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"Homo economicus -- the formation of society around the market and man as enterprise"



This post examines the lectures from French philosopher Michel Foucault given at the University of France titled “The Birth of Biopolitics 1978-1979”. At their fundamental level, Foucault traces governmentality from the birth of the British centered liberal economy in the 19th century through to the rise of the neoliberal modality of social, political, and economic organization that occurred throughout the world system throughout the 20th century. He demonstrates what comprises the neoliberal mode of governance and political economy at its core through the example of the drug trade showing great erudition and thought into how the market factors and pervades into every aspect of society and its respective rational decisions.


At its very fundamental level, Foucault posited that the principle rationality that formed the liberal mode of governance alongside laissez faire (in terms of opting to keep the state out of the affairs of the economy) was also that of ‘Homo economicus’ or that which man seeks to provide for his own ends according to his own needs utilizing his own rational decision-making. Following this theory of homo economicus is the necessity to look at man not just as his own rational actor pursuing his own interests, rather it requires looking at man as his own enterprise. Man as enterprise and all of the decisions he makes throughout the course of his life have a cost and this cost is rational concerning the profits that are to be made or lost. Thus, we have a very fine intertwining between a neoliberal modality of governance and man as homo economicus.


Neoliberalism rose to prominence in response to the social welfarism projects undertook by the United States and the great Western European powers following WW2. After immense downward pressure was placed upon capital given that labor became much more expensive due to the welfare benefits and social security that had to be paid – it was necessary to shift the balance of power back to capital. Thus neoliberalism was instituted after the great crisis' of the 1970s and what we see happen now is a massive decentralization, deregulation, and formidable business climate arise and a preeminence given back to the role of the family unit and the importance of the family in society. Following these developments ensues a shift of the decentralization of the urban as well and the rising preeminence of the suburbs being multiplied by the family unit acting as enterprise which continue to amplify the effect. At the same time, we see insurance and the role of insurance and protecting and hedging against risk take back the center role in the economy. It no longer became the state’s job to protect and provide welfare to individuals, it fell back on man as homo economicus acting as his own enterprise and rationality to do what is best for him and to ultimately take care of himself.


To sum up these lectures, Foucault also spoke of another important phenomena, the market as a site of veridiction and truth where the price, the right price that is, constituted and formulated by the supplies and demands of the market, directly formulated the governmentality and decision-making of the state and that of homo economicus. Let’s take for example the drug trade. At the height of the formulation of a neoliberal mode of governance where we see a shift from pure liberalism (the market) to neoliberalism (competition), everything is now formulated into a rationality of price and cost benefit thereafter. What is the cost to society, to the country of allowing the drug war to go on and how can we best prevent its demand (whether negative or positive) is the question being asked. Thus, in the case of the drug trade, the best way to limit or at least try to halt the drug trade is to limit new users, and specifically target those users who might be most willing to use the drug by raising the price so exorbitantly high by executing an all out war on drugs by targeting the supply to effectively impede upon their desire to act upon their demand and to thus allow those users who already have the drug and the means to purchase the drug to continue to do so. And this is the site of truth because the market is functioning according to this supply and demand so those who are able to acquire the drug – must have the means to do so and are thus executing the truth of the market and thereby validate the political, social, and economic modality of organization of neoliberalism.

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