Michel Foucault: The Political Economy and Liberalism (2024)

8The limitation of governmental action was a question that preoccupied the second half of the eighteenth century. It is true that the latter is an epoch of the extension of bureaucratic activity, thanks to the development of the administrative monarchy, whose wherewithal and spheres of competence are considerably broadened. Moreover, artisans are often advocates of liberalism, as in the case of Maurepas, Trudaine, or Turgot. For his part, Tocqueville explains the French Revolution as a consequence of this accumulated administrative centralization. An increasingly autonomous and vengeful public opinion criticizes this governmental activity, which it readily identifies with a manifestation of absolutism, hoping to limit it.

9Even if the economic dimension is not absent from these Enlightenment debates, the central question is that of political liberalism. Yet the latter does not interest Foucault, who concentrates exclusively and sometimes almost obsessively on governmental self-limitation alone. In political liberalism, power finds the principles of limitation only outside of itself. Yet this type of limitation external to governmental reason, whether of religious, juridical, or political origin, does not enter into the problematic of Foucault’s two courses.

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Internal limitation means that in looking for the principle of this limitation. .. we will not seek in it the natural rights prescribed by God to all men, for example, or in revealed Scripture, or even in the wills of subjects who at a given moment agree to enter into society. No, the principle of this limitation is not to be sought in what is external to government, but in what is internal to governmental practice, that is to say, in the objectives of government.

11Alongside the exclusion of politics, another important consequence of this search for governmental self-limitation is the distancing of law, which runs like a thread through both volumes. This distancing takes place to the direct benefit of political economy, evoked many times as the antinomical figure to law. The latter is reproached not so much for its exteriority in relation to governmental reason, and still less for its insufficient capacity to make power respect legal rules or principles that would limit its field of action. In a late reflection (lecture of March 28, 1979, the penultimate chapter) dedicated to hom*o economicus and the invisible hand, Foucault opposes the juridical subject produced by contract theory to the subject of interest imagined by political economy. He emphasizes how the two differ on a point that he considers essential: whereas the first is required to renounce certain rights in order to safeguard others, the second is never required to go against his or her own interests. As had been argued by the Jansenist Pierre Nicole, and Mandeville in his Fable of the Bees, what is in fact important is that each should always follow his or her own interest, cultivating and intensifying it in some way, in order that the economy should be brought to good. “The market and the contract function in exactly opposite ways” (BBP 276 [279]), Foucault concludes. This remarkable difference constitutes the second reason why political economy fascinates him: the governmental self-limitation that it justifies has as its corollary the absolute liberty of everyone to pursue his or her individual interest.

12Such an antinomical construction ends up making of law and political economy two totally incompatible approaches to the world. One consequence of this is the impossibility of an economico-juridical science, whose nonexistence is the sign of this antinomy. The absolute heterogeneity of the politico-juridical world and the economic world is crucial in Foucault’s apparatus, which insists purposefully upon it: it implacably reinforces the very singular position of political economy, as the unique rational discourse capable of forcing government to limit itself.

13This distancing of law has a cost. For it leads to the exclusion of property rights, a notion that is totally absent from Foucault’s reflections. The reason is obvious, since the right to property belongs to those external limitations that do not interest the author. It is even one of the first guarantees that is given to protect the individual against the arbitrary force of the king. A number of thinkers of sovereignty at the end of the sixteenth century, beginning with Jean Bodin, as well as theorists of absolute monarchy in the first half of the seventeenth century, such as Cardinal Le Bret, placed in doubt the king’s faculty to raise new taxes without the agreement of the representatives of the people in the name of the inviolable respect for private property. But above all, the absence of this latter is paradoxical given the fact that the liberal authors of the eighteenth century themselves placed it at the heart of their analysis, making respect for private property the central principle and raison d’être of political economy.

25As will have been understood, a central role is played in this by the couplet population (nature)/government (artifice). Although Foucault declares that he is principally reflecting on the history of governmentality, what ultimately interests him most is the question of population—that is to say, the autonomy of society. The difficulty is that the general definition proposed for governmentality says nothing as to its content. First of all, why intervene? Even if self-limitation specifies the nature of liberal governmentality, and even if Foucault insists on the necessity of a “frugal government,” nevertheless intervention is necessary. Why?

26The first reason is that the interests of individuals within the population are contradictory, or even opposed to each other. The liberal art of governing thus finds itself constrained to determine with precision to what point this divergence may constitute a danger for the general interest. Both liberty and security must be guaranteed, which inevitably supposes a certain amount of danger and the taking of a certain risk that belongs to the exercise of all liberty, but equally supposes the protection of the collective interest against the individual interest (and vice versa). The second reason is that since security mechanisms must be large “consumers” of freedom in order to function, they must also be “producers” of it. This paradox, which Foucault does indeed emphasize, is in fact something that applies to all liberalism, but it is aggravated in the case of self-limiting liberalism. Thus, staying with a simple example, the freedom of the market necessitates that there should be no monopoly, which supposes legislation that restrains competition and the free action of agents.

27There must therefore be a permanent arbitrage between liberty and security. One important consequence of this is that the liberal art of governing thus conceived generates a great boom in procedures of control, the necessary counterpart to liberties. Government’s primary function therefore is to surveil the general mechanics of behaviors; but subsequently it must intervene when this surveillance reveals dysfunctions. The figure of Bentham, so prominent in Discipline and Punish, reappears here, the panopticon seeming to be the very formula of liberal government.

28This new art of governing that is liberalism thus implies a complex, perhaps ambiguous relation with liberties, for it must produce them, and yet in doing so it risks destroying them. If Foucault sees very well that liberalism alone does not define a governmental practice, he makes no attempt to outline a precise definition of “good intervention.” Many times he emphasizes the unique direction in which the reasoning must go, namely the recourse to utilitarianism, which is no longer to his mind an ideology of the organization of society, but a technique of (the limitation of) government. With utilitarianism, calculation thus becomes the sole form of governmental reason. “Governmental reason will have to respect these limits inasmuch as it can calculate them on its own account in terms of its objectives and [the] best means of achieving them” (BBP 11[13]). This theme of the rationality of government (one might even say of its hyper-rationality, given the exclusive importance accorded to calculation) is important, for it makes of governmentality almost the direct outcome of an objectivation of natural phenomena. It is of great interest to Foucault, who identifies its emergence in the eighteenth century, in maritime law and in the projects for perpetual peace, for example; and it is upon this idea of “the art of governing rationally” that the last lecture, that of April 4, 1979, ends. Yet these historical examples are hardly satisfying, for in fact what they illustrate is the idea of naturalism and of the natural order. On the other hand, the reference to utilitarianism and to calculation says nothing as to the difficult arbitrage between liberty and security, a central problem of liberal governmentality that leads the author to paradoxical propositions such as this surprising return of the panoptic figure of Bentham at the heart of security apparatuses, when the positing of the latter earlier in the book had seemed to place him at a distance. The key to these difficulties lies in the question already raised above: How to fix limits to government intervention—that is to say, how to guarantee the autonomy of the population once resistance in terms of rights has been disqualified?

