The constitution of neoliberal governmentality from early neoclassical economics to public choice theory
Michel Foucault, a true polymath within the humanities and social sciences, provides a fertile and unprecedented ground for a new critical understanding of neoliberal governmentality as the present form of global power in its relation to neoclassical economics. Defying the usual academic specializations and disciplinary divides, his work opens up new ways of approaching politics and economics. Foucault demonstrates how economics played a crucial role in the constitution of classical liberal and, in turn, neoliberal governmentality. Foucaults work also helps us understand how economics in the late 19th century became expert knowledge that laid the foundation for neoliberal governmentality, a ‘norm imposing’ power modality and ‘normative political reason’ (Brown, 2015; Dardot & Laval, 2013). His analysis of economics as part and parcel of the (neo)liberal governmentality rests on the particular conception of power. Foucault (2007), identifying three forms of power (sovereignty, discipline, security management), shows particularly how economics played a decisive role in the transition from the disciplinary mode of power regulated by police to the security-management modality of power. He also presents a rigorous method and analysis as well as a history of government to analyze this critical role of economics around its three interrelated dimensions: knowledge, power/government, and ethics. In doing so, Foucault presents us with a historical, methodological, and analytical framework to elaborate on the evolution of modern economic analysis in its relation to (neo)liberal power. However, one of the missing points in Foucault’s work is the absence of the analysis of public choice theory as part of neoliberal governmentality. Another one is a complete analysis of the relationship between early neoclassical economics and the subsequent neoliberal governmentality, with a focus on the specific power modality of security management.
Neoclassical economics was born out of the so-called marginalist revolution in economics in the late 19th century and public choice theory developed after 1940. Foucault (2008) examines, to a degree, how liberal governmentality based on classical political economy underwent a colossal transformation over the late 19th century, but he is much more focused on the role of 20th-century neoliberal ideas in this revolution crafting a new political reason against Keynesian politics and economics. Nevertheless, he refers very little to early neoclassical economics, and public choice theory is left completely unnoticed in his account. Given that neoclassical economics with its early and late versions (e.g., new consensus in macroeconomics, behavioral economics, new institutional economics, etc.) and public choice theory are the hegemonic knowledge of economic analysis, discourse, and practice that govern and control the teaching of economics on a micro level (Zuidhof, 2014) and the administration of the state at a macro level, an attempt at incorporating early neoclassical economics and public choice theory into Foucaults history of neoliberal governmental- ity will be helpful for conceiving the governmental actuality of neoliberalism around its current effects and phenomena.
For Foucault, (neo)liberal governmentality is not reducible to economics and, no less, economic policies. And yet, economics as “knowledge-power” (Foucault, 2008: 19) has always been lateral to (neo)liberal power and governmentality'. This being so, neoclassical economics and public choice theory are not to be understood simply as scientific knowledge analyzing the functioning of the capitalist market economy at micro and macro levels. Given their overreach to non-economic relations, spheres, and structures through the application of economic knowledge to the social realm, both theoretical bodies build up and disseminate a specific normative social and political rationality. Following Foucaults analytics and historical survey into governmentality, the particular question to be addressed is how the marginalist turn in economics and later public choice theory, which takes its starting point from Knut Wicksells neoclassical economics (Buchanan, 1987; Wicksell, 1958), have reformulated the governmental reason of classical political economy by' modifying especially its moral aspects and its articulation with different forms of power (i.e., sovereignty, discipline, and security management). In studies of Foucaults analytics of power and governmentality, the place of early neoclassical economics and public choice theory are largely left untouched or underevaluated, except for a few studies (Amariglio, 1988, 1990; Birken, 1990; de Lima, 2019; Gtirkan, 2016; Olssen, 2018). The present chapter takes a step towards filling this gap and aims at contributing to the studies of Foucault and governmentality'. Before going into this deeply, the problem and method concerning the power and influence of economics over the social and political life will be specified referring to James Buchanan, the founding father of public choice theory'.
2 Problem and method
With the neoliberal revolution throughout the 1980s, Buchanan and public choice theory became influential on governments as they started reforming their policies, organizations, and administrative and political reason. During the post—World War II period, Keynesian theory and policies played an essential role in guiding the economy' and public policies. This also holds true for its guiding power in governing public reason about socio-economic matters. The rise of protest movements in the West during the late 1960s was in some respects directed against the disciplinary formation of society under the auspices of the bureaucratic control system that the Keynesian central planning economic model entailed to achieve the aims of full employment and sustainable mass demand that induces investment. This model based on the bureaucratic welfare state was, as Richard Sennett (2006: 27—37) defines, a Weberian ‘social capitalism’ that created an ‘iron cage’ because of its highly functional and hierarchical structure despite its certain democratic and progressive aspects. Alongside the new trends in left politics at that time, public choice and monetarism strove to increase their intellectual power of influence and significance for guiding the struggles of masses for freedom vis-a-vis the increasing comprehensive state actions. As Keynesianism was becoming a “common enemy” (Foucault, 2008: 79) at the diverse poles of the political spectrum, public choice scholars took on a political task and action in theory and practice. Public choice theory and its supporters set down the essential principals for guiding the public reason through neoliberal economics and provided an operational framework for economists and politicians as they sought to make new formulations to conduct the social, political, and economic course of movements. Buchanan himself got involved in public debates as part of the public choice school’s political mission for promoting normative political economics to guide political and public debates. He occasionally participated in the meetings of the Joint Economic Committee of the US Congress founded in 1946 and expressed his thoughts on public finance and political issues. Buchanan also took a position against the student protests endorsed by left academics and supported tax-protest movements in the 1970s (Brennan & Buchanan, 2000). During the course of social movements in the 1960s and 1970s, Buchanan’s approach to politics and economics changed from a libertarian attitude against the state towards embracing strict regulations by means of state authority (Fleury & Marciano, 2018). His aim was to take control of the social unrest against capitalism and reformulate a new way of the security of the market, which explains his support of Reagans conservatism and neoliberal policies.
