By Gordon Hull
As Foucault emphasizes in Birth of Biopolitics, one of the signal moves in American neoliberalism is the extension of economic analysis into all aspects of life. As he puts it, the American neoliberals “try to use the market economy and the typical analyses of the market economy to decipher non-market relationships and phenomena which are not strictly and specifically economic but what we call social phenomena” (BB 239-40). This “absolute generalization” of the market form “functions … as a principle of intelligibility and a principle of decipherment of social relationships and individual behavior,” enabling a “sort of economic analysis of the non-economic” (BB 243). Foucault uses the neoliberal analysis of crime as exemplary. Rather than pursuing the panoptic dream of zero-crime, or earlier theories about “the delinquent” as a character type, the neoliberal treats crime as an economic activity: we are all potential criminals; the key to lowering crime is to raise its cost. This has sometimes surprising results, one of the most important of which is that one should not spend more social resources on combatting crime than the crime costs.
For example, Jeff Sessions and his stupid “zero-tolerance” policy are not just barbaric: they are economically irrational. Tinpot Dictator must have an inkling of this, which is why he tries to say that all immigrants are gang members, so as to make them look more costly than they are. Sort of like ticking-time-bomb scenarios try to make torture look efficient. Yes, I know he is motivated by racism. Posner & co. never let conscious motives get in the way of a good description. You just assume that Tinpot has stable preferences (racism and narcissism and more racism), and then “all human behavior can be viewed as involving participants who maximize their utility from a stable set of preferences” (Essence of Becker, 13).
Thus for one application of this theory. What I want to trace here in outline form is one consequence of its application, often discussed in terms of the impossibility of seeing non-economic aspects of life, and the precise institutional mechanisms by which that happens. The disappearance of any place for politics – and thus democracy – is developed in Wendy Brown’s Undoing the Demos. One of Brown’s examples that resonated with me was her discussion of the insidious creep of “best practices” as a form of governance.
The development of Chicago school antitrust theory provides another, very specific example. The development of Chicago school law and economics isn’t given enough attention in the literature on neoliberalism, but it is central to understanding neoliberalism in law in particular (the best critical literature I know of is by William Davies and by Rob van Horn and his coauthors). It will surprise no one that the theory, which originated in the early 1950s, developed a view of antitrust that argued that monopolies were beneficent and antitrust enforcement bad. The fully developed Chicago theory makes two moves. One is to apply the neoliberal extension of markets into all social relations, by reducing social welfare to consumer welfare. The other is to insist on interpreting matters according to its own economic analysis, which consistently downplayed any negative effects of monopolies by arguing that in open markets, competition always arose to erode monopolies. The canonical statement of the mature position is Robert Bork’s 1978 Antitrust Paradox. Bork summarizes the view:
“The primary characteristics of the Chicago School of antitrust are two. The first is the insistence that the exclusive goal of antitrust adjudication, the sole consideration the judge must bear in mind, is the maximization of consumer welfare. The judge must not weigh against consumer welfare any other goal, such as the supposed social benefits of preserving small businesses against superior efficiency. Second, the Chicagoans applied economic analysis more rigorously than was common at the time to test the propositions of the law and to understand the impact of business behavior on consumer welfare” (1993 ed., p. xi)
Together, these meant that the sorts of problems in pricing and distribution that troubled classical liberals receded in importance. Rather than competition, policy should promote “efficiency.” Judge Posner puts it this way:
“To the extent that efficiency is the goal of antitrust enforcement, there is no justification for carrying enforcement into areas where competition is less efficient than monopoly because the costs of monopoly pricing are outweighed by the economies of centralizing production in one or a very few firms” (qt. in Davies, Limits of Neoliberalism, 94).
As Davies underscores, all of this amounts to a “wholesale reappraisal of monopoly, resulting in a model of applied neoliberal policy and law in which large concentrations of corporate power and high profitability were typically justified on efficiency grounds” (ibid.)
It also serves – to return to my main point – to make traditionally “political” questions invisible to antitrust analysis, since they fall outside of the purview of consumer welfare. The theory thus provides a good example of Brown’s thesis that the neoliberal extension of economic categories into all social spheres tends to make democracy impossible. Current efforts to resist Chicago antitrust doctrine emphasize precisely this point; as Lina Khan summarizes, “the fixation on efficiency … has largely blinded enforcers to many of the harms caused by undue market power, including on workers, suppliers, innovators, and independent entrepreneurs” (132). These actors are all market agents in the sense that they occupy economic roles, yet even they are hidden from view except insofar as they can indirectly be considered consumers.
The problems extend farther than this, however. For example, by offering high rewards to the inventors of medicines for diseases that trouble the affluent, the structure of the patent system encourages the development of “me-too” drugs as competitors to pharmaceutical blockbusters like Viagra. As long as these products are sufficiently different from Viagra to avoid patent infringement, they should enhance consumer welfare by introducing competition into the erectile-dysfunction drug market. The patent monopoly thus generates competition, which generates lower prices, and voila! Consumers win. Even on the assumption that this theory is correct, one should note that it makes it impossible to consider the degree to which the money spent developing competitors to Viagra is money not spent on developing treatments for diseases like malaria. In that sense, the consumer welfare gain might very well turn out to be a loss in terms of social welfare (it’s a separate question whether the money spent developing Viagra initially is a similar misallocation of resources; a system of medical research driven by strong patent rights will necessarily favor treatments targeted to people who can pay).
More broadly still, the reduction of social welfare to consumer welfare creates an enormous blind spot to human capabilities or other ways to understand human welfare. Capabilities theory, of course, as Martha Nussbaum makes clear, is designed in part to remedy the myopic reduction of “development” to GDP. So it is not surprising that it would work as an example in the present context. Capabilities like education can only be articulated by a neoliberal theorist like Becker as an investment in human capital. Brown is again good on the damage this theory does to education, which “as it devotes itself to enhancing the value of human capital ... now abjures the project of producing a public readied for participation in popular sovereignty” (Undoing, 184). The problem is a reductive misdescription of personhood:
“Even [neoliberalism’s] critics cannot see the ways in which we have lost a recognition of ourselves as held together by literatures, images, religions, histories, myths, ideas, forms of reason, grammars, figures, and languages. Instead, we are presumed to be held together by technologies and capital flows” (Undoing, 188).
Brown is of course not talking about Chicago antitrust. But consider work on geographic indicators as a form of trademark (yes, I did a paper on this) – requiring, say, rooibos tea to come from the its original location in South Africa, and to be produced in traditional ways. Advocates for indigenous cultures like Madhavi Sunder use capabilities theory to articulate a very different understanding of the points and purposes of trademark from the standard, economic version. Thus, one argument Sunder advances for protecting geographic indicators is that they contribute to the viability of rural areas and “inefficient” ways of life and forms of production. I’ll leave it to others to decide in what ways these are worth preserving (and whether GI’s don’t introduce their own problems; I claim that they do in my paper, though I think the case is a close one), but the point here is simply that a Chicago antitrust theorist simply has no way to even make the argument coherent. After all, inefficiency reduces consumer welfare, and that is the only measure of value on the table. In other words, as Brett Frischmann and Evan Selinger have recently argued, we need to think about the value in being deliberately inefficient sometimes.
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