29It is, among other reasons, to resolve this difficulty that Foucault takes a detour, beginning with the lecture of January 31, 1979, through the German ordoliberalism of the 1930s–1950s and postwar American neoliberalism. For these two forms of political economy propose a rather radical solution to the question of intervention, but do so by modifying the initial hypotheses on the basis of which Foucault had been working. In particular, they postulate the spontaneous convergence of interests, whereas security apparatuses needed to account for their possible contradiction.

30In 1948, Germany, more than anywhere else in Europe, was dominated by the imperatives of reconstruction, and therefore interventionist—in particular Keynesian—politics. In April 1948, a report of the scientific council of the German administration in the Anglo-American zone predicted, contrary to this tendency, that “the function of the direction of the economic process must be assured as widely as possible by the mechanism of price,” a proposition that recalls Turgot’s proposition in the famous edict of September 1774 establishing freedom of commerce in grain. This definition of liberalism is due to the advisors of Ludwig Erhard, the head of this administration, who uses this report as the overriding orientation for his action. These economists form the group of ordoliberals, whose origins go back to the Weimar Republic. According to them, since the end of the nineteenth century the liberal art of governing has in a certain sense been afraid of its own success, and sought to invent a technique of intervention through the statist management of economic phenomena so as to limit the very effects of liberalism. Their major “theoretical coup,” clearly explained in thinkers such as Hayek and Röpke, is to consider that the Nazi system was not the consequence of an extreme state of crisis, but was the logical consequence, the ultimate point of evolution, of a policy of Keynesian-style intervention. The lesson that the ordoliberals draw from the experience of Nazism is therefore that, rather than accept a freedom of the market surveilled and limited by the state, we must on the contrary generalize the logic of the market and make of it the regulator of the state. Thus a break is made with eighteenth- and nineteenth-century laissez-faire liberalism, for it is not merely a question of leaving the economy free, but of extending the logic of competition and of the market. Now, it would be “naturalist naivety” to think that the establishment of the free market would suffice to generalize the mechanisms of competition. In order for the latter to play a central role in a society, the liberal government must be active and interventionist. “Competition is therefore an historical objective of governmental art and not a natural given that must be respected” (BBP 120 [124]). Given this fact, the interventions of public powers must be dedicated to the conditions of the market alone, so that this subtle and most effective mechanism may function fully. Every other objective (full employment, purchasing power, the balance of payments, and so forth) can only be secondary. In the same way, the government should not correct ex post the destructive effects of the market on society. It must intervene in society itself so that in each case the mechanisms of competition may play their role as regulator.

31This innovative reflection, according to Foucault, would lead to the invention of another type of capitalism, enterprise capitalism, within which each economic agent or each household is seen as an enterprise that is both autonomous and responsible, so that the individual may no longer be alienated in relation to his milieu of life and work. This generalization of the “enterprise” form distinguishes ordoliberalism from classic laissez-faire, for which hom*o economicus was essentially a trading partner. Certainly, its objective is to make economic regulation the model of social relations, but also to put at the heart of social life a whole set of values linked to the enterprise (independence of the individual, ethical responsibility, and so forth) opposed to the coldness of the mechanism of competition that, in Röpke’s expression, is “morally and sociologically more of a dissolving than a unifying principle.” The interventionism of the government must therefore not be of an economic, but of a social nature. The state puts in place a Gesellschaftspolitik so as to allow the fragile competitive mechanisms of the market to play out. This “politics of society” contributes to the constitution of the market by favoring, for example, access to property, or by helping to replace collective social security with individual insurance. In this liberal society where competition pits against each other not just traders but enterprises, law can be nothing more than a mere rule of the game for the market.

32Economics therefore becomes the reference for the construction of the political—economics produces the necessary legitimacy of the state, and liberty between economic partners creates political consensus—but also for the social body, and even for cultural values. From this precise angle but with different arguments, the logical successor to German ordoliberalism is American neoliberalism, in particular the Chicago school, which developed in a reaction against the New Deal and the social programs pursued in the United States under Truman and Johnson. Despite important differences related to the greater radicality of the American current, the common points with the German tradition are numerous, the most salient among them being that both schools consider analysis in terms of market economy to be generalizable to all aspects of human behavior, with the individual being considered as an entrepreneur of himself or herself. These economists, such as Gary Becker and the adepts of the theory of human capital, a notion to which Foucault pays very close attention, extend economic analysis to multiple sectors of social life. Each agent decides, for example, on their investment in education for their children, so as to form a human capital that will subsequently produce revenues, or to arbitrate between the expected gains of a criminal career and the risk of legal sanction.

33The great interest of this generalized economic framework of the neoliberals is that it allows governmental action to be tested, to be put to the test of a quantitative critique. It now becomes possible to gauge governmental action in the light of its efficacy in implementing the play of competition and the market. The great analytical progress in relation to eighteenth-century laissez-faire liberalism is that economics, rather than being a mere model or illustration of a more general governmentality, becomes governmentality par excellence. At once it becomes possible to give a more precise definition of governmental intervention: it must establish the conditions under which a market economy and competition can function. Its limit is included in its very definition, since the description of society as a space of free competition and of the convergence of interests supposes that governmental intervention is interested only in the conditions of existence of the market, its legal framework, but not its economic content or its social consequences. No doubt this is what best defines the “frugal government” so dear to Foucault, at once narrower in its ambitions and more distant in relation to society. Ordoliberalism and neoliberalism in a certain sense reprise the concept of population but in a more radical way, assigning to the public powers the task of making sure society is in a suitable condition to guarantee its autonomy, and ensuring that they no longer have to intervene (or hardly ever so).

