In the end, is not economics the analysis of forms of rational conduct and does not all rational conduct, whatever it may be, fall under something like economic analysis? Is not a rational conduct, like that which consists in formal reasoning, an economic conduct in the sense we have just defined, that is to say, the optimal allocation of scarce resources to alternative ends, since formal reasoning consists in deploying certain scarce resources—a symbolic system, a set of axioms, rules of construction, and not just any symbolic system or any rules of construction, but just some—to be used to optimal effect for a determinate and alternative end, in this case a true rather than a false conclusion which we try to reach by the best possible allocation of scarce resources? So, if it comes to it, we do not see why we would not define any rational conduct or behavior whatsoever as the possible object of economic analysis.
In truth, this already extremely extensive definition is not even the only one, and Becker, for example—the most radical of the American neoliberals, if you like—says that it is still not sufficient, that the object of economic analysis can be extended even beyond rational conduct as defined and understood in the way I have just described, and that economic laws and economic analysis can perfectly well be applied to non-rational conduct, that is to say, to conduct which does not seek at all, or, at any rate, not only to optimize the allocation of scarce resources to a determinate end. Becker says: Basically, economic analysis can perfectly well find its points of anchorage and effectiveness if an individual’s conduct answers to the single clause that the conduct in question reacts to reality in a nonrandom way. That is to say, any conduct which responds systematically to modifications in the variables of the environment, in other words, any conduct, as Becker says, which “accepts reality,” must be susceptible to economic analysis. Homo oeconomicus is someone who accepts reality. Rational conduct is any conduct which is sensitive to modifications in the variables of the environment and which responds to this in a non-random way, in a systematic way, and economics can therefore be defined as the science of the systematic nature of responses to environmental variables.
This is a colossal definition, which obviously economists are far from endorsing, but it has a certain interest. It has a practical interest, if you like, inasmuch as if you define the object of economic analysis as the set of systematic responses to the variables of the environment, then you can see the possibility of integrating within economics a set of techniques, those called behavioral techniques, which are currently in fashion in the United States. You find these methods in their purest, most rigorous, strictest or aberrant forms, as you wish, in Skinner, and precisely they do not consist in analyzing the meaning of different kinds of conduct, but simply in seeing how, through mechanisms of reinforcement, a given play of stimuli entail responses whose systematic nature can be observed and on the basis of which other variables of behavior can be introduced. In fact, all these behavioral techniques show how psychology understood in these terms can enter the definition of economics given by Becker. There is little literature on these behavioral techniques in France. In Castel’s last book, The Psychiatric Society, there is a chapter on behavioral techniques and you will see how this is precisely the implementation, within a given situation—in this case, a hospital, a psychiatric clinic—of methods which are both experimental and involve a specifically economic analysis of behavior.
Today though, I would like to emphasize a different aspect. This is that Becker’s definition, which, again, although it is not recognized by the average economist, or even by the majority of them, nonetheless, despite its isolated character, enables us to highlight a paradox, because homo oeconomicus as he appears in the eighteenth century—I will come back to this shortly—basically functions as what could be called an intangible element with regard to the exercise of power. Homo oeconomicus is someone who pursues his own interest, and whose interest is such that it converges spontaneously with the interest of others. From the point of view of a theory of government, homo oeconomicus is the person who must be let alone. With regard to homo oeconomicus, one must laisser-faire; he is the subject or object of laissez-faire. And now, in Becker’s definition which I have just given, homo oeconomicus, that is to say, the person who accepts reality or who responds systematically to modifications in the variables of the environment, appears precisely as someone manageable, someone who responds systematically to systematic modifications artificially introduced into the environment. Homo oeconomicus is someone who is eminently governable.--Michel Foucault, 28 March, 1979, translated by Graham Burchell, Lecture 11, The Birth of Biopolitics, 269-270 (emphasis added)
At the start of the eleventh lecture, Foucault says he wants to go back to the starting point of the year, which (via Freud and Walpole) was (recall) on the liberal art of governing. This is a bit disappointing because he ended the tenth lecture with hints of a new kind of governmental practice. But before we have time to reflect on this, he turns, quickly, to the nature of (what I have been calling following Talcott Parsons) 'economic imperialism. This is odd because it is the topic (recall) he had introduced at the start of the previous lecture. Foucault quickly name-checks Mises Human Action (268) as the fount of neoliberalism, and then goes on to reveal that he has been reading back-issues of the Journal of Political Economy (hereafter: JPE) the house-organ of the The University of Chicago's economics department, from the years 1960–1970, and recommends a "series of articles" from 1962 by "Becker, Kirzner, and others." (268)*
It is by no means obvious what the liberal art of government and the shifting definitions of homo oeconomicus have in common. But, amazingly, by the end of the lecture it is completely clear. To give away the punchline (and to look ahead to some future posts), in Foucault's hands (and this is already clear in what I quote above), Becker's very redefinition of homo oeconimicus effectively betrays the original achievement of liberalism, which consists in not just "limiting the sovereign’s power," but "stripping the sovereign of power" by revealing an "essential, fundamental, and major incapacity of the sovereign, that is to say, an inability to master the totality of the economic field," (292); and the betrayal is, in a certain sense, as Foucault argues during the eleventh lecture, a return to physiocracy. In Foucault's telling Becker throws away the very achievement of Adam Smith, and creates a subject capable of being (to use the phrase Foucault had introduced in lecture 9) programmed, nudged, and shaped by a knowing sovereign.
