The economization of the state and of social policy. The virtue of competition is that it generates economic growth, the promotion of which is “the only one and true fundamental social policy.” Foucault elaborates: In neoliberalism, “social policy must not be something that works against economic policy and compensates for it” or that “follows strong economic growth by becoming more generous.” Instead, economic growth by itself should enable individuals to prosper and to protect themselves against risk, so economic growth is the state’s social policy. Competition is a means facilitating an end; the state primes this means so that the economy can generate the end.
Neoliberal states thus depart from liberal ones as they become radically economic in a triple sense: The state secures, advances, and props the economy; the state’s purpose is to facilitate the economy, and the state’s legitimacy is linked to the growth of the economy — as an overt actor on behalf of the economy, the state also becomes responsible for the economy. State action, state purpose, and state legitimacy: each is economized by neoliberalism. The Ordoliberals carried this even further: the market economy should also be the principle of the state’s internal regulation and organization. Reversing the liberal formulation in which a free market is defined and supervised by the state, for them, the state should be defined and supervised by the market. In short, the state itself should be economized.
Competition replaces exchange; inequality replaces equality. In neoliberalism, competition replaces the liberal economic emphasis on exchange as the fundamental principle and dynamic of the market. This is another of those seemingly trivial replacements that is a tectonic shift, affecting a range of other principles and venues. Most importantly, equivalence is both the premise and the norm of exchange, while inequality is the premise and outcome of competition. Consequently, when the political rationality of neoliberalism is fully realized, when market principles are extended to every sphere.--Wendy Brown (2015) Undoing the Demos: Neliberalism's Stealth Revolution, pp. 63-64 (emphasis in original)
It is fair to state that Brown's Undoing the Demos is the most influential treatment of neoliberalism that simultaneously draws on Foucault's Birth of Biopolitics. Brown is not uncritical of Foucault. In particular, in her third chapter she argues that in articulating "the novel dimensions of the contemporary neoliberal subject," he fails to register "its specific eclipse of homo politicus...[S/he] is not a character in Foucault's story." (85-86). This matters because the homo politicus "forms the substance and legitimacy of whatever democracy might mean beyond securing the individual provisioning of individual ends; this "beyond" includes political equality and freedom, representation, popular sovereignty, and deliberation and judgment about the public good and the common." (87) The underlying claim is that Foucault has (what the Anthropologists call) 'gone native' and that his analysis recapitulates some of the flaws of the neoliberal authors and movements he analyzes.
Now, in the passages I quoted from pp. 63-64, Brown is quoting from Foucault's lecture(s) of 7 and 14 February 1979, that is, lectures five and six, both primarily devoted, as Brown explicitly recognizes, to German Ordo-liberalism (or the ORDOs). And as a summary of their views, Brown's account is misleading in two very important ways: first, she misrepresents the 'virtue' of competition in their thought. Second, she misrepresents what it means for the ORDOs to suggest that the market economy should be the principle of the state’s internal regulation and organization.
First, for the ORDOs the market's main virtue is that it, if it is properly regulated, it is a mechanism against (what Samuel Bagg calls) 'concentrated power.' This is absolutely explicit in Eucken's central work, The Foundations of Economics, where the "main task" is to find a "system" that is "effective" and does “justice to the dignity of man.” (p. 314) For Eucken “economic history is [full] of brutal struggles for power.” (264) In the context of perfect competition we are least likely to be dominated (and when some agent tries to do so we can safely exit). By contrast communism and Nazism are characterized by concentrated power (128) and "loss of independence." (p. 268). The ORDO embrace of markets and their suspicion of cartels and (in the hands of Röpke, especially) very large corporations (as well as unions) is motivated by their aversion to concentrated power. (See also Wilhelm Röpke (1960) A humane economy: the social framework of the free market, p. 32.)
It is worth noting that while Foucault does not use the phrase 'concentrated power,' it is still odd that Brown misses the significance of the neo-Kantian themes in Foucault's treatment of the ordoliberals and the republican concern with combatting domination. For, Foucault frames his discussion of modern variants of neoliberalism with a distinction between what he calls, at the end of the second lecture, "the fundamental axiomatic of the rights of man and the utilitarian calculus of the independence of the governed." (17 January 1979, p. 43) The former is associated with Rousseau and Kant, and the latter with Benthamite radicalism, and he is explicit there is a complex dynamic between them. And the most natural way to read his subsequent discussion is that Chicago economics is in the tradition of Benthamite radicalism (a point he explicitly makes), and the ORDOs in the former (a point he makes by implication by treating them as neo-Kantians). I return to the significance below.
Second, to think that for the ORDOs "the state should be supervised by the market" is not altogether strange in light of some of Foucault's expressions.* But even in Foucault, it is completely clear that for the ORDOs the state must have independent capacity and knowledge to be an umpire over the market (in terms of anti-trust), and to create the pre-conditions (in terms of rule of law, and social skills) to make markets function properly. (See, especially, lectures 6- 7.) So, what's going on here?