34In writing his history of liberal governmentality, Foucault says repeatedly that he does not wish to set out from the universals of political philosophy (subjects, state, civil society, and so forth) but from concrete practices and the way in which they are reflected and rationalized, following the method already put to work not so long before, in Discipline and Punish. This project is partly realized in the first stage, dedicated to the eighteenth century, since through practices (among other things) it brings to light the existence of a form of utilitarian liberalism. But it fails, as we have seen, in the elaboration of that which really interests it, which is not, in the strict sense, contained in the project of political economy upon which it depends: self-limiting liberalism.

35The passage from eighteenth-century to twentieth-century liberalism thus helps in advancing the theoretical resolution of the central question posed by these two books, namely governmental self-limitation. However, this chronological displacement poses a new problem: that of the relation to the real. In the second stage, dedicated to the German and American neoliberalisms, practices just disappear in favor of the elaboration of what is only a theoretical form, limited governmentality, a discourse that is disconnected from “ways of doing.”

36Another of Foucault’s initiatives to anchor this history of representations in that of realities is to mobilize the notion of the regime of veridiction, which, as we know, was essential to his more general project of a “history of systems of thought,” whether that of the prison, the psychiatric institution, or sexuality. To write the history of regimes of veridiction is to take an interest in the effects that systems of thought have when they are thought to indicate what truth is. As Foucault recalls:

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Recalling all the erroneous things that doctors have been able to say about sex or madness does us a fat lot of good.. .. What is important is the determination of the regime of veridiction that enabled them to say and assert a number of things as truths that it turns out we now know were perhaps not true at all.

38Foucault holds that from the middle of the eighteenth century, in particular with the different techniques put to work for the management of scarcity, the free market is on the way to becoming for contemporaries of the time “what I will call a site of veridiction” (BBP 32 [34]). According to political economy, the truth expressed by a market left to its freedom thus replaces the indefinite series of interventions of policy that mercantilism calls for. Foucault plays marvelously on semantic ambiguity here, since the economists of the epoch used precisely the expression “true prices” to designate the price of goods obtained on a free market, and which are considered to be true because they validate individual behaviors and also governmental practices consistent with the common objectives of the preservation of populations against scarcity and, more broadly, of the production of wealth.

39We now understand the importance that Foucault affords to these ideas, for, on the one hand, the truth of the market constitutes one of the strongest arguments in favor of the self-limitation of governmental practices and, on the other hand, the principle of the regime of veridiction confers upon political economy an effectiveness and an action upon the course of things. But does this principle apply to political economy as well as Foucault thinks it does? There is room for doubt here. Although we might easily accept that liberal political economy influences economic policy and the organization of the market, it is not so easy to accept that the effects of such policy can be measured by the results observed on the market. There is an essential difference here from, for example, psychiatry. Psychiatric discourse, since it is normative, and decides upon criteria of truth to define the partition between madness and normality, or between acceptable and deviant sexual practices, exerts considerable direct effects on social life. But political economy, while it might prescribe a liberal policy, is incapable of controlling the effects of the latter. What is a “true price,” if not an abstraction that has no meaning other than within an approach in terms of market equilibrium, but one whose very abstraction makes it difficult to give it any empirical content (even if certain economists try to do so)—meaning it is of dubious utility in indexing and thus limiting governmental policy? The claim that the market is abstractly a principle of veridiction is consistent with the ambitions of liberal theory; but the claim that the market produces data that express a truth capable of making of it an instance of veridiction, and thus of the limitation of governmental practices, is excessive. It is not clear what Foucault’s point of view is on economic theory and what credit he gives it, but he takes its effects seriously, and in this sense he grasps poorly the particularity of economic discourse, a discourse whose link with reality is, to say the least, complex, today as in the past.

40Likewise, he integrates the liberal critique of sovereignty into his reflection, all the more easily given that it comes back to a reflection that, in his work, is already an old one.

41The critique of sovereignty is at the heart of the longstanding reflections undertaken by Foucault on the question of power. His ambition is to construct a consideration of domination that is radically freed from the model of sovereignty. He explains this repeatedly and, in particular, in Society Must Be Defended (henceforth SMD), [8] in the lectures of January 14 and 21, 1976, which are presented explicitly as “a sort of farewell to the theory of sovereignty” (SMD 43 [37]): “As I see it, we have to bypass or get around the problem of sovereignty. .. and the obedience of individuals who submit to it, and to reveal the problem of domination and subjugation instead of sovereignty and obedience” (SMD 27 [24–25]).

42But what is sovereignty, for Foucault? Essentially a juridical question, and in particular a question of rights: on the one hand, the rights that are ceded by subject, which they have renounced and, on the other hand, the rights that have been acquired by the sovereign, and in whose name he exercises his authority. On multiple occasions, Foucault insists on this juridical dimension of the model of sovereignty, which to his mind is constitutive: the model of sovereignty grasps “power in a juridical form.” [9] The subordination in the juridical order that Foucault, in Society Must be Defended, calls obedience as opposed to subjection, supposes that subjects acquiesce to authority’s claims to legitimacy. What follows from this is a power that is hardly intrusive, that takes subjects as they are, and that does not seek to scour consciences or to correct souls. This power acts piecemeal, principally upon wealth and goods, through the play of a system of discontinuous deductions, of which taxation is the exemplary figure. Foucault is interested in a power of a very different nature, namely disciplinary power, which does not proceed through a momentary grasping but through a close and continuous grid, aiming to extract labor and to produce perpetual submission via systems of correction and surveillance. This is a mode of functioning that is radically heterogeneous to sovereign power. [10] Whereas the latter places at its center the glory of the prince, the former is involved in the fabrication of subjects. More broadly, the rejection of the juridical translates Foucault’s obsession with understanding power in its reality, not from the point of view of the supposed legitimacy of its actions but from that of their effectiveness in transforming subjects, in actual contact with bodies themselves. “We have to study power outside the model of Leviathan, outside the field delineated by juridical sovereignty and the institution of the State. We have to analyze it by beginning with the techniques and tactics of domination” (SMD 34 [30]).

