Governmentality accounts of the economy: a liberal bias?

Abstract

The governmentality literature offers a host of insights into liberal modes of government. A key theme in this literature is that the economy came to be seen as an autonomous domain requiring its own form of governmental reason. Yet the emergence of the economy has never been specified, in terms of both what would constitute an economy and how it was constituted. Instead, the appearance of an economy has been conflated with the general rise of liberal understandings of agency. In this paper I seek to provide an alternative and more precise account. This involves showing how the importance of Smith lies not so much in his formulation of a liberal version of agency, but in the disjunction he introduces between reason of state and political oeconomy. Crucially, despite his significance, Smith's arguments do not usher in an economy. For that event we have to wait for Ricardo's problematic of distribution. This alternative account is intended to weaken the association of the rise of liberal government with the emergence of the economy as an object of thought.

Keywords:

• economy
• Foucault
• governmentality
• liberalism
• political economy

Acknowledgements

I would like to thank Barry Hindess, Michael Leininger-Ogawa, Keith Tribe and the journal's referees for valuable comments on earlier versions.

Notes

1. For some of the key collections see Burchell, Gordon and Miller (1991), Barry, Osborne and Rose (1996) and Dean and Hindess (1998).

2. There has been a suggestion of liberal bias in the governmentality literature before – the elision of the authoritarian moments of liberal political reason (Dean, 2002; Hindess, 2001). The bias suggested here is therefore quite different, and one that Dean and Hindess do not escape.

3. For discussions of police, see Oestreich (1980, p. ch. 9), Raeff (1983) and Tribe (1995).

4. An extended and rich account is found in Dean's earlier work (1991); see especially chapter 7 for Smith and chapter 8 for Ricardo. Yet, similarly, there the economy is also announced as arriving with political economy without an explanation of how the laws that knowledge formulates can constitute an economy.

5. Foucault (2003 [1966], pp. 180–218) discussed the analysis of money in his classical period in very similar terms. His general concern was to show how the shift from representation in the classical period to history in the modern period, or perhaps the Figure of Man, corresponded with a shift from treating money as representing wealth to treating labour as the source of value. This allowed Foucault to present political economy as deploying an analytic of finitude, since material scarcity was the dominant theme of that knowledge. Accordingly, despite its richness, Foucault's account is of limited help here in tracing the emergence of the economy, since his analysis occurred at a different level – at the level of epistemes and their knowledges, not knowledges and their objects.

6. Importantly, two limits to the division of labour are also discussed in The wealth of nations. The first is that the nature of agricultural labour is such that the division of labour cannot normally be carried out to the same degree as in manufacturing (1976, I, p. 16). For example, many of the requisite tasks in agriculture are seasonal, and consequently ‘it is impossible that one man should be constantly employed in any one of them’. This general impediment to specialization in agriculture, Smith suggested, may well explain why ‘the improvement of the productive powers of labour in this art, does not always keep pace with their improvement in manufactures’. This in-principle demotion of agriculture vis-à-vis manufactures is in tension with its status in the quote given earlier as that use of capital which employs the greatest ‘quantity of productive labour’. It is this status as the best use of capital that is ultimately affirmed in later books of The wealth of nations, as Tribe (2006, p. 64) has recently argued. The second limit to the division of labour is due to its very origin: since ‘it is the power of exchanging that gives occasion to the division of labour, so the extent of this division must always be limited by the extent of that power … by the extent of the market’ (1976 , I, p. 31).

7. See Tribe's (2006) excellent discussion of these themes.

8. Indeed, when Smith does speak of armies, in Book V, it is in the context of the expenses of the state. Smith (1976, II, pp. 698–708) suggested that wealthy nations are an appealing target because of their wealth, and so have need of some form of common defence. This defence can take two forms – as a militia or as a standing army. After reviewing some historical problems with militias and the relationship between forms of defence and stages of civilization, Smith concluded that for an opulent nation only a standing army would do. He also noted that a standing army, in view of the nature of modern warfare, engenders considerable costs, and those nations that can best afford them will have an advantage over those that cannot afford them quite as well.

9. See Tribe's (1978) chapter 6 for a discussion of pamphlets of the same year by Malthus, Torrens and West that similarly broke with the preceding forms of argument, albeit less radically than Ricardo. The Essay is not Ricardo's first performance in political economy, but his earlier writings do not break with the existing regularities in significant ways.

10. As Tribe has argued (1978, pp. 104–6), on the one hand Smith's treatment of rent as a monopoly payment the landlord extracts from the tenant breaks with political oeconomy, where it is simply a return on the fertility of the land. But on the other hand rent and profits are not brought into a theoretical relation (rent is simply a topic to comment on in the course of a tract on oeconomy), since rent and profits are determined by a number of independent exigencies. As Tribe showed so brilliantly, the absence of abstract and general relations is closely related to the absence of economic agency (1978, pp. 120, 127, 145).

11. In a footnote Ricardo referred to Smith's explanation of why the rate of profits may differ between employments: for example, because of differences in the security of one investment over another. But, as Ricardo made clear, the important point, and his claim, is that the proportion between the profits of these different employments will be held constant through the allocation of capital to its most profitable uses. However, as Sraffa argued (1951, I, pp. xxxi–xxxii), the architectural reason that Ricardo never made explicit is that the Essay is a corn model, that is, in agriculture corn is both capital input (as wages) and output, but other trades must use agricultural output as an input. In agriculture, then, profits are simply a ratio between input and output, so that the problem of value is elided. This elegance is lost by the shift away from a corn model in the Principles, hence its troubled chapter 1, ‘On value’, where labour is made to explain the formation of value.

12. The Eurocentric conceit here is that the original position is associated with the initial settlement of a territory, so that progress begins only after colonization.

13. That is, a rise in wages above their natural price permits this class to propagate at an increased rate, which then augments the supply of labour, reducing wages.

14. Of course this account of the formation of the economy as a theoretical object is specific to the British context, and, as may be expected, there are important variations across contexts. For the process in Germany, see Tribe (1988, esp. chs 2, 8).

15. Consider the preface to the German edition of The General Theory, where Keynes suggested that ‘the theory of output as a whole, which is what the following book purports to provide, is much more easily adapted to the conditions of a totalitarian state, than is the theory of the production and distribution of a given output produced under conditions of free competition and a large measure of laissez-faire’ (1973 [1936], p. xxvi). Or his claim in his chapter ‘Concluding notes on the social philosophy towards which the general theory might lead’: ‘I conceive, therefore, that a somewhat comprehensive socialisation of investment will prove the only means of securing an approximation to full employment’ (1973 [1936], p. 378). Equally relevant here is Dean's claim that in the context of globalization ‘knowledge of the economic sphere … can authorize a comprehensive government and reform of personal and social life’ (2002, p. 56).