Digressions&Impressions

21 February 1979: Foucault on The Rule of Law (XXII)

Now, they say, how can we avoid the error of planning? Precisely by seeing to it that the tendency Schumpeter identifies in capitalism towards the organization, centralization, and absorption of the economic process within the state, which he saw was not a tendency of the economic process but of its social consequences, is corrected, and corrected precisely by social intervention. At this point, social intervention, the Gesellschaftspolitik, legal interventionism, the definition of a new institutional framework of the economy protected by a strictly formal legislation like that of the Rechtsstaat or the Rule of law, will make it possible to nullify and absorb the centralizing tendencies which are in fact immanent to capitalist society and not to the logic of capital. This is what will enable us to maintain the logic of capital in its purity and get the strictly competitive market to work without the risk of it ending up in the phenomena of monopoly, concentration, and centralization observable in modern society. As a result, this is how we will be able to mutually adapt to each other, on the one hand, a competitive type of economy, as defined or at least problematized by the great theorists of the competitive economy, and, on the other, an institutional practice whose importance was demonstrated in the great works of historians or sociologists of the economy, like Weber. Broadly speaking, according to the ordoliberals the present historical chance of liberalism is defined by a combination of law, an institutional field defined by the strictly formal character of interventions by the public authorities, and the unfolding of an economy whose processes are
regulated by pure competition.
This analysis, political project, and historical wager of the ordoliberals has, I think, been very important, forming the framework of modern German policy. And if there really is a German model, it is not the frequently invoked model of the all-powerful state, of the police state, which, as you know, has so frightened our compatriots. The German model being diffused is not the police state; it is the Rule of law (l’État de droit). And I have not made these analyses just for the pleasure of engaging in a bit of contemporary history, but so as to try to show you how it was possible for this German model to spread, on the one hand, in contemporary French economic policy, and, on the other, in a number of liberal problems, theories, and utopias like those we see developing in the United States. So, next week I will talk about some aspects of Giscard’s economic policy and then about American liberal utopians. Michel Foucault, 21 February 1979,  translated by Graham Burchell, Lecture 7, The Birth of Biopolitics, 178-179

Foucault closes his seventh lecture -- the midpoint of the series -- with a two-fold clear contrast between the realististic German Ordo-Liberals (ORDOs) and Schumpeter, who is the pessimistic outlyer toward the left, and the Chicago school American liberal utopians, which fuel, it seems, "a stubborn American extreme Right born in the Midwest" (174).* The key point vis a vis Schupeter is that for ORDOs capitalist monopoly and concentration is always the effect of a political process, or badly formed laws, that facilitate rents or high profits. So, a proper rule of law both aims to prevent that from occurring, or intervenes not by redistributing income (or wealth) directly, but by proper antitrust law, patent-law, property-rights, etc. And crucially, the latter must not be ad hoc, but ground in principles. In addition, there must be an investment in human capital, and even culture that can help shape an enterprising spirit. 

The nature of the rule of law then becomes crucial. The core of the lecture is, in fact, Foucault's analysis of the competing conceptions of the rule of law. In a crucial way, law must be capable of doing four things at once: first, (i) it must be a site where citizens (and corporations) encounter each other as relative equals and resolve conflicts peacefully; second, (ii) it must be a site where individuals can hold the state to account, the "possibility of judicial arbitration, by one or another institution,
between citizens and the public authorities," (171) ; third, (iii) it is a site where new social problems -- due to technological change and increasing growth, and so more mutual "friction" (175) -- are diagnosed and resolved. (Obviously, (i)&(iii) can blend in each other.) And (iv) "public authorities act within the framework of the law and can only act within the framework of the law" that is, there is no political or conceptual space for non-law-governed sovereign agency as is common in despotism or security-states. (169; this is why states of exception attract our notice.) 

Now, I call, following Lippmann and Rougier (recall here;  and Locke; here), the rule of law in (iii) the source of the 'principle of adaptation' that liberal society must instantiate if it is to survive in liberal fashion (164). One natural problem is that is by no means obvious that existing legal principles can survive the encounter with new sources of friction and technological change unscathed. So, (iii) will also be a source of legal innovation in the principles that are supposed to guide the framework (which I call principled rule of law). 

There is an obvious problem here in how the principle of adaptation and the principled rule of law interact once they go out of sync. There seem three option: (a) for Lippmann (who is not discussed by Foucault) it is clearly the role of politics to do the mediation, but for this to succeed he requires from politicians that they do so in impartial, judicial faction. This strikes me as too far-fetched to expect in practice. For, (b) Hayek, who is discussed at length in this lecture, we must trust the evolving jurisprudence of the common law as a kind of bottom up discovery engine. It can only be such an engine, if economic agents can feel secure in the expectation that "the legal framework is fixed in its action and will not change." (173, Foucault paraphrasing Constitution of Liberty.)+ A fixed legal framework is uncertainty reducing, confidence inspiring, and allows for mutual coordination. This approach can allow existing principles to be reinterpreted, but as Lippmann noted, it can be abused as an instrument to preserve a status quo (which registers previous existing economic/social powers). So, it is not obvious that this allows for the transformation of legal principles where needed. As Hayek and with Hayek James Buchanan became more influential among ORDOs this more status quo friendly tendency is also visible among them.

Even so, as Foucault clearly recognizes, a third option (c), is visible among the (early) ORDOs. To be sure all ORDOs agree with Hayek that even soft forms of planning (associated with Keynes and New Deal) are to be rejected. But these early ORDOs recognize that intellectual and political leadership is needed to implement, and, where necessary, develop an apt legal framework. That is to say, an intellectual class must be nourished, students who combine/integrate law, history, economics, sociology and philosophy become the source of innovation in the principles that can guide the framework, or Gesellschaftspolitik. This class must, in particular, generate expertise in the workings of institutions within and among (legal, economic, social, etc.) orders as well as in their wider frameworks (see, especially, 167).

Admittedly, Foucault does not quite explicitly say (c), although his repeated quotes from Ropke and, especially, Eucken suggests indicate it. The problem, of course, is that (c) shades into views more commonly associated with Pareto and Schumpeter, an administrative technocracy/elite. But regardless whether the development of such a class was fully intended by Eucken (as I think it was), it is clear that is partially generated by the ORDO agenda  in light of (iii). And, I think, it is no surprise we encounter such a class in the institutions -- be it the 'Geneva' ones centered on internal trade and law, described by Quinn Slobodian or in the EU -- non-trivially influenced by ORDO thought.

I should close here, but I do want to note that the tension between (iii) and (iv) is characteristic of the European Central Bank's (ECB) problems during the 2007-2013 Euro-crisis. It needed new principles to act, but it felt constrained by a lack of legal mandate; and it lacked the intellectual class to supply it (and the political elites/democracies) with the principles to do so. From the perspective of the ORDOs, the ad hoc and upwardly redistributive nature of European monetary policy is clearly a threat to the survival of liberalism and rule of law, in terms of (i), if only because it has enshrined in law a class of economic agents (systematically significant banks) as privileged (because too big to fall). 

