What's new . . . government intervention to spread the fragile market form

From John Protevi's essay "What does Foucault think is new about Neoliberalism"

Neoliberalism [. . .] Foucault insists, is something other than liberalism; neoliberals "break" with classical liberalism; we must "avoid at all costs" seeing neoliberalism as a mere "repetition" of classical liberalism after a Keynesian interlude. So for Foucault neoliberalism is a modification of the art of governing as an exercise of political sovereignty; it is another turning point in the history of the state seen through the grid of governmentality. Its novelty consists in an interventionist state which creates conditions for the artificial or purely competitive market in which homo economicus makes choices as rational self-entrepreneur.

For Foucault, neoliberal macroeconomics is not so much a shift from the Keynesian objective of full employment to the monetarist control of inflation (although it does of course entail that as well), as it is a change in government's relation to market structure. For classical liberals, the market was a natural mechanism for the exchange of commodities. For the neoliberals, the market is an ideal structure of competition, fragile and in need of construction and support. Thus neoliberalism is not laissez-faire, but interventionist, though neoliberal intervention into society occurs at the level of the conditions of market, and its intervention must take the form of the "rule of law".

Let us repeat the key contrast. Classical liberals want the market to be a free natural zone where government can't interfere, precisely to let the invisible hand provide for social benefits from individual self-interest. There's a whole anthropology here of the natural homo economicus as only an abstraction from concrete man living in civil society, of which the juridical subject is another abstraction. But the important thing for classical liberals, ignored by the neoliberals, is the Smithian analysis of moral sentiments and the need for government to provide the moral framework that the market erodes. So the classical liberal formula is "protect the market from government in order to allow social benefits from natural exchange." The neoliberals say we must proceed on two paths: (1) we must have government intervention at the level of the conditions of the market in order (2) to spread the enterprise form throughout the social fabric. So the neoliberal formula here is "use government to change society to constitute an artificial and fragile market."

For Foucault, the American neoliberals are more radical than their German counterparts. They share the desire to intervene at the level of market conditions to support fragile competition. But for government / market relations they also want to refuse to shield government from market relations: they want to submit all government actions to cost-benefit analysis. But this is just macro-level reflection of the move to insert market relations throughout the social fabric. This is not simply the drive to privatize government services; it also entails making the surviving government agencies into enterprises, so that we must ask what is bottom line for, in the American system, agencies such as Amtrak, the Post Office, the National Parks, and so on). And this is not just the drive to make any multi-unit organization into a collection of enterprises (each department in a university has its own bottom line and its own contribution to the university bottom line: e.g., loss of subventions for university presses). It goes further than that: each individual becomes an enterprise, a self-entrepreneur.