Buchanan produced considerable volumes of books and articles on public choice theory and constitutional political economy. His analysis of modern society has economic, political, fiscal, and normative-ethical dimensions. It is economic because his theory is concerned with overcoming the crisis of economics by redirecting it on the theoretical course of subjective choice (Buchanan, 1981, 1999) and the will of individualistic freedom. Buchanan’s analysis (1964, 1975, 1987) is normative and political because it aims at sharpening the critique of the state/political market and the economic/fiscal course of affairs that make a case for the Leviathan form of state. Buchanan’s theory deals mainly with fiscal policies because he believes that public finance as a science and art of government guides the collective and individual choices of public goods in a market environment and as such lies at the center of politics. Buchanan assigns a critical and defining role to political economists in guiding the public reason towards an ideal society he imagines. As such, in Buchanans setup politics and economics have two dimensions: positive and normative. On the positive side, he sets out to explain scientifically the actual course of economic and political events and developments. On the normative side, from a constitutionalist political economy perspective, he aims at guiding the governmental reason of state as well as the behavior of individuals as they inveigh against the state on the way towards making a new social contract. Finally, Buchanans public choice theory (1978, 1988) has a strong ethical dimension, which has received less attention, because it aims to construct and govern the moral attitudes, behaviors, and subjectivities of individuals in accordance with the rules of the market that emerge out of the rational expectations of individuals and set limits to the state. Buchanan (2008: 472—474) in his recent work turned to Kants moral philosophy and called for a ‘deontological turn’ in political economy as a way to govern the conducts and choices of individuals. Buchanans formulation of internal governmentality of subjects for the constitution of the market society can be best understood within the framework of Foucaults analytics of power and governmentality, which can establish a clear link between the inner logic of the theory and its performative power shaping the reality around their intersectional ties and disparities.
Within liberalism, government through economy can be carried out by making use of economics in two ways: economics as expert knowledge or economics as a means of strengthening individual empowerment. Buchanan sides with the latter and advances an economic and ethical critique of the first model. In doing so, his theory becomes committed to building a certain governmental reason for the state and the acts of individuals. But the vector of governmental relations does not originate from the state, directing itself towards individuals; it is quite the reverse due to its comparatively low costs of government within society. The liberal model of government of the public and individuals has two dimensions. The first includes the interactions between individuals as part of the population under the governmental authority informed by market rules, and the second is the internal governmentality of morality imposing certain restrictions on acts, which means in-depth government through self- government. Buchanan has developed public choice theory to shape this multilayered governmentality through the economics-based intelligibility of politics and, no less, ethics thereby laying the foundation for the government of the state and individuals without making a break between the two.
Buchanans public choice theory is highly interdisciplinary and has several aims at micro and macro levels. To bring them together and develop a comprehensive analysis of this theory, a unifying analytical framework and method are needed. Foucaults nominalism, discourse analysis, and analytics of power/ government present us with such an analytical and methodological framework. Foucaults overall work sees things and events in their historical course within a triangle, the corners of which consist of knowledge, power/government, and ethics. Knowledge here does not only stem from the scientific production of savants but is something that grows in relation to everyday experiences in micro and macro domains of social life. Knowledge reaches its true meaning when constituting the truth and shaping the governmental reason that guides power relations all over society. Then knowledge becomes ‘knowledge-power’. To see theories not as scientific knowledge but, through Foucault’s prism, as part of ‘knowledge-power’ that has a performative, constitutive, and concrete practical influence on social reality shows us the relation of knowledge, power, and ethics. Foucault, paying attention to the history of economics around these three dimensions, identifies the constitutive role of economics in shaping the governmental reason of liberalism and neoliberalism. In his words:
Economics is a type of knowledge (savoit), a mode of knowledge (connais- sance) which those who govern must take into account . . . Economics is a science lateral to the art of governing. One must govern with economics, one must govern alongside economists, one must govern by listening to the economists.
(Foucault, 2008: 286)
Foucault adds, however, that governmental rationality itself is not an entire derivative of economics and cannot be reducible to it. Government, an ensemble of rationalities, is much more than what economists say, but it is impossible to govern without economics in (neo)liberalism. Taking inspiration from this argument, the following sections characterize economics as public science and inextricable part of the art of government, arguing that the governmental attribute of economics is congenital (since its birth back in the ancient times was seen from the concept of oikonomia - the management of household). Therefore, the character of economics as public science and its practical influence on social life can be put by focusing on the notion of government. It is Foucault’s merit that we can take up the history of economics as part of the history of government, which allows us to turn this historical account into analytics from a socio-economic perspective.