43As the first part has shown, this critique of the juridical model grows yet more intense when Foucault comes to study security apparatuses. We then see him emphasize the distance between the logic of these apparatuses and juridical logic, between market and contract. This leads him to propositions on the heterogeneity of contract and market that liberal economists would find quite disorienting (BBP 275 [279]). If this is the case, Foucault tells us, it is because the contractual bond supposes, in the juridical subject, the renunciation of certain rights in exchange for the preservation of others—what he calls the “principle of the transfer” (BBP, 275 [278]). Yet in the economic sphere, it is quite otherwise, in so far as hom*o economicus never abandons anything. He remains at every instant entirely faithful to his interest, which guides him throughout: “Not only may each pursue their own interest, they must. .. pursue it through and through by pushing it to the utmost” (BBP 275 [279]). This renewed critique of the juridical does not give onto a complete disappearance of sovereignty, but onto an analysis where it no longer plays any more than a peripheral role, like a background figure that arouses not the least interest in the thinker. Even if Foucault writes that “the problem of sovereignty is not eliminated; on the contrary, it is made more acute than ever” (STP, 143 [110]), in the reality of his reflection, we cannot help but observe that this is not at all the case. Sovereignty no longer appears except as an apparatus trailing behind government, conceived entirely to serve it: “Given the existence and deployment of an art of government, [it is a question of] what juridical form, what institutional form, and what legal basis could be given to. .. sovereignty” (STP 142 [110]). And this is all that he will tell us about it.

44However, in The Birth of Biopolitics, Foucault goes further. On the occasion of this course he takes another step, in a certain sense an ultimate step, in his rejection of sovereignty. He does so on the basis of a thesis inspired in part by Hayek’s thought: “The market economy escapes any totalizing knowledge.” According to Hayek, one can certainly explain the abstract principles of the functioning of competition, but the particular facts or the practical circ*mstances of this or that economic conjuncture escape us irretrievably. If this is the case, it is because the commercial economy is a complex system. It is formed of an infinity of local adaptations that are impossible to mentally recapitulate, since the complete description of the simplest economic state brings into play millions of interactions and would presuppose the processing of a quantity of information vaster than what a human brain can grasp. For this reason, the economic world is opaque. It is “naturally non-totalizable” (BBP 282 [285]). Consequently, the state does not have the cognitive means to intervene effectively. Its intervention comes up against the complexity of the market economy. What follows from this is a radical disqualification of the sovereign’s ability to administer economic processes, not because he does not have the right, but because he does not have the capacity to do so: “You cannot [act] because you do not know, and you do not know because you cannot know” (BBP, 283 [286]).

45Fundamentally it is the model of spontaneous or catalectic order that serves as a reference here. It leads Foucault to conceive the mechanism of competition as being fundamentally allergic to all external intervention outside the strict sphere of private interests. The commercial universe is too complex to be taken as the target of deliberate action. Not only is state action not necessary in order for competitive regulation to function—such action is indeed profoundly disruptive in nature. Foucault concludes this analysis with some very strong claims in relation to the uselessness of the economic sovereign: “Economics is a discipline without totality; economics is a discipline that begins to demonstrate not only the pointlessness, but also the impossibility of a sovereign point of view over the totality of the state that he has to govern” (BBP 282 [286]). He concludes that there is no “sovereign in economics” (BBP 283 [287]). What is more, this condemnation of exteriority and transcendence is not limited to state action alone. It applies also to any actor who loses sight of its personal interest and assigns some collective aim to its action. What matters primarily is that each should remain within his role, namely “maximizing his interests,” and strictly limit himself to it. If certain actors were to abandon this line of action and take an interest in the general good, this could only be a source of deviations. This whole analysis leads to the paradoxical idea that in economics one must always privilege myopia and “limited views” (BBP 281 [284–285]), in line with Mandeville. “Being in the dark and the blindness of all the economic agents are absolutely necessary” (BBP 279 [283]). And when the state claims to have the long view, all it is seeing are “chimeras.”

46This analysis of the gaze and of visibility is most singular. One cannot help but compare it with Foucault’s reflections on the panopticon, seeing it as the exactly inverted figure of the latter. Neoliberal economics describes a world of individuals who are not only myopic, perceiving of others only what prices wish to communicate to them, but are above all free from any central surveillance that might seek to discipline them. On the one hand, we find a power that controls everything because it sees all and knows all; on the other, a power that is severely limited because it sees nothing and knows nothing. One could not imagine a more trenchant opposition.

47There is, however, an essential commercial reality upon which this liberal conception of an economy without totality founders, never managing to integrate it—namely, the monetary relation. [11] To understand this, it is enough to consider the legislative apparatus that surrounds money. Its failure to conform to the competitive order is plain to see. Consider, on the one hand, the sole right to issue that confers upon one particular institution, the central bank, the privilege of issuing money and, on the other hand, the legal-tender status that constrains commercial actors to accept the latter in their exchanges. Monopoly and constraint: here we are far indeed from the basic liberal precepts of competition and voluntary exchange! If we add to this the plurisecular links that unite money and power, we find ourselves before a scene that would be repellent to any partisan of spontaneous order. With money, it is the idea of the invisible hand that is called into question: the totalization of the commercial order here takes on an entirely manifest and visible form, namely monetary policy. Thus, it is easy to understand why a large part of liberal thought concerns itself with the aim of “neutralizing” money. By which we must understand the elaboration of a conceptual framework that accepts this institutional presence so contrary to the rules of competition, only so as to immediately establish that this presence has no effect upon the reality of economic relations: it does not change their concurrent nature. Why? Because money is a mere convention, like a language that allows communication without having any effect on the content of the messages. If the money supply were to be doubled, all prices would also be doubled, so that nothing fundamental would be affected—neither the rates of exchange between commodities, nor the level of production or employment. To say that money is neutral is to say precisely this. Or alternatively: money is a pure instrument whose aim is to make transactions easier without modifying the real situation of the actors. [12] Recall in addition that the most advanced formalization of the market economy, the one that structures contemporary economic thought at the deepest level, namely the Walrasian conception, proposes an analysis of markets from which money is absent. What better example could there be to illustrate the profoundly strange fact that money is opposed to the liberal conception of the competitive order?

