The “truth” of the market and some of its implications

The essential core of the neo-liberal narrative, as preached by the Chicago School for example, was illustrated by Michel Foucault in 1979, when he predicted that the market would establish a “regime of truth” (Foucault 2008). But before going deeper into Foucault’s ideas, let us take a step back in the history of the odd relationship between the market and truth. The discovery of the notion of “interest” in Europe in the seventeenth century was part of a new trend focusing on the passions, motives and inspirations of human action and intellect. Interest seemed to be a way of reaching the essence of human beings, a universal “truth” and a sort of “objective” basis to provide political discourse with a new legitimacy. At the same time, the discovery of interest was a step in the direction of rationalising behaviours and part of a modern strategy for overcoming political “passions” and the sense of belonging to collective entities, such as communities, factions and clans, typical of pre-modern societies (Hirschmann 1977). Nedham’s 1637 pamphlet Interest will not Lie. Or, a View of England’s True Interest later is well known.

The statement Interest will not lie became a widespread maxim in 17th-century political discourse (Gunn 1968).

The birth of the modern political economy, as noted by Foucault, can be seen as a challenge to the art of governing, thereby creating a “risk of governing too much”. In other words, political economy creates “a powerful wedge ... into the endless presumption of the police state” (Foucault 2009). Foucault’s words reflect the end of an era when the “prince” was in charge of choosing what was appropriate and fair for the common interest and the beginning of the “mini- mum/maximum” issue for governments, where the economic regime is in charge of establishing how much government is needed. Liberal theories inherited the tendency of lending too much weight to economic motives and processes, such as interest and markets, as good tests of the “governing too much” question. Groups of interest gained a central position in the legal scene and even at a constitutional level, leading to today’s “constitution of interests” (Brigham 1996) or “strategic constitution” (Cooter 1999).

In Europe there have traditionally been two different political cultures with different choices about the minimum/maximum option: two cultures referring to what Otto Mayr has defined as the “clock state” and the “balance state” (Mayr 1986). The former entrusted the “modern Prince” with the task of finding the right equilibrium among different demands and interests, just as a clock tells time. The latter, typical ofthe United Kingdom and later appropriated to an even greater extent by the United States, was more confident in self-governance and the ability of different interests to reach a spontaneous equilibrium through a feedback system, as on a balance. The difference between these two different political cultures in the West was partially bridged in the last decades of the last century through the general acceptance of neo-liberal dogmas on the market. During the 1980s, Great Britain gained a leading role in Europe by suggesting a reinvention of government (Osborne and Gaebler 1992) and “new public management” methods in the public sphere. Thus, there was significant political convergence within Europe towards a political style that reflected another Foucauldian concept drawn from the Christian Pastorat: that of “governamen- tality” (Foucault 2004; 2009). This refers to a government which is able to behave as a Good Shepherd leading his flock, while encouraging selfregulation by the governed people and taking into account their needs and options (Foucault 2004).

Foucault’s innovation lays in treating the subject of government as a problem based on the very radical “too much government” issue rather than within the wake of the contractualist philosophical tradition. Thus, the market as a specific “regime of truth” (Foucault 2008) means, first of all, “self-limitation of the reason of government” and accepting the “natural” succession of economic events as they happen in economic dynamics following a “laissez-faire” principle with the lowest possible amount of public intervention. Markets are places “of veridiction” (Foucault 2008): that is, they work as an “economic tribunal” (Foucault 2008) for the appraisal of the size and the style of government itself. They can assess the soundness of both political organisation and legal intervention in economic life. Thus, for example, the link between law and efficiency sponsored by the Law and Economics School (R. A. Posner 1978) became a crucial step for subjecting institutions to economic criteria and standards.

With the label of truth, markets could embellish themselves with different values (such as freedom, pluralism, fairness, and openness) and challenge the primacy of political power and its entitlement to establish limits and regulations on the economy. At the same time, this label made it possible for economic subjects in competition with the public power of states to claim greater power. As noted by Susan Strange, when analysing the incipient process of economic globalisation, it is quite difficult to include the concept of “market power” profitably in method analysis because it was both obscure and slippery (Strange 1996: 58). Therefore, this issue was mostly neglected, and markets came to be seen as extremely decentralised places without power. The idea of the market as a flow of relationships entrusted to the “self-interested” rationality of its actors conveyed the image of a self-moving mechanism, irrelevant to any study of power as suggested by Strange. As already mentioned, while theoretical and sociological research on the issue was becoming less frequent, the market was seen more and more as a model, or an ideology, than as a real concrete place to be investigated and analysed in its specific power dynamics. Even the growing importance of lobbies and lobbyism was mostly seen in a neutral way, or as evidence of a participative decision-making style, or even as an embodiment of democratic governance procedures in the wake of the American experience (Ferrarese 2010), rather than being conceptualised in terms of market power.

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