Student Blogger - Chicago’s Best Ideas: Bernard Harcourt on “Neoliberal Penality: A Genealogy of Excess”
In light of the financial crisis, many people are calling for greater regulation of the market. A few years ago, many called for freeing the market from excessive regulation. The common thread underlying both sentiments is that there is there is a spectrum along which market regulation can be located, from free at one end to excessively regulated at the other. These assumptions are ubiquitous, but not quite universal.
On May 21, Professor Bernard Harcourt gave a talk in the Chicago's Best Ideas lecture series entitled "Neoliberal Penality: A Genealogy of Excess" (about which he has a paper in progress). Harcourt took on the concepts of "free market" and "excessive regulation" by highlighting two snapshots in time: grain laws in France in 1739, commonly considered to epitomize excessive regulation; and the Chicago Board of Trade in 1996, representing the free market.
Paris in 1739 had extensive laws regulating the sale of bread. Loaves under a certain weight could not be sold; bread could not be sold before a certain hour, which depended on the season; people could not buy grain for resale; people could not utter speech that tended to cause the price of bread to increase. A book collecting grain regulations did not contain a separate entry for "markets"; rather, it contained a cross-reference: "Markets. See Police." The wheat pits of the Chicago Board of Trade in 1996 bore some surprising similarities. Extensive regulations cover after-hours trading that occurs in certain circumstances; the regulations establish who may participate, the length of time (two minutes), maximum increments above and below the settlement price, and types of orders (e.g., no new orders). Despite these similarities, Paris in 1739 is considered the height of excessive government intervention in the economy, and Chicago in 1996 is considered a prime example of the free market at work.
How did it come about that we would perceive one market as excessively regulated and the other as free? Harcourt traces the answer to the emergence of the concept of "natural order" in the eighteenth century and its gradual evolution into the idea of "market efficiency." Prior to the late eighteenth century, the realm of the market and the realm of policing were coextensive. Adam Smith, for example, gave a series of lectures on jurisprudence in Glasgow in 1762, where he stated, "Whatever regulations are made with respect to the trade, commerce, agriculture, manufactures of the country are considered as belonging to the police." The concept of "police" had a broader scope at that point in time and covered economic exchange; everything we would now consider police work was included, but so were many areas we would consider administration. A good example is Cesare Beccaria who, in On Crimes and Punishments, applied the lessons from commerce to the penal rules, which he saw as arbitrary and brutal, as opposed the rational workings of commerce.
The innovation came through the thought of François Quesnay, as well as other Physiocrat thinkers, envisioned the economy as an autonomous system, a "natural order," consisting of agricultural, landowning, and manufacturing that all reinforced each other. He saw positive laws handed down by legislatures as interfering with the functioning of natural laws, thus severing government action from the market. In 1776, Adam Smith published Wealth of Nations; unlike the lectures, this treatise almost completely failed to mention police. Thinking about markets had been completely transformed over a period of fourteen years.
Harcourt stressed two negative outcomes from this conceptual separation of the markets from the penal sphere. First, the domain of the penal laws expands. The modern view sees the market as a zone where government actions are improper and distorting, and the police power encircles this free zone and channels deviants who break the law back into the market. Penal law thus tends to expand in the "non-market" zone as the only place where government intervention is legitimate. Second, this mode of reasoning naturalizes market outcomes. The market produces natural efficiency and serves as its own justification because the result comes from free actions by individuals. By contrast, when we realize that the debate is simply among different distributional outcomes, the question is no longer about freedom, which is meaningless because every market is thoroughly regulated; instead, the question is about which distributional outcome we desire.