By Kendall Thomas
As it happens, I’ve been reading Michel Foucault’s 1978-1979 Collège de France lectures while preparing and teaching the first classes of a semester long course at Columbia Law School on “Law and Neoliberalism.” The course is a first year elective designed largely to provide a structured space for critical reflection on our school’s “Foundational Curriculum.” This is a series of courses which, in the last four decades or so (a period which happens to coincide with the triumph of political neoliberalism) has increasingly been given over to teaching our students (some would say indoctrinating them in) “economic analysis of law,” a body of scholarship whose central concepts and method received its early and most influential in the work of members of the law school and economics departments at the University of Chicago Law School.
The “Law and Neoliberalism” course starts with a screening and discussion of Charles F. Ferguson’s 2010 Oscar winning documentary film on the 2008 financial crisis, Inside Job. In addition to the film, I give the students a set of readings that is anchored by “Attack on American Free Enterprise System,” a “confidential memorandum” prepared for the Education Committee of the U.S. Chamber of Commerce by the corporate lawyer and former American Bar Association president Lewis F. Powell, Jr. The “Powell Memorandum” (as it has come to be known) was submitted to the Chamber of Commerce in the summer of 1971, a few months before Richard Nixon appointed Powell to the U.S. Supreme Court. The Powell Memorandum is a foundational text in the intellectual history of neoliberal corporate activism and “marks the beginning of the [U.S.] business community’s multi-decade takeover of the most important institutions of public opinion and democratic decision-making” (Cray:2011). In what follows, I propose to put elements of the Powell Memorandum and Inside Job in conversation with the line of argument advanced in The Birth of Biopolitics.
Toward the end of the 24 January 1979 lecture, Foucault shifts suddenly and somewhat surprisingly from a granular investigation mid-eighteenth century Europe and a narrative analysis of emergent ideas of liberal “freedom,” liberal “governmentality” and “[the] problems of what I shall call the economy of power peculiar to liberalism” to twentieth century Germany, England and the United States, and a set of reflections on the historical moment at which “this liberal art of government introduces by itself or is the victim from within [of] what could be called crises of governmentality” (BB:68). Foucault insists on the relative autonomy of the “crises of liberalism” and the “crises of capitalism”: while “not, of course, independent” of crises in capitalist economy, the way in which the crises of liberalism “manifest themselves, are handled, call forth reactions, and prompt re-organizations is not directly deducible from the crises of capitalism” (BB:70).
Foucault seems to be arguing here that the relationships between “the crisis of the general apparatus (dispositif) of governmentality” and the “crises of the capitalist economy” are indirect and contingent. Interestingly, and by contrast, Foucault appears to posit an essential, fundamental connection or continuity between the twentieth century “crisis of the apparatus of governmentality” (whose elements “have been set out and formulated over the last thirty years”) and the “general apparatus of governmentality which was installed in the eighteenth century” (BB:70) and further elaborated in the nineteenth (BB:70). The “way in which the crisis of the apparatus of government is currently experienced, lived, practiced, and formulated” (BB: 70) can be clarified only by understanding them as the contemporary expression of a century of recurrent and recursive problems in the “overall, general, and continuous history of liberalism from the eighteenth to the twentieth century” (BB:78).
Wendy Brown, Jim McGuigan and other readers of The Birth of Biopolitics have remarked the “prescience” of Foucault’s recognition of “the historical profoundity” (McGuigan: 2014) of the renascence of neoliberal thought in the 1960s and 1970s. There is no doubt that Foucault’s percipient analyses of neoliberalism as a system of thought, as a practice of politics and as a mode of subjectivity are an indispensable resource for understanding the ways in which the crises of government—and indeed, of capitalism– here in the United States and elsewhere is “experienced, lived, practiced and formulated” today, nearly four decades after the 1978-1979 lectures. We would do well to remember, however, the “precise context” (BB:83) in which Foucault was writing and speaking. The last lecture in The Birth of Politics series was delivered on 4 April 1979. Exactly one month to the day after Foucault’s final lecture, Margaret Thatcher took up residence at 10 Downing Street. Less than two years later, following a landslide electoral victory, Ronald Reagan moved into the White House. Foucault could not have anticipated was the ways in which the “applied neoliberalism” (Stedman Jones:2012) of Prime Minister Thatcher and President Reagan would outrun the neoliberal episteme whose elaboration and analysis were his subject in The Birth of Biopolitics. Nor could Foucault have foreseen the building out and scaling up of neoliberalism that occurred with the proliferation of information technologies. David Harvey has famously identified the cultural, political and economic consequences of digital technology’s “space-time compression” as a distinctive and defining feature of the neoliberalization of our lifeworld.