 

 

 

 

14 February 1979: Foucault on The Modernity of Neoliberalism (XVIII)

The first point to underline is that, as you can see, and as the neo-liberals have always said, neo-liberal governmental intervention is no less dense, frequent, active, and continuous than in any other system. But what is important is to see what the point of application of these governmental interventions is now. Since this is a liberal regime, it is understood that government must not intervene on effects of the market. Nor must neo-liberalism, or neo-liberal government, correct the destructive effects of the market on society, and it is this that differentiates it from, let’s say, welfare or suchlike policies that we have seen [from the twenties to the sixties]. Government must not form a counterpoint or a screen, as it were, between society and economic processes. It has to intervene on society as such, in its fabric and depth. Basically, it has to intervene on society so that competitive mechanisms can play a regulatory role at every moment and every point in society and by intervening in this way its objective will become possible, that is to say, a general regulation of society by the market. So this will not be the kind of economic government imagined by the physiocrats, that is to say, a government which only has to recognize and observe economic laws; it is not an economic government, it is a government of society. What’s more, one of the participants in the Lippmann colloquium, who, in 1939, was looking for this new definition of liberalism, said: Could we not call it a “sociological liberalism”? In any case, it is a government of society; what the neo-liberals want to construct is a policy of society......

So, what does this sociological government want to do in relation to this society that has now become the object of governmental intervention and practice? It wants, of course, to make the market possible. To play the role of general regulator, of principle of political rationality, the market must be possible. But what does it mean to introduce market regulation as regulatory principle of society?....It is not market society that is at stake in this new art of government; it is not a question of reconstructing that kind of society. 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. Not a supermarket society, but an enterprise society. The homo oeconomicus sought after is not the man of exchange or man the consumer; he is the man of enterprise and production. Michel Foucault, 14 February 1979,  translated by Graham Burchell, Lecture 6, The Birth of Biopolitics. 148-149. 

In addition to a polemic (recall) with lazy lefty reactions to neo-liberalism, Foucault's sixth lecture tries to grasp ORDO-liberal thought in its historical specificity. He tries to differentiate it from earlier forms of liberals, how it builds on other arts of government, and he shows how it relates to policy across Europe. This is in service of letting "knowledge of the past work on the experience of the present." (130) He does by using the ORDO approach to three areas where the art of government may be practiced: monopoly, social policy, and how to think about about government actions in a framework (Foucault treats this in terms of 'conformable actions'.) Each is fascinating in its own right, and perhaps, I'll end up writing a post on each.

The quoted material at the top of this post is the initial pay-off to his discussion. Neo-liberalism is a firm break with the night-watchman-state. Neo-liberal government is hyper-active. And this presupposes considerable state capacity. This is something Foucault kind of skips quickly. But clearly it presupposes (i) weberian-rule following bureaucracies; (ii) considerable technical expertise in lots of domains; (iii) and access to funds (debt or taxes) to pay (i-ii).

I do not mean to deny the significance of Foucault's remarks that this hyper-active and vigilant state does "not intervene on effects of the market" or on the market process. This latter point he had made earlier in the lecture, while commenting on the ORDO's attitude toward monopoly:

There is no need to intervene directly in the economic process, since the economic process, as the bearer in itself of a regulatory structure in the form of competition, will never go wrong if it is allowed to function fully. What constitutes the specific property of competition is the formal rigor of its process. But what guarantees that this formal process will not go wrong is that in reality, if one lets it function, nothing will come from competition, from the economic process itself, that is of such a nature that it will change the course of this process. Consequently, non-intervention is necessary at this level. (137)

But to make non-intervention necessary condition on market processes and market outcomes presupposes "an institutional framework" for example, one that prevents "either individuals or public authorities intervening to create a monopoly." (137) So the state must have independent juridical and economic expertise to policy the development of cartels and monopolies, but it also must find ways to immunize the political process from would-be-monopolistic forces. (This points to the need of effective campaign finance laws, public disclosure rules, etc.) So,in addition to having state capacity, the state must (iv) have the capacity to police itself so it does facilitate monopolistic or anti-competitive political powers. 

So, neoliberal -- in its ORDO variant -- art of government requires complex analysis of state capacity and must evaluate how states can develop the resources and apply them in such a way such that market functioning is made possible. To put this in quasi-Hayekian terms: the price system is a natural machine with a clear purpose... a mechanism for communicating information to dispersed agents. And to make this mechanism do its proper job in modern times, it presupposes a state with distinct capacities (i-iv). Lurking in the background is the Lippmannian idea (recall here; here), emphasized also by Nick Cowen, (v) that the state also supplies the conditions for the generation of at least some reliable basic information that can be used in the market.  (As Foucault notes in this sixth lecture (132) Lippmann's writings prompted the “Walter Lippmann Colloquium” in which these ideas got first hashed out in public.)

Of course, this whole set up presupposes a conceptual and social distinction between the market process (and its participants) and market outcomes, on one side, and the framework or preconditions that make markets possible. Since government intervention is only permitted on the latter and not on the former, this requires both (sociological-juridical-economic) knowledge where to draw the line between the two and skill at applying interventions such that this line is respected.

In addition to state capacity and skill (i-v), a new understanding of human agency is required: the man of enterprise and production. The gendered nature of this new homo oeconomicus is something explored (recall) by Melinda Cooper in her (2017) Family Values., which is inspired by Foucault without slavishly repeating him. Importantly, the enterprising and productive agent is itself somebody that must both be conceptualized scientifically, made possible juridically, and produced/prepared/invested in by government. So, while market processes and outcomes are highly unpredictable, even uncertain to particular market participants, these very differentiated market participants or populations are in another sense a certain type (and so predictable) if society or government does its proper job. 

So one important difference that Foucault tracks is that the art of eighteenth century liberal government involved agents conceived as naturally occuring traders who consumed with the aim of increasing the number of them (virtuous cycle of population, economic, and technological growth--to have lots of cheap goods), ORDO liberal government requires the state's development of enterprising and productive agents who can participate in the market process. From here the step to the Chicago school's focus on human capital is small, as future lectures show. And this population needs to be large enough so as to facilitate the relevant differentiation, but growing population is not an end in itself beyond this threshold.

Of course, this presupposes, as we have already seen, competition is "not presented as in any way a primitive and natural given" (131) but must be generated. That is to say, the Ordo variant of "Neoliberalism should not therefore be identified with laissez-faire, but rather with permanent vigilance, activity, and intervention. (132;) This last sentence is derived from Röpke as Foucault makes clear later (on p. 133).

Let me close with an important implication of this that Foucault makes explicit about how ORDOs experience the world and how the economy is conceptualized scientifically. When they see a monopoly they deny that this is product of market process alone (as a certain kind of Marxist might claim). Rather, it is an invitation to look critically at the juridical and state practices that make monopoly and rents possible (including not just rent-seeking behavior, but also the mutually reinforcing assignation of property rights, licenses, tariffs, and copyright/patent protections, etc.. (134-136)). Often this involves the interplay among domestic public opinion, public norms, and political lobbying with foreign (trade) policy. Often they conceptualize the forces of monopoly in terms of “predatory neo-feudalism" (Rüstow , 136). So, inscribed into this conceptualization is an idea of modernity. As Foucault notes, the intellectual foundations of "the ideas of [Douglas]  North on the development of capitalism, for example, are directly in line with this opening up made by the neoliberals." (135) 

7 February 1979: Foucault on Neo-Liberal Innovation (XIV)

The problem was: given a state that does not exist, if I can put it like that, and given the task of giving existence to a state, how can you legitimize this state in advance as it were? How can you make it acceptable on the basis of an economic freedom which will both ensure its limitation and enable it to exist at the same time? This was the problem, the question that I tried to outline last week and which constitutes, if you like, the historically and politically first objective of neo-liberalism. I would now like to try to examine the answer more closely. How can economic freedom be the state’s foundation and limitation at the same time, its guarantee and security? Clearly, this calls for the re-elaboration of some of the basic elements of liberal doctrine—not so much in the economic theory of liberalism as in liberalism as an art of government or, if you like, as a doctrine of government. (102)

