which their target – it being the population taken as a whole or a specific set of individuals – reacts to them. In conformity with his more general pattern of analysis of power relations, Foucault confers great importance on the fact that governmentality cannot be understood simply as a practice, but must be considered as a dispositive – or ‘apparatus’ – that encompasses a set of practices and a set of theoretical devices.

By the word ‘governmentality’ I mean three things. First, by ‘governmentality’ I understand the ensemble formed by institutions, procedures, analyses and reflections, calculations, and tactics that allow the exercise of this very specific, albeit very complex, power that has the population as its target, political economy as its major form of knowledge, and apparatuses of security as its essential technical instrument. Second, by ‘governmentality’ I understand the tendency, the line of force, that for a long time, and throughout the West, has constantly led towards the pre-eminence over all types of power – sovereignty, discipline and so on – of the type of power that we can call ‘government’ and which has led to the development of a series of specific governmental apparatuses (appareils) on the one hand, [and, on the other] to the development of a series of knowledges (savoirs). Finally, by ‘governmentality’ I think we should understand the process, or rather, the result of the process by which the state of justice of the Middle Ages became the administrative state in the fifteenth and sixteenth centuries and was gradually ‘governamentalized’.

(Foucault 2007, 108ff.)

The subject that governs (in this case the state, but what is at stake here affects every governing agency) needs, in order to govern, a specific knowledge, needs, better, a set of scientific devices that allows them not only to understand how members of a population settled within the state boundary live, think, work and so on, but also to mould the architecture of choice within which each individual is supposed to shape their personal life project. This is the reason why the term ‘biopolitics’ is strictly tied with that of ‘governmentality’: the action of governing individuals is supposed to affect not only those aspects of individual conduct that are expression of the persona, meant from a juridical point of view, but also those that are related to the individual project of life. And the latter needs to be captured by a specific knowledge.

To understand why knowledge and the exercise of power are such important elements of any modern governmental action we must bear in mind that the peculiar kind of intervention pursued by governmental agencies is not supposed to be brought about predominantly through the direct or indirect influence that the rule of law exercises onto the conduct of individuals. It is true that the understanding of such influence is important in order to construct a persuasive view of the way in which a given social formation – or collective, as we would prefer to say – decides to frame the space of liberty possibly granted to each of its members. Foucault himself has never denied that. Truly, his analysis of the disciplinary aspect of governmental intervention, explored in his previous works, attributes great importance to the role played by the legal system meant as a tool that can be used not only to bring an end to social conflicts, but also to shape the form that the different types of conflict within society can assume. But what the mere focus on the rule of law leaves out is the fact that collectives undergo practices of control and government whose effectiveness rests not on the law, but on a set of local norms. The latter are neither in contrast to the law, nor can substitute it. Local norms can simply better insert themselves into those tiny spaces of social interaction where the appeal to the law is not requested, or does not seem appropriate, because what is at stake is rather the definition of the frame within which the interplay between those who govern and those who are governed takes place. The organizational space that encompasses firms or public institutions provides a good example of the interplay we are talking about: here, internal rules and guidelines, customs, shared habits, different leadership styles determine each time what is to be the range of the bargaining power each actor is supposed to have – and effectively has. But the government of individuals within a collective goes far beyond the abstract and impersonal form provided by the law as it rests on the knowledge of what constitutes the different individual features. This is the reason why it is important to focus on the disciplines that allow those who govern to understand what motivates the individual action, what enables individuals to behave this or that way. According to Foucault, it is not possible to analyse a given power relationship if we do not understand through which discourses those who rule can represent the conditions of possibility of collective action. Here we meet one of the most recurring topics of Foucault’s philosophy, namely the intertwining of power and knowledge. He conceives of this intertwining not in the sense that a given set of scientific discourses helps legitimize a given set of power practices; the point is, rather, that those who govern shape their action by constantly referring its results to what they know about its target. To a certain extent, knowledge itself is supposed to have a performative power: in fact, it frames the range within which any single act of government takes place not only by defining its own scope, but above all by constructing the subject that must be governed – or imprisoned, disciplined, nursed, educated, sustained, helped, looked after, promoted, stimulated, and so on. More specifically, the birth of the modern state led to the parallel development of those disciplines that made available an insight into what could have improved the welfare of a given population – the creation of the concept of ‘population’ was in itself the secondary effect of the interest the state had in considering the improvement of the welfare of those who were under its rule as a main goal to be pursued. Among these disciplines, economics played a pivotal role since the beginning of the modern era. Economics defines what must be done – or avoided – by those who govern in order to let the subjects or citizens pursue their objectives within the market. The boundary of the latter can be regulated, of course. It must even be subdued to the law. But this regulation is supposed to produce the freedom individuals enjoy when pursuing their goals. This production of freedom has become part of the art of government during the modern age, at least since the second half of the eighteenth century. Thus, the modern state has legitimized its own action both by granting freedom to those who are able to partake in the market, and by imposing the rule of law on each member of society. And the mutual relationship between these two aspects determines, according to Foucault, the model – or the models – of rationality upon which the action of government rests. If the main goal of the governmental action taken as a whole consists in creating those spaces of freedom within which individuals are supposed to pursue their own project of life, it is clear that economics is likely to increase its importance as a source of knowledge that can – and must – offer to those who govern both guidelines and inspiration. Of course, other disciplines like psychiatry or statistics – just to mention two examples – have also been revealed to be important for the modern art of government: the first supplies the ‘adjustment’ of individuals that are at odds with their own self-positioning within society, individuals whose behaviour cannot be therefore considered as ‘normal’; the second, on the other hand, supplies the monitoring of what individuals do and desire. But the discourse about human action offered by economics shapes the abstract reference of what individuals do when attaining their goals as free actors. As economics succeeded in constructing a theoretical frame according to which it was possible to both describe the deep structure of human action and recognize what makes it to be self consistent, it became easier to forge the art of government in accordance with the model of man postulated by economics itself. In a certain way, as the discipline aims at investigating what improves the wellbeing of individuals, economics became not surprisingly the presupposition for governmental interventions of a biopolitical kind. Not the abstract subject meant as an individual entitled to specific rights, but the concrete desiring subject that economics describes and investigates becomes more and more the target of governmental interventions. The latter can acquire a biopolitical character, as their role is to take care of human life as such. In this context, ‘human life’ becomes nothing more than the epitome of the raw material each individual needs to build her own welfare. What Foucault describes, thus, is the historical process along which the model of rationality created by the economic discourse has become part of a broader governmental dispositive.