But just before Foucault explains the significance of the shift from the Robbins definition of economics ("the optimal allocation of scarce resources to alternative ends") to the Becker definition (the "science of the systematic nature of responses to environmental variables"),** he (that is Foucault) inserts a new analysis of the nature of science. Foucault does this in the first paragraph in the passage quoted above this post.
Now critics of the Robbins definition (itself indebted to Max Weber) tend to notice that it turns economics into a kind of engineering; for the ends are given, and act as constraints on an optimization problem. And since the Robbins definition is topic neutral (neither the resources, nor the ends, nor the implied agent/allocators(s) have to be trading or using money, etc.) it is no surprise that economic analysis so constituted can be applied across many different domains (and economic imperialism is out of the gates). Of course, the critics will see in the Robbins definition a paradigmatic case of instrumental rationality.
But if one looks at the Robbins definition, as it were, 'formally,' even the pinnacle of substantive rationality -- the inferring of true conclusions from, say, a set of axioms, can be treated, or, better yet, modelled as an instance of it. One is reminded here of Leibniz thinking of the "divine perfection" in terms of God as a perfect geometer in the Discourse of Metaphysics: "He who acts perfectly is like an excellent Geometer who knows how to find the best construction for a problem." (par. 5; Clarke is also tempted by this language.)+
So, economic analysis can be applied legitimately to God's choices and to scientific reasoning. Of course, and to be sure, while in God the context of construction/choice and context of justification coincide, one need not claim this about ordinary scientists. So, Foucault, is not here proposing to apply economic analysis to most scientific activity -- what I call 'public choice philosophy of science' of the sort Gordon Tullock and, at Chicago, George Stigler pioneered (and made mature by Sandra Peart and David Levy, now familiar within philosophy in the burgeoning Zollman school of philosophy of science [e.g., O'Connor Weatherall; Kofi Bright, etc.]). To be sure Foucault is not ruling it out. (I follows trivially from what he says.)
But rather, he is making the more audacious point that economic analysis is a way of conceptualizing disciplined scientific speech speaking the truth (when its claims are justified). And this is a kind of existence proof for the claim that "any rational conduct or behavior whatsoever" is "the possible object of economic analysis" with economic analysis understood in the sense of Robbins' definition. So, economic analysis might be philosophical speech, that is, capable of analyzing itself if and only if it generates "true conclusions."
I could close with the fate of that lovely sentence hanging in the balance. But I want to note two things here: first, there is a sense in which Foucault agrees with the Frankfurt's school's claim that under capitalism even science becomes conceived as a species of instrumental rationality. But he is not critical of it. He explicitly grants that all rational action can be modelled by economic analysis in this sense. And so, second, he rejects the distinction between instrumental and substantive rationality. For, while Foucault need not accept the much stronger claim that no other form of analysis, no other grid of intelligibility, is possible (he is clearly a pluralist about such matters [Robbins' definition "is not even the only one"]), he does not accept here the possibility that something is a species of rational agency and not capable of falling under the Robbins definition.++
And with that, I conclude my seventh full year of solo blogging and will take my customary winter break; I wish you happy holidays my dear reader!
*For the aficionados, JPE was then edited by Harry G. Johnson and Robert Mundell. Interestingly, there were both Canadians and played central roles in international affairs. One doesn't tend to think of Mundell (who has an important role to play in the history of the Euro) as Chicago economist. Johnson, by contrast, is crucial to any serious account of Chicago economics and the fate of global neo-liberalism. For Kirzner, in the context of the passage quoted above (recall this post which kind of belongs to the present series.)
**Before I started this present series, I analyzed Foucault's treatment of the Becker definition twice before (here in 2014 (no XXXIV) and here (no XXXV).
+It is a bit surprising that Leibniz, Bernoulli and Euler go unmentioned by Foucault (since Bernoulli and Euler are so important to twentieth century mathematical economics; but Foucault clearly had little time for Paul Samuelson).
++That is not trivial because it would rule out, say, Al-Ghazali, Spinozistic or Deleuzian intuition.
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