Nothing proves that the market economy is intrinsically defective since everything attributed to it as a defect and as the effect of its defectiveness should really be attributed to the state. So, let’s do the opposite and demand even more from the market economy than was demanded from it in the eighteenth century. In the eighteenth century the market was called upon to say to the state: Beyond such and such a limit, regarding such and such a question, and starting at the borders of such and such a domain, you will no longer intervene. This is not enough, the ordoliberals say. Since it turns out that the state is the bearer of intrinsic defects, and there is no proof that the market economy has these defects, let’s ask the market economy itself to be the principle, not of the state’s limitation, but of its internal regulation from start to finish of its existence and action. In other words, instead of accepting a free market defined by the state and kept as it were under state supervision—which was, in a way, the initial formula of liberalism: let us establish a space of economic freedom and let us circumscribe it by a state that will supervise it—the ordoliberals say we should completely turn the formula around and adopt the free market as organizing and regulating principle of the state, from the start of its existence up to the last form of its interventions. In other words: a state under the supervision of the market rather than a market supervised by the state.--116

Just as for Husserl a formal structure is only given to intuition under certain conditions, in the same way competition as an essential economic logic will only appear and produce its effects under certain conditions which have to be carefully and artificially constructed. This means that pure competition is not a primitive given. It can only be the result of lengthy efforts and, in truth, pure competition is never attained. Pure competition must and can only be an objective, an objective thus presupposing an indefinitely active policy. Competition is therefore an historical objective of governmental art and not a natural given that must be respected. In this kind of analysis we find, of course, both the influence of Husserl and, in a somewhat Weberian way, the possibility of connecting up history with the economy. The ordoliberals go on to say that the task of economic theory is the analysis of competition as a formal mechanism and the identification of its optimum effects. But what actually takes place in the societies we know cannot be analyzed on the basis of this theory of competition. We can only analyze it by taking the real historical systems within which these formal economic processes function and are formed and conditioned. Consequently, we need an historical analysis of the systems that intersect, as it were, as a horizontal intersects a vertical, the formal analysis of economic processes. Economics analyzes the formal processes and history will analyze the systems in which the operation of these formal processes is either possible or impossible.

The third consequence they draw from this is that the relation between an economy of competition and a state can no longer be one of
the reciprocal delimitation of different domains. There will not be the  market game, which must be left free, and then the domain in which the state begins to intervene, since the market, or rather pure competition, which is the essence of the market, can only appear if it is produced, and if it is produced by an active governmentality. There will thus be a sort of complete superimposition of market mechanisms, indexed to competition, and governmental policy. Government must accompany the market economy from start to finish. The market economy does not take something away from government. Rather, it indicates, it constitutes the  general index in which one must place the rule for defining all governmental action. One must govern for the market, rather than because of the market. Michel Foucault, 7 February 1979,  translated by Graham Burchell, Lecture 5, The Birth of Biopolitics. 120-121

Foucault's fifth lecture is full of spectacular gems: a history of twentieth century German philosophy in the wake of Max Weber (who displaces Marx) with Freiburg and Frankfurt as two orbiting poles (and Heidegger as unspoken shadow, black hole) and so the joint history of philosophy and political economy; the indebtedness of Marcuse to Sombart; the political significance of the road to serfdom thesis, etc. Here I want to focus on one strain in the lecture (and which frames it and connects it to the other lectures): a key innovation in the liberal art of government by German neo-liberalism (or ORDOs). 

And this innovation is part of a natural history of liberalism that Foucault is telling. And, in fact, the German neo-liberals are a third or even fourth stage in this natural history. To simplify today, Foucault recognizes that there is a shift, schematically, from (i) the Lockean picture in which states promote growing populations and economies by focusing on non-zero-sum policies and are to become self-limiting to (ii) markets that must be left free (late nineteenth century laissez faire) to (iii) free markets most be constructed and policed by the state.* On (iii), Foucault had noted the week before (recall here; here), and repeats in lecture 5, that in virtue of preserving basic rights and generating economic goods, including the interests of the "weak and the poor," the ORDOs created a form of output legitimacy that could legitimate the state as such. 

Now, before I get to my main point, I want to note that much discussion inspired by Foucault takes up what we may call the Husserlian and neo-Kantian theme about the necessity to construct markets and market regulations under neoliberalism. And, the best critics of neoliberalism will, quite rightly, call attention to the amount of policing and violence needed to do such constructing. (I am thinking of Melinda Cooper on American family policy.) Unlike their American counterparts who love police and prisons, the German ORDOs prefer a juridical and regularized form of constructing (recall this post on Mestmäcker).** And I do not wish to downplay the significance problems with a purportedly emancipatory theory of freedom that (to echo Rousseau) forces, lethally forces, people to be free. But for the ORDOs much of the work that needs to be done has the character of antitrust law, preventing corporations from colluding and, not insignificantly thereby, lacking, freedom to lord over their employees. (The point of antitrust is not consumer welfare but a blockage against concentrated power.)

But the more important point Foucault makes, en passant, is that in the very critical acumen of the ORDO critique (of the Marxists, Keynesians, and Nazis) there is a paradox hiding in plain sight. I quote again, "it turns out that the state is the bearer of intrinsic defects, and there is no proof that the market economy has these defects, let’s ask the market economy itself to be the principle, not of the state’s limitation, but of its internal regulation from start to finish of its existence and action." Remember, this is part of neoliberal critique of the critics of liberalism. And, especially, if one is willing to grant this critique of the standard criticism of liberalism, one is stuck with the following problem: if the market economy becomes the principle of its own internal regulation, and the model for the state, the state is still required as a kind of formal and efficient cause to help construct the market (and be its independent umpire or 'supervisor'). 

Now, this is not a problem if market and state both approach the ideal limit. So, in optimal circumstances there is no paradox. But as Foucault notes, the ORDOs recognize that "what actually takes place in the societies we know cannot be analyzed on the basis of this theory of competition." Scientifically, this has the salutary effect of attempting to integrate political economy with history ("we can only analyze it by taking the real historical systems within which these formal economic processes function and are formed and conditioned.") The ORDOs can't help it that the Swedish nobel committee preferred a different conception of science. 

But politically, it puts neo-liberalism in a catch-22. The very state that needs to be modeled on the market, and, in turn, construct the market and govern for it, will be captured by many interests. And, while the ORDOs can smile wryly and wisely at their left-wing and youthful critics, who will treat 'true democracy' as a magic wand for any problem, it reinforces the cul-de-sac they are in. The state, whose legitimacy depends on proper functioning markets which protects basic rights, protects the vulnerable, and limits the accrual of power, must itself be modeled on the market, but which it can only shape and police properly, if it is in some sense already proper functioning, and so on.+ A regress looms once one recognizes that the government most constitute the free-market and, in turn, modeled on the market. But like a great entertainer ('good serial'), Foucault postpones discussion of this catch-22. 