48Foucault, as an attentive reader of neoliberal thought, conforms to this analysis. Neither monnaie nor argent appears in the index. Even the close and well-attested links between money and sovereignty do not hold his attention. When he imagines the interaction between economic actors, it is a world made uniquely of markets that he considers. Yet money is neither a secondary element nor a neutral instrument. It is the specific form that sovereignty takes on in economics. For this reason, the liberal unease in regard to it is entirely understandable. But there is no point entering here into a theoretical discussion concerning these points. [13] What we wish to show is the extent to which Foucault’s exclusive usage of the Hayekian thematic leads him to an erroneous vision of the role that sovereignty plays in market economies. It is the analysis of the birth of the German Federal Republic (GFR) set out in the lecture of January 31, 1979, that will be the occasion for this.

49If the example of the birth of the GFR interests Foucault so much that he dedicates almost an entire lecture to it, it is because it allows us to consider a limit experience—nothing less than the constitution of a community outside of the reach of sovereignty. One cannot insist enough on the theoretical import of this event. In it we must read in some sense the empirical confirmation of the theses developed previously on the uselessness of the sovereign. For Foucault the GFR offers the example of a society founded not on the exercise of historical sovereign rights—precisely, after Nazism the Germans do not possess such rights—but upon the institutionalisation of economic freedom. Foucault sums this up in a strong formula: the “legitimizing foundation of the state on the guaranteed exercise of an economic freedom” (BBP 83 [85]). In the absence of historical rights and political legitimacy, it is in the freedom of prices and in Erhard’s advocacy of the social market economy in June 1948 that we must seek the foundations of the new German state. Here the theoretical analysis of the limits of sovereign power finds an exemplary expression. Foucault deduces from it the description of a society that can be described as “entirely economic” since it is produced outside of sovereign constraint, through the play of free exchange alone.

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But—and this is what Ludwig Erhard’s text says implicitly—let’s suppose an institutional framework whose nature or origin is not important: an institutional framework x. Let us suppose that the function of this institutional framework x is not, of course, to exercise sovereignty, since, precisely, there is nothing in the current situation that can found a juridical power of coercion, but is simply to guarantee freedom. So, its function is not to constrain, but simply to create a space of freedom, to guarantee a freedom, and precisely to guarantee it in the economic domain. Let us now suppose that in this institution x—whose function is not the sovereign exercise of the power to constrain, but simply to establish a space of freedom—any number of individuals freely agree to play this game of economic freedom guaranteed by the institutional framework. What will happen? What would be implied by this free exercise of this freedom by individuals who are not constrained to exercise it but who have simply been given the possibility of exercising it? Well, it would imply adherence to this framework; it would imply that consent has been given to any decision which may be taken to guarantee this economic freedom or to secure that which makes this economic freedom possible. In other words, the institution of economic freedom will have to function, or at any rate will be able to function as a siphon, as it were, as a point of attraction for the formation of a political sovereignty.

51This startling quotation should be read with care. Foucault describes the founding of a life in common not on the basis of a sovereign act that would bring together individuals within a territory through a constraining power, but on the basis of the establishment of economic liberty. Foucault tells us that it is the voluntary exercise of this instituted liberty that will necessitate the adhesion of the members of society. How? Through the effect of the benefits, in terms of economic wellbeing, that competitive practice is supposed to engender. Certainly this collective approbation will take on a political form, but in terms of its motivations it is not of a political nature. It is something else, a voluntary adhesion to the game of liberty. As the following section will show, it is a matter of considering the possibility of a civil society that exists perfectly autonomously without the need for any specialized political apparatus. Foucault insists on the fact that this specific and properly political role of economics has remained, despite its origins, one of the fundamental features of contemporary Germany:

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In fact, in contemporary Germany, the economy, economic development and economic growth, produces sovereignty: it produces political sovereignty though the institution and institutional game that, precisely, makes this economy work. The economy produces legitimacy for the state that is its guarantor. In other words, the economy creates public law.

53“The economy creates public law” (BBP 84 [86])—isn’t this the ultimate formula of liberalism? Or, if you like, the affirmation of the primacy of economics over law, of governmentality over sovereignty. The economy produces political signs. It alone is justification enough. In other words, the existence of a specific political apparatus, having as its object the definition of a territory, as its aim to ensure the collective adhesion of citizens, and as its medium the monopoly of legitimate violence, no longer seems at all to be a necessary moment. One can perfectly well do without the power of constraint. Economic liberty alone produces sufficiently powerful effects to ensure the social bond and the collective adhesion of actors. It is better at producing agreement than politics, which always tends to divide citizens. And it creates this agreement by creating something else far more concrete, far more powerful than juridical legitimacy: a social bond, confidence, in the form of consensus, “a permanent consensus of all those who may appear as agents within these economic processes, as investors, workers, employers, and trade unions. All these economic partners produce a consensus, which is a political consensus, inasmuch as they accept this economic game of freedom” (BBP 84 [85–86]). Such is the new, singular formula of the West German state. It gives us to think a state without a sovereign, a “radically economic state” (BBP 86 [87]) uniting investors, workers, bosses, and unions. Ultimately that “great juridical edifice of the theory of sovereignty” (SMD 35 [33]) whose disappearance Foucault prophesies, will have effectively disappeared in order that the concept of the pure economic state might appear. Here we are at the extreme point of this path along which Foucault has little by little ceased to consider the sovereign, to speak only of government:

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While I have been speaking about population a word has constantly recurred—you will say that this was deliberate, but it may not be entirely so—and this is the word “government.” The more I have spoken about population, the more I have stopped saying “sovereign.”. .. and the fact that government is basically much more than sovereignty, much more than reigning or ruling, much more than the imperium.

55However, a more detailed reflection on the German economic situation in 1948 and 1949 brings to bear a very different analysis.

