There is a deep tension in contemporary US political thought between the notion of freedom that tends to dominate in the socio-economic domain and the concept of liberty that predominates in the penal sphere. In socio-economic matters, the idea of freedom tends to be shaped by classic economic liberalism: the belief that an invisible hand shapes favorable public outcomes, that individuals need robust protection from the government, that the state should refrain from interfering in commerce and trade. In the law enforcement and punishment context, by contrast, the dominant way of thinking about liberty gives far more ground to the government, to the police and to the state security apparatus.

This tension, when it gets acute, gives rise to what I would call "two-faced" or "Janus-faced liberalism". Over the last 40 years, during a period characterized by increased faith in free markets, in deregulation, and in privatization, America's Janus-faced liberalism has worsened and fueled the uniquely American paradox of laissez-faire and mass incarceration. In the country that has done the most to promote the idea of a hands-off government, our government runs, paradoxically, the single largest prison system in the whole world.

This past month, the great American paradox took a distinctly dystopian turn, particularly at the US supreme court. The oral argument on the constitutionality of President Obama's Affordable Care Act, in conjunction with the court's decision on the constitutionality of strip-searching all persons arrested even on the most minor traffic infractions, crystallize this worrisome trend. My sense is that I am not alone in this assessment; there appears to be growing recognition across the US that this two-faced liberalism may, in fact, be pushing the country, inch-by-inch, in the direction of a police state. This is surely true of the recent strip-search case, Florence v County of Burlington.

Associate Justice Anthony Kennedy, more than any other supreme court justice perhaps, embodies and reflects this deep tension in liberal thought. In the socio-economic domain, Justice Kennedy embraces a robust economic-liberal notion of freedom. At oral argument on the Affordable Care Act, Kennedy signaled strong reservations about the federal government imposing a health insurance "mandate" on anyone. He emphasized, in an eerily deliberate way, that "the reason, the reason this is concerning, is because it requires the individual to do an affirmative act." Kennedy went on to say:

"And here the government is saying that the federal government has a duty to tell the individual citizen that it must act, and that is different from what we have in previous cases and that changes the relationship of the federal government to the individual in the very fundamental way."

Forcing Americans to buy health insurance, on Justice Kennedy's view, violates a fundamental notion of liberty and basic values of a liberal democracy – despite the fact that all Americans already pay for Medicare and Medicaid, as well as other social programs, not to mention military interventions. In the economic sphere, Kennedy evidently is attached to a robust economic-liberal approach. He almost sounds libertarian.

Only a few days later, though, Justice Kennedy dramatically expanded the government's reach over the individual by deciding to allow federal, state, and local law enforcement officers to force anyone arrested for even the most minor traffic violation to be stripped naked, forced into a delousing chamber, compelled to squat, cough, and lift their genitals under the peering supervision of a jailor. The fundamental values of a liberal democracy, on Justice Kennedy's view, do not require even one iota of reasonable suspicion, before the state can strip its citizens of all dignity, bodily integrity, and personal autonomy.

It is not an exaggeration to say that the decision "changes the relationship of the federal government to the individual in the very fundamental way" (to borrow justice Kennedy's own words). The decision overturned the rulings of seven US courts of appeal and contradicted the best practices of the federal bureau of prisons, the US marshals service, the US immigration and customs service, and the US bureau of Indian affairs – agencies that all require reasonable suspicion before strip-searching minor offenders. Despite this, incidentally, the Obama administration weighed in favor of the constitutionality of blanket strip-searches.

The contrast in conceptions of liberty could not be more stark. In the strip-search case, Justice Kennedy adopted what I would call a "police-state logic", a logic that is fundamentally at odds with the classical liberal political theory tradition. Under this logic, the court first identifies all possible security risks, no matter how trivial and low-probability; the court then delegates to the security apparatus the decision regarding the effectiveness and appropriateness of different security measures; finally, the court abdicates any pretense of independently weighing the security risks against individual liberty interests, so as to avoid, at all cost, any appearance of undermining the security experts.