 

 

On Foucault on 17 January 1979: On Dynamics of Liberty or Method and Enemies (V)

Undertaking the history of regimes of veridiction—and not the history of truth, the history of error, or the history of ideology, etcetera—obviously means abandoning once again that well-known critique of European rationality and its excesses, which has been constantly taken up in various forms since the beginning of the nineteenth century. From romanticism to the Frankfurt School, what has always been called into question and challenged has been rationality with the weight of power supposedly peculiar to it. Now the critique* of knowledge I would propose does not in fact consist in denouncing what is continually—I was going to say monotonously—oppressive under reason, for after all, believe me, insanity (déraison) is just as oppressive. Nor would this political critique of knowledge consist in flushing out the presumption of power in every truth affirmed, for again, believe me, there is just as much abuse of power in the lie or error. The critique I propose consists in determining under what conditions and with what effects a veridiction is exercised, that is to say, once again, a type of formulation falling under particular rules of verification and falsification. Michel Foucault, 17 January 1979, lecture 2  The Birth of Biopolitics. translated by Graham Burchell, 35-36

One strain easy to miss in the fascinating ambitions of lecture 2, is Foucault's polemic with the Frankfurt school. That is to say, I missed it when I taught last year it only to be taken by surprise (looking ahead) in lecture 5. His main criticism above seems to be that ideology critique lacks originality (it goes back to romanticism) and is tired old hat ("etcetera;" "once again;" "well- known;" "constantly" "always"). The more subtle criticism, which is a consequentialist argument from authority ("believe me") is is that if the effect of ideology critique is a regime of unreason or error, it is no better. That is to say, and this has been noted by critics of Foucault, there is a kind of status quo bias built into Foucault's methodology; it is not sufficient to show that the status quo is problematic if you don't have a path toward a better outcome. 

It would be tempting now to turn to Foucault's methodology, but, as it happens, the polemic with Frankfurt is not finished yet. A few pages (or since these are lectures, minutes) later he claims that:

We should keep in mind that heterogeneity is never a principle of exclusion; it never prevents coexistence, conjunction, or connection. And it is precisely in this case, in this kind of analysis, that we emphasize, and must emphasize a non-dialectical logic if want to avoid being simplistic. For what is dialectical logic? Dialectical logic puts to work contradictory terms within the homogeneous. I suggest replacing this dialectical logic with what I would call a strategic logic. A logic of strategy does not stress contradictory terms within a homogeneity that promises their resolution in a unity. The function of strategic logic is to establish the possible connections between disparate terms which remain disparate. The logic of strategy is the logic of connections between the heterogeneous and not the logic of the homogenization of the contradictory. So let’s reject the logic of the dialectic and try to see—this is what I will try to show in these lectures—the connections which succeeded in holding together and conjoining the fundamental axiomatic of the rights of man and the utilitarian calculus of the independence of the governed. (42-43)

The heterogeneity he has in mind (recall) is liberalism's two traditions/concepts of liberty -- the contractualist-republican and utilitarian ones. And the significance of his claim, to liberalism, and this anticipates structurally something Jacob Levy has recently emphasized (recall;and recall) in a slightly different fashion, is the creative tension, a dynamics of liberty, within liberalism of these non-identical yet coexisting conceptualizations of liberty. And strikingly, Foucault wants to adopt a logic of inquiry that does justice to and can convey precisely these dynamics, "the connections which succeeded in holding together and conjoining the fundamental axiomatic of the rights of man and the utilitarian calculus of the independence of the governed. " As I signaled earlier in the week, by adopting what he calls strategic logic, Foucault's rewriting of the tradition is simultaneously a means of extending it because it facilitates the expression of this creative dynamic. 

At this point it is unclear whether Foucault thinks that by so doing one gives liberalism a new lease on life or one helps to push it over the precipice. But he is explicit that dialectical logic (which I take him to associate with the Frankfurt school, especially Horkheimer and Marcuse [both mentioned later in the lecture series)) is both simplistic and incapable of respecting the creativity lodged within the liberal tradition. De facto he is saying that the unity they offer is not worth having.

I could stop here, but it is worth noting what liberalism's rule of reason he is willing to apply strategic logic to is. He writes:

Governmental reason in its modern form, in the form established at the beginning of the eighteenth century with the fundamental characteristic of a search for the principle of its self-limitation, is a reason that functions in terms of interest. But this is no longer the interest of an entirely self-referring state which only seeks its own growth, wealth, population, and power, as was the state of raison d’État. In the principle to which governmental reason must conform, interest is now interests, a complex interplay between individual and collective interests, between social utility and economic profit, between the equilibrium of the market and the regime of public authorities, between basic rights and the independence of the governed. Government, at any rate, government in this new governmental reason, is something that works with interests....In its new regime, government is basically no longer to be exercised over subjects and other things subjected through these subjects. Government is now to be exercised over what we could call the phenomenal republic of interests. (44...46)

The rule of reason is thus the rule of interests, and this is, quite clearly, itself in constant motion a moving target. And in part it is a moving target because as interests are both shaped and pursued, perceived needs and how these perceptions are constituted evolve. So, we  may say that in this phenomenal republic there is lodged a further complex dynamics that has, in turn, a complex interplay with the dynamics of liberty. 

These complex, multi-faceted dynamics come together in the market which is (recall) a stupendous machine that helps coordinate the pursuit of our needs. I put it like this because here in lecture 2, Foucault has already signaled, without mentioning his name, that Hayek is not an aberration from liberalism but central to the tradition. But the lecture ends on alerting to the reader to the significance of James Buchanan's research program (e.g. Calculus of Consent):

The fundamental question of liberalism is: What is the utility value of government and all actions of government in a society where exchange determines the true value of things? this question encapsulates the fundamental questions raised by liberalism. With this question liberalism posed the fundamental question of government, which is whether all the political, economic, and other forms which have been contrasted with liberalism can really avoid this question and avoid formulating this question of the utility of a government in a regime where exchange determines the value of things. (46)

This is, of course, precisely the research agenda of public choice theory (Buchanan, Tullock), which goes unnamed in the Birth of Biopolitics (and perhaps everywhere in Foucault's work). And, of course, if we look at Buchanan's research project closely it mixes the two traditions noted by Foucault. The contractualist-republican element is (recall) exhibited in the significance to Buchanan of the constitutional moment; this is the part of Buchanan where he is very close to Rawls.  But within the constitutional order Buchanan inherits (what Foucault calls) the radical tradition and applies in Foucaults terms the utility value of government and all actions of government in a society where exchange determines the true value of things.* That is to say, Foucault helps explain why the Virginia school is, itself, an expression of the central problematics of liberalism. 

 

On Chicago Economics (Becker vs Kirzner), Foucault, and Darwinism (via Daniel Dennett & David Haig)

Becker, for example—the most radical of the American neoliberals, if you like—says...that the object of economic analysis can be extended...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....
...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. From being the intangible partner of laissez-faire, homo oeconomicus now becomes the correlate of a governmentality which will act on the environment and systematically modify its variables.--Michel Foucault, The Birth of Biopolitics, 28 March 1979, translated by Graham Burchell,  269-271

While it is not the main topic of today's digression, it is worth noting how incredibly prescient Foucault is in grasping that what is now known as nudging is an eminently foreseeable, internal development of Chicago economics. In context that point is even clearer in light of the concluding remarks of the previous lecture (of March 21), which focuses on the possibility of "an environmental type of intervention" to produce or stabilize homo oeconomicus which in the Becker/Stigler version of Chicago just is MaxU.

Now, Foucault rightly notes that Becker actually relies on a relatively thin notion of agency which really amounts to responding 'systematically to modifications in the variables of the environment.' Incentives matter, after all. Let's call this the modern economist's conception of agency.  

As an aside, as I have noted before Foucault actually understates the situation here. Becker's own position develops an idea from Alchian (and noted by Arrow) that even 'agents' who behave stochastically, will, if they respond to the environment -- and there is some selective winnowing -- approximate the behavior of MaxU, or, as Milton Friedman also emphasized, can be treated as if they do so. 

Okay, with that in place, let's turn to Daniel Dennett's treatment of the Warden's Rule: "if it can happen, it will happen. (See Freedom Evolves, 2003, 160-61. The version I discuss below is reproduced from Dennett's preface to David Haig's excellent From Darwin to Derrida (forthcoming); recall this post by Haig.)