56To Foucault’s eyes, it is the liberalization of prices on June 24, 1948, that constitutes the high point of this refoundation of a German state. It is on the basis of this moment that the economic game is established, and may produce its positive effects. However, this analysis raises numerous questions, firstly historical ones, but above all theoretical ones. Strangely, when he analyzes the German renewal Foucault does not mention what was its first and most exemplary act—namely, the monetary reform of June 20, 1948. A new money, the Deutschmark (DM), was created, the old money, the Reichsmark, was abolished, and a first distribution of 40 DM per person was organized on Sunday June 20, 1948. This forgetting is even stranger given the unanimity of commentators in emphasizing the extreme importance of the role played by this reform. For this reason, June 20, 1948, is a fundamental date for contemporary Germany, the date of its birth. For the introduction of the DM marks a decisive turn for the future Federal Republic, far more significant that the latter’s official coming into force in 1949. Note in addition that the first institution operating on the set of the three Western zones of occupation was the Bank Deutscher Länder (BDL), the future central bank. In other words, the BDL is the first institutional form of existence of the GFR. Its creation precedes the constitution of the first federal government by eighteen months. And although Foucault’s analysis concentrates on the law of June 24, 1948, its very title—Law on the Principles of Management and Price Policy after the Monetary Reform (Gesetz über Leitsätze und Preispolitik nach der Geldreform)—designates it clearly as proceeding from the monetary reform. This liberalization only made sense, and was only able to have any effect, because monetary reform had taken place. It is the abolition of the oversupply of money that made price policy effective. Monetary reform was necessary in order for prices to even have any meaning. And yet Foucault does not say a word about this.

57But what are we dealing with, in the 1948 monetary reform? What is primarily at stake in it? We can get an initial idea by observing that it is not the result of a German initiative, for, as Foucault rightly notes, there is no longer any German administration, nor a fortiori any German government, after May 1945. It is a question of an action conceived and carried out by the dominant power of the Western camp, the United States of America, who imposes it on its British and French partners. In other words, the monetary reform is an act promoted by an occupying military power. Its stakes are essentially of a political nature: to create a new state capable of confronting Communist power. Here we find sovereignty in its purest form. What is more, all of the parties involved are perfectly conscious of this—above all the Soviets, who oppose it. Their protest is based upon a stipulation of the Potsdam Treaty of August 1945, which declares that Germany must be “treated as one single economic unit.” The Soviets react to this monetary initiative by declaring the Berlin Blockade, whose immediate aim is to prohibit the circulation of the DM. Here we see the centrality of the monetary question and its inextricable links to questions of sovereignty and territory. One can never be disentangled from the other. What is more, with the German monetary reform, it is the division of Germany and the Cold War that come into play as factors.

58Nothing illustrates these stakes of the monetary reform and its nature better than the question of Berlin. Perfectly conscious of the Soviet opposition to this reform, which would lead to the division of Germany, rendering the Eastern zone autonomous, the Allies had initially left Berlin out of the reform. They then hoped to be able to come to a quadripartite agreement that would permit a monetary unification of Berlin, in line with its peculiar status and its complex geopolitical situation. Thus the exchange of notes on June 20, 1948, in the course of which each German was given a first quota of 40 DM, did not include Berlin. This restriction did not fail to disquiet pro-Western East Berliners who, with Ernst Reuter as spokesman, demanded the full incorporation of West Berlin into the Western economic system, which implied sharing the same money: “Whoever possesses the currency possesses the power.” [14] The Soviet response to the monetary reform is, on the one hand, the prohibition of the West German DM throughout their whole zone, including most of Berlin, and the creation of a new concurrent currency. The Soviet military governor declares that the notes distributed in the Western zone would not be put into circulation in the Soviet-occupied regions. Consequently, he proceeds with Berlin Blockade. In addition, he announces the creation of a new money in the Soviet zone. Straight away, the Westerners reject the enforcement of these decisions in their sectors, and ultimately decide to introduce the new money into them, imprinted with a ‘B’ to distinguish it from the DM. But they also authorize the circulation of Soviet money in their occupied zone. It would be difficult to better express the intrinsic bond that links money and sovereignty: the first battlefield of the Cold War was the monetary question, in which what was at stake was the existence of a pro-Western Germany. Determining who issues the notes is not simply a technical, but also a political question. It is a matter of specifying who the sovereign is.

59This brief analysis shows clearly that one cannot consider the West German state as being a radically economic one. At its roots, the preoccupations of the United States and its policy of the containment of Communism were central. The question of frugal government here plays an entirely secondary role, if any at all. Foucault seems to seriously underestimate the role played in this matter by concerns that belong to the order of the most classical politics of sovereignty—that of powers in conflict. One can also get an idea of how the DM is the product of an act of pure sovereignty by noting that the Germans took no part in this. German experts were not consulted except, in the framework of the “Conclave of Rothwesten,” to draft the texts specifying the technical details of this reform. Thus, contrary to Foucault, we must consider that the 1948 reform had a political aim. We can see this more clearly once again if we keep in mind the importance of the redistributive effects produced by this reform, against the idea of monetary neutrality. In simple terms, and without entering into the details, all monetary savings were strongly depreciated whereas real possessions (capital, property, means of production) were in general left untouched. On this point, Michael L. Hughes speaks of one of the greatest confiscations of wealth in history, comparable in scale to the forced collectivization of agriculture in the USSR. [15]

60Because he adheres to a conceptual framework that makes money a neutral instrument of exchange, Foucault leaves entirely in the shadows the important political dimensions produced by the monetary reform through its redistributive effects. Thus, contrary to the proposed image of an economic game provoking the collective adhesion of actors (investors, workers, bosses, unions) around the expression of their interests, rendered harmonious by competitive forces, monetary reform was the object of wide debates and polemics that powerfully divided the West German body politic. The reform was experienced as particularly unjust because it did not affect real properties, depreciating only rights expressed in currency—very far, then, from the automatic consent that Foucault speaks of. What is more, when he pays attention to the game of competition, he never invokes the possibility of this game producing disagreements, in terms of salaries for example. Now, as far as this particular economic conjuncture is concerned, important doubts would come to light following the liberalization of prices. The inflation that it would provoke boded ill for the purchasing power of salaries, and on November 12, 1948, more than nine million Germans went on strike for twenty-four hours in an appeal to the Deutscher Gewerkschaftsbund (DGB), to protest against the cost of living. The idea of a permanent consensus thus cannot be upheld for the period of the formation of the FGR. Later on, strong economic results certainly had important political effects. They engendered a strong collective adhesion around the model of the social market economy.