Now, it's important to recognize that that in Brown's presentation above, 'competition' becomes synonymous with 'market economy.' And so when Foucault represents the ORDOs as emphasizing competition, even treating it as a principle of regulation of the state, it is quite natural to read this as suggesting a kind of total displacement of the state's political functions with principles of the market. And this natural reading is by no means odd, if we look at the rhetoric (and some of the practice) of New Public Management in subsequent decades. Brown herself recognizes that in some respects this is much closer to the Chicago school than the ORDOs (see, especially, p. 60).
Even so, at the political level, 'competition' does not have to be identified with 'market economy.' It is quite natural to treat elections as competitive mechanisms. In fact, in ordo-liberalism one will find defenses and legitimations of the market economy or the price system in terms of a referenda. In 1951 Röpke writes "The process of the market economy is like an uninterrupted referendum on what use should be made (at every minute) of the productive resources of the community." ("The Problem of Economic Order" (Third lecture), published in Two Essays by Wilhelm Ropke, edited by Johannes Overbeek, Lanham: University of America Press, 1987, p. 26) Even Hayek, who allows himself plenty of skeptical comments about democracy, thought that judicial review of the sort practiced Stateside ought to be complemented by a referendum (see The Constitution of Liberty, p. 286, a work that Foucault read carefully). Röpke, especially, held up Switzerland as a model to be emulated by a wider European Union.
Now, at this point one may object that Ordoliberalism also has considerable suspicion of pure democracy or what Brown tends to call the popular sovereignty of the demos. While I think this tends to get emphasized too much in critical discussions of the ORDOs -- they are fully committed to democratic politics of the Bonn and Berlin republics (and as Foucault notes their political allies tend to win elections in it, and German social democracy had to change character/ideology if it wanted to win elections!) --, it is undeniably true that the ORDOs have some suspicion of the rent-seeking that takes place through political life and the (collectivist) temptation to use state power to plan and direct the economy. This, too, is emphasized in Foucault through the significance of the road to serfdom thesis in his analysis of them.
But the ORDOs respond to this (and this echoes Lippmann's analysis) not just by emphasizing markets and the rule of law, or even the countervailing powers of civil society, but rather by what one may call the fragmentation of the polity by way of federalism and de-centralization. (This is also quite present in Chicago economics starting with Simons.) Foucault is absolutely explicit on this:
Such a Gesellschaftspolitik was therefore orientated towards the formation of a market. It was a policy that had to take charge of social processes and take them into account in order to make room for a market mechanism within them. But what did this policy of society, this Gesellschaftspolitik have to consist in for it to succeed in constituting a market space in which competitive mechanisms could really function despite their intrinsic fragility? It consisted in a number of objectives which I have talked about, such as, for example, avoiding centralization, encouraging medium sized enterprises, support for what they call non-proletarian enterprises...(Lecture 10, 21 March 1979, pp. 240-241--emphasis added)
In addition, Foucault treats the ORDOs as the heir of Kant's federal plan for perpetual peace, and he inscribes this idea into the ORDO significance to the construction of the European Union. (In fact, he is quite prescient about this.) So, on their view of politics it should be polycentric with federalism at the national and European level. Now, admittedly Foucault doesn't use the term (despite quoting Michael Polanyi), but unless one assumes that neoliberalism is committed to creating economic markets at all levels, the fact that 'competition' has a political significance is very hard to miss in Focault's treatment of the ORDOs.
So, rather than rejecting homo politicus, as Brown ascribes to Foucault and the ORDOs, the ordoliberals ask of her to participate in political life at different federal levels and with elections at different times. And to do so in a position of sufficient independence (and dignity) so that her political voice can express her interests and even her vision of the common good. Especially in Erhard (who Foucault discusses at length in lecture four) this also involves a defense of basic rights.
Now, obviously, it is possible that the homo politicus of the ORDOs is too thin and too liberal for the more substantive conception that Brown adheres to. Gesellschaft can mean 'enterprise'/'corporation,' but also 'society.' And a politics that defends and organizes society may be too bourgeois for Brown. There is no doubt that the ORDOs are comfortable with the existence of considerable economic inequality, although not so much inequality that this can be organized to extract rents or to become a source of concentrated power.
And while it is true that economic growth is very significant to the ORDOs. In Foucault's analysis this is so because it can create (what since has come to be called) 'output legitimacy.' And this legitimacy is explicitly treated as a form of representativeness. For, the output legitimacy (which involves economic growth is the effect of respecting "the basic freedoms, the essential rights of citizens" and thereby be "representative of its citizens." (31 January, 1979, p. 81, discussing Erhard.) As Foucault puts it "it is simply a matter of saying that a state which abuses its power in the economic realm, and more generally in the realm of political life, violates basic rights, impairs essential freedoms, and thereby forfeits its own rights." (p. 80) In reading Brown on ordoliberalism, and her account of Foucault's treatment of it, one would simply miss this tight connection between respecting homo politicus and advancing (a new conception of) homo economicus.+
*In addition to the passages quoted by Brown, see also, for example, "The society regulated by reference to the market that the neo-liberals are thinking about is a society in which the regulatory principle should not be so much the exchange of commodities as the mechanisms of competition. It is these mechanisms that should have the greatest possible surface and depth and should also occupy the greatest possible volume in society. This means that what is sought is not a society subject to the commodity effect, but a society subject to the dynamic of competition." (14 February 1979, p. 147)
+To what degree Chicago economics does displace homo politicus by homo economicus, I leave for another time.
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