The Warden's Rule...is an improvement on “Murphy’s Law,” that whatever can go wrong will go wrong. It is an improvement because there are real circumstances where a version of it is true, not merely an amusing expression of pessimism. It is supposedly the maxim of every prison warden. Its rationale is that prisons are full of prisoners with time on their hands and a measure of patience and an inquisitive and competitive nature. They will exhaustively search every aspect of the system in which they are incarcerated looking for a way out, or a way of improving their condition, however arduous the path.  How clever are the prisoners?  Some are brilliant, others just dogged; if they share their discoveries it doesn’t much matter who gets credit for the innovations. Instead of testing them for intelligence, test their environments for opportunities. (In Elbow Room (1984), I described the existence of a bag of jewels in a trash can a few feet away as a bare opportunity—if only I had known about it, I could have been rich, but I had no information at all that would lead me to check that trash can for treasure.) According to the Warden’s Rule, even bare opportunities must be counted, since prisoners have nothing better to do than hunt for them. No trash cans go untested in a prison.

Bare opportunities abound in the world of evolution, and it doesn’t take intelligence to stumble across them; it just takes lots of time for variations to arise and get tried. If there is information in an evolutionary environment, a difference that could make a difference to something that could detect or just respond to that difference, it will make a difference (generally—this is a rule of thumb), a difference that in turn can be amplified by reproduction, making a bigger difference and, in a recursive process, making the detection of that difference more likely in the future, and so forth.  Yes, this is just another way of explaining how natural selection works, but it works this way all the way down, so that even simple molecular structures can be usefully seen to be like those persistent prisoners, ever delving, ever seeking an advantage that they can exploit to further their own “interests”.  The prisoners have a single overarching goal: Escape!  These agents have a different goal: Reproduce!--Daniel Dennett.

The warden rule prompts a useful contrast with the modern economist's conception of agency. What the warden's rule suggest is that rather than treating agents as responding systematically to modifications in the variables of the environment, agents are better thought of as responding to systematic possibilities in the environment. The difference isn't primarily about the shift from incentives (a) to information (after all, the variables in the environment can be treated as information). Nor is the difference (b) that the warden rule stipulates away search and opportunity costs (something an economist would not do)--the warden rule effectively assumes that prisoners have infinite time (and patience, etc.). I don't mean to deny that (b) is important. That evolution takes place in time, often extended periods of time, is non-trivial. Rather it is, primarily about the shift from tracking features of the environment (c) to searching and exploiting possibilities in the environment. In particular, the warden rule (d) tacitly recognizes the agency of the agent in her shaping the environment in ways that cannot be effectively foreseen. I view (c)-(d) as connected. 

Now, I could stop here.* As Foucault notes, but does not explore, Becker's analysis received a response by Kirzner in 1962 (the leader of the Austrian school of economics in exile). As I noted a few weeks ago, Kirzner was very interested in entrepreneurship. This matters for my present purposes because (d) just describes entrepreneurship (or attributes it to organisms). So, today, I am going to assume Kirzner's commitment to some analogue of (d). But I am interested in his relationship toward (c). To get to that we must note that Kirzner conceived of market processes as essentially about "the systematic way in which plan revisions are made as a consequence of the disappointment of earlier plans." (381; Kirzner is describing buying and selling plans.) In other context, it would be tempting to talk about updating here. But we can discern here that Kirzner is articulating features of (c). 

The connection between (c) and the intentional stance is also made explicit by Kirzner: "only by assuming that buyers purposefully seek to achieve given goals can we predict that their thwarted market plans of yesterday will lead to their systematically offering more attractive choices to sellers today." (382) Of course, Kirzner may well think that the intentional stance is more than a mere stance, but as he goes to acknowledge one need not assume such purposeful rationality.+ He recognizes that market institutions as a system may induce behavior that can be treated as purposeful. It is worth asking if he was already aware of Vernon Smith's striking experimental results (about that some other time).

Now, one may think that I have not said sufficient amount to motivate that Kirzner is really articulating a version of (c). But the relationship between search (which is his main focus in context), the intentional stance, and the role of possibility in the environment, is pretty clear in his thought: "on the assumption of rationality, a market demand curve is seen as a set of hypothetical equilibrium positions." (I agree it is not identical to the Warden Rule, but we're not far removed either.) 

Okay, let me zoom out again. Foucault, correctly noted that one way to understand the difference between classical liberalism (e.g., Adam Smith) and many branches of twentieth century neoliberalism, is that the former treated economic analysis in terms of exchange and the latter in terms of competition. Both of these are fundamentally about processes. Foucault treats Becker (with a nod to Robbins) as something radically new: now "the starting point and general frame of reference for economic analysis should be the way in which individuals allocate these scarce means to alternative ends." (223, 14 March 1979). And with the ends given (by experts or politicians, tradition, society, etc.) the individual can be nudged into being good at such allocations.

As Kirzner discerned, Becker's approach is not at all about process. By contrast he thinks, "it is primarily upon the systematic revisions of disappointed plans that the market process depends." (384) He thinks this feature of purposeful behavior generates stable outcome patterns associated with market processes. As is well known, Becker's approach was vastly more influential in economics and facilitated the manner in which it became the imperial discipline in other social sciences. So, Foucault was prescient to ignore Kirzner and focus on Becker.

Let me wrap up. I understand Vernon Smith's contribution to economics in part to teach us all that the micro-foundations of economics are unknown. (Let's not even begin with macro.) However, in other part, some institutions and norms generate remarkably stable outcome patterns without us really understanding why. With Dennett and David Haig re-articulating Darwinian theory, and, in particular, supplying a new set of ideas about natural teleology and social functions (recall Haig here; and me on Dennett here); and about which more soon), a Darwinian process oriented approach (not necessary Kirzner's) is ripe for a major relaunch in the human sciences, also in economics. 

 

Effective Altruism and Gary Becker

The conclusion is that firms making cash transfers because of their altruism obtain greater utility than other firms with the same preferences and market opportunities who subsidize customers, workers or suppliers. Consequently, firms making cash transfers are more likely to "survive" because they do better than firms using market transactions to convey their altruism. Although participants in market transactions may be highly altruistic, they act as if they are selfish and maximize their money incomes. They express their altruism through cash transfers not tied to market transactions, as dramatically illustrated by the enormous charitable contributions by allegedly selfish captains of industry in the United States at the end of the nineteenth and the beginning of the twentieth centuries.'--Gary Becker (1981) Altruism in the Family and Selfishness in the Market Place, Economica, New Series, Vol. 48, No. 189 (Feb., 1981), 11

As regular readers know (recall), because of Melinda Cooper's excellent Family Values, I have been re-reading neoliberal texts in light of their analysis of the family. Gary Becker's work on the role of the family of making the division of labor possible is crucial to her argument (see p. 10 in linked piece), and something I wish to discuss in the future. But the passage above caught my eye because it is a quasi-Darwinian style of argument (indebted to Alchian and Milton Friedman in the early 1950s) that shows, in context, why cash transfers are more "efficient." And while the official point is not to make the normative argument that we ought to prefer expressing our "altruism through cash transfers not tied to market transactions," the rhetoric of the passage leaves no doubt that's implied. It turns out that the "captains of industry" are worth emulating for  their altruism!