In the process, the court adopts weak reasoning, even patently deficient arguments, to support the police-state logic. The fact, for instance, that the Oklahoma City bomber, Timothy McVeigh, was stopped for driving without a license plate, or that "one of the terrorists involved in the September 11 attacks was stopped and ticketed for speeding just two days before hijacking Flight 93", is completely irrelevant to the decision whether to impose a requirement of reasonable suspicion before stripping someone arrested for a minor violation. Strip-searching McVeigh or, for that matter, the September 11 terrorist would not have prevented, in any way, those tragedies. Justice Kennedy nevertheless embraces the non-sequitur because it bolstered his police-state logic. In the security realm, "you never know …" is regarded as a clinching argument.

This contrasts sharply with what we could call "liberal-economic logic" – the approach that places two thumbs on the scale of liberty in economic matters. Had this logic been applied in the strip-search case, there is no question the case would have come out differently, given the high cost to human dignity and self-respect, as well as, the grave risk of racial discrimination. The disproportionate arrests of African Americans in the US is extremely alarming in light of Justice Kennedy's decision, as evidenced by the facts surrounding the arrest, week-long detention, and multiple strip-searches of Albert Florence, in that case.

The growing chasm between these notions of liberty in the economic domain and in the police context has not escaped attention. Maureen Dowd sarcastically commented in the New York Times, following the strip-search decision: "So much for the conservatives' obsession with 'liberty'." Andrew Trees, in the Chicago Tribune, underscored this two-faced liberalism, remarking that "a majority of justices view a strip-search for something as trivial as failing to use a turn signal as perfectly acceptable, but requiring a citizen to buy healthcare is an unwarranted intrusion on personal liberty."

News parodies also spoofed the paradox. In a mocking headline styled "In Controversial Decision, Supreme Court Replaces Annual Physicals with Strip-Searches", the Borowitz Report recounted, with dripping sarcasm, that "the supreme court decided today that annual physicals were unconstitutional and should be replaced by random strip-searches conducted by the nation's police." Sadly, this is not too far off-base.

How do we explain this deep tension in liberal thought? How can liberty be treated so differently by Kennedy and some of his fellow supreme court justices in the context of economic exchange (healthcare) as opposed to the context of policing (strip-searches)?

Though the contrast is so stark, there is a coherence and logic to it. It dates back to the 18th century, when the idea of natural order (which would evolve into the concept of free-market efficiency) was introduced into economics hand-in-hand with the idea of a police state. The first economists, François Quesnay and his disciples, referred to this as "legal despotism". Using this rubric, they formulated a political ideal of complete governmental inactivity in all but the penal sphere. Given the existence of natural laws governing economic exchange, the group envisaged no role for the legislature except to criminalize and punish severely those who fail to see and appreciate the fundamental laws of nature. The only object of positive manmade laws was to severely punish those who were disorderly, as a way to protect society from "thieves and the wicked".

The same paradoxical, but coherent link ran through early laissez-faire liberalism. It was reflected in the writings of Jeremy Bentham, who argued that the government should "Be Quiet" in economic matters – at the very same time that he was inventing the all-seeing panopticon prison. This paradox is found in the Chicago School of economics as well, which defined the function of criminal law in a capitalist society as punishing and preventing those who "bypass" the free market. And of course, it continues to the present – a period in which we may be declared free from a government mandate on healthcare, but subject to strip-searches and delousing if arrested.

Since the 18th century, the idea of economic freedom has been joined at the hip with the need for a police state; government is perceived as incompetent with regard to economic regulation, but fully legitimate and competent at policing and punishing. Not surprisingly, the periods of strongest belief in the free market (the "Market Revolution" in the 1820s and the recent period of neoliberalism since the 1970s) have coincided with the starkest periods of penal expansion – with the birth of the penitentiary in the first half of the 19th century and the exponential rise in prison populations since 1973.