Given the distance and the difference between Foucault’s neoliberal moment and our own, I want to suggest, in the way of a thesis, that the “present value,” or if I may, the “utility” of Foucault’s 1979 lectures for us can become accessible only if we are abandon the dream of an “overall, general and continuous history of liberalism from the eighteenth to the twentieth century” discontinuity seriously.” To be sure, Foucault declares himself “unable to undertake” the writing of that “broad and lengthy history of two centuries of liberalism” (BB: 78); he nonetheless appears to view such an undertaking as both possible and desirable. In short, I propose a reading of The Birth of Politics that “takes discontinuity seriously.” I am thinking initially and most importantly of the elision (in part conceptual, in part terminological) through which Foucault formulates the question that is at the heart of his project. In the 31 January lecture, Foucault announces that he is concerned, inter alia, with how “liberal governmentality” appears and reflects on itself, how at the same time it is brought into play and analyzes itself, how, in short, it currently programs itself.” He then identifies the three themes (“[l]aw and order, the state and civil society, and politics of life”) to which he intends to devote his remaining lectures. In keeping with the “retrospective” approach to this history which starts from “things as they stand now” and works backward, Foucault then asks the following question: “What is the nature of today’s liberal, or as one says, neoliberal program?” (BB:78) (emphasis added). This is, I believe, the first time the idea-image of “neoliberalism” is appears in the text. In noting Foucault’s textual elision of “liberalism” and “neoliberalism,” I do not mean to suggest that he ignores the differences between the two concepts-terms. Such a claim could not be sustained in the face of the dense and detailed arguments he makes about the specificity of neoliberalism, its definitions and uses of law and legality, its distinctive neoclassical refiguration of homo economicus and the like. However, Foucault’s recognition of the ways in which the “neoliberal turn” can be seen as a series of “shifts” on classical liberalism stops short of seeing neoliberalism (particularly in its U.S. incarnation) as a break, as radically discontinuous in ways that render it not simply a revival or renewal of classical liberalism, but an altogether new thing. Foucault holds onto a vision of the relationship between “liberalism” and “neoliberalism” as a relationship of continuity in which neoliberalism emerges from and extends the “rationality” of the liberalism that constitutes it. Consider, in this connection, his argument (in the Résumé du Cours) that “American neo-liberalism seeks . . . to extend the rationality of the market, the schemas of analysis it offers and the decision-criteria it suggests, to domains which are not exclusively or not primarily economic: the family and the birth rate, for example, or delinquency and penal policy” (BB:323).
In what follows, and drawing on Inside Job and the Powell Memorandum, I want to identify a couple of what I take to be among the richest and most productive lines of argument Foucault pursues in The Birth of Biopolitics on the problem of “today’s . . . neoliberal program.” Although considerations of time and space preclude any detailed analysis, I suggest in each instance if we suspend the Foucauldian assumption of continuities and connections between liberalism and neoliberalism—or within the different configurations of neoliberalism itself—we can begin to see and make sense of aspects of political economy, governmentality, and subjectivity that are unique to “our neoliberalism.”
1. From Liberal “Veridiction” to Neoliberal “Fantastication”
Foucault contends that liberalism represents a moment in the art of government when a market which had until the middle of the eighteenth century had been “essentially a site of justice” (BB:30) or a juridical “regime of jurisdiction” becomes a “site of truth” (BB:31) or a “regime of veridiction” (BB:35). This “market-truth” produces a “new governmental reason”: henceforth government finds “the principle of truth of its own governmental practice” (BB:32) in a market which, in Foucault’s formulation “must tell the truth (dire le vrai) because it obeys and has to obey the “natural” or “spontaneous” mechanisms of its own self-functioning. Today’s neoliberal market is a market in which “truth” (and its opposite) is neither “natural” nor “spontaneous.” Contemporary neoliberalism’s “market-truth,” like the market itself, is made.
Inside Job includes archival footage from a U.S. Senate Committee hearing on the 2008 Financial Crisis and the investment bank Goldman Sachs in which the CEO of Goldman Sachs, Lloyd Blankfein, is questioned by Senator Carl Levin about the multiple millions of dollars the bank made by securitizing and selling subprime assets made up tranches of various mortgages and related instruments known as Collateralized Debt Obligations or CDOs. Goldman Sachs didn’t just sell these toxic assets but bet against them by purchasing billions of dollars in insurance protection in the form Credit Default Swaps from the American International Group (AIG) on CDOs that it didn’t issue or own, but which were of course part of the market the investment bank had created. Fearing that AIG might go bankrupt because of its exposure, Goldman subsequently bought tens of millions of dollars of insurance against AIG’s collapse. The investment bank then started to sell CDOs specifically designed so that the more money their customers lost the more money Goldman Sachs made. When the bubble burst, the U.S. government, under the direction of then Secretary Treasury Henry Paulson, himself a former CEO of Goldman Sachs, managed matters so that after AIG had been bailed out by the federal government Goldman Sachs got all of the $14 billion dollars AIG owed it (at 100 cents on the dollar). Moreover, as a term of the bailout, Secretary Paulson forced AIG to surrender any legal right to sue Goldman Sachs for fraud.