Now, this idea is a core feature (see here) of the so-called effective altruism movement which ordinarily is traced back to Peter Singer's writings, especially his (1972) "Famine, Affluence, and Morality."  When the efficiency of cash transfers is connected to the idea one can give most and so generate highest utility if one makes a lot of money in market economy, one can obtain the result that a successful mergers & acquisition consultant who annually donates 70% of her salary to Give Well does more good than most aid workers in crisis areas. Critics dislike this feature of effective altruism not because it violates our intuitions but because it may well be that market transactions actually generate the structural causes that do -- or the political forces that reinforce -- real damage to people's lives.*

As it happens, Becker's argument is articulated in terms of "effective altruism" and "effective altruist." A google-scholar search (1900-1981) shows nobody used the term "effective altruist" in a scholarly context before Becker's influential article. (This surprised me!) And if we search on "effective altruism," the term gets used extremely rarely (see especially Quinton's (1973) Utilitarian Ethics) and never in this specific context. For example, granting Bradley that "it is, no doubt, true that a consequentialist manner of reasoning in morals leaves more scope for self-regarding distortion," Quinton writes, "on the other hand it also leaves more room for apt and effective altruism than a set of rigidly unconditional specific principles." (96; I thank Neil Levy for locating this passage.) This foreshadows the ruling idea of the movement, but it is underdeveloped in Quinton.

Now, by linking these ideas to Becker I mean to suggest that the effective altruism movement has clear neoliberal features, in particular, the technocratic wing of neoliberalism. Of course, I do not mean to deny that elements of the effective altruism movement are developed independently from Chicago economics and its cultural influence. But I got thinking about the links because of the following passage in Becker's article: 

The effect of a little altruism on cooperative and efficient behaviour can be illustrated by Good Samaritan situations (see the analysis in Landes and Posner, 1978). A selfish person encountering someone drowning, being assaulted or in other dire circumstances would refuse to help without the expectation of monetary or psychic compensation. An altruist, however, might help even if he became exposed to danger, and even if his altruism were sufficiently weak that he did not help in any way prior to the misfortune. Although the marginal utility from helping might have been small prior to the misfortune, the total increase in utility to the altruist from helping could exceed the disutility of the effort or risk involved because of the large imminent decline in the victim's welfare. Note that this example shows not only how altruism can induce efficient behaviour where selfishness fails, but also how altruism can significantly change behaviour even when the altruism is weak. (10)

Landes and Posner (1978) is "Salvors, finders, good samaritans, and other rescuers: an economic study of law and altruism," which is a famous article in Chicago law and economics. It discusses rescuing drowning people cases in terms of "the economics of altruism." (Altruism is understood in terms of lack of expectation of compensation.) And they offer a utilitarian model to do so that clearly anticipates Becker. But their interest is really in to what degree the law should require compensation for failures to rescue. (Their prototypical case is: "A drowning man cries for help, a strong swimmer ignores his cries, and the man drowns. Is the decedent's estate entitled to damages from the swimmer?"

Now Landes and Posner do not cite any philosophers. As regular readers know (recall) drowning child/adult cases have a long history in philosophy, from Mencius to Sophie de Grouchy, to motivate (the existence of) natural compassion. But the central example for our present purposes is Peter Singer's own famous drowning man case:

 If I am walking past a shallow pond and see a child drowning in it, I ought to wade in and pull the child out. This will mean getting my clothes muddy, but this is insignificant, while the death of the child would presumably be a very bad thing. Singer (1972) "Famine, Affluence, and Morality."  (231)

Here the case is used to motivate the idea that, "if it is in our power to prevent something very bad from happening, without thereby sacrificing anything morally significant, we ought, morally, to do it." This duty itself does not require commitment to utilitarianism, but in Singer's hands it is a key step toward the idea that "we ought to give until we reach the level of marginal utility-that is, the level at which, by giving more, I would cause as much suffering to myself or my dependents as I would relieve by my gift."

Now, in his main line of argument, Becker is thinking about altruism in terms of a kind of intra-family insurance scheme. And so I don't want to suggest that he and Singer agree on all important issues. And I don't think Becker ought to accept Singer's strong version of his intuition. After, all Becker wants to explain why altruism, even at considerable cost to oneself, can be genuinely utility enhancing even efficient. (And, in fact, he can explain why all things equal altruists tend to be more responsive to disaster relief than prevention.) I don't want to claim that Singer influenced Becker. 

Okay, let me wrap up. It is conventional wisdom to think that in the nineteenth century, the economic, normative, and psychological branches of utilitarianism were tightly bound up with each other. And that in the twentieth century, as economists moved to revealed preference, these connections weakened if not dissolved. Much (PPE style) research in policy relevant philosophy on, say, inter-generational justice and climate policy, shows that utilitarianism is not exhausted as a living tradition in which the different branches influence each other.

And, if we look at the history of the effective altruism movement, it is undeniable that some of its most important ideas were developed, perhaps independently, within Chicago economics and law & economics. And so when critics say that effective altruism is neoliberal in character, they have a point. Some other time I'll explore if effective altruism also inherits the problems (and benefits) I associate with Chicago.

 

On Milton Friedman and Hayek on Consensus

I venture the judgment, however, that currently in the Western world, and especially in the United States, differences about economic policy among disinterested citizens derive predominant from different predictions about the economic consequences of taking action - differences that in principle can be eliminated by the progress of positive economics - rather than from fundamental differences in basic values, differences about which men can ultimately only fight.--Milton Friedman (1953) "The Methodology of Positive economics" in Essays in Positive Economics, p. 5

Friedman relies here on [A] a tacit distinction between basic values and not-so-basic values. When there is (fundamental) disagreement over these society returns, we can say, to the state of nature. So, not unlike one of his Chicago mentors, Henry Simons, he relies on the idea (recall) that states presuppose considerable consensus. (I have noted the somewhat disastrous afterlife of this idea in Chicago economics elsewhere; e.g.  here and here.) Another, no less consequential, distinction he relies on [B]  is that between disinterested and (ahh) self-interested citizen. Presumably the disinterested citizen advocates the public or common interest, whereas the self-interested citizen promotes a self/sinister interest. 

This means that in a functioning political unity -- i.e., one with considerable background consensus -- if we encounter public disagreement, there are for Friedman three possible sources of controversy: (i) disagreement over likely outcomes of policy; (ii) disagreement over which no-so-basic value to prioritize [in the context of major agreement]; (iii) people advocating their own interest as opposed to public interest. In principle, and this is the point of Friedman's essay, (i) can be eliminated as positive (that is empirical) economics progresses. This suggests, and again this is no surprise, that for Friedman a mature positive economics will be characterized by consensus over the relationship between policy and outcomes. In addition, in principle, (ii) can be eliminated as normative economics progresses. Friedman does not spend much time on this, and it is unclear if he agrees with Robbons who does not expect such convergence in normative economics, or with later more optimistic professional philosophers.

An important consequence of Friedman's stance is that it entails that if, one agrees with him and understands oneself as a policy-scientist (and Friedman often does), one can model public policy debates with representative agents who exhibit public spirit. For these will all agree on the common good. For those who think of 'Chicago' as a bastion of self-interest this is surprising. It is worth noting this because it makes clear that the subsequent public choice (Buchanan/Tullock) and rent-seeking (George Stigler, etc.) revolution (by his Chicago trained contemporaries) also impacts Friedman's own program. 

Another important consequence of Friedman's stance is that one cannot assume that public spirited representative agents will agree across space and time, especially as they become culturally more distant. This has obvious consequences  when one aims to do comparative policy work.