61The importance of the role played by ordoliberal analyses in the West German conception of political legitimacy appears with equal force under Foucault’s pen when he turns to the adhesion of the SPD to the social market economy at the time of the famous congress of Bad Godesberg in 1959. He begins by distancing himself from the classical analysis of these events in terms of treason, an analysis that dominated the Left and Far Left at the moment when he wrote these passages. Such a denunciation sees in the justifications put forward by the SPD concerning the possibility of an “equitable social order” in the framework of social market economy mere hypocrisy designed to mask its backtracking. This is not the case for Foucault, who writes:

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But for someone who hears these same phrases with a different ear on the basis of a different theoretical “background,” these words—“equitable social order,” “condition of genuine economic competition”—resonate very differently because they indicate. .. adherence to a doctrinal and programmatic whole which is not simply an economic theory on the effectiveness and utility of market freedom: it is adherence to a type of governmentality that was precisely the means by which the German economy served as the basis for the legitimate state.

63Foucault analyzes this adherence of the SPD to neoliberalism in the light of the analysis he has just made of the federal German state. His thesis is as follows: the German situation confronts us with an inverted situation in so far as “it [is] the economic that [is] radical in relation to the state, and not the state that [is] primary as the historical-juridical framework for this or that economic choice” (BBP 90 [91]). But once the foundation of political legitimacy is sought in the very rules of economics, namely liberal governmentality, to accept this logic constitutes the condition sine qua non of participation in the political game. Thus, at Bad Godesberg, for the SPD it is a question of adhering to what is being imposed as the foundational German politico-economic consensus, that of economic growth, of entering into the game of governmentality to which Germany had given itself over since 1948. Foucault would even go further in this year of 1979, when the French Left finds itself at the doors of political power, since he insists on the fact that there is no socialist governmentality (BBP 92, 93 [93, 95]). In Socialism he recognizes “an historical rationality, an economic rationality, and an administrative rationality,” but no autonomous governmentality. To his eyes, in order to exist, Socialism is bound to connect itself up to diverse types of government.

64It is tempting to apply this framework of interpretation to the European Union. For in the latter we see the same inversion of the economic and the political, and the same foundational role for monetary rule. Moreover, as the project for a constitutional treaty has shown once more, the norm of competition plays a structuring role not only as far as the economy is concerned, but more broadly as far as the very conception of political institutions is concerned. As Foucault writes of the FGR, the question is no longer: What freedom will the state leave to the economy? Rather, it is: How can economic freedom have a function and a role of “statization,” in the sense that it would permit the effective founding of the legitimacy of a state (BBP 94 [95–96])? In short, liberal governmentality is certainly a key concept with which to approach the study of the European situation.

66In the third lecture, Foucault explains to his audience that, after having studied in his preceding books the specificity of disciplinary mechanisms in relation to the system of law, he intends in this course to reflect on the difference between discipline and the mechanisms of security. His ostensible objective is to “put a stop to repeated invocations of the master as well as to the monotonous assertion of power” (STP 83 [57]). This declaration testifies firstly to his becoming conscious of the limits and insufficiencies of a reflection on the social order in terms of discipline and constraints that does not take account of recent forms taken by the government of men. [16] Above all, its fault is that it presents liberty, with the modern sense that this word takes on after the eighteenth century, as an ideology or a universal concept, a sort of right of man that would bring triumph in the struggle against the disciplinarization of society. Liberty, Foucault maintains, is something else entirely: it is a technique of power, a relation between governor and governed.

67Two political readings are possible. The first, “Foucauldian” in the narrow sense of the term, would take this affirmation as an advocacy. Let us not misunderstand: the liberty left to the population is used by power for the ends of control, and there is discipline in the liberty that modern governmentality grants us. Moreover, the fact that security apparatuses are the producers of the liberty that they consume illustrates very well this essential observation: liberties depend upon power. The second reading insists on the contrary on the fact that, governmentality being necessarily protective of liberty, it constitutes a type of power that merits reflection and that can exert a certain attraction. Both readings are possible, and one may suppose that Foucault was capable of envisioning both. The reflexive tension that runs through both courses, however, tends to make one think that, unambiguously even if never explicitly, their author seeks the second direction.

68A clue to this is given by the reflection he proposes on the state. Faithful to his method, he refuses to have recourse to such a general category of political philosophy. The state is not a universal, it has no essence: to understand it, we must “come from outside,” and understand it through practices, that is to say through the general technology of power. And it is precisely to avoid any risk of “circular ontology” that we must do the genealogy of the state on the basis of a history of governmental reason. This argument is only apparently exclusively methodological. For it also allows Foucault to initiate a strong critique of those who denounce the state on the pretext that it tends to acquire an unlimited power or that its expansion is historically irreversible. Such a conception is too reductive, because in fact it amounts to hypostasizing the state, according it something like an essence. Foucault situates the origin of such an approach in the German liberals of the first half of the twentieth century, whose discourse is taken up later, unknowingly, by the Left, or even leftist, critique of the seventies that identifies all affirmation of the role of the state with a form of authoritarianism, or even fascism. According to Foucault this position is unacceptable for two reasons. The first is that the interference of the state in societal affairs is from the outset limited within the configuration proposed by liberal governmentality. The second is that its intervention is necessary for the establishment of liberty.

69Foucault’s true object throughout this genealogical reflection on governmentality is doubtless not so much governmentality itself as a possible elaboration of the autonomy of the subject. The way he chooses passes via liberalism, and more exactly via that particular form that is self-limiting liberal government. These two courses can be read, as we have said, as an attempt to posit its foundations. But why choose such a peculiar path? Because Foucault thinks he will find in such a modality of power the best guarantees to preserve this autonomy of the subject. There are multiple reasons for this and they are strung out over many pages, without ever becoming the object of a systematic presentation. The provisional and experimental character of such an argument only prompts Foucault to exercise prudence.

70A first reason is that the consequence of political economy’s advocacy of scientificity is a transformation in the relation between knowledge and power. Whereas mercantilism did not advocate this scientific status at all, and was associated with the reason of the state, that is to say with mysteries of government inaccessible to common mortals, economic science must be established or verified by everyone, even if they are not involved in governing, since science’s very vocation is to be a common mode of knowing. Thus power no longer has the monopoly on knowledge and truth; on the contrary, it is the exigencies of knowledge that delimit the abilities of power from within.

