A spectre is haunting America — the spectre of fascism. All the powers of neoliberal political economy have entered into a holy alliance to exorcise this spectre. Instead, however, they have inadvertently nurtured its ghost and laid the groundwork for its resurrection.

In his monograph The Birth of Biopolitics (the numbers in parentheses throughout this article refer to page numbers from Foucault’s text), Michel Foucault discusses, among other topics, the development of neoliberalism. Neoliberalism itself is something of a contested term (and that argument goes on longer than I have space for here). What I’m interested in discussing is the development of an economic system, originating in liberalism, and growing into a form of political economy still in operation today — one characterized by a radical laissez-faire capitalism and a commitment to frugality and efficiency in the exercise of government.

You’re all familiar with neoliberalism: the free market reigns supreme; it’s never wrong, and by the way, we don’t have room in the budget for whatever it is you’re requesting because it’s simply too expensive. Be rational, please. Be more frugal, but also be more productive while being more frugal. Be neoliberal.

Neoliberalism developed in post-World War II Europe. Among its primary objectives were transitioning Germany from a war economy back to a peace economy (79) and preventing the revival of Nazism in Europe (80). These were absolutely essential requirements for governing post-war economic policies.

Nazism, the German neoliberals (ordoliberals) decided, was “Essentially and above all… the unlimited growth of state power” (111). The ordoliberals determined that, in fact, Nazism revealed that all the defects that previously had been attributed to the market economy were in actuality defects of the state (116). The solution was clear.

On April 28th, 1948, Ludwig Erhard (economic advisor, future Minister of Economic Affairs, and eventual German Chancellor) delivered a report explaining how to temper the defects of the state without abandoning the state form altogether. In order for the state to shake off and remain disentangled from fascism and its firm grip on the economy, Erhard explained, “We must free the economy from state controls” (80–81). The economy, in other words, ought to function according to the “natural” and “spontaneous” mechanisms of the free and deregulated market. That deregulation, they argued, was the most effective means for ensuring security and also justice.

But the market is not and has never been a neutral site of justice.

In the Middle Ages, the market was controlled by what Foucault often refers to as “royal power.” Prices were fixed such that they balanced the needs of producers, merchants, and consumers. In this way, the market really was considered as “a site of distributive justice” because it ensured that “if not all, then at least some of the poorest could buy” basic necessities (30). Furthermore, the market was controlled in such a manner that protected the buyer from fraud. Of utmost importance was the protection of the consumer.

In the middle of the 18th century, however, views on the function of the market took a turn. Thinkers like Adam Smith began to argue that, rather than allowing the government to fix fair market prices, the market must obey “natural” mechanisms. Rather than the monarch setting prices, now Smith’s famous “invisible hand” of the market would ensure the “just” price. Any attempt to intervene in these spontaneous market mechanisms would, Smith et al. argued, only mangle the market’s already perfectly fine spontaneous operations.

In a way, this shift in thinking about the market feels like a religious movement: human intervention in the market will only result in anguish and woe, whereas the divine intervention of the market’s “invisible hand” will fairly tend to the economic needs of one and all.

Of course, the “natural” or “just” price that the free market determines is now completely stripped of any old medieval “connotations of justice” (31). What we’re left with is a mere number, “a certain price that fluctuates around the value of the product” (31). The “just” price is determined by the internal mechanisms of the market as it reaches an equilibrium price point between supply and demand.

So, what we discover in this price-value relationship is that the market can reveal the truth of something’s value and can even spit out a number telling you exactly what that value is. We can apply this logic to any service or commodity. Furthermore, thinking in terms of political economy, we can even apply this judgment of the market to governance itself.

What is revealed is that through natural mechanisms, the market “enables us to falsify and verify governmental practice” (32). Yes, “inasmuch as it enables production, need, supply, demand, value, and price, etcetera, to be linked together through exchange, the market constitutes a site of veridiction… a site of verification-falsification for governmental practices” (32). That’s right, folks: the market will tell us the truth of governmental practice, and because of the way that market logic has evolved, we are no longer talking about justice in the sense of justice for all.

Quite simply, we are using the market to justify government action.