I could end here, but I want to call attention to a feature in Hayek's thought (ca 1945). Consider the closing two sentences, in particular, from the following passage from a justly famous essay:

The price system is just one of those formations which man has learned to use (though he is still very far from having learned to make the best use of it) after he had stumbled upon it without understanding it. Through it not only a division of labor but also a coordinated utilization of resources based on an equally divided knowledge has become possible. The people who like to deride any suggestion that this may be so usually distort the argument by insinuating that it asserts that by some miracle just that sort of system has spontaneously grown up which is best suited to modern civilization. It is the other way round: man has been able to develop that division of labor on which our civilization is based because he happened to stumble upon a method which made it possible. Had he not done so he might still have developed some other, altogether different, type of civilization, something like the "state" of the termite ants, or some other altogether unimaginable type. All that we can say is that nobody has yet succeeded in designing an alternative system in which certain features of the existing one can be preserved which are dear even to those who most violently assail it-such as particularly the extent to which the individual can choose his pursuits and consequently freely use his own knowledge and skill. F Hayek (1945 "The Use of Knowledge in Society," 528

In the paper, Hayek treats the price system as a natural machine with a clear purpose: "We must look at the price system as such a mechanism for communicating information if we want to understand its real function." (526) This is compatible with the thought (a) that the price system has many derivative functions and (b) that the real function can be undermined or obstructed. (For Hayek's argument, (b) is very important.) And one can easily see, that the gap between Hayek and Ordoliberalism is fairly small, if Hayek were to grant the Ordos that (c) one of the key functions of the state is not just not to interfere with, but to maintain actively the conditions that enable the proper functioning of the price system.

Now, one may well wonder, why Hayek assumes that there is one and only one "real function" of the price system. I think he helps himself to this claim without argument. But let's stipulate he is right about this, and that it's methodologically kosher to attribute functions to social systems at all. Even so, one may well wonder what function the communicating of information serves. In this paper he is rather silent about this more fundamental end. And here it is clear that whatever it is, not unlike Friedman later, Hayek relatives this more fundamental function to "our civilization."

And somewhat surprisingly, not unlike Simons and Friedman, Hayek also assumes considerable agreement over what Friedman calls basic values.  This is clear from his response tho those who reject the price system as privileged machine. To them he de facto says, 'we agree about some of these fundamental ends -- which may call in short-hand individual 'freedom' and 'autonomy' -- and any replacement of the price-system will have to secure these, too.' My interest here is not whether this is an accurate claim about either the status of these ends in our civilization nor the extent to which illiberal critics of the price-system would endorse these. (I am, it should be clear, skeptical of both.) But rather that Hayek, too, ends up suggesting that if there is any disagreement over the functioning of the price system, it will not be due to disagreement over fundamental ends. And this suggests, that if there is disagreement, the other side(s) is/are engaged in special pleading. 

Not for the first time I am struck by the lack of space for genuine pluralism over ends in twentieth century liberalism. As regular readers know I think this plays no small role in the predicament it finds itself today.

 

On Defending the Family/individual: On the Crisis of Liberalism (VI)

Despite their very real differences, then, [social conservative] communitarian and neoliberal legal scholars are united in their aversion to sexual rights discourse. Both are convinced some limit must be  imposed on sexual freedom, differing only on the question of whether these limits should be exceptional (the neoliberals) or foundational (the [social conservative] communitarians).

It is this convergence, no doubt, that explains...why one of the most libertarian of Chicago legal scholars, Richard A. Epstein, is also the most radical in his commitment to the nonnegotiatable nature of family obligations. What Epstein recognizes perhaps more lucidly than any other law and economics scholar is that freedom of contract cannot exist without the ostensibly natural, noncontractual obligations of family. The rules of social welfare should therefore "follow the basic pattern of natural obligation as it is perceived to arrive within families." The task of neoliberal welfare reform is "to transform [this] inclination into duty" and thus to "derive an 'is' from an 'ought'" -- a precise translation of the poor law philosophy of natural charity within the family.--Melinda Cooper (2017) Family Values: Between Neoliberalism and the New Social Conservatism, p. 116-117.

Regular readers know (recall) that I believe the second wave of liberalism has ended and that it may not survive the present darkness. (In brief: first long wave: 1776-1914; second wave: 1945-2009. Some readers will say, good riddance, and to you I say, I hope you do better.) This is the sixth post (recall here (I);  here (II); here (III); here (IV); here (V); ) in an open-ended series (see also here, here, here, and here) on the crisis of liberalism in which I step back from headline politics and scholarship.

Today's post start from the thought that the half-century alliance between neoliberals and social conservatives has led the liberal tradition into an intellectual cul-de-sac (about which below). The political alliance with social conservatives also left the liberal tradition compromised in being slow to recognize the dangers to fundamental liberal values from the authoritarian right. Before one can undo the damage it may be useful to reflect on the intellectual attraction of social conservatives to neoliberalism.  

One natural way, especially if you are a Marxist, to understand the alliance of American neo-liberalism (by which I include, for the sake of shorthand, folks adhering to variants of Chicago economics, law & economics, public choice theory, Austrian economics, and libertarians) with social conservatives during the last half century is (not just as a tactical one) but as a strategic defense of capital. While this is by no means silly (liberals have no suspicion of property and wealth), it misses the thoroughgoing attack on rent-seeking that practically everybody in neo-liberalism shares.  The defense of markets is self-consciously aimed at inherited privilege.

Even so, it is notable that during the last half-century some forms of unearned income -- inheritance, even monopoly rents -- have received a pass from neoliberals due to an evolution of views about estate taxes and antitrust law. So, the Marxist view is not silly. I view the growth of, say, Bleeding Heart Libertarianism as a welcome corrective to the unmistakable tendency of some neoliberals to favor capital as such.  So much for the Marxist analysis.  

The turn to the social conservative right occurred during the 1960s. This was the age of the expansion of the welfare state (Great Society), the Vietnam war, the civil rights movement, the vast expansion of higher education, and the sexual revolution. Some critics have tried hard to link neoliberalism with the racist elements within the Republican coalition developed by Nixon and Reagan. This connection undoubtedly existed (see, e.g., Jacob Levy's excellent pieces here and here), but in so far as any American thought can escape the taint of racism, it is also not characteristic of neoliberalism as a whole. (Unfortunately, we still await clear-headed scholarship on this vexed issue.) Much of the defense of markets by neoliberals is intended as a contrast to Jim Crow (and the ways unions elsewhere excluded African-Americans). In addition, much neoliberal thought was critical of the Vietnam war; in fact, part of Milton Friedman's popularity on college campuses was due to his outspoken criticism of the draft. (His argument also explicitly attacks the racist concerns over a professional army.)

One reason why Family Values (partially quoted above) by Melinda Cooper* is so welcome is that she helps explain why social conservatives and neoliberals were, despite profound differences, able to agree so much on policy. In particular, she shows that the attack on the welfare state and the sexual revolution (and by implication emancipation) amounted to the same thing. A key argument  in her book is the following:

The problem with social welfare, from [the neoliberal] perspective, is that undermines the natural incentive to family altruism and this deprives the poor of their primary support system. Even as they celebrate the freedom of contract in the public marketplace of love and money, neoliberals such as [Gary] Becker just as insistently affirm the necessity of noncontractual obligation in the family and are more than willing to invoke the full power of the state to enforce it. It is here after all that they locate the proper locus of economic security and the ideal alternative to the social welfare state. (p. 107)

To put Cooper's point in terms of a slogan: while social conservatives thought that the family must be protected from the market, neoliberals thought that a proper functioning market both presupposed families and, if the incentives (workfare, familial obligations, etc.) were properly aligned, families could help facilitate market society. The contrast here is (to quote Epstein again) between "the zone of voluntary market exchange" and "the non-price, non-exchange economy of the family." (p. 356 note 93). This helps explain the neoliberal fondness for policies that quite frankly are coercive in nature.