At the Senate hearing Levin asks Blankfein, “What do you think about selling securities which your own people think are crap? Does that bother you? . . . Is there not a conflict when you sell something to somebody and then are determined to bet against that same security and you don’t disclose that to the person you’re selling it [to]?” Blankfein replies, “I heard nothing today [about Goldman’s conduct] that makes me think anything went wrong . . . . In the context of market making that is not a conflict.” Like the market itself, the “truth” of the contemporary neoliberal economy is not “natural” but “made.” The neoliberal marketplace is not a regime of veridiction but a “regime of fantastication.” The neoliberal regime of fantastication is not “the set of rules enabling one to establish which statements in a given discourse can be described as true or false” (BB:35) but a set of rules under which the “true” and the “false” have no fixed propositional content or practical “political significance” whatsoever (BB:36-37). Put another way, “one might say” that neoliberalism’s constitution of the market as a “regime of fantastication” suspends rather than extends liberalism’s “regime of veridiction.”
2. From Liberal “Homo Economicus” to Neoliberal “Homo Freakonomicus”
In the lecture of 14 March, Foucault contrasts classical liberalism’s conception homo economicus with the figure of homo economicus which emerged with neoliberalism. In the classical conception “economic man” is “the man of exchange, the partner, one of the two partners in the process of exchange” (BB:225). Liberal homo economicus a rational actor (my colleague Patricia Williams describes him as the “arms length transactor”) willing and working within a utilitarian “problematic of needs” (BB:225) within which he “describes” and “defines” “a utility which leads to the process of exchange” (BB:225).
By contrast, neoliberal homo economicus is not the “bargained-for-exchanger” but an “entrepreneur,” the “entrepreneur of himself, being for himself his own capital, being for himself his own producer, being for himself the source of [his] earnings (BB:226). Following Gary Becker, Foucault notes that neoliberalism’s homo economicus is not merely a producer, but a consumer “who produces his own satisfaction” as “an enterprise activity by which the individual, precisely on the basis of the capital he has at his disposal, will produce something
that will be his own satisfaction.” What bears remarking here, however, is that like his liberal ancestor, neoliberal homo economicus is governed by a logic of rational choice and utility maximization. This view of the economic subject as an essentially rational and reasonable character holds true as well in the context of the neoliberalizing “generalization of the grid of the domain of homo economicus to domains that are not immediately and directly economic” (BB:268).
In Inside Job, Charles Ferguson interviews Andrew Lo, Professor and Director of the MIT Laboratory for Financial Engineering. Lo describes neuroscience research involving experiments in which researchers have “taken individuals and put them into an MRI machine and they have them play a game where the prize is money and they notice that when these subjects earn money the part of the brain that is stimulated is the same part that cocaine stimulates.”
The image of neoliberal homo economicus portrayed in Inside Job is an image of competitive consumption, and, at its limit, of competitive “self consumption,” i.e., of addiction and waste. Another interviewee was a psychotherapist whose clientele consisted principally of finance industry professionals:
“These people are risk takers, they’re impulsive. It’s part of their behavior, it’s part of their personality and that manifests outside of work as well . . . . It was quite typical for the guys to go out, go to strip bars. I see a lot of cocaine use, use of prostitution . . . . A lot of people feel that they need to really participate in that behavior to make it, to get promoted, to get recognized.” It never was enough. There’s just a blatant disregard for the impact that their actions might have on society, on family. They have no problem using a prostitute and going home to their wife.”
Contemporary neoliberalism’s attraction to and enchantment with risk (whose internal economy to be distinguished from the external danger Foucault associates with liberalism) is a defining feature of the present moment. In Inside Job, the story of the neoliberal subject is a story whose central protagonist is neither the homo economicus of classical liberalism, nor the Chicago School’s neoliberal rational economic actor whom Foucault describes, but a more more decadent figure who might be aptly named homo freakonomicus.
In the 24 January lecture, Foucault calls attention to the “consciousness of crisis” that was an emergent feature of the neoliberalism of his time. One feature of the “crisis of liberal governmentality” is that the “liberogenic” devices or “mechanisms for producing freedom, precisely those that are called upon to manufacture this freedom, actually produce destructive effects which prevail over the very freedom they are supposed to produce” (BB:69). “This,” Foucault writes, “is precisely the present crisis of liberalism.” My aim here has been to sketch some of the elements of a neoliberalism whose “destructive effects” differ both in kind and degree, and find expression not only in the “general apparatus of governmentality” but in the conduct of the neoliberal subjects whose freedom that apparatus claims to promote and protect.