71The principal reason for this, however, is linked to the dependency of politics in relation to the economics established by self-limiting liberalism. Now, far from constituting a destructive oppression, the primacy of economics over politics is the best possible guarantee of safeguarding the independence of the subject. This theme only emerges gradually in Foucault’s reflection, but once it comes to light it becomes ever more present and crucial. The essential argument rests upon the fact, as we have said, that economics is a discipline without totality. Foucault finds the principal elements of his analysis in Friedrich von Hayek, but also in eighteenth-century thought, whose political economy “denounces the paralogism of political totalization of the economic process.” The blindness of the state is therefore remarkable not because it chooses this blindness for political ends, which are always revisable, but because its perception of economic phenomena is always limited. The state cannot intervene directly and invasively, not because it does not have the right or because it has taken on some contractual obligation not to do so but, far more radically, because it does not know. An important consequence drawn by Foucault in the penultimate lecture is that collective good cannot be envisaged, still less achieved, by any agent, including the state. It would suppose an overview that is possible neither for a sovereign nor for any institution whatever: no one can understand better than the individual himself or herself what his or her own interests are and what his or her behavior should be. Foucault insists a great deal on the absolute, nonnegotiable radicality of this position, whose importance lies, of course, in the fact that, according to him, the interest and the singularity that each must express and protect can be transposed from the field of economics to that of behaviors in general.

72It is within this optic that the American neoliberals are of particular interest to him. Firstly, because although these authors consider, following Hayek, that all economic totalization is impossible, they also insist on the fact that the framework of intelligibility of government in relation to the individual should be conceived of entirely in cost-benefit terms, thus taking on an economic form. hom*o economicus, a notion that Foucault only brings to bear at the end of his course but which is present in the very logic of his quest for a self-limiting government, is thus the unique interface between power and the individual. Of course, this does not mean that the person is limited to the economic dimension alone but that the latter, and it alone, is mobilized to analyze all types of behavior. A good illustration of this is given by the analysis of the criminal. The American neoliberals study the criminal with the same tools that are put to work to understand the behavior of every other individual—“The criminal is nothing other than absolutely anyone whomsoever” (BBP 253 [258])—since the framework they use is entirely economic, analyzing the criminal’s deeds and gestures in terms of the calculation of utility—that is to say, it is the same as that mobilized in general to gauge the rationality of an individual. How could one imagine a better protection of each person’s identity, a more attentive respect to differences or preferences of every order, than such a system wherein politics finds itself constrained by this economic angle through which it apprehends society?

73Bringing his reflections to a close, Foucault finds at the end of the road, in the notion of civil society proposed by Adam Ferguson in An Essay on the History of Civil Liberty (1767), the missing articulation between economics and politics. He can thus broach the primordial question: How to govern a society peopled by economic subjects? Foucault sees in the work of Ferguson the analog in the political domain of what Adam Smith proposes some years later for the economic domain. For the Scottish philosopher, civil society rests upon two elements. Firstly, it is produced from the spontaneous synthesis of individuals, with no reference to any explicit contract or constitution of a sovereignty through a pact of subjection. This synthesis is assured by a set of disinterested sentiments with regard to others, such as sympathy, benevolence, or compassion (but also the attraction of the misfortune of others) or the feeling of belonging to the same community. And then, as in natural law, the fact of power and of the commandment of certain men over others is present in the state of nature, anterior to all political institutions. “Some mode of subordination,” says Ferguson, “is as necessary to men as society itself”—a fundamental claim, since it allows the circumvention of the difficulties of contract theory. It is within civil society thus constituted that the economic bond is inscribed. Thus we find resolved both the question of power and that of the cohesion of society, thanks to the principle of coherence that is the spontaneous convergence of interests.

74Where does the state or government fit in to this configuration? What place can they have faced with an already constituted, “completely given” society? Foucault takes care not to respond, or more exactly he responds in an extreme fashion, repeating the quotation from Thomas Paine in his address to the American people: “We should not, he says, confuse society and government. ‘Society is produced by our wants, and government by our wickedness. .. government, even in its best state, is but a necessary evil; in its worst state an intolerable one’” (BBP 310 [313–314]).

75Here Foucault’s demonstration ends. The experiment closes with this almost complete exclusion of power and government. The conditions under which such an experiment might actually be realized are of course most improbable: Foucault does not take Röpke’s, von Hayek’s, and Becker’s economic lucubrations quite that seriously. But he has explored, doubtless conscious of often being at the limit, the abstract conditions that would have to be in place in order for such a liberal project to take shape.

76The experiment is not without effect, for traces of it remain. The “hard” liberal way, that of intransigent economists, opens onto something fascinating enough, in that it substitutes for disciplinary society a policy of the respect for differences, up until this point impossible to envisage even from a theoretical point of view. And this respect for heterodoxies no doubt counts more than anything in Foucault’s political reflection. He makes a strong allusion to it at the end of the lecture of March 21, 1979, when he surveys the horizon of the analyses he has sketched out:

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What appears on the horizon of this kind of analysis is not at all the ideal or project of an exhaustively disciplinary society in which the legal network hemming in individuals is taken over and extended internally by, let’s say, normative mechanisms. Nor is it a society in which a mechanism of general normalization and the exclusion of those who cannot be normalized is needed. On the horizon of this analysis we see instead the image, idea, or theme-program of a society in which there is an optimization of systems of difference, in which the field is left open to fluctuating processes, in which minority individuals and practices are tolerated, in which action is brought to bear on the rules of the game rather than the players, and finally in which there is an environmental type of intervention instead of the internal subjugation of individuals.

78This rich analysis, which brutally shifts the spotlight from the economic field toward that of behaviors in general, condenses the essential points of the political philosophy of these two courses. The reflection is thereby opened up, and not without a certain exaltation:

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Liberalism has always left it to the socialists to produce utopias, and socialism owes much of its vigor and historical dynamism to this utopian or utopia-creating activity. Well, liberalism also needs utopia. It is up to us to create liberal utopias, to think in a liberal mode, rather than presenting liberalism as a technical alternative for government.

80This last quotation, programmatic in its own way, is found bizarrely slipped in to the very middle of a lecture, as if to hide it away. Why such discretion? It may be put down to the undeniably experimental dimension of Foucault’s reflections and, as a result, his not particularly assured conclusions. More likely it is explained by the provocative and iconoclastic character of these conclusions. The liberal temptation of Foucault, although it testifies to a surprisingly free spirit, capable of freeing itself from a form of thought that it had itself contributed to establishing, can only appear uncertainly, dotted here and there.