In her very well written book, Cooper makes her argument by taking a careful look at welfare reform, debates over inheritance, the aids crisis, access to credit, and human capital policy.* One fascinating feature of her argument is her diagnosis of the structural equivocation between 'individual' and 'family' in neoliberal arguments.+ Once alerted, one finds such equivocation in many places. For example, here is a passage from Stigler and Becker's famous (1977) "De Gustibus Non Est Disputandum:" "The power of stable preferences and utility maximization in explaining a wide range of behavior has been significantly enhanced by a recent reformulation of consumer theory. This reformulation transforms the family from a passive maximizer of the utility from market purchases into an active maximizer also engaged in extensive production and investment activities." (77) Consumer theory is presented in terms of the utility maximization of (active) families not individuals. (In fact, individuals are not mentioned in the piece, except once in context of the discussion of the role of information.) 

In our imperfect world, when the coercive powers of the state are called upon to fortify the family, to be urged into the private domain, this is usually a call to support patriarchy and to police minority bodies. As regular readers know, (recall) I had become distinctly reserved about the state's privileging of marriage (for more detailed argument see Clare Chambers). Cooper's book helps me see that the liberal tradition needs to recover a more thoroughgoing, emancipatory individualism and needs to be cured from its tendency to wish to police other people's bodies. That's (theoretically) the easy part. The more challenging bit is to confront the idea that markets presupposes families and the exploitation of unpaid labor in it. 

A footnote to Foucault on Becker

The approach suggested here is intellectually more modest and realistic, without sacrificing generality. It does not regard uncertainty as an aberrational exogenous disturbance, as does the usual approach from the opposite extreme of accurate foresight. The existence of uncertainty and incomplete information is the foundation of the suggested type of analysis; the importance of the concept of a class of "chance" decisions rests upon it; it permits of various conflicting objectives; it motivates and rationalizes a type of adaptive imitative behavior; yet it does not destroy the basis of prediction, explanation, or diagnosis. It does not base its aggregate description on individual optimal action; yet it is capable of incorporating such activity where justified. The formalization of this approach awaits the marriage of the theory of stochastic processes and economics-two fields of thought admirably suited for union. It is conjectured that the suggested modification is applicable to a wide class of events and is worth attempts at empirical verification.''“N17 (emphasis added)

Note 17: "Preliminary study in this direction has been very convincing, and, in addition, the suggested approach appears to contain important implications relative to general economic policy; but discussions of these are reserved for a later date. Alchian ((1950) “Uncertainty, Evolution, and Economic Theory,” 221; emphases added)

Alchian’s approach turns on three crucial steps: first, one brings uncertainty within one’s formal apparatus by, second, treating Knightian uncertainty essentially as an instance of randomness. Third one then treats randomness as a stochastic process (recall this post).

Alchian’s move, in turn, has two far-reaching pay-offs: first, by treating Knightian uncertainty as something that can be put inside the model by substituting randomness for it, one can use mathematical technique(s) (e.g., Monte Carlo simulations, Kolmogorov randomness, martingales, etc.) to assign numbers where that previously had been impossible. Once Knightian uncertainty is reinterpreted as a stochastic process and after specifying the mathematical technique by which one models randomness, it can be domesticated within a formal framework.[1] Second, such a formal framework holds the promise in Alchian’s words of “empirical verification.”As I noted before, Alchian's move got picked up by Arrow at once, and it was incorporated not just into general equilbrium theory, but also became a corner-stone of portfolio-theory, finance, and option pricing. Eventually, Alchian's move became central to the very idea of (financial) markets, which came to be understood as random walks (with no arbitrage).

Alchian’s paper is explicitly acknowledged in the very first note of Gary Becker’s seminal, “Irrational Behavior and Economic Theory” (1962).[2] As Foucault rightly notes, Becker’s position can be understood as claiming that “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.” (Foucault  The birth of biopolitics, p. 269. Unfortunately, in his footnotes Foucault refers incorrectly to the title of Becker’s paper!)

One might think given Foucault's use of 'non-random' that Becker's  approach differs from Alchian's in a non-trivial way. But that's not quite right. Because, in a rare oversight, Foucault seems to be unaware of Alchian, he misses Becker's claim that "impulsive behavior will be represented by a probabilistic model in which decisions are determined so to speak, by the throw of a multisided die."  (Becker, 5; the whole page is relevant.) So we need to restate Foucault's claim about economics as follows, “rational conduct is any conduct which is sensitive to modifications in the variables of the environment and which responds to this in a systematic way even if the individual's [firm's, etc.] decision rule appears to be random.” This is, as Foucault correctly recognized, a non-trivial departure from Savage's axioms (as an aside, Savage may have recognized the possibility, and we should be surrpised he understood his own approach to be normative not empirical long before it was fashionable (20ff)). 

 

Gary Becker and Economic Imperialism

I learned this week-end that Gary Becker had died. It's a testament to his significance that general philosophy blogs mentioned this fact (here and here in respectful fasfion). Outside of economics his work is known for two (very) connected features: (a) he is one of the Godfathers of what has become known as neo-Liberalism and the technocratic conception of Politics (recall my post on Becker). As Kieran Healy reminds us, Foucault was prescient and insightful about all of this (see also here). (b) The University of Chicago obituary captures another aspect of his significance by claiming that "He crossed disciplinary boundaries to apply core economic tenets—maximizing behavior, market equilibrium, stable preferences, and rational choice—to subjects thought to be the domain of sociology, psychology, law, and other fields." That is to say, Becker's work is what people had in mind when they speak of 'economic imperialism.' (Wikipedia's brief entry on the topic is full of references to Becker.) As the distinguished philosopher of economics, Uskali Mäki. writes, "as paradigmatic examples of the trend, one may cite works such as Gary Becker’s The Economics of Discrimination (1957)..." (he also mentions Becker’s (1981) A Treatise on the Family as another such paradigmatic work; Mäki's piece is very fair to Becker and worth re-reading.) And, again, Healy's selections show that Foucault also has understood this.

In the passages quoted by Healy, Foucault calls attention to the significance of a essay by Robbins in preparing the conceptual ground for Becker's project (on Robbins, recall, here, and here.) Interestingly enough, one influential observer-participant-critic, discerned Foucault's point, but with a twist--it's people attacking Robbins that reveal the imperialistic inclinations of economics! Here's Talcott Parsons, writing, as he announces in the first sentence, as "a sociologist, not an economist" in 1934 in The Quarterly Journal of Economics (while criticizing Souter's criticism of Robbins): this "leads him [Souter] into an "economic imperialism" (to borrow his own phrase), which results not only in enriching these neighboring "countries," [that is in Parson's terms, "neighboring sciences"--ES] which of course it does, but in putting some of them into a strait jacket of "economic" categories which is illsuited to their own conditions." (512; I thank Rachel McKinnon for helping me get my hands on a copy of this article.)

Now, in his piece, Parsons traces the logic of economic imperialism back to Alfred Marshall (522). The connection to Marshall is not a coincidence because Marshall was revered by Becker's teacher, Milton Friedman, who wrote a major piece on Marshall. (On Marshall, see also here.)* Parsons sumps up his own argument:

the real result of Souter's empiricism, like Marshall's, is the tendency to attempt to extend " economic" categories to cover the whole of concrete life. This is the objectionable "economic imperialism" of which I spoke above. If pushed far enough it will result in the same kind of harmful lack of perspective of which Marshall was guilty. (He thought of India simply as a "backward country" for instance.) It is a tendency against which the sociologist, as well as other scientists, must stand up and fight for his scientific life. It is a tendency against which the sociologist, as well as other scientists, must stand up and fight for his scientific life. (Parsons, 535)