The rise of neoliberal thought since the 1970s has left us with a frightening union, one in which there is both free-market ideology (which militates against universal healthcare) and mass incarceration (with the attendant excesses like generalized strip-searches). This is what many of us have come to call "neoliberal penality". Justice Kennedy's Janus-faced liberalism is just the most recent, and troubling instance, where the socio-economic domain (healthcare reform) is governed by skepticism of the state and the need to protect the freedom of the individual, while the penal sphere is governed by a police-state logic that gives the state security apparatus carte blanche to eradicate even the smallest security risks (with a sledge hammer, if necessary). No delegation is permitted to social security experts in the economic realm, lest we fundamentally alter the relationship of the government to the individual; but we give free rein to the domestic security experts in policing and punishing – even when the magnitude of the potential harm is minimal.

In both contexts, naturally, there are risks. In the case of detention in a general holding cell, there is some danger that a person arrested might smuggle contraband into jail and harm himself or others. As Justice Kennedy reported:

"Officers at the Atlantic County Correctional Facility, for example, discovered that a man arrested for driving under the influence had '2 dime bags of weed, 1 pack of rolling papers, 20 matches, and 5 sleeping pills' taped under his scrotum."

In the healthcare context, there is the risk that an uninsured person may require medical attention and thereby impose costs on the insured. Justice Kennedy seemed to recognize as much at oral argument when he noted that:

"[I]n the insurance and healthcare world … the young person who is uninsured is uniquely proximately very close to affecting the rates of insurance and the costs of providing medical care in a way that is not true in other industries."

Despite the existence of risk in both situations, the supreme court delegated decision-making to the domestic security experts in the strip-search case, but appeared reluctant to do so to the social security experts on the healthcare side. Justice Kennedy closes his opinion in the strip-search case with these words:

"Courts must defer to the judgment of correctional officials that the inspections served not only to discover but also to deter the smuggling of weapons, drugs, and other prohibited items."

Never in a million years would you expect to see that kind of deference extended to social security experts. This should give rise to wide-scale cognitive dissonance, but that has not occurred. And the reason is that most Americans have, over the past several centuries, internalized the great American paradox. There is a growing disconnect, but we do not hear or see it. The liberal paradox has become, well, second nature.

Paul Krugman, writing about the Trayvon Martin justice shooting, does a powerful job of connecting the dots – particularly, the connection between the illusory ideology of free markets and the growth of the prison complex. Krugman documents how the call for limited government and free markets hides what he calls "crony capitalism", namely the practices that put in place a "privatized government" in which "corporations get their profits from taxpayer dollars, dollars steered their way by friendly politicians". This form of crony capitalism diverts public resources toward private profit – especially, in the direction of the prison complex. Krugman observes that:

"[W]e seem to be turning into a country where crony capitalism doesn't just waste taxpayer money but warps criminal justice, in which growing incarceration reflects not the need to protect law-abiding citizens but the profits corporations can reap from a larger prison population."

Mass incarceration and generalized strip-searches are two of the most glaring examples – and they are heading us in the direction of an America dystopia. The fact that we incarcerate almost 1% of the adult population in this country is itself appalling. The racial disparities in our criminal justice system are equally shocking. Today, 27% of African Americans and 26% of Hispanics in this country – more than one in four – live in poverty; and one in nine African-American men between the ages of 20 and 34 are behind bars.

Stripped naked, deloused and uninsured: these are, indeed, frightening prospects. Not surprisingly, Americans are facing these prospects precisely because of increasingly two-faced liberalism. The very question of the healthcare mandate arose because of an allergy to government-based economic interventions, stemming from the fundamental paradox in American notions of liberty. If the country had adopted a single-payer healthcare system, like the (already-existing) Medicare or Medicaid programs, none of these mandate issues would have arisen. The country would simply have a tax and transfer; as it does for innumerable social programs, economic subsidies to large corporations, and international conflicts such as the wars in Iraq and Afghanistan.

Instead, resistance to the Affordable Care Act grew (almost a majority of Americans oppose the reform), and is now accompanied by supreme court-approved strip-searches, delousing showers and mass incarceration. It is hard to imagine a worse combination: the cycle of poverty, precariousness, uninsurance and incarceration is becoming dystopic.