It is not worth exposing the historical reconstruction Foucault provided within his lectures of the year 1977–78 on the emergence of state power in a detailed manner. But the core of his arguments is of chief importance here, namely the relationship between individual life and politics meant as an art of government. Not life in general, not the various forms of life that give rise to the complexity of a given societal asset, but the bodily experience of the world that marks the presence of a single individual and makes out its uniqueness constitutes the focus of governmental intervention. Thanks to our individual body – better: through it and in the force of it – we both become part of the human species and receive those entitlements that make us personae, namely physical entities upon which the state exercises its legal power. In this sense, each individual is the instantiation of the human species and, at the same time, the collector of those proprieties that define the realm of human agency in its broader extent. If the goal of governing individuals coincides with the implementation of a collective space within which human life as such is to be protected, reproduced and enhanced, then it becomes impossible to ignore what moves individuals and leads them to take this or that decision as regards their conduct of life. Moreover, since economics has become the science that studies human behaviour as a relationship between ends and scarce means which have alternative uses, according to the universally known definition given by Lionel Robbins in 1932, it is not surprising that the disciplinary discourse of economics advocated for itself a leading role with regard to what every decision maker needs to know in order to shape the context within which human beings make their choices. What confers a deep significance to Foucault’s analysis of neoliberalism is precisely the fact that the latter stands out as the most successful attempt to conflate a given set of hypotheses about human behaviour into an art of government.

Now, if we take the term of comparison that allows to consider neoliberalism as a successful case of government based on a specific model of rationality, we gain the opportunity to elucidate the distinction between liberalism and neoliberalism. In our view, this is one of the most important moments of Foucault’s argument, and one of the most misunderstood as well. Foucault builds a narrative for the rise of neoliberalism that underscores both the continuity and the rupture with the liberal form of government. The fact that knowing how people live (and die) is a necessary premise for governing them is not a recent discovery, peculiar to the second half of the twentieth century. Since its inception during the age of the Enlightenment, the discipline of economics offered its services to the rulers of the modern state in order to make the space where market interactions take place visible, recognizable and thus governable. In a sense, the rise of economics as an independent science and the rise of the modern state are two elements that belong to the same historical process. Here it is worth mentioning the fact that Foucault has been very careful in describing the way in which economics burgeoned from Polizeywissenschaft, which, during the first half of the eighteenth century, embedded into one bundle of knowledge different scientific approaches to the social reality in order to better govern it. As a typical result of the attention paid by the sovereign to the welfare of his subjects, Polizeywissenschaft encompassed not only what we would call political economy, but also public law, administrative science, public health concerns, urban planning and statistics. Those who have been trained in the Polizeywissenschaft and acted as devoted public managers could make the sovereign sure that the availability of a continuous source of money would not have been interrupted by an inappropriate or malfunctioning administration of the state as long as their skills proved to be appropriate to monitoring and measuring the welfare of the population. The birth of autonomous disciplines and their specific domains took place in step with the growing complexity of the relationship between state apparatuses and modern society. The latter can reflect upon itself only by observing the way in which each discipline describes what human beings do and how they account for their actions. It is in this context that economics became the discourse that provided the art of government with those tools according to which the nation state could limit its own action in front of – and in relation to – the individuals who acted within the market during the age of classical liberalism. According to Foucault, liberalism was not simply the ideology of rising capitalism; it was rather the result of the awareness that the sphere within which economically relevant actions took place is separate from the sphere within which individuals act in the name of principles that do not coincide with the preservation of self-interest. The first sphere has been the object of the analysis we can still read in Smith’s Inquiry into the Nature and Causes of the Wealth of Nations, while he devoted his Theory of Moral Sentiments to the second. Taking the views expressed in Smith’s two masterpieces as paramount examples of the classical liberal thought, we see how the latter held that selfishness, on the one hand, was to be seen as a good virtue as long as it remains a constitutive element of the behaviour of individuals whose thirst for profit is the main motivating factor, while sympathy, on the other, was supposed to take the place of selfishness as soon as human action is triggered by the desire to build a collective in which it is possible to give expression to those feelings that impro...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of tables
• Introduction: the counter-revolution of neoliberalism
• 1. Foucault and beyond
• 2. The building of economics as a science
• 3. The building of individuals as rational agents
• 4. Turning the world into a firm
• Postscript: a new ethics for a new liberalism?
• Index